TMI Blog2008 (8) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... ter the search and filing of the returns before and after the search by alleged benamidar and various case laws and we fully agree with these and uphold the findings of learned CIT(A) that the contemporary evidence which are in the form of statement recorded by search party u/s 132(4)/131 and statements recorded under the customs authorities clearly speak that the alleged benamidars were acting for themselves. No corroborative evidence was brought on record to prove that the business concerns belonging to these alleged benamidars were funded, managed and controlled by the assessee or his associates and they are the beneficial owner of these concerns. Thus, we are of the view that there was no sufficient material or evidence before the AO to come to the conclusion that Shri Umesh Saboo, Shri O.P. Ghiya, Shri Mahesh Sharma, Shri Mohan Prakash Sharma, Naman Gems (P) Ltd., Shri Gauri Shanker Pareek, Shri Mahesh Khandelwal, and Shri Raghuvar Dayal Pareek were benamidar of the assessee and his partners, Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari and the assessee and his partners cannot be held as involved in any manner in the business of these persons. Therefore, the AO was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohit, Manmohan Krishna Bagla and Ramesh Maheshwari neither control the acquirer of the shares nor they are their agents because the Revenue has no any positive evidence to show that money received against the sale of share was transferred or given to S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari and there is nothing on record to suggest that money relating to these share transaction have flowed from S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari or the shares of these companies were transferred to the above named persons or any benefit has been accrued to these person. In the result ground No. 6 of the appeal filed by the Revenue is dismissed. Addition made by the AO on account of Jewellery - whether the jewellery found at the time of search is explained or not - AO has not led any iota of evidence to prove that Smt. Ram Janki might have given her jewellery to someone else. The AO merely disbelieved the explanation given by the assessee. Hon'ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee vs. CIT [ 1963 (3) TMI 47 - SUPREME COURT] , observed that the IT Department cannot by merely rejecting unreaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year and the business of the assessee remained unattended and the clients shifted to other parties cannot be brushed aside without giving any adverse material against the assessee. For other expenses like car petrol, car insurance, interest on car loan, depreciation on car, we find the disallowance is at higher side. We thus, while setting aside orders of the lower authorities in this regard, direct the AO to restrict the disallowance upto 10 per cent of the total expenses as against the disallowance under these heads made by the AO. In the result ground No. 3 of the appeal filed by the assessee and ground Nos. 6, 7 and 8 of the appeal filed by the Revenue are dismissed. - I. C. SUDHIR J.M. and B. P. JAIN A.M. Vijay Goyal, for the Appellant. V. S. Kothari, for the Respondent. ORDER I.C. SUDHIR, J.M. : The appeal of the Revenue as well as of the assessee arises from the order of learned CIT(A), Central, Jaipur, dt. 29th Jan., 2007 for the asst. yr. 1998-99 to asst. yr. 2004-05. The first appellate order has been questioned by the Revenue in ITA Nos. 372/Jp/2007 (asst. yr. 1998-99), 373/Jp/2007 (asst. yr. 1999-2000), 374/Jp/2007 (asst. yr. 2000-01), 375/Jp/2007 (asst. yr. 2001-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luji, one of the agents, which is evident in the case of M/s Naman Gems (P) Ltd., Mumbai, the address of which is given as 16, Girgaum Terrace, Dr. D.D. Sathe Marg, Opera House, Mumbai, which clearly shows that these persons were working on behalf of Svs Rakesh R. Purohit alias Lalluji, and his associates Ramesh Chand Manihar and Manmohan Krishna Bagla. 5. ignoring the facts that Shri Umesh Kumar Saboo, Shri Mahesh Sharma, Shri Raghuvar Dayal Pareek, Mohan Prakash Sharma, O.P. Ghiya who were different persons gave statements and affidavits disclosing the persons controlling the business activities of their concerns/company and also had past connection with the above three persons indicating thereby that they were telling truth and were simply benamidars and the circumstantial evidences were thus against the assessee and his associates Shri Manmohan Krishna Bagla and Shri Ramesh Chand Manihar as per the decision of Supreme Court in the case of Smt. Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124: (1995) 214 ITR 801(SC) and CIT vs. Durga Prasad More 1973 CTR (SC) 500: (1971) 82 ITR 540(SC) are applicable in this case. 6. deleting the trading additions of ₹ 20,000 without appreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and office premises of the assessee and his partners. The Department has also carried out search and seizure operations over Shri Umesh Saboo Prop. of M/s Shruti Gems, Shri Om Prakash Ghiya Prop. of M/s Anmol Ratna, Shri Mohan Prakash Sharma Prop. of M/s Ambika Impex and power of attorney holder of M/s Vinayak Overseas, Shri Mahesh Khandelwal, Shri Raghuvar Dayal Pareek, Ram Ratan Patwari and M/s Naman Gems (P) Ltd. 6.1 The AO held that M/s Shruti Gems (Prop. Shri Umesh Saboo), M/s Anmol Ratna (Prop. Shri Om Prakash Ghiya), M/s Vinayak Overseas (Prop. Shri Gauri Shanker Pareek), M/s Tirupati Balaji Gems (Prop. Shri Mahesh Sharma), M/s Mine-O-Gems (Prop. Shri Sanjay Pareek), Shri Ram Ratan Patwari (Prop. M/s Ram Ratan Patwari) and Naman Gems (P) Ltd. (directors Shri O.P. Ghiya and Shri Mahesh Khandelwal) were primary concerns engaged in issuing of bogus purchase bills. Shri Mahesh Khandelwal and Shri Raghuvar Dayal Pareek were proprietors of several secondary concerns and these concerns were used in withdrawal of money from banks. Besides these, the learned AO listed M/s Ambika Impex (Prop. Shri Mohan Prakash Sharma), in the list of several secondary concerns mentioned at page No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 1998-99 1999--00 2000-01 2001-02 2002-03 2003-04 2004-05 Commission on a/c of bogus bills issued by benami firms (Other than M/s Vinayak Overseas) 3,05,560 6,07,652 11,52,789 7,10,850 41,36,236 25,50,888 11,02,636 Commission on a/c of bogus bills issued by M/s Vinayak Overseas 3,53,006 11,55,000 4,87,383 9,54,377 2,81,350 The learned CIT(A) held that the alleged benamidars were acting for themselves and no corroborative evidence was brought on record to prove that the business concerns belonging to these alleged benamidars were funded, managed and controlled by the assessee or his associates and they are the beneficial owner of these concerns. The learned CIT(A) held that the onus of establishing the benami is on the person who alleges benami which has not been discharged. The learned CIT(A) further held that Shri Umesh Saboo and others alleged benamidars have acted on their own to give entries of adjustment to others; but it might be possible that Shri Rakesh R. Purohit, Shri Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari might have introduced some entry taker persons who wanted bills of purchase. The commission income 10 paise per hundred in the hands of Shri Rakesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Departmental Representative submitted further that in the bank account of M/s Naman Gems (P) Ltd. in Vysya Bank, Mumbai, the address is given 16B Girgaum Terrace, Dr. D.D. Sathe Marg, Opera House, Mumbai, and this premise belongs to Shri Rakesh R. Purohit alias Lalluji. The learned Departmental Representative submitted that Shri Rakesh R. Purohit has sold shares of Gayatri Shakti Paper Boards Ltd. worth of ₹ 35 lacs to Shri Om Prakash Ghiya. The learned Departmental Representative submitted further that these persons were either relatives or ex-employees of the assessee and his partners and the past connection of the assessee and his partners from these persons proves that the assessee and his partners have floated various business concerns in the name of these persons and these concerns were used in issue of the bogus purchase bills on commission basis, therefore the assessee and his partners have not acted only as introducer/facilitator for bogus billing but they were real and beneficial owner of the primary and secondary concerns. The learned Departmental Representative further submitted that the AO has recorded the statements of Shri Umesh Saboo, Shri O.P. Ghiya, Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions made the AO. 9. On the other hand learned Authorised Representative Shri Vijay Goyal submitted that the assessee has made detailed submission before the learned CIT(A) which has been reproduced at pp. 14-36 of the order of learned CIT(A) for asst. yr. 1998-99. The assessee gave point-to-point explanations over the paras A to R of AO, which the learned CIT(A) has reproduced at pp. 20 to 35 of his order for asst. yr. 1998-99. The learned CIT(A) after appreciating all the facts and legal position, made his