Shri Yashwant Amrutlal Thakkar, Ahmedabad V. DCIT , Central Circle-1(1), Ahmedabad

ITA 2099/AHD/2018

AI Insights

The case involves cross appeals by the assessee, Shri Yashwant Amrutlal Thakkar, and the Revenue against the order of the Commissioner of Income Tax (Appeals)-11, Ahmedabad, concerning the assessment year 2015-2016. The primary issues revolved around the rejection of a claim for a capital loss of ₹ 5,73,13,610 on account of the transfer of shares and the calculation of short-term capital gain on the sale of shares amounting to ₹ 2,60,17,820. The assessee argued that he was the beneficial owner of the shares and had paid taxes on the undisclosed income used for purchasing these shares. The AO, however, treated the transactions as involving accommodation entries and disallowed the claimed losses and gains. The CIT(A) upheld the AO's decision, leading to the current appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134517 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 08-10-2018
• Other Referred Cases: Addl. CIT vs Lata Mangeshkar, Jawaharbhal Atmaram Hathiwala vs ITO, D.A. Patel vs. Dy. CIT, Dr. Keyur Parekh vs. ACIT, Devaram C Bhavani vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Income from undisclosed sources; Search and seizure; Document seized; Cost of acquisition; Accommodation entries; Competent authority; Block assessment; Documents seized; TDS; Set aside; FORM 26AS; Bogus
• Section: 69; 132; 69C; 234B; 133(6); 69A; 72; 22

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ A’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकर अपील सं./ITA No. 2099/AHD/2018 िनधाᭅरण वषᭅ/Asstt. Year: 2015-2016 Shri Yashwant Amrutlal Thakkar, 19, 20, 21, 3 rd Floor, Nr. Patang Hotel, Ashram Road, Ahmedabad. PAN: AAIPT1697G Vs. D.C.I.T., Circle-1(1), Ahmedabad. And आयकर अपील सं./ITA No. 2220/AHD/2018 िनधाᭅरण वषᭅ/Asstt. Year: 2015-2016 A.C.I.T., Circle-1(1), Ahmedabad. Vs. Shri Yashwant Amrutlal Thakkar, 19, 20, 21, 3 rd Floor, Nr. Patang Hotel, Ashram Road, Ahmedabad. PAN: AAIPT1697G (Applicant) (Respondent) Assessee by : Shri Tushar Hemani, Sr. Advocate with Shri Parimalsinh B. Parmar, A.R Revenue by : Shri Durga Dutt, CIT.D.R सुनवाई कᳱ तारीख/Date of Hearing : 15/03/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 12/06/2023 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned cross appeals have been filed at the instance of the Assessee and the Revenue against the order of the Learned Commissioner of Income Tax(Appeals)-11, Ahmedabad, dated 10/08/2018 arising in the matter of ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 2 assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in- after referred to as "the Act") relevant to the Assessment Year 2015-2016. ITA No.2099/Ahd/2018 for A.Y. 2015-16, an appeal by the assessee. 2. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO by rejecting the claim towards the capital loss of ₹ 5,73,13,610/- on account of transfer of shares and further erred in calculating the short-term capital gain on the sale of shares at ₹ 2,60,17,820/- only. 3. The necessary facts arising from the order of the authorities below are that the assessee in the present case is an individual and promoter/director of various companies belonging to Amarpali Group. There were certain people who were holding the shares in the company namely M/s Amrapali Fincap Pvt. Ltd. since the financial years 2008-09 and 2009-10. The details of such shareholders are extracted below: Sr.No. Name of the Registered owner No. of shares Face Value/Rate at the time of allotment Total Investment i.e cost of acquisition 1. Surnisha Orgenizer Pvt. Ltd. 50,000 10/- 5,00,000/- 2. Omrim Securities Ltd. 10,68,058 10/- 1,06,80,580/- 3. Saharshi Securiites Pvt. Ltd 50,000 10/- 5,00,000/- 4. Rakesh B. Patel 42,809 10/- 42,8090/- 5. Nexus Software Ltd. 13,00,867 1,30,08,670/- Total 13,00,867 1,30,08,670/- 3.1 However, the assessee claimed to be the beneficial owner of the shares held by the entities/ persons as discussed above. It was submitted by the assessee that the above shares were purchased by him in the name of aforesaid parties out of his undisclosed income which was offered to tax in the petition filed under section 245C before the income tax settlement commission Mumbai and the due tax thereon was also paid by him (the assessee). The assessee accordingly ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 3 has passed the accounting entries in the year under consideration in his books of accounts to show that he was the beneficial owner of the shares held by the companies as discussed above. Besides the above the assessee has also filed, to justify the beneficial ownership, the statutory forms bearing numbers MGT-4, MGT-5, and MGT-6 with the Registrar of Companies. Thus, it was the contention of the assessee that the period of holding of the shares held by the aforesaid companies being the registered shareholders should be taken from the date when the shares were held by these registered