TMI Blog2017 (12) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... ided in favour of assessee. Addition u/s 68 - unexplained cash addition as assessee could not prove the source of advances received - HELD THAT:- Revenue s claim that during the course of survey concerns giving advances were found to be non-existent. However, the assessee claims that the above concerns were having PAN and the new address could have been ascertained from Registrar of Companies. It is also noted that the ACB, Govt. of Rajasthan, Jaipur has conducted the similar enquiries against the concerns at Mumbai and found the concerns were not existing on the given registered office addresses. The ld.AR of the assessee submitted that lower authorities have referred and relied on the enquiries conducted by the ACB, Govt. of Rajasthan, however, no such report of ACB was made available to the assessee at any stage. Assessee was not provided opportunity to controvert the report if any. There is violation of natural justice. Law does not allow such act. Thus it will be in the interest of equity and justice to restore the issue to the file of the AO to decide it afresh - Decided in favour of assessee for Statistical purposes. - ITA No. 484/JP/2016 Assessment Year: 2009-10 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminating documents(namely Annexure A-1 A-4) seized from Sh Tambi s premise contain names of Sh Vishnu Maharwal, Smt Aruna Sankhla M/s. Kamakshi International. Sh Manish Tambi being a finance broker, arranges finance both in cheque and cash. Late Sh Bimal Kr Jain was also covered under search action conducted against this group and during the search operation on the basis of entries made in seized documents found from the premises of Sh Manish Tambi had made a disclosure of undisclosed investment of ₹ 68 lacs in cash arranged through Sh Manish Tambi and also earned interest on the said undisclosed investment. In view of these facts and circumstances evidences, AO has observed that Smt. Aruna Sankhla whose name appearing in seized material Annexure A-1 to A-4, seized from the residential cum business premises of Sh Manish Tambi has made an undisclosed investment of ₹ 13 lacs through Sh Manish Tambi and earned interest of ₹ 34,500/- for the intervening period. It is also fact that before forming this opinion, AO has also examined Sh Vishnu Maharwal u/s 131 of the Act, where, Sh Vishnu Maharwal in the sworn statement recorded on oath u/s 131 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not require any adjudication. 7.1 The ground Nos. 3 and 4 are in connection with one issue only. The facts apropos to this issue are that during search certain loose papers were found and seized from the assessee. These papers contain debit and credit entries for which the assessee has got no explanation. As per the assessee, only peak credit theory is applicable in such cases. According to the assessee, the entries should be so arranged in serial order that a credit following a debit entry should be treated as referable to the latter to the extent possible and that not the aggregate but only the peak of the credit should be treated as unexplained. The AO has calculated the peak amount and has made the impugned addition. The defence of the assessee is that the peak computed by the AO is not correct. The seized papers marked as Annexure A-1 to A-4 is mentioned in para 5 by the AO in his assessment order, containing transaction of cash relating to finance business. The entries did not contain the addresses of the creditors or the debtors. The assessee was not in a position to explain and furnish the source and evidence of entries or address thereof. The assessee offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee does not maintain any books of account wherein the debtors and creditors are reflected, therefore, this addition has also been wrongly made and upheld u/s 69B of the Act. Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the Ld. CIT(A) and order to delete the entire addition so made. Thus Ground Nos. 3 and 4 of the assessee are allowed. 8.1 The next ground No. 5 which pertains to confirmation of addition of ₹ 1,24,77,126/- made on account of interest income which is not the real income of the assessee. 8.2 .. 8.3 After considering the rival submissions and on perusal of the materials available on record, we have found that the AO has failed to cause enquiry in respect of these parties,. In our considered opinion, the AO has wrongly considered the entire credits and interest entries in the hands of the assessee. Accordingly, we are in agreement with the submission of the Ld. AR and order to delete the addition of ₹ 1,24,77,126/- added on account of notional interest. Thus the Ground No. 5 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y member of same group is allegedly advancing. 3.1.3 Premises of Smt. Aruna Sankhla was also searched and no documents of her advancing the money through Shri Manish Tambi were found or seized from her premises. It is a normal practice that if money is lent, the accepted hundi of borrower, duly signed by the borrower, is kept by the lender. Such document was neither found from the premises of Shri Manish Tambi nor from the premises of Smt. Aruna Sankhla. Without such document the money cannot be recovered and, therefore, its existence is a pre condition for making any addition. 3.1.4 Shri Manish Tambi had not admitted that this transaction belong to Smt. Aruna Sankhla (Para 53 pg 15 AO order). It is quite possible that Shri Manish Tambi circulated his own black money in the name of Smt. Aruna Sankhla. Such is a normal practice with finance brokers. Ld. Assessing officer also had this possibility in his mind and, therefore, he added the said sum protectively in the hands of Shri Manish Tambi. 3.1.5 Neither the seized documents were made available nor cross examination of Shri Manish Tambi was allowed. 3.1.6 Ld. CIT(A), at page 31 32 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) are books within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91). .. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued mr. Sibal. He next contended that even if it was assumed for argument's sake that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also. This Court has considered the entries in Jain Hawala diaries, note books and file containing loose sheets of papers not in the form of Books of Accounts and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 17. It has further been laid down in V.C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. The materials in question are not only irrelevant but are also legally inadmissible under Section 34 of the Evidence Act, more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered opinion that the seized papers cannot treated as books of account. Furthermore, only the commission income can be assessed in the hands of the assessee @ 0.10% on a total of the credits of ₹ 91,67,81,272/-. The addition u/s 68 of the Act can be made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a book of account in a commercial sense. Thus the addition made u/s 68 is not justified. It is noticed that over and above the peak credit, the A.O. has further made an addition of ₹ 52,40,137/- on account of debtors exceeding the creditors. We have found that the peak determined by the A.O. is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment order. The relevant findings of the AO are summarized as under: a) The transactions were made in cash. The reason for making such a huge transactions was not very convincing. b) A survey operation was conducted on 23.07.2009 to verify the genuineness of the concerns at the given address and in the survey operation, M/s. Ravik Finance Investment Pvt Ltd, Mumbai and M/s Murti Real Estate Pvt Ltd Navi Mumbaiwere found to be non -existent on the given addresses. c) ACB, Govt. Of Rajasthan, Jaipur has also conducted similar enquiries against those concerns and found them non-existent which further proves the finding of the AO. d) Assessee said to have entered to the agreement with the new director Suresh Navsare, who was not a director of M/s. Ravik Finance Investment Pvt Ltd, Mumbai on 02.01.2009 and sh Ashish Verma was also not a director of M/s Murti Real Estate Pvt Ltd Navi Mumbai, meaning therebyi.e., the date of said agreement of sale /on the date of transaction. Meaning thereby on the date, he was not in a capacity to enter into such an agreement of sale. e) On the date of agreement Sh Nayan Arvind Shah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ik Finance Investment Pvt. Ltd, Mumbai and M/s Murti Real Estate Pvt. Ltd. Navi Mumbai were found to be non-existent on the given address. The buyer companies were incorporated under the provisions of Companies Act, 1956. This fact is not doubted. No evidence was brought on record by the department in support of its allegation that the companies were not existent on the given addresses. Without prejudice to this, it is submitted that the Companies Act, 1956 allows companies to change their registered office. However, on any given point of time, exact address of any company can be ascertained from the office of Registrar of Companies. No such efforts have been made except making unsubstantiated allegations. (c) ACB, Govt. Of Rajasthan, Jaipur has also conducted similar enquiries against those concerns and found them non-existent which further proves the finding of AO. Lower authorities have referred and relied on the enquiries conducted by ACB, Government of Rajasthan. However, no such report of ACB was made available to the assessee at any stage so as to give her opportunity to rebut the same. (d) Assessee said to have entered to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of functioning of Notary, if any, has no relevance for the appellant. Moreover, there is no dispute that agreement is signed by both the parties and both are owning and admitting the same. Any frivolous matter cannot negate the validity of the agreement. 3.3 It is also submitted that no incriminating documents, suggesting this transaction to be bogus, was found during the search operation. Had it been a managed transaction, some traces of the same would have been found. But nothing was found suggesting that a contrary transaction had taken place than what was recorded in the books. 3.4 The contents of the agreement are presumed to be true in view of the provisions of section 132(4A). It is binding on the department. 3.5 Reliance is placed on the decision of the Hon ble jurisdictional High Court in the case of Pr. CIT vs Shubh Mines Pvt Ltd (D.B. Income Tax Appeal No. 96/15), where even addition is held to be unjustified unless it is proved that money belonged to the assessee. Relevant portion of the decision is extracted below: In the considered opinion of this court, in absence of any cogent evidence on record establishing that the mone ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
