DCIT, New Delhi V. M/s. Arora Timber International Ltd., New Delhi

ITA 4777/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2740 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 21-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: ASHISH GOYAL ADV S
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Additional evidence; Documents seized
• Section: 40A(3); 142(1); 153A; 68; 132

Judgement Text

1 ITA NOS. 4891/DEL/2015 & ORS IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 4891/DEL/201 5 ( A.Y 2007-08) ITA NO. 4892/DEL/201 5 ( A.Y 2008-09) ARORA TIMBER INTERNATIONAL PVT. LTD. (FORMERLY KNOWN ARORA TIMBER INTERNATIONAL LTD.) C-7/3, IIIRD FLOOR, VASANT VIHAR NEW DELHI AAECA8026B (APPELLANT) VS ACIT CENTRAL CIRCLE-14 NEW DELHI (RESPONDENT) ITA NO. 4776/DEL/2015 ( A.Y 2007-08) ITA NO. 4777/DEL/2015 ( A.Y 2008-09 DCIT CENTRAL CIRCLE-29, ROOM NO. 318, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI (APPELLANT) VS ARORA TIMBER INTERNATIONAL PVT. LTD. 2/29, TIMBER BLOCK, WHS, KIRTI NAGAR NEW DELHI AAECA8026B (RESPONDENT) APPELLANT/RESPONDENT BY SH. VED JAIN & SH. ASHISH GOYAL, ADVS. RESPONDENT/APPELLANT BY SH. S. S. RANA, CIT DR ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST THE ORDER DATED 17/03/2015 PASSED BY CIT(A)-XXX, N EW DELHI. DATE OF HEARING 18.01.2018 DATE OF PRONOUNCEMENT 28.03.2018 2 ITA NOS. 4891/DEL/2015 & ORS 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 4892/DEL/2015 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OR DER PASSED BY THE LEARNED CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE APPELLANT THAT THE SEIZED DOCUMENTS ON THE BASIS OF WHICH AN ADDITION OF RS.21,03,250/- FOUND DURING THE COURSE OF THE SEARCH PERTAINS TO M/S SAN TOSH TIMBER TRADING CO. LTD. AND HENCE NO ADVERSE INFERENCE CAN BE DRAWN AG AINST THE ASSESSEE. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT THE SEIZED DOCUMENTS REPRESENT THE UNACCOUNTED TURNOVER AND HENCE PROFIT AT THE RATE O F 20% IS THE UNDISCLOSED INCOME EARNED BY THE ASSESSEE. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.420,650/- I.E. 20% OF TOTAL ADDITION OF RS. 21,0 3,250/- MADE BY THE LEARNED A.O., UNDER SECTION 68 OF THE ACT ON ACCOUN T OF CERTAIN FIGURES APPEARING ON A LOOSE SHEET OF PAPER FOUND DURING TH E CAUSE OF SEARCH. 3. THAT THE ABOVE ADDITION HAS BEEN CONFIRMED TO THE EXTENT OF 20% OF THE TOTAL ADDITION MADE BY THE LEARNED AO ARBITRARILY WITHOUT GIVING ANY PROPER JUSTIFICATION FOR APPLYING SUCH PERCENTAGE. ITA NO. 4891/DEL/2015 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED CIT(A) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE ASSESSEE THAT THE PROCEEDINGS INITIATED UNDER SECTION 153A AGAINST TH E APPELLANT ARE IN VIOLATION OF THE STATUTORY CONDITIONS OF THE ACT AN D THE PROCEDURE PRESCRIBED UNDER THE LAW AND AS SUCH THE SAME IS BAD IN THE EY E OF LAW. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE ASSESSEE THAT THE NOTICE ISSUED UNDER SECTION 153A BY THE AO IS BAD B OTH ON FACTS AND IN LAW AND AS SUCH THE ASSESSMENT FRAMED IN CONSEQUENCE TH EREOF IS LIABLE TO BE QUASHED. (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ORDER OF THE AO MAKING VARIOUS 3 ITA NOS. 4891/DEL/2015 & ORS ADDITIONS IN THE PROCEEDING FOR ASSESSMENT UNDER SE CTION 153A DESPITE NO INCRIMINATING MATERIAL BEING FOUND DURING THE COURS E OF THE SEARCH. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTIO N OF THE APPELLANT THAT THE SEIZED DOCUMENTS ON THE BASIS OF WHICH AN ADDITION OF RS.50,20,710/- FOUND DURING THE COURSE OF THE SEARCH PERTAINS TO M/S SAN TOSH TIMBER TRADING CO. LTD. AND HENCE NO ADVERSE INFERENCE CAN BE DRAWN AG AINST THE ASSESSEE. ITA NO. 4776/DEL/2015 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD . CIT (A) HAS ERRED IN LAW & ON FACTS IN DIRECTING THE AO TO DELETE 80% OF THE ADDITION OF RS. 21,03,250/- MADE ON ACCOUNT OF UNDISCLOSED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND ON LAW IN NOT APPRE CIATING THE EVIDENCE GATHERED DURING THE COURSE OF SEARCH AND SEIZURE OP ERATION WHICH VERY CLEARLY POINTED OUT THAT CASH TRANSACTIONS APPEARING IN THE SEIZED DOCUMENTS WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE. 3. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NO T TENABLE ON FACTS AND IN LAW. ITA NO. 4777/DEL/2015 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD . CIT (A) HAS ERRED IN LAW & ON FACTS IN DIRECTING THE AO TO DELETE 80% OF THE ADDITION OF RS. 21,03,250/- MADE ON ACCOUNT OF UNDISCLOSED INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS ERRED BOTH ON FACTS AND ON LAW IN NOT APPRE CIATING THE EVIDENCE GATHERED DURING THE COURSE OF SEARCH AND SEIZURE OP ERATION WHICH VERY CLEARLY POINTED OUT THAT CASH TRANSACTIONS APPEARING IN THE SEIZED DOCUMENTS WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE. 3. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NO T TENABLE ON FACTS AND IN LAW. 3. WE ARE TAKING UP THE BRIEF FACTS OF ASSESSMENT Y EAR 2007-08 AS THE SAME ARE IDENTICAL WITH THE A.Y. 2008-09.SEARCH AND SEIZ URE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT AT VARIOUS PREMISES OF ARORA GROUP' ON 18.01.2008. THIS GROUP IS STOCK BROKER FOR EQUIT Y AND COMMODITIES. ALSO SOME OF THE GROUP COMPANIES ARE DOING TRADING OF TI MBER. THE GROUP IS 4 ITA NOS. 4891/DEL/2015 & ORS MANAGED BY SH. GAURAV ARORA AND SH. GANESH ARORA, W HO ARE BROTHERS. BOTH DO BUSINESS INDEPENDENTLY, WHILE SH. GAURAV ARORA D OES STOCK/COMMODITY BROKERAGE BUSINESS THROUGH TWO OF HIS FLAGSHIP COMP ANIES I.E M/S. JAPYEE CAPITAL SERVICES (P) LTD. AND M/S. JAYPEE COMMODITI ES (P) LTD. SH GANESH ARORA IS IN TIMBER BUSINESS. SEARCH OPERATION WAS A LSO CARRIED OUT AT BUSINESS PREMISES AT 2/29, KIRTI NAGAR, NEW DELHI. THEREAFTE R, THE CASE WAS CENTRALIZED U/S 127(2) OF THE ACT. SINCE A SEARCH WAS INITIATED U/S 132 OF THE ACT AFTER THE 31 ST DAY OF MAY 2003, A NOTICE U/S 153A OF THE INCOME T AX ACT, 1961 WAS ISSUED ON 11.12.2008 WHEREIN THE ASSESSEE WAS REQUI RED TO FILE A RETURN IN THE PRESCRIBED FORM FOR THE ASSESSMENT YEAR 2007-08 WIT HIN SIXTEEN DAYS. THIS NOTICE WAS SERVED ON 16.12.2008. THE ASSESSEE COMPA NY FILED ITS RETURN OF THE INCOME U/S 139(1) READ WITH SECTION 153A OF THE INC OME TAX ACT, 1961, ON 25.05.2009 DECLARING A TOTAL INCOME OF RS. 14.12,70 0/- AND AS PER PROVISION OF MAT BOOK PROFIT HAS TAKEN RS. 13,20,583/-. NOTICE U /S 143(2) OF THE INCOME TAX ACT, 1961, WAS ISSUED ON 30.06.2009, WHICH WAS DULY SERVED UPON THE ASSESSEE THROUGH AR ON 02.07.2009. DETAILED QUESTIO NNAIRE ALONG WITH NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 WAS ISSUED O N 31.08.2009 AND WHICH WAS SERVED UPON ASSESSEE ON 4/9/2009. NOTICE U/S 14 2(1) AND NOTICE U/S 271(L)(B) DATED 22.10.2009 WERE ISSUED AND SERVED B Y SPEED POST AND THROUGH AR OF THE ASSESSEE ON 26.10.2009. SHOW CAUSE NOTICE U/S 142(1) DATED 11.12.2009 WAS ISSUED AND SERVED UPON AR OF THE ASS ESSEE ON 14/12/2009. IN COMPLIANCE THERETO, AUTHORIZED REPRESENTATIVES O F THE ASSESSEE COMPANY ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILE D NECESSARY DETAILS/INFORMATION/DOCUMENTS AS REQUIRED. THE CASE WAS DISCUSSED WITH THE AR OF THE ASSESSEE COMPANY ON VARIOUS RELATED ISSUE S AND SUBMISSION PUT FORTH BEFORE THE ASSESSING OFFICER. THE ASSESSING O FFICER MADE DISALLOWANCES OF RS.5,36,790/- UNDER THE HEAD DIRECT EXPENSES AND DI SCOUNT AND THE ADDED THE SAME TO THE TOTAL INCOME. THE ASSESSING OFFICER IN RESPECT OF SEIZED MATERIAL MADE ADDITION OF RS.50,20,710/- AS UNDISCLOSED INCO ME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER FURTHER MADE DISALLOWANCE OF RS.7,17,000/- IN RESPECT OF CASH PURCHASE BY HOL DING THAT AS PER PROVISIONS 5 ITA NOS. 4891/DEL/2015 & ORS OF SECTION 40A(3) READ WITH RULE 6DD, THE TOTAL DIS ALLOWANCE AMOUNT WORKS OUT TO RS.7,17,000/- (RS.31,000 + RS.6,86,000) AND ADDE D THE SAME TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A)PARTLY ALLOWED THE APP EAL OF THE ASSESSEE. 5. AS RELATES TO GROUND NO. 1 AND 2 OF THE ASSESSEE S APPEAL, THE SAME IS GENERAL IN NATURE, HENCE THE LD. AR HAS NOT GIVEN A NY SUBMISSIONS. THE LD. AR FURTHER SUBMITTED AS RELATES TO GROUND NO. 3 AND 4 THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT VARIOUS PREMISES OF ARORA GROUP ON 18.1.2008. SEARCH WAS ALSO CONDUCTED ON THE PREMISES OF THE ASSESSEE COMPANY. DURING THE COURSE OF SEARCH A SEIZED DOCUMENT ANNEXURE A-1 WAS FOUND FROM THE RESIDENTIA L PREMISES OF SH. GANESH ARORA. IN THIS SEIZED DOCUMENT, NAME OF THRE E PARTIES BEING SHIKHAR CHAND, WOOD AL CRAFTT AND GURCHARAN SINGH ARE WRITT EN AND IN THEIR RESPECTIVE COLUMNS CERTAIN AMOUNTS AS UNDER THE COL UMN, CHEQUE AND CASH WERE WRITTEN. THE AMOUNTS RELEVANT TO THE ASSESSMEN T CONCERNED ARE IN SHIKHAR CHAND-RS.1857.05, WOOD A CRAFT-RS. 2076.70 AND GURCHARAN SINGH- 1086.90. THUS, THE SAME IS TOTALLING TO RS.5020.65. ON BEING ASKED DURING THE COURSE OF SEARCH AS WELL AS DURING THE ASSESSMENT P ROCEEDINGS, THE ASSESSEE ALL ALONG MAINTAINED THAT THIS DOCUMENT DOES NOT BE LONG TO HIM. HOWEVER, THE ASSESSING OFFICER ON THE BASIS OF SAID DOCUMENT CON CLUDED THAT THIS SHOWS CASH TRANSACTIONS ON ACCOUNT OF SALE MADE BY ASSESS EE OUT OF THE BOOKS AND BY EXTRAPOLATING THE FIGURE OF 2103.25 TO RS.21,03, 250/- MADE THE ADDITION IN THE HANDS OF THE ASSESSEE. AGGRIEVED BY THE ORDER O F THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND MAIN TAINED ITS EARLIER STAND THAT THE DOCUMENT DOES NOT BELONG TO IT. THE ASSESSEE A LSO FILED CERTAIN DOCUMENTS AS ADDITIONAL EVIDENCES UNDER RULE 46A STATING THAT THIS DOCUMENT BELONGS TO SANTOSH TIMBER TRADING CO. LTD. AND SINCE SH. GANES H ARORA THE DIRECTOR OF THE ASSESSEE COMPANY IS A MEMBER OF THE TIMBER MARK ET SOCIETY, THIS 6 ITA NOS. 4891/DEL/2015 & ORS DOCUMENT WAS GIVEN TO HIM TO SETTLE THE DISPUTE BET WEEN THE PARTIES. THE ADDITIONAL EVIDENCES WERE IN THE FORM OF LEDGER ACC OUNTS IN THE BOOKS OF SANTOSH TIMBER TRADING CO. LTD. IN THE NAME OF THRE E PARTIES NAMELY SHIKHAR CHAND PRADEEP KUMAR AND CO., GURUCHARAN SINGH TIMBE R MERCHANTS AND WOOD AL CRAFT WORKS, THE NAMES WHICH WERE APPEARING IN THE SEIZED DOCUMENT CERTAIN COPIES OF INVOICES IN THE NAME OF THESE PAR TIES WERE ALSO FILED. THE ADDITIONAL EVIDENCES WERE FORWARDED BY THE CIT(A) T O THE ASSESSING OFFICER FOR REMAND. THE ASSESSING OFFICER IN HIS FIRST REMAND R EPORT DATED 18.03.2014 OBJECTED TO THE ADMISSION TO THE ADDITIONAL EVIDENC ES, HOWEVER, THE CIT(A) ADMITTED THESE EVIDENCES AS IS EVIDENT FROM THE CIT (A) ORDER AT PARA 6.2 AND AGAIN SENT THE DOCUMENTS FOR AOS COMMENT. IN HIS R EMAND REPORT DATED 15.05.2014, THE ASSESSING OFFICER STATED THAT DURIN G THE REMAND PROCEEDINGS AS ASKED BY HIM MR. AKASH KUMAR ACCOUNTS MANAGER OF SANTOSH TIMBER TRADING CO. LTD. WAS PRODUCED, WHO WAS ASKED TO PRO DUCE THE BOOKS OF ACCOUNTS WHICH COULD NOT BE PRODUCED BEFORE HIM. IN THIS MANNER, THE ASSESSING OFFICER CONCLUDED THAT THE FIGURES MENTIO NED IN THE SEIZED DOCUMENTS REMAINED UNVERIFIED. IN THESE CIRCUMSTANC ES, THE CIT(A) GAVE HIS DECISION AT PARA 6.3 WHEREBY CONCLUDED THAT THOUGH HE WAS CONVINCED THAT THE ASSESSEE HAS SOME FINANCIAL ROLE IN THE TRANSACTION CONTAINED IN THE SEIZED DOCUMENT, HOWEVER, TO HAVE A FAIR VIEW HE CONFIRMED 20% OF THE ADDITION AND PREFERRED TO DELETE THE REMAINING 80%. THEREFORE, T HE LD. AR SUBMITTED THAT THE ASSESSEE AS WELL AS REVENUE BOTH ARE IN APPEAL BEFORE THE TRIBUNAL. THE LD. AR SUBMITTED THAT ALL ALONG THE ASSESSEE HAS MAINTA INED THAT SEIZED DOCUMENT DOES NOT RELATE TO THE ASSESSEE. DURING THE APPELLA TE PROCEEDINGS EVEN THE PRESUMPTION RAISED AGAINST IT WAS REBUTTED BY FILIN G THE COPIES OF LEDGER ACCOUNT AND INVOICES AND EXPLAINING HOW THE ITEMS S PECIFIED IN THE SEIZED DOCUMENT BELONG TO SANTOSH TIMBER TRADING CO. LTD. THE LD. AR SUBMITTED THAT ALL THE FIGURES MENTIONED IN THE SEIZED DOCUME NT UNDER THE HEAD CHEQUE CAN BE IDENTIFIED WITH THE RESPECTIVE ENTRIES IN TH E RESPECTIVE LEDGER ACCOUNT. SINCE IN THE RELEVANT YEAR WE ARE CONCERNED WITH TH E ONLY ENTRY APPEARING UNDER THE COLUMN CASH IN THE ACCOUNT OF GURUCHARAN SINGH AS ON 28.04.2007, 7 ITA NOS. 4891/DEL/2015 & ORS IT IS TO BE NOTED THAT A CORRESPONDING FIGURE OF 27 11.87 IS MENTIONED UNDER THE COLUMN CHQ WHICH IS THE LEDGER ACCOUNT OF GURUCH ARAN SINGH IN THE BOOKS OF SANTOSH TIMBER TRADING CO. LTD. WHEREBY AS ON 2 8.04.2007, AN AMOUNT OF RS.2,71,187/- IS DEBITED ON ACCOUNT OF SALE OF TIMB ER. SIMILARLY ALL OTHER FIGURES APPEARING UNDER THE HEAD CHEQUE FOR OTHER P ARTIES ALSO ARE MATCHING WITH THE RESPECTIVE LEDGER ACCOUNTS PERTAINING TO T HESE PARTIES IN THE BOOKS OF SANTOSH TIMBER TRADING CO. LTD. ONCE THESE AMOUNTS MATCH WITH THE AMOUNT MENTIONED IN THE SEIZED DOCUMENT, IT PROVES WITHOUT ANY DOUBT THAT THE SEIZED DOCUMENT RELATES TO SANTOSH TIMBER TRADING CO. LTD. AND NOT TO THE ASSESSEE. THE LD. AR SUBMITTED THAT IT IS WELL SETTLED LAW TH AT THE PRESUMPTION U/S 292C IS A REBUTTABLE PRESUMPTION AND ONCE THE ASSES SEE EXPLAINS THE SEIZED DOCUMENTS FOUND DURING THE COURSE OF SEARCH, THE AD DITION ON THE BASIS OF SAID DOCUMENT SHOULD NOT BE MADE. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF PR.CIT VS. M/S DELCO INDIA PVT. LTD. 2016(2)TMI607 AND ITAT DELHI IN CASE OF M/S HABITAT ROYALE PROJECTS PVT. LTD. VS. ACIT 2016 (11) TMI1365. THE LD. AR SUBMITS THAT DOCUMENT RELIED ON BY THE ASSESSING OFFICER HAS TO BE READ AS WHOLE. THE LD. AR FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO THE EARLIER SUBMISSIONS, EVEN IF THE PRESUMPTION IS RAISED AGAINST THE ASSESSEE AND IT IS HELD THAT THE FIGURES OF SHIKHAR CHAND OF 1857.05, WOOD AL CRAFT OF 2076.70 AND OF GURUCHARAN SINGH 1086.90 AS MENTIONED IN THE COLUMN CASH IN THE SEIZED MATERIAL PERTAINS TO THE ASSESSEE , THE DOCUMENT HAS TO BE READ AS A WHOLE AND THE FIGU RE OF 1857.05 CANNOT BE EXTRAPOLATED BY THE ASSESSING OFFICER TO RS.18,57,0 50/- ETC. THE DOCUMENT MENTIONS FIGURES TO BE 1857.05 EVEN IF THE SAME IS CONSIDERED TO BE THE UNDISCLOSED INCOME OF THE ASSESSEE NO ADDITION MORE THAN RS.5020.71 CAN BE MADE IN THE HANDS OF THE ASSESSEE AS THERE IS NO EV IDENCE BEFORE THE ASSESSING OFFICER OR THE CIT(A) TO TREAT THE FIGURE OF RS.50, 20,710/-. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT A ND TRIBUNAL IN CASE OF CIT VS. GIRISH CHAUDHARY 296 ITR 619, MTNL VS. ACIT 8 S OT 376, GLASS LINE EQUIPMENTS CO. LTD. VS. CIT 253 ITR 454 AND ACIT VS . RAVINDER YADAV ITA NO. 2738/DEL/2012 DATED 07.10.2016. THE LD. AR FURTHER SUBMITTED THAT THE 8 ITA NOS. 4891/DEL/2015 & ORS CIT(A) HAS ARBITRARILY APPLIED THE RATE OF 20%. THE RE IS NO DISCREPANCY IN THE BOOKS OF THE ASSESSEE. THERE IS NO CORROBORATIVE EV IDENCE WITH THE CIT(A) AND ASSESSING OFFICER EVEN AFTER PRESUMPTION IS REBUTTE D BY THE ASSESSEE. THERE IS NO COMPARABLE TO APPLY 20% RATE. 6. AS RELATES TO GROUND NO. 5, THE LD. AR SUBMITS T HAT GENUINENESS OF PURCHASES HAS NOT BEEN DOUBTED BY THE AO AS WELL AS BY THE CIT(A) AND THEREFORE NO DISALLOWANCE BE CALLED FOR. THE LD. A R RELIED UPON THE DECISION OF HONBLE APEX COURT IN CASE OF ATTAR SINGH GURUMUKH SINGH VS. ITO 191 ITR 667 WHEREIN IT IS CLEARLY OBSERVED THAT THE PURPOSE OF SECTION 40A(3) IS TO DISALLOW BOGUS CASH PAYMENT FOR INCREASING THE EXPE NDITURE FOR ARTIFICIALLY REDUCING ASSESSABLE INCOME ONLY BUT NOT TO DISALLOW GENUINE EXPENDITURE THOUGH INCURRED IN CASH DUE TO BUSINESS EXIGENCIES. SIMILARLY IN THE CASE OF RAMADITYA INVESTMENTS VS. CIT (2004) 138 TAXMAN 231 , THE HONBLE DELHI HIGH COURT HELD THAT SINCE THE GENUINENESS OF THESE TRANSACTIONS IS NOT DOUBTED OR CALLED IN QUESTION THE DISALLOWANCE MADE IS UNSUSTAINABLE. 7. AS RELATES TO GROUND NO. 6, THE LD. AR SUBMITS T HAT THE AMOUNT HAS BEEN INCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINE SS AND THE DISCOUNT HAS BEEN OFFERED TO ATTRACT THE CUSTOMERS AND INCREASE THE SALES. SALES HAVE NOT BEEN DOUBTED. 8. REGARDING REVENUES APPEAL, THE LD. AR FOR GROUN D NO. 2, THE LD. AR SUBMITS THAT THE SUBMISSIONS MADE FOR GROUND NO. 3 & 4 IN ASSESSEES APPEAL BE TAKEN. AS REGARDS GROUND NO. 3 AND 4, THE LD. AR SUBMITS THAT GENUINENESS OF PURCHASES HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER AS WELL AS CIT(A) AND THEREFORE NO DISALLOWANCE BE CALLED FOR. 9. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND SUBMITS THAT THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS . NARESH KUMAR AGGARWAL (2011) 9 TAXMANN.COM 249 HELD THAT THERE WAS A PRES UMPTION RAISED UNDER SECTION 132(4A) ON SEIZURE OF FAX MESSAGE AND IT WA S UPON ASSESSEE TO REBUT 9 ITA NOS. 4891/DEL/2015 & ORS THAT PRESUMPTION BY OFFERING A PLAUSIBLE EXPLANATIO N. THE LD. DR FURTHER RELIED UPON THE DECISION OF THE HONBLE JHARKHAND HIGH COU RT IN CASE OF MAHABIR PRASAD RUNGTA VS. CIT (2014) 266 CTR 175 WHEREIN IT IS HELD THAT LOOSE SHEETS SEIZED DURING SEARCH SOMETIME CONTAIN VALUABLE INF ORMATION AND THUS THOSE ARE TO BE REGARDED AS DOCUMENT WITHIN THE MEANING O F SECTION 158B(B). THERE IS PRESUMPTION RAISED UNDER SECTION 132(4A) REGARDI NG DOCUMENTS SEIZED AND IN LIGHT OF SUCH PRESUMPTION, ASSESSEE OUGHT TO HAV E PRODUCED OTHER DOCUMENTS TO DISPROVE ENTRIES MADE IN LOOSE SHEETS. THE LD. DR SUBMITS THAT IN CASE OF BHAGHEERATHA ENGINEERING LTD. VS. ACIT ( 2015) 379 ITR 244 THE HONBLE KERALA HIGH COURT HELD THAT IN VIEW OF INTR ODUCTION OF SECTION 158BH PRESUMPTION UNDER SECTION 132(4A) REGARDING OWNERSH IP OF SEIZED ASSETS WAS NOT LIMITED TO PROCEEDINGS FOR SEARCH AND SEIZURE U NDER SECTION 132, AND WAS ALSO AVAILABLE FOR FRAMING REGULAR ASSESSMENT. THE LD. DR FURTHER RELIED UPON THE DECISION IN CASE OF ASHOK KUMAR VS. CIT (2016) 386 ITR 342, WHEREIN THE HONBLE PATNA HIGH COURT HELD THAT WHERE ASSESSING OFFICER PASSED INCOME ESCAPING ASSESSMENT ON BASIS OF A LOOSE SHEET FOUND IN PREMISES OF FATHER OF ASSESSEE, ACTION OF ASSESSING OFFICER WAS JUSTIFIED BEING BASED ON RELEVANT MATERIAL AND, MERELY, BECAUSE HE USED WRONG PRESUMP TION IN ASSESSMENT ORDER IT WOULD NOT CHANGE NATURE OF ORDER. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. AS RELATES TO GROUND NO. 1 AND 2 OF THE ASSESSEES APPEAL ARE GEN ERAL IN NATURE. THEREFORE, THE SAME NEED NOT BE ADJUDICATED. WE ARE TAKING UP GROUND NO. 3 AND 4, IT IS PERTINENT TO NOTE THAT THE CIT(A) GAVE HIS DECISION AT PARA 6.3 WHEREBY CONCLUDED THAT THOUGH HE WAS CONVINCED THAT THE ASS ESSEE HAS SOME FINANCIAL ROLE IN THE TRANSACTION CONTAINED IN THE SEIZED DOC UMENT, HOWEVER, TO HAVE A FAIR VIEW HE CONFIRMED 20% OF THE ADDITION AND PREF ERRED TO DELETE THE REMAINING 80%. THE CIT(A) HELD AS UNDER: 6.3 DECISION:- I HAVE CONSIDERED THE ASSESSMENT ORDER, FRESH EVIDE NCE FILED UNDER RULE 46A, 10 ITA NOS. 4891/DEL/2015 & ORS REMAND REPORT, REJOINDER FILED AND ORAL ARGUMENTS O F LD. AR. I HAVE PERUSED THE SEIZED DOCUMENT WHICH IS PART OF PAPER BOOK AT PAGE 28. THE CONTENTS OF THE SEIZED DOCUMENT IS REPRODUCED A S UNDER:- . I HAVE VERIFIED THE LEDGER ACCOUNTS OF M/S SHIKKAR CHAND, M/S. WOOD-AC- CRAFT AND SH. GURCHARAN SINGH IN THE BOOKS OF ACCOU NT OF M/S SANTOSH TIMBER TRADING CO. LTD. (ALL THESE LEDGERS ARE MADE PART O F THE ORDER AS ANNEXURE A. ENTRIES OF CASH IN THE SEIZED DOCUMENTS DO NOT TALL Y WITH THE LEDGER WITH SPECIFIC DATE AND AMOUNT. THEREFORE, I AM NOT CONVI NCED THAT THESE ENTRIES CONTAINED IN THE SEIZED DOCUMENTS ARE PART OF THE A LLEGED LEDGER OF M/S SANTOSH TIMBER TRADING CO. LTD. AND THEREFORE, DO N OT BELONG TO THE APPELLANT BUT BELONG TO M/S SANTOSH TIMBER TRADING CO. LTD. DURING THE REMAND PROCEEDINGS, THE BOOKS OF ACCOUNT S OF M/S SANTOSH TIMBER TRADING CO. LTD. COULD NOT BE PRODUCED DESPITE SEVE RAL ADJOURNMENTS GIVEN BY THE ASSESSING OFFICER. THEREFORE, I DO NOT AGREE WITH THE ARGUMENTS OF LD. AR THAT THE APPELLANT HAS DISCHARGED ITS ONUS THAT THESE SEIZED DOCUMENTS BELONGS TO M/S SANTOSH TIMBER TRADING CO. LTD. BY P RODUCING THEIR AUTHORIZED REPRESENTATIVE, AS THE ISSUE INVOKED IS WHETHER THE CONFIRMED ACCOUNTS GIVEN AS ADDITIONAL EVIDENCE IS PARTS OF B OOKS OF ACCOUNTS OF M/S. SANTOSH TIMBER TRADING CO. LTD. IN VIEW OF THE ABOVE FACTS, I AM NOT CONVINCED THAT THE APPELLANT HAS NOT FINANCIAL/BUSINESS ROLE IN THE TRANSACTION CONTAINE D IN THE SEIZED DOCUMENTS. DEFINITELY THESE TRANSACTION CONTAINED IN THE SEIZE D DOCUMENTS RELATE TO TRADING TRANSACTION. THE ASSESSING OFFICER HAS AFTE R DECIPHERING THE FIGURE CONTAINED IN THE SEIZED DOCUMENT HAS MADE ADDITION OF TOTAL CASH RECEIVABLE AS INCOME. IN MY VIEW, THE CASH TRANSACTION IS UNAC COUNTED TURNOVER AND TO HAVE A FAIR VIEW, 20% OF SUCH AS UNACCOUNTED INCOME FOR BOTH THE ASSESSMENT YEAR. THEREFORE, THE INCOME AT THE RATE OF 20% OF ADDITION IS CONFIRMED AND BALANCE ADDITION IS DELETED FOR BOTH THE ASSESSMENT YEAR. ACCORDINGLY, THIS GROUND OF APPEAL IS PARTLY ALLOWE D FOR BOTH THE ASSESSMENT YEARS. THUS, THE CIT(A) HAS GIVEN A CATEGORICAL FINDING T HAT THESE TRANSACTIONS CONTAINED IN THE SEIZED DOCUMENTS RELATE TO TRADING TRANSACTION. THUS THE CO- RELATION OF THE SEIZED DOCUMENTS WERE SHOWN BY THE CIT(A) AFTER TAKING INTO 11 ITA NOS. 4891/DEL/2015 & ORS CONSIDERATION THE ADDITIONAL EVIDENCE AND REMAND RE PORT OF THE ASSESSING OFFICER. THE CIT(A) RIGHTLY CONFIRMED THE 20% ADDIT ION AFTER VERIFYING AND ANALYZING THE DOCUMENTS AND SUBMISSIONS MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS. THUS, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). GROUND NO. 3 AND 4 OF THE ASSESSEES APPEAL IS DISMISSED. 11. NOW WE TAKE UP GROUND NO. 5 OF THE ASSESSEES A PPEAL. THE CIT(A) HAS CATEGORICALLY HELD THAT PAYMENT IS MADE TO PURCHASE PARTIES M/S AJAY KRISHNA TIMBER DEPORT & SAWMILL AND M/S NOVA TRADING (P) LT D. AND THESE PAYMENTS ARE NOT COVERED BY CLAUSE OF RULE 6DD. THE ASSESSIN G OFFICER HAS GIVEN A DETAIL OBSERVATION THAT THE ASSESSEE ADMITTED THAT THE PUR CHASE HAVE BEEN MADE IN CASH FROM THE CONCERNED PARTIES AND INCURRED EXPEND ITURE IN RESPECT OF PAYMENT MADE TO RESPECTIVE PARTY IN A SUM EXCEEDING RS.20,000/-. THE LD. AR RELIED UPON THE DECISION OF HONBLE APEX COURT IN C ASE OF ATTAR SINGH GURUMUKH SINGH VS. ITO 191 ITR 667 WHEREIN IT IS CL EARLY OBSERVED THAT THE PURPOSE OF SECTION 40A(3) IS TO DISALLOW BOGUS CASH PAYMENT FOR INCREASING THE EXPENDITURE FOR ARTIFICIALLY REDUCING ASSESSABLE IN COME ONLY BUT NOT TO DISALLOW GENUINE EXPENDITURE THOUGH INCURRED IN CASH DUE TO BUSINESS EXIGENCIES. SIMILARLY IN THE CASE OF RAMADITYA INVESTMENTS VS. CIT (2004) 138 TAXMAN 231, THE HONBLE DELHI HIGH COURT HELD THAT SINCE T HE GENUINENESS OF THESE TRANSACTIONS IS NOT DOUBTED OR CALLED IN QUESTION T HE DISALLOWANCE MADE IS UNSUSTAINABLE. THE RELIANCE OF THE DECISION BY THE LD. AR WILL BE APPLICABLE IN PRESENT CASE AS THE ASSESSING OFFICER AS WELL AS TH E CIT(A) HAS NOT DOUBTED THAT THE SAID AMOUNT WAS UTILIZED FOR BUSINESS PURP OSE. THUS, THE ASSESSING OFFICER AS WELL AS THE CIT(A) WAS NOT RIGHT IN HOLD ING THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE AS PER PROVI SIONS OF SECTION 40A(3) OF THE ACT. THUS, GROUND NO. 5 OF THE ASSESSEES APPEA L IS ALLOWED. 12. AS RELATES TO GROUND NO. 6 OF THE ASSESSEES AP PEAL, THE AMOUNT HAS BEEN INCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINE SS AND THE DISCOUNT HAS 12 ITA NOS. 4891/DEL/2015 & ORS BEEN OFFERED TO ATTRACT THE CUSTOMERS AND INCREASE THE SALES. SALES HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A). THEREFORE, THE CIT(A) AND THE ASSESSING OFFICER WAS NOT CORRECT IN DISALLOWING THE SAID EXPENSES. THUS, GROUND NO. 6 OF THE ASSESSEES APPE AL IS ALLOWED. 13. AS RELATES TO REVENUES APPEAL FOR GROUND NO. 1 AND 2, THE SAME IS IN CONSONANCE WITH THE GROUND NO. 3 AND 4 OF THE ASSES SEES APPEAL AND WE HAVE ALREADY UPHELD THE ORDER OF THE CIT(A). THEREFORE, THIS GROUND NO. 1 AND 2 OF THE REVENUES APPEAL IS DISMISSED. 14. IN RESULT, ITA NOS. 4776/DEL/2015 AND 4891/DEL /2015 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 15. FOR ASSESSMENT YEAR 2008-09, THE ASSESSEE AS W ELL AS THE REVENUE IS IN APPEAL WITH THE ONLY TWO IDENTICAL GROUNDS OF A.Y. 2007-08 WHICH ARE GROUND NO. 3 AND 4 OF THE ASSESSEES APPEAL AND GROUND NO. 1 AND 2 OF THE REVENUES APPEAL. THE SAME ARE ANSWERED HEREINABOVE AND THUS , THE ORDER OF THE CIT(A) IS UPHELD. BOTH THE APPEALS OF THE REVENUE AND ASSE SSEE FOR ASSESSMENT YEAR 2008-09 ARE DISMISSED. 16. IN RESULT, ITA NOS. 4777/DEL/2015 AND 4892/DEL/ 2015 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH MARCH, 2018 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 28/03/2018 R. NAHEED * 13 ITA NOS. 4891/DEL/2015 & ORS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 18/01/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 18/01/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 8 .03.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.