shareholders i.e. from the financial years 2008-09 and 2009-10. Accordingly, the assessee on the sale of the shares as discussed above, in the year under consideration, has calculated the long-term capital loss in the manner as discussed below: Name of the Company Sales Price/Dt oftrf Purchase Price/ Dt of trf Index Cost Transfer Exps. Exempt Capital Gain/loss Amrapali Fincap Ltd. 2,28,00,000 (25.03.2015) 1,90,00,000 (31.03,2009) 33429553 0 0 -10629S53 Amrapali Fincap Ltd. 13,33,04,520 (26.03.2015) 11,10,86,700 (31.03.2010) 179988577 0 0 -46684057 Total 15,61,04,520 13,00,86,700 213418130 0 0 -57313610 4. However, the AO during the assessment proceedings conducted inquiries from the registered shareholders namely Shri Rakesh B Patel and M/s Omrim Securities Ltd. to find out the genuineness of the transaction. But these shareholders have admitted being engaged in providing the accommodation entries in the form of investment in shares in Amarpali group. In simple words, the investment shown in the name of the registered shareholders was made from the money provided by the Amarpali group. Thus, the entire investment made by the shareholders in the form of shares in the company, namely Amarpali Fincap Pvt Ltd is bogus and belongs to the Amarpali group only. Accordingly, the AO was of the view that the concept of registered shareholder and beneficial ownership of the shares cannot be applied in the transactions which were made after using the colorable device. In view of the above, the AO has disallowed the loss of ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 4 ₹5,73,13,610/- and made the addition of short-term capital gain of ₹2,60,17,820/- by observing as under: 8.2 This is a classic case of defrauding the revenue which can be summarized as below The assessee claims to have bought shares of a company of his own group (Amrapali). The shares are actually registered in the name of other persons, who admittedly are accommodation entry providers. No statutory obligations regarding registered / beneficial ownership has been met in prescribed time. The shares are sold to his son, who is also a director of the company of which the shares belong Though there is a gain of Rs. 2,60,17,820/-, the assessee has fraudulently claimed indexation and claimed Long Term Capital Loss of Rs. 5,73,13,610/-, which has been carried forward to next years. 8.3 In view of the facts and circumstance, it is held that the assessee has not brought on record any evidence to show that the shares of Amrapali Fincap Ltd. where held for more than 36 months which would allow the assessee the benefit of indexation on the cost shares for computing long term capital gain. The assessee contention that he was a beneficially owner of the shares from 31.03 2009 and 31.03.2010 as a fraudulent claim as has been discussed at length in this order. Therefore, the gross gain of Rs. 2,60,17,820/- on transactions of shares of Amrapali Fincap Pvt. Ltd. as treated as short term capital gain. The claim of Long Term Capital Loss of Rs. 5,73,13,610/- is accordingly disallowed 8.4 In view of the above, the income u/s. Term Capital Gain is determined of Rs. 2,60,17,820/- 5. Aggrieved assessee preferred an appeal to the learned CIT(A). 6. The assessee before the learned CIT(A) submitted that the investment in shares by the registered shareholders was made from the money provided by the Amarpali group and the assessee is the key person of such group. The source of investment in the company was also not doubted by the AO during the assessment proceedings. The source of investment was also offered to tax by the assessee in the petition filed before the learned settlement commission and the assessee has also paid the due taxes on such income. All these facts establish that money was invested by the assessee in the company through the registered shareholders. Accordingly, the assessee is the beneficial owner of the shares. The ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 5 relevant accounting entries were also made in the books of accounts of the assessee in the year under consideration and not in the year of acquisition of the shares 2008-09 and 2009-10 but the accounting entries is not determinative the year of acquisition of the shares. Moreover, the necessary forms Nos. MGT-4, MGT-5 and MGT-6 were also filed to prove that the beneficial owners of the shares in the company as discussed above. Since the assessee is the beneficial owner of the shares, there is no need to transfer the shares from the registered shareholders to the assessee. This fact was also admitted by the AO that the assessee is the beneficial owner of the shares and therefore the income on the transfer of such shares was taxed in the hands of the assessee but without giving the benefit of indexation which is contradictory to the facts available on record. Furthermore, the relevant date for the acquisition of the shares by the assessee in the capacity of beneficial owner is decipherable from the forms i.e. MGT-4 and MGT-5. 7. Furthermore, the AO has not disputed the cost of acquisition of the shares acquired by the registered shareholders. As such the AO for working out the capital gain has taken the cost of acquisition of the shares at the value at which the registered shareholders acquired the shares of the company. As such, the year in which the registered shareholders have acquired the shares of the company should be taken as the basis year for calculating the income under the head capital gain. The term used in defining short-term capital assets is that the assets should be 1 st held by an assessee and not purchased or acquired by it. 8. However, the ld. CIT(A) rejected the contentions of the assessee and confirmed the order of the AO by observing as under: The appellant claimed to have purchased the shares in the year 2009-10 and on inquiry, it was stated that these shares were in the name of Rakesh B. Patel & Omnim Securities Ltd and the appellant was beneficial owner of these shares. The AO issued notice u/s 133(6) of the Act to Shri Rakesh B Patel and Omrim Securities Ltd. In response to the same, Shri Rakesh B. Patel stated that he provided accommodation entries in the form of investment in shares of Amrapali Fincap P Ltd out of the funds provided by the promoters of Amrapali Fincap P Ltd. These facts clearly show that these shares cannot be deemed to have been acquired by the appellant in the year 2009-10. Moreover, the appellant's contention that ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 6 he has filed necessary details before the ROC in statutory forms i.e. MGT-4, MGT-5 & MGT- 6 in which he has been shown as beneficial owner is not acceptable for the reason that the appellant filed these forms after the search conducted upon the appellant and group concerns. The appellant did not file these forms before the ROC immediately after so acquisition of these shares in 2009-10. Therefore, this contention of the appellant stating that he has filed necessary information before the ROC to prove his beneficial ownership is not correct, hence rejected. His beneficial ownership can be accepted from the date, he filed the statutory forms before the ROC. From this date, the period of holding of these shares is less than 36 months (being capital asset) and hence, the appellant is not eligible for claiming the long term capital gain The AO has correctly considered the gain on sale of shares as capital asset and taxed rightly the capital gain as short term capital gain. The appellant's another contention that he has shown these transactions as beneficial owner in the application filed before the Settlement Commission, Mumbai and the Settlement Commission has accepted the same in the order passed u/s 245D(1) of the Act. However, this contention is also not acceptable as the application of the appellant was rejected by the Settlement Commission while passing order u/s.245D(4) of the rejection of application by the Settlement Commission, Mumbai, the appellant filed writ before the Hon'ble High Court of Gujarat, Ahmedabad and the same was dismissed by the Hon'ble High Court. The appellant filed appeal before the Hon'ble Supreme Court against the order of the High Court and same is still pending before the Hon'ble Apex Court. Keeping in view the discussion above, the additions of Rs. 2,60,17,820/- made by the AO considering the short term capital gain on these share transactions is confirmed and consequently the claim of the appellant of long term capital loss of Rs. 5,73,13,610/- as disallowed by the AO is also confirmed. This ground of appeal is dismissed. 9. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 10. The learned AR before us filed a paper book running from pages 1 to 287 and contended that the assessee is the beneficial owner of the shares, and this fact was not doubted by the authorities below. Moreover, the registered shareholders have also confirmed that the assessee was the beneficial owner of the shares. Similarly, the necessary documents filed with the ROC i.e. Form RGT-4 RGT-5 and RGT-6 also establish the fact that the assessee is the beneficial owner of the shares. Moreover, the revenue has not disputed the cost shown by the registered shareholders for the shares in dispute. Thus, it was contended by the learned AR that the shares held by the registered shareholders represent the long- term asset and therefore the assessee should be allowed the benefit of indexation cost. ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 7 11. On the contrary, the learned DR before us vehemently supported the order of the authorities below. 12. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that it is the admitted position that the assessee was the beneficial owners of the shares held by the registered shareholders elaborated in the order of the authorities below. It is also not in doubt that the shares were acquired by the registered shareholders in the financial years 2008-09 and 2009-10 but the authorities below have taken the period of holding from the year in dispute and therefore worked out the income under the capital gain without giving the benefit of cost of indexation being short term capital gain. As such the revenue has worked out the short-term capital gain whereas the assessee claimed that it was long-term capital loss as the period of holding was more than 36 months. Thus, the limited controversy before us to adjudicate what is the period of holding of the shares in the hands of the assessee. Once the revenue has admitted that the assessee was the beneficial owner of the shares then the period of holding to our understanding must be taken from the year in which the shares were held by the registered owners. 12.1 Admittedly, the assessee has made necessary compliance under the Companies Act by furnishing the necessary declarations in the form MGT-4, MGT-5 and MGT-6 which were duly accepted by the competent authority i.e. Registrar of companies. Accordingly, we are of the view that the authorities below cannot interpret such declarations according to their understanding without pointing out any fault therein. 12.2 It is equally important to note that the two registered shareholders have admitted in the statements to having received money from the Amarpali group for making the investment. To this effect, the relevant finding of the AO in the assessment order is extracted below: ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 8 To ascertain the facts, letters u/s 133(6) of the I.T. Act were issued to Shri Rakesh B. Patel and Omrim Securities was issued from the file of Amrapali Fincap Ltd.. which was under scrutiny before the undersigned for A.Y. 2015-16. In the said response to the said letter, Shri Rakesh B Patel has stated that he had provided accommodation entries in the form of investment in shares of Amrapali Fincap Ltd. to the tune of Rs. 31.24 Crores by way of investment in the shares of Amrapali Fincap Ltd. out of the funds provided by the promoter of Amrapali Fincap Ltd. He also submitted that investment in the name of various group concerns including the proprietary concern M/s. Bahar Traders were made out of funds layered through various group concern and group concern of Pratik R. Shah. In response to the letter u/s 133(6) of the act to Omrim Securities Ltd., Shri Rakesh B. Patel, on behalf of the company submitted exactly similar reply as in his individual capacity 12.3 Moreover, the assessee has also paid the taxes on the investment made by him in the name of registered shareholders out of his undisclosed income and therefore it will be inappropriate to allege that the transaction shown by the assessee represents the use of colorable device. Furthermore, the revenue while calculating the capital gain in the hands of the assessee has adopted the cost of acquisition shown in the name of the registered shareholders for the investment made in the shares in the years 2008-09 and 2009-10. Thus, a conjoint reading of the of all the above stated facts establishes that the period of holding while calculating the income under the head capital gain exceeds 36 months and therefore the assessee must be given the benefit of indexation cost. Hence, the ground of appeal of the assessee is hereby allowed. 12.3 In the result the appeal filed by the assessee is allowed. Now coming to the Revenue’s appeal bearing ITA No.2220/Ahd/2018 for A.Y. 2015-16. 13. The Revenue has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in deleting the addition of Rs.5,10,37.810/- made by the AO u/s.69A of the Act, treating the cash received by the assessee as unexplained money. 2. On the facts and circumstances of the case and in law, the id. CIT(A) has erred in law and on facts in deleting the addition of Rs.11,32,00,650/- made by the AO u/s 69C of the Act, treating the transaction of cash payment made by the assessee to Venus Group as unexplained expenses. ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 9 3. On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in deleting the aforesaid additions even while accepting that the abbreviation 'YT' in the material found during the course of search in the Venus Group referred to the assessee and SMS were exchanged between the assessee and Ashok S. Vaswani, many of which contained particulars of financial transactions between the two groups. 4. On the facts and circumstances of the case and in law, the Id. CIT(A) has erred in law and on facts in deleting the aforesaid additions only on the ground that the incriminating documents were not found from the premises of the assessee, ignoring the various corroborative evidences of the unaccounted transactions discussed in the assessment order. 5. On the facts and circumstances of the case and in law, the Id. CIT (Appeal) ought to have upheld the order of the AO. 6. It is, therefore, prayed that the order of the Id. CIT(A) be set aside and that of the AO be restored to the above extent. 14. The interconnected issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO for Rs. 5,10,37,810/- and Rs. 11,32,00,650/- on account of unexplained money and unexplained expenses not recorded in the books of accounts under section 69A/69C of the Act. 15. The facts in brief are that the assessee in the present case is an individual. There was a search and seizure operation carried out at the 3 rd party premises in the name of Venus group dated 10 March 2015 under the provisions of section 132 of the Act. As a result of search and seizure operation, certain documents in the form of cash book and cash vouchers were found containing the financial transactions relating to the assessee. It was found out based on the impugned seized documents that the assessee has received a sum of ₹ 5,10,37,810/- in cash and made cash payment of Rs. 11,32,00,650/- which is nothing but represents unexplained expenses. All these cash transactions were carried out by the assessee with the Venus group. Based on the above, the AO has made the addition of Rs. 5,10,37,810/- and 11,32,00,650/- under section 69A/69C of the Act. 16. Aggrieved, assessee preferred an appeal to the learned CIT(A) who deleted the addition made by the AO by observing as under: ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 10 6.2 The facts mentioned in the assessment order and the submissions of the appellant has been carefully considered. The AO stated in para 9.7 of the assessment order that the appellant made payment of Rs 11.32,00,650/- in cash to Venus Group which remains as unexplained expenses and same has been added u/s 69C of the Act The AO further stated that the appellant received Rs.5,10,37,810/- in cash from the Venus group and the same has been considered as unexplained money and added u/s.69A of the Act. Before going to the other contentions of the appellant, it is clear from the findings of the AO that during the year, the appellant has paid Rs 11,32,00,650/- and received Rs.5.10.37,810/-. The AO made additions of total of these two amounts Le Rs.16,42,38,460/- which is incorrect because in this situation when payment is made and received during the same year, the difference of these two figures should have been added by the AO. Therefore, additions of only Rs.6,21,62,840/- (Rs.11,32,00,650 5,10,37,810) should have been made by the AO. Thus, the additions made by the AO to the extent of Rs. 16,42,38,460/- is excessive. 6.3 After going through the reasons for making the additions and contentions raised by the appellant against these additions, it is found that the additions made by the AO are not justified. The AO has correctly identified abbreviation "YT" as Yashwant Thakkar after making enquiries from various sources as mentioned in the assessment order and the exchange of sms between Ashok S. Vaswani and the appellant. But it is a fact that the documents relied upon for making these additions have been found from the premises of Venus group and not from the premises of the appellant. These documents are not in the handwriting of the appellant nor signed by the appellant or by any authorized person on behalf of the appellant. These documents were written by Shri Deepak M. Gajjar, Accountant of Vaswani group and are signed by Shri Ashok Vaswani/Deepak Vaswani. Therefore, presumption u/s. 292C of the Act is not applicable against the assessee when the document is not found from the premises of the appellant, nor in the handwriting of the appellant and not signed by the appellant, therefore, additions made by the AO on the basis of such dumb document are not legally sustainable. During the course of search. statement of Shri Rajesh Vaswani, Deepak Vaswani & Shri Ashok Vaswani were recorded and they admitted before the DDIT(Inv) vide letter dated 24/7/2015 that documents seized from the premises belong to Vaswani family and other entities of the Venus group. However, it has never been stated by anyone that these documents contained any transactions between the appellant and Venus group persons Even no question was asked to the persons of Vaswani family from whose premises these documents were found about the relation of these papers with the appellant. Therefore, the statements of Vaswani family members do not contain anything against the appellant. Regarding statement of Shri Deepak Gajjar, Accountant of Vaswani group as reproduced by the AO on page 40/41 of the assessment order, there was no question asked about these papers and he only admitted that these papers are written in his handwriting as per directions of Shri Ashok Vaswani but there is no mention of the appellant in the whole statement of Shri Deepak Gajjar. These facts clearly prove that during the course of search, post search and assessment proceeding, there is no statement of anyone which has any reference of the assessee in any manner which can be attributed against the appellant. When the persons from whose premises the documents were found, does not state anything against the appellant, additions made in the hands of the appellant are not found justified. Regarding exchange of SMS between Shri Ashok Vaswani and the appellant as reproduced on page 22 of the assessment order. these sms contains the details of bank accounts of Ashrita Construction P Ltd and Amrapali Capital and Finance Service Ltd, but nowhere name of the appellant or mention of any bank account of the appellant is written in these sms. Regarding the 2nd sms showing bank account details of Amrapali Capital and Finance Service Ltd, the appellant submitted that it is on 12/12/2014 and amount of Rs.779558/- is shown in the regular books of accounts of Amrapali Capital and Finance Service Ltd. This bank account is regular bank account of Amrapali Capital and Finance Service Ltd and it should be considered while making the assessment of Amrapali Capital and Finance Service Ltd and not in the hands of the appellant. Regarding the chart on page No.28/29 of the assessment order, 2 entries at Sr.No. 8 & Sr. Bo. 11 amounting to Rs. 16,00,000/- and Rs. 1,54,620/- are written as "YT TDS. But on going through the Form 26AS of the appellant for the relevant period which is available on ITD, no such TDS has been found in Form No 26AS of the appellant. These facts show that these entries mentioned at page No.28 of the assessment order prepared on the basis of vouchers are not reliable. There are several entries written as YT Int which means "YT Interest" but no such interest was found credited in the books of accounts of the appellant. During the course of search upon Venus group persons, no unaccounted bank account of the appellant was found in which such interest was found deposited. It is accepted practice that when the interest is paid and TDS is done as per the provisions of the Act, such entries are shown in the regular books of accounts. In the case of the appellant such entries have not been found in the regular books of accounts/bank account of the appellant nor in unaccounted bank accounts of the appellant was found. These findings further ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 11 strengthened that the entries in the seized documents cannot be relied for making the additions in the hands of the appellant. Keeping in view the facts that the documents were not found at the premises of the appellant, not in the handwriting of the appellant, not signed by the appellant, no statement of anyone which mentions anything adverse against the appellant and non-reliability of the documents relied upon, as mentioned in paras above, additions made by the AO are not found justified. Moreover, the appellant's case is further found covered by the following judgments of higher judicial authorities a) Addl. CIT vs Lata Mangeshkar, (1974) 97 ITR 696 (Bom) Section 69A of the Income-tax Act, 1961 Unexplained moneys Assessment years 1962-63 to 1964- 65-Relying on evidence in form of statements by two persons that they had paid money in 'black' to assessee, as well as entries in books belonging to them regarding alleged payments, ITO made additions to assessee's total income as income from undisclosed sources Tribunal, o scrutiny of said statements, having found that evidence tendered suffered from serious infirmities held that mere entries in accounts regarding payments to assessee were not sufficient to prove tha assessee had received money in black' for which she did not issue a receipt - Tribunal delete additions accordingly - Whether entries in day-book or ledger would be a corroborative piece evidence and once direct evidence of persons having made payments in 'black' was disbelieved, I value could be attached to those entries Held, yes - Whether therefore, Tribunal was justified deleting additions - Held, yes. b) Jawaharbhal Atmaram Hathiwala vs ITO, (2010) 128 TTJ 36 (Ahd) Section 69 of the Income-tax Act, 1961- Unexplained investments - Assessment year 1999-2000- Where assessee was alleged to have paid a sum as 'on money for purchase of flat but no evidence could be brought on record by Revenue to show that in fact assessee had paid 'on-money to developers, and no document containing signature of assessee or handwriting of assessee to corroborate above making of payment by assessee was found during course of search, addition on account of alleged payment was not justified [in favour of assessee! c) D.A. Patel vs. Dy. CIT. (2000) 72 ITD 340 (Murn) Section 1588C of the Income-tax Act, 1961 - Block assessment in search cases - Computation of undisclosed income - Assessment years/block period 1-4-1986 to 15-7-1995 During course of search conducted at residential and business premises of assessee photocopies of certain hundies aggregating to Rs. 1,60,97,000 were found - One of seized documents (sheet 41) showed various amounts aggregating to Rs. 1,36,42,000 and interest thereon from 1-1-1992 to 31-12-1995 and thus total amount at Rs 2,64,46,000- Assessing Officer treated said amount as unaccounted investment and brought to tax same as income under head 'other sources - Whether addition of Rs. 1,60,97,000 including outstandings upto 31-12-1992 of Rs. 1,36,42,000 interest calculated thereon for year 1992 (Rs. 24,55,000) for which Assessing Officer had found photocopies of hundies during search could be sustained-Held, yes - Whether though sheet 41 showed interest also for period 1-1- 1993 to 31-12- 1995, since no hundies were found in support of receipt of sald interest amount it could not be said that those amounts were actually received and, therefore, no addition could be sustained in respect of those amounts-Held, yes- Whether out of above amount of Rs. 1,60,97,000 amounts aggregating to Rs. 1,36,42,000 had to be brought to tax under head 'Income from other sources' in respective years in which date of hundies fell and interest amount under head 'business' as income from money-lending business - Held, yes d) Dr. Keyur Parekh vs. ACIT in IT(ss)A No. 604 /Ahd/2011 dated 18/10/2013. At Para 8.13 of the said order, the Hon'ble Bench has held that it is a universal law that the 'Suspicion howsoever strong cannot take the place of evidence'. At best, it can only lead to investigation. No person can be punished merely on the basis of a doubt, but side by side, must not be spared on the basis of unfavorable evidence. So the procedure is that a mistrust leads to investigation and an investigation leads to collection of evidence. There are several decisions in the past pronounced by the Hon'ble Apex Court wherein a general rule is framed that although the ITO is not fettered by the technical rule of evidence, but ITO is not entitled to make a pure guess, however, required to make an assessment without reference to any evidence. There must be something more than bare suspicion. In the present appeal a fundamental question is that whether there was sufficient clinching evidence unearthed by the Revenue Department consequent upon the ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 12 search to make a firm belief that in fact there was the existence of unaccounted Investment in the purchase of land. Side by side a second question therefore arises that whether the impugned addition was in the nature of suspicion only. We have carefully examined both these questions and on critical analysis of the evidences and under the totality of the circumstances, we hereby hold that those were not even the incriminating material but simply e) Devaram C Bhavani vs ITO in ITA No. 4675/Mum/2016 dated 29/12/2017 At Para 6 of the said order, the Hon'ble Bench that in the case the nothing could be safely gathered from a perusal of the dumb notings in the impugned impounded document. We thus in the backdrop of our aforesaid observations that there is no basis for relating the notings in the Impounded document, viz. Annexure A-2-Page 37 & Page 105 with the purchase of Flat No. 2002, Kent Garden, Borivali (W), Mumbai, by the assessee, therefore, are of the considered view that the addition of Rs. 47,00,000/- made by the A.O u/s 69 and sustained by the CIT(A), cannot be upheld. We thus set aside the order of the CIT(A) and delete the addition of Rs. 47,00,000/-. The Ground of appeal No. 2 to 4 are allowed in terms of our aforesaid observations. The Ground of appeal No. 5 wherein the assessee had assalled the levy of interest u/sss. 234A, 234B and 234C being consequential in nature, therefore, the A.O is directed to recomputed the same after giving effect to our directions. Keeping view the above mentioned binding orders of higher judicial authorities, additions of Rs. 5,10,00,000/- u/s 69A of the IT Act and Rs. 11,32,38460/- u/s 69C totaling to Rs. 16,42,38,460/- are deleted. This ground of appeal is allowed. 17 Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 18. The learned DR before us contended that there were seized documents containing the financial transactions relating to the assessee which were not disclosed in the books of accounts of the assessee. Thus, there remains no ambiguity that the assessee has received the unaccounted cash and made payment without recording in the books of accounts. 19. On the other hand, the learned AR before us submitted that there was no corroborative evidence, or the statements brought on record by the search party suggesting that the assessee was involved in any of the financial transactions as alleged by the Revenue. The learned AR also contended that the assessee was not supplied with the statement recorded of the persons relating to the Venus group and likewise no opportunity of cross-examination was afforded. The documents found from the premises of third-party is subject to the presumptions provided under section 292C of the Act and therefore the same cannot be used against the assessee. ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 13 20. Both the learned DR and the AR vehemently supported the order of the authorities below as favourable to them. 21. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that there was a search and seizure operation under section 132 of the Act at the premises of Venus group dated 10-03-2015. As a result of the search, certain documents were found in the form of vouchers and cash book, containing various financial transactions. Based on these documents, the addition was made by the AO in the hands of the assessee for the different amounts which have been elaborated in the preceding paragraph. Before we deal with the specific issue arising from the order of the authorities below, we note that there is a presumption under section 132(4A) of the Act, providing that the documents found during search shall be presumed belonging to the search party. There is no ambiguity to the fact that the documents were found from the 3 rd party which have been used for the purpose of the addition in the hands of the assessee. In other words, the documents found from the premises of 3 rd party have been used against the assessee. However, on perusal of the assessment order, we note that nothing had been mentioned by the AO with reasons of using such documents against the assessee which is against the spirit of the provisions of section 132(4A) of the Act. Admittedly, the presumption provided under section 132(4A) of the Act is rebuttable presumption i.e. the search party by bringing the evidence on record can rebut such presumption. However, on perusal of the assessment order nothing arises or suggests that the documents belonged to the assessee. It was the onus upon the Revenue to produce with the cogent reasons for using the documents against the assessee which were recovered from the 3 rd party premises during search, but we note that such onus has not been discharged by the Revenue. Thus, at the threshold, we are inclined to hold that no addition based on the documents found from the premises of the 3 rd party can be made in the hands of the assessee in the given facts and circumstances. Likewise, such documents were not in the ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 14 handwriting of the assessee, nor the signature of the assessee was bearing on such papers. These documents found during the search raise doubts but the same cannot be used as evidence until and unless it is supported by the corroborative material and after carrying out independent enquiries. Even the statements recorded in the case of Venus group do not suggest the assessee was involved in such cash transactions. Moreover, the statements of the Venus group were not supplied to the assessee for the rebuttal and therefore the same cannot be used against the assessee and that too without providing the opportunity of cross- examination. 21.1 Regarding the SMS between the assessee and Shri Ashok Vaswani, it does not establish that the assessee has carried out cash transactions with Venus group. The SMS was relating to transactions of the other companies which were duly recorded in the books of accounts. Therefore, the SMS cannot be a basis to draw any inference against the assessee. 21.2 Under the provisions of section 69A/69C of the Act, the primary onus lies upon the revenue. In other words, it is the onus of the revenue to prove based on the documentary evidence that the assessee was the owner of the unaccounted money. But we note that the entire addition lacked supporting evidence. The Hon’ble High Court of Bombay in the case of CIT Vs. BG Shirke Construction Technology (P) Ltd. reported in 257 taxman 561 has held that the primary onus under the 69C lies upon the revenue. The relevant extract of the order is reproduced as under: "The primary requirement for application of section 69C is that assessee should incur expenses out of unexplained source of income. The section cannot apply if the source of income for making expenses is explained. This section refers to the source of expenditure and not to the expenditure itself. No evidence of any unexplained expenditure has been brought on record either by search party or by the AO. None of the seized material or document indicates that the appellant has incurred any unexplained expenditure out of books. Section 69C is a deeming provision. Therefore, it has to be interpreted strictly. Onus was on the AO to prove that the appellant had incurred expenses out of books of account. The AO has not brought on record any material to show that the appellant incurred expenses out of books of account” ITA nos.2099 & 2220/AHD/2018 Asstt. Year 2015-16 15 21.3 In view of the above, and after considering the facts in totality, we do not find any reason to interfere in the order of the learned CIT(A). At the time of hearing, the learned DR has also not brought anything on record contrary to the finding of the learned CIT(A). Thus, we uphold the order of the learned CIT(A). Hence the ground of appeal of the revenue is hereby dismissed. 21.4 In the result, the appeal of the Revenue is dismissed. 21. In the combined result, the appeal filed by the assessee is allowed whereas the appeal filed by the revenue is dismissed. Order pronounced in the Court on 12/06/2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 12/06/2023 Manish