ACIT, Gwalior V. Sh. Hem Kumar Jain, Gwalior

ITA 404/AGR/2009

• Counselvise Citation: 40420314 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 24-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V BAPNA
• Keywords: Unexplained investment; Business income; Loose papers; Document seized; Onus to prove; Documents seized
• Section: 153A; 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.399, 400, 401, 402, 403 & 404/AGR/2009 ASSESSMENT YEARS: 2000-01, 2001-02, 2002-03, 2003- 04, 2004-05 & 2005-06 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI HEM KUMAR JAIN, CIRCLE-1, GWALIOR. SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : ABWPJ 4305 L). APPELLANTS BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENTS BY : SHRI V. BAPNA, C.A. DATE OF HEARING : 28.03.2012 DATE OF PRONOUNCEMENT : 27.04.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE REVENUE AGAINST COMB INED ORDER DATED 02.06.2009 PASSED BY THE LD. CIT(A), GWALIOR FOR TH E ASSESSMENT YEARS 2000-01 TO 2005-06 RESPECTIVELY. ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 2 2. SOME OF THE GROUNDS RAISED IN THESE APPEALS ARE BASED ON IDENTICAL SET OF FACTS. THEREFORE, FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS ARE DECIDED BY THIS COMMON ORDER. 3. THE FACTS OF THE ISSUES LEAD IN ASSESSMENT YEAR 2000-01 IN THE CASE OF HEM KUMAR JAIN, ITA NO.399/AGR/2009. THEREFORE, WHILE DECIDING THE COMMON ISSUES THE FACTS OF THE CASE FOR ASSESSMENT YEAR 2000-01 H AVE BEEN TAKEN INTO CONSIDERATION. 4. THE FIRST COMMON GROUND RAISED IN REVENUES APPE AL IS IN RESPECT OF DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUN T OF CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFT ER). 5. THE BRIEF FACTS OF THE ISSUE ARE THAT A SEARCH A ND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 06.01.200 5. THE ASSESSEE ENGAGED IN MONEY LENDING BUSINESS. DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER NOTICED CERTAIN CASH CREDITS. YEAR-WISE DE TAILS OF THESE CASH CREDITORS ARE REPRODUCED AS UNDER FROM THE ORDER OF CIT(A) :- ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 3 THE ADDITION RELATES TO CASH CREDIT TREATED UNDISC LOSED INCOME U/S 68 IN A.Y. 2000-01 AS UNDER :- NAME AMOUNT SHRI MILAPCHAND JAIN 5000 SHRI NEMI CHAND JAIN 10000 SHRI NAVAL CHAND JAIN 10182 SHRI NIRMAL CHAND 5945 SHRI ALLURAM 1000 TOTAL 32127 ADDITION ON ACCOUNT OF CASH CREDIT ` `` ` 62,000/- IN A.Y. 2001-02 THE ADDITION RELATES TO CASH CREDIT TREATED UNDISCL OSED INCOME U/S 68 AS UNDER :- NAME AMOUNT SHRI MILAPCHAND JAIN 2000 SHRI NEMI CHAND JAIN 12000 SHRI AMITABH JAIN 12000 SHRI SHUSHIL K. JAIN 18000 TOTAL 62000 ADDITION ON ACCOUNT OF CASH CREDIT ` `` ` 40,530/- IN A.Y. 2002-03 THE ADDITION RELATES TO CASH CREDIT TREATED UNDISCL OSED INCOME U/S 68 AS UNDER :- NAME AMOUNT DATE OF LOAN REPAID ON SHRI SHANKAR SHARMA 15530 28.05.01 12.07.03 SHRI ANIL JAIN 15000 03.04.01 04.10.03 SHRI AMITABH JAIN 10000 01.10.01 22.07.03 TOTAL 40530 ADDITION ON ACCOUNT OF CASH CREDIT ` `` ` 40,530/- IN A.Y. 2003-04 ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 4 THE ADDITION RELATES TO CASH CREDIT TREATED UNDISCL OSED INCOME U/S 68 AS UNDER :- NAME AMOUNT DATE OF LOAN REPAID ON SHRI SATISH JAIN 19000 01.04.02 04.10.03 SHRI MUKESH JAIN 19000 02.05.02 25.11.03 SHRI UMESH JAIN 18000 10.06.02 04.10.03 SHRI PRAMOD JAIN 19000 03.09.02 04.10.03 SHRI ALOK JAIN 17000 21.10.02 04.10.03 SHRI ALOK SHARMA 18500 31.12.02 06.11.03 SHRI KAILASH SHARMA 13500 15.02.03 06.11.03 TOTAL 124000 ADDITION ON ACCOUNT OF CASH CREDIT ` `` ` 40,530/- IN A.Y. 2004-05 THE ADDITION RELATES TO CASH CREDIT TREATED UNDISCL OSED INCOME U/S 68 AS UNDER :- NAME AMOUNT DATE OF LOAN SHRI UTTAM CHAND JAIN 19000 09.07.03 SHRI PURUSHOTTAM JAIN 10000 09.07.03 TOTAL 29000 ADDITION ON ACCOUNT OF CASH CREDIT ` `` ` 42,000/- IN A.Y. 2005-06 THE ADDITION RELATES TO CASH CREDIT TREATED UNDISCL OSED INCOME U/S 68 AS UNDER :- NAME AMOUNT SHRI DEEPAK SHARMA 15000 SHRI RAM KUMAR JAIN 15000 SHRI RAM KISHAN SHARMA 12000 TOTAL 42000 ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 5 6. THE ASSESSING OFFICER MADE ADDITION ON THE GROUN D THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. NO NE OF THE CREDITORS IS ASSESSED TO TAX. THE CIT(A) DELETED THE SAID ADDITION FOR ALL THE YEARS OBSERVING AS UNDER :- THE APPELLANT ASSESSEE HAS FURNISHED COPY OF CERTI FICATE FROM THESE DEPOSITORS. THE ACIT HAS NOT MENTIONED ANY R EASON WHY THEY ARE NOT ACCEPTED GENUINE AND HELD AS UNDISCLOSED IN COME AND ADDED IN THE INCOME. THE COMPLETE ADDRESSES ARE ALSO GIV EN. THE ACIT COULD HAVE EITHER MADE INQUIRIES BY GIVING NOTICE T O THEM BEFORE REJECTING APPELLANTS VERSION AND EXPLANATION SUPPO RTED WITH CONFIRMATIONS, BUT WITHOUT MAKING ANY VERIFICATION AND WITHOUT BRINGING ON RECORD ANY MATERIAL, THE ADDITION HAS B EEN MADE. ON THE CONTRARY THESE ARE SMALL DEPOSITS AND THE DEPOSITOR S HAVE CONFIRMED THE SAME. THE APPELLANT BY FILING CONFIRMATION LET TERS AND GIVING NAMES AND ADDRESS HAS MADE INITIAL COMPLIANCES AND THERE AFTER IT WAS FOR THE A.O. TO GO FURTHER BEFORE REJECTING THE SAME. THIS HAS NOT BEEN DONE. ALL DEPOSITS ARE SMALL AMOUNTS. THE AD DITION IS NOT SUSTAINABLE ON THESE FACTS AND HENCE, I DELETE ADDI TION ON ACCOUNT CASH CREDIT IN ALL THE YEARS IN APPEALS. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE NOTICE THAT THE ASSESSING OFFICER MADE THE ADDIT ION UNDER SECTION 68 IN RESPECT OF VARIOUS ENTRIES FOUND CREDITED IN THE BOOKS OF A CCOUNTS OF THE ASSESSEE AS THE ASSESSEE FAILED TO SATISFY THE CONDITIONS LAID DOWN IN SECTION 68 OF THE ACT. THE ASSESSING OFFICER NOTICED THAT NONE OF THE CREDITOR IS ASSESSED TO TAX. THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE DEP OSITOR AS THE ASSESSEE DID NOT FURNISH ANY COPY OF BANK ACCOUNT, BALANCE SHEET, PA N ETC. THE CIT(A) DELETED THOSE ADDITIONS ONLY ON THE GROUND THAT THE ASSESSE E FILED CONFIRMATION AND THE ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 6 ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY. HE ALS O DELETED THE ADDITIONS OBSERVING THAT ALL DEPOSITS ARE SMALL AMOUNTS. AFT ER CONSIDERING 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 DEPOSITS ARE SMALL A ND THE ASSESSEE HAS TO FURNISH CONFIRMATION. THE CIT(A) SHIFTED THE BURDEN ON THE ASSESSING OFFICER WHICH IS NOT IN ACCORDANCE WITH LAW. THE BURDEN IS ON THE A SSESSEE TO ESTABLISH THE THREE INGREDIENTS REQUIRED UNDER SECTION 68 OF THE ACT I. E. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THE ASSESSEE POSSESSES SUFF ICIENT EVIDENCE TO DISCHARGE HIS BURDEN. UNDER THE CIRCUMSTANCES, WE THINK IT PROPE R TO SEND BACK THE ISSUE RELATING TO THE ADDITION ON ACCOUNT OF CASH CREDIT IN ALL TH E YEARS TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE SAME AFRES H IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. THE SECOND GROUND OF APPEAL IS THAT THE CIT(A) E RRED IN DELETING THE ADDITION OF ` 97,454/- IN AY 2000-2001 ON ACCOUNT OF UNEXPLAINED LOOSE PAPERS. THE ADDITIONS ARE PERTAINING TO LOOSE PAPERS AND GOLD O RNAMENT FINANCE. THIS IS COMMON GROUND OF APPEAL RAISED IN ALL YEARS UNDER C ONSIDERATION. ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 7 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH SEVERAL LOOSE PAPE RS AND BOOKS WERE FOUND. ON EXAMINATION OF THESE LOOSE PAPERS, CERTAIN ENTRIES TOTALING TO ` 2,74,531/- FOR A.Y. 2000-2001 WAS FOUND WHICH COULD NOT BE EXPLAINED BY THE ASSESSEE. THE ASSESSING 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 O F ` 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. ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 8 3. ` 1,00,639/- 276/- 100915/- -------------- 125799/- 345/- 126144/- ------------- 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 ` 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 OF LOOSE PAPERS FOU ND AT THE TIME OF SEARCH. THE ASSESSING OFFICER MADE ADDITION OF GROSS AMOUNT ON THE GROUND THAT NO ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 9 EXPLANATIONS WERE FURNISHED BY THE ASSESSEE. THIS IS FIRST TYPE OF ADDITION IN ALL THE YEARS. ITEMS OF ADDITION AT SL. NO. 3 OF ABOVE TABLE-A ARE IN RESPECT OF LOOSE PAPERS CONTAINING SALE OF GOLD ORNAMENTS FOUND. IT IS NOT ICED THAT THE ASSESSING OFFICER HAS TAKEN TOTAL OF LOOSE PAPERS AS TURNOVER OF SALE OF GOLD ORNAMENT BUSINESS AND APPLIED 10% PROFIT RATE FOR ESTIMATING PROFIT. THE ASSESSING OFFICER ALSO MADE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN S TOCK 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. RATE AND ALSO ESTIMATED INVESTMENT YEAR WISE WHICH IS AS UNDER :- (CIT(A)S ORDER PAGE NO.15) 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 ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 10 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 ASSESS EE FAILED TO ESTABLISH THE GENUINENESS OF DEWAL. IT IS PERTINENT TO MENTION T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF HUNDI AND MONEY LENDING BUSINESS. THE ASSESSEE, APART FROM HIS OWN CAPITAL INVESTMENTS IN HUNDI, ALSO DOING HUNDI BUSI NESS WHEREIN THE AMOUNT OF OTHER PARTIES WERE ADVANCED TO CERTAIN PARTIES AND THE ASSESSEE WAS TO GET ONLY COMMISSION ON SUCH TRANSACTIONS. AS PER THE PRACTI CE FOLLOWED IN THIS TRADE AND BY THE ASSESSEE, WHATEVER TRANSACTIONS OF HUNDI ARE IN BETWEEN THE THIRD PERSON, THE INCOME OF THE ASSESSEE IS IN THE FORM OF COMMISSION . IN HUNDI BUSINESS IT IS MENTIONED IN HUNDI AS LEWAL AND DEWAL. LEWAL MEANS THE AMOUNT OF FINANCE RECEIVED AND DEWAL MEANS AMOUNT GIVEN BY THE THIRD PARTY/ARRANGED BY THE ASSESSEE FROM THIRD PERSON. SINCE IN CERTAIN HUNDIES THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF DEWAL OR SOME HUNDIES DOES NOT CARRY NAME OF DEWAL, THE ASSESSING OFFICER WAS OF THE VIEW THAT T HESE WERE SUCH HUNDIES FOR WHICH THE ASSESSEE HAS INVESTED HIS OWN CAPITAL. S INCE THESE HUNDIES WERE NOT ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 11 FOUND RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, THE INVESTMENT MADE BY THE ASSESSEE IN SUCH HUNDI BUSINESS WAS TREATED AS OUT OF THE BOOKS OF ACCOUNTS. THEREFORE, THE ASSESSING OFFICER MADE THE 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 ADDITIONS FROM ALL THE YEARS FROM A.Y. 1999-2000 TO 2005-2006, FIRSTLY ON THE BASIS OF LOO SE PAPERS FOUND AT THE TIME OF SEARCH WHICH WERE NOT EXPLAINED SATISFACTORILY BY T HE ASSESSEE. SECOND TYPE OF ADDITIONS ARE ON THE BASIS OF DOCUMENTS FOUND IN RE SPECT OF GOLD ORNAMENTS IN MONEY LENDING BUSINESS. THIRD TYPE OF ADDITIONS AR E ON ACCOUNT 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 BUS INESS OF HUNDI FINANCE AND THOSE LOOSE PAPERS PERTAIN TO THAT BUSINESS OF THE ASSESSEE, THEREFORE, ONLY PROFIT ELEMENT CAN BE TAXED. SUCH ADDITIONS YEAR-WISE AND RELIEF GRANTED BY THE CIT(A) ARE REPRODUCED FROM PAGE NO.5 OF ASSESSEES PAPER B OOK 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 ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 12 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 RELATING TO SALE OF JEWELLERY WHICH WAS NOT BELONGING TO THE ASSESSEE BECAUSE DURING THE COURSE OF SEARCH THE PAPERS FOUND FROM THE POSSESSION OF THE ASSESSEE CLEARLY SHOWED THAT AMOUNT OF SALE WHICH WERE NOT RECORDED OR SHOWN BY THE ASSESSEE IN RETURN OF INCOME. IN PRINCIPLE, THE CIT(A) AGREED WITH THE VIEW OF THE ASSESSING OFFICE R 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 INVES TMENT. THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING U NACCOUNTED INVESTMENT IN STOCK @ 12% OF THE SALE. THE ADDITION MADE BY THE ASSES SING OFFICER ON THIS COUNT HAS BEEN CONFIRMED BY THE CIT(A). HOWEVER, IN RESP ECT OF PROFIT RATE, THE CIT(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 REASONABL E RATE INSTEAD OF 10%. THE CIT (A) ALLOWED 5% RELIEF IN THIS REGARD. A COMPARATIV E POSITION OF SUCH RELIEF NOTED FROM THE ASSESSEES PAPER BOOK AT PAGE NO.4 IS AS U NDER:- ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 13 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 5 2, HAS DELETED THE ADDITION ON ACCOUNT OF PERSONAL 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, FINANCIAL WORTHIN ESS OF DEWALS COULD NOT BE PROVED AND THE APPELLANT HAS HELD TO B E THE INVESTOR OF MONEY IN HUNDIES. HOWEVER, IT IS NOT UNDERSTOOD AS TO HOW THE SUM REMAINED UNPROVED & STILL UNEXPLAINED AFTER THE APP ELLANT HAS PROVIDED THE DETAILS AS ALSO THE PANS OF THE INVEST ORS WHO HAVE DULY CONFIRMED THE TRANSACTIONS. FURTHER TO THAT THE AS SESSING OFFICER 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 QUOTED B Y THE ASSESSING OFFICER DOES NOT SUPPORT THE ADDITION AS MADE BY TH E ASSESSING OFFICER ON THIS SCORE. ALL THE TRANSACTION IN HUNDI ARE AD MITTEDLY TAKEN PLACE BY WAY OF CHEQUES AND ARE THROUGH THE BANKING CHANN EL WHICH ARE FURTHER NOTED IN THE RELEVANT ROKAD KHATA (CASH BOO K) AS WELL AS IN THE RELEVANT ACCOUNTS GIVEN IN THE HUNDI REGISTERS. AL L THESE HUNDI REGISTERS SEIZED AT THE TIME OF SEARCH OPERATIONS A RE ADMITTEDLY IN POSSESSION OF THE DEPARTMENT. THUS, THE GENUINENES S OF THE HUNDIES ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 14 AND THE TRANSACTIONS IN THE NAMES OF DEWALS AND LEW ALS VIZ. THE INVESTORS AND BORROWERS RESPECTIVELY ARE VERIFIABLE ON WHICH THE APPELLANT HAS SHOWN TO HAVE RECEIVED COMMISSION 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 EXCEPT FROM RECEI VING COMMISSION OR DALALI ON THE SAME. IN VIEW OF FOREGOING, IT IS EV IDENT THAT THE ASSESSING OFFICER HAS PROCEEDED TO MAKE THE ADDITIO N ON THE BASIS OF A MERE PRESUMPTION WHILE THE ENTIRE FACTS ON RECORD I NCLUDING THE MATERIAL EVIDENCE INCLUDING THAT FOUND AND SEIZED O R IDENTIFIED DURING THE COURSE OF SEARCH PROVED CONTRARY TO THE STAND T AKEN BY THE ASSESSING OFFICER. THE ADDITION IS, THEREFORE, BAS ELESS AS NO MATERIAL IS BROUGHT ON RECORD TO SUPPORT OF THE SAME. THE A DDITION, 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 COURSE OF SEA RCH, SEVERAL LOOSE PAPERS AND BOOKS WERE FOUND. THE PAPERS AND DOCUMENTS FOUND A T THE TIME OF SEARCH WERE EXAMINED AND QUERIES WERE MADE BY THE ASSESSING OFF ICER. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER PREPAR ED THE DETAILED CHART OF THE ADDITION WHICH IS FORMING PART OF THE ASSESSMENT OR DER. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF DOCUMENTS, MATERIAL AND LOOSE PAPERS F OUND AT THE TIME OF SEARCH. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED T HAT 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 T HE COMMISSION FROM 10% TO 5% IN RESPECT OF GOLD ORNAMENT FINANCE TRANSACTION. IT WAS ALSO SUBMISSION OF THE ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 15 LD. DEPARTMENTAL REPRESENTATIVE THAT THE ENTIRE FAM ILY OF THE ASSESSEE IS ENGAGED IN TRANSACTION IN HUNDIES. THE LD. DEPARTMENTAL RE PRESENTATIVE FURTHER SUBMITTED THAT APART FROM FINANCING THEIR OWN MONEY IN HUNDIE S THEY ARE OPERATING HUNDIES OF OTHER PERSONS ON COMMISSION BASIS. THE LD. DEPA RTMENTAL REPRESENTATIVE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, O N EXAMINATION OF THE SEIZED DOCUMENTS, THE ASSESSING OFFICER NOTICED THAT CERTA IN HUNDIES DO NOT CARRY ADDRESSES OF THE DEWALS AND LEWALS MENTIONED IN THE HUNDIES. THE ASSESSEE WAS ASKED TO ESTABLISH THE IDENTITY OF THE PERSONS, PAN AND NAME OF THE ASSESSING OFFICER BUT THE ASSESSEE HAS FAILED TO FURNISH THE REQUIRED DETAILS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE SOUR CES OF ENTRIES WERE FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT WAS THE DUTY OF THE ASSESSEE TO SUBMIT VERIFICATION AND SUBSTANTIATE THE ENTRIES. THE BURD EN OF PROVING IS ON THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITT ED THAT IN ABSENCE OF IDENTITY OF DEWALS THE ASSESSING OFFICER HAS RIGHTLY TAKEN T HOSE HUNDIES AS INVESTMENT MADE BY THE ASSESSEE OUT OF HIS UNDISCLOSED SOURCES . THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER IS SUSTAINABLE. THE LD. D EPARTMENTAL REPRESENTATIVE SUBMITTED 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. PATEL VS. DCIT, 7 2 ITD 340(MUM) ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 16 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 KUMAR JAIN OR SOME OTHER PERSON. HE FUR THER CONTENDED THAT THE ASSESSEES BUSINESS IS HUNDI DALALI. THEREFORE, TH E 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 ONLY. THE ASSES SEE DOES NOT RECEIVE INTEREST AMOUNT MENTIONED IN SUCH LOOSE PAPERS AS THE MONEY DOES NOT BELONG TO THE ASSESSEE. THESE SIMPLY CARRY INTEREST CALCULATION WITHOUT SHOWING THAT THE INTEREST IN FACT WAS PAID OR PAYABLE TO THE ASSESSEE. THE L D. AUTHORISED REPRESENTATIVE 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 APPELLANT. T HE BASIC FACT WHICH HAS TO BE CONSIDERED IS THAT THE BUSINESS OF THE APPELLANT IS THAT OF HUNDIES AND IS SHOWING COMMISSION EARNED ON THEM AS INCOME FROM HUNDI DALALI. IT IS THUS OBVIOUS THAT ASSESSE E HAS TO KEEP PAPERS RELATING TO HUNDI/LOANS AND TO CALCULATE INTEREST T HEREON IN THE COURSE OF CONDUCTING BUSINESS. IT IS ALSO EXPLAINED THAT THE SLIPS ARE RECORDED FOR THE PURPOSE OF REMINDING OF REPAYMENT OR RENEWA LS BEFORE THE DUE DATE WITH THE MUTUAL CONSENT OF BOTH LEWAL AND DEWA L. 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 ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 17 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 & PROHIBIT & L OSS A/C FILED ALONG WITH THE RETURN OF INCOME. THE CONCLUSIVE EV IDENCE 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 DU MB PAPERS OR USED BY ADDING 000 DOES NOT ESTABLISH THAT THIS IS INVES TMENT 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. AN D 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 BASIS OF LOOSE PAPER, TH E CIT(A) HELD THAT BASICALLY THE ASSESSEE IS A DALAL AND IN CASE OF SUCH TYPE OF NOT ING ON LOOSE PAPER, ONLY DALALI OR COMMISSION INCOME CAN BE ADDED ON INCOME OF THE ASS ESSEE. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ASSESS 1% INCOME FROM DALA LI ON THE INVESTMENT AS COMPUTED BY THE ASSESSING OFFICER AND DELETED THE B ALANCE AMOUNT OF ADDITION RELATED TO INTEREST. WHILE DELETING THE ADDITION, THE CIT(A) CONSIDERED THE ASSESSEES SUBMISSION THAT THE BUSINESS OF THE ASSE SSEE IS THAT OF HUNDI AND HE IS SHOWING COMMISSION EARNED FROM THEM AS INCOME FROM HUNDI DALALI. THEREFORE, ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 18 IT IS OBVIOUS THAT THE ASSESSEE HAS TO KEEP PAPERS RELATING TO HUNDI LOAN AND TO CALCULATE THE INTEREST THEREON IN THE COURSE OF CON DUCTING BUSINESS. FURTHER THESE PAPERS/SLIPS ARE RECORDED FOR THE PURPOSE OF REMAIN ING REPAYMENT OR RENEWAL BEFORE THE DUE DATE WITH THE MUTUAL CONSENT AND REVIVAL AN D RENEWAL. THE ASSESSEE RELIED UPON THE DECISION OF I.T.A.T., MUMBAI BENCH IN THE CASE OF BIREN V. SAVLA VS. ACIT, 100 TTJ (MUM) 2006 AND PUNE BENCH IN THE CASE OF RAMAQNLAL P. CHORADIA VS. ACIT, 87 TTJ (PUNE) 713 WHEREIN IT HAS BEEN HEL D THAT THE INVESTMENT IN HUNDIES AND INTEREST THEREON CANNOT BE HELD TO BE I NCOME OF THE ASSESSEE SINCE HE IS A HUNDI DALAL. HE IS ONLY CONCERNED WITH HIS CO MMISSION. IT IS ADMITTED FACT THAT THE ASSESSEE ENGAGED IN MONEY LENDING/HUNDI BU SINESS. THE LOOSE PAPERS FOUND DOES NOT CARRY A FACT THAT THESE LOOSE PAPERS PERTAIN TO UNACCOUNTED HUNDI TRANSACTIONS OUT OF ASSESSEES OWN CAPITAL. IT IS PRESUMPTION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE THE INVESTMENT O UT OF BOOKS IN THESE HUNDIES. WHEREAS, THE EXPLANATION OF THE ASSESSEE IS THAT SI NCE THE ASSESSEES BUSINESS BEING OF HUNDI, THEREFORE, THE ASSESSEE HAS TO KEEP PAPER S RELATING TO HUNDI LOAN AND TO CALCULATE INTEREST THEREON DURING THE COURSE OF CON DUCTING BUSINESS TO EXPLAIN THE SAME TO THE CONCERNED PARTIES. THESE CALCULATIONS WERE MADE DURING THE COURSE OF BUSINESS FOR THE PURPOSE OF REMINDING OF REPAYMENT OR RENEWAL BEFORE THE DUE DATE WITH THE MUTUAL CONSENT OF LEWAL AND DEWAL. IN ABS ENCE OF COGENT EVIDENCE NOTED ON LOOSE PAPERS, IT CANNOT BE HELD ON PRESUMPTION T HAT THESE WERE THE ASSESSEES ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 19 OWN INVESTMENT OUT OF BOOKS OF ACCOUNTS. CONTRARY TO THAT AT THE MOST IT CAN BE HELD THAT THERE WERE THE BUSINESS TRANSACTIONS OF T HE ASSESSEE AND FOR THAT PURPOSE THE PROFIT ELEMENT CAN BE ESTIMATED FOR THE PURPOSE OF CALCULATION OF TOTAL INCOME. WE DO NOT FIND ANY ERROR IN THE APPROACH OF THE CIT (A) IN DIRECTING THE ASSESSING OFFICER TO ASSESS 1% INCOME FROM DALALI ON TURNOVER COMPUTED BY THE ASSESSING OFFICER AND DELETE THE ADDITIONS ACCORDINGLY. IN T HE LIGHT OF THE ABOVE 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 CALCULATIO N OF THE ASSESSING OFFICER EXCEPT REDUCING THE PROFIT RATE FROM 10% TO 5%. AF TER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND AFTER CONSIDERING T HE 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 APPLICABLE TO THE CASE UNDER CONSIDERATION. THERE IS NO CONTRARY MATERIAL ON RECORD NOR HAS THE SAME BEEN POINTED OUT BY THE REVENUE AT THIS STAGE. UNDER THE CIRCUMSTANCES, WE CONFIRM THE ORDER OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO APPLY 5% NET PROFIT RATE INSTEAD OF 10%. ORDER OF THE CIT(A) ON THIS ISSUE IS ALSO CON FIRMED. ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 20 17.2 ONE MORE TYPE OF ADDITION MADE BY THE ASSESSIN G OFFICER IN ASSESSMENT YEARS 2002-03, 2003-04, 2004-05 & 2005-06 ARE ON AC COUNT OF UNEXPLAINED HUNDI AS THE ASSESSEE WAS HELD TO BE THE INVESTOR OF THE MONEY IN HUNDIES. THE ASSESSING OFFICER NOTICED THAT ENTIRE FAMILY OF THE ASSESSEE IS ENGAGED IN TRANSACTION OF HUNDIES. APART FROM INVESTING THEIR OWN MONEY IN HUNDI, THEY ARE OPERATING HUNDIES OF OTHER PERSONS ON COMMISSION BA SIS. 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 ASSESSEE WAS ASKED TO ESTA BLISH THE IDENTITY OF THE PERSONS PAN AND NAME OF THE ASSESSING OFFICER. THE ASSESSE E FAILED TO FURNISH THE DESIRE INFORMATION. THE ASSESSING OFFICER MADE THE ADDITI ON ON THE GROUND THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY AND F INANCIAL WORTHINESS OF THE PERSONS ADVANCING HUNDI TO THE ASSESSEE AND AS THE NAMES AP PEARS AS DONOR IN THE BOOKS OF ACCOUNTS. BEFORE THE CIT(A) THE ASSESSEE FURNISHED A DETAILED EXPLANATION IN THE FORM OF RECONCILIATION STATEMENTS AND CHART SHOWING THE RELEVANT ENTRIES WHICH HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASS ESSEE 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 EXPLAI NED BY THE ASSESSEE THAT SEIZED DIARY RELATES TO THE PERSONAL HUNDIES GIVEN BY THE ASSESSEE AND THAT IS THE REASON THAT THE NAME OF DEWAL GIVEN IN ORDER AS HEM KUMAR JAIN I.E. THE ASSESSEE. THESE ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 21 HUNDIES ARE GIVEN BY THE ASSESSEE HIMSELF FROM HIS OWN ACCOUNT WHICH WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS AT THE TIME OF SE ARCH, AS EVIDENT FROM THE BOOKS SEIZED AT THE TIME OF SEARCH. ALL THESE ENTRIES AR E OF ACCOUNT PAYEE CHEQUES AND A COMPLETE RECONCILIATION IS FURNISHED BEFORE THE CIT (A). IT WAS ALSO SUBMITTED TO THE CIT(A) THAT ASSESSING OFFICER HAS CONFUSED THAT DEWAL IS SOMEONE OTHER THAN THE ASSESSEE WHEREAS ALL THE HUNDIES ARE PART OF BO OKS OF ACCOUNTS AND ARE THROUGH BANKING CHANNEL. THE RELEVANT INTEREST HAS BEEN SH OWN IN PROFIT & LOSS ACCOUNT OF THE ASSESSEE. DEWAL IS THE ASSESSEE HIMSELF, THERE FORE, 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 COMMISSION EARNED ON HUNDIES PAID BY VARIOUS PARTIES AFTER TAKING THEM FROM INVESTOR. AS STATED ABOVE, T HE ASSESSEE HAS FILED RECONCILIATIONS FOR ALL THE YEARS. TO PROPERLY APP RECIATE THE RECONCILIATION FILED BY THE ASSESSEE, WE REPRODUCE THE RECONCILIATION FOR A .Y. 2002-2003 FROM 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 M ISSING. THE DETAILS YEAR WISE ARE, AS UNDER WHICH HAS BEEN DRAWN FROM S EIZED DIARY NO.P-1 A-22 ASSESSEE LEDGER (DEWAL) ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 22 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 VAIVAHIK SAREE CENTRE 20000 20-03-02 SHOW IN BALANCE 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 ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 23 EXPLAINED EACH AND EVERY ENTRY OF HUNDIES THAT THES E 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 NECESS ARY EXPLANATION IN THE FORM OF RECONCILIATION. THE ASSESSEE HAS ALSO POINTED OUT MISTAKE AND DISCREPANCIES IN THE FACTS NOTED BY THE ASSESSING OFFICER. FOR EXAMPLE, IN ASSESSMENT 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 W AS ` 50,000/- BUT THE ASSESSING OFFICER HAS TAKEN WRONGLY ` 58,000/-. THE ASSESSING OFFICER WHILE CALCULATING THE AMOUNT OF ADDITION, THE AMOUNT OF O NE HUNDI HAS BEEN TAKEN TWICE IN SOME CASES. THE ASSESSEE HAS ALSO EXPLAINED THE DETAILS OF ADDITION ON THE BASIS OF HUNDIES OF OTHER DEWALS WHICH IN FACT CONTAINED THE DETAILS OF DEWALS, LEWALS, AMOUNT, DATE, COMMISSION AND CASH BOOK PAGE NUMBER AND DATE. THE COMMISSION INCOME HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOU NTS AND OFFERED TO TAX. IT 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 ASSESSEE HA S FURNISHED COMPLETE DETAILS. THE REVENUE FAILED TO POINT OUT ANY CONTRARY MATERI AL TO THE FINDING OF CIT(A). IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 24 17.4 AS REGARDS THE DECISION, ON WHICH THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON, DOES NOT HELP THE REVENUE. THE CALCUT TA 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 GENUINEN ESS OF HUNDI LOANS, THEREFORE IT WAS HELD THAT THE HUNDI LOANS ARE NOT GENUINE. BUT IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS DISCHARGED THE ONUS BY FURNISHING EXPLANATIONS AND RECONCILIATIONS. THEREFORE, THE SAID JUDGMENT CITE D BY THE LD. DEPARTMENTAL REPRESENTATIVE IS DISTINGUISHABLE ON FACTS. SIMILA RLY, 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 SUSTAINED. THE GRO UND THAT PHOTOCOPIES THEM WAS EVIDENCE OF THE ADVANCE OF THE LOANS. THERE CANNOT BE A PHOTOCOPY WITHOUT THE ORIGINAL. IT IS FOR THE ASSESSEE TO HAVE PRODUCED THE ORIGINAL WHICH HE CHOSE NOT TO. BUT IN THE CASE UNDER CONSIDERATION, THE ASSESSEE H AS FURNISHED EXPLANATION AND RECONCILIATION REGARDING THE HUNDIES NOTED BY THE A SSESSING OFFICER. THEREFORE, THIS JUDGMENT ALSO DOES NOT HELP THE REVENUE. IN T HE LIGHT OF THE ABOVE DISCUSSION, WE CONFIRM THE ORDER OF CIT(A) ON THE ISSUE OF DELE TION OF ADDITION IN RESPECT OF OWN HUNDIES IN ALL THE YEARS. ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 25 18. APART FROM THE COMMON GROUNDS, ONE MORE GR OUND RAISED IN REVENUES APPEAL FOR THE ASSESSMENT YEAR 2005-06 IS IN RESPEC T OF DELETION OF ADDITION OF ` 2,00,000/- ON ACCOUNT OF CASH FOUND AT THE TIME OF SEARCH. THE BRIEF FACTS OF THE ISSUE ARE THAT DURING THE COURSE OF SEARCH, ` 6,64,000/- IN CASH WAS FOUND. IT WAS EXPLAINED THAT PART OF THE CASH BELONGED TO THE FAM ILY MEMBERS OF THE ASSESSEE. THE ASSESSEE DECLARED ` 4,00,000/- INCOME OUT OF CASH FOUND AND INCOME OF ` 2,00,000/-WAS EXPLAINED TO BE OF YOUNGER BROTHER SH RI SANTOSH JAIN LIVING IN THE SAME HOUSE AND ` 64,000/- PERSONAL AND PETTY SUM OF OTHER MEMBERS. THE ASSESSING OFFICER ALLOWED ` 40,000/- CASH AVAILABLE ONLY OUT OF ` 4,00,000/- WAS DECLARED AND BALANCE ` 2,50,000/- WAS ADDED IN THE HANDS OF THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT OUT OF ` 2,50,000/- A SUM OF ` 2,00,000/- BELONGED TO SHRI SANTOSH JAIN, YOUNGER BROTHER OF THE ASSESSEE LIVING IN THE SAME HOUSE. THE ASSESSEE EXPLAINED THROUGH CASH BOOK OF SHRI SANTOS H JAIN WHEREIN ` 2,00,000/- HAS BEEN SHOWN AS BALANCE AS ON DATE OF SEARCH. TH E ASSESSMENT UNDER SECTION 153A HAS ALSO BEEN SHOWN IN THE CASE OF SHRI SANTOS H JAIN AND THE SAME CASH BOOK HAS BEEN VERIFIED BY THE ASSESSING OFFICER IN HIS C ASE AND THERE IS NO ADVERSE COMMENTS GIVEN BY THE ASSESSING OFFICER IN THAT CAS E. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION AND DELETED THE ADDITION OF ` 2,00,000/-.HOWEVER, HE ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 26 CONFIRMED THE BALANCE AMOUNT OF ` 50,000/- AS THE ASSESSEE HAS FAILED TO GIVE ANY EVIDENCE TO PROVE THAT THE AMOUNT REPRESENTS THE AS SESSEES FAMILY MEMBERS. 19. WE HAVE HEARD THE LD. REPRESENTATIVES OF TH E PARTIES AND RECORDS PERUSED. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND THE CONTENTION OF THE ASSESSEE WHICH HAVE NOT BEEN CONTROVERTED BY THE RE VENUE BEFORE US THAT ` 2,00,000/- HAS BEEN EXPLAINED THROUGH CASH BOOK AND SHRI SANTOSH JAIN WHOSE ASSESSMENT IS ALSO SUBJECT TO SECTION 153A, THE ASS ESSING OFFICER HAS VERIFIED THE CASE OF SHRI SANTOSH JAIN AND NO CONTRARY MATERIAL HAS BEEN POINTED OUT. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS GROUND. ORDER OF THE CIT(A) IS, THEREFORE, CONFIRM ED ON THE ISSUE. 20. IN THE RESULT, ALL THE APPEALS BY THE REVENUE A RE PARTLY ALLOWED FOR STATISTICAL PURPOSES. (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/* ITA NOS.399 TO 404/AGR/2009 A.YS.2000-01 TO 2005-06 27 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