TMI Blog2016 (9) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... support the assessment. In another case of K.P. Varghese vs. ITO, [1981 (9) TMI 1 - SUPREME COURT] has held that mere seizure of note books of documents at the personal residence of an employee would not conclude the issue against the employer company that the on money has been received by the employer company. The onus of proving the charging of on money lies on the Revenue. - Decided in favour of assessee - I.T.A. No.585/Ind/2015 Assessment Year: 2009-10 - - - Dated:- 21-9-2016 - Shri D.T. Garasia And Shri O.P. Meena, JJ. Appellant by Shri Mohd. Javed, Sr. DR Respondent by Shri Arpit Mundra, C. A. ORDER O.P. MEENA, This appeal is filed by the Revenue against the order of ld. Commissioner of Income-tax (Appeals)-I, Indore [hereinafter referred to as the CIT(A)] dated 27.04.2015 and pertains to assessment year 2009-10 as against appeal decided in assessment order passed u/s 148 dated 28.03.2014 of ITO Ward 2(3) Indore [hereinafter referred to as the AO]. I.T.A. No.585/Ind/2015 Assessment Year: 2009-10 2. The Revenue has taken following grounds of appeal :- 1. The CIT(A) was not justified in deleting the addition of ₹ 2,50,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated that the entry relating to money advanced amounting to ₹ 2,50,00,000/- is mentioned in the copy of loose paper LPS-A/4 page 7 shown to him does not pertain to him. In this regard, the statement of the assessee was also recorded in which the assessee has accepted that he is known to Ritesh Ajmera, one of the Directors of the Company and has done some transactions with him through Bank only but denied to advance any money to Shri Nilesh Ajmera and also denied to have received any amount as interest of ₹ 9,37,500/- as shown in the LPS-A/4 page 7. However, the AO concluded that reply of the assessee is not acceptable, because the entry in the loose paper was found during the course of search and the name of the assessee is clearly mentioned in the entry. The statement of the assessee was also recorded on oath in which assessee accepted the transaction with Shri Ritesh Ajmera. The perusal of the bank statement with State Bank of Indore and J K Bank makes it clear that the assessee has made various financial transactions with Shri Ritesh Ajmera, which is evident from the record and during the assessment proceedings in the case of Shri Nilesh Ajmera. Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before this Tribunal from the side of the Revenue in appeal No. 251/Ind/2013 for assessment year 2009-10 dated 17.05.2016 vide ground nos. 2 to 2.3. The ground of the Department was dismissed by this Tribunal, Indore in the case of Shri Nilesh Ajmera. The order of the CIT(A)-7 in order no. CIT(A)-7/IT-922/11-12 dated 28.03.2013 was confirmed by the Tribunal. The ld. Sr. Departmental Representative could not controvert the submission of the assessee. 7. It was further submitted before us that the departmental ground nos. 2 to 2.3 in IT(SS)A-251/Ind/2013 in the case of Shri Nilesh Ajmera are similar to that of Ground Nos. 2 to 2.5 taken by the Department in its appeal for A.Y. 2008-09 (Appeal No. IT(SS)A-250/Ind/2013) in the case of Shri Nilesh Ajmera. Therefore, finding given in such appeal will also be applicable in the present case. In view of this submission, we are reproducing hereunder the relevant portion of the order of the Tribunal passed in I.T.(SS)A.No. 250/Ind/2013 for ready reference :- DEPARTMENTAL GROUND Nos.2 to 2.5 (SHRI NILESH AJMERA) The Revenue has taken these grounds of appeal against the action of the ld. CIT(A) in holding that the addition u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks . Having held the loose papers, diaries and computer print-outs as books , the AO held that any unexplained credit entry made in such books was liable for addition under s.68 of the Act. Accordingly, the AO made the addition under s.69D alternatively under s.68 of the Act in respect of the cash loans amounting to ₹ 92,24,410/-, ₹ 47,00,000/- ₹ 12,50,000/- and ₹ 35,25,000/- taken by the assessee in his income. The relevant findings of the Assessing Officer are recorded at Para 7.1 to Para 7.7 from Page No.7 to 9; Para 12.1 to Para 12.6 from Page No. 68 to 76; Para 13.1 to Para 13.6 from Page No. 77 to 86; Para 14.1 to Para 14.6 from Page No. 86 to 91 of the assessment order. Matter carried to CIT(A) and the CIT(A), after considering the submission of the assessee, deleted the additions of ₹ 92,24,410/-, ₹ 47,00,000/- ₹ 12,50,000/- and ₹ 35,25,000/- by giving his findings at para 7.4, 7.5, 8.2, 8.3, 9.4, 9.5, 10.4 10.5 of his Order, which reads as under:- 7.4 having considered the A.O. s order as well as the appellant s A/R submissions and also taking note of the fact that on similar set of facts and circumstances, the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, I find that there is no borrowing on Hundi by the appellant. I also find substance in the appellant s A/R submission that no Hundi, either alive or discharged, was found or seized from any business premises of the appellant or its group concern. In this perspective of the appellant s case and also after taking note of the decision of Madras High Court in the case of CIT vs. Paranjothi Salt co. (1995) 211 ITR 141 (Mad.) the decision of S.K.S. Rajamani Nadar vs. CIT (1995) 216 ITR 696 (Mad) and other judicial pronouncements cited by the appellant s A/R specially Delhi High Court decision reported in 170 taxman 5, I am of the considered view that the addition made by the A.O. even alternatively u/s 69D of the Act is also not justified and correct. Accordingly in my considered view, the A.O. s action is incorrect and unjustified on this score also 7.5 In view of my decision above in A.Y.-07-08 in the appellant s own case, I consider it proper and appropriate to hold that the A.O. was not justified in making the addition of ₹ 90,24,410/- to the income of the appellant on both the scores i.e. u/s 68 and u/s 69D of the Act. Accordingly the addition so made by the A.O. is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been noted by A.O., hence this ground of appeal is allowed. 10.4 I have considered the A.O. s order as well as the appellant s submission. Having considered the factual position of the case, I find that the similar issue i.e. borrowing on Hundi has been decided by me in favour of the appellant vide my order No.CIT(A)-IT-920/11-12 dated 28/03/2013 for A.Y.-07-08. Since the facts of the case are similar to the facts as in A.Y.-07-08, I am of the considered view that the A.O. was not justified in making the aforesaid addition to the income of the appellant. 10.5 Thus, following the rule of consistency, I consider it proper and appropriate to hold that the A.O. was not justified and correct in his action. Thus, the addition so made by the A.O. is deleted, as in this ground of appeal raised by the appellant, the issue is the same and also the similar facts have been noted by A.O., hence this ground of appeal is allowed. The ld. AR has made oral submission as well as written submission as under: It is submitted that the entire action of the AO in making the addition in the assessee s income u/s 69D is based upon certain excel sheets and one diary i.e. BS-8 found and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 but, in the common parlance, the term 'Hundi' is regarded as a Bill of Exchange, as defined under section 5 of the Negotiable Instruments Act, 1881. The term 'Bill of Exchange' is defined under section 5 of the Negotiable Instruments Act, 1881 as under: 5. A bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. On a comparison of the Expressions Promissory Note and Bills of Exchange , as given under the Negotiable Instruments Act, 1881, one can find that while there is a similarity in both the instruments as regard to the payment of a certain sum of money by a person to some other there is a clear distinction in both the instruments as regard to the signatory of the instrument and number of parties involved. In the case of Promissory Note, it is the borrower only who is required to put his signature on the instrument and the signature of the lender is not required. Further, in the case of Promissory Note, the borrower promises to pay a certain sum either to the len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been given. During the course of entire search proceedings, not a single hundi was found, therefore, in our opinion, the issue in controversy is covered by the decision of Hon ble High Court of Madras in the case of CIT vs. Paranjothi Salt Co. (1995) 211 ITR 141 (Mad.) wherein it was held that for the purpose of invoking the provisions of s. 69D there must be an existence of Hundi and unless and until one document fulfills the characteristics of a Hundi, no addition u/s 69D can be made in the assessee s income. The Hon ble High Court of Andhra Pradesh in the case of CIT vs. Dexan Pharmaceuticals (P) Ltd. (1995) 214 ITR 576 (AP) has held that there are always three parties to Hundi transactions and if a transaction is bilateral it is a very strong indication to show that it is not a Hundi transaction. The Coordinate Mumbai F Bench in the case of ACIT vs. Om Prakash Co. (2004) 87 TTJ 183 (Mum.), at para 60 has held that the existence of Hundi is a must for invoking the provisions of s. 69D of the Act. Further, this Hon ble Bench in the case of Ghanshyam Cloth Syndicate vs. ITO (1984) 19 TTJ (Ind.)569 has held that once there is a finding that there was no execution of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keeping the accounts of its business. As stated above, this book pertains to Mr. Paras Ram Rohira, therefore, the same has been written by him for keeping his accounts. In this note book only two pages are written, which can also be easily removed. This is a rough note book, the pages of, which can also be easily removed. Therefore, it cannot be considered as a book as the sheets of this note book can be easily detached and replaced. Even if it is considered as a book of account no addition can be made on the basis of the amounts mentioned in this note book as we have discussed above in detail. Thus, the provisions of s. 68 of the Act are not applicable to this case. Further, the ITAT, Mumbai Bench in the case of Biren V. Savla vs. ACIT (2006) 100 TTJ 1006 (Mum.) has held that the memorandum of transactions between lenders and borrowers entered in a diary cannot be regarded as cash book or ledger and, therefore, on the basis of such notings the provisions of s. 68 cannot be invoked. In view of the facts and circumstances of the case, and various judicial pronouncements, the provisions of s. 68 cannot be invoked. Even otherwise, The AO himself at various places in the bod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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