ACIT CC 6(4), MUMBAI V. SHANTILAL C. SHETH, MUMBAI

ITA 2966/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0586 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 05-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: B V JHAVERIAR
• Keywords: Search and seizure; Loose papers; Corroborative evidences
• Section: 143(3); 153A; 131

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , , , , , , ,, , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND SAKTIJIT DEY,JUDICIAL MEMBER / ITA NO.2966/MUM/2015: /ASSESSMENT YEAR:2011-12 ACIT, CENTRAL CIRCLE-6(4) R.NO.32(1), GROUND FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. SHRI SHANTILAL C. SHETH 9, CHEMOX HOUSE, 3RD FLOOR BARRACK ROAD, NEAR BOMBAY HOSPITAL MUMBAI-400 020. PAN:AAOPS 0258 E REVE NUE BY: MS. VIDISHA KALRA-CIT-DR ASS ESSEE BY: SHRI B.V. JHAVERI-AR / DATE OF HEARING: 06.06.2017 / DATE OF PRONOUNCEMENT: 06.06.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 02.03.2015 OF CIT(A)-48 , MUMBAI,THE ASSESSING OFFICER (AO), HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL IS A FINANCE BROKER WHO FILED HIS RETURN OF INCOME ON 28/09/2011,DECLARING TOTAL INCOME RS.4. 46 CRORES.THE AO COMPLETED ASSESSMENT U/S. 153A R.W.S. 143(3) OF THE ACT DETERMINING HIS INCOME AT RS.6.84 CRORES.EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING ADDITION OF RS.2.34 CR ORES. BRIEF FACTS : 2. A SEARCH AND SEIZURE ACTION U/S.132(1) OF THE ACT W AS CARRIED OUT IN THE LODHA GROUP OF CASES.SIMULTANEOUSLY,SEARCH ACTION WAS ALSO CARRIED OUT AT THE PREMISES OF THE ASSESSEE. DURING THE SEARCH FROM THE RESIDENCE OF SOMNATHAN N AIR (SN),AN EMPLOYEE OF LODHA GROUP, CERTAIN LOOSE PAPERS WERE SEIZED BY THE INVESTIGATI ON WING OF THE DEPARTMENT.THE AO HELD THAT PERUSAL OF DOCUMENTS REVEALED THAT THE ASSESSE E HAD ENTERED INTO CASH TRANSACTIONS WITH THE LODHA GROUP.HE DIRECTED THE ASSESSEE TO EXPLAI N AS TO WHY THE CASH TRANSACTION SHOULD NOT BE BROUGHT TO TAX IN HIS HANDS. IN HIS REPLY, D T.03/03/2013 , THE ASSESSEE STATED THAT HE HAD NO DEALINGS WITH THE LODHA GROUP,THAT HE HAD NEVER RECEIVED ANY CASH/PAID CASH TO THE SAID PARTY,THAT HE HAD ONLY GIVEN FINANCES TO THE GROUP IN THE EARLIER YEARS. THE AO RECORDED THE STATEMENT OF THE ASSESSEE U/S. 131 OF THE ACT ON 1 5.03.2013. AFTER CONSIDERING THE AVAILABLE MATERIAL,HE STATED THAT STATEMENT OF SN WAS RECORDE D DURING THE COURSE OF SEARCH, THAT IN HIS STATEMENT SN HAD STATED THAT THE ASSESSEE HAD CASH TRANSACTION WITH LODHA GROUP,THAT RS.10.00 LAKHS WERE SEIZED FROM THE OFFICE PREMISE S OF THE ASSESSEE.FINALLY,HE HELD THAT THE NET AMOUNT, BEING AMOUNT RECEIVED FROM LODHA GROUP AND AMOUNT PAID TO LODHA HAD TO BE 2966/M/15-(11-12)SHANTILAL C. SHETH 2 BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE BEING UNEXPLAINED FUNDS AVAILABLE WITH HIM.HE MADE AN ADDITION OF RS.2.34 CRORES TO THE TOTAL I NCOME OF THE ASSESSEE. 3. AGGREIVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA). BEFORE HIM,IT WAS ARGUED THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL NO ADDITION COULD BE MADE, THAT THE AO HAD MADE THE ADDITION WITHOUT ANY EVIDENCE, THAT THE PRESUMPTION DRAWN BY HIM WAS ONLY FIGMENT OF HIS IMAGINATION, THAT THE AO HAD NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF THE ASSESSE E,THAT HE DID NOT KNOW ANYTHING ABOUT LOOSE PAPERS SEIZED FROM SN,THAT IN HIS STATEMENT R ECORDED BY AO HE HAD DENIED THAT HE KNOWS SN,THAT THE STATEMENTS OF TWO OF THE OTHER EM PLOYEES OF THE LODHA GROUP WERE USED FOR THE FIRST TIME.HE REQUESTED THE FAA TO PROVIDE HIM THE COPIES OF STATEMENT OF THOSE EMPLOYEES. HE DIRECTED THE AO TO CONFIRM AS TO WHET HER SN HAD IDENTIFIED THE ASSESSEE AND HAD CONFIRMED THE IMPUGNED TRANSACTION WITH THE ASS ESSEE.HE ALSO DIRECTED THE AO TO SUBMIT THE COPIES OF RELEVANT PAPERS BASED ON WHICH ADDITI ON WAS MADE. IN HIS LETTER DT.28/1/2015, THE AO CONFIRMED THAT IN THE STATEMENT OF SN THERE WAS NO REFERENCE AND QUESTIONS REGARDING THE CASH TRANSACTION ENTERED INTO BY THE ASSESSEE W ITH THE LODHA GROUP. AFTER CONSIDERING THE AVAILABLE MATERIAL,THE FAA HE LD THAT THE AO HAD RELIED UPON THE LOOSE PAPERS FOUND FROM THE RESIDENCE OF SN WHEREIN TRANS ACTIONS FOR THE PERIOD 21/12/2010 TO 05/01/2011 WERE RECORDED, THAT THE AO HAD RELIED UP ON STATEMENT OF TWO EMPLOYEES OF LODHA GROUP,THAT STATEMENT OF ABHINANDAN LODHA(AL)A KEY PERSON OF LODHA GROUP,WAS RECORDED ON 11.01.2011,THAT HE WAS ASKED A QUESTION ON THE L OAN ENTRIES FOUND PERTAINING TO THE GROUP CONCERNS,THAT IN THE STATEMENT THERE WAS NO MENTION OF CASH RECEIVED FROM ASSESSEE ,THAT THE AO HAD QUOTED STATEMENT OF TWO EMPLOYEES OF LODHA G ROUP,THAT QUESTION ASKED TO THEM WAS ABOUT CASH FOUND FROM LOCKERS OPERATED BY THEM,THAT THE ADDITION WAS MADE ON THE BASIS OF STATEMENT OF EMPLOYEES BUT ON THE BASIS OF PAPER FO UND AND SEIZED FROM THE RESIDENCE OF SN, THAT IN THE STATEMENTS OF EMPLOYEES THERE WAS NO S PECIFIC MENTION OF THE ASSESSEE.HE REFERERD TO STATEMENT OF SN RECORDED ON 10.01.2011 AND OBSER VED THAT SN DID NOT IDENTIFY THE SPECIFIC PERSONS WITH WHOM CASH TRANSACTION WERE CARRIED OUT , THAT THE CASH FOUND AT THE RESIDENCE OF SN WAS OWNED UP BY HIM,THAT THERE WAS NOTHING IN TH E STATEMENT WHICH SHOWED THAT THE CASH MENTIONED IN THE PAPERS SEIZED BELONGED TO ANY SPEC IFIC PERSON,THAT THE STATEMENT OF THE ASSESSEE WAS RECORDED AFTER A FEW DAYS OF SEARCH,T HAT HE WAS CONFRONTED WITH THE LOOSE PAPER FILED/ SEIZED FROM THE RESIDENCE OF SN, THAT THE AS SESSEE DENIED THAT THE TRANSACTION APPEARING IN THE LOOSE PAPERS RELATED TO HIM,THAT THE AO DID NOT CALL UPON SN TO IDENTIFY THE ASSESSEE AS A PARTY APPEARING IN THE LOOSE PAPERS, THAT NO OPPO RTUNITY OF CROSS EXAMINATION WAS GIVEN TO 2966/M/15-(11-12)SHANTILAL C. SHETH 3 THE ASSESSEE ,THAT THE AO DID NOT QUESTION SN TO AS CERTAIN THE IDENTITY OF THE PERSON WITH WHOM ALLEGED CASH TRANSACTION TOOK PLACE, THAT THIR D PARTY STATEMENT ENTERTAINED IN ABSENCE OF SOME CORROBORATIVE EVIDENCE COULD NOT RESULT IN ADD ITION ,THAT THE PRESUMPTION AVAILABLE U/S. 132(4)A WAS APPLICABLE TO THE PERSONS FROM WHOM INC RIMINATING MATERIAL WAS FOUND AND SEIZED.REFERRING TO CERTAIN CASE LAWS,HE HELD THAT THE ALLEGED CASH TRANSACTIONS, APPEARING IN LOOSE PAPERS WERE NOT WRITTEN BY ASSESSEE,THAT THE UNACCOUNTED CASH TRANSACTIONS WERE NOT CORROBORATED BY ANY MATERIAL FOUND IN THE SEARCH,TH AT THE AO,WHILE USING LOOSE PAPERS /STATEMENTS OF THIRD PARTY SHOULD HAVE ALLOWED THE ASSESSEE TO CROSS EXAMINE THE PERSONS CONCERNED,THAT DURING THE SEARCH PROCEEDINGS NOEVID ENCE WAS FOUND REGARDING CASH TRANSACT TIONS WITH LODHA GROUP FROM THE PREMISES OF THE AS SESSEE ,THAT THE PERUSAL OF LOOSE PAPERS SHOWED NAME OF ONE SHANTIBHAI WAS APPEARING IN THE DOCUMENTS, THAT THE AO HAD NOT VERIFIED THE FACT ABOUT THE ALLEGED TRANSACTION THAT SN HAD NOT CORROBORATED THE INFERENCE OF THE AO, THAT THE NAMES ARE NOT LEGIBLE IN THE DOCUMENTS, NA ME OF ONE SHATIBHAI ALONG WITH SO MANY OTHER WAS APPEARING IN DOCUMENTS,THAT IT WAS NOT E STABLISHED THAT SHANTIBHAI AND THE ASSESSEE (SHANTILAL SETH) WERE THE SAME PERSON.FINALLY, HE D ELETED THE ADDITION MADE BY AO. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTM ENTAL REPRESENTATIVE(DR)STRONGLY RELIED UPON THE ORDER OF AO.THE AUTHORISED REPRESE NTATIVE (AR) SUBMITTED THAT NO INCRIMIN -ATING DOCUMENTS WERE FOUND FROM THE PREMISES OF AS SESSEE ,THAT HE WAS NOT AWARE OF THE CASH TRANSACTIONS ENTERED INTO BY EMPLOYEES OF LODHA GRO UP,THAT THERE WAS NO LINK BETWEEN LOOSE PAPERS FOUND FROM RESIDENCE OF SN AND ASSESSEE.HE R EFERRED TO CASES OF MAULIK KUMAR K. SHAH (307ITR137) AND AMARJIT SINGH BAKSHI(86ITD13) . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AN ACTION U/S. 132(1) WAS CARRIED OUT IN LODHA GROUP C ONCERN AND AT THE PREMISES OF THE ASSESSEE, THAT CERTAIN LOOSE PAPERS WERE SEIZED FROM PREMISES OF SN, THAT IN THE LOOSE PAPERS NAME OF ONE SHANTIBHAI WAS APPEARING,THAT ASSESSEE HAD STAT ED THAT HE HAD NOT ENTERED INTO ANY TRANSACTION WITH LODHA GROUP ENTITIES,THAT THE PAP ERS FOUND AT THE RESIDENCE OF SN WERE WRITTEN BY SN AND NOT BY THE ASSESSEE,THAT THE AO N EVER CONFRONTED THE ASSESSEE AND SN , THAT THERE WERE NO CORROBORATIVE EVIDENCE OF CASH T RANSACTION ALLEGEDLY ENTERED INTO BY ASSESSEE.THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT NO DOCUMENTARY/SUPPORTING EVIDENCE WERE FOUND DURING THE SEARCH THAT COULD PR OVE THAT ASSESSEE HAD PAID CASH TO LODHA GROUP OR RECEIVED CASH FROM THE GROUP.CONSIDERING T HE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT ORDER OF THE FA A DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL 2966/M/15-(11-12)SHANTILAL C. SHETH 4 INFIRMITY.SO, RELYING UPON THE CASE OF MAULIK KUMAR K.SHAH (SUPRA) AND CONFIRMING THE ORDER OF FAA,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH ,JUNE, 2017. 6, , 2017 SD/- SD/- ( / SAKTIJIT DEY ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :06.06.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.