findings in para Nos. 5.03.01 to 5.03.14. The learned Authorised Representative submitted that the learned CIT(A) has rightly held that the owners of the primary and secondary concerns were not benamidar of the assessee and his associates. In this regard the learned CIT(A) has made reasoned findings in para Nos. 5.03.08 to 5.03.11 which should be upheld. The learned Authorised Representative submitted that the AO was completely confused on the point. The learned AO assessed the income in the hands of Shri Umesh Saboo, Shri O.P. Ghiya, Shri Mahesh Sharma, Shri Mahesh Khandelwal, Shri Mohan Prakash Sharma, Shri Raghuvar Dayal Pareek, M/s Naman Gems (P) Ltd., on protective basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim or action that the property is held benami. The doctrine of benami will by virtue of this Act cease to be a part of Indian Law. The learned Authorised Representative submitted further that the statement/affidavit before the AO by the alleged benami person are self-serving statements/documents. No any documentary evidence was given in support of the allegation made by them against the assessee. The statements/affidavit before the AO is contrary to the sworn statements made before the search party and customs authorities and returns filed by these persons wherein the sworn verification has been made. The assessee has rebutted the allegations and contents of the statements/ affidavits made/filed by the alleged benami person before the AO and the assessee has discharged his onus by filing the reply affidavit (copy at paper book pp. 75-108), wherein the allegations made by the alleged benami persons were specifically denied and factual position was explained. The AO has also recorded the statement of the assessee on 10th March, 2006 (paper book pp. 179 to 188) wherein the allegations made by the alleged benami persons were specifically denied. It is well-settled position of the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shruti Gems. This fact is contrary to the copy of the IT returns filed by him from time-to-time wherein he has signed declaring M/s Shruti Gems as his proprietorship concern. The copy of IT return for asst. yr. 2001-02 is at paper book pp. 493-495. Net profit from M/s Shruti Gems declared ₹ 2,660 (paper book p. 494) and shown in the IT return for asst. yr. 2001-02 (paper book p. 493). The copy of IT return, audited annual accounts for asst. yr. 2002-03 is at paper book pp. 472-492. Net profit from M/s Shruti Gems declared ₹ 1,09,355 (paper book p. 473) and shown in the IT return for asst. yr. 2001-02 (paper book p. 472). The trading account, P L a/c and balance sheet of M/s Shruti Gems signed by Shri Umesh Saboo (paper book pp. 485-487). The copy of IT return, audited annual accounts for asst. yr. 2003-04 is at paper book pp. 449-471. Net profit from M/s Shruti Gems declared ₹ 1,11,861 (paper book p. 450) and shown in the IT return for asst. yr. 2001-02 (paper book p. 449). The trading account, P L a/c and balance sheet of M/s Shruti Gems signed by Shri Umesh Saboo (paper book pp. 462-464). The return for asst. yr. 2004-05 filed after search on 1st Aug., 2004, (pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account in Corporation Bank. In answer to question No. 39 of statement dt. 30th June, 2003 (paper book pp. 204-205) he sated that the transaction in bank account at Corporation Bank are relating to purchase and sales. (v) In answer to question No. 14 of statement dt. 25th Nov., 2005 (paper book p. 436) he stated that he never went to Surat. In answer to question Nos. 19 and 20 of statement dt. 30th June, 2003 (paper book p. 197-198) he sated that he used to go to Surat to purchase goods and working of the Surat office was explained. (vi) In answer to question No. 22 of statement dt. 25th Nov., 2005 (paper book p. 439) he stated that Maruti car No. RJ 14 6C 9408 was purchased by these three persons (Shri Rakesh R. Purohit, Shri Manmohan Krishna Bagla and Shri Ramesh Manihar) and they left this car at his house at the time of search. In answer to question No. 6 of his statement dt. 30th June, 2003 (paper book p. 192) he stated that he possessed a Maruti car, which he purchased in November, 2002 on monthly instalment of ₹ 8,000. The search party has also recorded the statement of Shri Kamlesh Saboo brother of Shri Umesh Saboo on 19th June, 2003 under s. 132(4) of IT Act (p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mesh Saboo and no addition for the said investment was made in asst. yr. 2002-03 and asst. yr. 2003-04. Shri Umesh Saboo after the search opened a demat account with ING Vyasya Bank Ltd. on 30th Oct., 2003 in his personal name (paper book p. 269). The shares of Gayatri Shakti Paper Board Ltd. (which were purchased out of the funds of M/s Shruti Gems) were dematerialized in his personal demat account, (paper book p. 270), Shri Umesh Saboo sold these shares to M/s JMD Telefilms Industries Ltd. which was transacted through the said demat account on 3rd March, 2005. Shri Umesh Saboo received allotment of shares of RPL on 5th May, 2006 on public issue in the same demat account. This is sufficient to show that this demat account was opened and operated by Shri Umesh Saboo and he himself was beneficial owner of M/s Shruti Gems. 9.2 The learned Authorised Representative submitted that initial investment in M/s Shruti Gems was made by Shri Umesh Saboo. The personal balance sheet of Shri Umesh Saboo for asst. yr. 2001-02 (paper book p. 495) reveals investment of ₹ 34,415 in M/s Shruti Gems, which shows that investment in opening of the firm M/s Shruti Gems was made by Shri Umesh Saboo. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A). 9.7 As regard Shri Mahesh Sharma Prop. of M/s Tirupati Balaji Gems, the learned Authorised Representative submitted that the AO has relied on affidavit filed by Shri Mahesh Sharma. The AO has enclosed the copy of his affidavit with the assessment order for asst. yr. 2001-02. The affidavit filed by Shri Mahesh Sharma is self-serving document. Further, Shri Mahesh Sharma has mentioned wrong facts in the affidavit therefore such affidavit cannot be relied upon. In para No. 3 of the affidavit, he stated that he was an employee of group consisting Shri Rakesh R. Purohit, Ramesh Chand Maheshwari, and Shri Manmohan Krishna Bagla. In fact, Shri Mahesh Sharma never remained the employee of this group as evident from IT returns of Shri Mahesh Sharma, wherein he has never shown salary income from the said group. In para No. 3 of the affidavit, he stated that he was in service of M/s Tirupati Gems. He stated that Shri Sanjay Pareek was proprietor of M/s Tirupati Gems, who was an associate of group consisting Shri Rakesh R. Purohit, Ramesh Chand Maheshwari, and Shri Manmohan Krishna Bagla. In fact, the same AO has passed assessment orders of Shri Sanjay Pareek assessing him as an inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee group and their family members were submitted at paper book pp. 537-560 and the learned Authorised Representative submitted that the assessee group paid by account payee cheque against the goods purchased from these concerns. The assessee group has sold import license against the payment received from these concerns and whatever loan received from these concerns were repaid by account payee cheques. Therefore, there is no transfer of profit, or transfer of funds directly or indirectly by gifts, share capital or otherwise in the assessee group. 9.11 The learned Authorised Representative submitted further that the assessee is not concerned how the alleged benamidar made arrangements for the transactions of crores of rupees. The AO has not brought any material to prove that the assessee's funds were involved in the transactions made by these persons. The learned AO has listed out 7 primary concerns, which according to him were involved in the issue of bogus purchase bills. The AO himself has not assessed all these concerns belonging to the assessee. The learned AO has assessed M/s Mine O Gems and M/s Ram Ratan Patwari as separate independent assessees and assessed M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) which has been reproduced at pp. 30-33 of the order of learned CIT(A). 9.13 The learned Authorised Representative submitted further that Shri Om Prakash Ghiya (proprietor M/s Anmol Ratan), Shri Mahesh Sharma (proprietor M/s Tirupati Balaji Gems), Shri Mohan Prakash Sharma (proprietor M/s Ambika Impex), Shri Gauri Shanker Pareek (proprietor M/s Vinayak Overseas), Shri Raghuvar Dayal Pareek (proprietor of several secondary concerns) never remained as employee of assessee or of the business concerns of the assessee. Only Shri Umesh Saboo and Mahesh Khandelwal were ex-employees of the assessee. Shri Umesh Saboo was under employment of M/s Amarnath Associates upto November, 2000. Shri Umesh Saboo left the service in November, 2000 and after that Shri Umesh Saboo never worked under the direction, supervision and control of the assessee and he never remained under the employment of the assessee or in partnership firm or company belonging to the assessee. Shri Mahesh Khandelwal was under employment upto March, 2001. Shri Mahesh Khandelwal left the service in March, 2001 and after that Shri Mahesh Khandelwal never worked under the direction, supervision and control of the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, Shri Mohan Prakash Sharma has filed return for asst. yr. 2005-06 on 7th June, 2006 (after completion of assessment under s. 153A) wherein he has shown M/s Ambika Impex as his proprietary firm. The demat account of Shri Umesh Saboo was opened on 30th Oct., 2003 (after the search) (paper book p. 269) wherein the shares of Gaytri Shakti Paper Boards Ltd. were transacted on 3rd March, 2005 (paper book p. 270). In the same demat account the shares of Reliance Petroleum Ltd. were allotted in IPO. The copy of demat account of Shri Om Prakash Ghiya is at paper book pp. 260 to 268. Shares of Lupin were received by allotment on IPO; shares were transacted in this account even after the search. Therefore, the circumstantial evidence is also in favour of the assessee. 9.14 The learned Authorised Representative submitted that so far as Departmental appeal is concerned, he relies on the findings of learned CIT(A) given at paras 5.03.01 to 5.03.14 of the order of learned CIT(A) for asst. yr. 1998-99. He prayed that the grounds raised in the Departmental appeal deserve to be rejected. However, in support of ground No. 2 of the assessee's appeal he submitted that the learned CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative that the Department has carried out intensive search operations over three groups namely (i) Mittal Gems and Sanjeev Prakashan Group, (ii) Assessee group and (iii) alleged benamidar group but no documentary evidence has been brought to our notice to establish that the assessee and his associates were real and beneficial owner of M/s Shruti Gems, M/s Anmol Ratna, M/s Tirupati Balaji Gems, M/s Vinayak Overseas, M/s Ambika Impex, and Naman Gems (P) Ltd. and several other concerns owned by Shri Mahesh Khandelwal and Shri Raghuvar Dayal Pareek. The Department has shown no material to establish that these concerns were managed, controlled and operated by assessee and his associates. We find that subsequent statements made/affidavits filed by alleged benami persons before the AO lead the AO to arrive at the conclusion that these persons are name lenders and benami of the assessee and his associates. During the course of search none of persons except Shri Mahesh Sharma has alleged that they were working for and on behalf of the assessee and his associates. The statements of Shri Mahesh Sharma before the Investigation Wing cannot be used against the assessee because these statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 during the assessment proceedings are self-serving statements and have no evidentiary value and therefore cannot be relied upon. To treat a concern as benami, it is necessary to establish that the flow of funds was from assessee and his partners and they were real beneficiaries of the profit earned in the name of various concerns whose proprietors and directors are above named alleged benami persons. The learned Departmental Representative has neither brought any such material to our notice nor the AO has made any such finding in his order. We agree and uphold the findings of learned CIT(A) that the onus of establishing the benami is on the person who alleges benami, which has not been discharged in the case of the assessee. We also noticed from the balance sheet of M/s Shruti Gems and demat account of Shri Umesh Saboo that shares worth of ₹ 59 lacs of M/s Gaytri Shakti Paper Board Ltd. were purchased from the funds of M/s Shruti Gems and these shares were transferred in the personal name of Shri Umesh Saboo which is evident from the demat account of Shri Umesh Saboo. Shri Umesh Saboo opened this demat account after the search and on sale these shares were transferred fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee or the application was signed by the assessee or his partners. The AO has not brought any positive material to show that any of the primary or secondary concerns of the alleged benami was operated from the business or residential premises of the assessee or his partners or bank accounts of these concerns were operated by the assessee or his partners. We hold that mere mentioning of the assessee's address on the application form for opening/closing of bank account is not sufficient material to hold that these concerns are benami concerns of the assessee and his partners. We are also not convinced with the contention of learned Departmental Representative that assessee has sold shares worth of ₹ 35 lacs to Shri O.P. Ghiya and this proves that these concerns were benami concerns of the assessee and his partners. We hold the share transaction of the assessee worth of ₹ 35 lacs with Shri O.P. Ghiya is not sufficient material to hold that these concerns are benami concerns of the assessee and his partners specially when Shri O.P. Ghiya has purchased shares worth of ₹ 2.51 crores of the same company from other independent persons. We find that the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Manmohan Krishna Bagla and Shri Ramesh Chand Maheshwari might have acted as introducer/facilitator for bogus billing. 11. In the result ground Nos. 1 to 5 of the appeal filed by the Revenue in ITA Nos. 372/Jp/2007, 373/Jp/2007, 374/Jp/2007, 375/Jp/2007, 376/Jp/2007, 377/Jp/2007 and 378/Jp/2007 are dismissed and ground No. 2 of the appeal filed by assessee in ITA No. 209/Jp/2007, ITA No. 210/Jp/2007, ITA No. 211/Jp/2007, ITA No. 212/Jp/2007, ITA No. 213/Jp/2007, ITA No. 214/Jp/2007 and ITA No. 215/Jp/2007 is allowed. Ground No. 6 (Department'ITA Nos. 372 to 376/Jp/2007) 12. Ground No. 6 of the appeal filed by the Revenue in ITA No. 372/Jp/2007, ITA No. 373/Jp/2007, ITA No. 374/Jp/2007, ITA No. 375/Jp/2007 and ITA No. 376/Jp/2007 is common and is against deletion of the trading addition of ₹ 20,000 (correct figure is 67,353) in asst. yr. 1998-99, ₹ 20,000 in asst. yr. 1999-2000, ₹ 1,57,704 in asst. yr. 2000-01 ₹ 49,874 in asst. yr. 2001-02 and ₹ 2,82,533 in asst. yr. 2002-03. Facts and issue being more and less common, therefore for the sake of convenience and also to avoid repetition, these grounds are decided simultaneously. 13. The assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jp/2007 is dismissed. Ground No. 6 (Department'ITA No. 377/Jp/07) 16. Ground No. 6 of the appeal filed by the Revenue in ITA No. 377/Jp/2007 for asst. yr. 2003-04 is against the deleting the addition of ₹ 1,05,08,334 pertaining to unexplained investment and commission earned in share transactions. The AO made the addition of ₹ 10,50,834 in the hands of the assessee on account of 1/3rd share in alleged commission earned in sham share transactions and unexplained investment in purchases of shares of Gaytri Shakti Papers Boards Ltd. The learned CIT(A) has discussed the facts of the issue in para Nos. 5.03.16 to 5.03.17 at pp. 85 to 89 of his order for asst. yr. 1998-99. The learned CIT(A) has deleted this addition on the basis of his elaborate findings in paras 5.03.18 to 5.03.19 at pp. 89 to 93 of his order for asst. yr. 1998-99. The learned Departmental Representative submitted that Shri O.P. Ghiya, Shri Umesh Saboo, Shri Mahesh Khandelwal, and Shri Raghuvar Dayal Pareek are benamidar of the assessee and his partners. During this year the total investment of ₹ 2,99,15,000 in the shares of M/s Gaytri Shakti Paper Board Ltd. was made by the assessee and his partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hiya. Shri O.P. Ghiya purchased the shares of ₹ 3 crores from other parties. It is relevant to mention here that Shri O.P. Ghiya purchased the shares of ₹ 1.14 crores from Shri Kishori Saran Garg AOP and shares of ₹ 1.37 crores were purchased from Shri Sanjay Lashkari. Shri Sanjay Lashkari is son of Shri Kishori Saran Garg. Hence, Shri O.P. Ghiya has purchased the shares worth of ₹ 2.51 crores from the family of Kishori Saran Garg. Shri Kishori Saran Garg and his family is not connected in any way by the assessee, these are independent persons. Therefore, the assessee cannot be held responsible for the shares purchased by Shri O.P. Ghiya from the independent other parties. The assessee cannot be held as beneficial person in respect of the sale transaction made by Shri O.P. Ghiya. Shri O.P. Ghiya has not sold the shares @ ₹ 2.25 to the assessee or a person connected with the assessee therefore the assessee derived no benefit from the shares sold by Shri O.P. Ghiya. As regard share transactions made by Shri Ram Ratan Patwari, the learned Authorised Representative submitted that Shri Ram Ratan Patwari is an independent assessee and addition has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative relied upon the findings of learned CIT(A) given at paras 5.03.16 to 5.03.19 of first appellate order for asst. yr. 1998-99 at pp. 85-93 and prayed that the order of learned CIT(A) deserves to be upheld. The learned Authorised Representative relied upon the following decisions in support of his contention : (i) Umacharan Shaw Bros. vs. CIT (1959) 37 ITR 271 (SC); (ii) CIT vs. Daulatram Rawatmull (supra); (iii) Jaydayal Poddar vs. Bibi Hazra (supra); (iv) Prakash Narain vs. CIT (supra); (v) Ashok Kumar Rastogi vs. CIT (1991) 100 CTR (All) 204; (vi) Radhey Shyam Tanwar vs. Asstt. CIT 26 Tax World 250 (Jd); (vii) Lal Chand Agarwal vs. Asstt. CIT (supra); (viii) ITO vs. Shree Ladani Family Trust (supra); (ix) Dy. CIT vs. PSM Family Trust (supra); (x) Ravi Mathur Ors. vs. Asstt. CIT (supra); (xi) Ramjas Nawal vs. Asstt. CIT (supra); (xii) S.S. Gupta vs. Asstt. CIT (supra); (xiii) Sandeep Loomba vs. Asstt. CIT (supra); (xiv) ITO vs. Suresh Chand Gupta (supra); (xv) Manju Devi Kogta vs. ITO (supra); (xvi) Smt. Kesar Devi vs. ITO (supra); (xvii) Uttam Chand Nahar vs. ITO (supra); (xviii) Vijendra Kumar Mamodia vs. Dy. CIT (supra); (xix) Rajesh Jain vs. ITO (supra); (xx) Radhey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions is Agarwal family. We uphold the findings of learned CIT(A) that S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari neither control the acquirer of the shares nor they are their agents because the Revenue has no any positive evidence to show that money received against the sale of share was transferred or given to S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari and there is nothing on record to suggest that money relating to these share transaction have flowed from S/Shri Rakesh R. Purohit, Manmohan Krishna Bagla and Ramesh Maheshwari or the shares of these companies were transferred to the above named persons or any benefit has been accrued to these person. In the result ground No. 6 of the appeal filed by the Revenue in ITA No. 377/Jp/2007 (asst. yr. 2003-04) is dismissed. Ground No. 9 (Department'ITA No. 378/Jp/2007) 18. Ground No. 9 of the appeal filed by the Revenue in ITA No. 378/Jp/2007 for asst. yr. 2004-05 is against the deleting the addition of ₹ 5,49,270 and ₹ 4,16,091 made by the AO on account of jewellery explained by the assessee as belonging to his daughters-in-law and mother of the assessee, respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription of gold articles was not given in the WT return filed by Smt. Janki Devi. In this regard, the learned Authorised Representative submitted that the weight of the gold ornaments has been mentioned in the statement of computation of net wealth. These returns were accepted by then AO and the assessment of the wealth declared in these returns was made by then AO (copy of assessment order paper book pp. 131, 134, 137). Further, the learned AO has already accepted the jewellery belonging to Smt. Sneh Purohit, wife of the assessee on the basis of similar type of WT returns. Therefore, not giving the narration regarding the description of gold articles in the WT return cannot be a ground for addition. The total weight of Ginni and Mohar found by the search party was 119.300 gms., which is part of the total weight 60 tolas i.e. 699.72 gms. declared in WT return. It is tradition practice to receive the Ginni/Mohar in marriage and to keep these in Puja. The learned Authorised Representative submitted further that the learned AO rejected the claim of the assessee on probabilities and possibilities. He held that the late mother of the assessee might have given her jewellery to other re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he possession and control of the assessee, therefore, no addition can be made in the hands of the assessee on account of jewellery belonging to Smt. Mandakani Purohit and Smt. Sweta Purohit. Further the assessee has filed details of marriage expenses (paper book p. 61). The total expenses on the marriage of two sons were ₹ 12,07,683, which includes expenditure of ₹ 2,75,000 on jewellery purchased at the time of marriage of sons. This shows that the daughters-in-laws of the assessee have received jewellery in gift from their parents, and other relatives besides the gift of jewellery from the assessee of ₹ 2,75,000. The learned Authorised Representative submitted that even in normal cases, where the assessee are not wealth-tax payers, the CBDT has issued guidelines prescribing the norms for seizure of gold jewellery during the course of search. As per Circular No. 1916, dt. 11th May, 1994 the Board has prescribed such limit at 500 gms. in the case of a married lady. In the case of the assessee the claim of daughters-in-law is for 502.10 and 498.400 gms. jewellery. Accordingly, as per the circular even in the normal course the credit for jewellery required to be give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jewellery has been given in the WT returns and the assessee has not filed copy of the will. The AO has no material to rebut the claim of the assessee. The AO has not led any iota of evidence to prove that Smt. Ram Janki might have given her jewellery