Shri Vivek Shankarrao Deshpande, Aurangabad V. DCIT, Cent. Cir., Aurangabad

ITA 241/PUN/2011

• Counselvise Citation: 24124514 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-08-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: ARVIND SONDE
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Corroborative evidences; Documents seized
• Section: 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 241 / P N/ 20 1 1 ASSESSMENT YEAR : 200 3 - 04 SHRI VIVEK S . DESHPANDE, 53/54, ADI TYA NAGAR, GARKHEDA, AURANGABAD VS. DCIT, CENTRAL CIRCLE, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. ADUPP4023B APPELLANT BY: SHRI ARVIND SONDE RESPONDENT BY: SHRI A.K. MODI ORDER PER R.S . PADVEKAR , JM : - IN THIS APPEAL, THE ASSESS EE HAS CHALLENGED THE IMPUGNED O RDER OF THE LD. CIT(A) , AURANGABAD DATED 21 - 12 - 2010 FOR THE A.Y. 200 3 - 04. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND IN THE APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD ERRED IN UPHOLDING THE ADDI TION OF RS.1,03,51,820/ - MADE BY THE AO, CENTRAL CIRCLE, AURANGABAD, AS UNDISCLOSED EXPENDITURE. THE ADDITION IS BAD IN LAW IN VIEW OF THE FINDING OF THE AO IN THE ASSESSMENT ORDER THAT THE RELEVANT PAPERS BELONG TO THE ASSOCIATION OF CONTRACTORS AND SUB - CONTRACTORS. 2. THE FACTS PERTAINING TO THE ISSUE ARE AS UNDER. THE ASSESSEE IS AN INDIVIDUAL AND ALSO PARTNER IN RUDRANEE CONSTRUCTION COMPANY (IN SHORT THE RCC). THERE WAS A SEARCH AND SEIZURE ACTION U/S. 132 OF THE INCOME - TAX ACT ON 02 - 02 - 2006 IN THE RUDRANEE GROUP AND ITS ASSOCIATES AND THE ASSESSEE WAS ALSO COVERED IN THE SAID SEARCH AND SEIZURE ACTION. AS NOTED BY THE ASSESSING OFFICER , THE RES IDENCE OF THE ASSESSEE WAS 2 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD SEARCHED AND DURING THE SEARCH ACTION THE INCRIMINATING DOCUMENTS WERE S EIZED. THE ASSESSEE WAS ISSUED THE NOTICE U/S. 1 53A ON 08 - 06 - 2006 AND IN RESPONSE TO THE SAID NOTICE THE ASSESSEE FILED THE RETURN ON 28 - 08 - 2007. THE ASSESSING OFFICER HAS OBSERVED THAT FROM THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH FROM THE BUSIN ESS PREMISES OF RUDRANEE CONSTRUCTIONS COMPANY , IT WAS NOTICED THAT THE ASSESSEE HAS INTRODUCED MONEY ON MANY OCCASIONS AND THERE WERE ALSO WITHDRAWAL. AS NOTED BY THE ASSESSING OFFICER , AS PER THE SEIZED DOCUMENTS ; ANNEXURE A - 25 THE TRANSACTIONS OF THE I NTRODUCTION OF THE CASH AND WITHDRAWAL OF THE CASH REFLECTED IN ANNEXURE A - 25 WERE OUT OF THE REGULAR BOOKS OF ACCOUNT OF THE RUDRANEE CONSTRUCTIONS COMPANY. THE ASSESSING OFFICER HAS OBSERVED THAT TO THE EXTENT OF RS.45,95,000/ - THE AMOUNT WAS INTRODUCED IN THE RUDRANEE CONSTRUCTIONS COMPANY. IN RESPECT OF THE ISSUE ARISING IN THIS APPEAL , IN THE SEARCH AND SEIZURE OPERATION AT THE RES IDENCE OF THE ASSESSEE ON 02 - 02 - 2006 , PAPERS WERE SEIZED IN THE NATURE OF THE FAX MESSAGE DATED 26 - 02 - 2003 AND 13 - 03 - 2003 IN WHICH AS NOTED BY THE ASSESSING OFFICER AN AMOUNT OF RS.1,03,51,820/ - WAS MENTIONED AGAINST THE NAME OF THE ASSESSEE. THE ASSESSING OFFICER SOUGHT THE EXPLANATION OF THE ASSESSEE BY SEEKING THE FOLLOWING INFORMATION: I . THE NAME AND ADDRESS OF THE PER SONS FROM WHOM THE SAID MONEY IS STATED TO HAVE BEEN COLLECTED, II . THE PURPOSE FOR COLLECTION OF MONEY, AND III THE NAME AND THE ADDRESS OF THE PERSONS TO WHOM THE PAYMENTS ARE STATED TO HAVE BEEN MADE ALONG WITH DOCUMENTARY EVIDENCES TO SHOW THAT THE PAY MENTS HAVE ACTUALLY BEEN MADE . 3. THE ASSESSEE FILED THE REPLY BY STATING THAT PAGE NO. 31 IS IN RESPECT OF THE AMOUNTS OUTSTANDING FROM GODAVARI MARATHWADA IRRIGATION DEVELOPMENT CORPORATION (GMIDC) , GOVT. OF MAHARASHTRA 3 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD UNDERTAKING IN RESPEC T OF THE VARIOUS CONTRACTORS INCLUDING RCC. SINCE , THOSE PAYMENTS WERE OUTSTANDING FROM GOVT. UNDERTAKING FOR A LONG TIME, ALL THE CONTRACTORS/SUB - CONTRACTORS UNITEDLY DECIDED TO FIND OUT SOME METHOD FOR EARLY REALIZATION OF OVERDUE BILLS. IT WAS EXPLAIN ED BY THE ASSESSEE THAT AS THE RCC AND MAJOR ASSOCIATES WERE A SUB - CONTRACTORS FOR THE ABOVE REFERRED GOVT. PROJECT, THE FAX MESSAGE APPEARING PAGE NO. 29 (TYPED EXCEL SHEET) WAS FORWARDED TO THE ASSESSEE FOR READY INFORMATION STATING THE EXACT POSITION OF OUTSTANDING OF AMOUNTS LISTED ON PAGE NO. 31. 3.1. THE ASSESSEE ALSO STATED IN REPLY THAT SO FAR AS THE RC C IS CONCERN ONLY THREE MINOR PROJECTS ARE APPEAR ING IN THE SAID LIST AND THE ASSESSEE ALSO G A VE THE DETAILS OF THOSE PROJECTS. THE ASSESSEE ALSO FILED THE EXPLANATION IN RESPECT OF PAGE NOS. 29 AND 31 BY STATING THAT THE PARTICULARS OF CONTRACT RECEIPTS SHOWN OUTSTANDING OF RCC APPEARING ON THOSE PAPERS ARE DULY REFLECTED SITE WISE IN THE BOOKS OF RCC AS AND WHEN THEY WERE RECEIVED. THE ASSESSEE ALSO FILED THE STATEMENT OF CONTRACTS RECEIPTS FOR THE A.YS. 2002 - 03 AND 2003 - 04. IN RESPECT OF PAGE NO. 30 , THE ASSESSEE STATED THAT THE SAME IS FAX MESSAGE DATED 13 - 03 - 2003 AND THE SAME IS ADDRESSED TO ONE MR. PANHALE, WHO IS ONE OF THE SUB - CONTRACTORS OF RCC AND ALSO CONTRACTOR/SUB - CONTRACTOR FOR THE GOVT. PROJECT REFERRED IN THE EARLIER PAGES. IT WAS EXPLAINED THAT MR . PANHALE IS THE PERSONAL FRIEND OF THE ASSESSEE AND ALSO MEMBER OF VIVEK S. DESHPANDE PRALHAD H. PANHALE (AOP). THE ASSESSEE FURTH ER STATED THAT IN THAT CAPACITY AND OTHERWISE ALSO MR. PANHALE KE PT VISITING THE ASSESSEE AND THE FAX MESSAGE (PAGE NO. 30) WAS SPECIFICALLY FOR MR. PANHALE AND SAID PAPER WAS INADVERTENTLY LEFT OUT BY MR. PANHALE IN THE HOUSE OF THE ASSESSEE. THE ASSESSE E ALSO DENIED HAVING ANY KNOWLEDGE OF THE CONTENTS OF THE SAID FAX MESSAGE. THE ASSESSING OFFICER WAS NOT CONVINCED ON THE EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER, 4 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD THEREFORE, MADE THE ADDITION OF RS. 1,03,51,820/ - BY GIVING THE FOLLOWING REASON S: I HAVE CAREFULLY CONSIDERED REPLY GIVEN BY THE ASSESSEE. IT IS VERY CLEAR FROM THE PERUSAL OF THE PAGES 29, 30 AND 31 THAT THIS BELONGS TO ASSOCIATION OF THE CONTRACTORS AND SUB - CONTRACTORS WHOSE NAME HAVE BEEN GIVEN ON THE PAGE 29 OF THE ABOVE REFERR ED ANNEXURE. THERE IS ALSO MENTION OF THE GROSS WORK DONE BY THESE CONTACTOR IN THE PROJECT TOTALING TO RS.10.96 CRORES. THE PAGE 30 OF THE ANNEXURE HAS DETAILS OF THE AMOUNT OF WORKING OF CERTAIN AMOUNT, WHICH HAS BEEN WORKED OUT 3% AND 5% OF THE GROSS CONTRACT WORK DONE BY DIFFERENT CONTRACTORS. IT IS SEEN THAT THESE PAPERS THAT THESE AMOUNTS HAVE BEEN PRECISELY WORKED OUT AND HAVE BEEN COLLECTED AND PAID TO DIFFERENT PERSONS. THE NAME OF THE ASSESSEE APPEARS ON THESE PAGES AND THERE IS ALSO MENTION T HAT THE AMOUNT HAS BEEN TRANSFERRED TO DIFFERENT PERSONS WHOSE NAMES ARE GIVEN ON THESE PAPERS. THEREFORE THE CONTENTION OF THE ASSESSEE . 4. THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT(A) AND LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. IT APPEARS THAT THE LD. CIT(A) CALLED FOR THE REMAND REPORT OF THE ASSESSING OFFICER IN WHICH THE ASSESSING OFFICER HAS JUSTIFIED HIS STAND . THE OPERATIVE PART OF THE FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 9.4. I HAVE CONSIDERE D THE FACTS OF THE CASE, SUBMISSIONS OF THE AR AND ALSO GONE THROUGH THE ASSESSMENT ORDER, REMAND REPORTS AND THE COPIES OF SEIZED MATERIAL. ON PERUSAL OF THE COPIES OF THE SEIZED MATERIAL, IT IS EVIDENT THAT THE APPELLANT HAS PAID AN AMOUNT OF RS.1,03,51, 820/ - TO THE DIFFERENT PERSONS. THE APPELLANT HAS FAILED TO PROVE THAT THE SAID PAYMENT OF RS.1,03,51,820/ - HAS NOT BEEN ACTUALLY MADE BY HIM. AS THE SEIZED PAPER WAS FOUND IN POSSESSION OF THE APPELLANT, IN VIEW OF PROVISIONS OF SECTION 132(4A), IT IS TO BE PRESUMED THAT THE SAID PAYMENT HAS BEEN ACTUALLY EFFECTED BY THE APPELLANT. THE APPELLANT HAS FAILED TO REBUT THE SAID PRESUMPTION BY BRINGING EVIDENCE ON RECORD. THE ABOVE PROPOSITION OF LAW IS SUPPORTED BY THE RATIO LAID DOWN BY THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SMS INVESTMENT CORPORATION (P) LTD. (1994) 207 ITR 364 (RAJ.) WHEREIN IT HAS BEEN LAID DOWN THAT IF ANY DOCUMENT IS FOUND IN THE COURSE OF SEARCH, THEN BY LEGAL 5 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD PRESUMPTION IN ACCORDANCE WITH SECTION 132(4A), HAS TO BE DRA WN THAT SUCH DOCUMENT BELONGS TO THE PERSON FROM WHOSE POSSESSION OR CONTROL IT WAS FOUND AND THE CONTENTS OF SUCH DOCUMENTS ARE TRUE, BUT THIS PRESUMPTION IS REBUTTABLE. FURTHER, IT HAS BEEN LAID DOWN IN FOLLOWING DECISIONS THAT THE PRESUMPTION IS APPLICA BLE IN THE CASE OF PERSON IN WHOSE POSSESSION THE PAPERS ARE FOUND IN ACTION U/S 132 AND NOT IN THE CASES OF ANY OTHER PERSON - (I) ASHIWANI KUMAR VS. ITO (1992) 42 TTJ (DEL) 644. (II) SMT. BOMMANA SWARNA REKHA VS. ACIT (2005) 94 TTJ (VISAKHA) 885. (III) STMPTEX (INDIA) (P) LTD. VS. DCIT (2003) 79 TTJ (MUMBAI) 228 :(2003) 84 (IV) RAMA TRADERS VS. FIRST ITO 32 TTJ 483, 1TAT, PATNA BENCH. THE APPELLANT HAS NOT FILED ANY EVIDENCE IN RESPECT OF THE SOURCE OF THE SAID AMOUNT PAID BY HIM OUT OF THE BOOKS OF ACC OUNTS. IF HE HAS REALLY NOT INDULGED IN THE TRANSACTIONS MENTIONED IN THE LOOSE PAPERS, IT WAS FOR HIM TO GIVE PROPER AND CORRECT EXPLANATION ABOUT CONTENTS OF THE SEIZED DOCUMENTS. IF THE PREPONDERANCE OF PROBABILITIES IS CONSIDERED AND IF THE CIRCUMSTANT IAL EVIDENCE IS CONSIDERED, IT ALL GOES AGAINST THE APPELLANT. THE DECISION RELIED UPON BY THE LD.AR ARE DISTINGUISHABLE ON FACTS AND LAW. IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS MADE PAYMENT OF RS.1,03,51,820/ - AS AP PEARING IN THE SEIZED MATERIAL OUT OF HIS UNDISCLOSED INCOME AS HELD BY THE A.O. THE ADDITION OF RS.1,03,51,820/ - , THEREFORE, STANDS CONFIRMED. GROUND NOS.2 & 3 OF THE A.Y.2003 - 04 ARE DISMISSED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD T HE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE ISSUE IS REVOLVING AROUND ONE DOCUMENT SEIZED DURING THE COURSE OF THE SEARCH WHICH APPEARS TO BE THE FAX MESSAGE. THE ASSESSEE HAS FILED THE PAPER BOOK IN WHICH THE COPIES OF THE SEIZED PAP ERS I.E. PAGE NOS. 29 AND 30 ARE FILED. ON PAGE NO. 30 ON THE TOP IT IS MENTIONED THAT KIND ATTENTION MR. PANHALE AND CERTAIN FIGURES ARE GIVEN 6 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD WHICH ARE GROUP ED IN THE MONTHS LIKE JAN., FEB. & MAY, 2002 AND JUNE TO FEB., 2003 ETC. AND CERTAIN PERCENTAGE IS ALSO SHOWN. BELOW DOWN , IT IS MENTIONED AS VIVEK A/C. CASH COLLECTED FROM PARTIES 103.52 AND PAID TO SACHIN 86.25 BALANCE 17.27 WHICH IS SHOWN AS BALANCE TO PAY. BELOW IT IS MENTIONED THAT FROM ASSOCIATION (PAGE NO. 3 OF THE COMPILATION). THE RE ARE DIFFERENT COLUMNS, THE FIRST COLUMN IS IN RESPECT OF THE NAME OF THE CONTRACTOR , SECOND COLUMN IT IS MENTIONED AS NAME OF THE WORK THEN THERE ARE COLUMNS IN WHICH THE MONTH S ARE MENTIONED. THERE ARE MONTH WISE FIGURES AND TOTAL IS SHOWN AS 1096.5 FROM WHICH 709.42 IS REDUCED AND BALANCE IS SHOWN AS 386.73 . AT BOTTOM IT IS MENTIONED AS VIVEK A/C . TO UNDERSTAND THE CASE OF THE ASSESSING OFFICER WE HAVE TO GO WITH THE REMAND REPORT CALLED BY THE LD. CIT(A) AS IN THE ASSESSMENT ORDER THE ISSUE IS DISCUSSED IN CRYPTIC WAY, EVEN WITH NO PROPER CONCLUSION. 9.2. THE PRESENT REMAND REPORT DATED 05/08/2010 ALONG WITH LETTER DATED 06/10/2010 FROM THE ADDL. CIT, CENTRAL RANGE, NASHIK HAS BEEN ALSO MADE AVAILABLE TO THE APPELLANT. IN THE FORWARDING LETTER DATED 06/10/2010, THE ADDL. CIT, CENTRAL RANGE, NASHIK HAS SUMMARIZED THE FACTS OF THE CASE AND HAS ANALYZED THE FACTS AND ISSUE AS UNDER 'THE MAIN ISSUE IS REGARDING ADDITION OF RS.1,03,51,820/ - DURING THE ASSESSMENT YEAR 2003 - 04. THIS ADDITION I S BASED ON SEIZED DOCUMENT BEARING NO. ANNEXURE A - 1 PAGES 29, 30 AND 31. AS PER PAGE 30, AN AMOUNT OF RS.1,03,51,820/ - HAS BEEN SHOWN AS 'CASH COLLECTED BY VIVEK FROM CONTRACTOR'. APART FROM THIS FIGURE, THERE IS ANOTHER FIGURE OF RS.50,53,910/ - . THESE TWO FIGURES ARE REFERRED TO AS B & A RESPECTIVELY AND HAVE BEEN TOTALED TO READ RS.L,54,05,730/ - . BELOW THIS, THERE IS A RECORD OF CASH TRANSFERRED TO MUMBAI AND ELSEWHERE. AGAINST THIS, TOTAL CASH TRANSFERRED OF RS.1,67,25,000/ - , AN AMOUNT OF RS.86,25,000/ - HAS BEEN REFLECTED AGAINST VIVEK WHILE BALANCE 81 LACS HAS BEEN REFLECTED AGAINST 'PNP'. SUBSEQUENT TO THIS, THERE IS AN ENTRY TITLED AS VIVEK ACCOUNT. THIS SHOWS 7 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD CASH COLLECTED FROM PARTIES AMOUNTING TO RS.103.52 LACS WHICH IS THE SAME FIGURE REFLECTED AT 'B' ABOVE. OUT OF THIS RS.86.25 I.E. 86.25 LACS HAS BEEN SHOWN AS PAID TO SACHIN. THE BALANCE 17.27 LACS IS MENTIONED AS 'BALANCE TO PAY'. TO THIS FIGURE LOC EXPENSES HAVE BEEN ADDED AS UNDER: - 102 X 3% = 3.06 284.73 X 5% = 14.24 17.30 LACS THUS THE FINAL ENTRY STATES THAT TOTAL ACCOUNT TO VIVEK 17.27 + 17.30 = 34.57 IT IS APPARENT THAT VIVEK DESHPANDE HAS RECEIVED CASH AMOUNTING TO RS.1.03 CRS AND FURTHER 17.30 LACS AS LOC EXPENSES. OUT OF THE SAME 86.25 LACS HAS BEEN SHO WN AS PAID TO ONE SACHIN. ON PAGE NO. 29, AN EXCEL SHEET SHOWS THE VARIOUS CONTRACTS EXECUTED BY DIFFERENT CONTRACTORS. THE VALUE OF CONTRACTS IS 1096.15 I.E. 10.96 CRS. OUT OF THE SAME, 709.42 IS MENTIONED AS PHP A/C. AND 386.73 AS VIVEK ACCOUNT. THIS PAP ER CO - RELATES WITH PAGE NO. 30 WHERE LOC EXPENSES HAVE BEEN 'COMPUTED ON THE SAME FIGURE OF 386.73 I.E. 3.86 CRS. ON PAGE NO. 29 ALSO, PAYMENTS AMOUNTING TO RS. 81 LACS TO SACHIN HAVE BEEN MENTIONED. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE HAD STATED THAT THE SEIZED DOCUMENT IS A FAX MESSAGE ADDRESSED TO MR. PANHALE WHO IS ONE OF THE SUB - CONTRACTORS OF RUDRANEE CONSTRUCTION WHICH IS A BUSINESS CONCERN OF VIVEK DESHPANDE HAS DENIED ANY CONNECTION WITH THE SEIZED DOCUMENT. HOWEVER, THE ENTRIES ON THE DO CUMENT ARE CLEAR AND DO NOT CREATE ANY DOUBT. IN THE FIRST PLACE THE DOCUMENTS WERE FOUND IN THE PREMISES OF VIVEK DESHPANDE. PAGE NO. 29 CARRIES THE CAPTION SHRI VIVEK DESHPANDE. VIVEK A/C AND PHP A/C I.E. ACCOUNTS OF VIVEK DESHPANDE AND P.H. PANHALE HAVE BEEN CLEARLY MENTIONED AND IMPUTED. P.H. PANHALE IS A BUSINESS ASSOCIATE OF VIVEK DESHPANDE. THE CASH COLLECTED BY VIVEK DESHPANDE AND THE METHOD OF ARRIVING AT THE SAME, HAS BEEN MENTIONED. THE PAYMENTS MADE TO ONE, SACHIN HAVE ALSO BEEN CLEARLY MENT I ON ED. IT IS FOR VIVEK DESHPANDE TO 8 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD EXPLAIN THE NATURE OF SUCH CASH RECEIPTS, THE IDENTITY OF SACHIN AND THE NATURE OF PAYMENTS MADE TO HIM AND CONFIRMATION OF THE ENTIRE TRANSACTION. IN VIEW OF THE DOCUMENTS SEIZED, THERE APPEARS TO BE NO GROUND TO GIVEN A NY RELIEF TO VIVEK DESHPANDE. 6. THE LD. COUNSEL ARGUES THAT EXCEPT THE GUESS WORK, THE ASSESSING OFFICER HAS NOT EVEN RECORDED STATEMENT OF ANY OF THE PARTIES WHEN HE ADMITS THAT THE SAID PAPER IS A FAX MESSAGE TO ONE MR. PANHALE. HE SUBMITS THAT THE ASSESSEE HAS ALREADY INFORMED THE ASSESSING OFFICER ABOUT THE FAX MESSAGE OF MR. PANHALE LEFT WITH HIM . T HE FAX MESSAGE WAS PROBABLY BROUGHT BY MR. PANHALE TO ASSESSEES HOUSE AND INADVERTENTLY LEFT THERE. HE SUBMITS THAT PRESUMPTION U/S. 132(4A) HAS ITS OWN LIMITATIONS AND THAT CANNOT BE EXTENDED TO PUT EVERYTHING ON THE ASSESSEE WHEN THE ASSESSEE HAS GIVEN THE EXPLANATION IN RESPECT OF THE SEIZED PAPER AND WHEN THERE ARE SO MANY NAMES AND THE ASSESSEE IS NOT AWARE ABOUT THE CONTENTS . T HE BURDEN IS DISC HARGED BY THE ASSESSEE AND THE ONUS IS ON THE ASSESSING OFFICER TO BRING SOME COGENT MATERIAL TO HOLD THAT THE TRANSACTIONS MENTIONED IN FAX MESSAGE PERTAIN TO THE ASSESSEE. MERELY BECAUSE SOME PIECE OF PAPER IS FOUND THOUGH IT IS DESCRIBED AS EVIDENCE BU T TO MAKE THE SAID PAPER AS EVIDENCE , T HE ASSESSING OFFICER HAS TO ESTABLISH THAT THERE ARE TRANSACTIONS WHICH ARE PERTAINING TO THE ASSESSEE AND WHICH ARE NOT DISCLOSED BY THE ASSESSEE. THE LD. COUNSEL RELIED ON THE FOLLOWING DECISIONS: (I). PUSHKAR NARA IN SARRAF VS. CIT 183 ITR 388 (ALLAHABAD H.C.) (II). M/S. RAJ PAL SINGH RAM AUTAR VS. ITO 39 TTJ (DEL) 544 (III) ASHWANI KUMAR VS. ITO 42 TTJ (DEL) 644 (IV). STRAPTEX (INDIA) (P) LTD. VS. DCIT 84 ITD 320 (MUMBAI) 7. PER CONTRA, THE LD. CIT (DR) RELIED O N THE DECISION IN THE CASE OF CIT VS. S.M.S. INVESTMENT CORPORATION (P) LTD. 207 ITR 364 (RAJ). 9 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD 8. IN THE CASE OF PUSHKAR NARAIN SARRAF (SUPRA) THE HON'BLE HIGH COURT HAS EXPLAINED THE SCOPE OF SEC. 132(4A) OF THE ACT AS UNDER: 6. TAKING THE FIRST QUES TION FIRST, WE ARE CLEARLY OF THE OPINION THAT THE PRESUMPTION ARISING UNDER SECTION 132(4A) IS AVAILABLE ONLY IN REGARD TO AND IN THE CONTEXT OF SEARCH AND SEIZURE. SECTIONS 132 TO 132B OF THE INCOME TAX ACT, IN OUR OPINION, EMBODY AN INTEGRATED SCHEME LA YING DOWN COMPREHENSIVELY THE PROCEDURE FOR SEARCH AND SEIZURE AND THE POWER OF THE AUTHORITIES MAKING THE SEARCH AND SEIZURE TO ORDER THE CONFISCATION OF THE ASSETS SEIZED UNDER SECTION 132 OF THE ACT, THAT IS, THE PRESUMPTION ARISING UNDER SUB SECTION (4 A) OF SECTION 132 APPLIES ONLY IN RELATION TO THE PROVISIONAL ADJUDICATION WHICH IS CONTEMPLATED UNDER SUBSECTION (5) OF SECTION 132. SUB SECTION (5) OF SECTION 132 PROVIDES FOR ESTIMATION OF THE UNDISCLOSED INCOME OR THE CALCULATION OF THE AMOUNT OF TAX O N THE INCOME SO ESTIMATED AND THE DETERMINATION OF THE AMOUNT OF INTEREST PAYABLE OR THE AMOUNT OF PENALTY IMPOSABLE IN A SUMMARY MANNER. FOR THIS LIMITED PURPOSE, THE LEGISLATURE HAS PROVIDED UNDER SECTION 132(4A) THAT THE BOOKS OF ACCOUNT, OTHER DOCUMENT S, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES SEIZED FROM THE POSSESSION OF THE ASSESSEE SHALL BE PRESUMED TO BELONG TO THE ASSESSEE IF THEY ARE FOUND IN THE POSSESSION OR CONTROL OF THE ASSESSEE IN THE COURSE OF THE SEARCH. A SIMILAR PRESUMPTION MAY ALSO BE MADE AS TO THE CORRECTNESS OF THE CONTENTS OF THE BOOKS OF ACCOUNT SO SEIZED. SO ALSO THE SIGNATURE AND EVERY OTHER PART OF THE BOOKS OF ACCOUNT MAY BE ASSUMED TO BE IN THE HANDWRITING OF THE PERSON BY WHOM IT IS PURPORTED TO HAVE BEEN WRITTEN . 7. THIS PRESUMPTION CANNOT, HOWEVER, HAVE THE EFFECT OF EXCLUDING SECTION 68 WHEN REGULAR ASSESSMENT IS MADE IN REGARD TO THE INCOME OF THE PERSON FROM WHOSE POSSESSION THOSE BOOKS OF ACCOUNT WERE SEIZED UNDER SECTION 132. SECTION 68 PROVIDES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACT ORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THIS PROVISION IS, IN OUR OPINION, A PROVISION OF GENERAL APPLICATION. WE FIND NOTHING EITHER IN SECTION 132 OR SECTION 68 OR ELSEWHERE TO EXCLUDE TH E 10 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD APPLICATION OF THIS GENERAL PROVISION TO A CASE WHERE THE BUSINESS PREMISES OR THE RESIDENCE OF A PERSON HAS BEEN SEARCHED AND DOCUMENTS AND OTHER THINGS SEIZED UNDER SECTION 132 OF THE ACT. INDEED, IF THE CONTRARY SUBMISSION MADE BY LEARNED COUNSEL FOR THE ASSESSEE WERE TO BE ACCEPTED, IT WILL PLACE THE ASSESSEE AGAINST WHOM PROCEEDINGS UNDER SECTION 132 HAVE BEEN INITIATED AND FROM WHOSE CUSTODY BOOKS OF ACCOUNT WERE SEIZED IN A POSITION OF CONSIDERABLE ADVANTAGE OVER OTHER ASSESSEES AGAINST WHOM SEARCH AND SEIZURE WAS NOT ORDERED UNDER SECTION 132 INASMUCH AS SUCH OTHER ASSESSEES ARE OBLIGED UNDER SECTION 68 TO PROVE CASH CREDITS BY EVIDENCE, NOT HAVING THE BENEFIT OF THE PRESUMPTION CONTEMPLATED UNDER SECTION 132(4A). SUCH A RESULT CANNOT OBVIOUSLY HAV E BEEN INTENDED BY THE LEGISLATURE. THE TRIBUNAL WAS HENCE RIGHT IN OBSERVING THAT IT WAS ONE THING TO SAY THAT THE ENTRIES WERE NOT REQUIRED TO BE PROVED TO BE IN THE HANDWRITING OF THE PERSON BY WHOM THE SAME WAS PURPORTED TO HAVE BEEN MADE DURING SEARCH AND SEIZURE, BUT IT WAS QUITE, ANOTHER THING TO SAY THAT THE TRANSACTIONS EVIDENCED BY SUCH ENTRIES SHOULD BE TREATED AS GENUINE AND ESTABLISHED EVEN WHEN REGULAR ASSESSMENT IS COMMENCED. 8. THE UPSHOT OF THE FOREGOING DISCUSSION IS THAT THE PRESUMPTION ARISING UNDER SECTION 132(4A) DOES NOT OVERRIDE OR EXCLUDE SECTION 68, THAT IS, IT DOES NOT OBVIATE THE NECESSITY TO ESTABLISH BY INDEPENDENT EVIDENCE THE GENUINENESS OF THE CASH CREDITS UNDER SECTION 68. FURTHER, THE PRESUMPTION UNDER SECTION 132(4A) IS A VAILABLE ONLY IN REGARD TO THE PROCEEDINGS FOR SEARCH AND SEIZURE AND FOR THE PURPOSE OF RETAINING THE ASSETS UNDER SUB SECTION (5) OF SECTION 132 AND THEIR APPLICATION UNDER SECTION 132B OF THE ACT. THE PRESUMPTION IS RELEVANT AND LIMITED ONLY TO THE SUMM ARY ADJUDICATION CONTEMPLATED UNDER SUB SECTION (5) OF SECTION 132. NEITHER MORE NOR LESS. 9 . IN THE CASE OF M/S. RAJ PAL SINGH RAM AUTAR (SUPRA) IT IS HELD AS UNDER: 4.1. WE WILL NOW CONSIDER THE VARIOUS POINTS RAISED DURING THE COURSE OF HEARING. THE FI RST POINT REQUIRED OUR CONSIDERATION IS WHETHER THE PRESUMPTION IN S. 132(4A) APPLIES IN RELATION TO THE 11 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD PROCEEDINGS FOR INVOKING THE PROVISIONS OF S. 69 OF THE ACT. IN OUR VIEW, SUCH PRESUMPTION ARISING OUT OF SUB - S (4A) OF S. 132 OF THE ACT IS AVAILABLE TO THE REVENUE ONLY FOR THE LIMITED PURPOSE OF SEARCH AND SEIZURE AND THE PROCEEDINGS UNDER S. 132(5) AND 132(11). THE AFORESAID PROVISION PROVIDES THAT THE BOOKS OF ACCOUNTS, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES SEIZED FRO M THE POSSESSION OF THE ASSESSEE SHALL BE PRESUMED TO BELONG TO THE ASSESSEE IF THEY ARE FOUND IN THE POSSESSION OR CONTROL OF THE ASSESSEE IN*THE COURSE OF SEARCH. A SIMILAR PRESUMPTION MAY ALSO BE MADE AS TO THE CORRECTNESS OF THE CONTENTS OF THE BOOKS O F ACCOUNTS SO SEIZED. SUCH PRESUMPTIONS ARE AVAILABLE ONLY FOR THE LIMITED PURPOSE OF ESTIMATING THE UNDISCLOSED INCOME AND THE ESTIMATED TAX LIABILITY FOR THE PURPOSES OF DECIDING WHETHER THE SEIZED ASSETS SHOULD BE SEIZED OR RETAINED. THIS PRESUMPTION CA NNOT HAVE THE EFFECT OF EXCLUDING OR OVERRIDING THE PROVISIONS OF S. 69 DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. THE VIEW IS FORTIFIED BY THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF PUSHKAR NARAYAN SARAF VS. CIT(SUPRA). 4.2. HOW EVER, EVEN WITHOUT THE AVAILABILITY OF SUCH STATUTORY PRESUMPTION AS CONTAINED IN S. 132(4A) DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, THE INITIAL ONUS OF PROVING THAT THE ASSESSEE WAS NOT ITS OWNER WAS ON THE ASSESSEE, AS IT IS AN ADMITTED FACT THAT THE SAID PAPER WAS FOUND AND SEIZED FROM THE DEBRIS IN THE SHOP PREMISES BELONGING TO THE ASSESSEE FIRM. THE HON'BLE SUPREME COURT IN THE CASE OF CHUHARMAL (SUPRA) HAS CLEARLY HELD THAT IT IS A SALUTARY PRINCIPLE OF COMMON LAW JURISPRUDENCE THAT WHER E A PERSON WAS FOUND IN POSSESSION OF ANYTHING, THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER WAS ON THAT PERSON. 4.3. LET US ALSO EXAMINE THE INGREDIENTS OF S. 69 DEALING WITH UNEXPLAINED INVESTMENTS. BEFORE INVOKING THE PROVISIONS OF S. 69 IT WILL BE NEC ESSARY TO ENSURE THE FULFILLMENT OF ALL THE CONDITIONS PRECEDENTS AS TO THE EXISTENCE OF SUCH UNEXPLAINED INVESTMENT. THE PROVISIONS CAN BE INVOKED ONLY IF IT IS FACTUALLY FOUND THAT THE ASSESSEE HAS MADE INVESTMENT IN THE MONEY - LENDING BUSINESS AND THE AS SESSEE AND NONE ELSE WAS THE OWNER OF SUCH UNEXPLAINED INVESTMENT. IT WILL HAVE TO BE FURTHER ESTABLISHED THAT THE AMOUNT HAS NOT BEEN RECORDED OR IS IN EXCESS OF THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUC H AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY. 12 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD THE AMOUNT OF SUCH UNEXPLAINED INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR IN WHICH THE ASSESSEE MADE SUCH UNEXPLAINED INVESTMENTS. THE FACTS MUST BE FOU ND TO CLEARLY BRING A CASE WITHIN THE AFORESAID DEEMING PROVISION AND IT WILL HAVE TO BE ESTABLISHED THAT ALL THE ABOVE CIRCUMSTANCES DO FACTUALLY EXIST. 10 . IN THE PRESENT CASE IN SPITE OF EXPLANATION OF THE ASSESSEE THE ASSESSING OFFICER DID NOT TAKE PAINS TO EXAMINE MR. PANHALE. MOREOVER, AS PER OUR READING, THE SAID PAGE CONTAINS THE AMOUNT PERTAINING TO THE DIFFERENT PROJECTS BY THE DIFFERENT PERSONS AND NO OTHER MATERIAL OR ANY DIARY OR ANY DOCUMENT WAS SEIZED TO CO - RELATE THE SAID TRANSACTIONS. THE LD. CIT(A) HAS ONLY GONE ON THE APPLICABILITY OF SEC. 132(4 A ) WHICH SCOPE HAS BEEN EXPLAINED BY THE HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF PUSHKAR NARAIN SARRAF (SUPRA). IN RESPECT OF THE DECISION RELIED ON BY THE LD. CIT (DR) IN THE CASE OF S .M.S. INVESTMENT CORPORATION (P) LTD. (SUPRA) THERE IS NO QUARREL ON THE LEGAL PROPOSITION THAT THE DOCUMENT FOUND AND SEIZED D URING THE COURSE OF SEARCH THE BURDEN IS ON THE PERSON FROM WHOSE POSSESSION IT IS SEIZED TO EXPLAIN THE PRESENCE OF THE SAID DOC UMENTS AND ALSO THE CONTENTS BUT IN THE PRESENT CASE THE ASSESSEE HAS ALREADY GIVEN THE EXPLANATION THAT THE FAX MESSAGE WAS TO MR. PANHALE . E VEN THE ASSESSING OFFICER HAS NOT EXAMINE D THE TELEPHONE NUMBERS OF THE FAX MESSAGE. AS THE LAW IS WELL SETTLED THAT THE PROVISIONS OF SEC. 132(4A) HAS A LIMITED APPLICATION AS EXPLAINED BY THE HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF PUSHKAR NARAIN SARRAF (SUPRA) . LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. MOREOVER, EACH AND EVERY PIECE OF DOCUMENT CANNOT BE TREATED AS EVIDENCE TOWARDS UNDISCLOSED INCOME OF THE SEARCH PERSON BUT THERE MUST BE SOME OTHER SUPPORTING EVIDENCE ALSO. IN OUR OPINION THE DOCUMENTS IS TO BE READ AS A WHOLE AND ASSESSING OFFICER CANNOT ADOPT PICK AND CHOOSE POLICY. WE FIND NO JUSTIFICATION IN ADDITION MADE 13 ITA NO. 241/PN/2011, SHRI VIVEK SHANKARRAO DESHPANDE, AURANGABAD BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). WE, ACCORDINGLY, DELETE THE SAME. 1 1 . IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 27 - 05 - 2014 P RONOUNCED IN THE OPEN COURT ON - 05 - 2014 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH MAY, 20 1 4 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE