Asstt. C.I.T., Circle-1, Gwalior V. Shri Amit Kumar Jain, Gwalior

ITA 234/AGR/2009

• Counselvise Citation: 23420314 RSA 2009
• Duration Of Justice: 2 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 26-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V BAPNA
• Keywords: Unexplained investment; Business income; Loose papers; Document seized; Corroborative evidences; Onus to prove; Documents seized
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NOS. 179, 180, 233 & 394/AGRA/2009 ASST. YEARS : 2002-03, 2003-04, 2004-05 & 2005-06 R ESPECTIVELY ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI S ANJAY KUMAR JAIN, CIRCLE-1, GWALIOR. SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : ABWPJ 4309 G) ITA NOS. 189 & 190/AGRA/2009 ASST. YEARS : 2004-05 & 2005-06 RESPECTIVELY ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI V INOD KUMAR JAIN, CIRCLE-1, GWALIOR. SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : ABWPJ 4311 N) ITA NO. 185/AGRA/2009 ASSTT. YEAR : 2004-05 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI V IRENDRA KUMAR JAIN, CIRCLE 1, GWALIOR. VS. SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : ABWPJ 4310 P) ITA NOS. 183 & 184/AGRA/2009 ASSTT. YEARS : 2004-05 & 2005-06 RESPECTIVELY ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI S IDHARTH JAIN, CIRCLE-1, GWALIOR. SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : AEDPJ 5818 A) ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 2 ITA NO. 234/AGRA/2009 ASSTT. YEAR : 2004-05 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI A MIT KUMAR JAIN, CIRCLE-1, GWALIOR. SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : AEDPJ 5820 Q) (APPELLANT) (RESPONDENTS) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENTS BY : SHRI V. BAPNA, C.A. DATE OF HEARING : 29.03.2012 DATE OF PRONOUNCEMENT : 27.04.2012 ORDER PER BENCH: THESE APPEALS BY THE REVENUE IN THE CASES OF DIFFER ENT ASSESSEES NAMELY S/SHRI SANJAY KUMAR JAIN, VINOD KUMAR JAIN, VIRENDR A KUMAR JAIN, SIDHARTH JAIN AND SHRI AMIT KUMAR JAIN, ARE DIRECTED AGAINST SEPA RATE ORDERS PASSED BY THE LEARNED CIT (APPEALS), GWALIOR FOR THE ASSESSMENT Y EARS MENTIONED IN THE TITLE ABOVE AGAINST EACH OF THESE APPEALS. SINCE MOST OF THE ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON, THEREFORE, FOR THE SAKE OF CONV ENIENCE, ALL THE APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 3 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH UN DER SECTION 132 OF THE ACT WAS CARRIED OUT ON 06.01.2005 IN THE RESIDENTIAL PREMIS ES OF THE ASSESSEE S/SHRI SANJAY KUMAR JAIN, VINOD KUMAR JAIN, VIRENDRA KUMAR JAIN, SIDHARTH JAIN & AMIT KUMAR JAIN. DURING THE COURSE OF SEARCH, SOME INCR IMINATING DOCUMENTS AND RECORDS WERE FOUND. DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEES HAVE TAKEN CASH LOANS. THE ASSESSEE-WISE DETAILS OF SUCH CASH LOANS OF DIFFERENT YEARS ARE AS UNDER :- S.NO. NAME A.Y. 2002-03 ( ` ) A.Y. 2003-04 ( ` ) A.Y. 2004-05 ( ` ) A.Y. 2005-06( ` ) 1. SANJAY KUMAR JAIN 51,000/- 93,000/- NIL 60,000/- 2. VINOD KUMAR JAIN NIL NIL 10,000/- 25,000/- 3. VIRENDRA KR. JAIN NIL NIL 37,000/- NIL 4. SIDHARTH JAIN NIL NIL 55,000/- 48,500/- 3. THE ASSESSING OFFICER MADE THE ABOVE ADDITIONS A S THE ASSESSEE HAS FILED ONLY CONFIRMATION AND DID NOT FILE OTHER DETAILS. THE CIT(A) DELETED THE ADDITIONS ONLY ON THE BASIS THAT THE CASH CREDIT WAS PETTY ON E AND ASSESSEE FILED CONFIRMATIONS. 4. THE LD. REPRESENTATIVES OF BOTH THE PARTIES SUBM ITTED THAT THE FACTS OF THE COMMON GROUNDS IN RESPECT OF ADDITIONS ON ACCOUNT O F CASH CREDIT AND HUNDIES ARE IDENTICAL TO THE FACTS OF THE CASE OF SHRI HEM KUMA R JAIN FOR ASSESSMENT YEARS ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 4 2000-01 TO 2005-06 WHICH HAS BEEN HEARD ON 28.03.20 12. IT WAS SUBMITTED THAT IDENTICAL ISSUES IN THESE APPEALS MAY BE DECIDED IN THE LIGHT OF THE ARGUMENTS AND SUBMISSIONS MADE IN THOSE APPEALS. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. AS SUBMITTED BY THE LD. REPRESENTATIVES OF THE PART IES, THE FACTS OF THESE CASES ARE IDENTICAL TO THE FACTS IN THE CASE OF SHRI HEM KUMA R JAIN IN ITA NOS.399 TO 404/AGR/2009. WE FIND THAT IN THE CASE OF SHRI HEM KUMAR JAIN IN ITA NOS.399 TO 404/AGR/2009, THE I.T.A.T. VIDE ORDER OF EVEN DA TE DECIDED THE ISSUE AS UNDER :- 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT THE ASSESSING OFFI CER MADE THE ADDITION UNDER SECTION 68 IN RESPECT OF VARIOUS ENT RIES FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS THE ASS ESSEE FAILED TO SATISFY THE CONDITIONS LAID DOWN IN SECTION 68 OF T HE ACT. THE ASSESSING OFFICER NOTICED THAT NONE OF THE CREDITOR IS ASSESSED TO TAX. THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINE SS OF THE DEPOSITOR AS THE ASSESSEE DID NOT FURNISH ANY COPY OF BANK AC COUNT, BALANCE SHEET, PAN ETC. THE CIT(A) DELETED THOSE ADDITIONS ONLY ON THE GROUND THAT THE ASSESSEE FILED CONFIRMATION AND THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY. HE ALSO DELETED THE ADDI TIONS OBSERVING THAT ALL DEPOSITS ARE SMALL AMOUNTS. AFTER CONSIDE RING TOTALITY OF THE FACTS OF THE CASE, WE NOTICE THAT THE CIT(A) HAS DE LETED THE ADDITION MERELY ON THE GROUND THAT THE AMOUNTS OF ALL DEPOSI TS ARE SMALL AND THE ASSESSEE HAS TO FURNISH CONFIRMATION. THE CIT( A) SHIFTED THE BURDEN ON THE ASSESSING OFFICER WHICH IS NOT IN ACC ORDANCE WITH LAW. THE BURDEN IS ON THE ASSESSEE TO ESTABLISH THE THRE E INGREDIENTS REQUIRED UNDER SECTION 68 OF THE ACT I.E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE SUBMISSION OF THE LD. AUTHORISED ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 5 REPRESENTATIVE WAS THAT THE ASSESSEE POSSESSES SUFF ICIENT EVIDENCE TO DISCHARGE HIS BURDEN. UNDER THE CIRCUMSTANCES, WE THINK IT PROPER TO SEND BACK THE ISSUE RELATING TO THE ADDITION ON ACC OUNT OF CASH CREDIT IN ALL THE YEARS TO THE FILE OF THE ASSESSING OFFIC ER WITH THE DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. FOLLOWING THE ABOVE ORDER OF I.T.A.T. IN THE CAS E OF SHRI HEM KUMAR JAIN IN ITA NOS.399 TO 404/AGR/2009, THE ISSUE IN THESE APP EALS IS ALSO BEING SENT BACK TO THE FILE OF THE ASSESSING OFFICER WITH IDENTICAL DI RECTION. 7. THE SECOND COMMON GROUND IN THESE APPEALS IS IN RESPECT OF ADDITION ON ACCOUNT OF HUNDIES. THE ASSESSEE-WISE DETAILS OF S UCH ADDITIONS MADE BY THE ASSESSING OFFICER ON THIS COUNT ARE AS UNDER :- S.NO. NAME A.Y. 2002-03( ` ) A.Y. 2003-04( ` ) A.Y. 2004-05 ( ` ) A.Y. 2005-06 ( ` ) 1. SANJAY KUMAR JAIN 48,08,000/- 14,18,000/- 1,51,98,000/- 8,62,24,425/- 2. VINOD KUMAR JAIN NIL NIL 40,16,000/- 23,69,000/- 3. VIRENDRA KR. JAIN NIL NIL 31,95,000/- NIL 4. SIDHARTH JAIN NIL NIL 31,50,000/- 65,00,000/- 5. AMIT KUMAR JAIN NIL NIL 32,94,000/- NIL 8. APART FROM THE ABOVE ADDITIONS ON ACCOUNT OF HUN DIES, THE ADDITION OF ` 6,66,368/- IS ALSO MADE BY THE ASSESSING OFFICER IN THE CASE OF SHRI SANJAY KUMAR JAIN IN A.Y. 2005-06 ON ACCOUNT OF LOOSE PAPERS. T HE CIT(A) DELETED THE ADDITION ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 6 ON THE GROUND THAT THE ASSESSEE HIMSELF IS DEWAL AN D RELATED TRANSACTION HAS BEEN REFLECTED IN THE BOOKS OF ACCOUNT AND BANK ACCOUNT WHICH WERE IN THE POSSESSION OF THE DEPARTMENT. IN RESPECT OF ADDITION TREATING TH E ASSESSEE AS NOT DEWAL, THE CIT(A) HELD THAT THE GENUINENESS OF THE HUNDIES AND TRANSACTIONS IN THE NAME OF DEWAL AND LEWAL ARE VERIFIABLE ON WHICH THE ASSESSE E HAS SHOWN TO HAVE RECEIVED COMMISSION/DALALI. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE TRANSACTIONS WERE RELATED TO THE ASSESSEE EXCEPT FROM RECEIVING COMMISSION FROM DALALI. THE ASSESSING OFFICER MADE ADDITION MERELY ON PRESUMPTI ON WHEREAS THE ENTIRE FACTS WERE ON RECORD. 9. AS STATED BY THE LD. REPRESENTATIVES OF THE PART IES THAT IDENTICAL ISSUE HAS BEEN ARGUED IN THE CASE OF SHRI HEM KUMAR JAIN IN I TA NOS.399 TO 404/AGR/2009, IT WAS SUBMITTED THAT THESE CASES MAY ALSO BE DECID ED ACCORDINGLY. WE NOTICE THAT ON IDENTICAL SET OF FACTS, THE I.T.A.T., AFTER RECO RDING THE RELEVANT FACTS AND SUBMISSIONS OF THE ASSESSEE, DECIDED THE ISSUE AS U NDER :- 8. THE SECOND GROUND OF APPEAL IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF ` 97,454/- IN AY 2000-2001 ON ACCOUNT OF UNEXPLAINED LOOSE PAPERS. THE ADDITIONS ARE PERTAIN ING TO LOOSE PAPERS AND GOLD ORNAMENT FINANCE. THIS IS COMMON G ROUND OF APPEAL RAISED IN ALL YEARS UNDER CONSIDERATION. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH SEVE RAL LOOSE PAPERS AND BOOKS WERE FOUND. ON EXAMINATION OF THESE LOOS E PAPERS, CERTAIN ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 7 ENTRIES TOTALING TO ` 2,74,531/- FOR A.Y. 2000-2001 WAS FOUND WHICH COULD NOT BE EXPLAINED BY THE ASSESSEE. THE ASSESS ING OFFICER GAVE THE DETAILS OF THE ADDITION OF ` 2,74,531/- AT PAGE NOS. 9 TO 12 OF HIS ORDER. THE SUMMARY DETAILS OF ADDITION OF ` 2,74,531/- MADE IN A.Y. 2000-2001 NOTICED FROM THE ASSESSING OFFICERS ORDE R ARE AS UNDER :- TABLE-A S.NO. AMOUNT SEIZED PAPERS PARTICULARS 1. ` 37,472/- LPS-1/3 CODE P-1 C-1 PAGE-60 AS PER THE ASSESSING OFFICER, THE AMOUNT WAS ADVANCED AND INTEREST WAS EARNED, THEREFORE, THE AMOUNT WAS ADDED AS INCOME.(35000/- +2472/-) 2. ` 10,000/- LPS-1/3 CODE P-1 C-1 PAGE-62 AS PER THE ASSESSING OFFICER, THE AMOUNT COULD NOT BE VERIFIED FROM THE BOOKS OF ACCOUNTS. 3. ` 1,00,639/- 276/- 100915/- -------------- 125799/- LPS-1/4 P-1 C-4 LPS-1/7 P-1 C-7 (1)(A)SOME LOOSE PAPERS CONTAINING SALE OF GOLD ORNAMENT WAS FOUND. THE ASSESSEE FAILED TO PROVE ANY VERIFICATION IN THIS REGARD. THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION THAT THESE WERE ESTIMATES BECAUSE ON THESE PAPERS ESTIMATE IS PRINTED. (2)(A) THE ASSESSING OFFICER ALSO CALCULATED 10% PROFIT ON SALE RS.2,763/- OF WHICH CALCULATION COMES TO RS.276/- (1)(B) THE ASSESSING OFFICER NOTICED TOTAL OF SUCH PAPERS FOR 10,06,394/-. ASSESSING OFFICER AFTER CONSIDERING THE PROFIT RATE IN THIS LINE OF BUSINESS APPLIED 10% AND ESTIMATED THE INCOME OF ` 1,00,639/-. THE ASSESSING OFFICER ALSO ESTIMATED INVESTMENT IN STOCK ABOVE THE SALE ` ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 8 345/- 126144/- ------------- 1,25,799/-.APPLYING 12.5% OF SALE. (2)(B) INVESTMENT IN THE SAID TURNOVER (2) (A) ESTIMATED AT ` 345/-. THUS THE TOTAL ADDITION MADE IS RS621/- TOTAL 274531/- TO APPRECIATE THE ABOVE TABLE-A, IT IS TO CLARIFY T HAT ABOVE ITEMS AT SL. NO.1 & 2 ARE THE ADDITION ON ACCOUNT O F LOOSE PAPERS FOUND AT THE TIME OF SEARCH. THE ASSESSING OFFICER MADE ADDITION OF GROSS AMOUNT ON THE GROUND THAT NO EXPLANATIONS WERE FURN ISHED BY THE ASSESSEE. THIS IS FIRST TYPE OF ADDITION IN ALL TH E YEARS. ITEMS OF ADDITION AT SL. NO. 3 OF ABOVE