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2015 (10) TMI 2575 - ITAT MUMBAI

2015 (10) TMI 2575 - ITAT MUMBAI - TMI - Addition u/s 69A - addition has been made mainly on the basis of “Parvez Sir” appearing on the loose paper bearing No. 4 & 5 and cash statement dated 18.11.2006 - Held that:- AO had made the addition only on surmise that the impounded papers bearing No. 4 & 5 were containing entries which are dated 11.11.2006 whereas the assessee retired from the firm on 15.11.2006. Assessee in his statement before the Assessing Officer has categorically denied that he is .....

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A/ di. 19.03.2009, clearing mentioned that the said firm had constructed unauthorized construction of mezzanine floor and additional room with attached toilet in Alliance Hotel, 3rd floor, Empire Building. The fact of reconstruction of Alliance Hotel was accepted by Shri Kasan Ghaswala, being Managing Partner of the firm. In view of this it is absolutely evident that the Assessing Officer has made the addition on conjuncture and surmises without concrete evidence in his possession. - The Ass .....

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uired to be made. In view of our discussion coupled with the fact that provisions of section 69A has no application on the act of assessee’s case therefore, the addition of ₹ 40,00,000/- made by Assessing Officer under section 69A of the Act was rightly directed to be deleted. Accordingly, both the additions of ₹ 2,62,40,000/- plus ₹ 40,00,000/-, aggregating to ₹ 3,02,40,000/-, were rightly directed to be deleted. This reasoned findings of the CIT(A) need not any interfer .....

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CIT(A) has erred in directing to delete the addition of ₹ 2,62,40.000/- made by the Assessing Officer u/s. 69A of the Income tax Act solely relying on the submission made by the assessee during the course of appellate proceedings ignoring the facts :- a) In Page No. 4 & 5 of the impounded loose sheets as per Annexure Al, at SL. No. 4 it was mentioned as 'Parvez Sir' and an amount of ₹ 2,62,40.000/- was shown against this name. b) The Assessing Officer in his assessment o .....

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s erred in directing to delete the addition of ₹ 40,00,000/- made by the Assessing Officer u/s. 69A of the Income tax Act solely relying on the submission made by the assessee during the course of appellate proceedings ignoring the facts :- a) The cogent evidence found during the course of survey proceedings which duly reflected in the cash statement that the assessee received an amount of ₹ 40,00,000/-. b) The Assessing Officer in his assessment order has clearly established by exha .....

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halid Ghaswala (b) Farank Omidazdeh and (c) Parvez Mohammed Hussain Ghaswala. Subsequently, the assessee has retired on14.11.2006 and in place of him Kasarn Khalid Ghaswala and Mr. Zishan Khand Ghaswala were admitted into the partnership with aforesaid remaining two partners. M/s. Alliance Hotel wanted to reconstruct and renovate its hotel premises in Empire building at D.N. Road, Mumbai. For this purpose, a project report was prepared in which the expenditure on renovation and reconstruction wa .....

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ve the money by pay order/cheque on the ground that they have to make payments in cash on a daily basis for purchase of material and labour. To counter this problem, an arrangement was made by the firm whereby the pay orders/cheque were issued in the name of certain suppliers of materials who were prepared to give bills to the Bank and after receiving the cheques from the Bank against the loan sanctioned. These suppliers claimed to be agreed to withdraw the loan amounts received and after retain .....

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nd letters were found and impounded along with computer sheets and CDs. Out of the papers impounded, loose papers bearing numbers 4 and 5 and cash statement dated 18.11.2006 are relevant for the A.Y. 2007-08. Similarly the computer sheets impounded contained the details of Project report obtained for reconstruction and renovation of the hotel premises of M/s Alliance Hotel. (i) With regard to loose papers bearing number 4 and 5, which were impounded during the course of survey, are dated 19.12.2 .....

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re paid in two installments of ₹ 30,00,000 and ₹ 10,00,000 to "Parvez Sir". These entries appear in the cash statement dated 18.11.2006, the left hand side of which shows that ₹ 1,08,00,000/- was received on 17.11.20006 and the right hand side shows how this amount was utilized by making payment to various persons including ₹ 40,00,000/- to Parvez Sir . (ii) Shri Kashan Ghaswala is a nephew of the assessee became a partner with effect from 15.11.2006 in the firm .....

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held that the words Parvez Sir", relates to the assessee and included the sums of R.2,62,40,000/- (appearing on pages 4 and 5 of the impounded papers) and ₹ 40,00,000/- (30,00,000 + 10, 00,000) appearing on the cash statement dated 18.11.2006 as the assessee s income. 5. In appeal assessee submitted written statements, which are reproduced in para 5 of the order of CIT(A). As per the above said statement the Assessing Officer made additions under section 69A of the Act of ₹ 2,6 .....

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& 5 of the impugned loose sheets as per Annexure A1, at Sl. No. 4 it was mentioned as Parvez Sir and an amount of ₹ 2,62,40,000/- was shown against this name. Assessing Officer, in his assessment order, established that Parvez Sir is none other than Shri Parvez M.H. Ghaswala, who has received an amount of ₹ 2,62,40,00/-. The material evidence procured by the investigation wing during the course of survey and also the facts discussed by the Assessing Officer in the assessment ord .....

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d to Shri Kashan Ghaswala was Is he the same Parvez M. Ghaswala ? The answer was He is not the same . Further, our attention was drawn to question No. 10 in para 6 of the statement of assessee wherein he was asked whether there was any person working as staff/contractor/suppliers /supervisor named as Parvez. In response assessee answered that when we were partner in Alliance Hotel and Hotel City Palace nobody was in the name of Mr. Parvez. If after my retirement if anybody in the name of Mr. Par .....

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he has stated that there is no other person in Alliance Hotel and Hotel City Palace in the name of Parves Sir at the relevant point of time. The learned counsel also drew our attention to para 8 of the assessment order wherein regarding admission it was submitted that an amount of ₹ 6,88,22,000/- has been admitted as unaccounted income of Alliance Hotel. So the additions are not justified and the same have been rightly deleted by the CIT(A). The learned A.R. for the assessee also opposed a .....

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to him. He stated that he seized to be a partner with effect from 15.11.2006 in the firm of Alliance Hotel and the amounts shown as having been paid to Parvesh Sir did not relate to him, as stated by Kasam Ghaswala, partner of Alliance Hotel. Further stand of the assessee has been that these slips of paper were recovered from the business premises of Alliance Hotel and not from assessee. These slips of paper bearing No. 4 & 5 and cash statement dated 18.11.2006 were not in his handwriting. A .....

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cer of the assessee in his case recorded the statement of the assessee wherein assessee had denied that he is not Pervez Sir as mentioned in the papers found during the course of survey action conducted at the premises of Alliance Hotel. It is undisputed that papers showing the name of Parvez Sir were found in the premises of Alliance Hotel during the course of search action and not from assessee. Papers found were not in his handwriting. The partner of Alliance Hotel, Shri Kasam Ghaswala in his .....

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provisions of section 69 of the Act assessee should be the owner of any money, bullion, jewellery or any other valuable articles. In this case of assessee he was not found to be the owner of any money, bullion, jewellery or any other valuable articles in previous year relevant to assessment year. In such a situation invoking of provisions of section 69 was not justified. The entries made on pages 4 & 5 of the impounded papers were not made contemporaneously. The right hand top corner of page .....

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the renovation work executed. Having considered the same the CIT(A) rightly held that assessee was not found to be owner of any money, bullion, jewellery or other valuable articles. No concrete evidence has been brought on record by Assessing Officer to establish that the entry Parvez Sir in the impounded paper establishes the fact that it refers to the assessee, i.e. Shri Parvez Mohammed Hussain Ghaswala. Similarly the amount of ₹ 2,62,40,000/- mentioned against the entry of Parvez Sir wa .....

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g at the conclusion that the entry Parvez Sir is referring to assessee. It is undisputed fact that Alliance Hotel had carried out reconstruction work which was subsequently turned out to be illegal and was demolished. This fact was further corroborated by the order of the Brihyan Mumbai Mahanagar Palika bearing No. ACA/180/MOHA/ di. 19.03.2009, clearing mentioned that the said firm had constructed unauthorized construction of mezzanine floor and additional room with attached toilet in Alliance H .....

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hands of assessee. The stand of the assessee was that the unexplained investment, if any, in the reconstruction of its business premises should be considered in the hands of Alliance Hotel. A perusal of the assessment order of Alliance Hotel shows that the Assessing Officer has made certain observations with regard to the sum of ₹ 6.88 crores found noted in the loose papers 4 & 5 and the entire amount has been assessed in the hand of Alliance Hotel. Under this background the Assessing .....

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statement dated 18.11.2006. The deletion of ₹ 2,62,40,000/-, has already been upheld by us in the preceding paragraphs. So there is no use of further discussion on the issue. As regard to the addition of ₹ 40,00,000/-, it was claimed by assessee that this sum of ₹ 40,00,000/- (30,00,000+10,00,000) formed part of ₹ 2,62,42000/- appearing on page 4 of the impounded papers. Further submission in regard to this sum of ₹ 40,00,000/- was that assessee was not found to be .....

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regard was that as the assessee was not found to be the owner of any money or other valuables, so no addition can be made in assessee s hand invoking section 69A of the Act. The argument of the assessee was that while arriving at unexplained investment made on the reconstruction and renovation of hotel premises, Assessing Officer assessing Alliance Hotel considered this point and did not make a separate addition based on the cash statement dated 18.11.2006 as he was of the view that this formed .....

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urce of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may deemed to be the income of the assessee for such financial year." It is undisputed fact that assessee was not found to be the owner of ₹ 40,00,000/- appearing in the cash statement dated 18.11.2006. Assessing Officer was, therefore, .....

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llowing observations in this regard:- "This sheet contains the details of cash receipt and expenditure. The sheet is dated 18.11.2006 which clearly indicates that the expenses relates to the FY 2006-07. It contains the details of the cash expenses of ₹ 1.08 crore which were required to be explained by the assessee. However, these receipts and expenditure closely match with the impounded loose papers 4 & 5 which contains the fund-flow of ₹ 6.88 cr. This finding only supports .....

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opinion that over and above ₹ 2,62,40,000/-, no further addition of ₹ 40,00,000/- is required to be made. In view of our discussion coupled with the fact that provisions of section 69A has no application on the act of assessee s case therefore, the addition of ₹ 40,00,000/- made by Assessing Officer under section 69A of the Act was rightly directed to be deleted. Accordingly, both the additions of ₹ 2,62,40,000/- plus ₹ 40,00,000/-, aggregating to ₹ 3,02,40,00 .....

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his predecessor in the assessee's own case for AY 2007-08 ignoring the facts:- (a) The assessee was not able to prove that the said cash was expended for the activities of the firm, as such the assessee obviously becomes the owner of the money so received, and therefore it is correctly taxed in his hands by the A.O. (b) Based on the impounded loose papers and digitalized information in CD, indicated cash transactions of ₹ 10,69,420/- between the assessee and M/s Alliance Hotels which .....

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case and in law, the Ld. CIT(A) has erred in not following the decision of the Hon'ble Supreme Court in the case of Nund & Samant Co Pvt Ltd vs CIT (1970) 78 ITR 268 (SC) wherein the Court has held that it is for the tax payer to establish by evidence that the particulars expenditure is justifiable. (3) The appellant prays that the order of the CIT(A) on the above ground be set side and that of the AO be restored. 12. As stated above, assessee was partner in Alliance Hotel and retired fr .....

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provisions of section 147/148 were invoked. Subsequently in the assessment order, Assessing Officer has given finding that the entries confirm cash receipt by assessee from Alliance Hotel. The entire amount has been added to the income and assessee is in appeal. The matter was carried before the first Appellate Authority wherein the issue of reopening was challenged. The same has been rejected by the CIT(A). With regard to addition of ₹ 10,69,420/- on basis of digitalized information foun .....

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by the Assessing Officer under section 69A of the Act relying on the decision of his predecessor in the assessee's own case for AY 2007-08 ignoring the fact that assessee was not able to prove that the said cash was expended for the activities of the firm, as such the assessee obviously becomes the owner of the money so received, and therefore it is correctly taxed in the hands of assessee. Accordingly order of CIT(A) be set aside and that of Assessing Officer be restored. On the other hand .....

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