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TMI Blog2014 (11) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... zed. As per these documents, the assessee M/s. Kejal Furnishings had carried out money lending activity through Shreeram H. Soni for which he was paid commission/brokerage. The interest and principal utilized in the money lending transactions had not been disclosed in the return of income filed by the assessee with the income-tax department. Accordingly, the AO reopened the assessment by issuing notice u/s.148 on 28-03-007. The assessee asked for the reasons for such reopening which were provided to the assessee on 10-10-2007. Subsequently, the assessee also asked for the information/documents on the basis of which notice u/s.148 was issued. 2.1 The AO issued a detailed show cause notice with the copies of the seized documents in the case of Shreeram H. Soni group to the assessee. The Annexure-A to the said questionnaire reads as under : "Annexure-A M/s. Kejal's Furnishings 689, Narayanp Peth Pune - 411 020 S.No. Cheque No. & Date Amount Borrower Investor Per Int Brok 1 11792 BEAERR 3.1.2000 100.00 BACHU BHOY(B) Kajal's Rashmi G. 90 1.50 0.25 The assessee strongly challenged the reopening of the assessment. 2.2 So far as the seized document is concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to borrowers in cash and recorded in books of Shreeram H. Soni. 3.1 As regards the submission of the assessee that no addition can be made on the basis of Third Party, the AO held that as per section 80 of the Indian Evidence Act, there is presumption as to documents produced as record on evidence are genuine, that any statements as to the circumstances under which it was taken, purporting to be made by the persons signing it, are true and that such evidence, statement or confession was duly taken. Relying on various decisions the AO made addition of Rs. 1,04,500/- as unexplained investment u/s.69 of the I.T. Act. for the A.Y. 2000-01 by calculating the same as under : S.No. Borrower Amount (in Rs.) Date of Borrowal Interest Due date Total (Principal +Interest (in Rs.) 1 BACHUBHOY (B) 1,00,000 03-01-2000 4,500 03-01-2000 1,04,500 4. Before CIT(A) the assessee strongly challenged the reopening of the assessment u/s.148 stating that the same is bad in law and therefore it should be declared null and void. So far as the merit of the case is concerned, the assessee reiterated the same arguments as made before the AO. It was argued that the addition has been made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's claim, he should have brought on record any such entity existing in these names. It is important to point out that the appellant could not bring on record as to how the combination of Kejals - Rashmi G. can lead to any other identity than the Kejals Furnishings itself. From the submissions of the appellant it can be seen that the appellant admits that Mr. Rashmikant Gandhi is the partner in M/s Kejal Furnishings. He has also admitted that he is not partner in the sister concern M/s Kejal Linen. The argument of the appellant that there is one more entity of the name of Kejals at Camp area also could not be shown that its partner is Mr. Rashmikant Gandhi. In view of the entry available in the seized documents as "Kejals - Rashmi G", the inescapable inference leads to the appellant. The Assessing Officer therefore, can be seen to have correctly arrived at the conclusion to treat the appellant as the investor. The appellant has cited various decisions of Courts and Tribunals for the proposition that the entries on the seized documents cannot be applied against a third. party, and the presumption u/s 132(4A) can be used only against the persons from whose premises the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 478 & 518/PN/2007 for Assessment Years 1998-99 to 2003-04, in the case of Shri Shriram H. Soni, which has also upheld the authenticity of the entries made in the documents. Therefore, inference of Assessing Officer is legally correct, more so when it remained rebutted. 6.6. It is noticed that the appellate order in the case of Shri Shriram H. Soni has already been passed by the ITAT, Pune Bench in ITA nos. 474 to 478, 518/PN/2007 for assessment years 1998- 99 to 2003-04, order dated 17.06.2010, in which one important issue before the ITAT was whether the amounts mentioned in these, particular seized documents (vide bundle nos. 98 and 99) under the head 'investors' in the specific names of certain persons could be treated as appellant's (Shri Soni's) income u/s 68 of the I.T. Act as unexplained credit. The Tribunal took note of these various entries in the seized documents along with the arguments of the appellant's A.R. in which he had vehemently relied upon the statements recorded, especially that of Shri Sunil W. Ratnakar the accountant of Shri S H. Soni as well as that of Shri S.H. Soni during the course of search and afterwards u/s.132(4)/131(1)(d) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ker and it was further held that there were 'investors' names mentioned in the documents seized vide Bundle nos. 98 & 99, which duly showed the heads of 'investors' and 'borrowers'. 6.8. The Tribunal pointed out that A.O. has also mentioned at one place in the order that many of the investors whose names are indicated in the seized documents also found place in the regular bocks of the assessee. The Tribunal held that the statement recorded on 30.07.2003 during the search, of Shri Sunil W. Ratanakar, accountant of the Shri S.H. Soni emphasized that the pages contained in bundle no. 100 (cash book) had got a substantial evidentiary value as per law. He had stated that the investors used to invest their money and the borrowers used to take money as a loan. He has described the modus operandi in detail regarding preparation of promissory notes in duplicate by the borrowers, in which the original was written in ink bearing the details of cheques etc. and a second copy was also prepared. He had also revealed that Shri S.H. Soni used to give a code and identification number in respect of every transaction. Pie Tribunal also referred to the statement recorded of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he hands of Shri S.H. Soni. For this purpose the Tribunal also repeatedly took note of the summons issued u/s 131 to different investors and the assessment orders passed in their cases. The Tribunal only confirmed the additions as the income of Shri S.H. Soni which were appearing in unidentifiable codes viz. 'Shree SK', 'SRS-3', 'S/3', 'SKS', 'XYZ' etc., which were held to be the own income of Shri S.H. Soni invested in these names. By implication, it was concluded that the amounts mentioned under this head 'Investor' in Bundle nos. 98 & 99 other than these particular abbreviations; were held to be the particular person's investment. 6.10. In view of the above salient findings noticed from the ITAT's order dated 17.06.2010 it was obvious that the ITAT has held that the entries under the head 'investors' in bundle nos. 98 and 99 related to the particular persons mentioned therein i.e. the investors had infact advanced the particular amounts to Shri S.H. Soni, who was a finance broker, and who in turn had advanced it to other persons who were interested in borrowing from Shri S.H. Soni. The elaborate method discussed in the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reliable entries for accepting the case of the Department. Inter alia, it pointed out that the ledger containing the said entries had not been produced before it, that no corresponding entries were there in the day-book of the relevant period and that V did not rely on this ledger in the course of its own assessment proceedings but for its own assessment proceedings different set of books had been relied upon as genuine set of books." On the other hand, in the Tribunal's order dated 17.06.2010 in the case of Shri S.H. Soni discussed above, the entries made on seized documents vide bundle nos. 98, 99 and 100 are all held to be authentic and relevant. The Tribunal in this case has not given the finding that these entries are fictitious and cannot be relied upon. Therefore, the judgement in the case of Addl. CIT vs. Ms. Lata Mangeshkar of the hon'ble jurisdictional High Court was dearly distinguishable from that of the appellant's case. 6.13. The claim of the appellant that Mr. Soni never admitted that the loan was advanced by the appellant from his unaccounted sources is also incorrect. Mr. Soni admitted the authenticity of the documents seized and ascertained tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon." 4. The learned CIT(A) failed to appreciate that the addition was made totally based on presumption and surmises and there was no evidence that the assessee had advanced any such loan. 5. The learned CIT(A) failed to appreciate that - a. The assessee had never advanced any loan to Shri Soni or any person through Shri Soni out of his unaccounted sources. b. The documents found with Shri Soni did not indicate that the assessee had advanced any loan. c. The presumption u/s 132(4 A) if at all applicable could be applied only in the case of Shri Soni and not in the case of the assessee. d. No addition could be made in the hands of the assessee on the basis of some loose documents found with third party. e. Shri Soni had also never admitted that the assessee advanced loan to him out of his unaccounted source. 6. The learned CIT(A) erred in placing reliance on sections 80 and 114 of the Indian Evidence Act without appreciating that they had no relevance to the facts of the present case. 7. The learned CIT(A) erred in placing reliance on the ITAT, Pune decision in the case of Shri Shriram Soni when there was no finding given by Hon'ble ITAT that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shreeram H. Soni, no such opportunity was granted to the assessee. He submitted that no promissory note or any other document evidencing money given by the assessee to Shreeram H. Soni was found from the residence of Shreeram H. Soni. Referring to pages 7 to 11 of the paper book he drew the attention of the Bench to the detailed submissions filed before CIT(A) vide letter dated 05-08-2008. Referring to para 4 of the said letter the Ld. Counsel for the assessee drew the attention of the Bench to the following submissions made before the CIT(A) : "First of all, it is submitted that the assessee has never lent any funds to Soni Group. Even the documents found with Soni Group do not pertain to the assessee. The notings on the various documents are relating to "kajal's Rashmi G" which is not pertaining to the assessee at all. The name of the assessee is Kejals Furnishings and the name of the partner is Rashmikant Gandhi and the same is not on the said loose papers found with Soni Group. There is no name of the assessee noted on the documents found with Soni Group. The learned A.O. has also referred to other documents which are written in Marathi language wherein 'Kejal's Rash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of Jagannath Eknath Lahoti (HUF) vide ITA No.453/PN/2012 order dated 11-02-2014 he submitted that under identical facts and circumstances the addition made by the AO and upheld by the CIT(A) was deleted. 10. The Ld. Departmental Representative on the other hand heavily relied on the order of the Ld.CIT(A). 11. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case made an addition of Rs. 1,04,500/- on the basis of certain documents seized from the premises of one Mr. Shreeram H. Soni. We find the AO confronted the notings of the seized documents to the assessee. The assessee vide his reply dated 07-12-2007 had submitted that it has never lent any funds to Soni group. It was categorically stated that the notings are relating to one Mr. Rashmi Gandhi and it does not pertain to the assessee firm. It was also stated that no evidence whatsoever was available with the department that the Soni group has accepted that this particular assessee has advanced fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts appearing in the seized diaries in the name of different investors was treated as undisclosed income of Mr. Shriram H. Soni by the CIT(A), however, the Tribunal vide order dated 17-06-2010 has reversed the same by holding that persons are identifiable and all the materials available clearly show that Mr. Shriram H. Soni has only earned commission. Be that as it may be, Mr. Shriram H. Soni had refused to identify each and every person. We find the seized diaries/papers clearly show different names such as "Jagannath Lahoti" and "Jaguseth Lati". However, we find no addition has been made on account of entries appearing in the name of the assessee, i.e. Jagannath Lahoti. Even the entries appearing in the name of the assessee for subsequent years has also not been brought to tax by reopening the assessment, a statement made by Ld. Authorised Representative and not controverted by the Ld. Departmental Representative. We, therefore, find merit in the submission of the Ld. Counsel for the assessee that the Department by not reopening the assessment in the subsequent year has accepted that "Jagannath Lahoti" is different from "Jaguseth Lati". Further, the assessee from the very beginnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m H. Soni has stated about the assessee that whatever the notings found were in respect of the assessee. No corroborative material is found. In our opinion, the Ld.CIT(A) has rightly deleted the entire addition as there is no evidence against the assessee. We find no merit in the appeal filed by the Revenue. Accordingly, the same is dismissed." 8.2 Since identity of the assessee was not proved by Mr. Shriram H. Soni at any point of time nor any corroborative evidence was found from the residence of Mr.Shriram H. Soni so as to prove that the assessee is the same person as per the name appearing in the seized document, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal in the case of Ashok Keshvlal Oswal (Supra) and in absence of any contrary material brought to our notice, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the addition." 11.2 Since the facts of the instant case are identical to the facts in the case of Jagannath Eknath Lahoti (HUF) (Supra), therefore, following the same ratio, we hold that no addition is called for in the instant case. We accordingly set aside the order of the CIT(A) on this issue a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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