to someone else. The AO merely disbelieved the explanation given by the assessee. Hon'ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112(SC), observed that the IT Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof . Further, overall jewellery declared in the WT return should be taken into account while deciding whether the jewellery found at the time of search is explained or not. We are of the view that the jewellery disclosed in past cannot be lost sight in view of non-availability of item-wise tally. Our view also finds support from the view expressed by Tribunal, Ahmedabad Bench C in the case of Bhaijibhai Alias Bhupendra Himatlal Shah vs. Dy. CIT (1999) 107 Taxman 83(Ahd)(AT), wherein it has been held that merely because item of jewellery indicated in deed executed in 1932 did not tally with jewellery seized could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 50,959 made by the AO on account of unexplained cash. The brief facts are that the search party found total cash of ₹ 2,05,035 from the residence of the assessee from the possession of different family members except ₹ 18,000 found from locker at Union Bank of India. The learned AO did not find the explanation given by the assessee as satisfactory and treated the cash of ₹ 51,000 as explained and for the remaining amount ₹ 1,54,035, he made addition of ₹ 50,959 in the hands of assessee and of ₹ 1,03,076 in the hands of wife of the assessee, Smt. Sneh Purohit. In support of the ground, the learned Departmental Representative placed reliance on the assessment order whereas the learned Authorised Representative justified the first appellate order reiterating the submission made before the lower authorities with the decisions cited before learned CIT(A). 23. After considering the above submissions, we find substance in the contention of learned Authorised Representative that the cash found by the search party cannot be treated as unexplained specially when the assessee had prepared the books of account on the basis of bank statement and seized do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as correct. Therefore, in the circumstances and facts of the case, the AO was not justified in making addition of ₹ 50,959 on account of unexplained cash and learned CIT(A) has rightly deleted the addition. 24. Ground No. 10 of the appeal filed by the Revenue in ITA No. 378/Jp/2007 for asst. yr. 2004-05 is thus dismissed. Ground No. 1 (Assessee'ITA Nos. 209 to 215/Jp/2007) 25. Ground No. 1 of the appeal filed by assessee in ITA No. 209/Jp/2007, ITA No. 210/Jp/2007, ITA No. 211/Jp/2007, ITA No. 212/Jp/2007, ITA No. 213/Jp/2007, ITA No. 214/Jp/2007 and ITA No. 215/Jp/2007 is common wherein the assessee has questioned the validity of the assessment order. During the appeal, the learned Authorised Representative has withdrawn this ground therefore dismissed as not pressed. Ground No. 3 (Assessee'ITA Nos. 209 to 212, 214 and 215/Jp/2007) and Ground No. 7 (Department'ITA No. 377) and Ground Nos. 6, 7 and 8 in ITA No. 378/Jp/2007. 26. The ground No. 3 of the appeals filed by the assessee in ITA No. 209/Jp/2007 (asst. yr. 1998-99), ITA No. 210/Jp/2007 (asst. yr. 1999-2000), ITA No. 211/Jp/2007 (asst. yr. 2000-01), ITA No. 212/Jp/2007 (asst. yr. 2001-02), ITA No. 214/Jp/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,52,770 1,52,770 1,52,770 0 Already disallowed in P L a/c Current period 67,403 67,403 53,922 13,481 20% Disallowance out of telephone expenses 53,238 48,095 42,772 5,323 20% Total 5,50,215 5,45,072 4,70,907.4 74,164 The learned CIT(A) confirmed the addition made by AO in asst. yr. 1998-99 to asst. yr. 2001-02. In asst. yr. 2003-04 and asst. yr. 2004-05, the learned CIT(A) allowed part relief. 28. The learned Authorised Representative submitted that the disallowance was made purely on guess. The Department has carried out search over the assessee and no evidence was found to justify the disallowance. The assessee was doing the business of purchase and sale of import license. The business requires heavy telephone calls. Straightjacket formula cannot be applied for all the persons and the quantum of telephone expenses should be examined by appreciating the business needs. The disallowance on account of vehicle expenses and depreciation on vehicle is very high and unjustifiable. The learned Departmental Representative submitted that the disallowance made by the AO is reasonable and deserves to be upheld. 29. Considering the above submission of the parties, we hold that the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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