TILAKNAGAR INDUSTRIES LTD, MUMBAI V. DCIT CC 1(1), MUMBAI

ITA 5819/MUM/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0688 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 28-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT PATNAKAR
• Assessee Lawyers: B V JHAVERI
• Keywords: Search and seizure; Document seized; Charitable institution; Documents seized
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.5819 & 5820/M/2017 ASSESSMENT YEARS: 2010-11 & 2011-12 ITA NO.109/M/2016 ASSESSMENT YEAR: 2008-09 SURESH VIRJI THAKKAR, FLAT NO.703, CENTRE POINT BLDG, NEAR TMC OFFICE, SANT GANESHWAR PATH, THANE (W), PIN 400 602 PAN: AAHPT 4430G VS. DCIT, CENTRAL CIRCLE-1, THANE, 6 TH FLOOR, ASHAR I.T. PARK, ROAD NO.16Z, WAGALE IND. ESTATE, THANE (W), PIN 400 604 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B.V. JHAVERI, A.R. REVENUE BY : SHRI ABHIJIT PATNAKAR, D.R. DATE OF HEARING : 11.09.2018 DATE OF PRONOUNCEMENT : 01.10.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN FILED BY THE AS SESSEE AGAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX APPEALS [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 22.06 .2017 RELEVANT TO ASSESSMENT YEARS 2010-11 & 2011-12 AND DATED 20. 10.2015 RELEVANT TO ASSESSMENT YEAR 2008-09. ITA NO.109/M/2016 RELEVANT TO A.Y. 2008-09 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 2 1. ON THE FACTS AND IN LAW, THE HON. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.1,01,00,000/- ON THE BASIS OF ENTRIES ON SEIZED PAPER NO. 6 OF BUNDLE 2, SEIZED FROM THE RESIDENCE OF THE APPELLANT IN THE COURSE O F SEARCH AND SEIZURE ACTION U/S 132, HOLDING THE APPELLANT TO HAVE ADVANCED THE SAI D AMOUNT AS INTEREST BEARING LOAN, WHICH NOT BEING THE CASE THE ADDITION IS NOT JUSTIFIED. 2. ON THE FACTS AND IN LAW, THE HON. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.38,217/- AS ALLEGED INTEREST INCOME FOR THE YEAR UNDER APPEA L ON THE BASIS OF ENTRIES NOTED ON SEIZED PAPER NO. 6 OF BUN DLE 2. 3. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , DELETE AND/OR VARY ANY OF THE ABOVE GROUND OF APPEAL/RELIEF CLAIMED AT ANY TIME BEFORE THE DECISION OF THE APPEAL. 3. THE ISSUE RAISED IN FIRST GROUND OF APPEAL IS AG AINST THE CONFIRMATION OF ADDITION OF RS.1,01,00,000/- BY LD. CIT(A) AS MADE BY THE AO ON THE BASIS OF ENTRIES FOUND IN TH E SEIZED DOCUMENTS FROM THE RESIDENCE OF THE ASSESSEE DURING THE COURSE OF SEARCH. 4. THE FACTS IN BRIEF ARE THAT A SEARCH WAS CONDUCT ED ON THE ASSESSEE ON 22.02.2012 AND HIS ASSOCIATED CONCERNS. NOTICE UNDER SECTION 153A WAS ISSUED ON 28.12.2012 WHICH W AS SERVED ON 11.01.2013 FOR THE YEAR UNDER CONSIDERATION AND WAS COMPLIED WITH BY THE ASSESSEE BY FILING THE RETURN ON 05.03.2013. DURING THE ASSESSMENT PROCEEDINGS, THE AO AFTER EXAMINING THE DOCUMENTS SEIZED FROM THE RESIDENCE O F SURESH THAKKAR NOTED THAT ASSESSEE HAS GENERATED HUGE CASH FROM UNRECORDED TRANSACTIONS IN TRADING OF FOOD GRAINS A ND RECEIPT OF ON MONEY WHICH WAS ADVANCED TO VARIOUS PARTIES ON I NTEREST. THE AO ON THE BASIS OF PAGE NO.6 THE SEIZED DOCUMEN T WORKED OUT THE TOTAL AMOUNT ADVANCED BY THE ASSESSEE AT RS.1,01,00,000/- WHICH WAS GIVEN ON INTEREST @ 12%. ACCORDING TO THE AO THE TOTAL INTEREST WORKING ON VARIOUS DAT ES AMOUNTED ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 3 TO RS.19.19 LAKHS OVER A PERIOD OF TIME FROM A.Y. 2 008-09 TO A.Y. 2011-12. THE SAID SHEET NO.6 SHOWS THE AMOUNT ADVA NCED, RATE OF INTEREST, PERIOD AND CALCULATION OF INTEREST. D URING THE COURSE OF SEARCH PROCEEDINGS THE ASSESSEE STATED THAT THE SAID SHEET BELONGED TO THE NOTE BOOK OF HIS MINOR SON WHO IS D OING COMMERCE AND FINALLY THE AO ALSO NOTED THAT IN THE SAID SHEET THE AMOUNTS WERE MENTIONED BY REMOVING THREE ZEROS MEANING THEREBY THAT RS.5 LAKHS WAS WRITTEN AS RS.5,00/- AN D RS.10 LAKHS WAS WRITTEN AS RS.1,000/-. THE ASSESSEE ALSO SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT HE IS CONNECTED WITH A NUMBER OF CHARITABLE TRUSTS AND TH E ASSESSEE ACTS AS MEDIATOR FOR THE RESOLUTION OF DISPUTES TO HIS COMMUNITY PEOPLE AND THE SAID DOCUMENT MAY BELONG TO ANY OF T HE SAID DISPUTES AND THUS MIGHT BE BELONGING TO THE PEOPLE WHO CAME TO HIM FOR ARBITRATION IN THE DISPUTE. FINALLY THE AO ADDED A SUM OF RS.1,01,00,000/- ON THE GROUND THAT THE SAID SHE ET PAPER CLEARLY SHOWED THAT ASSESSEE HAS INVESTED BY WAY OF ADVANCING LOANS AND PARTLY IN IMMOVABLE PROPERTIES WHICH WERE NOT ACCOUNTED FOR AND RECORDED IN THE BOOKS OF ACCOUNTS BY FRAMING ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 53A VIDE ORDER DATED 21.03.2014 BESIDES MAKING VARIOUS OTHER ADDITIONS. 5. THE LD. CIT(A) AFFIRMED THE ORDER OF AO ON THE G ROUND THAT THE PAPER WAS FOUND FROM THE ASSESSEES POSSESSION DURING THE COURSE OF SEARCH AND IT IS THE RESPONSIBILITY OF TH E ASSESSEE TO EXPLAIN THE CONTENTS THEREOF. IF THE ASSESSEE CHOO SES TO REMAIN SILENT, THE AO IS JUSTIFIED IN MAKING THE PRESUMPTI ON AGAINST THE ASSESSEE. ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 4 6. THE LD. A.R. VEHEMENTLY ARGUED BEFORE US THAT TH E ORDER PASSED BY LD. CIT(A) AFFIRMING THE ADDITION OF RS.1 ,01,00,000/- WAS TOTALLY WRONG ON FACTS AS WELL AS ON LAW. THE LD. A.R. SUBMITTED THAT THE DOCUMENTS SEIZED DURING THE COUR SE OF SEARCH DID NOT BELONG TO THE ASSESSEE AT ALL WHICH WAS ALSO DENIED BY THE ASSESSEE EVEN DURING THE COURSE OF SE ARCH. THE LD. A.R. DREW OUR ATTENTION SEIZED DOCUMENT FROM T HE POSSESSION OF THE ASSESSEE FILED AT PAGE NO 1 OF TH E PAPER BOOK WHICH DID NOT STATE THE NAME OF THE ASSESSEE AL ALL AND ONLY AMOUNT, DATE, NUMBER OF DAYS AND AMOUNT OF INTEREST WERE STATED THEREIN. THE ASSESSEE WHILE REITERATING HIS ARGUMENTS BEFORE US STATED THAT THE DOCUMENT DID NOT BELONG T O THE ASSESSEE AT ALL AND IT MAY BELONG TO THE PEOPLE OF THE COMMUNITY OF THE ASSESSEE WHO ARE COMING TO HIM FOR RESOLUTIO N OF DISPUTES QUITE OFTEN. THE ASSESSEE ALSO STATED THAT ASSESSE E IS CONNECTED WITH VARIOUS