TMI Blog2022 (3) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... ects viz. Bhoslewadi, Goregaon, Pune and Ladiwala Chawl in his individual capacity. Even during the course of recording of the Statement the assessee clarified that no cash interest was paid to the lenders who had advanced loans to various concerns of Rohan Group. When the jottings in rough sheets are not in themselves capable of expressing or describing the essence of the transaction the way AO has deciphered them especially without corroborative evidence of parties attributed to the transaction, and when there is no material to show nexus between the assessee herein and the alleged transactions, no addition to the income can be justifiably made. In other words, it is held that no addition can be made when there is nothing to establish that such payments as alleged have been received or expended. No enquiry in this direction is seen made by the Assessing Officer. We accordingly hold that the impugned addition of on-money payment and receipts made in assessee s case is on the basis of a mere dumb document and not corroborated by any other evidence and thus, not sustainable. The additions made on the basis of uncorroborated noting and scribbling on loose sheets is accordingly uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord to hold that such workings had materialized and cash payment of interest was actually made. Under the circumstances we are unable to sustain the addition as made. We accordingly direct that the addition made by the Assessing Officer in respect of alleged cash payment of interest be deleted. - ITA Nos. 3803, 3799, 3805 And 3802/MUM/2019 - - - Dated:- 22-2-2022 - Shri S. Rifaur Rahman, Hon'ble Accountant Member And Ms. Suchitra Raghunath Kamble, Hon'ble Judicial Member For the Assessee : Hema Kataria For the Department : D.K. Gupta ORDER PER S. RIFAUR RAHMAN (AM) 1. The appeals in question are directed against the consolidated order of the Learned Commissioner of Income Tax (Appeals)-47, Mumbai [hereinafter in short Ld.CIT(A) ] dated 29.03.2019 in respect of the assessment years A.Ys. 2007-08, 2008-09, 2011-12 2012-13. The facts being identical and issues common, for the sake of brevity and convenience, the appeals that have been heard together are disposed off by this common consolidated order. 2. The facts in brief are that a Search and Seizure action u/s 132 of the Income Tax Act, 1961 was carried out on 26.05.2011 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) erred in confirming AO's action of making an addition of ₹ 11,82,89,580/- on account of undisclosed income being negative peak. 2. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal. 3. The appellant prays before the Hon ble Tribunal to delete the addition made by the AO to the extent confirmed by the Ld. CIT(A). A.Y. 2011-12 1. On the facts and in the circumstances of the appellant s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of ₹ 1,94,877/- on account of undisclosed income being negative peak. 2. On the facts and in the circumstances of the appellant s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of ₹ 17,20,35,681/- on account of alleged cash interest. 3. On the facts and in the circumstances of the appellant s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of ₹ 45,99,142/on account of alleged cash interest (Shivalik). 4. The appellant craves leave to add to, alter, amend and /or delete all or any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune Property. Also, on the basis of seized material Page no. 10 Annexure A-1, the Assessing Officer held that the assessee made unaccounted cash payments of ₹.4,71,48,962/- to brokers for purchase of Goregaon Property. Further on the basis of Page No. 11 of Annexure A6 the Assessing Officer has made an addition of ₹.4,00,000/- on account of alleged unaccounted payment towards purchase of property at Ladiwala Chawl. On the basis of seized document Page no. 15 of Annexure, A-1 the Assessing Officer has made addition of ₹.65,000/- on account of alleged cash household expenses. Also, a promissory note for ₹.50,00,000/- being document numbered Page No. 5 of Annexure A-5 was seized from the residence of appellant s employee Shri Vijay Jasani. This promissory note was seen to contain the signature of Harresh Mehta on behalf of Rohan Developers Pvt. Ltd. 8. On the basis of afore mentioned seized documents being Page nos. 8,14,10,11 15 of Annexure A1, A5 A6 the Assessing Officer has held that assessee has made unaccounted investments in purchase of Pune Property at ₹.25,00,000/-, unaccounted payment for brokerage on purchase of Goregaon Property at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,25,08,839 In respect of Bhoslewadi Property 11. In order to have an understanding of the matter, it is imperative to revert to the statement of Shri Jitendra Mehta recorded during the course of search on 22.07.2011 being confronted with the seized material. The relevant extract of statement of Shri Jitendra Mehta is reproduced as under: - Q. 5 Please refer to the page-1 of loose paper folder of Annexure-A-1 which was found and seized during the search proceedings from your residence. On perusal of the same apparently it is appearing that date wise receipts to the tune of ₹ 20,78,51,498/- made by the group. The details are appearing for Bhoslewadi. You are requested to explain the contents along with documentary evidence like copy of bank account, copy of cash book and source of such payment. Please also explain who the CFO Jandelwal is. You are requested that please explain that what treatment was given in the regular books of account, Please produce the ledger for the same. Ans. I submit that if the receipts noted on this page are treated as my unaccounted income, said money should be presumed to be available with me for maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 20,78,51,498/- noted on the seized page no. 1 of Annexure A-1 are duly covered in my disclosure of ₹ 29,66,34,233/-. The noting relating to Bhoslewadi/ CFO are not related and relevant in view of the disclosure made by me. The above disclosure is made voluntarily by me and I request that no penalty be levied or any other penal action be initiated against me. It may be noted that the above disclosure covers disclosures made by me in the course of statement recording under section 132 (4) of the Income Tax Act 1961 earlier on account of payments recorded on the various seized papers .. 12. The Assessing Officer has treated the said amounts appearing in seized material as unaccounted receipts on sale of Bhoslewadi Property and made addition of ₹.10,50,00,000/- in AY 2007-08 and ₹.9,80,43,198/- in A.Y.2008-09 on the ground that assessee has accepted the same as unaccounted receipt in his statement recorded u/s 132(4) of the Act and that the disclosure is not voluntary but impelled by the incriminating material in the course of search from residence of the assessee. In respect of the addition towards unaccounted payment for purchase of property at Gore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of Assessing Officer to prove his hypothesis that said noting reveal either unaccounted income, or unaccounted investment or unaccounted expenditure of assessee. None of the properties as mentioned appear in the financials of the assessee. Placing reliance on the order of the jurisdictional Tribunal in the case of ACIT Vs Layer Exports Ltd [2017] 184TTJ 469, which as clarified by the Ld AR, has drawn support from the judgement of the Hon ble Supreme Court in the case of Mohd.Yusuf Anr Vs D. Anr AIR 1968 Bom 112, it is contended by Ld AR that when seized material contains jottings of certain figures but same does not describe or express the contents and the contents themselves are not capable of describing the transactions the way Assessing Officer has deciphered them without support of corroborative evidence of parties attributed to the alleged transaction, the additions are without basis and unsustainable. According to Ld AR it is an ascertainable fact that assessee has not carried out any construction / development business. It is the companies Rohan Developers Ltd and associated entities who have carried out such business and not the assessee. Further, she also contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipients regarding schedule of payments, any on-money involved and actual payments made, for reasons best known to the Department and for said reasons addition is not sustainable on the basis of statement alone. According to Ld AR, a suspicion cannot be the basis of addition. In support of her contentions, the Ld AR has further cited the following judicial precedents to press home the issues flagged by her as mentioned above:- a) Karam Chand v. Asstt. CIT [2000] 73 ITD 434 (Chd.) b) Manoj Prabhakar v. Asstt. CIT [2004] 84 TTJ (Delhi) 625. c) Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) d) Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (Punj.) 16. Considered the rival submissions and have given anxious thought to the questions raised before us. We have carefully considered the orders of the lower authorities, the submissions made before us by the Revenue and the relevant seized materials. It is to be noted that there are jottings in the seized material being certain figures date-wise as well as and abbreviations as deciphered by the Assessing Officer as cash/cheque towards alleged investments. Certain inferences w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Mehta that such transactions as per the rough noting had taken place. It is apparent that it only in a manner of conditional declaration that such sums were admitted. Undoubtedly, the assessee has not explained the nature of transactions emanating from the seized material. It is indeed not clear as to which noting denotes purchase of property and which transaction constitutes sale of property. There is no mention as to whom the property is sold or from whom the property is purchased. There has been no attempt on part of Department to track down either seller/ buyer or even purported broker whose name has been mentioned in the seized material. In other words, the Assessing Officer, merely on the basis of statement made, has made the addition without ascertaining the nature of transaction, without ascertaining the parties involved in such transactions, what tax implication can be drawn and the additions sustained by the Ld.CIT(A) without facilitating any further enquiry or investigation. No attempt has been made by lower authorities to scratch the surface and probe in to the alleged transactions. We cannot bring ourselves to agree with the finding of the Ld CIT(A) that the admissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not strictly applicable to proceedings under the Income Tax Act; it is the broad principles of law of evidence that apply to proceedings under the Income Tax Act. Besides, in our considered view, in the peculiar facts of the instant case where the declarant is no more and the legal heir has renegaded from the declaration of the dead person by stating that as per his study of the documents/ books maintained as well as the seized material for the purpose of filing the return in his capacity as legal heir, such transactions had never materialized, and that such admission had been made only to purchase peace as well as avoid litigation, it was incumbent on Assessing Officer to bring independent and corroborative material on record to justify his findings on the basis of which the additions were made . In support of our view that the additions made based solely on rough jottings in seized loose sheets, which jottings have not been explained by assessee, nor has Assessing Officer brought any independence evidence in support of his hypothesis of what they represent and on the basis of which disclosure has been obtained, are not sustainable in the absence of independent, tangible, evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper or loose sheets of paper cannot fall in this category. Nothings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person, who admittedly is a party to the nothings. f) In the case of D.A. Patel v. Dy. CIT [2000] 72 ITD 340 (Mum.) it has been held that simply because a sheet of paper was found during the search at the premises of an assessee, he could not be saddled with a tax liability unless it could conceivably be related to the assessee in some reasonable manner. g) The Hon ble Bombay High Court in case of PCIT V. Umesh Ishrani [2019] 108 taxmann.com 437 (Bombay) held that since the tribunal concluded that entries reflected in loose papers were not corroborated with any other evidence on record, therefore the Tribunal was justified in deleting impugned additions made by revenue. h) As per the order of Mumbai ITAT in case of S.P. Goyal v. Dy. CIT [2002] 82 ITD 85 (Mum.) (TM) : . The loose paper in itself has got no intrinsic value. When it is a mere entry on a loose sheet of paper and if the assessee claims that it was only a planning, not supported by actual cash, then ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s case is on the basis of a mere dumb document and not corroborated by any other evidence and thus, not sustainable. The additions made on the basis of uncorroborated noting and scribbling on loose sheets is accordingly unsustainable and is therefore directed to be deleted. On the basis of the above considered findings, the addition made in respect of each year is dealt accordingly in the ensuing paragraphs. A.Y: 2007-08 Ground No.1 19. In A.Y. 2007-08, the Assessing Officer has made addition of ₹.10,35,59,382/- in respect of negative peak and unaccounted receipts on sale of Bhoslewadi Property based on the seized page no. 1 of Annexure A-1. In view of our findings in paragraphs 16 to 18 of said order, said addition is hereby found unsustainable and is accordingly deleted. Ground no. 1 of the assessee is allowed. Ground No. 2 20. In ground 2, the assessee has assailed the addition of ₹.65,000/- made on the basis of seized material page no. 15 of Annexure A-1 which contained jottings of various amounts totaling to ₹.65,000/-. The Assessing Officer, in the assessment order, made addition of ₹.65,000/- by holding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 17,20,35,681/- made by the Assessing Officer on account of alleged cash interest. Shri Samir Shah, finance broker of Rohan Group was also searched along with the Rohan group. It appears that Samir Shah arranges finance for the Rohan Group. During the course of search at residential premises of Shri Samir Shah, loose page no. 206 of Annexure A-1 was found wherein, the names of various parties were mentioned against the amounts which is related to alleged interest payment in cash to various lenders. The Assessing Officer considered the amounts mentioned in seized page as cash interest paid by Rohan Group and thus, he made addition of ₹ 17,20,35,681/- by relying on the statement of Samir Shah who has admitted that cash interest was given by the Rohan group to the various parties for the period 01/01/2011 to 31/03/2011. Mr.Samir Shah has given the list of such parties to whom cash interest was paid during the F.Y. 2010-11 and he has worked out of the cash interest component allegedly paid by the M/s Rohan Group during this period. The details of such cash interest paid during the period 01/04/2011 to 26/05/2011 is worked to the tune of ₹.17,20,35,681/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now how to use the computer. Therefore, initially I used to maintain, the record of such loans in hand written pages. However, considering the volume of work I could not properly maintain such records and lots of errors and discrepancies erupted in such records. I was not able to maintain proper / accurate / complete records and therefore mainly used to rely on the records maintain by respective parties. Further considering the volume I requested my daughters to help me in maintaining these noting in the computer Since I did not understand how computer works, there are numerous noting which are incomplete, in parts and without any reference. A lot of trial and error was carried by me with the help of my daughters to enable me to maintain proper record of the transactions. In the process lot of incomplete noted records have been generated which were subject to checking / verification which would not make any sense in oration Therefore many of the printouts found and seized from my residence you will note that no names are written, no reference are written and some rough numbers with some rough calculations are mentioned. Few such examples are Annexure A-1 pages, 62-66, 71, 149, 194, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial-and-error exercise and it cannot be correlated with any of the actual transactions that may have been carried out. Further, in response to Q.39, he has admitted that various lenders were demanding higher rate of interest and as a broker, he prepared these proposed workings to present before his clients. Samir Shah has himself admitted that these are merely tentative workings. The AR of assessee has also pointed out that that Assessing Officer has completely ignored this part of the statement given by Samir Shah. Further, it is the submission of the AR that during the course of search, the assessee was also confronted with the statement of Samir Shah and assessee has also denied of any cash payment of interest made by him. The assessee in his statement has explained that Mr. Samir Shah was claiming additional interest citing several reasons including market conditions and there was a dispute between the two of them regarding the same. However, having said so, he admitted that he is making disclosure of ₹ 17.20 crores in order to avoid inconvenience to Samir Shah and to buy peace of mind and avoid litigation. Thus, the Ld AR contented that addition is made by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any cash interest has been received by them. All these documents/statements support the contention of the assessee that the entries mentioned on the seized pages are merely tentative workings of additional interest and there is nothing on record to hold that such workings had materialized and cash payment of interest was actually made. Under the circumstances we are unable to sustain the addition as made. We accordingly direct that the addition of ₹ 17,20,35,681/- made by the Assessing Officer in respect of alleged cash payment of interest be deleted. Ground no. 2 raised by the assessee is allowed. Ground no. 3 33. Ground no. 3 raised by the assessee against the Assessing Officer s action of making addition of ₹ 45,99,142/- on account of alleged cash interest paid the basis of seized material found during the course of search at the residence of Samir Shah. The Assessing Officer alleged that Shivalik Ventures P. Ltd., a Rohan Group company has made cash payment of interest. The Assessing Officer s allegation is similar to the facts discussed while dealing with ground no. 2. 34. During the course of search at the residence of Samir Shah, amongst var ..... X X X X Extracts X X X X X X X X Extracts X X X X
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