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2016 (10) TMI 410 - ITAT MUMBAI

2016 (10) TMI 410 - ITAT MUMBAI - TM - Undisclosed income - Held that:- The assessee has duly explained the said cash of ₹ 20 lakhs which was found in his possession while travelling from Delhi to Mumbai via Jet airways flight on 28-11-2006. The assessee has duly rebutted the presumption u/s 132(4A) of the Act . The assessee has duly brought on record the audited books of accounts of Le Shark Exports Private Limited and other cogent material to prove that infact cash belonged to Le Shark E .....

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orts Pvt. Ltd. has mentioned in the assessment order u/s 143(3) of the Act dated 03-09-2009 that the cash seized has been taxed in the hands of Mr. Ajay B. Sabharwal whereby the contention of M/s Le Shark Exports Pvt. Ltd to adjust the said cash of ₹ 20 lacs against advance tax was rejected by the Revenue. In our opinion, addition is not sustainable in the hands of the assessee as the assessee has duly discharged his burden and has duly rebutted the presumption which arose u/s 132(4A) of t .....

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/2010 - Dated:- 25-8-2016 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri B.V. Jhaveri For The Revenue : Dr. Gulshan Raj ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee company, being ITA No. 6048/Mum/2010, is directed against the appellate order dated 28th April, 2010 passed by learned Commissioner of Income Tax (Appeals)- 14, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2007-08, the appellat .....

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as per law. 2. The learned CIT(A) further erred in treating the seized cash as unexplained income in the hands of Your Appellant. 3. The learned CIT(A) failed to appreciate the following; a) The cash belonged to Leshark Exports P. Ltd. and the same was sufficiently proved by the documentary evidence submitted at the time of search itself. b) The company has also confirmed that the cash belonged to it. 3. The brief facts of the case are that in the instant case proceedings u/s 132(1) of the Act .....

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nder authority of M/s Le Shark Exports Pvt. Ltd. and the said cash belong to the said company and he was also carrying a letter from the said company. While recording the statement he stated that he was one of the Directors of M/s In Design India Pvt. Ltd. and also working as a consultant to M/s Le Shark Exports P. Ltd. The A.O. issued notice u/s. 153A of the Act and in compliance the assessee filed return of income disclosing total income at ₹ 17,98,890/-. During the course of assessment .....

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of Le Shark Exports Private Limited produced, the cash was withdrawn from Corporation Bank. Tirupur on 19th October, 2006. Copy of cash book of Tirupur unit of Le Shark Exports Private Limited reflects sending of money through Shri Anil Shah, M.D. which was handed over to Mr Anil Shah on 19-10-2006 and the cash was brought to Mumbai by Mr Anil Shah on 20-10-2006 and kept at the registered office of M/s Le Shark Exports P. Ltd. , but there was no corresponding entry of receipt of cash in the cash .....

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h of ₹ 20 lacs in Mumbai office without any entries in the books of account for a long period from 20-10-2006 to 23-11-2006 appears to be not probabale as the assessee had office in Mumbai whereby regular books of accounts and bank accounts are maintained. Therefore, it was observed by the AO that it can be seen that cash was brought from Tirupur to Mumbai on 20th October, 2006 and the same cash was handed over to Shri Ajay Sabharwal on 27th /28th November, 2006 does not hold good at all. .....

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a letter specifying carrying of money. Thus, in nut-shell he submitted that cash of ₹ 20 lacs belonged to Le Shark Exports Private Limited. The statement of Mr. Kiran Bhat was also recorded who is the Accountant of Le Shark Exports P. Ltd. whereby he confirmed that he is working as Accountant of Le Shark Exports P. Ltd. for the last 12 years. He stated that he had handed over the money to Shri Ajay Sabharwal on 23rd or 24th November, 2006 and also handed over a letter to Shri Ajay Sabharwa .....

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r any manufacturing units by Shri Ajay Sabharwal in Delhi from where he proposed to buy machines for Le Exports Private Limited. Shri Ajay Sahharwal also did not knew the denomination of cash of ₹ 20 lacs which he was reportedly carrying and he could not recollect the date of letter which specified carry of money on behalf of M/s Le-Shark Exports Pvt. Ltd. It was observed from the submission that the cash was brought by Shri Anil Shah, M.D. of M/s Le Shark Exports (P) Ltd. at the time of h .....

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nd hence could not be concluded that return of Shri Ajay Sabharwal to Mumbai was decided on 28th November, 2006. The A.O. observed that the normal place of work of Shri Anil Shah was at Tirupur and no evidence that Shri Anil Shah was in Mumbai on 28th November, 2006 i.e. the date of authority letter has been brought on record . Shri Ajay Sabharwal in his statement recorded on 28th November, 2006 stated that he was not in a position to state that cash was disclosed at the airport in Coimbatore in .....

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s undisclosed income in the hands of the assessee, vide assessment order passed by the AO u/s. 143(3) read with Section 153A of the Act. 4. Aggrieved by the assessment order passed by the A.O. u/s. 143(3) read with Section 153A of the Act, the assessee filed his first appeal before the ld. CIT(A). 5. Before the ld. CIT(A) , the assessee submitted that the assessee is proprietor of M/s In-design providing consultancy services in connection with textile production and exports. He submitted that he .....

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Delhi, initiated and conducted proceedings u/s 132 of Act and took the assessee to Income Tax Office at Scindia House without any legal warrant or notice and seized the cash of ₹ 20 lacs from the possession of the assessee. The assessee submitted that the Revenue before taking action u/s 132 of the Act should have reason to believe that the amount of money has not been disclosed or will not be disclosed as income. The belief has to be a bonafide belief. The assessee submitted that at the .....

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of the assessee. Thus, the assessee prayed that the proceedings u/s 132 of the Act were bad in law. The ld. CIT(A) rejected the contentions of the assessee and observed that the assessee has challenged the proceedings under section 132 of the Act. An amount of ₹ 20 lakhs was found in possession of the assessee at the Delhi Airport and the same was seized by the Mumbai Income Tax authorities as the source of the cash has not been properly explained by the assessee. Hence, there was reason t .....

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e company that the cash belongs to them and PAN card , the audited balance sheet for the financial year 2006-07 wherein the company has reflected the cash of ₹ 20 lakhs seized by the income tax department as advance tax and the company has also written to the A.O. to adjust the seized cash towards its advance tax liability were submitted. Thus, the additions have been made on the basis of surmises and conjunctions. It was submitted that the A.O. had given undue importance to the fact that .....

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Shark Exports P. Ltd that the said cash belonged to them and the assessee was carrying the same for the purposes of advancing the same for purchase of machinery. The assessee submitted that the books of account of the company and the other evidences were submitted immediately on interception by the tax-authorities within five hours of interception at Mumbai airport. The ld. CIT(A), however, rejected the contentions of the aseessee and held that the assessee could not give proper reply to the sat .....

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e of any machinery of any particular type from Delhi, then he replied that there was no consultation with respect to purchase of any machinery of any specific design. This reply shows that Shri Ajay Sabharwal was not asked to purchase any machinery and as such there were no specific direction from the Shri Anil Shah , Director to Shri Ajay Sabharwal for purchase of machinery. Hence, the purpose of carrying cash from Mumbai to Delhi and back as explained by the assessee was not convincing/accepta .....

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or verification with regard to the date of purchase of ticket from Mumbai to Delhi. The ld. CIT(A) thus held that source of cash amounting to ₹ 20 lakhs found in possession of the assessee was not properly explained and he miserably failed to establish that the said amount belonged to M/s Le Shark Exports P. Ltd., hence, the addition made by the A.O. was confirmed by the ld. CIT(A) as unexplained income of the assessee, vide appellate order dated 28-04- 2010. 5. Aggrieved by the appellate .....

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tted that the said amount of ₹ 20 lacs has been added to the income of the assessee as undisclosed income in the hands of the assessee vide assessment order u/s 153A/143(3) of the Act passed by the AO which was confirmed by the ld. CIT(A). He submitted that the assessee was duly carrying the letter dated 28th November, 2006 at the time of travelling issued by Le Shark Exports P. Ltd confirming that the assessee was carrying cash of ₹ 20 lacs with him for purchase of machinery on beha .....

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rcepted him and took him to Income Tax Office whereon he explained that the cash belonged to Le Shark Exports P. Ltd. for purchase of machinery and also produced the said letter dated 28th November, 2006 issued by Le Shark Exports P. Ltd owning the said cash. The ld. Counsel submitted that within short span of 5 hours, all the records were called from the office of the said company Le Shark Exports Private Limited, Tirupur by FAX and submitted to the income Tax authorities which clearly showed t .....

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ash book, PAN and confirmation from Le Shark Exports P. Ltd were placed before the Income Tax authorities within 5 hours of interception whereby Le Shark Exports P. Ltd explained that cash belonged to them and they owned the cash. The ld. Counsel submitted that Shri Anil Shah, Director of Le Shark Exports P. Ltd. who brought the cash from Coimbatore to Mumbai on 20th October, 2006 and copy of the air ticket is placed on record (Flight No. DN 616) (page 12/pb) . He went back to Coimbatore on 27th .....

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t order is placed on record (PB No. 74-75) and no addition has been made in the hands of Le-Shark Exports Pvt. Ltd. . It was pointed out that the Revenue has mentioned in the assessment order of Le Shark Exports P. Ltd that the cash of said Le Shark Exports P. Ltd was accounted as advance tax and the Revenue did not accpetd the contention in the hands of Le Shark Exports P. Ltd as the additions were made in the hands of the assessee. The ld. Counsel also placed on record the letter written by M/ .....

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dule 11 - Loans and Advances which is part of the financial statement. The ld. Counsel relied on the decision of Hon ble Supreme Court in the case of CIT v. Vindhya Metal Corporation(1997) 224 ITR 614(SC). 7. The ld. D.R. relied on the orders of authorities below and submitted that the facts are not disputed. 8. We have considered the rival contentions and also perused the material placed on record. We have observed that the assessee was travelling from Delhi to Mumbai on 28th November, 2006 by .....

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ports Pvt. Ltd. for advancing amount for purchase of the machinery which was duly submitted by the assessee to the Income tax authorities at the time of interception. The assessee, within a short span of five hours obtained all the documents by FAX from the Tirupur office of Le Shark Exports Private Limited such as cash book, bank statement , PAN, confirmation that cash of ₹ 20 lacs belonged to Le Shark Exports P. Ltd and produced the same before the Income Tax authorities . The said amoun .....

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y the Income tax authorities from the possession of the assessee on 28/29th November 2006 It is also observed that Shri Anil Shah, Director of M/s Le Shark Exports Pvt. Ltd. who travelled from Coimbatore to Mumbai on 20th October, 2006 by Air Deccan flight (copy of the ticket is placed on record vide PB No. 12) and he again travelled back from Mumbai to Coimbatore on 27th November, 2006 by Jet Airways flight (copy of the air ticket is placed on record vide PB No. 13) and it is submitted before u .....

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i office from 20-10-2006 till it was stated to be handed over to the assessee two-three days prior to his actual travelling to Delhi from Mumbai on 28-11-2006. The assessee submitted that the amount of ₹ 20 lakhs was advanced by Shri Kiran Bhat , accountant of Le Shark Exports Private Limited which was meant for the purpose of purchase of machinery , two- three days prior to 28-11-2006 . The said cash of ₹ 20 lacs is duly reflected in the books of accounts of Le Shark Exports Private .....

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20 lacs as undisclosed income. We have observed that as per the provisions of section 132(4A) of the Act where any books of account, other documents, money , bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of search u/s 132(1) of the Act, it may be presumed that such books of account, other documents, money , bullion, jewellery or other valuable article or thing belong or belongs to such person and that the contents o .....

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hat this cash of ₹ 20 lacs found and seized from the assessee on 28/29th November 2006 is undisclosed income of the assessee , whereas the said M/s Le Shark Exports Pvt. Ltd has duly owned up the cash of ₹ 20 lacs as belonging to them . The assessee has brought on record authority letter from Le Shark Exports Pvt. Ltd. at the time of his flying when the assessee was carrying the cash of ₹ 20 lacs while travelling on 28-11-2006 that the money belonged to M/s Le Shark Exports Pvt .....

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said company owned up the money immediately on being asked to do so as also the assessee was carrying with him the authority letter while travelling on 28-11-2006 from Delhi to Mumbai when the money was found in his possession which he immediately brought to the notice of the authorities vide the authority letter of Le Shark Exports Private Limited dated 28-11-2006 stating that cash belonged to Le Shark Exports Private Limited. All the evidences were produced before the authorities below immedia .....

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on 19-10- 2006 to Mr Anil Shah. Director of M/s Le Shark Exports Pvt. Ltd who ultimately carried the cash on the next date i.e. 20-10-2006 to Mumbai from Coimbatore for which evidences are placed on record such as airticket , bank statement and cash book . In our considered view, the assessee has duly explained the said cash of ₹ 20 lakhs which was found in his possession while travelling from Delhi to Mumbai via Jet airways flight on 28-11-2006. The assessee has duly rebutted the presumpt .....

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