TABLE-A ARE IN RESPECT OF LOOSE PAPERS CONTAINING SALE OF GOLD ORNAMENTS FOUN D. IT IS NOTICED THAT THE ASSESSING OFFICER HAS TAKEN TOTAL OF LOOSE PAPERS AS TURNOVER OF SALE OF GOLD ORNAMENT BUSINESS AND APPLIED 10% P ROFIT RATE FOR ESTIMATING PROFIT. THE ASSESSING OFFICER ALSO MADE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN STOCK FOR THE PURPOSE OF SAID TURNOVER BY APPLYING 12.5% OF SALE AMOUNT. THE YEAR -WISE DETAILS OF SUCH ADDITIONS NOTICED FROM THE ORDER OF CIT (A) AT PAGE NO.15 ARE REPRODUCED AS UNDER:- TABLE-B AS REGARDS SALE BILLS, THE ASSESSING OFFICER HAS MADE CALCULATION OF TOTAL SALES AND APPLIED 10% N.P. RAT E AND ALSO ESTIMATED INVESTMENT YEAR WISE WHICH IS AS UNDER :- (CIT(A)S ORDER PAGE NO.15) ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 9 A.Y. AMOUNT OF SALE PROFIT ESTIMATED@10% UNEXPLAINED INVESTMENT IN SALE 12 % 1999-2000 76,348 7,638 9,548 2000-2001 10,09,157 1,00,915 1,26,144 2001-2002 1,29,252 12,925 16,156 2002-2003 2,35,658 23,555 29,444 2003-2004 5,31,871 53,186 66,483 2004-2005 NIL NUIL NIL 2005-2006 5,78,992 57,898 72,373 10. THE THIRD TYPE OF ADDITION ON ACCOUNT OF H UNDIES IS IN A.Y. 2002-2003 TO 2005-2006. THE ADDITION IS ON ACCOUNT OF OWN HUNDI. THE ASSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF HUNDI AS THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF DEW AL. IT IS PERTINENT TO MENTION THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF HUNDI AND MONEY LENDING BUSINESS. THE ASSESSEE, APART FROM H IS OWN CAPITAL INVESTMENTS IN HUNDI, ALSO DOING HUNDI BUSINESS WHE REIN THE AMOUNT OF OTHER PARTIES WERE ADVANCED TO CERTAIN PARTIES A ND THE ASSESSEE WAS TO GET ONLY COMMISSION ON SUCH TRANSACTIONS. AS PE R THE PRACTICE FOLLOWED IN THIS TRADE AND BY THE ASSESSEE, WHATEVE R TRANSACTIONS OF HUNDI ARE IN BETWEEN THE THIRD PERSON, THE INCOME O F THE ASSESSEE IS IN THE FORM OF COMMISSION. IN HUNDI BUSINESS IT IS ME NTIONED IN HUNDI AS LEWAL AND DEWAL. LEWAL MEANS THE AMOUNT OF FINANCE RECEIVED AND DEWAL MEANS AMOUNT GIVEN BY THE THIR D PARTY/ARRANGED BY THE ASSESSEE FROM THIRD PERSON. SINCE IN CERTAIN HUNDIES THE ASSESSEE FAILED TO ESTABLISH THE GENUIN ENESS OF DEWAL OR SOME HUNDIES DOES NOT CARRY NAME OF DEWAL, THE ASSE SSING OFFICER WAS OF THE VIEW THAT THESE WERE SUCH HUNDIES FOR WH ICH THE ASSESSEE HAS INVESTED HIS OWN CAPITAL. SINCE THESE HUNDIES WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, THE I NVESTMENT MADE BY THE ASSESSEE IN SUCH HUNDI BUSINESS WAS TREATED AS OUT OF THE BOOKS OF ACCOUNTS. THEREFORE, THE ASSESSING OFFICER MADE TH E ADDITION OF GROSS AMOUNT. 11. FROM THE ABOVE FACTUAL POSITION OF THE ADDITION S, WE NOTICE THAT THE ASSESSING OFFICER HAS MADE THREE TYPES OF ADDIT IONS FROM ALL THE YEARS FROM A.Y. 1999-2000 TO 2005-2006, FIRSTLY ON THE BASIS OF LOOSE ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 10 PAPERS FOUND AT THE TIME OF SEARCH WHICH WERE NOT E XPLAINED SATISFACTORILY BY THE ASSESSEE. SECOND TYPE OF ADD ITIONS ARE ON THE BASIS OF DOCUMENTS FOUND IN RESPECT OF GOLD ORNAMEN TS IN MONEY LENDING BUSINESS. THIRD TYPE OF ADDITIONS ARE ON A CCOUNT OF OWN HUNDI. 12. IN RESPECT OF LOOSE PAPERS, THE CIT(A) CONFIRME D THE ADDITIONS TO THE EXTENT OF 1% ON THE GROUND THAT THE ASSESSEE WAS DOING BUSINESS OF HUNDI FINANCE AND THOSE LOOSE PAPERS PERTAIN TO THAT BUSINESS OF THE ASSESSEE, THEREFORE, ONLY PROFIT ELEMENT CAN BE TAX ED. SUCH ADDITIONS YEAR-WISE AND RELIEF GRANTED BY THE CIT(A) ARE REPR ODUCED FROM PAGE NO.5 OF ASSESSEES PAPER BOOK IN TABLE-C AS UNDER:- TABLE-C A.Y. ADDITION BY A.O. RELIEF BY CIT(A) CONFIRMED BY CIT(A) 1% COMMISSION 2000-01 47477(47472) 47002 475 2001-02 709860 702761 7099 2002-03 70700 69993 707 2003-04 3891950 3853030 38920 2004-05 817500 809325 8175 2005-06 26188558 25926672 261886 13. IN RESPECT OF GOLD ORNAMENTS FINANCE, THE CIT(A ) DID NOT ACCEPT THE ASSESSEES CONTENTION THAT LOOSE PAPERS RELATIN G TO SALE OF JEWELLERY WHICH WAS NOT BELONGING TO THE ASSESSEE B ECAUSE DURING THE COURSE OF SEARCH THE PAPERS FOUND FROM THE POSSESSI ON OF THE ASSESSEE CLEARLY SHOWED THAT AMOUNT OF SALE WHICH WERE NOT R ECORDED OR SHOWN BY THE ASSESSEE IN RETURN OF INCOME. IN PRINCIPLE, THE CIT(A) AGREED WITH THE VIEW OF THE ASSESSING OFFICER THAT IN SUCH TYPE OF TRANSACTION RECORDED IN LOOSE PAPERS, THE ADDITION IS WARRANTED FIRSTLY IN RESPECT OF PROFIT AND SECONDLY IN RESPECT OF UNEXPLAINED IN VESTMENT. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R IN ESTIMATING UNACCOUNTED INVESTMENT IN STOCK @ 12% OF THE SALE. THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS COUNT HAS BEE N CONFIRMED BY THE ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 11 CIT(A). HOWEVER, IN RESPECT OF PROFIT RATE, THE CI T(A), AFTER CONSIDERING NATURE OF TRADE, FACTS OF SIMILAR TRADE AND IN THE INTEREST OF JUSTICE, FOUND THAT THE PROFIT RATE @ 5% WILL BE A REASONABLE RATE INSTEAD OF 10%. THE CIT (A) ALLOWED 5% RELIEF IN T HIS REGARD. A COMPARATIVE POSITION OF SUCH RELIEF NOTED FROM THE ASSESSEES PAPER BOOK AT PAGE NO.4 IS AS UNDER:- A.Y. SALE ESTIMATED A.O. APPLIED 10% N.P. CIT(A) REDUCED 5% N.P. A.O. ADDED & CIT(A) CONFIRMED 12.5% OF SALE AS STOCK INVESTMENT 2000-01 1009157 100915 50458 126144 2001-02 129252 12925 6463 16156 2002-03 235658 23555 11778 29444 2003-04 531871 53186 26593 66483 2004-05 NIL NIL NIL NIL 2005-06 578992 57898 28949 72373 14. ON THE BASIS OF RECONCILIATIONS AND EXPLANATION S FOR ALL THE YEARS WHICH HAVE BEEN REPRODUCED BY THE CIT(A) FROM PAGE NOS.23 TO 52, HAS DELETED THE ADDITION ON ACCOUNT OF PERSONA L HUNDIES AS UNDER :- THE ASSESSING OFFICER HAS FINALLY HELD THAT THE ID ENTITY OF DEWALS COULD NOT BE ESTABLISHED. THE APPELLANT HAS DIRECT NEXUS WITH LENDING OF MONEY. IN SOME CASES, FINANC IAL WORTHINESS OF DEWALS COULD NOT BE PROVED AND THE AP PELLANT HAS HELD TO BE THE INVESTOR OF MONEY IN HUNDIES. H OWEVER, IT IS NOT UNDERSTOOD AS TO HOW THE SUM REMAINED UNPROVED & STILL UNEXPLAINED AFTER THE APPELLANT HAS PROVIDED THE DE TAILS AS ALSO THE PANS OF THE INVESTORS WHO HAVE DULY CONFIRMED T HE TRANSACTIONS. FURTHER TO THAT THE ASSESSING OFFICE R HAS NOT CARRIED OUT ANY ENQUIRIES TO HOLD OTHERWISE AND NO CONTRARY FINDING HAS NOT NOTED OR BROUGHT ON RECORD BEFORE T REATING THE SAME AS UNEXPLAINED. THE RATIO OF THE CASE LAW QUO TED BY THE ASSESSING OFFICER DOES NOT SUPPORT THE ADDITION AS MADE BY THE ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 12 ASSESSING OFFICER ON THIS SCORE. ALL THE TRANSACTI ON IN HUNDI ARE ADMITTEDLY TAKEN PLACE BY WAY OF CHEQUES AND ARE TH ROUGH THE BANKING CHANNEL WHICH ARE FURTHER NOTED IN THE RELE VANT ROKAD KHATA (CASH BOOK) AS WELL AS IN THE RELEVANT ACCOUN TS GIVEN IN THE HUNDI REGISTERS. ALL THESE HUNDI REGISTERS SEI ZED AT THE TIME OF SEARCH OPERATIONS ARE ADMITTEDLY IN POSSESSION O F THE DEPARTMENT. THUS, THE GENUINENESS OF THE HUNDIES A ND THE TRANSACTIONS IN THE NAMES OF DEWALS AND LEWALS VIZ. THE INVESTORS AND BORROWERS RESPECTIVELY ARE VERIFIABLE ON WHICH THE APPELLANT HAS SHOWN TO HAVE RECEIVED COMMISSIO N OF DALALI. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD IF ANY OF SUCH PARTIES HAVE DENIED ANY SUCH TRANSACTION OR IF ANY PART OF SUCH TRANSACTION RELATED TO THE APPELLANT ASSESSEE EXCEP T FROM RECEIVING COMMISSION OR DALALI ON THE SAME. IN VIE W OF FOREGOING, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS PROCEEDED TO MAKE THE ADDITION ON THE BASIS OF A MERE PRESUMP TION WHILE THE ENTIRE FACTS ON RECORD INCLUDING THE MATERIAL E VIDENCE INCLUDING THAT FOUND AND SEIZED OR IDENTIFIED DURIN G THE COURSE OF SEARCH PROVED CONTRARY TO THE STAND TAKEN BY THE ASSESSING OFFICER. THE ADDITION IS, THEREFORE, BASELESS AS N O MATERIAL IS BROUGHT ON RECORD TO SUPPORT OF THE SAME. THE ADDI TION, THEREFORE, DOES NOT SURVIVE WHICH IS HEREBY DELETED . 15. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT DURING THE COU RSE OF SEARCH, SEVERAL LOOSE PAPERS AND BOOKS WERE FOUND. THE PAP ERS AND DOCUMENTS FOUND AT THE TIME OF SEARCH WERE EXAMINED AND QUERIES WERE MADE BY THE ASSESSING OFFICER. AFTER CONSIDER ING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER PREPARED THE DETAIL ED CHART OF THE ADDITION WHICH IS FORMING PART OF THE ASSESSMENT OR DER. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDI TION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUMENTS, MA TERIAL AND LOOSE PAPERS FOUND AT THE TIME OF SEARCH. THE LD. DEPART MENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE CIT(A) IS NOT CORRECT IN DELETING THE ADDITION OF THE GROSS AMOUNT OF TRANSA CTION NOTED IN LOOSE PAPERS. THE LD. DEPARTMENTAL REPRESENTATIVE ERRED IN REDUCING THE COMMISSION FROM 10% TO 5% IN RESPECT OF GOLD ORNAME NT FINANCE TRANSACTION. IT WAS ALSO SUBMISSION OF THE LD. DEP ARTMENTAL REPRESENTATIVE THAT THE ENTIRE FAMILY OF THE ASSESS EE IS ENGAGED IN ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 13 TRANSACTION IN HUNDIES. THE LD. DEPARTMENTAL REPRE SENTATIVE FURTHER SUBMITTED THAT APART FROM FINANCING THEIR OWN MONEY IN HUNDIES THEY ARE OPERATING HUNDIES OF OTHER PERSONS ON COMMISSIO N BASIS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING T HE ASSESSMENT PROCEEDINGS, ON EXAMINATION OF THE SEIZED DOCUMENTS , THE ASSESSING OFFICER NOTICED THAT CERTAIN HUNDIES DO NOT CARRY A DDRESSES OF THE DEWALS AND LEWALS MENTIONED IN THE HUNDIES. THE AS SESSEE WAS ASKED TO ESTABLISH THE IDENTITY OF THE PERSONS, PAN AND NAME OF THE ASSESSING OFFICER BUT THE ASSESSEE HAS FAILED TO FU RNISH THE REQUIRED DETAILS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMI TTED THAT THE SOURCES OF ENTRIES WERE FOUND IN THE BOOKS OF ACCOU NTS OF THE ASSESSEE. IT WAS THE DUTY OF THE ASSESSEE TO SUBMIT VERIFICAT ION AND SUBSTANTIATE THE ENTRIES. THE BURDEN OF PROVING IS ON THE ASSESS EE. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT IN ABSENCE OF IDENTITY OF DEWALS THE ASSESSING OFFICER HAS RIGHTL Y TAKEN THOSE HUNDIES AS INVESTMENT MADE BY THE ASSESSEE OUT OF H IS UNDISCLOSED SOURCES. THEREFORE, THE ADDITION MADE BY THE ASSES SING OFFICER IS SUSTAINABLE. THE LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT ADDITION ON ACCOUNT OF SUCH HUNDIES ARE SUSTAINABLE IN VIEW OF THE JUDGEMENT OF CALCUTTA HIGH COURT IN THE CASE OF K.M . SADHUKHAN & SONS PVT. LTD. VS. CIT, 239 ITR 77(CAL) AND D.A. PA TEL VS. DCIT, 72 ITD 340(MUM) 16. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T NONE OF THESE LOOSE PAPERS WERE IN THE WRITING OF THE ASSESSEE OR HIS NAME IS MENTIONED, BUT IT IS IN THE WRITING OF SANTOSH KUMA R JAIN OR SOME OTHER PERSON. HE FURTHER CONTENDED THAT THE ASSESS EES BUSINESS IS HUNDI DALALI. THEREFORE, THE ASSESSEE WAS REQUIRED TO MAKE CALCULATION OF INTEREST FOR MONEY OF THE CUSTOMERS. THESE SLIPS IN THE FORM OF LOOSE PAPERS RELATE TO SUCH CALCULATIONS ON LY. THE ASSESSEE DOES NOT RECEIVE INTEREST AMOUNT MENTIONED IN SUCH LOOSE PAPERS AS THE MONEY DOES NOT BELONG TO THE ASSESSEE. THESE S IMPLY CARRY INTEREST CALCULATION WITHOUT SHOWING THAT THE INTER EST IN FACT WAS PAID OR PAYABLE TO THE ASSESSEE. THE LD. AUTHORISED REP RESENTATIVE RELIED UPON THE ORDER OF THE CIT (A) IN THIS REGARD. THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER :- I HAVE GONE THROUGH THE ADDITION MADE BY A.O. AND I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLAN T. THE ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 14 BASIC FACT WHICH HAS TO BE CONSIDERED IS THAT THE B USINESS OF THE APPELLANT IS THAT OF HUNDIES AND IS SHOWING COMMISS ION EARNED ON THEM AS INCOME FROM HUNDI DALALI. IT IS THUS OB VIOUS THAT ASSESSEE HAS TO KEEP PAPERS RELATING TO HUNDI/LOANS AND TO CALCULATE INTEREST THEREON IN THE COURSE OF CONDUCT ING BUSINESS. IT IS ALSO EXPLAINED THAT THE SLIPS ARE RECORDED FO R THE PURPOSE OF REMINDING OF REPAYMENT OR RENEWALS BEFORE THE DU E DATE WITH THE MUTUAL CONSENT OF BOTH LEWAL AND DEWAL. THE APPELLANT HAS RELIED ON SEVERAL JUDGEMENTS BUT FOLLOWING JUDGEMENTS WHICH DEALS WITH THE IDENTICAL CASES OF HUNDI DALAL ARE MORE RELEVANT WHICH ARE :- (1) BIREN V. SAVLA V. ACIT 100 TTJ (MUM) 1006 (2) RAMANLAL P. CHORDIA V. ACIT 87 TTJ (PUNE) 713 IN THESE CASES THE HONBLE MEMBERS HAVE HELD THAT T HE INVESTMENT IN HUNDIES AND INTEREST THEREON CANNOT B E HELD TO BE INCOME OF THE APPELLANT SINCE HE IS A HUNDI DALAL. HE IS ONLY CONCERNED WITH HIS COMMISSION. THE HUGE ADDITION M ADE BY THE A.O. DOES NOT MACH WITH HIS BALANCE SHEET & PROHIBI T & LOSS A/C FILED ALONG WITH THE RETURN OF INCOME. THE CON CLUSIVE EVIDENCE THAT THE INVESTMENT IN THESE HUNDIES IS OF THE APPELLANT IS NO WHERE ON RECORD. EVEN MOST OF AT THESE LOOSE PAPERS APPEARS TO BE DUMB PAPERS OR USED BY ADDING 000 DOE S NOT ESTABLISH THAT THIS IS INVESTMENT OF THE APPELLANT. ON THE OTHER HAND IT IS NOT DOUBTED THAT THE APPELL ANT IS A DALAL. IN MY OPINION THE APPELLANT HAS ONLY INCOME FROM DA LALI OR COMMISSION. I THEREFORE DIRECT THE A.O. TO ASSESS 1% INCOME FROM DALALI ON THE INVESTMENT AS COMPUTED BY THE A. O. AND DELETE THE ADDITION RELATING TO INTEREST ` 67,158/- IN A.Y. 2001- 02, ` 1,58,038/- IN A.Y. 2002-03, ` 1,18,700/- IN 2003-04, ` 3,600/- IN A.Y. 2004-05 AND ` 68,174/- IN A.Y. 2005-06. 17. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IN RESPECT OF ADDITION ON THE BAS IS OF LOOSE PAPER, THE CIT(A) HELD THAT BASICALLY THE ASSESSEE IS A DA LAL AND IN CASE OF ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 15 SUCH TYPE OF NOTING ON LOOSE PAPER, ONLY DALALI OR COMMISSION INCOME CAN BE ADDED ON INCOME OF THE ASSESSEE. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ASSESS 1% INCOME FROM DALALI O N THE INVESTMENT AS COMPUTED BY THE ASSESSING OFFICER AND DELETED TH E BALANCE AMOUNT OF ADDITION RELATED TO INTEREST. WHILE DELETING TH E ADDITION, THE CIT(A) CONSIDERED THE ASSESSEES SUBMISSION THAT THE BUSIN ESS OF THE ASSESSEE IS THAT OF HUNDI AND HE IS SHOWING COMMISSION EARNE D FROM THEM AS INCOME FROM HUNDI DALALI. THEREFORE, IT IS OBVIOUS THAT THE ASSESSEE HAS TO KEEP PAPERS RELATING TO HUNDI LOAN AND TO CA LCULATE THE INTEREST THEREON IN THE COURSE OF CONDUCTING BUSINESS. FURT HER THESE PAPERS/SLIPS ARE RECORDED FOR THE PURPOSE OF REMAIN ING REPAYMENT OR RENEWAL BEFORE THE DUE DATE WITH THE MUTUAL CONSENT AND REVIVAL AND RENEWAL. THE ASSESSEE RELIED UPON THE DECISION OF I.T.A.T., MUMBAI BENCH IN THE CASE OF BIREN V. SAVLA VS. ACIT, 100 T TJ (MUM) 2006 AND PUNE BENCH IN THE CASE OF RAMAQNLAL P. CHORADIA VS. ACIT, 87 TTJ (PUNE) 713 WHEREIN IT HAS BEEN HELD THAT THE IN VESTMENT IN HUNDIES AND INTEREST THEREON CANNOT BE HELD TO BE I NCOME OF THE ASSESSEE SINCE HE IS A HUNDI DALAL. HE IS ONLY CON CERNED WITH HIS COMMISSION. IT IS ADMITTED FACT THAT THE ASSESSEE E NGAGED IN MONEY LENDING/HUNDI BUSINESS. THE LOOSE PAPERS FOUND DOE S NOT CARRY A FACT THAT THESE LOOSE PAPERS PERTAIN TO UNACCOUNTED HUND I TRANSACTIONS OUT OF ASSESSEES OWN CAPITAL. IT IS PRESUMPTION OF TH E ASSESSING OFFICER THAT THE ASSESSEE HAS MADE THE INVESTMENT OUT OF BO OKS IN THESE HUNDIES. WHEREAS, THE EXPLANATION OF THE ASSESSEE IS THAT SINCE THE ASSESSEES BUSINESS BEING OF HUNDI, THEREFORE, THE ASSESSEE HAS TO KEEP PAPERS RELATING TO HUNDI LOAN AND TO CALCULATE INTE REST THEREON DURING THE COURSE OF CONDUCTING BUSINESS TO EXPLAIN THE SA ME TO THE CONCERNED PARTIES. THESE CALCULATIONS WERE MADE DU RING THE COURSE OF BUSINESS FOR THE PURPOSE OF REMINDING OF REPAYME NT OR RENEWAL BEFORE THE DUE DATE WITH THE MUTUAL CONSENT OF LEWA L AND DEWAL. IN ABSENCE OF COGENT EVIDENCE NOTED ON LOOSE PAPERS, I T CANNOT BE HELD ON PRESUMPTION THAT THESE WERE THE ASSESSEES OWN I NVESTMENT OUT OF BOOKS OF ACCOUNTS. CONTRARY TO THAT AT THE MOST IT CAN BE HELD THAT THERE WERE THE BUSINESS TRANSACTIONS OF THE ASSESSE E AND FOR THAT PURPOSE THE PROFIT ELEMENT CAN BE ESTIMATED FOR THE PURPOSE OF CALCULATION OF TOTAL INCOME. WE DO NOT FIND ANY ER ROR IN THE APPROACH OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ASSESS 1% INCOME FROM DALALI ON TURNOVER COMPUTED BY THE ASSESSING O FFICER AND DELETE ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 16 THE ADDITIONS ACCORDINGLY. IN THE LIGHT OF THE ABO VE DISCUSSIONS, WE CONFIRM THE ORDER OF THE CIT (A) ON THE ISSUE. 17.1 ANOTHER ADDITION MADE BY THE ASSESSING OFFICER IS IN RESPECT OF GOLD ORNAMENTS. THE CIT (A) HAS ACCEPTED THE CALCU LATION OF THE ASSESSING OFFICER EXCEPT REDUCING THE PROFIT RATE F ROM 10% TO 5%. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIR CUMSTANCES AND AFTER CONSIDERING THE ORDERS OF THE ASSESSING OFFICER AND CIT(A), THE CIT(A) HAS RIGHTLY APPLIED 5% RATE OF PROFIT AS 10% RATE APPLIED BY THE ASSESSING OFFICER IS ARBITRARY RATE AND 5% RATE APPLIED BY THE CIT(A) IS FORTIFIED BY PROVISIONS OF SECTION 44AF O F THE ACT THOUGH WE ARE AWARE THAT SUB-SECTION 44AF IS NOT DIRECTLY APP LICABLE TO THE CASE UNDER CONSIDERATION. THERE IS NO CONTRARY MATERIAL ON RECORD NOR HAS THE SAME BEEN POINTED OUT BY THE REVENUE AT THIS ST AGE. UNDER THE CIRCUMSTANCES, WE CONFIRM THE ORDER OF THE CIT(A) I N DIRECTING THE ASSESSING OFFICER TO APPLY 5% NET PROFIT RATE INSTE AD OF 10%. ORDER OF THE CIT(A) ON THIS ISSUE IS ALSO CONFIRMED. 17.2 ONE MORE TYPE OF ADDITION MADE BY THE ASSESSIN G OFFICER IN ASSESSMENT YEARS 2002-03, 2003-04, 2004-05 & 2005-0 6 ARE ON ACCOUNT OF UNEXPLAINED HUNDI AS THE ASSESSEE WAS HE LD TO BE THE INVESTOR OF THE MONEY IN HUNDIES. THE ASSESSING OF FICER NOTICED THAT ENTIRE FAMILY OF THE ASSESSEE IS ENGAGED IN TRANSAC TION OF HUNDIES. APART FROM INVESTING THEIR OWN MONEY IN HUNDI, THEY ARE OPERATING HUNDIES OF OTHER PERSONS ON COMMISSION BASIS. FROM THE BOOKS AND PAPERS SEIZED FROM THE RESIDENTIAL PREMISES OF THE FAMILY MEMBERS OF THE ASSESSEE AND THE ASSESSEE ITSELF, ALSO BUSINESS PREMISES OF THE FAMILY, HUGE NUMBER OF ENTRIES WERE FOUND. THE ASS ESSEE WAS ASKED TO ESTABLISH THE IDENTITY OF THE PERSONS PAN AND NAME OF THE ASSESSING OFFICER. THE ASSESSEE FAILED TO FURNISH THE DESIRE INFORMATION. THE ASSESSING OFFICER MADE THE ADDITION ON THE GROUND T HAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY AND FINANCIAL WORTHINESS OF THE PERSONS ADVANCING HUNDI TO THE ASSESSEE AND AS THE NAMES APPEARS AS DONOR IN THE BOOKS OF ACCOUNTS. BEFORE THE CIT(A) THE ASSESSEE FURNISHED A DETAILED EXPLANATION IN THE FORM OF REC ONCILIATION STATEMENTS AND CHART SHOWING THE RELEVANT ENTRIES W HICH HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND OTHER REASONS AS MENTIONED IN RESPECTIVE CHART. THE CIT (A) REPRODU CED LIST OF RECONCILIATION CHART FROM PAGE NOS.23 TO 51 OF HIS ORDER. IT WAS ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 17 EXPLAINED BY THE ASSESSEE THAT SEIZED DIARY RELATES TO THE PERSONAL HUNDIES GIVEN BY THE ASSESSEE AND THAT IS THE REASO N THAT THE NAME OF DEWAL GIVEN IN ORDER AS HEM KUMAR JAIN I.E. THE ASS ESSEE. THESE HUNDIES ARE GIVEN BY THE ASSESSEE HIMSELF FROM HIS OWN ACCOUNT WHICH WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS AT THE TIME OF SEARCH, AS EVIDENT FROM THE BOOKS SEIZED AT THE TIM E OF SEARCH. ALL THESE ENTRIES ARE OF ACCOUNT PAYEE CHEQUES AND A CO MPLETE RECONCILIATION IS FURNISHED BEFORE THE CIT (A). IT WAS ALSO SUBMITTED TO THE CIT(A) THAT ASSESSING OFFICER HAS CONFUSED T HAT DEWAL IS SOMEONE OTHER THAN THE ASSESSEE WHEREAS ALL THE HUN DIES ARE PART OF BOOKS OF ACCOUNTS AND ARE THROUGH BANKING CHANNEL. THE RELEVANT INTEREST HAS BEEN SHOWN IN PROFIT & LOSS ACCOUNT OF THE ASSESSEE. DEWAL IS THE ASSESSEE HIMSELF, THEREFORE, THERE IS NO QUESTION OF ESTABLISHING IDENTITY AND OTHER INGREDIENTS OF SECT ION 68 OF THE ACT. THE OTHER PART OF THE DIARY IS IN RESPECT OF COMMIS SION EARNED ON HUNDIES PAID BY VARIOUS PARTIES AFTER TAKING THEM F ROM INVESTOR. AS STATED ABOVE, THE ASSESSEE HAS FILED RECONCILIATION S FOR ALL THE YEARS. TO PROPERLY APPRECIATE THE RECONCILIATION FILED BY THE ASSESSEE, WE REPRODUCE THE RECONCILIATION FOR A.Y. 2002-2003 FRO M THE ORDER OF THE CIT(A) AT PAGE NO.23 AS UNDER :- A.Y. 2002-03. THIS ADDITION RELATES TO PERSONAL HUNDIES OF THE APPELLANT GIVEN BY HIM AND ADDED IN THE INCOME BY T HE LEARNED ACIT CITING WRONGLY THAT THE PARTICULARS OF DEWALS ARE MISSING. THE DETAILS YEAR WISE ARE, AS UNDER WHICH HAS BEEN DRAWN FROM SEIZED DIARY NO.P-1 A-22 ASSESSEE LEDGER (DEWAL) S.NO. A.Y. NAME OF LEWALS AMOUNT DATE CASH BOOK PAGE NO. 1 2002-03 NAVNEET MARKETING 15000 08-04-02 SHOW IN BALANCE SHEET 2 2002-03 RADHA KISHAN KHETAN 65000 09-01-02 SHOW IN BALANCE SHEET 3 2002-03 NAVNEET MARKETING 10000 11-03-02 139 4 2002-03 SHRI KRIPARAM 20000 20-03-02 SHOW IN BALANCE ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 18 VAIVAHIK SAREE CENTRE SHEET 5 2002-03 GURDEEP SINGH GYANI RAMSWAROOP 40000 27-03-02 145 6 2002-03 OSWAL TRADERS 50000 29-03-02 SHOW IN BALANCE SHEET 6 2002-03 OSWAL TRADERS 50000 29-03-02 DUPLICATE 7 2002-03 OSWAL TRADERS 15000 30-03-02 SHOW IN BALANCE SHEET 7 2002-03 OSWAL TRADERS 15000 30-03-02 DUPLICATE TOTAL 280000 KINDLY REFER FOLLOWING MISTAKES:- 1. A.Y. 2002-03 S.NO.1 ENTRY IS WRONGLY TAKEN BY A .O. IN 08-12- 01 WHEREAS ACTUAL DATE IS 08-04-02 IN P1 A22 DIARY. 2. A.Y. 2002-03 S.NO.6 & 7 ENTRIES ARE TAKEN 2 TIME S WHEREAS THEY ARE 1 ONLY. 3. A.Y. 2002-03 S.NO.8 & 9 ENTRIES ARE TAKEN 2 TIME S WHEREAS THEY ARE 1 ONLY. 4. AMOUNT OF S.NO.4 P1 A22 DIARY IS ` 50,000/- BUT IT WRONGLY TAKEN BY A.O. ` 58,000/- 17.3 AFTER CONSIDERING TOTALITY OF THE FACTS OF THE CASE AND YEAR-WISE RECONCILIATION AND EXPLANATION FILED BY THE ASSESSE E, WE FIND THAT THE ASSESSEE HAS EXPLAINED EACH AND EVERY ENTRY OF HUND IES THAT THESE HUNDIES WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SOME OF THE HUNDIES HAVE BEEN ISSUED DUPLICATE AND THE ASSESSEE HAS FURNISHED THE NECESSARY EXPLANATION IN THE FORM OF RECONCILIATION. THE ASSESSEE HAS ALSO POINTED OUT MISTAKE AND DISCREPAN CIES IN THE FACTS NOTED BY THE ASSESSING OFFICER. FOR EXAMPLE, IN AS SESSMENT YEAR 2002-03, THE TOTAL OF SO CALLED HUNDIES HAS COME TO ` 2,80,000/- WHEREAS THE ASSESSING OFFICER HAS WRONGLY TAKEN IT AS ` 2,88,000/-. THE MISTAKE WAS ON ACCOUNT OF AMOUNT OF SL. NO.4P1 A22 DIARY WHEREIN THE AMOUNT WAS ` 50,000/- BUT THE ASSESSING OFFICER HAS ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 19 TAKEN WRONGLY ` 58,000/-. THE ASSESSING OFFICER WHILE CALCULATING THE AMOUNT OF ADDITION, THE AMOUNT OF ONE HUNDI HAS BEE N TAKEN TWICE IN SOME CASES. THE ASSESSEE HAS ALSO EXPLAINED THE DE TAILS OF ADDITION ON THE BASIS OF HUNDIES OF OTHER DEWALS WHICH IN FA CT CONTAINED THE DETAILS OF DEWALS, LEWALS, AMOUNT, DATE, COMMISSION AND CASH BOOK PAGE NUMBER AND DATE. THE COMMISSION INCOME HAS BE EN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND OFFERED TO TAX. I T HAS ALSO BEEN NOTICED THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON PRESUMPTION BASIS MERELY ON THIS UNDERSTANDING THAT THOSE HUNDIES DOES NOT CONTAIN DETAILS OF DEWALS, WHEREAS, THE AS SESSEE HAS FURNISHED COMPLETE DETAILS. THE REVENUE FAILED TO POINT OUT ANY CONTRARY MATERIAL TO THE FINDING OF CIT(A). IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 17.4 AS REGARDS THE DECISION, ON WHICH THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON, DOES NOT HELP THE REVEN UE. THE CALCUTTA HIGH COURT IN THE CASE OF K.M. SADHUKHAN & SONS PVT . LTD VS. CIT, 239 ITR 77 HELD THAT BURDEN LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF HUNDI LOANS. SINCE IN THAT CASE THE ASSESSEE HAS NOT DISCHARGED THE BURDEN TO PROVE THE GENUINENESS OF H UNDI LOANS, THEREFORE IT WAS HELD THAT THE HUNDI LOANS ARE NOT GENUINE. BUT IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS DISCHARG ED THE ONUS BY FURNISHING EXPLANATIONS AND RECONCILIATIONS. THERE FORE, THE SAID JUDGMENT CITED BY THE LD. DEPARTMENTAL REPRESENTATI VE IS DISTINGUISHABLE ON FACTS. SIMILARLY, ORDER OF THE I.T.A.T. MUMBAI BENCH IN THE CASE OF D.A. PATEL VS. DCIT, 72 ITD 34 0 WHEREIN THE ADDITION ON ACCOUNT OF HUNDI LOANS HAS BEEN SUSTAIN ED. THE GROUND THAT PHOTOCOPIES THEM WAS EVIDENCE OF THE ADVANCE O F THE LOANS. THERE CANNOT BE A PHOTOCOPY WITHOUT THE ORIGINAL. IT IS FOR THE ASSESSEE TO HAVE PRODUCED THE ORIGINAL WHICH HE CHO SE NOT TO. BUT IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS FURN ISHED EXPLANATION AND RECONCILIATION REGARDING THE HUNDIES NOTED BY T HE ASSESSING OFFICER. THEREFORE, THIS JUDGMENT ALSO DOES NOT HEL P THE REVENUE. IN THE LIGHT OF THE ABOVE DISCUSSION, WE CONFIRM THE O RDER OF CIT(A) ON THE ISSUE OF DELETION OF ADDITION IN RESPECT OF OWN HUNDIES IN ALL THE YEARS. ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 20 10. SINCE THE FACTS ARE IDENTICAL TO THE CASE OF SH RI HEM KUMAR JAIN, THEREFORE, FOLLOWING THE ABOVE ORDER OF I.T.A.T. IN THE CASE O F SHRI HEM KUMAR JAIN IN ITA NOS.399 TO 404/AGR/2009, WE CONFIRM THE ORDER OF CI T(A) ON THE ISSUES. 11. APART FROM THE ABOVE COMMON GROUNDS, THE OTHER GROUNDS RAISED BY THE REVENUE IN THESE APPEALS ARE DECIDED AS UNDER :- SHRI SANJAY KUMAR JAIN 12. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER MADE DISALLOWANCE OUT OF OFFICE EXPENSES, TELEPHONE EXPE NSES & PETROL EXPENSES ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE DETAILS OF EXPENDITURE ALONG WITH SUPPORTING VOUCHERS. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED EXCESS EXPENDITURE. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER IN DIFFERENT YEARS ARE AS UNDER :- A.Y. 2002-03 ( ` ) A.Y. 2003-04 ( ` ) A.Y. 2004-05 ( ` ) OUT OF OFFICE EXPENSES 15,000/- 10,000/- 5,000/- OUT OF TELEPHONE EXPENSES 10,000/- 10,000/- 10,000/- OUT OF PETROL EXPENSES 10,000/- 15,000/- 15,000/- ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 21 13. THE CIT(A) FOUND THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON EXCESSIVE SIDE. THE CIT(A) RESTRICTED THE DISAL LOWANCE TO THE EXTENT OF 20% AFTER ACCEPTING THE ASSESSEES EXPLANATION. 14. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE ASSESSING OFFICER DISALLOWED THE EXPENSES ON TH E GROUND THAT THE ASSESSEE HAS FAILED TO PRODUCE THE SUPPORTING EVIDENCE AND DISAL LOWED CERTAIN PORTION OF THE EXPENDITURE ON ADHOC BASIS. THE CIT(A) IN PRINCIPL E ACCEPTED THE ASSESSING OFFICERS VIEW BUT FOUND THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON EXCESSIVE SIDE. THE CIT(A) FOUND THAT 20% DISAL LOWANCE WILL BE REASONABLE TO COVER UP THE DEFICIENCIES POINTED OUT BY THE ASSESS ING OFFICER. SINCE IT IS A CASE OF ESTIMATION, THE ESTIMATION MADE BY THE ASSESSING OF FICER HAS BEEN EXAMINED BY THE CIT(A) AND THERE IS NO CONTRARY MATERIAL NEITHER ON RECORD NOR THE SAME HAS BEEN FURNISHED BEFORE US TO MAKE A DIFFERENT ESTIMATION AT THIS STAGE. IN A.Y. 2005-06, IN THE CASE OF SHRI SANJAY KUMAR JAIN, SIMILAR DISA LLOWANCES WERE MADE OUT OF TELEPHONE & PETROL EXPENSES AND THE CIT(A) RESTRICT ED THE SAME TO 20% AGAINST WHICH THE REVENUE DID NOT TAKE ANY GROUND IN THE AP PEAL FILED. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A). ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 22 15. ONE MORE GROUND RAISED IN THE CASE OF SHRI SANJ AY KUMAR JAIN FOR A.Y. 2005-06 IS IN RESPECT OF ADDITION OF ` 35,000/- ON ACCOUNT OF CASH FOUND. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER N OTICED THAT THE ACTUAL CASH BALANCE WAS ` 38,420/-. THE ASSESSING OFFICER ACCEPTED ` 3,420/- AND MADE ADDITION OF ` 35,000/- OF BALANCE AMOUNT. THE ASSESSING OFFICER MADE ADDITION ON THE GROUND THAT CASH IN HAND AS DISCLOSED CANNOT BE ACCEPTED AS THE ASSESSEE HAS CLAIMED HOUSEHOLD WITHDRAWAL OF ` 24,000/-. THE CIT(A), AFTER CONSIDERING THE FACTS OF THE CASE AND AFTER CONSIDERING SEPARATE AD DITION ON ACCOUNT OF HOUSE HOLD EXPENSES, FOUND THAT CASH TO THE EXTENT OF ` 20,000/- HAS BEEN EXPLAINED. THEREFORE, ADDITION OF ` 15,000/- WAS DELETED AND CONFIRMED THE BALANCE AMOU NT OF ` 20,000/-. 16. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, WE FIND THAT THE CIT(A) HAS DECIDED THE ISSUE AFTER CONSIDERING THE RELEVAN T FACTS. THE REVENUE HAS FAILED TO POINT TOUT ANY CONTRARY MATERIAL FACT TO THE FIN DING OF THE CIT(A). UNDER THE FACTS AND CIRCUMSTANCES, ORDER OF CIT(A) IS CONFIRM ED ON THE ISSUE. SHRI VINOD KUMAR JAIN ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 23 17. THE ASSESSING OFFICER MADE THE ADDITION OF ` 1,50,000/- IN THE A.Y. 2005- 06 ON ACCOUNT OF MARRIAGE OF THE ASSESSEE WHICH TOO K PLACE ON 01.06.2003. THE CIT(A) DELETED THE SAID ADDITION FROM A.Y. 2005-06 ON THE GROUND THAT THE ASSESSING OFFICER MADE THE ADHOC ADDITION WITHOUT A NY BASIS. THE CIT(A) ALSO NOTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT AN YTHING TO SUGGEST IF ANY EXPENSES ON WEDDING WERE INCURRED OTHER THAN EXPENS ES INCURRED BY THE BRIDES FAMILY OR IF ANY OTHER CEREMONY WAS ORGANIZED. 18. THE CIT(A) ALSO HELD THAT CONSIDERING THE MARRI AGE EVENT, THE ESTIMATION OF HOUSEHOLD EXPENSES FOR THE A.Y. 2004-05 HAS BEEN CO NSIDERED ACCORDINGLY. THE CIT(A) HAS ALSO NOTED THAT THE ADDITION OF ` 1,50,000/- DOES NOT RELATE TO THE A.Y. 2005-06. 19. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, WE FIND THAT THE CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT THERE I S NO MATERIAL THAT THE ASSESSEE HIMSELF HAS INCURRED MARRIAGE EXPENSES AS NORMALLY SUCH EXPENSES ARE INCURRED BY PARENTS OF BRIDE. THE CIT(A) HAS ALSO NOTED THAT T HE EVENT OF MARRIAGE HAS BEEN CONSIDERED WHILE ESTIMATING HOUSE HOLD EXPENSES IN THE A.Y. 2004-05. THE MARRIAGE WAS TAKEN PLACE ON 01.06.2003 WHICH PERIOD DOES NOT RELATE TO A.Y. 2005-06. THE REVENUE HAS FAILED TO POINT OUT ANY C ONTRARY MATERIAL TO THE FINDING ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 24 OF THE CIT(A). UNDER THE FACTS AND CIRCUMSTANCES, WE CONFIRM THE ORDER OF CIT(A) ON THE ISSUE. 20. ONE MORE GROUND RAISED IN A.Y. 2005-06 IS IN RE SPECT OF ADDITION OF ` 60,000/- ON ACCOUNT OF CASH FOUND. THE ASSESSING O FFICER DID NOT ACCEPT ASSESSEES EXPLANATION THAT SOME OF THE PORTION OF THE CASH FOUND BELONGED TO THE ASSESSEES WIFE. THE CIT(A) ACCEPTED THE ASSESSEE S CONTENTION THAT THE ASSESSEES WIFE HAS SHOWN CASH IN HAND OF ` 68,000/- ON 31.03.2005 IN HER BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME. THE CIT(A) DELETE D THE ADDITION IN THE LIGHT OF THE FACT THAT THE CASH BELONGED TO THE ASSESSEES W IFE AND THE SAME HAS BEEN SHOWN IN HER BALANCE SHEET. AFTER HEARING THE LD. REPRES ENTATIVES OF THE PARTIES, SINCE THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERI AL TO THE FINDING OF THE CIT(A), IN THE LIGHT OF THE FACT THAT CASH BELONGED TO THE ASSESSEES WIFE AND THE SAME HAS BEEN ACCOUNTED FOR IN HER ACCOUNT AND SHOWN IN THE BALANCE SHEET, THE CASH BALANCE IN THE HANDS AS ON 31.03.2005 WAS ` 68,000/-. WE, THEREFORE, FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF ` 60,000/- FROM THE HANDS OF THE ASSESSEE. SHRI VIRENDRA KUMAR JAIN ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 25 21. THE REVENUE DID NOT RAISE ANY OTHER GROUND THAN THE COMMON GROUNDS RELATING TO HUNDIES AND CASH CREDIT WHICH HAS BEEN DECIDED ALONG WITH COMMON GROUNDS OF APPEAL. SHRI SIDHARTH JAIN 22. THE REVENUE DID NOT RAISE ANY OTHER GROUND THAN THE COMMON GROUNDS RELATING TO HUNDIES AND CASH CREDIT WHICH HAS BEEN DECIDED ALONG WITH COMMON GROUNDS OF APPEAL. SHRI AMIT KUMAR JAIN 23. THE REVENUE DID NOT RAISE ANY OTHER GROUND THAN THE COMMON GROUNDS RELATING TO HUNDIES AND CASH CREDIT WHICH HAS BEEN DECIDED ALONG WITH COMMON GROUNDS OF APPEAL. 24. IN THE RESULT, APPEALS OF THE REVENUE IN THE CA SE OF SHRI SANJAY KUMAR JAIN FOR THE A.YS. 2002-03 TO 2005-06, IN THE CASE OF SH RI VINOD KUMAR JAIN FOR THE A.YS. 2004-05 & 2005-06, IN THE CASE OF SHRI VIREND RA KUMAR JAIN FOR THE A.Y. 2004-05, IN THE CASE OF SIDHARTH JAIN FOR THE A.YS. 2004-05 & 2005-06 ARE PARTLY ITA NOS.179, 180, 233, 394, 189, 190, 185, 183, 184 & 234/AGR/2009 A.YS.2002-03 TO 2005-06 26 ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF THE REVENUE IN THE CASE OF SHRI AMIT KUMAR JAIN FOR THE A.Y. 2004-05 IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.2012) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27 TH APRIL, 2012 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY