DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, AURANGBAD, AURANGBAD V. SANJAY SUGANCHAND KASLIWAL, AURANGABAD

ITA 1339/PUN/2024

AI Insights

The case involves the Income Tax Department's appeal against the decision of the CIT(A) which had deleted the addition made under section 69D of the Income Tax Act, 1961, concerning a sum of Rs. 8,61,80,284 alleged to be received by the assessee as a cash loan against Hundi from Late Shri Radheshyam Agrawal. The Tribunal examined the merits of the case, including the legal validity of the reassessment proceedings and the nature of the transaction between the assessee and Late Shri Radheshyam Agrawal. The Tribunal found that the addition made by the AO was not justified as the transaction was not a loan but an advance for the purchase of properties, and the reasons for reopening the assessment were flawed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474138 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: CIT vs. Brandix Mauritius Holdings Ltd., IPCA Laboratories Ltd. vs. DCIT, Hindustan Lever Ltd. vs. CIT, Grindwell Norton Ltd. vs. CIT, German Remedies Ltd. vs. DCIT, Aventis Pharma Ltd. vs. ACIT, CIT vs. S. Khader Khan Son, PCIT vs. Nageshwar Enterprises, Shri Ratan Babulal Lath vs. DCIT, Ajay Sharma vs. ACIT, DCIT vs. NIBR Bullion Pvt. Ltd
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH KUMAR SINGH; AGRAWAL
• Assessee Lawyers: VIPUL JOSHI
• Keywords: Business income; Opportunity of being heard; Reassessment proceedings; Corroborative evidences; Unexplained investment; Document seized; Documents seized; Gift; Retraction; Reopening of assessment; Accommodation entries; Loose papers; Assessment record; Initiation of penalty proceedings; Reason to believe; Opportunity of cross examination
• Section: 147; 148; 143(3); 142(1); 119; 201; 251; 48; 153; 131; 43; 22; 69; 133(6); 69C; 13; 73; 133A; 191; 72; 207; 271E; 20; 101

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1339/PUN/2024 Assessment Year : 2015-16 DCIT, Central Circle-1, Aurangabad Vs. Sanjay Suganchand Kasliwal, 215-216, Floor Building No.3, Apna Bazar, Jalna Road, Aurangabad – 431 001 Maharashtra PAN : ACEPK1886A Appellant Respondent C.O. No.31/PUN/2024 (arising out of ITA No.1339/PUN/2024) Assessment Year : 2015-16 Sanjay Suganchand Kasliwal, 215-216, Floor Building No.3, Apna Bazar, Jalna Road, Aurangabad – 431 001 Maharashtra PAN : ACEPK1886A Vs. DCIT, Central Circle-1, Aurangabad Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal filed by the Revenue and Cross Appeal filed by the assessee pertaining to Assessment Year Assessee by : Shri Vipul Joshi, Shri Shubham Rathi and Ms. Dinkle Hariya Revenue by : Shri Manish Kumar Singh Date of hearing : 07.01.2025 Date of pronouncement : 24.03.2025 ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 2 2015-16 and are directed against the order dated 18.04.2024 passed by CIT(A), Pune-12 which in turn is arising out of the Assessment order dated 31.03.2022 passed u/s.143(3) r.w.s.147 of the Act. 2. Brief facts of the case are that the assessee is an individual and is engaged in the business of Builders and Developers and apart from running sole proprietorship concern M/s. Kasliwal Construction, assessee is also a partner in various firms engaged in the same business. The assessee did not file regular return of income for the A.Y. 2015-16 but on 04.10.2017 assessee was issued and served with the notice u/s.148 of the Act. After duly recording the reasons to which necessary compliance was made, all the transactions for the year, i.e. A.Y. 2015-16 were examined by the Assessing Officer along with verification of bank statements and other details submitted by the assessee and the assessment was completed u/s.143(3) r.w.s.147 of the Act on 27.12.2018 assessing income at Nil. Prior to completion of the assessment proceedings u/s.143(3) r.w.s.147 of the Act on 27.12.2018, a survey action was conducted u/s.133A of the Act by ADIT(Investigation), Aurangabad on 24.08.2018 at the office premises of M/s. Raaj Kasliwal and certain loose papers were found and impounded containing 67 pages. These documents included a statement given by the assessee before the police authority in reference to the complaint filed by one Mr. Pankaj Radheshyam Agrawal on 23.06.2017 in Kranti Chowk Police Station, Aurangabad. As per the police complaint, assessee was alleged to have received a sum of Rs.8,61,80,284/- from Late Shri Radheshyam Agrawal during F.Y. 2014-15 towards purchase of immovable properties from assessee/partnership ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 3 firm and the reference was also given to alleged Hundi with Cheque Numbers and the amounts filled in the cheques totalling to Rs.8,61,80,284/-. 3. Based on the police complaint and the statement given by the assessee, when the information was received by the Assessing officer, he again issued notice u/s.148 of the Act on 15.03.2021 to the assessee after recording the reasons alleging that as per the information available and more precisely the statement given by the assessee before the police authorities, it is found that the assessee has taken cash loan from Late Shri Radheshyam Agrawal against Hundi. When the assessee was asked to give the reply as to why the alleged sum should not be added u/s.69D of the Act, the assessee vide letter dated 08.03.2022 stated that the alleged advance was agreed to be given against sale of immovable properties and the same would be in the nature of business receipt and it is not a loan or advance against Hundi. In this reply, the assessee attached the copy of FIR recorded by the police authorities at the request of Mr. Pankaj Radheshyam Agrawal where also Mr. Pankaj Radheshyam Agrawal has stated that alleged sum has been given as advance towards sale of immovable properties and it was nowhere admitted that it is a cash loan given to the assessee against Hundi. The reply by the assessee was not tenable to the ld. AO and he again raised show cause notice dated 12.03.2022 levelling the same allegation as to why not section 69D be invoked for cash loan against Hundi followed by initiation of penalty proceedings u/s.271D and 271E of the Act. Again, the assessee filed reply on 14.03.2022 and stated that the statement given by him before the police authorities was under ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 4 coercion, threat and undue pressure and even that statement was not signed and thus he denied the contents of his statement recorded by the police authorities. It was also stated that Mr. Pankaj Radheshyam Agrawal has filed a Criminal Complaint FIR No.0598 dated 23.06.2017 alleging that during the period 27.09.2014 to 27.11.2014 assessee has taken the amount of Rs.8,61,80,284/- from Late Shri Radheshyam Agrawal out of which Rs.4.50 crore was paid against sale of flats, row houses etc. in the Marvel Project and remaining amount was paid against some immovable properties at Paithan Road, Aurangabad. In the statement, it was also stated that no such huge cash was deposited in his bank account nor there is purchase of any land or other asset in cash which could corroborate the receipt of such a huge amount. Further it was requested that to verify the veracity of the claim made by Mr. Pankaj Radheshyam Agrawal before the police authorities the Assessing Officer should call for the income-tax return, financial statements, books of account and other details of Mr. Pankaj Radheshyam Agrawal and his father about the source of cash available with them in their books and the proof of the said cash being given to the assessee. However, the reply of the assessee did not find any merit in the view of the Assessing Officer and he concluded the reassessment proceedings observing that the assessee has taken loan against Hundi and thus invoked section 69D of the Act and made addition of the alleged sum and assessed the income at Rs.8,61,80,284/-. 4. Aggrieved assessee preferred appeal before the ld.CIT(A) and apart from challenging the grounds on merit, the assessee challenged the validity of the reassessment proceedings on the ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 5 ground that no actual reasons recorded were supplied; reasons were based on wrong assumption of facts; no proper sanction u/s.151 of the Act; conditions of the first proviso to section 147 were not fulfilled; there was no ‘reason to believe’ within the meaning of section 147 of the Act and also the assessment order did not contain Document Identification Number. 5. So far as the merits of the case are concerned, it was stated that no such sum was received by the assessee from anybody during the year and without prejudice no such money was received within the meaning of section 69D of the Act and without further prejudice that no such money was borrowed by the assessee in his individual capacity. It was also submitted that the statement given before the police authorities is not an admissible evidence as per the provisions of section 25 of the Indian Evidence Act, 1872 and therefore the sole reliance placed by the Assessing Officer on the said statement is not in accordance with law. 6. So far as the Hundis and Cheques are concerned, it was stated that the asessee was having good relations with late Shri Radheshyam Agrawal. There were some investment plans of Shri Radheshyam Agrawal in the immovable properties and as a security the assessee gave the cheques and the promissory notes but the promissory notes were not filled in. Thereafter, Shri Radheshyam Agrawal was suffering from acute illness and whatever deals he initiated for purchase of the immovable properties were also cancelled and even he received back the stamp duty amount. The assessee requested Shri Radheshyam Agrawal to give back the promissory notes and blank Cheques. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 6 It was stated by Shri Radheshyam Agrawal that they were misplaced and will be given as and when they are found but subsequently Shri Radheshyam Agrawal died on 03.03.2015. At the later stage, the cheques and the promissory notes given in good faith by the assessee to Late Radheshyam Agrawal were used by Shri Pankaj Radheshyam Agrawal alleging that the assessee received the alleged sum for sale of immovable properties and the said action has not been carried out by the assessee and therefore went before the police authorities for getting the immovable properties transferring in his name against the alleged sum given as advance. 7. The ld.CIT(A) called for the remand report from the Assessing Officer on various issues mainly regarding the proper sanction u/s.151 of the Act, supply of correct reasons recorded, DIN not mentioned on the body of the assessment order and after duly considering the comments of the assessee ld.CIT(A) finally dismissed all the legal grounds. So far as the merits of the case are concerned, the ld.CIT(A) after elaborately discussing the submissions of the assessee as well as the complaint given by Shri Pankaj Radheshyam Agrawal and the statement recorded by the assessee before the police authorities as well as during the course of survey finally came to conclusion that the statement recorded by the police authorities is not an admissible evidence as per the provisions of section 25 of the Indian Evidence Act, 1872 and that the Assessing Officer did not bring any cogent material on record to prove that the assessee has accepted the cash loan against Hundi giving rise to invocation of the provisions of section 69D of the Act and further held that the ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 7 transaction between the assessee and late Shri Radheshyam Agrawal was in the nature of a business transaction. 8. Aggrieved Revenue is now in appeal before the Tribunal challenging the finding of the ld.CIT(A) deleting the addition on merits by raising the following grounds : “1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts by deleting the addition made as per provisions of section 69D of the 1.T. Act of Rs 8,61,80,284/- on account of cash received as Hundis as per documents found during the course of survey action. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in ignoring the fact that the AO had in his possession credible evidence in the form of loose paper documents impounded during the course of survey u/s.133A of the Act which indicated that the assessee had actually taken a loan of Rs. 8,61,80,284/- during the F.Y. 2014-15 and given blank cheque and hundis against the loan, before arriving at a conclusion that AO did not bring any cogent material to prove that assessee has accepted cash. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law and in facts by not appreciating the facts that the then AO had brought all the facts on record such as copy of FIR, Statement recorded of the assessee during the course of survey & statement given by the assessee to Police Authorities which proved that the amount received by assessee is nothing but the Hundi and is liable to be taxed as per section 69D of the I.T. Act, 1961. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and in facts by not appreciating the fact that the assessee himself accepted vide question No.12 & 13 in his statement recorded during the course of survey action that he himself had approached Shri Radhesham Agrawal for loan and had given signed blank hundis and blank cheques as security which corroborates with statement given by the assessee before Police authorities. 5. The appellant craves leave to add, alter, modify, delete and amend any of the grounds as per the circumstances of the case.” 9. On the other hand, the assessee has raised the following grounds of appeal in its Cross Objection challenging the validity of the reassessment proceedings on account of various reasons as mentioned in the grounds of appeal : ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 8 “1. CHALLENGE TO THE INITIATION OF REASSESSMENT PROCEEDINGS 1.1 The Learned Commissioner of Income Tax (Appeals) [\"the Ld. CIT(A)) has erred in affirming the jurisdiction of the Ld. AO to initiate the reassessment proceedings. 1.2 The Ld. CIT(A) erred in affirming the action of the Ld. AO despite pre-conditions required for initiating the reassessment proceedings has not been fulfilled. 1.3 In the facts and circumstances of the case and in law, the initiation of reassessment proceedings in the present case is bad in law and therefore the notice issued u/s 148 deserves to be quashed. WITHOUT PREJUDICE TO THE ABOVE 2. THE ASSESSMENT ORDER OASSED IN VIOLATION TO CIRCULAR NO. 19/2019 DATED 14.08.2019 2.1 The Ld. CIT(A) has erred in affirming the legality of the assessment order, demand notice u/s 156 passed by the Ld. AO which is contrary to the CBDT Circular No. 19 /2019 dated 14.08.2019. 2.2 In the facts and circumstances of the case and in law, the assessment order passed deserves to be quashed. 3. LIBERTY The Appellant craves leave to add, alter, amend, delete or substitute any of the above grounds of appeal.” 10. Since legal issues have been raised by the assessee in the Cross Objection, we will first take up the legal issues and then while dealing with the Revenue’s appeal we will deal with the merits of the case. Summarily, the legal issues raised by the assessee in the Cross Objection read as under : “A. The reassessment is bad, illegal and without jurisdiction, as the following conditions necessary for initiation as well as completion thereof were not fulfilled: 1. No actual reasons were supplied to the Assessee. 2. The reasons were based on wrong assumption of facts. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 9 3. The condition of the first proviso to section 147 of the Act was not fulfilled. 4. There was no \"reason to believe\" within the meaning of sec. 147 of the Act. 5. No proper sanction in terms of section 151 of the Act was obtained. B. The assessment order is bad in law as the same was passed without valid DIN.” 11. So far as the issue of validity of the assessment order without mentioning Document Identification Number (DIN) is concerned, the assessee has made reference to CBDT Instruction No.19/2019, dated 14.08.2019 which has been issued stating that it is mandatory to quote DIN of all communications issued by any income-tax authority regarding assessments or appeal. Admittedly, the assessment order in question has been framed on 31.03.2022 and on the very same date, the intimation letter has been issued for the order u/s.143(3) r.w.s.147 of the Act on 31.03.2022 having DIN No.ITBA/AST/M/147/2021-22/ 1042354895(1). The assessee has referred to various judgments in support of its contention that mentioning of DIN in the body of the assessment order is mandatory. We however considering the fact that the issue of DIN has reached for adjudication before the Hon’ble Apex Court and recently the Hon’ble Apex Court stayed the order of Hon’ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. (2023) 149 taxmann.com 238/456 ITR 34 (Delhi)/293 taxmann 385 and Hon’ble Apex Court has observed that not mentioning of DIN in the assessment order may be an irregularity but does not make it an illegality and that quashing the assessment orders that did not contain the DIN is “of serious or consequence”. However, since the matter is subjudice before the Hon’ble Apex Court for the ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 10 hearing on the issue of DIN, we refrain from adjudicating this ground. If the outcome of the judgment of the Hon’ble Apex Court is in favour of the assessee, then the assessee would be at liberty to file a Miscellaneous Application for adjudicating this ground. 12. So far as the remaining legal issues are concerned, arguments of the assessee along with placing reliance on various judicial pronouncements read as under : Sr.No. Proposition Facts Judicial Precedents 3.1.1 The assessment order passed without supplying the actual reasons recorded for reopening of the assessment vitiates the entire reassessment proceeding. (Abridged reasons supplied during the assessment proceeding or the actual reasons supplied after the assessment order is passed does not mitigate the jurisdictional defect) (i) There appears to be two sets of reasons, one provided to SK along with the communication dated 27.01.2022 and the other, which was given at the time of remand proceeding (Refer 159 to 161 of the OPB). This gets evident from the following differentiations: Sr.No. Purported reasons supplied in the annexure to notice dated 27.01.2022 Actual reasons supplied along with the approval attached to the Remand Report a. Undated Date of recording of reasons not mentioned Dated Reasons recorded on 05.02.2021 b. Name of the officer recording the reasons Not mentioned Name of the officer recording the reasons Not mentioned c. Signature of the officer recording the reasons Signature of the officer recording the reasons (i) CIT v. Videsh Sanchar Nigam Limited (Bom)] [(2012) 340 ITR 66 (ii) CIT v. Trend Electronics - [(2015) 379 ITR 456 (Bom)] (iii) PCIT v. Shodiman Investments P. Ltd. [(2018) 93 taxmann.com 153 (Bom)] (iv) CIT v. IDBI Ltd. [(2016) 76 taxmann.com 227 (Bom)] (v)PCIT v. Hexaware Technologies Ltd.((2020) 191 DTR 73 (Bom)] (vi) PCIT v. V. Ramaiah - [(2019) 103 taxmann.com 201 (Kar)] ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 11 Not signed Signed by Mr. Vijay Netke d. Para 5 Last para of para 5 of the reasons supplied along with Remand Report not part of this reasons Para 5 Last para of Para 5 of the reasons recorded dated 05.02.2021 not part of the reasons supplied earlier (ii) Therefore, the purported reasons provided on 27.01.2022 were not the correct reasons, and, therefore, SK was not supplied the reasons during assessment proceeding, in the eyes of law. (iii) Therefore, the averments at Para 2.1 of the Remand Report depict non - application of mind. (iv) The CIT (A) admits that the purported reasons provided to SK during the assessment proceeding were not the actual reasons recorded for reopening of the assessment. (v) The CIT (A) further admits that the contents of the purported reasons provided to SK during the assessment proceeding and the actual reasons recorded are similar (and not identical). 3.1.2 The validity of the approval u/s. 151 of the Act is in doubt and, in any, is granted mechanically and without application of mind. (i) The sanction of PCIT (Central), Pune dated 04.03.2021, as available in the ITBA system, was not a valid approval. This is because, it was not obtained from the authority provided u/s. 151 of the Act. The notice u/s. 148 of the Act also mentioned PCIT (Central), Pune as the sanctioning authority. (ii) However, a copy of the sanction of PCIT(Central), Nagpur was supplied as Annexure -'2', along with the Remand Report, which was different from. This is different from a copy of the sanction provided during the assessment proceeding. (i) Chhugmal Rajpal v. S. P. Chaliha - [(1971) 79 ITR 603 (SC)] (ii) German Remedies Ltd. v. DCIT -[(2006) 287 ITR 494 (Bom)) (iii) CIT v. Suman Waman Chaudhary - [(2010) 321 ITR 495 (Bom)] (iv)Sharvah Multitrade Company P. Ltd. V. ITO - [(2022) 134 taxmann.com 134 ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 12 (iii) This approval of PCIT(Central), Nagpur was obtained manually and (v) is not system generated. Therefore, no trail of this manual approval is available in the ITBA system. (iv) The A.O. as well as the CIT (A) are completely silent on the aspect - (vi why the sanctioning authority mentioned in the notice u/s. 148 of the Act is PCIT (Central), Pune, if the correct sanctioning authority to the admission of both the authorities was PCIT(Central), Nagpur. (v) Thus, issuance of the notice u/s. 148 of the Act with the approval of the wrong sanctioning authority vitiates the reassessment proceeding. (vi) In any case, the approval was granted mechanically and without application of mind. (vii) It is a well settled legal position that the notice issued u/s. 148 without obtaining appropriate sanction of the concerned authority u/s. 151 of the Act is invalid. Consequently, it makes the entire re-assessment proceedings u/s. 147 bad in law. Further, while according sanction u/s. 151 of the Act, due application of mind on the part of the sanctioning authority is also must. (Bom)] (v) Nirmal Bang Securities P. Ltd. v. ACT-[W.P. No. 671 of 2022, Order dated 08.02.2022 (Bom HC)] (vi) United Electrical Co. P. Ltd. v. CIT - [(2002) 258 ITR 317 (Del)] 3.1.3 The reasons are recorded on the basis of incorrect facts and, therefore, the very initiation of the reassessment proceeding is (bad in law and illegal. (i) It is now a well settled legal position that initiation of reassessment proceeding based on wrong fact or wrong application of law is bad in law, void and without jurisdiction. (ii)In the present case, the reasons recorded for reopening were based on erroneous facts / non existent facts / erroneous assumption or (iii) interpretation of the actual facts/non-consideration of the actual facts. Some of such aspects are as under. a. The reasons recorded stated the wrong fact that the FIR filed against (iv) SK by PRA was that RA had given loan to SK (i) Giriraj Enterprises v. CIT-[(2019) 102 taxmann.com 188 (Bom)] (ii) Ankita A. Choksey v. ITO-[(2019) 411 ITR 207 (Bom)] (iii) Dr. Ajit Gupta v. CIT [W.P. No. 924 of 2014, Order dated 03.03.2016] (iv)Sagar Enterprises v. ACIT-[(2002) 257 ITR 335 (Guj)] (v)vCIT v. Man Mohan Das-[(1996) 218 ITR 730 (Guj)) ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 13 (Ex-facie, the FIR says otherwise, as has been the consistent case of (v) PRA himself, that the money was not given on loan but towards purchased properties). b. Further, wrong averment in the reasons recorded that as per the FIR, it was clear that SK had accepted cash loan and repaid the same. (As is self-evident, the charge in the FIR was opposite. Neither there was cash loan nor there was any repayment). c. The A.O. did not consider SK's statement recorded u/s. 131 of the Act, while recording reasons, despite having on record. Only a very cursory reference to the Statement of PRA w/s. 131 of the Act by the DDIT(Inv), as the reasons were in contradiction / inconsistent with the statement of PRA so recorded by the A.O. himself. d. Admittedly, no enquiry was made. However, it is claimed that 'due diligence' was made, without mentioning what and how. e. The sole basis of the addition was the unsigned typed Statement of SK recorded before the Police, the reference was of which was not even part of the Charge Sheet. 3.1.4 The reopening of assessment beyond four years from the end of the relevant assessment year, in the absence of any failure on the part of the assessee to fully and truly disclose all material facts, is bad in law and illegal The premise of the formation of reason to believe was based on erroneous and misleading facts. All the documents consistently proved that the dispute between SK and PRA is regarding acceptance or non- acceptance of advance (ii) against the investment in properties and not regarding cash loan on hundi. In any case, SK had denied having received any cash against any investment in properties. Therefore, there was no question of recording any entry in the books of accounts or declaring income in the return of income. Therefore, there was no failure on the part of SK to fully and truly disclose any material facts. It is a well-settled legal position that no reassessment can be made unless the alleged escapement of income is due to failure on the part (i) IPCA Laboratories Ltd. v. DCIT - [(2001) 251 ITR 416 (Bom)] (ii) Hindustan Lever Ltd. v. CIT [(2004) 268 ITR 339 (Bom)] (iii) Grindwell Norton Ltd. v. CIT - [(2004) 267 ITR 673 (Bom)] (iv) German Remedies Ltd. v. DCIT – [(2006) 287 ITR 494 (Bom)] (v) Aventis Pharma Ltd. v. ACIT - [(2014) 368 ITR 498 (Bom)] ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 14 of the assessee to disclose fully and duly all material facts necessary for its assessment. 3.2.1 (i) CBDT Circular No. 19/2019 dated 14/08/2019 makes it mandatory to quote DIN on all communications issued by any income tax authority regarding assessments or appeals. (ii) Any communication initiated without DIN is declared to be invalid and never to have been issued by the CBDT. (iii) Paras 2 and 4 of such order has been reproduced ( herewith- \"2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as \"the Act\"), has decided that no communication shall be issued by any income- tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty. prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. 3... 4. Any communication which is not in conformity with Para-2 (i) The assessment order was passed as well as demand notice was issued manually, without mentioning DIN in the body of the order/notice. (ii) It was only through an intimation that the so-called DIN was communicated to SK in manual form, while the said intimation document itself did not have DIN. [Ref: 98 to 100 of OPB] (iii) No exceptional circumstances pointed out by A.O. to pass the order/issue demand notice manually. iv) Therefore, the assessment order as well as demand notice passed/issued in violation of Circular No. 19 / 2019 dated 14.08.2019, is bad in law and illegal. (i) Hexaware Technologies Ltd. v. ACIT-[(2024) 162 taxmann.com 225 (Bombay)] (ii) CIT (IT) v. Brandix Mauritius Holdings Ltd. - [(2023) 456 ITR 34 (Delhi)J (iii) Ankit Jain v. DCIT-[(2023)] 155 taxmann.com 321 (Delhi - Trib.)] (iv) PCIT v. Tata Medical Centre Trust [(2023)] 154 taxmann.com 600 (Calcutta)] (v) DCIT v. Ragova Developers & Auto Services (P.) Ltd. - [(2023) 156 taxmann.com 11 (Hyderabad - Trib.)] (vi) SPS Structures Ltd. v. DCIT [2023] 157 taxmann.com 674 (Chandigarh - Trib.)] ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 15 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued.\" 13. On the other hand, ld. Departmental Representative vehemently argued supporting the order of the Assessing Officer and also stated that in the statement given before the police authorities the assessee has specifically accepted to have received the sum against Hundis and also the cheques given by the assessee supports the statement and these were material information which were sufficient enough to carry out the reassessment proceedings by issuance of notice u/s.148 of the Act and further stated that proper approval u/s.151 of the Act has been taken and therefore reassessment proceedings are valid and not liable to be quashed. In support of contentions of Revenue, ld. Departmental Representative further referred to the following written submissions : “Subject – Written submission in the above case. 1. Brief facts of the case : The assessee is an individual and a proprietor engaged in the business of builders and developers. He is one of the partners in various firms engaged in the same business. He is also proprietor of M/s Kasliwal Construction. A Survey action u/s 133A of the 1.T.Act, 1961 was carried out by the ADIT(Inv.), Aurangabad on 24/08/2018 at the office premise of M/s Raaj Kasliwal at 215-216, Apna Bazar, Jalna Road, Aurangabad. During the course of survey proceedings some loose papers documents were impounded as Annexure-'A' containing total pages 1 to 67. The loose papers numbered at page number 54 to 56 are a copy of the statement given by Shri Sanjay Suganchand Kasliwal before the Police against the complaint filed by Shri Pankaj Radheshyam Agrawal on 23/06/2017 in Kranti Chowk Police Station, Aurangabad. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 16 On perusal of the statement, it is observed that the assessee Shri Sanjay Suganchand Kasliwal has accepted that he had taken cash loans against hundi from father of Shri Pankaj R. Agrawal ie Shri Radheshyam Agrawal to the tune of Rs.8,61,80,284/ on different dates during financial year 2014-15. The statement contains details of 15 Hundis and 15 post dated cheques of different amounts and different dates totaling to Rs.8,61,80,284/-. During the course of post survey enquiries, this issue of cash loan against Hundi was confronted to the assessee in a statement recorded u/s 131(1) of the IT Act, 1961 on 12.11.2018. In reply to question no. 12 of the said statement, the assessee has accepted that he has issued these Hundis and post dated cheques. However, he has denied that he has received any cash loans against these Hundis. Relevant portion of the statement is a part of the assessment order (page no. 22 & 23)( Statement is attached in paper book at page no. 5). During the post survey enquiry, statement u/s.131(1) of the complainant Shri Pankaj Radheshyam Agarwal was also recorded on 02.11.2018. Shri Pankaj Agarwal in reply to question no. 7 has stated that he has made advance payment of Rs.8,61,80,284/- for purchase of row houses and twin bungalows from Shri Sanjay Kasliwal. He has accepted that Hundis and post dated cheques were kept as security (Statement is attached in paper book at page no. 10). From the above it emerges that the assessee received cash loans against Hundis and post dated cheques. The understanding between the assessee, Shri Pankaj Agarwal and his father was that these cash loans would be adjusted in the investment in row houses and bungalows being developed by the assessee at a later state. It is clear that at the time when the hundis were issued the nature of the transaction was that of cash loan only. Based on the above facts the assessment was completed and addition of Rs.8,61,80,284/- was made u/s 69D of the IT Act, 1961 as the assessee had borrowed the said amount on hundi in cash. Aggrieved by the assessment order the assessee filed appeal before the CIT(A). The Ld. CIT(A) has deleted the entire addition and held that the addition cannot be sustained as the amount received was not a hundi loan but an advance against the investment in property. The Ld. CIT(A) has deleted the addition only on the basis of the nature of the transaction. In this regard it is submitted that the assessee has issued 15 Hundis and 15 post dated cheques under his own name and signature in favour of Shri Radheyshyam R. Agarwal who is the father of the complainant. The assessee has nowhere denied that he has not issued these hundis and post dated cheques. In the statement before the police authorities he has stated that he received loan on interest against these hundis and he has repaid the loan. Therefore, there is no outstanding amount to be paid to Mr. Pankaj Agarwal. However, before ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 17 the Income Tax Authorities the assessee has stated that he never received any loan and has given the hundis and post dated cheques in anticipation of loan. This is clearly a contradictory statement and it is self serving and an afterthought. As regards the nature of transaction it is clear that the amount has been received by the assessee against hundi. Therefore, at the time of the transaction it is clearly an amount which is borrowed on a hundi and is clearly hit by the provisions of section 69D of the IT Act, 1961. The Ld. CIT(A) has also relied on the fact that the statement recorded by the police authorities is not admissible evidence as per the provisions of section 25 of the Indian Evidence Act, 1872. In this regard it is submitted that the addition has not been made solely on the basis of statement. There are strong corroborative evidence in the form of physical hundis and post dated cheques under the name & signature of the assessee Shri Sanjay Kasliwal in favour of Shri Radheyshyam Agarwal. The Ld. CIT(A) has erred in holding that the AO did not bring any cogent material on record to prove that the appellant has accepted cash loan against hundi in violation of provisions of section 69D. The hundis and the post dated cheques are clear evidence that loan has been accepted by the assessee. The assessee himself accepted in the statement before the police that he received cash loans against these hundis. In view of the above, it is humbly prayed that the addition made by the AO may kindly be confirmed.” 14. We have heard the rival contentions and perused the record placed before us and carefully gone through the decisions referred and relied on by the ld. Counsel for the assessee. Validity of the reassessment proceedings has been challenged on various legal grounds. The assessee case was reopened for assessment by recording following reasons : **Reason for re-opening of assessment in the case of Shri Sanjay Suganchand Kasliwal for AY 2015-16 under section 147 of the Income Tax Act, 1961. 1. Brief Details of Assessee: The assessee Shri Sanjay Suganchand Kasliwal is engaged in the business of builders and developers. He is one of a partners in various firms engaged in the same business and derive income from interest and shares of profit of the firms. He is also a proprietor of M/s Kasliwal Construction, which is also engaged in same business. For the year under consideration a notice u/s 148 was issued on 04/10/2017 to the assessee after recording the reason by ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 18 the then ACIT, Circle-3, Aurangabad as the assessee had not filed his return of income. Accordingly, assessment has been completed u/s 143(3) r.w.s 147 of the Act on 27/12/2018 assessing total income at Rs. nil. 2. Brief details of information received: A Survey action u/s 133A of the I.T.Act, 1961 was carried out by the ADIT(Inv.), Aurangabad on 24/08/2018 at the office premise of M/s RaajKasliwal at 215-216, Apna Bazar, Jalna Road, Aurangabad. During the course of survey proceedings some loose papers documents have been impounded as Annexure-'A' containing total pages 1 to 67. The loose papers numbered at page number 54 to 56 are a copy of the statement given by Shri Sanjay Suganchand Kasliwal before the Police against the complaint filed by Shri Pankaj Radheshyam Agrawal on 23/06/2017 in Kranti Chowk Police Station, Aurangabad. On perusal of the statement it is seen that Shri Sanjay Suganchand Kasliwal had taken loan against hundi from father of Shri Pankaj R. Agrawal Shri Radheshyam Agrawal to the tune of Rs. 8,61,80,284/- on different dated during financial year 2014-15 and on behalf of this amount Hundis issued to Shri Pankaj R. Agrawal by Shri Sanjay Suganchand Kasliwal. 3. Analysis of information collected/received: On verification of documents available with this office, it is seen that Shri. Pankaj Radheshyam Agarwal has filed an FIR against Mr. Sanjay Kasliwal on the issue that Mr. Sanjay Kasliwal has taken loan from his father to the tune of Rs. 8.61 crore but he has failed to repay it. On the contrary, Sanjay Kasliwal as per page no. 54 to 56 of impounded loose paper bundle accepts that he took the cash loan against hundi but he has repaid the same. In this regard Statement of Mr. Pankaj Radheshyam Agarwal was recorded u/s 131 by Office of DDIT(Inv.) Aurangabad. In the statement Pankaj Agarwal has stated that the amount of Rs. 8.61 crore was advanced to Sanjay Kasliwal for purchase of residential units from Sanjay Kasliwal. Further, Pankaj Agarwal has stated that Hundi's original have been submitted to the police by him. The page no. 54 to 56 of impounded lose paper bundle once read in the context of copy of FIR filed before police by Pankaj Agarwal and statement of Pankaj Agarwal u/s 131 of IT Act it is clear that Sanjay Kasliwal has accepted cash loan and repaid the same in cash. 4. Enquiries made by AO as sequel to information collected/received: On perusal of documents impounded during survey proceedings, which are possession with this office and material available with this office it is seen that assessee has taken hundi loan from father of Shri Pankaj R. Agrawal and repaid the same to the tune of Rs.8,61,80,284/- as per impounded material. 5. Finding of the AO: On the basis of documents in possession and statement recorded of Shri Sanjay Kasliwal and findings provided by investigation wing and due diligence thereof from the records, it is found that assessee has borrowed amounting to Rs. 8,61,80,284/-on ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 19 hundies and such amount is liable to taxed under the I.T. Act., However, the assessee has not offered the same for taxation in his income tax return. The provision of 69D of the Act is reproduced as under. \"69D. Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount wasborrowed or repaid, as the case may be: Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation. For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.\" In view of the above, this office has also examined the facts of the case independently and it is found that, there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment for the year under consideration. Therefore, I have reason to believe that the income chargeable to tax under the provisions has escaped assessment to the extent of Rs. 8,61,80,284/-. 6. Basis of forming reason to believe and details of escapement of income: In this case assessee was a non-filer for the year under consideration and assessment has been completed u/s 143 r.w.s 147 of the Act on 27/12/2018. This fact of acceptance and repayment of cash loan against hundi was not brought before the AO during earlier assessment proceedings. Accordingly, there is failure on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment for the year under consideration hence, is reason to believe that income to the extent of Rs. 8.61 crore has escaped assessment for AY 2015-16. Accordingly, reason to believe has been recorded. 7. Details of escapement of income chargeable to tax in relation to any asset located outside India : Not acceptable. 8. Applicability of provisions of section 147/151 to the facts of the case: In this case, assessee was a non-filer for the year under consideration and assessment has been completed u/s 143(3) r.w.s 147 of the Act. Since 04 years from the end of the AY has expired in this case, the requirement to initiate proceedings u/s 147 of the Act are ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 20 reason to believe that the income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the AY under consideration. It is pertinent to mention here that the reasons to believe that income has escaped assessment for the AY under consideration have been recorded above. I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the following material facts necessary for his assessment for the year under consideration. It is evident from the above facts that the assessee had not fully and truly disclosed material facts necessary for its assessment for the year under consideration thereby necessitating re-opening u/s 147 of the Act. It is true that the assessee has filed a copy of profit and loss account and balance sheet along with return of income where various other information/material were also disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, profit and loss account and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be disclosed by the AO and could not have been discovered except with due diligence, accordingly attracting provisions of explanation 1 of section 147 of the Act. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence, necessary sanction/approval to issue notice u/s 148 is required from the Pr. Commissioner of Income-tax(Central), Nagpur as per the provisions of section 151 of the Act.” 15. Now the reopening is beyond four years and proviso to section 147 clearly provides that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return u/s.139 or in response to a notice issued under sub-section (1) or section 142 or section 148 had to disclose fully and truly all ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 21 material facts necessary for his assessment for that assessment year. We note that the assessee though did not file the return of income but has been served with the notice u/s.148 of the Act during the year 2017 and after carrying out the detailed scrutiny proceedings where also one of the reason of reopening was that there were certain cash deposits/time deposits and sale of immovable properties during the year under consideration. The assessee duly replied to the notice issued by ld. AO and also explained the source of cash deposits and other transactions to the utmost satisfaction of the AO and the assessment order was passed accepting the return of income, i.e. loss declared at Rs.2,07,72,322/-. These facts prove that the assesse’s books of account including financial statements were properly scrutinised and whatever issue for which the assessment was reopened, assessee satisfied the AO with the source of cash deposits and other transactions referred in the reasons recorded. Now before the conclusion of the assessment proceedings on 27.12.2018 survey action took place in one Tapadia group and survey proceedings were also carried out u/s.133A at the office of M/s. Raaj Kasliwal who is partner of the assessee. In the survey action, certain unsigned typed statements mentioning that assessee has received alleged sum from Late Radheshyam Agrawal against Hundi and blank cheques given as security were found which seems to be kept ready by the police authorities for assessee’s signature which the assessee allegedly refused to sign but then on 12.11.2018 the statement of the assessee was again recorded u/s.131 of the Act by the Revenue authorities where he strongly denied of receiving any money from Late Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal and ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 22 stated that the cheques were given blank but in case the assessee had taken the loan against Hundi and has not repaid why these cheques were not lodged in the bank. It was also stated in the statement that these alleged Hundis and Cheques were demanded back from Shri Radheshyam Agrawal because no transaction of sale of immovable property took place and Shri Radheshyam Agrawal stated that they were misplaced and assured that they will not be misused. It was also stated that the statement given before the police authorities was given under immense pressure and the copy found with M/s. Raaj Kasliwal was unsigned. 16. We further note that in the complaint lodged by Shri Pankaj Radheshyam Agrawal to the police authorities, the allegation was regarding payment of advances against immovable properties. It was never the allegation that assessee took cash loan from Shri Radheshyam Agrawal against Hundi. Now inspite of having recorded the statement of the assessee u/s.131 and there being no proof of any cash loan taken by the assessee from Shri Radheshyam Agrawal in the complaint filed by Shri Pankaj Radheshyam Agrawal and also that the AO while carrying out the first round of reassessment proceedings was not aware about the survey proceedings also creates a doubt about the correctness of reasons recorded and the independent application of mind by ld. AO. But the fact remain that after the conclusion of the survey proceedings, first round of reassessment proceedings concluded on 27.12.2018 and no addition was made in the hands of assesssee. It means that till that date, no information was available with the AO about the ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 23 alleged transaction of assessee having taken loan from Shri Radheshyam Agrawal. 17. Now turning to the reasons recorded for the second round of reassessment proceedings, ld. AO should have taken note of the fact that this is not a general enquiry but it is a case where first round of assessment proceedings have been carried out u/s143(3) r.w.s.147 of the Act and now to again assess the income of the assessee by serving with the notice u/s.148 of the Act for carrying out the reassessment proceedings there should be some material information which the assessee has not disclosed in his regular return or any information which could prove that income has escaped assessment. However, ld. AO has straight away taken the basis of the statement of the assessee given before the police authorities and without even making further enquiry from the complaint given by Shri Pankaj Radheshyam Agrawal about the source of cash available with him or his father Shri Radheshyam Agrawal for giving alleged loan to the assessee. Further, ld. AO also did not consider the fact that there is no allegation of cash loan given by Shri Radheshyam Agrawal to the assessee but it is claimed to be purely a business transaction for purchase of immovable property. However, ld. AO brushing aside all these facts and without making proper application of mind and no proper reason to believe, proceeded ahead to again assess the income of the assessee which already stood assessed u/s.143(3) r.w.s.147 of the Act and that too for no failure on the part of the assessee to fully and truly disclose all material facts and proceeded for issuing notice u/s.148 of the Act based on wrong inference drawn from the statement of the assessee before the police ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 24 authorities allegedly given under immense pressure and coercion. Since all the documents consistently prove that the dispute between the assessee and Shri Pankaj Radheshyam Agrawal is regarding the acceptance or non-acceptance of advance against investment in immovable properties and not regarding cash loan against Hundi. We find that the reason to believe are based on erroneous and misleading facts and the reassessment proceedings are illegal and bad in law. 18. We find support from the judgment of Hon’ble Bombay High Court in the case of IPCA Laboratories Ltd. vs. DCIT (2001) 251 ITR 416 (Bom) where the reasons did not spell out on the part of the assessee to disclose fully and truly all material facts, therefore, deeming provision in Explanation 2 to section 147 had no application to the facts of the case. In the case of Hindustan Lever Ltd. vs.CIT (2004) 268 ITR 339 (Bom.) it was held that disclosure of reasons would make it clear that no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for that assessment year had been alleged and as such the notice was hit by the proviso to section 147 and the same being beyond the period of four years from the end of the assessment year was unsustainable in law. Further in the case of Grindwell Norton Ltd. vs. CIT (20024 247 ITR 673 (Bom) it was held that nowhere in the reasons recorded by the AO it was stated that there was failure on the part of the assessee to disclose material facts in the return of income filed by the assessee. Similar view was also taken in the case of German Remedies Ltd. vs. DCIT (2006) 287 ITR 494 (Bom.) where it was held that while granting approval it was obligatory on part of Commissioner to verify whether there was any failure on the ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 25 part of the assessee to disclose full and true facts in the return of income. Similarly in the case of Aventis Pharma Ltd. Vs. ACIT (2014) 368 ITR 498 (Bom.) the Hon’ble Jurisdictional High Court held that the while admittedly the reopening carried out after four years there was no facts which would indicate failure on the part of the assessee to submit truly and fully all material facts. 19. In the light of the above judgments and also considering the facts of the case, we find that in the instant case firstly ld. AO has not mentioned any failure of the assessee of not disclosing the material facts truly and fully in its income-tax return because there is no transaction reported by the assessee which were not disclosed by the assessee in the books of account. There was no documents except the statement of the assessee that too unsigned by the assessee before the police authorities and further the contentions were denied in the statement recorded u/s.131 of the Act. There was no cross examination of Shri Pankaj Radheshyam Agrawal who has filed the complaint and ld. AO has only considered the contents of the statement given before the police as gospel truth. Ld. AO even failed to corroborate the complaint filed by Shri Pankaj Radheshyam Agrawal which was only indicating about the transaction of purchase of immovable property against the advance. Ld. AO has on his motion without having any credible evidence alleged the assessee to have taken cash loan against Hundi which was not even the complaint of Shri Pankaj Radheshyam Agrawal. It shows that ld. AO had proceed one sidedly and with the predetermined mind to initiate reassessment proceedings for violation of section 69D of the Act without having any material evidence in his possession. At this ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 26 juncture, we also like to take note that that even the approval given u/s.151 of the Act by the prescribed authority were merely mechanical in nature which is just mentioning the word ‘yes’ for reopening without examining the records that the assessee has been scrutinised thoroughly u/s.143(3) r.w.s.147 of the Act and there being any other material except the statement which could not lead to proper reason to believe for reassessing the income of the assessee. Therefore, even the approval u/s.151 of the Act is not a proper approval. In view of the above discussion, we hereby allow the legal grounds raised by the assessee challenging the validity of the assessment proceedings on account of improper recording of reasons and no proper approval u/s.151 of the Act. Though the assessee had raised other legal grounds stating that reasons recorded which were given to the assessee were unsigned and the one which was discussed during the course of appellate proceedings were having other contents which tantamount to state that the correct reasons recorded were not served to the assessee which renders the assessment proceedings void but as we have already quashed the reassessment proceedings holding them as invalid and bad in law on the two legal grounds firstly that there was no proper reasons to believe with ld. AO for reopening the proceedings and therefore issuing of notice u/s.148 of the Act is invalid and illegal and secondly that no proper approval u/s.151 of the Act, we therefore refrain from dealing with other legal issues raised by the assessee challenging the reassessment proceedings and they are rendered infructuous. Accordingly, grounds of appeal raised by the assessee in the Cross Objections are partly allowed as per terms indicated above. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 27 20. Now we take up the grounds of appeal raised by the Revenue on merits. On going through the grounds, it emerges that the only issue raised for our consideration is that whether ld.CIT(A) erred in holding that ld. AO was not justified in invoking section 69D of the Act and further erred in holding that the alleged sum of Rs.8,61,80,284/- was not received in cash as loan against Hundi by the assessee from Late Shri Radheshyam Agrawal. 21. Ld. Departmental Representative vehemently argued referring to the detailed observation of the AO and also referring to the statement of the assessee given before the police authorities along with referring to the alleged document referred to as Hundi mentioned at pages 3 and 4 of the assessment order and 15 cheques allegedly issued by the assessee for various sums totalling to Rs.8,61,80,284/-. Ld. DR stated that the cheques issued by the assessee clearly prove that they were given as security against the loan taken by the assessee from Late Shri Radheshyam Agrawal and the amounts are mentioned in the documents allegedly named as Hundis and therefore it proves that the assessee has taken the alleged sum and therefore provisions of section 69D of the Act are clearly attracted. 22. On the other hand, ld. Counsel for the assessee firstly referred to the following written submissions filed before the ld.CIT(A) on various occasions : “3.1 The appellant in support of the grounds raised, filed submission dated 31.10.2023, the contents of which are as under. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 28 \"1. At the cost of repetition, I submit that Mr. Agrawal had launched an FIR against me by raising an allegation that he and his father had given cash to the tune of Rs.8,61,80,284/- to me during the relevant year to invest out of the said amount Rs. 4.50 crores in the sixteen row houses and two twin bungalows in one of my projects of namely Kasliwal Marvel and balance amount in the property at Paithan Road. His further allegation is that I have not registered the said properties in their name. On the basis of these facts, Mr. Agrawal has filed an FIR in the Kranti Chowk police station. 2. Thereafter there was a survey on M/s Raaj Kasliwal on 24.08.2018 and during a survey, a loose paper was found and the said loose paper was allegedly unsigned copy of the statement recorded by the police authority in relation to the FIR filed. On asking about the statement found during survey at the time of recording survey statement, I specifically mentioned that the said statement is unsigned and categorically denied the contents of the statement recorded as the statement was taken under pressure by the police authority. 3. Subsequently, on 02.11.2018 a statement was recorded u/s 131 of the Act of Mr. Agrawal the relevant question and question of the statement is reproduced as follows: Q 7. On verification of the document it is found that you have given an advance of Rs 8,61,80,284/- to Shri Sanjay Kasliwal. Please state whether the amount was advanced by you and also state the purpose of the same along with necessary detail and evidence in support of the allegation you have made against Shri Sanjay Kasliwal. Ans: I confirm that I have made advance payment of Rs.8,61,80,284/- for purchase of row houses and twin bungalows from Shri Sanjay Kasliwal the sale price was fixed in a meeting orally and accordingly I have received sale deed draft on my email ([e-mail]) on 29.03.2015 from email address of Sanjay Kasliwal ([e-mail]) at 09.03 pm. I have also paid franking amount (stamp duty) Rs. 49.85 Lakhs on 27.03.2015, on confirmation by SMS at my mob number on 9325002909 sent by Mr. Sanjay Kasliwal dated 25.03.2015 from his number 9326361555. The copies of stamp duty challans, email and SMS will be submitted within two days in support of my say.' 4. From the aforesaid statement it is clearly evident that the allegation leveled against me by Mr. Agrawal is of advance given against the purchase of the properties and nowhere he has stated and neither confirmed that the cash loan was given to me against the hundi. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 29 5. Further during course of the assessment proceedings, the Ld. AO issued a notice u/s 142(1) dated 22.02.2022 and show cause notice dated 12.03.2022, wherein he asked to explain why addition of Rs. 8,61,80,284/- should not be made u/s 69D of the Act. 6. In response to the same, I filed a reply dated 14.03.2022, wherein I once again denied the contents of the statement found during the survey and also explained the facts that it is not allegations of Mr. Agarwal that he has given cash loan against hundi. Along with the submission, I filed the copy of charge sheet filed by the police authorities, copy of FIR, copy of petition filed by Mr. Agarwal before the Civil Judge (S.D.) and my written statement before the court. In all the documents the allegation involved is cash given against the investment in properties. 7. It is brought to Your Honour's notice that Mr. Agrawal has lodged criminal complaint against me and as well as filed Special Civil suit no. 39/2018 before Civil Court, Senior Division, Aurangabad alleging that his father has given me cash of Rs. 8,61,80,284 from time to time between 27.09.2014 and 27.11.2014 for investment in the properties but same has not been registered in his name. 8. In the Special civil Suit filed by Mr. Agarwal, in response to the same I have filed written statement dated 12.01.2019 before the Hon'ble Civil Judge (S. D.) therein 1 categorically denied to have taken cash of Rs. 8,61,80,284/- from father of Mr. Agrawal or Mr. Agrawal. Attention is also sought to my written statement filed before the Court where I have made very detailed submission and denied all the allegation raised in the suit filed by Mr. Agrawal. 9. During course of the assessment proceedings it was also requested to the Ld. AO to verify the books of account, income tax return, financial statements and other documents of Mr. Agrawal, father of Mr. Agrawal and other family members so as to confirm whether the said amount of cash was given or not to me. Further it was also requested grant an opportunity to me to cross examine Mr. Agrawal. 10. The Ld. AO for reopening of the assessment as well as while passing of an order has merely relied merely on the statement recorded before the Police authorities and neither brought any corroborative evidence on record for making such huge addition. 11. It is apposite to mention that such statement recorded by the police authorities has no evidentiary and provision in that regard is provided in Section 25 of Indian Evidence Act, 1872. Further, support to the same can be taken from the charge sheet filed by the police authorities before the MPID Court. In the chargesheet ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 30 filed by the police authority there is no copy of my statement recorded by police authority and neither there is any reference to the same and further in the description of the facts by the police authorities in charge sheet the allegations levelled against me is that the cash was given against the investment in properties. 12. Further a reference is made to the communication by police station, Kranti Chowk, Aurangabad, addressed to the Ld. AO, in response to notice u/s 133(6) of the Act vide letter dated 28.03.2022. In the said communication also the police authority- has stated that the allegation against me is of the cash given against the investment in properties. There is absolutely no mention about the cash loan against the hundi. Therefore, neither the police authorities have any findings that there is cash loan given and neither there is allegation of Mr. Agarwal against me regarding cash loan given against hundi. This itself shows that there is no evidentiary value to the said statement recorded by the police authority. 13. In none of the statement, petition, FIR filed by Mr. Agrawal it has been alleged that cash was given to me towards to loan against the hundi. Therefore, the findings of the Ld. AO in Para 4 that 'FIR has been filed by Mr. Agrawal against me on the issue that I have taken cash from father of Mr. Agrawal and failed to repay it' is absolutely baseless and without application of mind. 14. Interestingly, the Ld. AO has doubted the allegations of Mr. Agrawal itself and has also gone to justify his stand that Mr. Agrawal and his father has given cash loan to me against hundi just to make the huge addition, that too without any corroborative evidence. The Ld. AO has not even taken effort to even verify the facts from the police authority before making such a huge addition. 15. It is pertinent to submit that on the basis of FIR filed, on the similar facts Mr. Agrawal has also filed a civil suit against me and the same is pending before the Hon'ble Special Civil Judge (S.D.) and therein I have filed its written statement denying all the allegations levelled against me by Mr. Agrawal. Considering my written submission as well as the oral submission, the Hon'ble Court have made observation in my favour and has also granted unconditional leave to defend. 16. Further, the Ld. AO has referred to the question no. 12 and 13 of my statement recorded during the survey proceedings and pointed out that I have accepted the fact in the statement that he had given signed hundis and blank cheques to father of Mr. Agrawal and the Ld. AO vaguely referring to the same concluded that I have accepted the loan in cash from Mr. Agrawal. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 31 17. In this regard it is humbly submitted that in the statement recorded during the survey it was clearly mentioned that blank hundis and blank cheques were given to father of Mr. Agrawal in the anticipation of receiving some amount from them but no amount was given to me. Further, to justify my statement I stated that if the loan would have been given to me by father of Mr. Agrawal then Mr. Agrawal should have deposited the cheques which were allegedly given for security of loan. As he has not deposited the cheques, it clearly shows that he has not given any loan to me. Also, it was pointed out that the said matter is pending before the Court. 18. In the said statement during survey, I have not acceded to the fact that I have received cash loan from father of Mr. Agrawal. In fact I clarified that I have not received cash in any form from them. The Ld. AO without pointing out on which basis or on the basis of which statement he concluded that I have accepted the fact of taking cash loan. This shows that there is completely non-application of mind by the Ld. AO and without appreciating the documents available on the record in right spirit, the Ld. AO has made such huge addition mechanically without justifying his stand. 19. Despite I filed various documents to prove that the allegation of Mr. Agrawal against me is not of the cash loan given but the allegation is about cash given for the investment in immovable property purpose, the Ld. AO has not dealt with these documents much less not even referred to these documents and has completely ignored those documents. 20. In the above circumstances. I humbly submit that I have proved with all the documents available on record including the copy of petition filed by Mr. Agrawal before the Court against me and the communication of the police authority to the Ld. AO itself proves that the allegation was of the cash given against the investment in the properties. Even in the said petition there is allegation that the cash was given to me against the investment in properties. Therefore, there is no question of attracting of the provisions of section 69D in the present case. 21. I also submitted before the Ld. AO that I have not received any cash from Mr. Agrawal or his father and to verify my submission, I requested to Ld. AO to verify the income tax return, books of account and financial statements of Mr. Agrawal, father of Mr. Agrawal and their relatives and further asked him to grant opportunity to cross examine Mr. Agrawal. The Ld. AO has not even verified the same. 22. It is worthy to note that at the time of recording of the statement u/s 131 of the Act of Mr. Agrawal, on asking about the source of advance given to me, he stated that same shall be ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 32 provided within two days. But it appears that no such source has been brought on record by Mr. Agrawal. It itself proves that there is absolutely no cash given by him to me and it is baseless allegations raised against me by Mr. Agrawal. 22. The additions made merely based on (he confession statement recorded by any authority is invalid. The reliance in this regard is placed on following case laws: a) CIT v. S. Khader Khan Son - [(2012) 25 taxmann.com 413 (SC) Statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. b) PCIT v. Nageshwar Enterprises [(2020) 122 taxmann.com 41 (Guj) Where Assessing Officer made addition in hands of assessee firm for unaccounted investment and purchases merely on basis of confessional statement of assessee firm's partner before DRI, but no other evidences were bought on record, said addition was to be deleted c) Shri Ratan Babulal Lath v. DCIT- [(I.T.A. No. 355/Bang/2017, Order dated 15.06.2018) Facts: The Appellant (Assessee) Ratan Babulal Lath, an individual filed his return of income for A.Y 2009-10 at total income of Rs. 13,44,160/-. Later, the Appellant was interrogated by CBI in connection with providing accommodation entries to the companies of Shri. Y S Jagan Mohan Reddy and the noticed that the appellant has provided a sum of Rs.60 crores to Shri. Navneet Kumar Singhania which was deposited in the accounts of 2 companies viz. M/s. Sugam Commodeal Pvt. Ltd., and M/s. Chandelier Tracon Pvt. Ltd. It was ultimately invested as share capital into M/s. Jagati Publications Pvt. Ltd. In the statement recorded by the CBI the appellant deposed that he had supplied cash of Rs.60 crores through local cash carrier Shri. Navneet Kumar Singhania, whose statement was also recorded. The CBI forwarded the information collected to the AO. On the basis of this information, the AO reopened the assessment under section 147 of the Act, by issuing notice under section 148 of the Act. In the case of addition of Rs 60 crore the ITAT held that the sole basis for making an addition in the hands of the Assessee is a statement of the Assessee as well as Shri Navneet Kumar Singhania recorded by the CBI. The ITAT observed that the settled position of law is that the statements recorded by the CBI ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 33 or police authorities/investigating authorities cannot be made the sole basis for making additions. Moreover, the statement recorded by the police authorities are not admissible as evidence as per provisions of Section 25 of Indian Evidence Act, 1982 and also in the light of judgment of the Supreme Court in the case of Zwinglee Ariel Vs. State of MP. For making addition, some more efforts were to be required on the part of the AO. In the present case, AO did not bring any material on record to show that Assessee has made the investment in Jagati Publications Ltd., by acquiring its shares during the impugned assessment year. Except such statements, the AO has not brought anything on record to establish that assessee had made such investment in Jagati Publications through Shri. Navneet Kumar Singhania and the same was not declared in its return of income. In the light of these facts, we are of the considered opinion that addition cannot be made in the hands of the assessee in the absence of the relevant evidence. d) Ajay sharma v. ACIT - ((2006) 101 TTJ 1065 (Delhi)] Where no evidence was collected during search to show that assessee was taking money for fixing cricket matches, reports of CBI and Madhavan Commission on match fixing could not be relied upon for making additions. e) DCIT v. NIBR Bullion Pvt. Ltd [I.T.A. No. 6320/Mum/2011, Order dated 05.12.2022, (Mumbai Trib)] Facts: During search proceedings, statement of Ajay C. Arora, Director of the assessee company was recorded u/s 132(4) of the Act. In his disclosure statement, he offered Rs. 12 crores towards undisclosed income in F.Y. 2008-09 to cover up discrepancies in the seized documents, digital data, stock, excess jewellery, etc. Thereafter, Ajay C. Arora retracted from his statement and restricted his disclosure to Rs.3.75 crores in respect of discrepancies aforesaid. AO vide assessment order dated 31/12/2010 passed u/s 143(3) of the Act assessed total income of assessee at Rs. 12,10,70,727/-. The AO rejected assessee's retraction of statement and made the addition of entire declaration made during search. Held: Held that the AO was not able to point any seized document that could be correlated to the disclosure statement. Therefore, that addition merely on the basis of confession during the course of search operation without supporting evidence is unsustainable in law. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 34 23. In the above circumstances, it is humbly submitted before Your Honour that I have not received any amount from Agrawal or his father in any form and civil case in this regard is pending before the Civil Court (S.D.) and the Court after considering my submission has granted me unconditional leave to defend by making observation in my favour. It is more than five years that the petition has been filed by Mr. Agrawal and still the court has not concluded that whether any cash was given to me and the Ld. AO merely on the basis piece of paper which has no evidentiary value has concluded that I have taken cash that too in the form of loan. 24. It is once again submitted that the addition made by the Ld. AO of Rs. 8,61.80,284/- u/s 69D on the basis of mere statement is baseless and without bringing any corroborative material on record and without appreciating the documents filed by me before him and therefore, in the above circumstances, the huge addition made deserves to be deleted as illegal. These are our preliminary submissions. If Your Honour still intends to confirm the action of the A.O., we request Your Honour to grant us a further opportunity of being heard to enable us to put further submissions. Needless to say, in the meanwhile, if any further clarification or information is sought, the same shall be supplied immediately upon intimation.\" 3.2 In continuation to the above, the appellant filed a rejoinder on 29.02.2024 as under. \"3. Addl. Ground: 3 The reopening notice issued without application of mind and wrong assumption of facts 3.1 In the submission filed before Your Honour, it was submitted that at the time of recording of the reasons for reopening, the Ld. AO had unsigned copy of my statement recorded before the Police Authorities and other documents as mentioned in Para 3.2 of the submission dated 31.10.2023. Further, by placing reliance on my unsigned statement recorded before the police authority, FIR and statement recorded u/s 131 of Mr. Agrawal the Ld. AO erroneously concluded that Mr. Agrawal has filed an FIR against me alleging that I have taken loan from Mr. Agrawal's father to the tune of? 8.61 crores but failed to repay the same, 3.2 This is absolutely a wrong fact mentioned by the Ld. AO in the reasons as in none of the documents available before the Ld. AO relating to Mr. Agarwal, he has alleged that I have taken loan from him. This fact has been recorded without application of mind. 5. However, in the remand report, the Ld. AO stated that my statement recorded by police authority available on record is ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 35 signed copy. In this regard, I submit that the Ld. AO who passed the order himself has mentioned in the para 6 of the assessment order that he issued notice u/s 133(6) vide dated 17.03.2022 and 28.03.2022 to the police authority for obtaining the signed copy of the statement recorded by police authority. Further, vide reply dated 31.03.2022 as reproduced in the assessment order, the police department submitted the copy of statement. These sequence of Ground: Addition u/s 69D of Rs. 8,61,80,284/- 5.1 The Ld, AO without discussing or controverting the detailed submission made before Your Honour has mechanically shown his agreement to the addition made. The Ld. AO being the quasi- judicial authority is expected to record his finding and bring on record the cogent evidence for making / agreeing to the addition. The Ld. AO in the present case has utterly failed in his duty as a quasi-judicial authority in the present case, 6. The Ld. AO has not controverted the additional ground: there is no reasonable formation of belief of escapement of income. This shows that the Ld. AO had nothing to controvert the submission made in that regard. In the aforesaid circumstances, it is humbly submitted before Your Honour, the Ld. AO has mechanically drafted the present remand report without going through the submission and documents filed. Therefore, it is prayed to quash the notice issued u/s 148 and/or delete the addition made of Rs. 8,61,80,284/- on the grounds raised in the submission filed before Your Honour.\" 3.3 The appellant made further submission on 8.3.2024 as under. \"With reference to the above appeal, and in addition to the previous submissions, I submit as follows: 1. The short issue raised to be decided by Your Honour in the present case is that whether addition u/s 69D can be made merely on the basis of a statement recorded by the police authority? 2. The Ld. AO has reopened my case merely by relying on the statement recorded by the police authority wherein under duress and tremendous pressure I have been compelled to accept that I have obtained a cash loan against hundi from Mr. Pankaj Agrawal [Mr. Agrawal'] and his father. 3. During the assessment proceedings, following documents were filed to prove no cash loan against hundi was taken by me from Mi'. Agrawal: ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 36 a. Copy of First Information Report (FIR) filed by Mr.Agrawal against me. [Ref: Pg. No. 32 to 36 of the PB] b. Statement recorded of Mr. Agrawal u/s 131 of the Income-tax Act, 1961 ['the Act'] [Ref: Pg. No.78 to 81 of the PB] C. Copy of suit filed by Mr. Agrawal before the Hon'ble Civil Court Senior Division, Aurangabad [Ref: Pg. No. 38 to 52 of the PB] d. Interim order of the Hon'ble Civil Court Senior Division, Aurangabad. [Ref: Pg. No. 62 to 67 of the PB] e. Chargesheet filed by the police authority before the MPID Court, Aurangabad [Ref: Pg. No. 68 to 72 of the PBJ f. A communication dated 28.03.2022 from the police authority to the Ld. AO in response to the notice issued u/s 133(6) [Ref: Pg. No. 82 of the PB] 4. In all the aforesaid documents, the allegation levelled against me is that cash was given to me against investment in the properties. The person who has raised allegation against me that is Mr. Agrawal, a government authority who has the responsibility to make the investigation that is the Police Authorities and a Judiciary Court that is the Hon'ble Civil Court Senior Division has recorded a consistent stand that the factual issued involved in the present case is whether I have received cash against the investment in the properties or not? It is no one's allegation that is of Mr. Agrawal or Police authority or the Hon'ble Court's findings that I have been given cash loan against hundi. 5. Despite filing all the aforesaid documents, the Ld. AO not even referred to all these documents remotely or tried to deal with the same, he bypassed all these documents by ignoring the same. It is apposite to mention that at various stages of the assessment the Ld. AO made a wrong statement even in recording the reasons, in Para 3, by referring to the FIR and statement recorded u/s 131 of Mr. Agrawal the Ld. AO stated that from the said documents it is clear that I have obtained a cash loan and failed to repay it. Which is absolutely false and nowhere in those documents there is single sentence about the cash loan given to me against hundi. Similarly in the assessment order various misstatements have been made. 6. Interestingly, in Para 8 of the assessment order the Ld. AO stated that on the basis of documents in possession and statement recorded of the assessee and Mr. Agrawal, it is clear ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 37 that I have borrowed loan against hundi and therefore the same is liable to be taxed u/s 69D of the Act. Accordingly, the Ld. AO made the addition of Rs. 8,61,80,281/-. 7. Despite filing the documents of the Judicial Court, the police authorities and a person who has made the allegations against me, the Ld. AO neither rejected the same and not even dealt with the same. The Ld. AO by merely relying on the statement before the police authority which has no evidentiary value in the eyes of law and court and by ignoring the documents filed during the assessment has made the addition. 8. Further, in the last hearing Your Honour had raised a question that what is the development of the case pending before the Civil Court. In this regard, I humbly submit a copy of the statement recorded by the Hon'ble Court of Mr. Agrawal on 26.02.2024. The said statement is attached herewith is Annexure tAl Even in the statement recorded by the Court, Mr. Agrawal alleged that he and his father has given cash to me against investment in the row house and plots etc. 9. In the aforesaid circumstances, it is humbly submitted that I have not taken / received any loan against hundi from Mr. Agrawal this fact is not in dispute and this is no one's allegation or finding that is neither of Mr. Agarwal or of police authority or nor of the Court. The dispute pending before the Court is whether I have received cash against the investment in the property from Mr. Agrawal or not. Therefore, the decision of the court on either of the side would not affect the finding of Your Honour. 10. In the aforesaid circumstances, it is humbly submitted that the Ld. AO has made the addition on the basis of transactions which never took place and despite proving the same to the Ld. AO by filing various documents, the Ld. AO chose to ignore the same and made a huge addition u/s 69D and the same is illegal and therefore deserves to be deleted.\" 23. Further, he referred to the number of points summarising the contents on merits during the previous dates of hearing : “SOME POINTS SUMMARIZED 1. Admittedly, there is absolutely no proof of Mr. Agarwal/ his father having given any cash to the Assessee. 2. In fact, Mr. Agarwal lied and misguided the Income Tax Department by claiming that he had receipt/proof of having given cash to the Assessee, but did not bring on record any such ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 38 proof. In fact, before the Court in cross-examination on oath, he admitted the he had no proof/ document in support 3. Even otherwise, it is impossible for a businessman to not to obtain a receipt or execute a document/writing at the time of lending such a huge amount of Rs. 8.61 crores. 4. In fact, it is highly improbable to give a such huge amount of Rs. 8.61 crores in cash. This was neither practical nor feasible in the circumstances of the case. 5. Undisputedly, no such transaction is recorded and reflected in the accounts or in the return of income of Mr. Agarwal or his father. Admittedly also, neither any source for such huge cash was in existence nor did Mr. Agarwal / his father have any capacity/possibility of generating such huge amount of the cash. In fact, Mr. Agarwal/his father had not even filed regular return of income. 6. In fact, in the succession certificate obtained after the death of the father of Mr. Agrawal there is no mention about such a huge amount allegedly given to the Assessee. This fact has been admitted by Mr. Agrawal during the cross examination. 7. Importantly, it is not known, nor it is brought on record, how the corresponding income is taxed in the hands of Mr. Agarwal / his father, as the same transaction should have corresponding implications in the hands of both the parties involved. The Department cannot have different stand/ standard for treatment of the same transactions in the hands of the two assesses involved. 8. Mr. Agarwal again lied and mislead the Income Tax Department by claiming that he had accounted these transactions in his books of the account. In the cross- examination on oath, he admitted that nothing was accounted. 9. It is also impossible/highly improbable that a lender, who had lent such a huge amount of money (Rs. 8.61 crores) would not present the cheques for clearance or present the hundi for clearance. 10. It is also impossible highly improbable for such a lender to not to even request, much less give reminder / notice, to the borrower for return of the alleged loan given; that to for two years. Before filing the police complaint, there was not even a formal notice issued. Obviously, therefore, the sole intention was to catch the Assessee in the state of total surprise/ unguarded /unpreparedness, and pressurize the Assessee, a prominent name in the community, with police complaint and harassments. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 39 11. Mr. Agrawal has also misled the Stamp Authorities by filing forged sale deed while obtaining stamp duty refund. More particularly, Mr. Agrawal himself had stated in the statement recorded before the stamp authorities that due to shortage of fund the transaction is not completed and no transaction will be made in future. 12. The sale deed sent through email also contains other parties as a purchaser that is Beejsheetal Research Pvt. Ltd and Sanchit B. Rajpal, however none of the said parties has filed any complaint as filed by Mr. Agrawal. This shows that this completely false story created by Mr. Agrawal with malafide intention of misusing the documents available with him. 13. Re: the hundis / cheques (i) At the outset, the documents cannot be regarded as 'hundi' in the eyes of law and for the purpose of section 69 D of the Act. They were in the form of promissory notes, involving only two parties, with an undertaking to pay a fixed amount to Mr. Agarwal after a fixed tenure. In any case, the transaction was fully identified and verifiable, as admitted by the lender himself. Pertinently, Mr. Agarwal himself has not uttered a word about 'hundi' in his examination in chief [Ref: Pg. 135 to 137 of P.B.]. WITHOUT PREJUDICE (ii) It had been the consistent stand of the Assessee throughout, including in the statement on oath, that he had handed over blank hundis / cheques to Mr. Radheshyam Agarwal and that they were filled in by Mr. Agarwal clandestinely much afterwards, for the obvious ulterior motives. This vital fact has remained undisputed / uncontroverted. This is also proved from the fact that the Bank has certified that the concerned cheque book itself was issued later on. (iii) There are obvious inconsistencies in the dates of the hundis and of the cheques. 14. Re: Police Statement (i) First of all, the Police Department itself has not even referred, much less relied upon, such alleged statement. In fact, interestingly, this statement is not found in the police records. (ii) Pertinently, there is not even a reference to this statement in the criminal proceeding (including in the Charge Sheet) or in the civil proceeding launched by Mr. Agarwal. (iii) There are inconsistencies in the signed and the unsigned statement. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 40 (iv) In any case, such a statement even otherwise has no evidentiary value in the eyes of the law. 15. Not loan but investment against purchase (i) It has been the consistent claim of Mr. Agarwal that the amount was not given as loan, but was given towards investment in the immovable properties, as reiterated in his civil and criminal complaint, as well as in his statement of oath before the Income Tax Department. (ii) Nothing is brought on record by the Department to rebut this crucial fact, as affirmed by its own star witness. 16. Collateral security (i) Strictly, without prejudice to the above, admittedly also, the hundis were given purely as collateral security, which has been the consistent stand of Mr. Agarwal himself. (ii) Here also, nothing is brought on record by the Department to rebut this crucial fact, as affirmed by its own star witness. 17. The receiver, if at all, not the Assessee Strictly without prejudice to the above, as per Mr. Agarwal, the amount was given towards acquiring row houses / bungalows being construed by M/sKasliwal Empire. As a natural corollary, the receiver of the amount, for the purpose of section 69 D of the Act has to be that firm and not the Assessee in his individual/personal capacity. The firm, being an artificial jurisdictional entity, has to conduct its activities through its partners.” 24. Further at the time of conclusion of hearing, the assessee was directed to file a detailed written synopsis and the same was filed with Registry on 03.03.2025 wherein also on merit it has been contended that the complaint made by Shri Pankaj Radheshyam Agrawal was not only false but was also motivated for ulterior motives and Shri Pankaj Radheshyam Agrawal has not only misguided the police but also the income-tax department misleading the averments made on oath. He stated that absolutely there is no proof with Shri Pankaj Radheshyam ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 41 Agrawal about alleged sum being given by his father Late Shri Radheshyam Agrawal to Shri Sanjay Kasliwal (the assessee). The sole evidence that the AO has is the statement given by the assessee before the police authority which has no evidentiary value as even before the police Shri Pankaj Radheshyam Agrawal has stated that the alleged sum was not given by way of loan but towards purchase of properties which were constructed by Kasliwal Empire and the alleged document including the cheques were purely given as a collateral security and even Shri Pankaj Radheshyam Agrawal has not considered the document as Hundi. To conclude, it was stated that no such money was received by the assessee from Late Shri Radheshyam Agrawal during the year by way of borrowing within the meaning of section 69D of the Act in his individual capacity and that the alleged document terms as Hundi is basically not a Hundi within the meaning of section 69D but merely a collateral security. In this regard, assessee placed reliance on the following judgements: 1. CIT v. Paranjothi Salt Co. - [(1995) 211 ITR 141 (Madras)] 2. CIT v. Grahalakshmi & Co. - [1999] 240 ITR 952 (Madras)] Approving [1982] 2 ITD 420 (Madras)] 3. CIT v. Dexan Pharmaceuticals (P.) Ltd. -[(1995) 214 ITR 576 (AP)] 4. CIT v. Intraven Pharmaceuticals (P.) Ltd.- [(1995) 219 ITR 225 (AP)] 5. CIT v. Prithivi Fire Works Industries [(1999) 239 ITR 230 (Madras)] 6. CIT v. Madura Devakottai Transports (P.) Ltd.- [(1999) 238 ITR 1003 (Madras)] 7. CIT v. K.P. Abdullah - [(2001) 240 ITR 947 (Madras)] 8. CIT v. Yamuna Digital Electronics (P.) Ltd.- [(1999) 238 ITR 717 (AP)] 9. CIT v. Jaya Stores - [(1999) 107 Taxman 612 (Madras)] 10. CIT v. Ram Niwas - [(2008) 170 Taxman 5 (Delhi)] ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 42 11. Bombay Engineering & Metal Works Pvt Ltd v. ITO. [1986] 24 ITJ 341 (Bom) 12. ACIT v. Bissheshwarlal Mannalal & Sons - [(2002) 80 ITD 69 (Calcutta Trib.)] 13. Himalaya Distributors v. ITO - [2009] 125 TTJ 705 (Pune)] 25. Some legal propositions have also been summarised in the paper book running into 29 pages referring evidenctiary value of a statement retraction, presumption u/s.132(4A)/292C, legal propositions regarding deeming provisions of section 68 to 69C to be strictly construed, onus/burden for the undisclosed income and that the discharge of burden by the Revenue, no addition merely on the basis of suspicion, opportunity of cross examination and also on the principle of preponderance of probability. Lastly, ld. Counsel for the assessee referred to the decision of Rajkot Bench of the Tribunal in the case of ITO Vs. Shri Tulsibhai P. Ladani in ITA Nos. 249 to 251/Rjt/2015, order dated 17.04.2024 for the proposition laid down by this Tribunal that addition cannot be made in the hands of assessee merely on the basis of chargesheet filed by CBI since the investigations against the assessee were in the court of law and there being no other evidence found against the assessee and that no opportunity of cross examination was provided to the assessee. 26. We have heard rival contentions and perused the records placed before us. The sole issue raised by the Revenue for our adjudication is that whether during the impugned year assessee has taken cash loan against Hundi of Rs.8,61,80,284/- from Late Shri Radheshyam Agrawal and that whether ld.CIT(A) erred in holding that section 69D of the Act cannot be invoked in the instant case by the AO. Though the facts have been dealt in ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 43 detail in the preceding paragraphs, we recapitulate and observe that the assessee is into business of Builder and Developer and also is a partner in other firms which are engaged in the Builder Developer business. Assessee was having good relations with one Shri Radheshyam Agrawal who expired on 03.03.2015. The dispute in the instant case arose when Mr. Pankaj Radheshyam Agrawal filed a police complaint alleging that the assessee has taken sum of Rs.8,61,80,284/- from his father for sale of row houses and twin bunglows and also gave reference to the document allegedly referred to as Hundi as well as cheques issued by the assessee to prove that alleged sum was received by the assessee from his father and the agreed properties were not transferred. Based on this police complaint, the assessee’s statement was recorded wherein also the allegation was that the assessee has received cash in advance of Rs.8,61,80,284/- against sale of immovable properties. Thereafter, the unsigned copy of the statement given by the assessee before the police authorities was found at the business of M/s. Raaj Kasliwal during the course of survey conducted u/s.133A of the Act on 24.08.2018. Based on the statement and the reference therein about the cheques given by the assessee as well as the document (referred as Hundi), the statement of the assessee was recorded u/s.131 of the Act wherein he stated that the statement given before the police authority was under undue pressure and coercion and no such loan has been taken. Thereafter even the matter travelled before the lower courts about the very same issue as to whether the assessee has received the alleged sum from Late Shri Radheshyam Agrawal. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 44 27. Now before us, the points raised by the Revenue are based on two evidences, firstly the statement given by the assessee before the police authorities accepting the alleged transaction and secondly copies of cheques and the document referred to as Hundi. On the other hand, the assessee has been contending that no such amount was received as loan from Late Shri Radheshyam Agrawal and there is no evidence putforth by Shri Pankaj Radheshyam Agrawal before the police authorities as well as before the court to prove that such sum was actually received in cash by the assessee. As far as cheques and the document alleged as Hundi, they were merely given as collateral security to Late Shri Radheshyam Agrawal when he asked the assessee for selling of the properties against some consideration to be given in advance. Based on this deal, transaction for sale of one of the immovable property was initiated and stamp duty was paid but the said transaction could not take off because of scarcity of funds with Late Shri Radheshyam Agrawal and also his deteriorating health. Subsequently, the stamp duty paid to the authorities for purchasing the property was claimed as refund and the said sum was duly received in the bank account of Shri Pankaj Radheshyam Agrawal/Late Radheshyam Agrawal. Thereafter, assessee asked Shri Radheshyam Agrawal to give back the cheques and the promissory notes/document alleged as Hundi but the same were stated to be misplaced and finally Shri Radheshyam Agrawal expired on 03.03.2015. Almost after 2 ½ years, Shri Pankaj Radheshyam Agrawal based on the documents available with him filed a complaint before the police authorities alleging that the assessee has received the said sum from his father. The assessee during the course of hearing ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 45 before the lower authorities has been contending that if it is presumed that the assessee has received the amount from Shri Radheshyam Agrawal then the source of cash available with him should have been enquired but no such evidence was filed. Even when Shri Pankaj Radheshyam Agrawal stated that the alleged sum was withdrawn from various business concern, but no evidence whatsoever has been filed till date nor the Revenue authorities has called for any such details from Shri Pankaj Radheshyam Agrawal. It has also been submitted that if the addition has been fastened in the hands of assessee, then what is the position of the addition if any to be made in the hands of Shri Pankaj Radheshyam Agrawal since he has been unable to prove the source of the alleged sum. It has also been stated that the only transaction which ever happened with Shri Radheshyam Agrawal and the assessee was the business transaction of selling of row houses and twin bunglows but it was never in the nature of any loan taken by the assessee from Shri Radheshyam Agrawal. Even the transaction of immovable property which was initiated by Shri Radheshyam Agrawal with the assessee’s business concern and later cancelled asserts this fact. 28. We further observe that the ld.CIT(A) after elaborately dealing with the facts of the case observed that the statements recorded before the lower authorities are not considered as an admissible evidence as per section 25 of the Indian Evidence Act, 1872 and deleted the impugned addition by holding that the ld. AO erred in invoking section 69D of the Act and there being no evidence to prove that the assessee has received cash loan of the alleged sum during the year from Shri Radheshyam Agrawal and ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 46 that no cash loan was taken against hundi. The relevant observation of the ld.CIT(A) reads as under : “4.1.1 The contention of the appellant in the aforesaid submission is that the sole basis of initiation of the reassessment proceedings is the copy of the unsigned statement recorded by the police authority which was impounded during the course of survey action. Further, the appellant submitted that while recording the reasons for reopening, in Para 3, the AO has mentioned wrong facts. The AO in the said para stated that Shri Pankaj Radheshyam Agrawal has filed an FIR against Shri Sanjay Kasliwal on the issue that Shri Sanjay Kasliwal has taken loan from Late Radheshyam Agrawal to the tune of Rs. 8.61 crore but he has failed to repay it. Whereas, the contention of the appellant is that as per the FIR filed against him by Shri Agrawal, the allegation levelled is that the cash was given against the investment in the properties and not against the loan. Therefore, the submission of the appellant is that the reasons are recorded without application of mind and by recording wrong facts in reasons. 4.1.2 Further, the AO in the communication dated 25.01.2024, on the aforesaid submission of the appellant commented as under. \"In this regard, it is submitted that the concerned Police Station has recorded the statement of assessee on 26/06/2017 after filing of FIR by Mr. Agrawal on the matter of cash transaction with his father late Sh. Radheshyam R. Agrawal. The statement bears the signature of the assessee on the perusal of the statement, it is clear. that the assessee has accepted the cash loan of Rs. 8,61,80,284/-from Shri Pankaj R. Agrawal and Late Radheshyam R. Agrawal on cheques and hundis. A copy of the statements of the assessee dated 26/06/2017 and relevant part of the statement of the assessee dated 22/08/2018 are enclosed herewith as per Annexure 'C' for kind perusal. In the view of the above, the assessee has made false allegation that the reasons was recorded by the AO without application of Mind and on the basis of the unsigned copy of statement before the Police authority. Then A.O. has information in physical form and the then A.O., has after due application of mind and facts available on record, framed the reasons to believe for reopening of the assessment proceedings in the assessee's case. Hence, the ground raised by the deserves to be rejected. 4.1.3 Further, in rejoinder to the comments of the AO, the appellant in written submission dated 29.02.2024 once again stated that at the time of recording of the reasons, the AO had in his possession- i) Unsigned statement recorded by the police authority ii) Appellant statement recorded during survey proceedings iii) The official copy of the FIR filed by Mr. Agrawal ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 47 iv) Statement recorded of Mr. Agrawal u/s 131 by DDIT (Inv) 4.1.4 The AO by placing reliance on the unsigned statement recorded by the police authority, FIR and statement recorded u/s 131 of Shri Agrawal, has erroneously concluded that Shri Agrawal has filed an FIR against the appellant alleging that he has taken loan from Shri Agrawal's father to the tune of Rs. 8.61 crores but failed to repay the same. The appellant further submitted that this is a wrong fact recorded by the AO in the reasons to believe. As per the appellant, in none of the documents available before the AO relating to Shri Agrawal, there is allegation that appellant had taken loan from Shri Agrawal. 4.1.5 For better appreciation of the submission of the appellant and AO, the relevant contents of the aforesaid documents are reproduced hereunder. xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 4.1.6 The relevant portion of the statement recorded u/s 131 by the DDIT (Inv) of Shri Agrawal is as under. \"Q. 7 On verification of the document it is it is found that found that you have given an advance of Rs. 8,61,80,284/- to Shri Sanjay Kasliwal. Please state whether the amount was advanced by you and also state the purpose of the same alongwith necessary detail and evidences in support of the allegation you have made against Shri Sanjay Kasliwal. Ans. I confirm that I have made advance payment of Rs. 8,61,80,284/- for purchase of row houses and twin bunglows from Shri Sanjay Kasliwal. The sale price was fixed in a meeting orally and accordingly I have received sale deed draft on my email ( [e-mail]) on 29.03.2015 from email address of Sanjay Kasliwal ([e-mail]) at 09.03 pm. I have also paid franking amount (stamp duty) Rs. 49.85 Lakhs on 27.03.2015 on confirmation by SMS at my mobile number on 9325002909 sent by Mr. Sanjay Kasliwal dated 25.03.2015 from his number 9326361555. The copies of stamp duty challans, email and SMS will be submitted within two days in support of my say.\" 4.1.7 From the aforesaid documents, which were available before the AO at the time of recording the reasons before issuing notice u/s 148, it is clear that the allegation of Shri Agrawal against the appellant was that he and his father had given cash of Rs. 8.61 crores to the appellant towards investment in the immovable properties. The finding of the AO vide Para 3 of the reasons to believe are reproduced as under. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 48 \"3. Analysis of information collected/received: On verification of documents available with this office, it is seen that Shri. Pankaj Radheshyam Agarwal has filed an FIR against Mr. Sanjay Kasliwal on the issue that Mr. Sanjay Kasliwal has taken loan from his father to the tune of Rs. 8.61 crore but he has failed to repay it. Onthe contrary, Sanjay Kasliwal as per page no. 54 to 56 of impounded loose paperbundle accepts that he took the cash loan against hundi but he has repaid thesame. In this regard Statement of Mr. Pankaj Radheshyam Agarwal was recordedu/s 131 by Office of DDIT(Inv.) Aurangabad. In the statement Pankaj Agarwal hasstated that the amount of Rs. 8.61 crore was advanced to Sanjay Kasliwal forpurchase of residential units from Sanjay Kasliwal. Further, Pankaj Agarwal hasstated that Hundi's original have been submitted to the police by him. The page no. 54 to 56 of impounded lose paper bundle once read in the context of copy of FIR filed before police by Pankaj Agarwal and statement of Pankaj Agarwal u/s 131 of IT Act it is clear that Sanjay Kasliwal has accepted cash loan and repaid the same in cash.\" (emphasis supplied) 4.1.8 The AO in the aforesaid para has wrongly stated that Shri Agrawal has filed an FIR against the appellant on the issue that the appellant has taken loan from father of Shri Agrawal. 4.1.9 On perusal of the FIR and statement of Shri Pankaj Agrawal recorded u/s 131 of the Act it is clearly evident that there is no allegation by Shri Agarwal that the loan was given to the appellant. In the FIR and statement recorded u/s 131 of the Act of Shri Agrawal, the allegation is only about advance of Rs. 8.61 crores given to the appellant for investment in immovable properties. 4.1.10 Further, the appellant submitted the copy of the charge sheet filed by the police authority before the Hon'ble MPID Court, Aurangabad which was also produced before the AO during the assessment proceedings and explained that there is no reference to such statement recorded by the police authority in the said charge sheet and further invited attention to the relevant facts mentioned in the said charge sheet, the same are reproduced as follows (translated in English): xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 4.1.11 Further, during the assessment proceedings the appellant had filed the copy of the petition filed by Shri Agarwal against the appellant before the Civil Court, Senior Division, Aurangabad. It is clear that in the said suit as well the allegation levelled against the appellant is that Rs. 8.61 crores were given by the father of the appellant towards ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 49 investment in immovable properties and the said properties have not been transferred in the name of Shri Agrawal. Further, the copy of the interim order of the Hon'ble Civil Court, Senior Division, Aurangabad was also filed before the AO, wherein at Para 10 of the interim order, the Hon'ble Court had also recorded that the dispute in the suit filed by Mr. Agrawal is that the allegation levelled against Shri Kasliwal is that his father had given Rs. 8.61 crores towards investment in immovable property. 4.1.11 Further, during the assessment proceedings the appellant had filed the copy of the petition filed by Shri Agarwal against the appellant before the Civil Court, Senior Division, Aurangabad. It is clear that in the said suit as well the allegation levelled against the appellant is that Rs. 8.61 crores were given by the father of the appellant towards investment in immovable properties and the said properties have not been transferred in the name of Shri Agrawal. Further, the copy of the interim order of the Hon'ble Civil Court, Senior Division, Aurangabad was also filed before the AO, wherein at Para 10 of the interim order, the Hon'ble Court had also recorded that the dispute in the suit filed by Mr. Agrawal is that the allegation levelled against Shri Kasliwal is that his father had given Rs. 8.61 crores towards investment in immovable property. 4.1.12 All the aforesaid documents filed before the AO during the assessment proceedings depict that the allegation of Shri Agrawal against the appellant is that his father had given advance to the appellant towards investment in property and it is not the allegation of Shri Agrawal that he or his father had given cash loan against hundi to the appellant. The AO during the assessment proceedings, without appreciating the relevant documents submitted before him has made the addition merely on the basis of the statement of the appellant recorded by the police authority. 4.1.13 Further, the AO has reproduced the copy of the statement recorded by the police authority of the appellant on page no.s 3 to 5 of the assessment order. On perusal of the same, it is seen that the said statement is unsigned and on denying the content of the said statement by the appellant, the AO issued a notice u/s 133(6) dated 17/03/2022 to the Police Inspector, Kranti Chowk Police Station, Aurangabad and requested to provide signed copy of the complete statement. In response, the Police Authority vide letter dated 28.03.2022 submitted as follows (translated in English): xxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxx 4.1.14 On perusal of the aforesaid response from the Police Authority it is clear that the complaint filed against the appellant by Shri Agrawal is that the amount of Rs. 8.61 crores was given to the appellant towards investment in immovable properties. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 50 4.1.15 The appellant further argued that the confession statement recorded before the Police Authorities has no evidentiary value as per section 25 of the Indian Evidence Act, 1872. To buttress his submission, the appellant also relied on the following case laws relating to the Income Tax Act: i) CIT v. S. Khader Khan Son - [(2012) 25 taxmann.com 413 (SC)] ii) PCIT v. Nageshwar Enterprises taxmann.com 41 (Guj)) [(2020) 122 iii) Shri Ratan Babulal Lath v. DCIT - [(I.T.A. No. 355 / Bang /2017, Order dated 15.06.2018)] iv) Ajay sharma v. ACIT - [(2006) 101 TTJ 1065 (Delhi)] v) DCIT v. NIBR Bullion Pvt. Ltd - [I.T.A. No. 6320 / Mum /2011, Order dated 05.12.2022, (Mumbai Trib)] 4.1.16 Further, during the hearing, the current status of the case pending against the appellant was asked. In response to the same, the Appellant filed the submission dated 08.03.2024 and along with the same, he filed a copy of the statement recorded of Shri Agrawal before the Additional Session Judge on 26.02.2024. In the said statement, Shri Agrawal has once again levelled the allegation against the appellant that he and his father gave appellant Rs. 8,61,80,284/- towards investment in immovable properties. 4.1.17 The AO in the assessment order is completely silent about such hefty documents filed by the appellant to prove that there is no allegation against the appellant that he has taken cash loan against hundi from Shri Agrawal. The AO in the assessment order states that \"after dispute between them, Mr.Agrawal has took stand that he has given cash to the appellant to purchase properties.\" Merely by this statement he denied all the contentions of the appellant. However, there are no documents brought on record by the AO to prove that Shri Agrawal has changed his stand. 4.2 On perusal of the documents filed and the factual and legal submissions made before me, it is noted that- i) The only issue for adjudication is that whether the appellant has accepted the cash loans against hundi in contravention of the provisions of section 69D of the Act. ii) The AO while recording the reasons to believe has mentioned that Shri Agrawal had filed FIR against the appellant on the issue that the appellant has taken loan from his father. In fact, in the said FIR there is no mention about the loan given to the appellant. ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 51 iii) The appellant filed the copies of the charge sheet filed by the Police Authorities before the MPID Court, copy of the FIR, copy of the statement recorded u/s 131 of Shri Agrawal by the DDIT(Inv), copy of the suit filed by Shri Agrawal before the Civil Court, Senior Division, Aurangabad against the appellant and copy of the interim order passed by the Hon'ble Civil Court, Senior Division. Further, in a communication dated 28.03.2022, from the Police Authority to the AO, it has been stated that complaint has been filed against the appellant that he has accepted amount against the investment in the properties from Shri Agrawal and his father and he has failed to abide by the commitment. All the aforesaid documents consistently prove that the dispute between the appellant and Shri Agrawal is regarding the acceptance or non acceptance of advance against the investment in properties. It is not the case that the appellant has accepted cash loan against hundi from Shri Agrawal and his father. iv) The sole basis of making addition by the AO of Rs. 8,61,80,284/- is a statement of the appellant recorded by the Police Authority. It is well settled position of law that the statement recorded by the Police Authorities cannot be the sole basis for making additions. Moreover, the statement recorded by the Police Authority is not admissible evidence as per the provisions of Section 25 of the Indian Evidence Act, 1872. In the present case, the AO did not bring any cogent material on record to prove that the appellant has accepted the cash loan against the hundi violating the provision of section 69D. 5. In view of the above discussion and based on the judicial pronouncements relied upon by the appellant, the impugned addition of Rs. 8,61,80,284/- made u/s 69D by the AO cannot be sustained as the amount received was not a hundi loan but an advance against the investment in properties. The addition is, therefore, deleted. Thus, the Original Grounds No. 1 to 3 raised by the appellant are allowed.” 29. Now after perusal of the above finding of the ld.CIT(A), we would first like to go through the provisions of section 69D of the Act which reads as under : “Amount borrowed or repaid on hundi. 69D. Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be : ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 52 Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation.—For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.” 30. From going through the above provision, we notice that the most important part of this section is that where any amount is “borrowed” and the next is amount due thereon is repaid. The first and foremost condition is that section 69D is invoked where any amount is “borrowed” on a “Hundi”. The word “Hundi” comes later to the word “borrowed”. It has been consistently held by the Hon’ble Courts that in case of the allegation by the department of the assessee earning undisclosed income, the burden is on the department to prove that such undisclosed income as referred in section 69 to 69D has been earned by the assessee. The Hon’ble Apex Court in the case of Parimisetti Seetharamamma vs CIT (1965) 57 ITR 532 while dealing the case involving addition on account of undisclosed income (gift) held that the burden was wrongly shifted to the assessee. In all cases in which receipt is said to be taxed as income, the burden lies upon the department to prove that it is within the taxing provisions. Now how the department has to discharge the burden has also been dealt with by the Hon’ble Apex Court in the case of Smt. Srilekha Banerjee And Others vs CIT (1963) 49 ITR 112 (SC) where it was held that if the explanation given by the assessee shows that the receipt was not of income nature, the department cannot act unreasonably and reject that explanation to hold that it was income. The Hon’ble Apex Court in the case of Dhokeshwari Cotton Mills Ltd. v. CIT, 26 ITR ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 53 775 (SC) held that ITO is not entitled to make a pure guess and make an assessment without reference to any evidence for any material at all. There must be something more than mere suspicion to support the assessment. 31. Now in the instant case, the AO has held that section 69D of the Act is attracted as the assessee has borrowed the funds from Shri Radheshyam Agrawal against Hundi. Before us, the contention of the ld. Counsel for the assessee has been that there is no transaction of borrowing the funds from Late Shri Radheshyam Agrawal and this fact has also been admitted by the complainant Shri Pankaj Radheshyam Agrawal. Reference is made to the statement of Shri Pankaj Radheshyam Agrawal recorded on 02.11.2018 we find that the copy of the statement has been filed in the paper book given by ld. DR on 05.12.2024 and the statement is placed at pages 10 to 13. We would like to take note of few replies given by Shri Pankaj Radheshyam Agrawal to the questions asked by ADIT(Investigation), Aurangabad. The said question and answers are reproduced below : “Q.7 On verification of the document it is found that you have given an advance of Rs.8,61,80,284/- to Shri Sanjay Kasliwal. Please state whether the amount was advanced by you and also state the purpose of the same alongwith necessary detail and evidences in support of the allegation you have made against Shri Sanjay Kasliwal. Ans. I confirm that I have made advance payment of Rs. 8,61,80,284/- for purchase of row houses and twin bungalows from Shri Sanjay Kasliwal. The sale price was fixed in a meeting orally and accordingly I have received sale deed draft on my email ([e-mail]) on 29.03.2015 from email address of Sanjay Kasliwal ([e-mail]) at 09.03 pm. I have also paid franking amount (stamp duty) Rs.49.85 Lakhs on 27.03.2015, on confirmation by SMS at my mobile number on 9325002909 sent by Mr. Sanjay Kasliwal dated 25.03.2015 from his number 9326361555. The ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 54 copies of stamp duty challans, email and SMS will be submitted within two days in support of my say Q.8 Please state as to whether you have any proof of advance such as receipt etc. If yes, please produce the copy of the same. Ans. Sir, we have cheques and receipts (hundis) duly signed by Mr. Sanjay Kasliwal in support of proof of advance, I have made to him. I will submit the copies of those cheques and hundis within two days. Original cheques and hundis are with the Police authorities for investigation purpose. Q.9 In reply to above question you have stated that you have given advance of Rs.8,61,80,284/-. Please furnish the mode of such advance. Ans. Sir, I have made payment in cash. Q. 10 Please give the sources of advance given by you for Rs. 8,61,80,284/- to Shri Sanjay S. Kasliwal. Ans. Sir, the said advance is paid by legitimate sources of my income such as business income & agricultural income in HUF status. Also, the cash advance is reflected in my books of account. I will submit the details of source with evidence within two days. Q. 11 You have stated that you derive income from agricultural activities in HUF status. Please give the details land holding and the crops from which you have derived income. Ans. Sir, in this regard I want to state that I have agricultural land more than 100 acres. I will submit the 7/12 extracts and other details relevant to agricultural land holding and income from agriculture within two days. Q. 12 Please state as to whether the sale deed in respect of row houses for which you have given advance has been executed. Ans. Sir, sale deed in respect of row houses for which I have given advance has not been executed till date. Q. 13 In reply to above question, you have stated that sale deeds have not been executed till date. Then please state whether the said advance has been returned by Shri Kasliwal. If yes, please furnish the mode of receipt. Ans. Sir, the said advance of Rs.8.61 crore has not been returned by Shri Sanjay Kasliwal till date. Therefore I have filed complaint against him.” ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 55 32. Going through the replies given by Shri Pankaj Radheshyam Agrawal to the ADIT (Investigation), Aurangabad, we notice that the consistent stand of Shri Pankaj Radheshyam Agrawal is that advance payment of the alleged sum was given to Sanjay Kasliwal (assessee) for purchase of row houses and twin bunglows. Even the sale price was orally fixed in a meeting and even draft sale deed was also received through email on 29.03.23015. Copies of such draft sale deeds have been filed in the paper book by the assessee at pages 302 to 341. In Question No.8, Shri Pankaj Radheshyam Agrawal states that the cheques and receipts (alleged to be Hundi) duly signed by Sanjay Kasliwal are in support of proof of advance. This means that there was a discussion for entering into the transaction between the assessee as well as the partnership firm where he was a partner with late Shri Radhedhyam Agrawal and Shri Pankaj Radheshyam Agrawal for sale of row houses and twin bunglows and some cheques and Hundis were given as security by Sanjay Kasliwal. Further the fact that there was always a transaction or purchase of immovable property and not of giving cash loan to the assessee gets fortified with the fact that the draft sale deed as referred above was further acted upon by both the sides and stamp duty of Rs.42.00 lakh was paid by Shri Pankaj Radheshyam Agrawal but thereafter since Shri Radheshyam Agrawal was passing through poor health and also they were having scarcity of funds and finally Shri Radheshyam Agrawal expired on 03.03.2015 the transaction could not move further and Shri Pankaj Radheshyam Agrawal applied for the refund of stamp duty paid by him for the purchase of immovable ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 56 properties from Kasliwal Enterprises. Page 316 of the paper book proves that refund of Rs.41,99,000/- was issued to Shri Pankaj Radheshyam Agrawal. The draft sale deed and the transaction of refund of stamp duty to Shri Pankaj Radheshyam Agrawal also throws light on important fact that the transaction was entered into between Shri Pankaj Radheshyam Agrawal and Kasliwal Empire through its partner Sanjay Kasliwal and the transaction if any was between Kasliwal Empire and Shri Pankaj Radheshyam Agrawal and not with the assessee. 33. Coming back to the dispute before us, from the record, it is well evident that there is some transaction between the assessee and Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal but that is certainly not in the nature of borrowing of funds against Hundi but the transaction, if any happened, is purely a business transaction of purchase of immovable properties by Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal from Kasliwal Empire (partner Sanjay Kasliwal). Now the department before alleging that the assessee has borrowed the funds should have examined the statement of Shri Pankaj Radheshyam Agrawal properly because it was stated by him that the payment was made in cash and that the cash advance is reflected in books of account. Such details which were agreed to be provided within two days has not been provided till date. Further it was claimed that Shri Pankaj Radheshyam Agrawal owns agricultural land and he has 7/12 extracts and other details to prove that it is having income from agricultural land but again no details/evidence were filed from the date of statement till date. It is also not evident as to whether any addition has been made in the hands of Shri Pankaj ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 57 Radheshyam Agrawal for the alleged cash available with him/his father Late Shri Radheshyam Agrawal for allegedly giving it to the assessee. It seems that the department is only working on the complaint of Shri Pankaj Radheshyam Agrawal but not taking into consideration the facts of the case where there is no concrete evidence that the assessee has borrowed the money from Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal on interest. The reasons of the complainant Shri Pankaj Radheshyam Agrawal has been observed by the Hon’ble Jurisdictional High Court in the Criminal Application No.3812/2017 granting anticipatory bail to the assessee observing that it is material to mention that the father of the informant (i.e. Shri Pankaj Radheshyam Agrawal) died in the month of March, 2015 since then there was inaction on the part of informant to allege any criminal proceedings immaterial or to file civil suit for recovery of the amount which is allegedly paid by the father of the informant to the applicant. Furthermore, even no notice has been issued by the informant to the present applicant requesting the applicant to execute his part of contract in reference to the sale deed. The above observation of the Hon’ble Jurisdictional High Court shows that Shri Pankaj Radheshyam Agrawal who was part of the transaction entered into in the registration of sale deed during March 2015 and was aware of the refund of stamp duty paid for the transaction of purchase of immovable property from Kasliwal Empire and therefore was a part of the transaction of purchase of immovable properties. But interestingly, for around 2 ½ years, he did not take any action and somewhere in the end of 2018 he filed a complaint based on the cheques and document alleged to be ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 58 Hundi. It seems that the alleged Hundi and cheques which were stated by Late Shri Radheshyam Agrawal as misplaced and were not given to the assessee when asked for after the transaction of immovable property was declined on account of scarcity of funds with Shri Radheshyam Agrawal and Shri Pankaj Radheshyam Agrawal but after long period when these misplaced documents came in hand of Shri Pankaj Radheshyam Agrawal, he seems to have made planning to file the complaint and accordingly took course of action discussed above. It therefore means that if such documents were not located or would not have come into the possession of Shri Pankaj Radheshyam Agrawal he would have never filed the complaint. We deem it so because Shri Pankaj Radheshyam Agrawal did not take any action against the assessee for almost 2 ½ years since the transaction was declined in March, 2015. In the instant case, it is only a collateral security and is not any conditional order or signed by the maker directing a certain person to pay a certain sum of money only to or to the order that certain person or to the bearer of instruction and since in this case it is not an order to pay a third person the document cannot be called as Hundi. In support, we place reliance on the decision of Hon’ble Madras High Court in the case of CIT vs. Paranjothi Salt Co. (1995) 211 ITR 141 and CIT Vs. K.P. Abdullah (2001) 240 ITR 947 (Madras). Therefore, unless and until there is borrowing of funds, the documents referred in the instant appeal alleged to be Hundi cannot be considered as Hundi for the purpose of attracting section 69D of the Act. 34. In view of the above discussion hereinabove, we are inclined to hold that the transaction if any which has happened between the assessee and Shri Radheshyam Agrawal/Shri ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 59 Pankaj Radheshyam Agrawal that too not being supported by any credible evidence filed by Revenue authorities, is of the nature of business transaction of sale of immovable properties by M/s. Kasliwal Empire to Shri Radheshyam Agrawal/Shri Pankaj Radheshyam Agrawal but by no means can be termed as transaction of borrowing funds in the form of cash loan against Hundi. The Revenue authorities have merely acted on the basis of the statement given by the assessee before the police authorities and it is judicially settled that such statement given before the police authorities is not an admissible evidence in terms of provisions of section 25 of the Indian Evidence Act and the other document which remains is cheques and documents alleged to be Hundi which are merely in the nature of collateral security given by the assessee for the purpose of entering into transaction of sale of immovable properties. 35. We therefore find that under the given facts and circumstances of the case, ld. AO erred in invoking section 69D of the Act as the assessee has not borrowed the alleged sum of Rs.8,61,80,284/- in cash from late Shri Radheshyam Agrawal on Hundi and the transaction if any (which is still not proved by any credible evidence) was only with regard to the entering of transaction for purchase of immovable properties in the form of row houses and twin bunglows by Shri Radheshyam Agrawal/Shri Pankay Radheshyam Agrawal from Kasliwal Empire, as referred in the draft sale deed discussed above. Even that draft sale deed could not culminate into the final sale deed since the sale consideration was not passed on from the buyer to seller and finally the stamp duty was also refunded back to the buyer namely Shri Pankay Radheshyam Agrawal. Thus, no ITA No.1339/PUN/2024 and Co.No.31/PUN/2024 Sanjay Suganchand Kasliwal 60 interference is called for in the finding of ld.CIT(A). Effective grounds of appeal raised by the Revenue on merits are dismissed. 36. In the result, the appeal filed by the Revenue is dismissed and the Cross Objection filed by the assessee is partly allowed as per terms indicated above. Order pronounced on this 24th day of March, 2025. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 24th March, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “B” ब\u0014च, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "