Pradeep Amrutlal Runwal, Pune V. Tax Recovery Officer, Range 3, Pune

ITA 334/PUN/2013

• Counselvise Citation: 33424514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Search and seizure; Loose papers; Document seized; Principle of natural justice; Source of fund; Corroborative evidences; Retraction; Documents seized
• Section: 143(3); 147; 148; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.334/PN/2013 (A.Y: 2004-05) PRADEEP AMRUTLAL RUNWAL 1 ST FLOOR, RUNWAL PLAZA, 41/12, KARVE ROAD, PUNE 411004 PAN: AAPPR5901C APPELLANT VS. TAX RECOVERY OFFICER, RANGE-3, PUNE RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI P.L . PATHADE DATE OF HEARING: 10.04.2014 DATE OF ORDER : 30.05.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, [IN SHOR T CIT(A)] PUNE, DATED 11.10.2012 FOR A.Y. 2004-05 ON THE FOLLOWING GROUNDS. 1) THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LEARNED A.O. IN REOPENING THE CASE OF THE ASSES SEE U/S 148 ON THE FOLLOWING GROUNDS- A. THE MATERIAL SEIZED WAS SUFFICIENT ENOUGH TO FORM A REASONABLE OPINION THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASST. B. THE CORRECTNESS OF THE MATERIAL SEIZED CANNOT BE CONSIDERED AT THE STAGE OF REOPENING BUT THE SAME WAS TO BE INVESTIGATED DURING THE ASST. PROCEEDINGS U/S 147. 2 C. THE A.O. HAD MUCH WIDER POWERS TO REOPEN THE CASE SINCE THE SCRUTINY ASST. U/S 143(3) HAD NOT TAKEN PLACE IN THE CASE OF THE ASSESSEE. 1.1) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE REOPENING U/S 148 IS BAD IN LAW AND HENCE, THE REASST. U/S 147 BE DECLARED NULL AND VOID FOR THE FOLLOWING REASONS A. THERE WAS NO EVIDENCE TO SHOW THAT THE LOOSE PAPERS SEIZED FROM THE THIRD PARTY RELATED TO THE ASSESSEE. B. THERE WAS NO CORROBORATIVE EVIDENCE TO INDICATE THAT THE ASSESSEE HAD RECEIVED ANY AMOUNT FROM THE RMD GUTKHA GROUP. C. THUS, THE REOPENING WAS BASED ON MERE SUSPICION AND SURMISES, WITHOUT ANY CONCRETE INCRIMINATING EVIDENCE AND THEREFORE, IT WAS ILLEGAL AND VOID. WITHOUT PREJUDICE TO THE ABOVE GROUND, THE ASSESSEE SUBMITS THE FOLLOWING GROUNDS 2] THE LEARNED CIT(A) ERRED CONFIRMING THE ADDITIO N OF RS.5.10 CRS. MADE BY THE LEARNED A.O. U/S 69A ON TH E GROUND THAT THE ASSESSEE HAD RECEIVED THE SAID AMOU NT FROM RMD GUTKHA GROUP ON THE BASIS OF PAPERS SEIZED IN THE COURSE OF SEARCH ACTION 'ON THE SAID GROUP. 2.1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE A DDITION WAS JUSTIFIED FOR THE FOLLOWING REASONS- A. SHRI SOHANRAJ MEHTA, THE C & F AGENT OF RMD GUTKHA GROUP HAD ADMITTED IN THE STATEMENT RECORDED U/S 132(4) THAT THE SEIZED PAPERS WERE WRITTEN BY H IM AND HENCE, THE SAME CARRIED GREAT EVIDENTIAL VALUE. B. THE NOTINGS ON THE SEIZED PAPER WERE EXPLAINED BY THE AUTHOR, SHRI MEHTA WHICH CLARIFIED THE MODUS OPERANDI OF THE DEALINGS OF THE RMD GROUP AND HENCE , THE SAID PAPERS COULD NOT BE REGARDED AS DUMB DOCUMENTS. C. THE AMOUNTS NOTED AGAINST THE NAME 'PRADEEP RUNWAL' WERE ACCEPTED BY SHRI MEHTA TO BE IN THE NATURE OF UNACCOUNTED PAYMENTS MADE BY THE RMD 3 GROUP AND HENCE, IT WAS CLEAR THAT THE SAID AMOUNTS WERE RECEIVED BY THE ASSESSEE. D. NO DOCUMENTS COULD REASONABLY BE EXPECTED TO BE MAINTAINED IN RESPECT OF UNACCOUNTED DEALINGS AND HENCE, IN SUCH CASES, THE CORROBORATIVE EVIDENCE HA S TO BE SEEN IN THE DOCUMENTS SEIZED WHEREAS THE INFEREN CE IS TO BE DRAWN BASED ON THE STATEMENTS RECORDED POS T SEARCH ACTION. E. THE ASSESSEE HAS NOT OFFERED A SATISFACTOR Y EXPLANATION IN RESPECT OF THE ALLEGED RECEIPT AS P ER THE NOTINGS IN THE SEIZED PAPERS AND HENCE, THE ADDITIO N MADE BY THE LEARNED A.O. IS JUSTIFIED IN VIEW OF TH E DECISION IN THE CASE OF SUMATI DAYAL [214 ITR801(SC )]. 3) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE ADDITION MADE BY THE LEARNED A.O. IS TOTALLY BASED ON PRESUMPTION AND SURMISES AND THERE IS NO EVIDENCE THAT THE ASSESSEE HAD RECEIVED ANY SUCH AMOUNT FROM RMD GUTKHA GROUP AND HENCE, THE ADDITION MADE IS NOT JUSTIFIED AT ALL. 3.1) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT - A. THE ASSESSEE HAD NOT RECEIVED ANY AMOUNT FROM RMD GUTKHA GROUP IN CASH. B. THE PRESUMPTION U/S 132(4A) IF AT ALL APPLICABLE COULD BE APPLIED ONLY IN THE CASE OF RMD GUTKHA GROUP AND NOT IN THE CASE OF THE ASSESSEE. C. NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF SOME LOOSE DOCUMENTS FOUND WITH THIRD PARTY. D. THERE MAY BE MANY PEOPLE OF THE NAME 'PRADEEP RUNWAL' IN PUNE AND HENCE, THE PRESUMPTION MADE ON THE BASIS OF THE SEIZED PAPER WAS NOT JUSTIFIED IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE AND THE RMD GROUP HAD ANY PAST BUSINESS RELATIONS. E. ALTHOUGH SHRI MEHTA HAD ADMITTED TO HAVE WRITTEN THE DOCUMENT, HE HAD NEVER SPECIFICALLY ADMITTED THAT THE RMD GROUP HAD ADVANCED ANY FUNDS TO THE ASSESSEE AND HENCE, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE, THE LEARNED A.O. IS NOT JUSTIFIED IN PRESUMING THAT THE PERSON NAMED IN THE SEIZED PAPER WAS THE ASSESSEE. 4 F. THE VARIOUS DECISIONS RELIED UPON BY THE LEARNED CIT(A) ARE DISTINGUISHABLE ON FACTS AND HENCE, THE SAME ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE . 4] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT NO ADDITION COULD BE MADE ON THE BASIS OF DOCUMENTS FOUND WITH THIRD PARTIES AND HENCE, THE ADDITION MA DE SHOULD HAVE BEEN DELETED. 5] THE LEARNED CIT(A) ERRED IN PLACING RELIANCE ON SECTION 114 OF THE INDIAN EVIDENCE ACT WITHOUT APPRECIATING THAT IT HAD NO RELEVANCE TO THE FACTS OF THE PRESEN T CASE. 6] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E ASSESSEE HAD NOT CARRIED OUT ANY TRANSACTION WITH RMD GUTKHA GROUP AND HENCE, THE ADDITION MADE ON PRESUMPTIONS AND SURMISES MAY KINDLY BE DELETED. 7] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE HAS NOT PRESSED THE GROUND NOS.1 AND 1.1 WHICH PERTAIN TO REOPENING, SO THEY ARE DISMISSED AS NOT PRESSED. THE ASSESSEE IS AN INDIVIDUAL. THE ORIGINAL RETURN OF INCOME DECLARING THE TOTAL INCOME OF 3,12,974/- WAS FILED ON 01.11.2004. THE ASSESSING OFFICER THEREAFTER RECEIVED INFORMATION F ROM ACIT, CENTRAL CIRCLE-1(2) THAT A SEARCH AND SEIZURE ACTIO N U/S.132 WAS CARRIED ON 21.01.2010 IN THE CASE OF SHRI SOHANRAJ MEHTA, C & F OF THE RMD GUTKA GROUP, WHEREIN, THE DOCUMENTS SEIZ ED DURING THE COURSE OF SEARCH ACTION INCLUDED TRANSACTION RE LATED TO THE ASSESSEE. THE SEIZED DOCUMENTS REVEALED THAT THE A SSESSEE WAS IN RECEIPT OF 4,80,00,000/- ON 17.05.2003 AND 30,00,000/- ON 13.05.2003. THE ASSESSING OFFICER, THUS AFTER S EEKING APPROVAL OF ADDL. CIT, RANGE-3, PUNE ISSUED A NOTIC E U/S.148 OF THE ACT. IN RESPONSE TO THE SAME, THE ASSESSEE FIL ED A RETURN OF INCOME FOR A.Y. 2004-05 ON 15.04.2012 WITH THE SAME RETURNED INCOME OF 3,12,974/- AS FILED IN ORIGINAL RETURN. THE ASSES SING 5 OFFICER SOUGHT THE EXPLANATION FROM ASSESSEE WITH R EGARD TO THE NOTING MADE ON SEIZED DOCUMENTS, FOUND AND SEIZED D URING THE SEARCH ACTION. THE ASSESSEE PUT FORWARD HIS EXPLAN ATION VIDE ITS LETTER DATED 28.12.2011. HOWEVER, THE ASSESSING OF FICER DID NOT ACCEPT THE SUBMISSION AND EXPLANATION FURNISHED ON BEHALF OF ASSESSEE. THE ASSESSING OFFICER THEREAFTER NOTED T HAT SEIZED DOCUMENTS FOUND AT THE RESIDENCE OF SOHANRAJ MEHTA C & F OF RMD GUTKA GROUP HAD BEEN ACCEPTED TO HAVE BEEN WRIT TEN BY HIM AND ALSO THAT THE MODALITIES OF THE METHOD OF T RANSACTION ENTERED INTO BY RMD GUTKA GROUP HAD BEEN COMPLETELY EXPOSED. THE ASSESSING OFFICER, THUS, PLACING RELIANCE ON SE CTIONS 80 AND 114 OF THE INDIAN EVIDENCE ACT AND ALSO FOLLOWING T HE CERTAIN DECISIONS HELD THAT THE ENTIRE AMOUNT OF 5,10,00,000/- AS UNEXPLAINED MONEY U/S.69A OF THE ACT. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) HAS CONF IRMED THE ORDER OF ASSESSING OFFICER ON PRELIMINARY AS WELL A S ON MERIT. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF ASSESS EE. AS DISCUSSED ABOVE, THE ISSUE OF REOPENING HAS NOT BEE N PRESSED BEFORE US, WE ARE CONFINED TO ADJUDICATE THE ISSUE ON MERIT WHICH IS WITH REGARD ADDITION OF 5,10,00,000/- MADE BY THE ASSESSING OFFICER U/S.69A ON THE GROUND THAT THE ASSESSEE HAS RECEIVED THE SAID SUM FROM RMD GUTKA GROUP. THE STAND OF THE AS SESSEE HAS BEEN THAT THE CIT(A) ERRED IN HOLDING THAT THE ADDI TION WAS JUSTIFIED FOR THE FOLLOWING REASONS- A. SHRI SOHANRAJ MEHTA, THE C & F AGENT OF RMD GUTK HA GROUP HAD ADMITTED IN THE STATEMENT RECORDED U/S 13 2(4) THAT THE SEIZED PAPERS WERE WRITTEN BY HIM AND HENC E, THE SAME CARRIED GREAT EVIDENTIAL VALUE. B. THE NOTINGS ON THE SEIZED PAPER WERE EXPLAINED BY THE AUTHOR, SHRI MEHTA WHICH CLARIFIED THE MODUS OPERAN DI OF 6 THE DEALINGS OF THE RMD GROUP AND HENCE, THE SAID P APERS COULD NOT BE REGARDED AS DUMB DOCUMENTS. C. THE AMOUNTS NOTED AGAINST THE NAME 'PRADEEP RUNW AL' WERE ACCEPTED BY SHRI MEHTA TO BE IN THE NATURE OF UNACCOUNTED PAYMENTS MADE BY THE RMD GROUP AND HENCE, IT WAS CLEAR THAT THE SAID AMOUNTS WERE RECE IVED BY THE ASSESSEE. D. NO DOCUMENTS COULD REASONABLY BE EXPECTED TO BE MAINTAINED IN RESPECT OF UNACCOUNTED DEALINGS AND H ENCE, IN SUCH CASES, THE CORROBORATIVE EVIDENCE HAS TO BE SEEN IN THE DOCUMENTS SEIZED WHEREAS THE INFERENCE IS TO BE DRAWN BASED ON THE STATEMENTS RECORDED POST SEARCH ACTION . E. THE ASSESSEE HAS NOT OFFERED A SATISFACTOR Y EXPLANATION IN RESPECT OF THE ALLEGED RECEIPT AS P ER THE NOTINGS IN THE SEIZED PAPERS AND HENCE, THE ADDITIO N MADE BY THE LEARNED A.O. WAS JUSTIFIED. THE CIT(A) FAILED TO HAVE APPRECIATED THAT - A. THE ASSESSEE HAD NOT RECEIVED ANY AMOUNT FROM RMD GUTKHA GROUP IN CASH. B. THE PRESUMPTION U/S 132(4A) IF AT ALL APPLICABLE CO ULD BE APPLIED ONLY IN THE CASE OF RMD GUTKHA GROUP AND NO T IN THE CASE OF THE ASSESSEE. C. NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSES SEE ON THE BASIS OF SOME LOOSE DOCUMENTS FOUND WITH THI RD PARTY. D. THERE MAY BE MANY PEOPLE OF THE NAME 'PRADEEP RUNWA L' IN PUNE AND HENCE, THE PRESUMPTION MADE ON THE BASI S OF THE SEIZED PAPER WAS NOT JUSTIFIED IN THE ABSENC E OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE AND THE RMD GR OUP HAD ANY PAST BUSINESS RELATIONS. E. ALTHOUGH SHRI MEHTA HAD ADMITTED TO HAVE WRITTEN TH E DOCUMENT, HE HAD NEVER SPECIFICALLY ADMITTED THAT THE RMD GROUP HAD ADVANCED ANY FUNDS TO THE ASSESSEE AN D HENCE, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE , THE LEARNED A.O. IS NOT JUSTIFIED IN PRESUMING THAT THE PERSON NAMED IN THE SEIZED PAPER WAS THE ASSESSEE. 7 F. THE VARIOUS DECISIONS RELIED UPON BY THE LEARNED CI T(A) ARE DISTINGUISHABLE ON FACTS AND HENCE, THE SAME AR E NOT APPLICABLE TO THE CASE OF THE ASSESSEE. G. NO ADDITION COULD BE MADE ON THE BASIS OF DOCUMENTS FOUND WITH THIRD PARTY. H. THE CIT(A) ERRED IN PLACING RELIANCE ON SECTION 114 OF THE INDIAN EVIDENCE ACT WITHOUT APPRECIATING THAT IT HA D NO RELEVANCE TO THE FACTS OF THE PRESENT CASE. I. THE CIT(A) ALSO FAILED TO APPRECIATE THAT THE ASSES SEE HAD NOT CARRIED OUT ANY TRANSACTION WITH RMD GUTKHA GRO UP AND HENCE, THE ADDITION MADE ON PRESUMPTIONS AND SURMISES MAY KINDLY BE DELETED. 4. ON THE OTHER HAND, THE STAND OF LEARNED DEPARTME NTAL REPRESENTATIVE HAS BEEN AS UNDER: A) A SEARCH ACTION U/S 132 OF THE I.T. ACT, 1961 WA S CARRIED OUT ON 09-10-2009 IN THE CASE OF SHRI MITHULAL, A R EAL ESTATE BROKER OF BANGALORE BY THE INVESTIGATION WING OF BA NGALORE. IN COURSE OF THIS SEARCH ACTION BY THE INVESTIGATION W ING OF BANGALORE, CERTAIN INCRIMINATING DOCUMENTS RELATED TO ONE SHRI SOHANRAJ MEHTA WERE FOUND WHICH WERE IN CONNECTION WITH THE C & F AGENCY OF RMD GROUP OF PAN MASALA AND GUTKHA PR ODUCTS. SUBSEQUENTLY, ON THE NEXT DAY SHRI SOHANRAJ MEHTA W AS ALSO COVERED BY THE INVESTIGATION WING OF BANGALORE AND CONFRONTED ON THESE INCRIMINATING DOCUMENTS. SHRI SOHANRAJ MEHTA ACCEPTED THAT THESE DOCUMENTS ARE RELATED TO HIM AND ARE IN CONNECTION WITH THE C & F AGENCY OF RMD GROUP FOR PAN MASALA A ND GUTKHA PRODUCTS. SINCE RMD GUTKHA GROUP IS BASED AT PUNE, INFORMATION RELATED TO THIS WAS INTIMATED BY THE IN VESTIGATION WING OF BANGALORE TO THE INVESTIGATION WING AT PUNE . ON ANALYSIS OF THE DOCUMENTS SEIZED BY THE BANGALORE INVESTIGAT ION WING, IT IS OBSERVED THAT THE TOTAL RECEIPTS DUE TO THE SALE OF UNACCOUNTED PRODUCTION CARRIED BY RMD GUTKHA GROUP THROUGH SHRI SOHANRAJ 8 MEHTA ALONE WHO IS OVER SEEING KARNATAKA REGION IS OF RS. 355.51 CRORES FOR THE PERIOD APRIL 2003 TILL FEBRUARY, 200 8. THIS AMOUNT RECEIVED HAS EITHER BEEN REMITTED BACK TO RMD GUTKH A GROUP OR HANDED OVER AS PER THE INSTRUCTIONS OF RMD GUTKHA G ROUP TO THE VARIOUS SUPPLIERS OF RAW MATERIALS, TO OTHER BUSINE SSMEN ETC. FOR THE PURPOSE OF ASCERTAINING THE BUSINESS CONNEC TION OF RMD GUTKHA GROUP WITH THE PARTIES WHOSE NAMES FIGUR ED IN THE SAID INCRIMINATING DOCUMENTS, EXTENSIVE DISCREET EN QUIRIES WERE CARRIED OUT. THESE ENQUIRIES REVEALED THAT MALIKARJ UN GROUP OF SHIMOGA, BHOLENATH RADHAKISHAN GROUP OF DELHI, P.C. JAIN GROUP OF MUMBAI, MUKESH GARG GROUP OF DELHI, VINEET RANAWAT GROUP OF MUMBAI, S. BALAN GROUP OF PUNE, MALU GROUP OF PUNE, CHAMPION PACKAGING GROUP OF BANGALORE, ETC. ARE CLO SELY CONNECTED WITH THE BUSINESS ACTIVITY OF RMD GUTKHA GROUP RELATED TO THE UNACCOUNTED PRODUCTION AND SALE OF G UTKHA AND PAN MASALA PRODUCTS. ACCORDINGLY, THESE BUSINESS GR OUPS WERE ALSO COVERED ALONGWITH RMD GUTKHA GROUP ON 20/01/20 10. B) THE MODUS OPERANDI REVEALED IN COURSE OF THE S EARCH ACTION CAN BRIEFLY BE ENUMERATED AS UNDER:- I. RMD GUTKHA GROUP CARRIES OUT A PARALLEL PRODUCTI ON OF ITS ACCOUNTED PRODUCTION AND ALSO ITS UNACCOUNTED PRODU CTION. FOR ITS ACCOUNTED AS WELL AS ITS UNACCOUNTED PRODUCTION , THE PURCHASES OF MAJOR RAW MATERIALS LIKE EDIBLE PERFUM ES, BETEL NUT, ELLAICHI, KATTHA ETC, ARE PURCHASED FROM THE SAME S UPPLIERS. THIS IS TO ENSURE THAT THE QUALITY OF ITS PRODUCTS BOTH ACCOUNTED AS WELL AS UNACCOUNTED, IS MAINTAINED. IN THE BOOKS OF THE SUPPLIERS, AND ALSO RMD GUTKHA GROUP THE SUPPLIES M ADE FOR THE ACCOUNTED PRODUCTION OF RMD GUTKHA GROUP ARE DU LY REFLECTED IN THE BOOKS BUT THE SUPPLIES MADE FOR TH E UNACCOUNTED PRODUCTION ARE KEPT OUT OF THE REGULAR BOOKS. 9 II. AFTER PROCURING OF RAW MATERIALS, THE MANUFACTU RING ACTIVITY IS CARRIED OUT IN THE FACTORIES OF RMD GUT KHA GROUP AT VADODARA AND BANGALORE. AT THESE TWO FACTORIES, NO PROPER PRIMARY RECORDS ARE MAINTAINED SO THAT A PROPER ANA LYSIS OF THE UNACCOUNTED PRODUCTION COULD NOT BE MADE BY THE GOV T, AUTHORITIES LIKE EXCISE, SALES-TAX ETC. III. FOR THE PURPOSE OF DISTRIBUTION AND MARKETING OF ITS PRODUCTS, RMD GUTKHA GROUP HAS APPOINTED A NUMBER O F C & F AGENTS. BELOW THE C & F AGENTS, A NUMBER OF DEALERS ARE APPOINTED WHO FINALLY SUPPLY THE PRODUCTS TO THE RE TAILERS, PAN SHOPS, ETC. RMD GUTKHA GROUP MAINTAINS DIRECT CONTA CT ONLY WITH THE C & F AGENTS. THE C & F AGENTS MAINTAIN AC COUNTS OF THE UNACCOUNTED SALES, EXPENSES INCURRED ETC. THE C & F AGENTS REMIT THE UNACCOUNTED CASH SO GENERATED TO THE RMD GUTKA GROUP AND ALSO MAKE PAYMENTS TO THE SUPPLIERS OF RA W MATERIALS, ETC, FOR THE UNACCOUNTED PRODUCTION AS PER THE INST RUCTIONS OF RMD GUTKHA GROUP. C) AT THE TIME OF SEARCH ACTION ON 20/01/2010, THE SAID DOCUMENTS SEIZED BY THE INVESTIGATION WING OF BANGA LORE RELATED TO THE UNACCOUNTED SALES AND DEPLOYMENT OF THE SALE PROCEEDS BY MR. SOHANRAJ MEHTA, C&F WERE CONFRONTED BOTH TO SHR I RASIKLAL M. DHARIWAL AND ALSO HIS SON, SHRI PRAKASH R. DHARI WAL. BOTH THESE PERSONS ACCEPTED THAT THE CHITS GIVING INSTRU CTIONS EITHER TO SHRI SOHANRAJ MEHTA (C&F OF RMD GUTKHA GROUP FOR KA RNATAKA REGION) OR SHRI JEEVAN SANCHETI (BANGALORE FACTORY IN-CHARGE OF RMD GUTKHA GROUP) WHICH ARE PART OF LOOSE PAPER BUN DLE A/MI/29 SEIZED VIDE PANCHANAMA DTD.9-10-2009, BEAR EITHER OF THEIR SIGNATURES. THEY ALSO ACCEPTED THAT THESE ARE SHORT TERM ADVANCES GIVEN BY THEM TO THEIR FRIENDS AND BUSINES S ASSOCIATES. HOWEVER, THEY REFUSED TO ACCEPT THE DE-CODING EXPLA INED BY SHRI SOHANRAJ MEHTA THAT THE AMOUNTS MENTIONED IN LAKHS ACTUALLY 10 STANDS FOR CRORES OF RUPEES AND THE WORD 'PACKET' S TANDS FOR A LAKH OF RUPEES. D) THE SAID INCRIMINATING DOCUMENTS SEIZED BY THE INVESTIGATION WING OF BANGALORE ON 9/10/2009 HAD DE TAILS OF THE UNACCOUNTED SALES OF GUTKHA CARRIED OUT BY MR. SOHA NRAJ MEHTA, C&F OF RMD GUTKHA GROUP FOR KARNATAKA REGION. AS PE R THESE SEIZED DOCUMENTS, THE SALE PROCEEDS FROM THIS UNACC OUNTED SALE WERE BEING DEPLOYED TO A NUMBER OF ENTITIES WHICH I NCLUDED SHRI S. BALAN (DIRECTOR OF M/S SAI CONSTRUCTIONS PVT. LT D.) TO WHOM AN AMOUNT OF RS.1435 LAKHS WAS PAID. SHRI S. BALAN WAS CONFRONTED ON THIS TRANSACTION IN COURSE OF THE SEARCH ACTION ON 20/1/2010. IN COURSE OF THE STATEMENT ON OATH, HE ADMITTED THA T HE WAS CUSTODIAN OF AROUND RS. 14 CRORES ON BEHALF OF RMD GUTKHA GROUP. THOUGH SUBSEQUENTLY UNDER INFLUENCE OF M/S. DHARIWAL INDUSTRIES LTD., HAS RETRACTED HIS STATEMENT ON 25. 11.2011 BY FILING AN AFFIDAVIT. E) SIMILARLY, AS PER THE SAID DOCUMENTS SEIZED BY T HE INVESTIGATION WING OF BANGALORE ON 9/10/2009, AN AM OUNT OF RS.4656 LAKHS WAS PAID TO SHRI MALLIKARJUN OF SHIMO GA FOR PURCHASE OF ARECANUT (SUPARI). SHRI MALLIKARJUN WAS CONFRONTED WITH THE DOCUMENTS SEIZED BY THE INVESTIGATION WING OF BANGALORE AT THE TIME OF THE SEARCH ACTION. IN COURSE OF HIS STATEMENT ON OATH, HE ADMITTED TO HAVE MADE UNACCOUNTED SALE OF RS. 4656 LAKHS DURING THE PERIOD OF APRIL 2003 TO FEBRUARY 2 008 TO RMD GUTKHA GROUP. THIS STATEMENT WAS SUBSEQUENTLY RETRA CTED BY SHRI MALIKARJUN OF SHIMOGA UNDER INFLUENCE OF M/S. DHARIWAL INDUSTRIES LTD. HOWEVER, CIRCUMSTANTIAL EVIDENCES S HOW THAT THE SAID UNACCOUNTED SALES HAVE ACTUALLY BEEN MADE TO R MD GUTKHA GROUP. F) FOR THE PURPOSE OF ESTABLISHING THE GENUINENE SS OF THE DOCUMENTS SEIZED BY THE INVESTIGATION WING OF BANGA LORE, A 11 NUMBER OF POST SEARCH INQUIRIES WERE CARRIED OUT. T HE SAID POST SEARCH INQUIRIES ARE ELABORATED AS UNDER: I. EXAMINATION OF THE SAID DOCUMENTS SEIZED BY THE INVESTIGATION WING OF BANGALORE REVEALED THAT SHRI SOHANRAJ MEHTA, C&F OF RMD GUTKHA GROUP FOR KARNATAKA REGION USED TO MAINTAIN A DETAILED DAY TO DAY ACCOUNT OF THE TRA NSACTIONS OF SALE OF GUTKHA AND ALSO OF THE DEPLOYMENT OF T HE SAID SALE PROCEEDS. FROM THE DAY TO DAY ACCOUNTS, HE USED TO DRAW A MONTHLY SUMMARY GIVING INFORMATION OF THE SALE P ROCEEDS RECEIVED AND ITS DEPLOYMENT DURING A PARTICULAR MONTH. FINALLY, FROM THE MONTHLY SUMMARY HE PREPARED A CON SOLIDATED SUMMARY FOR THE ENTIRE PERIOD. AS PER THE CONSOLIDA TED SUMMARY, THE TOTAL UNACCOUNTED SALES FOR THE PERIOD APRIL, 2 003 TO AUGUST, 2006 WERE OF RS.2,18,00,91,198/- AND THE TOTAL UNAC COUNTED SALES FOR THE PERIOD SEPT., 2006 TO FEB., 2008 WERE OF RS.1,27,74,71,480/-. IT WAS ESTABLISHED THAT THE SA ID DOCUMENTS SEIZED BY THE INVESTIGATION WING OF BANGALORE ARE N OT SOME BASELESS DOCUMENTS BUT A DETAILED ACCOUNT OF THE DA ILY, MONTHLY AND CONSOLIDATED SUMMARY OF THE UNACCOUNTED SALES C ARRIED OUT BY SHRI SOHANRAJ MEHTA ON BEHALF OF M/S DHARIWAL IN DUSTRIES LTD. II) SHRI RASIKLAL M. DHARIWAL WAS EXAMINED TO ASCER TAIN THE BUSINESS RELATION ETC. WITH THE VARIOUS ENTITIES WH OSE NAMES WERE MENTIONED ON THE SAID DOCUMENTS SEIZED BY THE INVES TIGATION WING OF BANGALORE. THIS EXAMINATION REVEALED THAT S HRI RASIKLAL M. DHARIWAL IS KNOWING MOST OF THE PERSONS WHOSE NA MES ARE MENTIONED IN THE SAID DOCUMENTS AND IS HAVING A CLO SE BUSINESS ASSOCIATION WITH THEM. THE NAMES MENTIONED ON THE S AID DOCUMENTS INCLUDED THE SUPPLIERS TO RMD GUTKHA GROU P OF BETEL NUT, KATTHA, EDIBLE PERFUME, CARDAMOM, MENTHOL AND PACKAGING POUCHES, SOME PROMINENT BUILDERS OF PUNE, ETC. WITH MOST OF THESE PARTIES THEIR ASSOCIATION WITH RMD GUTKHA GRO UP WAS VERY 12 OLD, IN FACT IN MOST OF THE CASES MORE THAN 10 YEAR S OLD. THIS SHOWS THAT THE DOCUMENTS SEIZED BY THE INVESTIGATIO N WING OF BANGALORE ARE CLEARLY RELATED TO THE RMD GUTKHA GRO UP ITSELF. III) IT WAS INITIALLY BEING CLAIMED BY RMD GUTKHA G ROUP THAT SHRI SOHANRAJ MEHTA IS A MAN OF DUBIOUS CHARACTER A ND THEREFORE THE RECORDS FOUND FROM HIM CANNOT BE RELIED UPON. I N COURSE OF THE POST SEARCH INQUIRIES, IT WAS REVEALED THAT SHR I SOHANRAJ MEHTA HAS BEEN THE C&F OF RMD GUTKHA GROUP FOR MORE THAN 15 YEARS AND DURING THIS PERIOD NO CASES ETC. OF ANY W RONG DOINGS HAVE BEEN FILED AGAINST HIM BY RMD GUTKHA GROUP. IT WAS FURTHER REVEALED THAT RMD GUTKHA GROUP DOES NOT HAV E THE FAITH AND CONFIDENCE TO GIVE INSTRUCTIONS IN THE FORM OF SIGNED CHITS TO ANY OTHER PERSON OTHER THAN SHRI SOHANRAJ MEHTA. MO REOVER, IT WAS ALSO REVEALED THAT IN A NUMBER OF AGREEMENTS SI GNED BY RMD GUTKHA GROUP FOR PROPERTIES ACQUIRED AT BANGALORE, SHRI SOHANRAJ MEHTA HAS SIGNED IN THE CAPACITY OF A WITN ESS. ALL THESE FACTS CLEARLY PROVE THAT THE CLAIM OF RMD GUTKHA GR OUP THAT SHRI SOHANRAJ MEHTA IS A MAN OF DUBIOUS CHARACTER IS INC ORRECT AND WITH A MOTIVE SO THAT IT CAN DISOWN THE CONTENTS OF THE SAID DOCUMENTS. IV) ON THE BASIS OF THE INSTRUCTIONS GIVEN IN THE S AID SIGNED CODED CHITS EITHER BY SHRI RASIKLAL M. DHARIWAL OR SHRI PRAKASH R. DHARIWAL, SHRI SOHANRAJ MEHTA USED TO MAKE PAYME NTS TO THE PARTIES WHOSE NAMES WERE MENTIONED ON THE SAID CHIT S. IN MANY INSTANCES, THESE PAYMENTS WERE SPREAD OVER MORE THA N ONE INSTALLMENT. THE DAY BOOKS MAINTAINED BY SHRI SOHAN RAJ MEHTA HAVE A DETAILED NARRATION OF THE VARIOUS INSTALLMEN T PAYMENTS FOR THE AMOUNTS MENTIONED IN THE SIGNED CHITS. AT TIMES , IN THE DAY BOOKS THE AMOUNTS HAVE BEEN MENTIONED IN DE-CODED FORM, WHICH AGAIN PROVE'S THE DECODING EXPLAINED BY SHR I SOHANRAJ MEHTA. 13 V. THE SAID DOCUMENTS SEIZED BY THE INVESTIGATION W ING OF BANGALORE HAVE DETAILS OF THE ACCOUNTED DISPATCHES AND ALSO THE UNACCOUNTED DISPATCHES MADE BY M/S DHARIWAL INDUSTR IES LTD. TO SHRI SOHANRAJ MEHTA. THE UNACCOUNTED DISPATCHES APPARENTLY HAVE LETTER 'A' MENTIONED BEFORE THEM AND THE ACCOU NTED DISPATCHES HAVE VDIL 1 MENTIONED BEFORE THEM. INVESTIGATIONS REVEALED THAT THE ACCOUNTED DISPATCHES ARE DULY REF LECTED IN THE BOOKS OF M/S DHARIWAL INDUSTRIES LTD. SINCE SHRI SO HANRAJ MEHTA HAS ACCEPTED THAT THE TRANSACTIONS WITH LETTE R 'A' MENTIONED BEFORE THEM ARE IN RESPECT OF THE UNACCOU NTED DISPATCHES, A NATURAL COROLLARY IS THAT THE SAME AR E ALSO DISPATCHES WHICH ARE NOT RECORDED IN THE REGULAR BO OKS OF M/S DHARIWAL INDUSTRIES LTD. G) EVEN BEFORE THE A.O DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, STATEMENT ON OATH WAS RECORDED OF SHRI SOHANRAJ MEHTA ON 10.08.2011 WHEREIN HE AGAIN CONFIRMED THAT THE TRANSACTIONS IN THE SAID SEIZED DOCUMENTS RELATE TO THE UNACCOUNTED AS WELL AS ACCOUNTED TRANSACTIONS OF M/ S. DHARIWAL INDUSTRIES LTD. IT WAS ALSO STATED THAT THE RETRACT ION MADE EARLIER WAS AT THE BEHEST OF M/S. DHARIWAL INDUSTRIES LTD. HOWEVER, SUBSEQUENTLY CLEARLY UNDER PRESSURE FROM M/S. DHARI WAL INDUSTRIES LTD., SHRI SOHANRAJ MEHTA SUBMITTED LETT ER DATED 03.12.2011 REQUESTING TO CONSIDER HIS RETRACTION MA DE VIDE HIS EARLIER LETTER DATED 23.12.2009. 4.1 BESIDES THIS, THE LEARNED DEPARTMENTAL REPRESEN TATIVE HAS POINTED OUT THAT A SIMILAR ADDITION HAS BEEN MADE I N OTHER CASES I.E. SHRI S. BALAN, SHRI BINIT RANAWAT, SHRI VIMAL NAHAR AND SHRI P.C. JAIN WHO WERE ASSESSED WITH DCIT, CENTRAL CIRC LE 1(1), PUNE AND ADDITIONS WERE ALSO MADE IN THE CASE OF ASSESSE E I.E. SHRI PRADEEP RUNWAL, SHRI KANTILAL LUNKAD & SHRI PRAVIN LUNKAD WHICH WERE ASSESSED WITH CIRCLE-3, CIRCLE-2 & WARD 1(1) 14 RESPECTIVELY. THE ISSUE OF SHRI PRADEEP RUNWAL IS BEFORE US AND WE WILL CONCENTRATE THE SAME ON MERITS IN ITS FACTS AND CIRCUMSTANCES. IT IS PERTINENT TO MENTION HERE THA T EVERY CASE IS DECIDED IN ITS FACTS AND CIRCUMSTANCES, SO WE WILL DECIDE THE CASE OF ASSESSEE IN ITS FACTS AND CIRCUMSTANCES WHICH AR E WITHOUT PREJUDICE TO OTHER SIMILARLY PLACED CASES. IT IS N OT APPROPRIATE FOR US TO COMMENT ON OTHER PARTIES WHICH ARE NOT BEFORE US. SO, THIS CASE IS BEING DECIDED IN ITS FACTS AND CIRCUMSTANCE S. 4.2 FURTHER, WITH REGARD TO THE ASSESSEES OBSERVAT ION THAT THE ASSESSING OFFICER HAS NEITHER PROVIDED COPIES OF ST ATEMENTS OF SEIZED PERSONS I.E. SOHANRAJ MEHTA NOR ANY OPPORTUN ITY TO CROSS EXAMINATION GIVEN TO THE ASSESSEE. THE LEARNED DEP ARTMENTAL REPRESENTATIVE STATED THAT THE ASSESSING OFFICER HA S NOT RELIED ON STATEMENT OF SHRI SOHANRAJ MEHTA WHILE MAKING THE A DDITION. THERE IS NO DISCUSSION OF THE SAID STATEMENT IN THE ASSESSMENT ORDER. WHEN THE ASSESSING OFFICER IS NOT RELYING O N THE STATEMENT FOR MAKING ADDITION, SO, THERE IS NO NEED TO GIVE I TS COPY TO THE ASSESSEE. SECONDLY, A COPY OF ASSESSEES LETTER DA TED 28.12.2011 FURNISHED TO THE ASSESSING OFFICER DURING SCRUTINY PROCEEDINGS CLEARLY STATES THAT THE ASSESSEE WAS GIVEN ALL INFO RMATION OF SEIZED DOCUMENTS BY THE ASSESSING OFFICER. HENCE, THE PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN VIOLATED BY THE RE VENUE. WITH REGARD TO THE IDENTITY OF SHRI PRADEEP RUNWAL, IT W AS STATED ON BEHALF OF LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE SEIZED DOCUMENTS MENTIONED SHRI PRADEEP RUNWAL FROM PUNE. A SEARCH IN THE ITD DATABASE OF THE INCOME TAX DEPARTMENT SH OWS ONLY ONE PRADEEP RUNWAL, WHICH IS THE ASSESSEE. SO, ACC ORDING TO LEARNED DEPARTMENTAL REPRESENTATIVE, THE PERSON MEN TIONED IN SEIZED DOCUMENTS IN QUESTION IS ONLY PRADEEP RUNWAL , SO THE ACTION IN THE CASE OF ASSESSEE IS JUSTIFIED AND THE ADDITION MADE IN HIS HAND SHOULD BE SUSTAINED. 15 5. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ISSUE BEFORE US IS REGARDI NG THE ADDITION OF 5,10,00,000/-. AS STATED EARLIER, DURING THE SEAR CH PROCEEDINGS IN THE CASE OF DHARIWAL GROUP, SOME LOO SE PAPERS WERE SEIZED WHEREIN CERTAIN AMOUNTS WERE WRITTEN AG AINST THE NAME OF 'PRADEEP RUNWAL'. HENCE, THE CASE OF THE AS SESSEE WAS REOPENED U/S 148 OF THE INCOME TAX ACT. IT WAS EXPL AINED TO THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAD NOT EARNED ANY SUCH INCOME OF 5.10 CRS. AND THEREFORE, NO ADDITION SHOULD BE MADE. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPT ED THE CONTENTION OF THE ASSESSEE. 5.1 THE ASSESSING OFFICER HAS STATED THAT THE PAPER S WERE SEIZED FROM DHARIWAL GROUP. THE SAID PAPERS WERE SEIZED FR OM THE RESIDENCE OF SHRI SOHANRAJ MEHTA. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE COULD NOT DISOWN THE EXISTENC E OF SUCH DOCUMENTS. THE ASSESSING OFFICER OBSERVED THAT THE MONEY HAS BEEN PASSED ON BY DHARIWAL GROUP THROUGH THEIR STAF F. HENCE, THE ASSESSEE MUST HAVE RECEIVED THE AMOUNT NOTED ON THE SEIZED PAPERS. THE ASSESSING OFFICER HAS PROCEEDED TO MAK E THE ADDITION OF 5.10 CRS. BY STATING THAT AS PER SECTION 114 OF TH E INDIAN EVIDENCE ACT, IT IS AN ACCEPTED RULE OF EVID ENCE THAT IF A PERSON POSSESSING AN EVIDENCE DOES NOT PRODUCE IT, THE INFERENCE IS THAT SUCH EVIDENCE IF PRODUCED IS DETRIMENTAL TO HIM. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT THE SA ID RECEIPTS WERE THE INCOME OF THE ASSESSEE. 5.2 THE ASSESSING OFFICER HAS FURTHER HELD THAT AC CORDING TO THE PROVISIONS OF SECTION 80 OF THE INDIAN EVID ENCE ACT, THERE IS A PRESUMPTION AS TO THE DOCUMENTS PRODUCED AS RE CORD OF EVIDENCE ARE GENUINE. HENCE, HE HAS HELD THAT THE DOCUMENTS SEIZED FROM DHARIWAL GROUP COULD BE RELIED UPON F OR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESS ING OFFICER HAS PLACED RELIANCE ON THE DECISIONS OF SUMATI DAYAL VS. CIT 16 [(1995) 214 ITR 801(SC)], CIT VS. DURGA PRASAD MORE [(1969)72 ITR 807(SC], HIMMATRAM LAXMINARAIN VS. CIT [(1986)1 61 ITR 7(P&H)], CIT VS. GANAPATHI MUDALIAR [(1964)53 ITR 6 23(SC)] AND CIT VS. LACCHMAN DASS OSWAL [(1980)126 ITR 446( P&H)]. 5.3 ACCORDING TO US, THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE NOT JUSTIFIED IN THE FACTS AND CIRCUMS TANCES VIS--VIS OF THE ASSESSEE. AS DISCUSSED EARLIER, DURING THE COURSE OF SEARCH IN THE CASE OF DHARIWAL GROUP, THE ONLY DOCUMENTS F OUND ON THE BASIS OF WHICH THE ADDITION U/S 69A HAS BEEN MADE I N THE CASE OF THE ASSESSEE ARE IN THE FORM OF TWO LOOSE PAPERS WH EREIN AMOUNTS OF 4.80 CRORES AND 30 LACS WERE NOTED AGAINST THE NAME 'MR. PRADEEP RUNWAL'. APART FROM THIS, NO EVIDENCE HAS BEEN FOUND TO SUGGEST THAT THE ASSESSEE HAD ACTUALLY RECEIVED THE SAID AMOUNT OR THAT THE ASSESSEE HAD ENTERED INTO ANY TR ANSACTION WITH DHARIWAL GROUP. THERE IS NO EVIDENCE ON RECOR D TO SUGGEST THAT THE ASSESSEE HAS PREVIOUS BUSINESS RELATIONS W ITH THE DHARIWAL GROUP. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE TO SUGGEST THE SAME, IT COULD NOT BE PRESUMED THAT THE AMOUNTS REFLECTED IN THE LOOSE PAPERS WERE THE INCOME OF TH E ASSESSEE RECEIVED FROM DHARIWAL GROUP. IT HAS BEEN THE CONS ISTENT STAND OF THE ASSESSEE THAT THERE MAY BE MANY PERSONS OF T HE NAME PRADEEP RUNWAL IN PUNE AND THERE WAS NO SPECIFIC EV IDENCE TO SUGGEST THAT THE SAID NOTINGS PERTAINED TO THE ASSE SSEE. HENCE, IT WAS NOT JUSTIFIED AS TO HOW, IN THE ABSENCE OF A NY OTHER CORROBORATIVE DETAILS, THE ASSESSING OFFICER HAS AS SUMED THAT THE AMOUNTS REFLECTED THE INCOME OF THE ASSESSEE HIMSEL F, WHILE THE ASSESSEE HAS NO BUSINESS DEALINGS OF HIS WITH DHAR IWAL GROUP. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD AN Y EVIDENCE TO SUGGEST THAT DHARIWAL GROUP HAS ADMITTED THAT THE A MOUNTS WERE PAID TO THE ASSESSEE. HENCE, SIMPLY BECAUSE T HE NAME OF THE ASSESSEE IS NOTED ON THE SEIZED PAPERS DOES NOT MEAN THAT THE ADDITION COULD BE MADE IN THE HANDS OF THE ASSE SSEE. SINCE 17 NO EVIDENCE WAS FOUND RELATING TO THE EXISTENCE OF ANY TRANSACTION BETWEEN THE ASSESSEE AND DHARIWAL GROUP AND IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUGGEST TH AT THE ASSESSEE HAD ACTUALLY RECEIVED THE SAID AMOUNT, NO ADDITION COULD BE MADE MERELY ON THE BASIS OF NOTING IN LOOS E PAPERS FOUND DURING THE SEARCH PROCEEDINGS IN THE CASE OF DHARIWAL GROUP AGAINST THE NAME OF THE ASSESSEE. 5.4 THE PRESUMPTION U/S 132(4A) IS AVAILABLE ONLY I N RESPECT OF THE PERSON FROM WHOM THE PAPER IS SEIZED. IT COULD NOT BE APPLIED AGAINST A THIRD PARTY AND HENCE, NO ADDITIO N COULD BE MADE ON THE BASIS OF THE EVIDENCE FOUND WITH THIRD PARTY. THE PRESUMPTION U/S. 132(4A) COULD BE USED ONLY AGAINST THE PERSON FROM WHOSE PREMISES THE DOCUMENTS ARE FOUND AND NOT AGAINST THE PERSON WHOSE NAME APPEARS IN THE SEIZED PAPERS. 5.5 IN THIS CASE, THE ADDITION HAS BEEN MADE ON THE BASIS OF THE DOCUMENTS FOUND WITH DHARIWAL GROUP AND THUS, THE PRESUMPTION U/S. 132(4A) COULD NOT BE USED AGAINST THE ASSESSEE SINCE NO INCRIMINATING DOCUMENTS WERE FOUND WITH IT . IN THE CASE OF ACIT VS. LATA MANGESHKAR (MISS) (1974) 97 ITR 69 6 (BOM), THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE ON T HE BASIS OF THE ENTRIES IN THE BOOKS OF THIRD PERSONS. HON'BLE BOMBAY HIGH COURT HELD THAT SUCH ADDITION COULD NOT BE MADE ONL Y ON THE BASIS OF THE NOTINGS IN THE BOOKS OF THIRD PERSONS. THE FACTS OF THE PRESENT CASE ARE COVERED BY THE DECISION OF LAT A MANGESHKAR (SUPRA). IT IS A SETTLED LEGAL POSITION THAT THE D ECISION OF JURISDICTIONAL HIGH COURT IS BINDING ON ALL AUTHORI TIES BELOW IT. THUS, THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE LOOSE PAPERS IS NOT JUSTIFIED AT ALL. THEREFORE, THE QUE STION OF MAKING ANY ADDITION IS NOT JUSTIFIED IN THE ABSENCE OF OTH ER CORROBORATIVE EVIDENCE TO THAT EFFECT. 18 5.6 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED AUT HORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITIONS BY RELYING ON THE PROVISIONS OF SECTION 114 OF THE INDIAN EVIDENCE ACT. THE CONCERN ED ASSESSING OFFICER HAS REFERRED THE AFORESAID SECTION WHICH ST ATES THAT THE COURT MAY PRESUME THAT THE EVIDENCE WHICH COULD BE AND IS NOT PRODUCED WOULD, IF PRODUCED BE UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT. IT IS PERTINENT TO MENTION THIS RULE APPLIES TO THE CASES WHEREIN IT IS EVIDENT OR AN ESTABLISHED FACT THAT A PARTICULAR EVIDENCE OR DOCUMENT WAS IN POSSESSION OF THE ASSES SEE. FOR EXAMPLE, AN OWNER OF A LAND MAY WELL BE EXPECTED TO BE IN POSSESSION OF A 7/12 EXTRACT OF THE SAID LAND IN OR DER TO CHECK WHETHER THE SAID LAND WAS USED FOR AGRICULTURAL PUR POSES. IN THE PRESENT CASE, THE PROVISIONS RELIED BY THE ASSESSIN G OFFICER ARE NOT APPLICABLE, THE ASSESSEE IS NOT WITHHOLDING ANY DOCUMENTS. THE CASE OF DEPARTMENT IS THAT THE AMOUNT MENTIONED ON THE SEIZED PAPER FOUND WITH THE DHARIWAL GROUP INDICATE S THAT THE ASSESSEE HAS RECEIVED THE AMOUNT, THEREFORE, THE BU RDEN WAS ON THE ASSESSING OFFICER TO ESTABLISH THE SAME. THE R ELIANCE PLACED ON THE PROVISIONS OF SECTION 114 OF INDIAN EVIDENCE ACT IS MISPLACED. 5.7 AS STATED ABOVE, IT HAS BEEN CONSISTENT STAND O F THE ASSESSEE THAT THE ASSESSEE HAS HAD NO BUSINESS RELA TIONS WHATSOEVER WITH THE DHARIWAL GROUP. FURTHER, APART FROM THE NOTING ON PAPER WITH THE NAME 'PRADEEP RUNWAL, THER E IS NO CORROBORATIVE EVIDENCE IN THIS REGARD AGAINST THE A SSESSEE. IN SUCH CIRCUMSTANCES, WHERE THE ASSESSEE HAS NOT ENTE RED INTO ANY TRANSACTION WITH THE DHARIWAL GROUP, ONE CERTAINLY COULD NOT EXPECT THE ASSESSEE TO BE IN POSSESSION OF ANY EVID ENCE TO SUGGEST THAT IT HAS NOT ENTERED INTO ANY SUCH TRANS ACTION EXCEPT FOR HIS BOOKS OF ACCOUNT WHICH HAVE ALREADY BEEN VE RIFIED BY THE CONCERNED ASSESSING OFFICER. HENCE, THE ASSESSING OFFICER WAS 19 NOT JUSTIFIED IN PLACING RELIANCE ON THE PROVISION OF SECTION 114 OF THE INDIAN EVIDENCE ACT. 5.8 IT WAS FURTHER SUBMITTED ON BEHALF OF ASSESSEE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE A DDITION BY RELYING ON THE PROVISIONS OF SECTION 80 OF THE INDI AN EVIDENCE ACT WHICH STATES THAT THERE IS A PRESUMPTION THAT THE D OCUMENTS PRODUCED BEFORE THE COURT AS RECORD OF EVIDENCE ARE GENUINE. IN THIS REGARD, THE STAND OF THE ASSESSEE IS THAT IN T HE CASE OF ASSESSEE, DOCUMENT PRODUCED WAS MERELY IN THE FORM OF A ROUGH NOTING WHEREIN CERTAIN AMOUNTS WERE WRITTEN AGAINST THE NAME 'PRADEEP RUNWAL'. AS DISCUSSED EARLIER, THERE MAY BE MANY PEOPLE OF THAT NAME IN PUNE AND IN THE ABSENCE OF A NY OTHER CORROBORATIVE EVIDENCE TO THAT EFFECT. IN SUCH A S ITUATION, IT CANNOT BE INFERRED THAT IT BELONGS TO THE ASSESSEE. 5.9 WHILE MAKING THE ADDITION OF 5.10 CRORES AS STATED ABOVE, THE CIT(A) RELIED ON THE FOLLOWING DECISIONS OF SUM ATI DAYAL VS. CIT [(1995) 214 ITR 801(SC)], CIT VS. DURGA PRASAD MORE [(1969)72 ITR 807(SC], HIMMATRAM LAXMINARAIN VS. CI T [(1986)161 ITR 7(P&H)], CIT VS. GANAPATHI MUDALIAR [(1964)53 ITR 623(SC)] AND CIT VS. LACCHMAN DASS OSWAL [(1980 )126 ITR 446(P&H)]. IN THIS REGARD, THE STAND OF THE ASSESS EE HAS BEEN THAT THE CASE LAWS RELIED BY THE ASSESSING OFFICER ARE DIFFERENTIABLE ON FACTS AND HENCE, THE SAME ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. IN ALL THE CASES RELIED BY THE ASSESSING OFFICER, THE FACT THAT THE ASSESSEE HAD ACTUALLY EA RNED INCOME OR RECEIVED AMOUNTS BY WAY OF CASH CREDITS, UNEXPLAINE D INVESTMENT ETC. WAS NOT UNDER DISPUTE. THE ISSUE RELATED TO W HETHER THE RECEIPTS WERE RECEIVED FROM GENUINE LENDERS OR WHET HER THE INVESTMENTS OR RECEIPTS WERE A PART OF THE DISCLOSE D SOURCES OF INCOME OF THE ASSESSEE. WE FIND THAT IN THE PRESEN T CASE, THE ISSUE IN QUESTION ITSELF IS WHETHER ROUGH NOTING ON LOOSE PAPER 20 FOUND IN THE COURSE OF SEARCH AT THE PREMISES OF TH IRD PERSON COULD BE ASSUMED THE INCOME FROM THE ASSESSEE AS IN THE CASES RELIED BY THE ASSESSING OFFICER. THIS FACT HAS NOT BEEN ESTABLISHED IN THE CASE OF ASSESSEE, THEREFORE, THE CASE LAWS RELIED BY THE ASSESSING OFFICER ARE CLEARLY DISTINGUISHABL E ON FACTS AND HENCE, NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 5.10 ACCORDING TO CIT(A), THE NAME OF THE ASSESS EE APPEARS ON THE SEIZED PAPERS AND SEIZED DOCUMENTS GIVE A DETAI LED AND MINUTE NOTING OF THE TRANSACTIONS OF DHARIWAL GROUP . HE HAS STATED THAT SHRI SOHANRAJ MEHTA HAS ADMITTED THAT T HE DOCUMENTS WERE WRITTEN BY HIM AND MOST OF THE PAPER S WERE WRITTEN IN MARWADI LANGUAGE. THE CIT(A) REFERRED TO THE FACT THAT SHRI MEHTA HAD ADMITTED THAT THE PAPERS BELONGED TO DHARIWAL GROUP. IN PARA 4.3, THE CIT(A) STATES THAT WHEN TH E AUTHOR OF THE PAPER HAS ACCEPTED THE NOTINGS MADE BY HIM, IN THAT EVENT, THE DOCUMENT IS HAVING GREAT EVIDENTIARY VALUE AND COUL D NOT BE REJECTED. AS REGARDS, THE OBJECTION OF THE ASSESSE E THAT NO EVIDENCE WAS FOUND TO INDICATE THAT THE ASSESSEE HA D RECEIVED THE AMOUNT, THE CIT(A) REFERRED TO THE FACT OF ACCEPTAN CE OF THE PAPER BY SHRI MEHTA AND CONSIDERING THE FACT THAT THE MOD US OPERANDI WAS CLARIFIED BY SHRI MEHTA, THE ADDITION WAS RIGHT LY MADE BY THE ASSESSING OFFICER, HAS BEEN HELD BY CIT(A). HE HAS REFERRED TO VARIOUS DECISIONS IN SUPPORT OF THE ADDITION MADE. FIRSTLY, HE HAS RELIED UPON THE DECISION OF ITAT THIRD MEMBER I N THE CASE OF KHOPADE KISANRAO MANIKRAO [74 ITD 25]. IN THIS REG ARD, THE STAND OF ASSESSEE IS THAT THE DECISION IN THE CASE BEFORE THIRD MEMBER WAS NOT APPLICABLE TO THE FACTS OF THE PRESE NT CASE. IN THE SAID CASE, THE ASSESSEE WAS SEARCHED AND DOCUME NTS WERE FOUND INDICATING ON MONEY RECEIVED ON SALE OF PLOTS . ON THE BASIS OF THE DOCUMENTS FOUND, THE ASSESSING OFFICER ESTIM ATED THE INCOME FROM ON MONEY WHICH WAS HELD TO BE VALID. I N THAT CASE, THE ISSUE THAT NO ADDITION COULD BE MADE ON THE BAS IS OF 21 DOCUMENTS FOUND WITH THIRD PARTY WAS NEITHER RAISED NOR APPLICABLE. THUS, ACCORDING TO US, THE SAID DECISIO N HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE'S CASE. 5.11 THE CIT(A) IN PARA 2.5 HAS PLACED RELIANCE U PON ITAT, PUNE DECISION IN THE CASE OF DHANVARSHA BUILDERS AN D DEVELOPERS PVT. LTD. [102 ITD 375]. IN THE SAID CASE, THE ASSE SSEE WAS SEARCHED AND DOCUMENTS WERE FOUND INDICATING ON MON EY RECEIVED BY THE ASSESSEE. IT WAS HELD THAT THE DOCU MENT WAS FOUND WITH THE ASSESSEE AND THEREFORE, THE A.O. WAS JUSTIFIED IN MAKING THE ADDITION. EVEN IN THIS CASE, THE ISSUE O F NO ADDITION CAN BE MADE ON THE BASIS OF DOCUMENTS FOUND WITH TH IRD PARTY WAS NOT RAISED. THE CIT(A) HAS FURTHER REFERRED TO THE DECISION OF ITAT, MUMBAI IN THE CASE OF P. R. PATEL VS. DCIT [( 2001) 78 ITD 51 (MUM)] FOR THE PROPOSITION THAT SEIZED PAPERS CA NNOT BE CALLED DUMB PAPER BECAUSE THEY INDICATE DATE, AMOUNT AND C ALCULATION. THERE IS NO DISPUTE WITH THE ABOVE PROPOSITION. THE PAPERS ARE FOUND PERTAINING TO DHARIWAL GROUP AS ADMITTED BY S HRI MEHTA AND THEREFORE, THESE DOCUMENTS MAY BE RELEVANT FOR DECIDING THE ISSUE IN THE CASE OF DHARIWAL GROUP. HOWEVER, IN TH E ABSENCE OF ANY CORROBORATIVE EVIDENCE, THE ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE SAID PAPE RS. 5.12 THE CIT(A) HAS FURTHER RELIED UPON ITAT TH IRD MEMBER DECISION IN THE CASE OF DHUNJIBHOY STUD AND AGRICUL TURAL FARM VS. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], IN THIS CAS E, THE ASSESSEE WAS A BUILDER AND HAD SOLD FLAT TO ONE MR. TANNA. THERE WAS SEARCH ON MR. TANNA WHEREIN A DOCUMENT WAS FOUN D INDICATING FLAT PURCHASED FROM THE ASSESSEE FIRM AN D THE AMOUNT OF CHEQUE AND CASH PAID. THE AMOUNT OF CHEQUE PAID WAS TALLYING WITH THE BOOKS AND THEREFORE, IT WAS HELD THAT CASH WAS PAID AS NOTED ON THE PAPER. MR. TANNA HAD ALSO ACCEPTED THE FACT THAT CASH WAS PAID TO THE ASSESSEE. IN THESE FACTS, ITAT HELD THAT 22 SINCE THERE WAS TRANSACTION BETWEEN ASSESSEE AND SH RI TANNA AND ALSO THE FACT THAT THE AMOUNTS PAID BY CHEQUE T ALLIED, THE ADDITION WAS RIGHTLY MADE. THE ASSESSEE RIGHTLY SUB MITTED THAT THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. FIRSTLY, THERE IS NO TRANSACTION BETWEEN THE ASSESS EE AND DHARIWAL GROUP. SECONDLY, THERE IS NO CORROBORATIVE EVIDENCE FOUND WHICH COULD SUGGEST THAT THE ASSESSEE HAD REC EIVED ANY AMOUNT. THE ASSESSING OFFICER AND CIT(A) HAVE ALSO NOT BROUGHT ON RECORD ANY EVIDENCE TO SUGGEST THAT THE PAYMENT WAS MADE TO THE ASSESSEE. ACCORDINGLY, CONSIDERING THE FACTUAL POSITION, THE DECISION IN THE CASE OF DHUNJIBHOY STUD AND AGRICUL TURAL FARM IS NOT APPLICABLE IN THE CASE OF ASSESSEE. 5.13 THE CIT(A) HAS RELIED ON THE DECISION IN TH E CASE OF VASANTIBAI N. SHAH VS. CIT [(1995) 213 ITR 805 (BOM )]. IN THIS CASE, THE ISSUE WAS REGARDING VALIDITY OF REASSESSM ENT PROCEEDINGS. THE ASSESSEE HAD MADE A FALSE DISCLOSU RE. SUBSEQUENTLY, THE CASE WAS REOPENED. HON'BLE HIGH C OURT HELD THAT THE REOPENING WAS VALID SINCE THE ASSESSEE HER SELF HAD MADE A FALSE DISCLOSURE. THUS, THE FACTS ARE TOTALLY DIF FERENT FROM THE PRESENT CASE AND HENCE, THE RATIO OF VASANTIBAI N. SHAH (SUPRA) IS NOT APPLICABLE TO THE ASSESSEE'S CASE. THE CIT(A) F URTHER RELIED ON THE DECISION IN THE CASE OF GREEN VALLEY BUILDER V. CIT [(2008) 296 ITR 225 (KER)]. IN THE SAID CASE, THE ASSESSEE WAS ENGAGED IN REAL ESTATE BUSINESS AND IT HAD SOLD CERTAIN PLOTS. THE ASSESSEE STATED THAT THE PLOTS WERE SOLD AT RS.1750/- PER CENT WHIL E THE ASSESSING OFFICER ON THE BASIS OF EVIDENCES HELD TH AT ACTUALLY THE LANDS WERE SOLD AT RS.4,000/- PER CENT. HON'BLE HIG H COURT HELD THAT THE ADDITIONS MADE WERE CORRECT. THE SAID DECI SION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE CI T(A) HAS FURTHER RELIED UPON THE DECISION IN THE CASE OF CHUHARMAL V S. CIT [(1988) 172 ITR 250 (SC)] FOR THE PROPOSITION THAT DOCUMENT ARY EVIDENCE PLAYS AN IMPORTANT PART. THERE IS NO DISPUTE TO THE SAID 23 PROPOSITION BUT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE NO ADDITION COULD BE MADE IN THE HANDS OF THE THIRD PA RTY. 5.14 WE FIND THAT IN THAKKAR DEVELOPERS LTD. [I T A NO. 581/PN/08], ITAT IN PARAS 3 AND 4 HELD AS UNDER:- 'THE ABOVE SAID SHRI KOLHE WAS EXAMINED, CROSS EXAM INED AND RE-EXAMINED AND NO EVIDENCE WAS GATHERED FROM H IM TO ESTABLISH THAT THE CONTENTS OF THE SEIZED DOCUMENTS WERE CORRECT AND TRUE. THUS, IN THE ABSENCE OF ANY CORRO BORATIVE EVIDENCE IN THE PRESENT CASE, THE SAID SEIZED DOCUM ENT HAS TO BE TREATED AS A DUMB DOCUMENT AS RIGHTLY OBSERVE D BY THE CIT(A). THE A.O. DISMISSED THE RETRACTION OF TH E STATEMENT DATED 29.03.2003 BY FILING AN AFFIDAVIT A S AN AFTER THOUGHT AND SELF SERVING. THE A.O. CONCLUDED THAT T HE FACTS MENTIONED IN THE SEIZED DOCUMENTS CLEARLY INDICATED THAT THE STATEMENT GIVEN ON 29.03.2003 WAS TRUE AND CORR ECT. THE A.O. HAS NOT BROUGHT ON RECORD ANY MATERIAL OR CORROBORATIVE EVIDENCES TO COME TO THESE CONCLUSION S. THE REASONS GIVEN BY THE A.O. IN THIS REGARD ARE WITHOU T ANY BASIS AND SUPPORT. THE AFFIDAVIT FILED BY SHRI KOLH E REMAINED UNCONTROVERTED AND WHICH IS AGAINST THE SE TTLED LEGAL POSITION ON THE ISSUE THAT THE CONTENTS OF TH E AFFIDAVIT BE REJECTED BY CONFRONTING THE SAME TO THE DEPONENT WHICH IS MISSING IN THIS CASE. NOTHING WAS SHOWN BY THE A . O. THAT THERE WAS ANY OTHER MATERIAL CO RELATED TO THE SEIZ ED DOCUMENTS. THE A.O. WAS NOT JUSTIFIED IN REJECTING THE CONTENTS OF THE AFFIDAVIT AS MENTIONED ABOVE. THE A .O. FURTHER RELIED ON THE PRESUMPTIONS U/S 132(4A) OF T HE ACT ON THE GROUND THAT THIS SECTION WAS VERY CLEAR THAT THE CONTENTS OF BOOK OF ACCOUNT AND OTHER DOCUMENTS MAY BE PRESUMED TO BE TRUE AND PRESUMPTION CAN BE DRAWN EV EN ON THE THIRD PERSON WHO WAS NOT SEARCHED U/S 132 OF THE ACT. THE A.O. FURTHER REJECTED THE SUBMISSIONS GIVE N BY THE ASSESSEE IN HIS PAPER BOOK DATED 28.12.2007 REITERA TING THE SAME STAND. THE A.O. HAS DRAWN INFERENCES AND PRESUPPOSES RELYING ON SURMISES AND CONJECTURES. TH E ITAT MUMBAI BENCH IN THEIR DECISION IN THE CASE OF STRAP TEX (INDIA) PVT. LTD. [84 ITD 320 (MUM), CLEARLY HELD T HAT THE PRESUMPTION U/S 132(4A) IS APPLICABLE ONLY AGAINST THE PERSON FROM WHOM POSSESSION THE BOOKS OF ACCOUNTS O R OTHER DOCUMENTARY WERE FOUND AND NOT AGAINST ANY OT HER PERSON. IT IS HELD THAT AS PER SECTION 132(4A) WHER E ANY BOOKS OF ACCOUNT OR DOCUMENT IS FOUND IN THE POSSES SION AND CONTROL OF ANY PERSON IN THE COURSE OF THE SEAR CH, IT IS TO BE PRESUMED THAT THEY BELONG TO ' SUCH PERSON'. THU S, CLEARLY THE PRESUMPTION IS IN RESPECT OF THE PERSON FROM 24 WHOM THEY WERE FOUND. THE USE OF THE WORD 'TO SUCH PERSON' IN THE SAID SECTION MEANS THE PERSON FROM W HOM THE BOOKS OF ACCOUNT OR DOCUMENTS WERE FOUND. CLAUS E (II) OF SECTION 132 (4A) PROVIDES THAT THE CONTENTS OF S UCH BOOKS OF ACCOUNT OR DOCUMENTS ARE TRUE. THIS PRESUMPTION CAN BE APPLIED ONLY AGAINST THE PERSON FROM WHOSE POSSESSI ON THE BOOKS OF ACCOUNT OR THE DOCUMENT WERE FOUND. THEREF ORE, THE A.O. WAS NOT JUSTIFIED IN APPLYING THE PROVISIO NS OF SECTION 132(4'A) TO THE ASSESSEE IN THE PRESENT CAS E WHO WAS NOT SEARCHED U/S 132 OF THE ACT NOR THE DOCUMEN T WAS FOUND AND SEIZED FROM, THEIR POSSESSION. EVEN, OTHE RWISE, SUCH PRESUMPTION U/S 132(4A) OF THE ACT IS NOT CONC LUSIVE AND REBUTTABLE ONE'. 6. SIMILAR VIEW HAS BEEN TAKEN BY ITAT, PUNE IN AMI T D IRSHID [ITA NO.988/PN/11] THAT PRESUMPTION U/S. 134(4A) IS AVAILABLE ONLY AGAINST THE PERSON FROM WHOSE POSSESSION THE D OCUMENT IS FOUND AND NOT AGAINST THE THIRD PERSON. IN THE ABS ENCE OF CLINCHING EVIDENCE AGAINST THE THIRD PERSON AS STAT ED ABOVE, NO ACTION COULD BE TAKEN AGAINST HIM. IN SUCH A SITUA TION, THE ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE ADDITIO N IN QUESTION IN ASSESSEES CASE. IN VIEW OF ABOVE, WE ARE OF TH E VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTI FIED AND THE SAME IS DIRECTED TO BE DELETED. IT IS PERTINENT TO MENTION HERE THAT THIS CASE IS BEING DECIDED IN ITS FACTS AND CI RCUMSTANCES; IT CANNOT BE APPLIED TO OTHER CASES AS SUCH. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 30 TH OF MAY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH MAY, 2014 GCVSR 25 COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE