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TMI Blog2018 (9) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... t survey operations u/s 133A of the Act in the hands of M/s Arihant Credit Souharda Sahakari Ltd (hereinafter referred as "Society/Bank" or "society") on 05-01-2012. The above said society is carrying on banking operations through its various branches. During the course of survey operation, the revenue impounded a Diary marked as Annexure-G 1/SACSSL/1. The Chairman of the society explained that the Diary has been written by the Asstt. General Manager (Deposits and Loans) named Shri S.K. Terdale. Accordingly a statement was recorded from Shri S.K. Terdale u/s 131 of the Act by ADIT on 06-01-2012. In the statement, he admitted that the diary was maintained by him and entries therein were written by him. From the noting made in the diary, it was noticed that details of receipt of deposits have been recorded against name of certain persons. When questioned about the same, Shri S.K. Terdale submitted that the moneys were received from the persons named therein which, inter alia, included the name of the assessee herein. He further submitted that the money received from those persons was deposited in fictitious names in various branches in order to hide the identity of the real depositor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n persons from whom amounts were claimed to have been received. Shri S.K. Terdale could produce only two persons and they have also owned up deposits. Four persons could not be traced at all. Based on the statements given by Shri S.K. Terdale and based on the fact that loans given to the relatives of the assessee by the Society, the AO concluded that the impugned deposits aggregating to Rs. 885 lakhs was made by the assessee only without accounting the same in his books of account and accordingly assessed the same as undisclosed income of the assessee in the respective years as detailed above. 8. The ld CIT(A) also confirmed the same in all the three years and hence the assessee has filed these appeals before us. 9. The Learned AR submitted that the Assessing Officer has made impugned additions in all the three years on the basis of diary maintained by Mr. S.K. Terdale and statements given by him. He submitted that Mr. Terdale has stated that the money was given to him by the assessee and he has deposited the same in various fictitious names in various branches. Mr. Terdale has further submitted that the assessee has claimed to have received such kind of moneys from seven persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed AR further submitted that the Assessing Officer has held that the loans given by the Society to the close relatives of the assessee would go to show that the assessee has adopted modus operandi of converting black money into white. The Assessing Officer has further observed that the loans given to the relatives of the assessee were unsecured. The learned AR submitted that all these observations are against the facts available on record. He submitted that the impugned loans were in the nature of cash credit loans given for the rice mill run by the relatives of the assessee and hence they are business loans. He further submitted that these loans are secured loans secured against the stock of business and further these parties have given lien certificate also to the Society. He further submitted that all these loans have been duly repaid to the society/bank within short period. He submitted that if it had been a case of converting black money into white, as alleged by the Assessing Officer, the close relatives of the assessee would not have repaid the loans. He further submitted that these loans aggregating to Rs. 120 lakhs were availed by the relatives only in financial year 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 157, which has since been confirmed by Hon'ble Supreme Court in the very same case reported in 352 ITR 480. 14. The learned AR submitted that an identical issue of making addition on the basis of entries recorded in the diary maintained by a third parry was examined by Hon'ble Bombay High Court in the case of Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 and the Hon'ble High Court confirmed the order of Tribunal in deleting the addition by holding that the evidences were not sufficient to implicate the assessee. 15. The learned AR also submitted that though name of the assessee is entered in the diary, but the same name was not entered in the main book of the society/bank. The Regular books of account maintained by the society/bank is reliable piece of evidence and the impugned diary, being a rough record maintained by one of the officers of the society/bank, cannot be considered as regular books of account of the society/bank. In the case of Miss Lata Mangeshkar (supra), diary found in the case of Vasu Films was not considered as regular books of account and in fact M/s. Vasu Films had produced some other books of account for the purpose of assessment. Accordingly, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessee and how it was utilised for making deposits under fictitious name in various branches. The learned DR further submitted that it is the responsibility of the society to explain the contents of material found during the course of survey and the society has discharged its burden by submitting that the diary was maintained by Mr. Terdale, AGM of the society. Further, Mr. Terdale has also explained various transactions including modus operandi adopted in receiving money and making deposits. Accordingly the ld D.R submitted that the burden of proof would shift to the assessee. He further submitted that the entries made in the diary, the statements given by Shri Tardale and the loan transactions of close relatives of the assessee clearly support the case of the AO that the assessee has given his unaccounted money to the society as per the entries found in the diary. The very fact that the deposits have been given by the assessee on various dates spreading in three assessment years also prove the reliability of the entries made in the diary. Accordingly, the ld D.R submitted that the Assessing Officer was justified in taking the view that the assessee has adopted the modu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. He submitted that the assessee is being compelled to prove a negative fact, which is not permissible under the law. Accordingly he submitted that the impugned additions are liable to be deleted as the AO has claimed to have made the additions in all the three years on the basis of evidences, but they are unsubstantiated ones and hence the impugned additions have been made only on surmises and conjectures. 20. We have heard rival contentions and perused the record. We notice that the revenue has carried out survey operations in the hands of M/s Arihant Credit Souharda Sahakari Ltd and during the course of survey, it has impounded a diary maintained by the AGM of the bank named Shri S.K. Tardale. The entries have been explained as details of rnoney received from certain persons who have been named in the diary. It has been further explained that the moneys so received have been used to make deposits under fictitious names in various branches of the Society by splitting deposits, in order to hide the identity of the real depositors. It was explained that the amounts have been received from seven persons, which included the name of the assessee also. Though Shri S.K.Tardale sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons who brought the money to him or the denominations in which the money were brought. Thus it is seen that Shri S.K. Terdale has received money through some persons and they have stated that the money has been sent by the assessee. Accordingly he has recorded the same against the name of the assessee. If Shri S.K. Terdale could identify the persons who have brought money and if those persons happen to be the employees or any other related persons of the assessee, then it may be possible to state that the statements given by Shri S.K. Terdale stood corroborated. We also notice that Shri S.K.Terdale could not bring any other material on record to substantiate his statements. We have also noticed that the assessee has denied the transactions recorded against his name in the diary and also did not accept the statements given by Shri S.K. Terdale. We have also noticed that Shri S.K. Terdale could not substantiate his statements by bringing any other credible or corroborative evidences. In the absence of any material to substantiate the statements given by Shri S.K. Terdale, in our view, the same cannot be used against the assessee. As rightly pointed out by ld A.R, in our view, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of survey operation is prescribed in sec. 292C of the Act, as per which the books of account and other evidences found during the course of survey shall be presumed to belong to the person who has been surveyed and the contents are true. Hence it is the responsibility of that person to prove the entries recorded therein are true. As contended by ld A.R, the said presumption may be used against the person who has been subjected to survey and not against others. Hence it is the primary responsibility of the Society/bank to explain the nature of documents/books of account and the entries recorded therein. The presumption prescribed in sec, 292C is rebuttable presumption. The question that arises is whether the society/bank has discharged its responsibility to prove that the transactions are true?. As noticed earlier, the Chairman of the society/bank has expressed his ignorance about the diary and he has stated that the diary has been maintained by Shri S.K. Tardale. Hence Shri S.K. Tardale was questioned with regard to the diary and he has simply stated that the money was received from the persons named in the diary, but could not furnish any other corroborative material to support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business concerns against the primary security of the Stock available with the business concern. Hence it cannot be said that the loans were unsecured loans and accordingly we are of the view that the said statement of Shri S.K. Tardale is not correct. The ld A.R also submitted that the borrowers have given lien letters to the society so that the society shall get security from other assets also. 28. The Assessing Officer has made impugned additions in Ays. 2009-10 to 2011-12, i.e., it has been claimed that the deposits have been received from the assessee from the financial year 2008-09 relevant to AY 2009-10 onwards. From the copy of loan statements furnished in the paper book filed by the assessee, we notice that the impugned loans have been sanctioned on 23.9.2010 and 01-01-2011. All the loan accounts have been closed by making repayment in May, 2011 and September 2011. The alleged deposit transactions have been made for a period of almost three years, but the loan transactions have taken place for a period of about nine months only, that too in the third year only. If the theory of the Assessing Officer that the assessee bias given money in black and obtained loan in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udev Menon, Managing partner of Vasu Films and from Mr. C.S. Kumar, Firm's Bombay manager, the above said entries were explained by them as the letter "W" would mean "white" and the letter "B" would mean "Black". The assessee given an opportunity to cross-examine these persons. Thereafter, the Assessing Officer accepted the entries recorded in the diary and came to the conclusion that the assessee has concealed income. Accordingly, he made additions. Before the Tribunal, it was contended on behalf of the assessee that entire evidences on which lower authorities had relied, merely created suspicion that the assessee might have accepted payments in black but it did not take place of proof. The Tribunal, after appreciating piece of evidence, came to the conclusion that the evidences were not sufficient to prove even a single evidence, where the assessee could be said to have received money in black for which she did not pass a receipt. Accordingly the Tribunal deleted the addition made by the AO. The Hon'ble Bombay High Court has upheld the view taken by the Tribunal. In our view, this decision supports the case of the assessee also. The entries recorded in the diary were different fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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