TMI Blog2016 (7) TMI 1681X X X X Extracts X X X X X X X X Extracts X X X X ..... USTICE G.R.UDHWANI MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1 RULE SERVED for the Opponent(s) No. 1 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal, the appellant Department has challenged the order dated 27/04/2016 passed by the ITAT in IT (SS) NO.37/RJT/2005 whereby the appeal of the Department came to be dismissed. 2. The short facts of the case are that a search operation under Section 132 of the Income Tax Act was carried out on 24/09/2002 at the residential and business premises of the assessee as well as at the business premises of Ajanta Group. During the search proceedings, it was found that the respondent had received a sum in various names of family members on retirement from various firms of Ajanta Group. The respondent was confronted and based on the statement given, the documentary evidence seized during the search and the statement of the other family members, the AO worked out the unaccounted interest received by the Vallamji Group and the proportionate share of respondent was worked out, which was treated as unaccounted income for the Assessment year 2003 2004. The matter was carried before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne is named as as per account and the other is named as per OM ; The learned AC has alleged that amount shown against the name of your appellant in the set of account as per OM is the unexplained capital of [he assessee. The learned CIT(A) has dealt with this issue in great detail it) his order, the relevant paragraphs of which have been quoted earlier in this order. In paragraph 4.8 of the said order, the CIT(A) has recorded the finding as follows: 4.8. ...It is seen that major disputes were going on amongst various group of Ajanta. There were various groups involved in various business/firms of Ajanta Group. The appellant represents one of such group. Ajanta group was running various business entities. Ajanta Industries was one such business entity. Ajanta Industry was doing business of Roofing Tiles. As a result of disputes, some groups were interested in taking over some business entities whereas, some groups were interested in being separated from business, provided they were paid hondsome amount. Thus all the groups had different interests and way of looking. With these different individual objects in mind every group made calculations that suited them most. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBI v. V. C. Shukla Ors (I998) 3 SCC 4l0 and Chuharmal v CIT (70 CTR 88 (SC)/l72 ITR 250 (SC) has observed It is a settled proposition, as held by various judicial authorities; that rigors of the rule of evidence contained in the Evidence Act are not applicable to income tar proceedings. However, the principles contained in the Evidence Act, incorporated from rules of natural justice forming part of the common law would naturally be applicable to income tax proceedings. It is amply clear that the loose papers and documents cannot possibly be construed as books of accounts regularly kept in the course of business. Such evidence would, therefore, be outside the purview of s.34 of the Evidence Act, 1872. Therefore, the Revenue would not be justified in resting its case on the loose paper and documents found from the residence of a third party even if such documents contain narrations of transactions with the assessee Company. In the case of S.K. Gupta v. DCIT (63 TTJ (Del) 532], addition was made on the basis of loose sheet and torn papers found during raid. No corroborating evidence has been brought on record to show that purchase and sale of properties had actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hird party even if such documents contain narrations of transactions with the assesseeCompany. 7. The matter was thereafter carried by the Department before this High Court by way of filing Tax Appeal No.79 of 2000 and the said Tax Appeal came to be dismissed by oral judgment dated 25/03/2011. The relevant observations made by this Court reads as under: 9. From the facts noted hereinabove, it appears that the submission advanced by the learned advocate for the respondent that the raid had not been conducted on the premises of the respondent assessee is correct. In the circumstances, the question formulated earlier is modified as follows: Whether on the facts disclosed pursuant to the raid conducted on the premises of M/s Gokul Corporation and its partner Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta, the Appellate Tribunal was right in law in deleting the additions of Rs.20 lakhs as well as Rs.25 lakhs made on the basis of statements of Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta for the reasons recorded in Para 12 and 13 of the order of the Tribunal? 10. Mr. K. M. Parikh, learned Standing Counsel appearing on behalf of the appellant, drew the atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in placing reliance upon the said provision in holding that there can be no presumption against the assessee under section 132(4A) of the Act in the facts of the present case. In support of his submission, the learned advocate has placed reliance upon the decision of the Supreme Court in the case of Kishinchand Chellaram v. Commissioner of Income Tax, Bombay City-II, (1980) 125 ITR 713. In the said case the sole question which arose for determination was whether there was any material evidence to justify the findings of the Tribunal that the amount of Rs.1,07,350 said to have been remitted by one Tilokchand from Madras represented the undisclosed income of the assessee. The only evidence on which the Tribunal could rely for the purpose of arriving at this finding was the letter dated February 18, 1955 said to have been addressed by the Manager of the Punjab National Bank Limited to the Income-tax Officer. The Supreme Court, interalia, held that it is true that proceedings under the income-tax law are not governed by the strict rules of evidence and therefore it might be said that even without calling the manager of the bank in evidence to prove the said letter, it could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 132 (4A) of the Act would not be applicable to a third party from whose possession such papers and documents had not been found by the revenue. - The statements recorded at the back of the assessee would not conclude the case against the assessee particularly when the makers of the statements have not been allowed to be interrogated by the assessee. - Shri Suresh Patel and Shri Deepak Patel are brokers and the transactions involving the receipt of on money have been, according to the revenue, arranged through these persons. Mere testimony of these brokers tendered at the back of the assessee would not be sufficient to establish that on money has been received by the assessee. - The document appearing at page 22 of Annexure A-1 shows the payment of Rs.20 lakhs on 20.9.1994 on the cancellation of the Silver Arc Scheme with Gautam Adani. Apparently it is a cancellation of the deal and the amount has been returned to the assessee by Shri Adani. There is nothing on record as to when the money was originally paid. - As per the books of account of the assessee a sum of Rs.25 lakhs has been paid by cheque on 8.5.1995 to Govind C. Patel in respect of Silver Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
