TMI Blog2016 (3) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... account of Euro 268.43 equivalent to ₹ 15,413/-. - Decided partly in favour of assessee Addition on account of Bandra Home on protective and substantive basis - Held that:- First of all, the figure mentioned on the said document is 20.00 and in the absence of Assessing Officer establishing 20.00 stands for ₹ 20 lakhs, the said addition cannot be upheld in the hands of assessee. Secondly, the said document has not been proved to relate to the assessee and merely because the assessee had given certain information about Bandra flat, which admittedly is owned by one person and was being used by him and was later owned by some other person, we find no merit in the presumption and assumptions made by the Assessing Officer that the entries in the document relate to a rental income of ₹ 68 lakhs, against which the assessee has earned commission of ₹ 20 lakhs. The said flat was being used as guest house and there was no question of earning rental income. Consequently, the objections and assumption raised by both the authorities that the assessee is aware of such flat in Bandra and hence, the name of Ajay relates to the assessee is baseless. First of all, before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances, we delete the addition of ₹ 47 lakhs. - Decided in favour of assessee Addition made on account of cash seized at the time of search - Held that:- With regard to observation of CIT(A) vis-à-vis remaining cash in hand being available on the date of search, we find no merit in the said stand of the authorities below. With regard to entries in the books of account, which were made on a later date, however, looking at the difference between the cash found of ₹ 3,78,500/- and the availability of cash as per cash book of ₹ 42,31,973/-, we are of the view that the presumption is in favour of the assessee that the cash found during the course of search is duly explained. In view of the smallness of cash found during the course of search as against the large amount shown in the books of account, we accept the plea of the assessee. However, this decision of our, shall not be used as precedent in any other case. - Decided in favour of assessee Addition on account of entries under the head ‘Sai Account’- Held that:- The assessee admits to have included the said sum of ₹ 13,62,000/- in the declared income of ₹ 70 lakhs for the year under con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar issues were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The assessee in ITA No. 91/PN/2014 has raised the following grounds of appeal:- 1. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in not appreciating that the assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 153A of the Act was bad in law and invalid. 2. The learned Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming the additions made by the Assessing Officer on account of the unexplained cash credit in the Mauritius Bank Account amounting to ₹ 14,93,773/-. 3. The appellant craves leave of Your Honour to add, alter, amend and/or delete all or any of the foregoing grounds of appeal. 4. The learned Authorized Representative for the assessee pointed out that the grounds of appeal No.1 raised by the assessee is not pressed, hence, the same is dismissed as not pressed. The issue in ground of appeal No.2 raised by the assessee is against the addition made on account of unexplained cash credit in Mauritius Bank Account amounting to ₹ 14,93,773/-. 5. Briefly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Euro 20,000 was deposited in the bank on 03.11.2006 and the confirmation would be submitted in short time. The Assessing Officer after considering the submissions of the assessee observed that as regards the question that how these papers relate to Ajay Bafna i.e. the assessee, was clear from the fact that the papers were found in the computer of the assessee. The Assessing Officer further noted that the said papers were found during the course of search in the case of assessee as well as in the case of Shri Madhu Koda and others and it was also found that the assessee was close associate of Shri Madhu Koda and others. The Assessing Officer also noted that the assessee has visited Ranchi several times by chartered flights, which were provided through M/s. Shakti Aviations, a Delhi based company. Further, the assessee was instrumental in investing money of Shri Madhu Koda and Binod Sinha at Pune and Bangalore through his friend Anil Bastawade. During the course of search, from the computer of the assessee, information relating to multiple accounts in foreign countries were found. The same had been forwarded to FTD wing of the CBDT, reply of which was awaited. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to buy peace of mind and cover up any discrepancies and in view thereof, no separate addition was called for. The Assessing Officer in the remand proceedings rejected the claim of assessee in the absence of any proof being filed to show that part of the income disclosure of ₹ 10 lakhs was utilized for purchasing Euros deposited in his Mauritius Bank account. The assessee in response to the remand report, further submitted that deposit of Euro 26000 in financial year 2006-07 in the said bank account was by one of the assessee s friend Mr. Hitendranath Beegoo, who was maintaining account with the said bank The said amount was deposited in assessee s account by Mr. Beegoo, by mistake, who in turn, had filed an Affidavit before the Assessing Officer, wherein he clearly mentioned that the said amount of Euro 26000 was wrongly deposited by him in the bank account of the assessee. Mr. Beegoo further stated in the Affidavit that the said amount represented the business funds and in order to establish the identity of the said person, copy of passport was furnished before the Assessing Officer. The grievance of the assessee in this regard was that the Assessing Officer had made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion (Euro 26,000) was not deposited by Shri Ajay Beegoo but was a remittance from a party by the name Mammoet (S) Pte. Ltd. Information available online pointed out the aforesaid company was a Singapore entity, which was part of a large MNC and there was no record to show any links or transactions between the assessee and the said company. As per documents on record, the transaction of one-off nature with no other transactions between the two parties either before or after the said credit of Euro 26000. The CIT(A) further observed that the version put forward by the assessee that the amount has been deposited by Shri Beegoo appears quite improbable. Further, the CIT(A) held that It is difficult to see how or why any person, especially a businessman like Mr. Beegoo who would be regularly using his bank accounts for his business transactions, would mistakenly convey another person s bank account instead of his own. Moreover, in order for a wire-transfer to be executed successfully, the account number and the name of the payee have to match. Notwithstanding these facts, and assuming for the sake of argument that the amount was indeed deposited in the appellants account instead o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative for the assessee made an alternate plea before the CIT(A), which is referred to in para 8.2 of the appellate order, wherein the summary of entries in The Mauritius Bank account are tabulated. The CIT(A) further vide para 8.7 accepts the plea of the assessee to allow set off of declaration of ₹ 10 lakhs. The learned Authorized Representative for the assessee pointed out that the said declaration made by the assessee of ₹ 10 lakhs was to be adjusted against the income declared in assessment years 2004-05 to 2007-08. 10. The learned Departmental Representative for the Revenue in reply, pointed out that the bank statement of The Mauritius Bank was found from the possession of the assessee and in the absence of any explanation vis- -vis deposits in the said account, additions were made in the hands of assessee. With regard to alternate plea of the assessee, the learned Departmental Representative for the Revenue pointed out that the same is not to be allowed as the amount deposited in the said bank account was different and no such declaration of deposit in the said account was made by the assessee. The learned Departmental Representative for the Revenue fairly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no merit in the claim of the assessee that the said amount of Euro 26000 was deposited by Shri Ajay Beegoo and does not belong to him. As per the findings of CIT(A), the amount was deposited by way of remittance from a different company which was Singapore based Entity and there is no merit in the claim made by the assessee in this regard, in the absence of proper evidence having been filed to establish its claim. 14. Before us, the learned Authorized Representative for the assessee has made an alternate plea that the said addition be adjusted against the additional income of ₹ 10 lakhs offered by the assessee in order to by peace of mind and cover up any discrepancy in the papers found during the course of search. Though the learned Departmental Representative for the Revenue has strongly objected to the said plea of the assessee, but we find merit in the aforesaid plea of assessee that where additional income is being added to the income of assessee, then credit for the amount offered by way of additional income, while recording the statement under section 132(4) of the Act should be allowed to the assessee. Another aspect to be noted in this regard is that the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow in making an addition on account of Bandra Home amounting to ₹ 68,00,000/- on protective basis and ₹ 20,00,000/- on substantive basis. 18. The Assessing Officer during the course of assessment proceedings considered the document which is attached with the Public Interest Litigation Petition (PIL) No.4700/2008, which was filed before the Hon ble High Court of Jharkhand by one Shri Durga Oraon alleging corrupt practices by Shri Madhu Koda and others. Through the affidavit, the Hon ble Court was requested to direct the Central Bureau of Investigation (CBI) to conduct an enquiry against accumulation of disproportionate assets by number of persons, who were Ministers in the erstwhile State Government under the Chief Ministership of Shri Madhu Koda. It was alleged that Shri Binod Sinha and Shri Sanjay Choudhary connived with Shri Koda and acquired huge properties in India and abroad by misusing the official position of Shri Koda. Along with the PIL petition, account of receipts and payments was attached as annexure. One such entry as per the Assessing Officer belonged to Shri Ajay Bafna. The said entry is reproduced under para 8 of the assessment order, which talks of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brokerage of ₹ 20 lakhs. However, since the assessee has failed to show this income, sum of ₹ 20 lakhs was taxed as undisclosed income. Further, seized records indicated payment of ₹ 68 lakhs, but the person to whom ₹ 68 lakhs was paid was not identified, therefore, the entire sum of ₹ 88 lakhs was added to the income of assessee. However, ₹ 68 lakhs out of ₹ 88 lakhs was added on protective basis. The Assessing Officer further observed that in case the assessee was unaware of the transaction, how could he locate the flat as mentioned in the said page and if he was so aware, then the name on paper automatically tallies with the name of assessee and under such circumstances, clear-cut inference could be drawn as the assessee was hiding the details. 19. The CIT(A) vide para 41 at pages 41 onwards considered the said issue i.e. the observations of Assessing Officer and explanation of the assessee and claim of the assessee that contents of the said document did not pertain to him and that the said document has no evidentiary value in the eyes of law. It was stressed by the assessee that merely because on the document name of Ajay was mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have confirmed substantially in the hands of any other persons, then this order would be rectified so as to delete the said amount. 20. The assessee is in appeal against the order of CIT(A). 21. The learned Authorized Representative for the assessee before us has stressed that the said document was attached to one PIL and was not found from the possession of assessee during the course of survey. Further, the said document only mentioned name Ajay , but there is no information to establish that Ajay referred in the said document is the assessee. Further, referring to the order of CIT(A), the learned Authorized Representative for the assessee pointed out that the CIT(A) had gone on preponderance of probability, wherein the page did not belong to the assessee nor was the same in the handwriting of the assessee, nor was found from the possession of assessee and further, no evidence was found from his possession, with whom the transaction was made. The Assessing Officer had presumed the transactional value of ₹ 68 lakhs of rent and assessee was held to have earned brokerage of ₹ 20 lakhs. He stressed that where the document does not belong to the assessee and where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said document reflects an entry of 50.00 on 14.11.2007 and 38.00 on 30.11.2007, total 88.00, out of which 20.00 is debited and the balance is 68.00. With regard to the said entry, first presumption by the Assessing Officer was that it belongs to the assessee since the name of Ajay was written under Bandra Home. The second presumption was that the said entries related to the assessee. The explanation of the assessee in this regard was that the above said document was not found from his possession and as such, there is no presumption under section 132(4) of the Act that the entries in the said document belonged to the assessee. Further, it was pointed out by the assessee himself that there was no connection whatsoever with Bandra Flat, except for an enquiry made in respect of the said property at Bandra. The assessee provided the information with regard to said property to the Assessing Officer that it was owned by a builder M/s. Lalani Group and was being used by them as guest house and further, the current owner of the property was Mr. Suvamar, who is Judge in Mumbai. He also attached the photos of the building of said Bandra Flat. In view of various submissions made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument is 20.00 and in the absence of Assessing Officer establishing 20.00 stands for ₹ 20 lakhs, the said addition cannot be upheld in the hands of assessee. Secondly, the said document has not been proved to relate to the assessee and merely because the assessee had given certain information about Bandra flat, which admittedly is owned by one person and was being used by him and was later owned by some other person, we find no merit in the presumption and assumptions made by the Assessing Officer that the entries in the document relate to a rental income of ₹ 68 lakhs, against which the assessee has earned commission of ₹ 20 lakhs. The said flat was being used as guest house and there was no question of earning rental income. Consequently, the objections and assumption raised by both the authorities that the assessee is aware of such flat in Bandra and hence, the name of Ajay relates to the assessee is baseless. First of all, before making any addition in the case of any of assessee, complete details should be available. It is not even clear as to which Bandra flat, the said paper relates and it is also not clear what are the entries made on that document wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The Assessing Officer did not accept the explanation of the assessee since the evidence produced by the assessee with reference to Shri Ajay Beegoo, who was an NRI, was not verifiable. He further noted that Shri Ajay Beegoo had not given the essence of transaction and Affidavit is not supported by passport details of relevant dates. Therefore, the verification of the said transaction as per the assessee was not possible. The Assessing Officer further holds that the said addition would be deleted if necessary evidence was produced by the assessee. 28. The CIT(A) upheld the addition as the Affidavit of Shri Ajay Beegoo did not refer to the information in particular and he also did not explain the connection with Kranti group. The CIT(A) was of the view that the presumption under section 132(4A) of the Act applies equally to the impugned document found on the computer which was kept at the premises of the assessee and upheld the addition. 29. The assessee is in appeal against the order of CIT(A). 30. The learned Authorized Representative for the assessee stressed upon the submissions made before authorities below and pointed out that File 16 talks of telephone details and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the said Kohinoor has been found. Further, no evidence was found during the course of search in respect of the said transaction, though voluminous books and documents were seized. The assessee further claimed that Shri Ajay Beegoo had categorically confirmed that the file consisted of transactions undertaken by him and was prepared while he was in Pune in the office of the assessee and also the copy of passport of Shri Ajay Beegoo was filed in order to enable the Assessing Officer to confirm these facts. Further, Shri Ajay Beegoo directly sent an e -mail to e-mail ID of Assessing Officer to confirm the said facts and where sufficient evidence was produced before the Assessing Officer, there was no justification in the aforesaid addition, which was without any basis. Admittedly, in case any document is found from the possession and control of the assessee within meaning of section 132(4A) of the Act, the presumption is that the document belonged to assessee, but the contents of the document have to be seen whether the same has any connection with the assessee. In case the contents of the document are not complete to establish the link with the assessee, merely because it is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 190/- 4. The Learned Commissioner of Income-tax (Appeals) has erred in low and in facts in confirming the additions made by the assessing officer on account of unexplained cash in the cash book amounting to ₹ 1,18,97,000/-. 5. The Learned Commissioner of Income-tax (Appeals) has erred in low and in facts in not deleting the addition of ₹ 13,62,000/-, included in the additions of ₹ 1,18,97,000/- as the some amounts to the double addition. 34. The ground of appeal No.1 raised by the assessee being general, is not pressed and the same is dismissed as not pressed. 35. The issue in ground of appeal No.2 raised by the assessee is against the addition made on account of cash seized at the time of search of ₹ 3,78,500/-. 36. The Assessing Officer made an addition on account of cash seized during the course of search as the assessee was unable to explain the source of cash. Before the CIT(A), the claim of the assessee was that the cash amounting to ₹ 42,31,973/- was the cash balance as per books of account and as such, the assessee had sufficient cash balance to justify the cash found. The explanation of the assessee was rejected by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the assessee. 41. The first objection of the assessee is against the addition of ₹ 13,62,000/- and directions of CIT(A) to the Assessing Officer to verify whether the said addition was part and parcel of disclosure of ₹ 70,07,190/-. By way of grounds of appeal No.4 and 5, the assessee is aggrieved by the addition made by authorities below on account of unexplained cash in the cash book amounting to ₹ 1,18,97,000/-. 42. Briefly, in the facts relating to the issue also, certain information was collected from the computer Excel sheet under Kranti group and certain entries were found. However, no period / date was mentioned and at the end, there was credit of ₹ 13,62,000/- and the assessee was asked as to why the said credit should not be considered as his income. The assessee in reply stated that this is found from computer and in the books of somebody. It did not relate to him and he did not carry assessees name and did not carry any date on it and hence, no addition was called for on this count. The Assessing Officer rejecting the explanation of the assessee, added the same as income of the assessee. Further, during the course of search, Bund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1.18 crores. The contention of the assessee before the CIT(A) was that the Assessing Officer has only considered the credit entries in the document and not considered the debit entries. However, this contention of the assessee was rejected observing that the assessee has failed to raise any serious arguments challenging the merits of additions of income. Further, the CIT(A) noted that the contention of assessee that addition of ₹ 1.18 crores also include sum of ₹ 13,62,000/-, which has been separately added by the Assessing Officer. The Assessing Officer was directed to check the veracity of the said transaction and decide the issue accordingly. Further, the contention of the assessee was that the Assessing Officer had not allowed the benefit of ₹ 70 lakhs, which was offered by him against the assessed income. The Assessing Officer in the remand report dated 16.09.2013 had reiterated that there was no objection for relief of ₹ 70 lakhs as admitted by the Assessing Officer in the assessment order. Hence, the ground of appeal raised by the assessee in this regard, was dismissed. 44. The assessee is in appeal against the observations of CIT(A) and has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the assessee on the other hand, was that it had already offered additional income of ₹ 70 lakhs in order to buy peace of mind and to cover any transactions arising out of seized documents. The said additional income of ₹ 70 lakhs has been declared by the assessee in the return of income filed. In the entirety of the above said facts and circumstances, we find merit in the claim of the assessee that the addition cannot be made in the hands of assessee by only totaling of credit side of the entries. The debit side entries, if any, on the said seized document, needs to be considered and only difference of the entries is to be added in the hands of assessee. Further, the assessee claims that it had already offered ₹ 70 lakhs as additional income against the discrepancy, if any, found in the seized documents. The CIT(A) had taken note of the fact that the Assessing Officer had not allowed the benefit of ₹ 70 lakhs while computing addition in the hands of assessee. The Assessing Officer in the remand report has admitted that the same is allowable to the assessee. Accordingly, we direct the Assessing Officer to re -compute the income on the basis of entries i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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