TRUSTS ABOUT 14 IN NUMBER, THE DETAILS WHEREOF IS GIVEN IN PARA 6 OF THE AFFIDAVIT FILED BY THE ASSES SEE A COPY OF WHICH IS ATTACHED FROM PAGE NO.159 TO 162. THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS ASSOCIATED WITH THE CHARITABLE BODIES AS PRESIDENT/SECRETARY/TREASURER/TRUSTEE/DIR ECTOR OR AS MEMBER. THE LD. A.R. ALSO POINTED OUT THAT THE ASS ESSEE HAS FILED AN AFFIDAVIT STATING THEREIN THAT WHAT HAS BE EN STATED AT THE TIME OF SEARCH AS REGARDS THE SAID SEIZED DOCUMENT HAS BEEN PUTFORTH BY WAY OF A SWORN DOCUMENT WHEREIN THE ASS ESSEE AGAIN DISOWNED THE SAID PAPER AND IT WAS ARGUED VEH EMENTLY THAT THE ADDITION OF RS.1,01,00,000/- MAY KINDLY BE DELETED AS THE SAID DOCUMENT IS A DUMB DOCUMENT AND DOES NOT C ONTAIN ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 5 THE NAME OF THE ASSESSEE OR IS WRITTEN IN THE HANDW RITING OF THE ASSESSEE OR HIS FAMILY MEMBER OR SINGED BY THE ASSE SSEE. SECONDLY THE LD. A.R. ALSO STATED THAT THE DOCUMENT SEIZED DOES NOT STATE WHETHER THE MONEY MENTIONED THEREIN REPRE SENTS THE LOAN GIVEN OR BORROWED AND THE AO HAS JUST PRESUMED WITHOUT ANY BASIS THAT THE AMOUNTS MENTIONED IN THE SAID PA PER WERE THE AMOUNTS LENT BY THE ASSESSEE. EVEN ON THIS BAS IS THE ADDITION DESERVED TO BE DELETED FOR THE REASON THAT THE DOCUMENT DOES NOT STATE WHETHER IT IS A MONEY BORROWED OR LE NT. PRESUMING FOR A MOMENT IN CASE THE AMOUNT STATED IN THE DOCUMENTS ARE THE LOANS TAKEN BY THE ASSESSEE THEN NOTHING CAN BE ADDED TO THE INCOME OF THE ASSESSEE. FINALLY TH E LD. A.R. PRAYED BEFORE THE BENCH THAT IN VIEW OF THESE FACTU AL THINGS THE ADDITION CONFIRMED BY THE LD. CIT(A) SHOULD BE DELE TED. 7. ON THE OTHER HAND, THE LD. D.R. STRONGLY RELIED ON THE ORDER OF LD. CIT(A) AND AO BY SUBMITTING THAT THE DOCUMEN T FOUND IN THE POSSESSION OF THE ASSESSEE HAS TO BE PRESUMED A S BELONGING TO THE ASSESSEE UNLESS AND UNTIL REBUTTED BY THE AS SESSEE BY GIVING A COGENT REASONS/EVIDENCES BUT IN THE PRESE NT CASE THE ASSESSEE FAILED TO GIVE ANY PLAUSIBLE AND REASONABL E EXPLANATION FOR THE AMOUNT STATED IN THE PAPER AND THEREFORE TH E AO AND LD. CIT(A) HAVE RIGHTLY PRESUMED THAT THE DOCUMENT IS N OT A DUMB DOCUMENT AND ADDITION WAS RIGHTLY MADE BY THE AO AN D AFFIRMED BY THE LD. CIT(A) ON THE BASIS OF SAID DOCUMENT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE SE IZED DOCUMENTS. WE FIND THAT THE DOCUMENTS SEIZED FROM THE ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 6 POSSESSION OF THE ASSESSEE CONTAINS CALCULATIONS OF INTEREST MENTIONING THEREIN THE AMOUNT, RATE OF INTEREST, PE RIOD AND AMOUNT OF INTEREST. THE AUTHORITIES BELOW HAD TRIE D TO DECODE THE CONTENTS OF THE DOCUMENT BY COMING TO THE CONCL USION THAT THE LAST THREE DIGITS WERE REMOVED FROM THE AMOUNT AND VARIOUS AMOUNTS WERE MENTIONED BY DELETING THE LAST THREE Z EROS. FOR EXAMPLE, RS.1,00,000/- HAS BEEN MENTIONED AS RS.100 /- AND RS.5,00,000/- HAS BEEN MENTIONED AS RS.500/-. WE F URTHER OBSERVE THAT THE SAID DOCUMENT DOES NOT STATE WHETH ER THE AMOUNTS STATED THEREIN ARE THE LOANS GIVEN OR ACCEP TED BY THE ASSESSEE. WE ALSO FIND THAT THE ASSESSEE HAS DENIE D OR DISOWNED THE SAID DOCUMENT RIGHT FROM THE INCEPTION WHEN THE SEARCH WAS CONDUCTED ON THE ASSESSEE AND ALSO TRIED TO EXPLAIN HIS STAND BY FILING AN AFFIDAVIT THE COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO.158 TO 162. THE ASSESSEE ALSO STATED TH AT HE IS INVOLVED IN MEDIATION TO SETTLE THE DISPUTES OF VAR IOUS PEOPLE BELONGING TO HIS COMMUNITY AS HE IS INVOLVED IN VAR IOUS CHARITABLE ACTIVITIES AND CONNECTED WITH 14 NON PRO FIT MAKING BODIES/CHARITABLE BODIES THE DETAILS WHEREOF IS F ILED IN PAGE NO.159 & 160 OF THE PAPER BOOK. INDISPUTABLY , THE DOCUMENT IS SEIZED FROM THE POSSESSION OF THE ASSESSEE AND ONUS IS ON THE ASSESSEE TO EXPLAIN THE CONTENTS THEREIN BUT WE FIN D THAT EVEN BEFORE THE LD. CIT(A) THE ASSESSEE HAS SPECIFICALLY STATED THE PRESUMPTION OF THE AO AS WRONG THE MONIES MENTIONED THEREIN REPRESENTED LOAN GIVEN BY THE ASSESSEE WHEREAS THE SAID DOCUMENT IS SILENT AS TO THE MONEY LENT OR BORROWED BY THE ASSESSEE. MOREOVER THE DOCUMENT IS NOT IN THE HAND WRITING OF THE ASSESSEE OR HIS FAMILY OR SINGED BY THE ASSESSE E. CONSIDERING ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 7 THE FACTS IN TOTALITY AND AFTER EXAMINING THE CONTE NTS OF THE DOCUMENT, WE OBSERVE THAT IT IS A GUESS OR PRESUMPT ION OF THE AO THAT THE MONEY MIGHT HAVE BEEN LENT BY THE ASSES SEE AND ASSESSEE IS DERIVING INTEREST OUT OF MONEY LENT. M OREOVER, DURING THE COURSE OF SEARCH NOTHING INCRIMINATING MATERIAL OR UNACCOUNTED WEALTH WAS FOUND TO CORROBORATE THE CON TENTS OF THE PAPER. UNDER THESE CIRCUMSTANCES, WE ARE OF TH E CONSIDERED VIEW THAT TO MAKE AN ADDITION ON THE BASIS OF DOCUM ENT WHICH DOES NOT STATE THE AMOUNT LENT BY THE ASSESSEE OR B ORROWED BY THE ASSESSEE IS NOT JUSTIFIED AND CAN NOT BE SUSTAI NED. ACCORDINGLY, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 9. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.38,217/- AS INTEREST INCOME ON TH E BASIS OF SEIZED DOCUMENT WHICH IS PLACED AT PAGE NO.6 OF BUN DLE 2. 10. SINCE WE HAVE ALREADY DELETED THE MAIN ADDITION IN THE GROUND NO.1, THE ISSUE OF ADDITION OF INTEREST OF R S.38,217/- IS AUTOMATICALLY DELETED. ACCORDINGLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED. ITA NOS.5819 & 5820/M/2017 (A.YS: 2010-11 & 2011-12) 11. WE HAVE ALREADY DELETED THE MAIN ADDITION IN IT A NO.109/M/2016 FOR A.Y. 2008-09 ON THE BASIS OF WHIC H THE INTEREST WAS ADDED TO THE INCOME OF THE ASSESSEE. THEREFORE, IN VIEW OF OUR DECISION, THE ADDITION OF INTEREST IN THESE TWO APPEALS ARE ALSO DELETED. ITA NOS.5819 & 5820/M/2017 ITA NO.109/M/2016 SURESH VIRJI THAKKAR 8 12. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.10.2018. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 01.10.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. 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