Shri Dinesh Babulal Thakkar, Ahmedabad V. The ACIT.,Cent.Circle-2(2), Ahmedabad

ITA 4436/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8769 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Search and seizure
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.4436/AHD/2007 A. Y: 2004-05 DINESH BABULAL THAKKAR, 10, ELEPHANTA SOCIETY, NR. D. K. HALL, NARANPURA, AHMEDABAD PA NO. AATPT 3154D VS THE A. C. I. T., CIRCLE -2(2), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. DIVATIA, AR RESPONDENT BY SHRI SHELLEY JINDAL, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-III, AHMEDABAD DATE D 12-10-2007 FOR THE ASSESSMENT YEAR 2004-05. THE ASSESSEE RAISED SEVERA L GROUNDS OF APPEAL. HOWEVER, LEARNED COUNSEL FOR THE ASSESSEE RESTRICTE D HIS ARGUMENTS TO THE CONFIRMATION OF ADDITION OF RS.20,00,000/- AS U NEXPLAINED ADVANCE TO SHRI D. K. DALAL. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT A CHEQUE BOOK OF ACCOUNT NO.10626 OF INDIAN OVERSEAS BANK, ASHRAM ROAD, AHME DABAD CONTAINING 20 CHEQUES VALUED FOR RS.1,00,000/- EACH AND SIGNED BY THE ACCOUNT HOLDER, SHRI D. K. DALAL (CHEQUE NOS. 96112 1 TO 961140) WAS SEIZED FROM THE PREMISES OF M/S. KALGI ON 26-08-200 3 INITIALLY BY AHMEDABAD POLICE. CHEQUES WERE DRAWN IN FAVOUR OF T HE ASSESSEE, WHICH WAS SUBJECTED TO ACTION U/S 132A OF THE IT ACT. THE AO SOUGHT EXPLANATION IN RESPECT OF THE SIGNED CHEQUES BOOK. IT WAS SUBMITTED BEFORE THE AO THAT SIGNED CHEQUES BOOK HAD BEEN TAK EN FROM SHRI D. K. DALAL WITH A VIEW TO ARRANGE A LOAN FOR HIM BUT THA T TRANSACTION COULD NOT BE MATERIALIZED. THE ASSESSEE HIMSELF HAD NOT GIVEN ANY LOAN BUT ITA NO.4436/AHD/2007 DINESH BABULAL THAKKAR 2 CHEQUES HAD BEEN TAKEN IN ANTICIPATION. THE AO HOWE VER, FELT THAT A SIGNED CHEQUES BOOK WOULD NOT HAVE BEEN GIVEN FOR A NY ANTICIPATED POSSIBLE TRANSACTION. IT WOULD HAVE BEEN GIVEN ONLY BY WAY OF SECURITY, ONCE THE LOAN OF EQUIVALENT AMOUNT HAD BEEN OBTAINE D. IT WAS FOR THIS REASON THAT SIGNED CHEQUES WERE GIVEN BY SHRI D. K. DALAL IN FAVOUR OF THE ASSESSEE AS SECURITY IN LIEU OF THE AMOUNT OF R S.20,00,000/- GIVEN BY THE ASSESSEE AS LOAN TO SHRI D. K. DALAL. THE AO FE LT THAT THE LOAN AMOUNT HAD BEEN GIVEN IN THE YEAR IN WHICH CHEQUE B OOK HAD BEEN ISSUED I.E. RELEVANT TO THE ASSESSMENT YEAR UNDER A PPEAL 2004-05 AND ACCORDINGLY MADE AN ADDITION OF RS.20,00,000/-. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND AFFIDAVIT OF SHRI D. K. DALAL WAS FILED IN SUPPORT OF THE CONTENTIONS THAT LOAN TRANS ACTION WAS NEVER MATERIALIZED. THE LEARNED CIT(A) HOWEVER, CONFIRMED THE ADDITION BECAUSE THE CHEQUES WERE FOUND IN FAVOUR OF THE ASSESSEE WH ICH LED TO THE CONCLUSION THAT THE ASSESSEE HAS ADVANCED THE AMOUN T OF RS.20,00,000/- TO SHRI D. K. DALAL AND HAD OBTAINED THESE SIGNED CHEQUES BY WAY OF SECURITY. THE APPEAL OF THE ASSES SEE WAS ACCORDINGLY DISMISSED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T NO DIRECT EVIDENCE WAS FOUND TO SHOW THAT CHEQUES WERE GIVEN TOWARDS A DVANCE BY THE ASSESSEE. IT WAS SIMPLY A PRESUMPTION OF THE AO. SH RI D. K. DALAL WAS NEVER EXAMINED BY THE AO IN THIS REGARD. THE CHEQUE S WERE UN-DATED. THEREFORE, IT WOULD NOT PROVE THAT ADVANCE OF LOAN WAS GIVEN IN THE YEAR UNDER CONSIDERATION. HE HAS, THEREFORE, SUBMITTED T HAT ADDITION IS MADE WITHOUT ANY BASIS AND MATERIAL ON RECORD. ON THE OT HER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW AND SUBMITTED THAT THERE WAS A STRONG PRESUMPTION AGAINST THE ASS ESSEE THAT THE ASSESSEE HAD GIVEN LOAN TO SHRI D. K. DALAL BECAUSE 20 CHEQUES IN FAVOUR OF THE ASSESSEE WERE FOUND DURING THE COURSE OF SEA RCH. ITA NO.4436/AHD/2007 DINESH BABULAL THAKKAR 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE ASSESSEE FILED COPIES OF THE SEIZED CHEQUES IN PAPER BOOK WHICH SHOWS THAT THE CHEQUES IN QUESTION ARE UN-DAT ED. THE CHEQUES IN FAVOUR OF THE ASSESSEE WERE FOUND FROM THE PREMISES OF M/S. KALGI WHICH DOES NOT BELONG TO THE ASSESSEE. THE AO NOTED THAT POLICE HAVE RAIDED THE PREMISES OF M/S. KALGI, OLD SHARDA MANDIR, AHMEDABA D ON THE GROUND THAT CRICKET BETTING ACTIVITY WAS BEING CARRIED OUT AT THE SAID PREMISES. SHRI TARUN KARIA AND SOME OTHER PERSONS WERE ARREST ED AND THEIR STATEMENTS WERE RECORDED U/S 131 (1A) OF THE IT ACT . THE ASSESSEE IN THE STATEMENT OF FACT NOTED THAT EVEN THE STATEMENT OF ONE SHRI TARUN KARIA WAS RECORDED BY POLICE WHEREIN HE HAS STATED THAT H E WAS EMPLOYEE OF THE ASSESSEE WHO WAS ENGAGED IN CRICKET BETTING. ST ATEMENT BY ACCUSED TO POLICE IS NOT ADMISSIBLE IN EVIDENCE. HOWEVER, N O EVIDENCE WAS BROUGHT ON RECORD THAT THE PREMISES IN QUESTION BELONG TO T HE ASSESSEE. IF THE VERSIONS OF THE POLICE AND THE AO ARE ACCEPTED THAT CRICKET BETTING ACTIVITY WAS GOING ON AT THE PREMISES SEARCHED BY T HE POLICE, IT IS HARD TO BELIEVE THAT ANY GENUINE TRANSACTION OF GIVING AND TAKING LOAN WOULD HAVE BEEN CONDUCTED FROM THEIR PREMISES. THE CHEQUE S IN QUESTION WERE SIGNED BY SHRI D. K.DALAL IN THE NAME OF THE ASSESS EE BUT ACCORDING TO THE ASSESSEE HIS STATEMENT WAS NEVER RECORDED BY TH E AO. THE AO HAS NOWHERE MENTIONED IN THE ASSESSMENT ORDER IF SHRI D . K. DALAL WAS EXAMINED BY THE AO AT THE ASSESSMENT STAGE. THE AO MERELY PRESUMED FROM THE ABOVE CHEQUES IN FAVOUR OF THE ASSESSEE TH AT THE ASSESSEE HAD ADVANCED THE AMOUNT OF RS.20,00,000/- TO SHRI D. K. DALAL. THE FINDING OF THE AO IS PURELY BASED UPON PRESUMPTION OF FACT WHICH IS NOT SUPPORTED BY ANY EVIDENCE OR MATERIAL ON RECORD. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH THAT CHEQUES WERE GIVEN TOWARDS ADVANCE GIVEN BY THE ASSESSEE. IT WAS FURTHER PRESUMED THAT SIGNED CHEQUES WERE OBTAINED BY THE ASSESSEE AS SECURITY OF THE LOAN. N O EVIDENCE IS ALSO FOUND DURING THE COURSE OF SEARCH THAT THE ASSESSEE OBTAINED THE CHEQUES BEING SECURITY OF THE LOAN AMOUNT GIVEN BY HIM TO SHRI D. K. ITA NO.4436/AHD/2007 DINESH BABULAL THAKKAR 4 DALAL. SINCE THE SEARCHED PREMISES DO NOT BELONG TO THE ASSESSEE, THEREFORE, IT IS ALSO HIGHLY UNBELIEVABLE THAT THE SIGNED CHEQUES WOULD BE KEPT THERE BY THE ASSESSEE FOR SECURITY PURPOSES. I F THE ASSESSEE HAD ACTUALLY GIVEN LOAN TO SHRI D. K. DALAL AND OBTAINE D CHEQUES AS SECURITY, THERE WAS NO REASON FOR HIM NOT TO KEEP THE SAID CH EQUES WITH HIM. THE CHEQUES ARE HOWEVER, FOUND AT THE PREMISES OF M/S. KALGI WHERE ACCORDING TO POLICE AND THE AO, CRICKET BETTING ACT IVITY WAS GOING ON. WHEN SOME UNLAWFUL ACTIVITIES WERE GOING ON AT THE PREMISES, THERE WAS NO REASON TO PRESUME THAT THE ASSESSEE WOULD GIVE A NY LOAN TO SHRI D. K. DALAL OR HAD OBTAINED CHEQUES BY WAY OF SECURITY OF THE LOAN AMOUNT. IN THE ABSENCE OF ANY DIRECT EVIDENCE ON RECORD TO SUP PORT THE FINDINGS OF THE AO AND FURTHER NO INCRIMINATING MATERIAL WAS FO UND AGAINST THE ASSESSEE, THE STORY PUT FORTH BY THE AO CANNOT BE B ELIEVED. THE CONCLUSION DRAWN BY THE ASSESSEE IS PURELY BASED UP ON PRESUMPTION OF FACT WHICH IS NOT SUPPORTED BY ANY MATERIAL OR EVID ENCE ON RECORD. NO EVIDENCE IS ALSO BROUGHT ON RECORD IF THE ASSESSEE HAD ADVANCED ANY LOAN DURING THE ASSESSMENT YEAR UNDER CONSIDERATION BECA USE THE CHEQUES WERE UN-DATED. NO CORROBORATIVE EVIDENCE WAS ALSO F OUND DURING THE COURSE OF SEARCH AGAINST THE ASSESSEE. IT IS SETTLE D LAW THAT SUSPICION HOWSOEVER MAY BE GRAVE, BUT CANNOT TAKE PLACE OF LE GAL PROOF. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE , WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ORDERS OF THE AUTHORIT IES BELOW OR THE RESULTANT ADDITION OF RS.20,00,000/-. WE ACCORDINGL Y, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDI TION OF RS.20,00,000/-. 5. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-03-2010. SD/- SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 22- 03-2010 LAKSHMIKANT/- ITA NO.4436/AHD/2007 DINESH BABULAL THAKKAR 5 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD