AJAY B. SBHARWAL, MUMBAI V. ACIT CEN CIR 6(1), MUMBAI

ITA 6048/MUM/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3557 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAJ
• Assessee Lawyers: B V JHAVERI
• Keywords: Bonafide belief; Reason to believe
• Section: 143(3); 153A; 131; 132; 11

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.6048 /MUM/2010 ( / ASSESSMENT YEAR : 2007-08) SHRI AJAY B. SABHARWAL, 208, SHAH & NAHAR INDUSTRIAL PREMISES, DR. E. MOSES ROAD, WORLI, MUMBAI 400 018. / V. ACIT, CIRCLE 6(1), ROOM NO. 563, AAYAKAR BHAVAN, MUMBAI. ./ PAN : AAIPS 1492 A ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI B.V. JHAVERI REVENUE BY : DR. GULSHAN RAJ / DATE OF HEARING : 07-6-2016 / DATE OF PRONOUNCEMENT : 25-08-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 6048/MUM/2010, IS DIRECTED AGAINST THE APPELLATE OR DER DATED 28 TH APRIL, 2010 PASSED BY LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)- 14, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSME NT YEAR 2007-08, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARI SING FROM THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER (HERE INAFTER CALLED THE AO) U/S 153A/143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 6048/MUM/2010 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE P ROCEEDINGS INITIATED U/S 132 AND THE SEIZURE OF CASH WERE AS PER LAW. 2. THE LEARNED CIT(A) FURTHER ERRED IN TREATING THE S EIZED CASH AS UNEXPLAINED INCOME IN THE HANDS OF YOUR APPELLANT. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FOLLOW ING; A) THE CASH BELONGED TO LESHARK EXPORTS P. LTD. AND THE SAME WAS SUFFICIENTLY PROVED BY THE DOCUMENTARY EVIDENCE SUBMITTED AT THE TIME OF SEARCH ITSELF. B) THE COMPANY HAS ALSO CONFIRMED THAT THE CASH BELO NGED TO IT. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THE INS TANT CASE PROCEEDINGS U/S 132(1) OF THE ACT WERE INITIATED AND CONDUCTED BY T HE DDIT (INV.) UNIT III(2), MUMBAI ON 28 TH /29 TH NOVEMBER, 2006 ON THE BASIS OF INFORMATION RECEIVE D FROM DDIT (INV).AIU NEW DELHI, THAT THE PASSENGER SHRI AJAY BALWANT SABHARWAL WAS TRAVELLING BY JET AIR WAYS FLIGHT NO. 9W 325 FROM D ELHI TO MUMBAI CARRYING WITH HIM CASH TO THE TUNE OF RS. 20 LACS. DURING THE CO URSE OF PROCEEDING U/S. 132 OF THE ACT , A STATEMENT U/S 131 OF THE ACT WAS RECORD ED OF SHRI AJAY SABHARWAL WHO STATED THAT HE WAS CURRYING THE CASH UNDER AUTH ORITY OF M/S LE SHARK EXPORTS PVT. LTD. AND THE SAID CASH BELONG TO THE S AID COMPANY AND HE WAS ALSO CARRYING A LETTER FROM THE SAID COMPANY. WHILE RECO RDING THE STATEMENT HE STATED THAT HE WAS ONE OF THE DIRECTORS OF M/S IN DESIGN I NDIA PVT. LTD. AND ALSO WORKING AS A CONSULTANT TO M/S LE SHARK EXPORTS P. LTD. THE A.O. ISSUED NOTICE U/S. 153A OF THE ACT AND IN COMPLIANCE THE ASSESSEE FILED RETURN OF INCOME DISCLOSING TOTAL INCOME AT RS. 17, 98,890/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, STATEMENT OF SHRI AJAY S ABHARWAL, FROM WHOM THE CASH OF RS. 20 LACS WAS SEIZED AND SHRI KIRAN BHAT, EMPLOYEE OF M/S LE SHARK ITA 6048/MUM/2010 3 EXPORT PVT. LTD. WHO HANDED OVER THE CASH TO SHRI S ABHARWAL WERE RECORDED. THE A.O. OBSERVED FROM THE RECORDS THAT MR. ANIL SH AH, DIRECTOR OF M/S LE SHARK EXPORTS PVT. LTD. WHO WAS LOOKING AFTER THE MANUFA CTURING UNIT AT TIRUPUR, CAME TO MUMBAI FROM COIMBATORE ON 20 TH OCTOBER, 2006 REPORTEDLY CARRYING THE CASH OF RS. 20 LACS. AS PER THE BANK STATEMENT OF LE SHARK EXPORTS PRIVATE LIMITED PRODUCED, THE CASH WAS WITHDRAWN FROM CORPO RATION BANK. TIRUPUR ON 19 TH OCTOBER, 2006. COPY OF CASH BOOK OF TIRUPUR UNIT OF LE SHARK EXPORTS PRIVATE LIMITED REFLECTS SENDING OF MONEY THROUGH S HRI ANIL SHAH, M.D. WHICH WAS HANDED OVER TO MR ANIL SHAH ON 19-10-2006 AND T HE CASH WAS BROUGHT TO MUMBAI BY MR ANIL SHAH ON 20-10-2006 AND KEPT AT TH E REGISTERED OFFICE OF M/S LE SHARK EXPORTS P. LTD. , BUT THERE WAS NO CORRESP ONDING ENTRY OF RECEIPT OF CASH IN THE CASH BOOK MAINTAINED AT THE REGISTERED OFFICE OF THE ASSESSEE COMPANY AT MUMBAI. IN THE WRITTEN SUBMISSION, IT W AS STATED THAT THE CASH WAS KEPT IN THE SAFE CUSTODY OF MR. KIRAN BHAT, ACCOUN TANT OF LE SHARK EXPORTS PRIVATE LIMITED AT THE MUMBAI OFFICE. IT WAS ASKED AS TO WHY THE CASH WAS NOT RECORDED IN THE CASH BOOK OF MUMBAI OFFICE AND KEPT IN BANK SINCE ACTUAL DATE OF TRAVEL BY MR. SABHARWAL TO DELHI WAS NOT SPECIFICAL LY FIXED. THE ASSESSEE COULD NOT FILE ANY REPLY IN THIS REGARD. KEEPING THE CASH OF RS. 20 LACS IN MUMBAI OFFICE WITHOUT ANY ENTRIES IN THE BOOKS OF ACCOUNT FOR A L ONG PERIOD FROM 20-10-2006 TO 23-11-2006 APPEARS TO BE NOT PROBABALE AS THE ASSES SEE HAD OFFICE IN MUMBAI WHEREBY REGULAR BOOKS OF ACCOUNTS AND BANK ACCOUNTS ARE MAINTAINED. THEREFORE, IT WAS OBSERVED BY THE AO THAT IT CAN BE SEEN THAT CASH WAS BROUGHT FROM TIRUPUR TO MUMBAI ON 20 TH OCTOBER, 2006 AND THE SAME CASH WAS HANDED OVER TO SHRI AJAY SABHARWAL ON 27 TH /28 TH NOVEMBER, 2006 DOES NOT HOLD GOOD AT ALL. THE A.O. OBSERVED THAT IT WAS CLEARLY AN AFTE RTHOUGHT STORY. AS PER THE STATEMENT OF SHRI AJAY SABHARWAL RECORDED U/S 131 O F THE ACT ON 15 TH DECEMBER, 2008 WHEREBY HE AGAIN REITERATED THAT HE GOT THE MO NEY FROM SHRI KIRAN BHAT , ACCOUNTANT OF LE SHARK EXPORTS PRIVATE LIMITED IN H IS OFFICE TWO THREE DAYS BACK FROM THE DATE OF SEIZURE AND DID NOT KNEW THE DENOM INATION. IT WAS CONFIRMED THAT HE WAS AUTHORIZED BY M/S LE SHARK EXPORTS (P) LTD. FOR PURCHASE OF ITA 6048/MUM/2010 4 MACHINERY FROM DELHI AND HE WAS CARRYING A LETTER S PECIFYING CARRYING OF MONEY. THUS, IN NUT-SHELL HE SUBMITTED THAT CASH OF RS. 20 LACS BELONGED TO LE SHARK EXPORTS PRIVATE LIMITED. THE STATEMENT OF MR. KIRAN BHAT WAS ALSO RECORDED WHO IS THE ACCOUNTANT OF LE SHARK EXPORTS P. LTD. WHERE BY HE CONFIRMED THAT HE IS WORKING AS ACCOUNTANT OF LE SHARK EXPORTS P. LTD. FOR THE LAST 12 YEARS. HE STATED THAT HE HAD HANDED OVER THE MONEY TO SHRI AJ AY SABHARWAL ON 23 RD OR 24 TH NOVEMBER, 2006 AND ALSO HANDED OVER A LETTER TO SHR I AJAY SABHARWAL. THE A.O. OBSERVED THAT SHRI AJAY SABHARWAL REACHED DELHI ON 28 TH NOVEMBER, 2006 AND RETURNED TO MUMBAI ON THE SAME DAY AND HAD A VERY L IMITED TIME FOR INSPECTION OR QUALITY/TYPE OF MACHINE ETC. UNLESS HE CHALKED O UT THE KIND OF MACHINE AS PER THE REQUIREMENT OF M/S. LA SHARK EXPORTS (P) LTD. B EFORE HAND. THERE WAS NO CONSULTATION REGARDING REQUIREMENT OF ANY PARTICULA R MACHINE BETWEEN SHRI ANIL SHAH AND SHRI AJAY SABHARWAL. NO EVIDENCE WHATSOEVE R HAS BEEN SUBMITTED REGARDING THE OFFICE ETC. OR ANY MANUFACTURING UNIT S BY SHRI AJAY SABHARWAL IN DELHI FROM WHERE HE PROPOSED TO BUY MACHINES FOR LE EXPORTS PRIVATE LIMITED. SHRI AJAY SAHHARWAL ALSO DID NOT KNEW THE DENOMINAT ION OF CASH OF RS. 20 LACS WHICH HE WAS REPORTEDLY CARRYING AND HE COULD NOT R ECOLLECT THE DATE OF LETTER WHICH SPECIFIED CARRY OF MONEY ON BEHALF OF M/S LE- SHARK EXPORTS PVT. LTD. IT WAS OBSERVED FROM THE SUBMISSION THAT THE CASH WAS BROUGHT BY SHRI ANIL SHAH, M.D. OF M/S LE SHARK EXPORTS (P) LTD. AT THE TIME O F HIS VISIT TO MUMBAI FROM COIMBATORE ON 20 TH OCTOBER , 2006 AND THEREFORE IT IS CLEAR THAT MR. SHAH REACHED MUMBAI ON 20 TH OCTOBER, 2006. THE A.O. DOUBTED THE WHOLE STORY. COPIES OF AIR TICKET IN RESPECT OF SHRI AJAY SABHAR WAL WERE ALSO NOT SUBMITTED AND THEREFORE VERIFICATION OF DATE OF PURCHASE OF T ICKET FROM MUMBAI TO DELHI COULD NOT BE VERIFIED AND ALSO MR. AJAY SABHARWAL D ECIDED TO RETURN TO MUMBAI FROM DELHI ON 28 TH NOVEMBER, 2006 AND THE PARTICULARS OF THE AIR TICK ET WAS ALSO NOT PROVIDED AND HENCE COULD NOT BE CONCLUDED THAT RETURN OF SHRI AJAY SABHARWAL TO MUMBAI WAS DECIDED ON 28 TH NOVEMBER, 2006. THE A.O. OBSERVED THAT THE NORMAL PLACE OF WORK OF SHRI ANIL SHAH WA S AT TIRUPUR AND NO EVIDENCE THAT SHRI ANIL SHAH WAS IN MUMBAI ON 28 TH NOVEMBER, 2006 I.E. THE DATE OF ITA 6048/MUM/2010 5 AUTHORITY LETTER HAS BEEN BROUGHT ON RECORD . SHRI AJAY SABHARWAL IN HIS STATEMENT RECORDED ON 28 TH NOVEMBER, 2006 STATED THAT HE WAS NOT IN A POSITIO N TO STATE THAT CASH WAS DISCLOSED AT THE AIRPORT IN COIMBATORE IN FRONT OF AIU OR CISF, THEREFORE, IT IS CLEAR THAT HE ALSO DID NOT W ANTED TO DISCLOSE ANY CASH AT MUMBAI AIRPORT TO THE AIU OR CISF WHICH PROVED BEYO ND DOUBT THAT HE WAS NOT IN POSSESSION OF MONEY OF RS. 20 LAKHS AT THE TIME OF PROCEEDING TO DELHI FROM MUMBAI. THE A.O. ACCORDINGLY CAME TO THE CONCLUSIO N THAT THE SOURCE OF CASH AMOUNTING TO RS. 20 LAKHS FOUND IN POSSESSION OF SH RI SABHARWAL WHICH WAS SEIZED WAS NOT PROVED AND THUS ADDITION WAS MADE FO R RS. 20 LAKHS TREATING THE SAME AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSE SSEE, VIDE ASSESSMENT ORDER PASSED BY THE AO U/S. 143(3) READ WITH SECTION 153A OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER PASSED BY THE A.O. U/S. 143(3) READ WITH SECTION 153A OF THE ACT, THE ASSESSEE FILED HIS FIR ST APPEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) , THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS PROPRIETOR OF M/S IN-DESIGN PROVIDING CONSULTANCY S ERVICES IN CONNECTION WITH TEXTILE PRODUCTION AND EXPORTS. HE SUBMITTED THAT HE WAS TRAVELLING BY JET AIRWAYS FLIGHT NO. 9W 325 FROM DELHI TO MUMBAI ON 2 8-11-2006 CARRYING WITH HIM CASH OF RS. 20 LAKHS. THE ASSESSEE SUBMITTED T HAT HE SUO MOTO INFORMED THE AIRPORT AUTHORITY AT DELHI THAT HE WAS CARRYING CASH OF RS.20 LAKHS ALONG WITH THE AUTHORITY LETTER OF LE - SHARK EXPORTS PVT . LTD. ON REACHING MUMBAI, DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) UNIT - III, MUMBAI, ON THE BASIS OF INFORMATION RECEIVED FROM DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) AIU, NEW DELHI, INITIATED AND CONDUCTED PROCEEDINGS U/S 132 OF ACT AND TOOK THE ASSESSEE TO INCOME TAX OFFICE AT SCINDIA HOUSE WITH OUT ANY LEGAL WARRANT OR NOTICE AND SEIZED THE CASH OF RS. 20 LACS FROM THE POSSESSION OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE REVENUE BEFORE TAKI NG ACTION U/S 132 OF THE ACT SHOULD HAVE REASON TO BELIEVE THAT THE AMOUNT OF MO NEY HAS NOT BEEN DISCLOSED OR WILL NOT BE DISCLOSED AS INCOME. THE BELIEF HAS TO BE A BONAFIDE BELIEF. THE ITA 6048/MUM/2010 6 ASSESSEE SUBMITTED THAT AT THE TIME OF INTERCEPTION ITSELF THE LETTER OF AUTHORITY OF THE COMPANY LE SHARK EXPORTS PRIVATE LIMITED WAS SH OWN TO THE CONCERNED AUTHORITIES AND WITHIN FIVE HOURS THE ASSESSEE OBTA INED THE FAX COPY OF THE NECESSARY BOOKS OF ACCOUNT, BANK STATEMENT OF THE C OMPANY WHICH WERE PRODUCED FROM TIRUPUR OFFICE OF LE SHARK EXPORTS PR IVATE LIMITED WHICH HAD REFLECTED THAT THE CASH WAS DULY ACCOUNTED CASH OF THE SAID COMPANY, HENCE, THERE WAS NO GROUND FOR A BONAFIDE BELIEF THAT THE CASH WAS UNDISCLOSED CASH OF THE ASSESSEE. THUS, THE ASSESSEE PRAYED THAT THE P ROCEEDINGS U/S 132 OF THE ACT WERE BAD IN LAW. THE LD. CIT(A) REJECTED THE CONTENTIONS OF THE ASS ESSEE AND OBSERVED THAT THE ASSESSEE HAS CHALLENGED THE PROCEEDINGS UNDER SECTI ON 132 OF THE ACT. AN AMOUNT OF RS. 20 LAKHS WAS FOUND IN POSSESSION OF T HE ASSESSEE AT THE DELHI AIRPORT AND THE SAME WAS SEIZED BY THE MUMBAI INCOM E TAX AUTHORITIES AS THE SOURCE OF THE CASH HAS NOT BEEN PROPERLY EXPLAINED BY THE ASSESSEE. HENCE, THERE WAS REASON TO BELIEVE THAT THE MONEY HAS NOT BEEN D ISCLOSED OR WILL NOT BE DISCLOSED AS INCOME. THUS, THERE WAS A BONAFIDE BEL IEF FOR TAKING ACTION U/S 132 OF THE ACT. THE ASSESSEE SUBMITTED THAT THE REVENU E HAS ERRED IN ASSESSING THE SEIZED CASH AS UNDISCLOSED INCOME. THE ASSESSEE SU BMITTED THAT THE ASSESSEE WAS CARRYING AUTHORITY LETTER FROM LE SHARK EXPORTS P. LTD. WHILE TRAVELLING FROM DELHI TO MUMBAI. THE NECESSARY DOCUMENTS LIKE CASH BOOK, BANK STATEMENT REFLECTING THE WITHDRAWAL, CONFIRMATION FROM THE CO MPANY THAT THE CASH BELONGS TO THEM AND PAN CARD , THE AUDITED BALANCE SHEET F OR THE FINANCIAL YEAR 2006-07 WHEREIN THE COMPANY HAS REFLECTED THE CASH OF RS. 2 0 LAKHS SEIZED BY THE INCOME TAX DEPARTMENT AS ADVANCE TAX AND THE COMPANY HAS A LSO WRITTEN TO THE A.O. TO ADJUST THE SEIZED CASH TOWARDS ITS ADVANCE TAX LIA BILITY WERE SUBMITTED. THUS, THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF SURMIS ES AND CONJUNCTIONS. IT WAS SUBMITTED THAT THE A.O. HAD GIVEN UNDUE IMPORTANCE TO THE FACT THAT CASH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AT MUMBAI WHER EAS THE CASH WAS BROUGHT TO MUMBAI OFFICE OF THE COMPANY LE SHARK EXPORTS P. LTD FROM TIRUPUR . THE ITA 6048/MUM/2010 7 CASH WAS DULY RECORDED IN THE BOOKS OF ACCOUNT OF T HE COMPANY AT TIRUPUR AND EVIDENCE PRODUCE WAS BRUSHED ASIDE STATING THAT IT WAS AN AFTERTHOUGHT. THIS IS INCORRECT DUE TO THE FACT THAT AT THE TIME WHEN THE ASSESSEE WAS INTERCEPTED AT THE AIRPORT AT DELHI AND MUMBAI, HE WAS IN POSSESSI ON OF THE AUTHORITY LETTER ISSUED BY THE COMPANY LE SHARK EXPORTS P. LTD THAT THE SAID CASH BELONGED TO THEM AND THE ASSESSEE WAS CARRYING THE SAME FOR THE PURPOSES OF ADVANCING THE SAME FOR PURCHASE OF MACHINERY. THE ASSESSEE SUBMI TTED THAT THE BOOKS OF ACCOUNT OF THE COMPANY AND THE OTHER EVIDENCES WERE SUBMITTED IMMEDIATELY ON INTERCEPTION BY THE TAX-AUTHORITIES WITHIN FIVE HOU RS OF INTERCEPTION AT MUMBAI AIRPORT. THE LD. CIT(A), HOWEVER, REJECTED THE CON TENTIONS OF THE ASEESSEE AND HELD THAT THE ASSESSEE COULD NOT GIVE PROPER REPLY TO THE SATISFACTION OF THE REVENUE. HE OBSERVED THAT THE ASSESSEE HAS GOT THE MONEY FROM ONE SHRI KIRAN BHATT , ACCOUNTANT OF M/S. LE-SHARK EXPORTS PVT. LT D. IN HIS OFFICE 2-3 DAYS BACK ALONG WITH LETTER FROM THE COMPANY LE SHARK EXPORTS P. LTD SPECIFYING CONVEYING OF THE MONEY. THE ASSESSEE FURTHER DISCLOSED THAT H E WAS GIVEN THIS MONEY FOR PURCHASE OF THE MACHINERY FROM DELHI, BUT WHEN HE W AS ASKED WHETHER HE HAD ANY CONSULTATION WITH MR. ANIL SHAH, DIRECTOR OF M/ S. LE-SHARK EXPORTS PVT. LTD FOR PURCHASE OF ANY MACHINERY OF ANY PARTICULAR TYP E FROM DELHI, THEN HE REPLIED THAT THERE WAS NO CONSULTATION WITH RESPECT TO PURC HASE OF ANY MACHINERY OF ANY SPECIFIC DESIGN. THIS REPLY SHOWS THAT SHRI AJAY SA BHARWAL WAS NOT ASKED TO PURCHASE ANY MACHINERY AND AS SUCH THERE WERE NO SP ECIFIC DIRECTION FROM THE SHRI ANIL SHAH , DIRECTOR TO SHRI AJAY SABHARWAL FO R PURCHASE OF MACHINERY. HENCE, THE PURPOSE OF CARRYING CASH FROM MUMBAI TO DELHI AND BACK AS EXPLAINED BY THE ASSESSEE WAS NOT CONVINCING/ACCEPT ABLE AND CONTRADICTORY. IT WAS OBSERVED BY THE LD. CIT(A) THAT SHRI AJAY SABHA RWAL REACHED DELHI ON 28 TH NOVEMBER, 2006 AND RETURNED TO MUMBAI ON THE SAME D AY HENCE IT IS CLEAR THAT HE HAD HARDLY GOT VERY LIMITED TIME FOR INSPECTION OF QUALITY AND TYPE OF MACHINE ETC. TO BE PURCHASED FOR LE SHARK EXPORTS PRIVATE L IMITED . NO CONSULTATION REGARDING REQUIREMENT OF ANY PARTICULAR MACHINE HAD TAKEN PLACE BETWEEN MR AJAY SABHARWAL AND MR ANIL SHAH. NO AIR TICKET WAS BROUGHT ON RECORD BY THE ITA 6048/MUM/2010 8 ASSESSEE FOR VERIFICATION WITH REGARD TO THE DATE O F PURCHASE OF TICKET FROM MUMBAI TO DELHI. THE LD. CIT(A) THUS HELD THAT SOU RCE OF CASH AMOUNTING TO RS. 20 LAKHS FOUND IN POSSESSION OF THE ASSESSEE WAS NO T PROPERLY EXPLAINED AND HE MISERABLY FAILED TO ESTABLISH THAT THE SAID AMOUNT BELONGED TO M/S LE SHARK EXPORTS P. LTD., HENCE, THE ADDITION MADE BY THE A. O. WAS CONFIRMED BY THE LD. CIT(A) AS UNEXPLAINED INCOME OF THE ASSESSEE, VIDE APPELLATE ORDER DATED 28-04- 2010. 5. AGGRIEVED BY THE APPELLATE ORDER DATED 28-04-201 0 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNA L. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITION OF RS. 20 LAKHS HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. THE A SSESSEE WAS TRAVELLING FROM DELHI TO MUMBAI BY JET AIRWAYS FLIGHT NO. 9W 325 ON 28-11-2006 CARRYING WITH HIM RS. 20 LACS IN CASH. THE COPY OF THE JET AIRWA YS ACCOUNT AND THE CHECK IN BOARDING PASS WERE PLACED ON RECORD VIDE PAPER BOOK PAGE 46 AND 47. IT WAS SUBMITTED THAT THE SAID AMOUNT OF RS. 20 LACS HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE VIDE ASSESSMENT ORDER U/S 153A/143(3) OF THE ACT PASSED BY THE AO WHICH WAS CONFIRMED BY THE LD. CIT(A). HE SUBMITTED THAT THE ASSESSEE WAS DULY CARRYING THE LETTER DATED 28 TH NOVEMBER, 2006 AT THE TIME OF TRAVELLING ISSUED BY LE SHARK EXPORTS P. LTD CONFIRMING THAT THE ASSESSEE WAS CAR RYING CASH OF RS. 20 LACS WITH HIM FOR PURCHASE OF MACHINERY ON BEHALF OF LE SHARK EXPORTS P. LTD AND THE SAID CASH BELONGED TO LE SHARK EXPORTS P. LTD. THE ASSE SSEE WAS CARRYING RS. 20 LAKHS ON BEHALF OF LE SHARK EXPORTS P. LTD. FOR PUR CHASE OF MACHINERY. THE RELEVANT LETTER DATED 28 TH NOVEMBER 2006 BY LE SHARK EXPORTS P. LTD. IS PLACE D IN PAPER BOOK PAGE 11. THE ASSESSEE SUBMITTED THAT HE WAS GOING TO DELHI FROM MUMBAI, HE DID NOT DECLARE THE CASH WHILE AT THE TI ME OF RETURNING HE DECLARED AT DELHI AIRPORT. THE DDIT (INV) , MUMBAI ON ARRIVAL AT MUMBAI INTERCEPTED HIM AND TOOK HIM TO INCOME TAX OFFICE WHEREON HE EXPLAI NED THAT THE CASH BELONGED ITA 6048/MUM/2010 9 TO LE SHARK EXPORTS P. LTD. FOR PURCHASE OF MACHIN ERY AND ALSO PRODUCED THE SAID LETTER DATED 28 TH NOVEMBER, 2006 ISSUED BY LE SHARK EXPORTS P. LTD O WNING THE SAID CASH. THE LD. COUNSEL SUBMITTED THAT WITH IN SHORT SPAN OF 5 HOURS, ALL THE RECORDS WERE CALLED FROM THE OFFICE OF THE SAID COMPANY LE SHARK EXPORTS PRIVATE LIMITED, TIRUPUR BY FAX AND SUBMITTED TO TH E INCOME TAX AUTHORITIES WHICH CLEARLY SHOWED THAT THIS AMOUNT WAS WITHDRAWN FROM CORPORATION BANK, TIRUPUR OF LE SHARK EXPORTS P. LTD ON 19 TH OCTOBER, 2006. THE COPIES OF THE SAID BANK STATEMENT HAVE BEEN PLACED AT PAPER BOOK PAGE 39 TO 45 AND COPY OF CASH BOOK IS ALSO PLACED ON RECORD VIDE PAPER BOOK PAGE 14 TO 38 WHEREBY THE WITHDRAWAL OF RS. 20 LAKHS ON 19 TH OCTOBER, 2006 AND ALSO THE SAID AMOUNT WAS GIVEN TO THE SHRI ANIL SHAH FOR PURCHASE OF MACHINE RY ON 19 TH OCTOBER, 2006 ITSELF WAS DULY REFLECTED . THE COPIES OF BANK STAT EMENT, CASH BOOK, PAN AND CONFIRMATION FROM LE SHARK EXPORTS P. LTD WERE PLAC ED BEFORE THE INCOME TAX AUTHORITIES WITHIN 5 HOURS OF INTERCEPTION WHEREBY LE SHARK EXPORTS P. LTD EXPLAINED THAT CASH BELONGED TO THEM AND THEY OWNED THE CASH. THE LD. COUNSEL SUBMITTED THAT SHRI ANIL SHAH, DIRECTOR OF LE SHARK EXPORTS P. LTD. WHO BROUGHT THE CASH FROM COIMBATORE TO MUMBAI ON 20 TH OCTOBER, 2006 AND COPY OF THE AIR TICKET IS PLACED ON RECORD (FLIGHT NO. DN 616) (PAG E 12/PB) . HE WENT BACK TO COIMBATORE ON 27 TH NOVEMBER, 2006 BY JET AIRWAYS, COPY OF THE AIR TIC KET IS ALSO PLACED ON RECORD VIDE PAPER BOOK PAGE NO. 13. THE CASH WAS KEPT BY SHRI KIRAN BHAT, ACCOUNTANT OF LE SHARK EXPORTS PRIVATE LIMITE D IN MUMBAI IN THE OFFICE OF LE SHARK EXPORTS P. LTD . IT WAS ALSO SUBMITTED THA T THE SAID COMPANY HAS OWNED THE CASH AND THE SAME ARE REFLECTED IN THEIR BOOKS OF ACCOUNT. ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT IN THE CASE OF LE SHARK EXPORTS P. LTD FOR ASSESSMENT YEAR 2007-08 AND COPY OF THE ASS ESSMENT ORDER IS PLACED ON RECORD (PB NO. 74-75) AND NO ADDITION HAS BEEN MADE IN THE HANDS OF LE-SHARK EXPORTS PVT. LTD. . IT WAS POINTED OUT THAT THE REV ENUE HAS MENTIONED IN THE ASSESSMENT ORDER OF LE SHARK EXPORTS P. LTD THAT T HE CASH OF SAID LE SHARK EXPORTS P. LTD WAS ACCOUNTED AS ADVANCE TAX AND TH E REVENUE DID NOT ACCPETD THE CONTENTION IN THE HANDS OF LE SHARK EXPORTS P. LTD AS THE ADDITIONS WERE ITA 6048/MUM/2010 10 MADE IN THE HANDS OF THE ASSESSEE. THE LD. COUNSEL ALSO PLACED ON RECORD THE LETTER WRITTEN BY M/S LE-SHARK EXPORTS PVT. LTD ON 13 TH MARCH 2007 (PB NO. 59) TO THE INCOME TAX DEPARTMENT REQUESTING FOR RELEASE OF CASH AND ALSO CONFIRMED THAT THE CASH WAS BEING CARRIED BY MR AJAY SABHARWA L ON BEHALF OF LE SHARK EXPORTS PVT. LTD. THE COMPUTATION OF INCOME HAS ALS O BEEN PLACED ON RECORD WHEREBY ADJUSTMENT OF RS. 20 LAKHS AS ADVANCE TAX ( PAPER BOOK PAGE NO. 61 TO 73) WAS SOUGHT BY THE SAID LE SHARK EXPORTS PRIVATE LIMITED. THE SAID CASH IS DULY REFLECTED AS ADVANCE TAX (P. B. PAGE 67) IN SC HEDULE 11 LOANS AND ADVANCES WHICH IS PART OF THE FINANCIAL STATEMENT. THE LD. COUNSEL RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF C IT V. VINDHYA METAL CORPORATION(1997) 224 ITR 614(SC). 7. THE LD. D.R. RELIED ON THE ORDERS OF AUTHORITIE S BELOW AND SUBMITTED THAT THE FACTS ARE NOT DISPUTED. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND AL SO PERUSED THE MATERIAL PLACED ON RECORD. WE HAVE OBSERVED THAT THE ASSESS EE WAS TRAVELLING FROM DELHI TO MUMBAI ON 28 TH NOVEMBER, 2006 BY JET AIRWAYS FLIGHT . HE WAS CAR RYING CASH AMOUNT OF RS. 20 LAKHS WHILE TRAVELING TO MUMBAI ON 28-11-2006. HE WAS INTERCEPTED BY THE CISF AT DELHI AIRPORT. THE INFOR MATION WAS PASSED ON TO MUMBAI AND WHEN HE LANDED IN MUMBAI, HE WAS INTERC EPTED IN MUMBAI AND WAS TAKEN TO THE INCOME TAX OFFICE. THE ASSESSEE W AS CARRYING WITH HIM WHILE FLYING A LETTER DATED 28-11-2006 ISSUED BY LE SHAR K EXPORTS P. LTD CONFIRMING THAT THE CASH OF RS. 20 LACS WHICH HE WAS CARRYING WAS ON BEHALF OF LE SHARK EXPORTS PVT. LTD. FOR ADVANCING AMOUNT FOR PURCHASE OF THE MACHINERY WHICH WAS DULY SUBMITTED BY THE ASSESSEE TO THE INCOME TAX AU THORITIES AT THE TIME OF INTERCEPTION. THE ASSESSEE, WITHIN A SHORT SPAN OF FIVE HOURS OBTAINED ALL THE DOCUMENTS BY FAX FROM THE TIRUPUR OFFICE OF LE SHAR K EXPORTS PRIVATE LIMITED SUCH AS CASH BOOK, BANK STATEMENT , PAN, CONFIRMATI ON THAT CASH OF RS. 20 LACS BELONGED TO LE SHARK EXPORTS P. LTD AND PRODUCED TH E SAME BEFORE THE INCOME ITA 6048/MUM/2010 11 TAX AUTHORITIES . THE SAID AMOUNT OF RS 20 LACS CAS H WAS STATED TO BE WITHDRAWN FROM CORPORATION BANK , TIRUPUR BRANCH OF LE SHARK EXPORTS P. LTD ON 19-10- 2006 . LE SHARK EXPORTS PVT. LTD. HAS ALSO PRODUCED BEFORE THE DDIT (INV.), THE BANK STATEMENT, COPY OF PAN , CASH BOOK AND CONFIRM ATION OWNING THE CASH OF RS 20 LACS FOUND IN POSSESSION OF THE ASSESSEE . TH E ABOVE DOCUMENTS WERE PRODUCED WITH IN FIVE HOURS OF INTERCEPTION OF THE ASSESSEE BY THE INCOME TAX AUTHORITIES. THE SAID CASH OF RS. 20 LACS WAS SEIZ ED BY THE INCOME TAX AUTHORITIES FROM THE POSSESSION OF THE ASSESSEE ON 28/29 TH NOVEMBER 2006 IT IS ALSO OBSERVED THAT SHRI ANIL SHAH, DIRECTOR OF M/S LE SHARK EXPORTS PVT. LTD. WHO TRAVELLED FROM COIMBATORE TO MUMBAI ON 20 TH OCTOBER, 2006 BY AIR DECCAN FLIGHT (COPY OF THE TICKET IS PLACED ON RECORD VIDE PB NO. 12) AND HE AGAIN TRAVELLED BACK FROM MUMBAI TO COIMBATORE ON 27 TH NOVEMBER, 2006 BY JET AIRWAYS FLIGHT (COPY OF THE AIR TICKET IS PLACED ON RECORD VIDE PB NO. 13) AND IT IS SUBMITTED BEFORE US THAT CASH WAS BROUGHT TO MUMBAI FROM COIMBATORE BY SAID MR ANIL SHAH ON 20-10-2006 WHILE THE SAID CASH WAS WITHDRAWN FROM BANK ACCOUNT AT CORPORATION BANK , TIRUPUR OF M/S LE SHA RK EXPORTS PVT. LTD. ON 19- 10-2006 , BANK STATEMENT IS PLACED IN PAPER BOOK. THE SAID CASH IS DULY REFLECTED AS ADVANCED TO SH ANIL SHAH BY M/S LE SHA RK EXPORTS PVT. LTD FOR ADVANCE FOR PURCHASE OF MACHINERY ON 19-10-2006 , C ASH BOOK IS PLACED IN PAPER BOOK. THE SAID CASH WAS STATED TO BE KEPT BY MR ANI L SHAH IN MUMBAI OFFICE FROM 20-10-2006 TILL IT WAS STATED TO BE HANDED OVE R TO THE ASSESSEE TWO-THREE DAYS PRIOR TO HIS ACTUAL TRAVELLING TO DELHI FROM M UMBAI ON 28-11-2006. THE ASSESSEE SUBMITTED THAT THE AMOUNT OF RS. 20 LAKHS WAS ADVANCED BY SHRI KIRAN BHAT , ACCOUNTANT OF LE SHARK EXPORTS PRIVATE LIMIT ED WHICH WAS MEANT FOR THE PURPOSE OF PURCHASE OF MACHINERY , TWO- THREE DAYS PRIOR TO 28-11-2006 . THE SAID CASH OF RS 20 LACS IS DULY REFLECTED IN THE BO OKS OF ACCOUNTS OF LE SHARK EXPORTS PRIVATE LIMITED WHICH ARE AUDITED AND PRODU CED BEFORE THE AUTHORITIES BELOW. THE AMOUNT OF RS. 20 LAKHS SEIZED WAS ALSO O FFERED AS ADVANCE TAX BY LE SHARK EXPORTS PRIVATE LIMITED AS AMOUNT LYING WITH INCOME TAX DEPARTMENT WHICH IS ACCOUNTED AS ADVANCE TAX BY M/S LE SHARK E XPORTS PVT. LTD IN ITS ITA 6048/MUM/2010 12 BOOKS OF ACCOUNTS, BUT THE REVENUE HAS NOT ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND PASSED ASSESSMENT ORDER U/S 143(3)/153 A OF THE ACT MAKING ADDITIONS IN THE HAND OF THE ASSESSEE TO THE TUNE O F RS. 20 LACS AS UNDISCLOSED INCOME. WE HAVE OBSERVED THAT AS PER THE PROVISION S OF SECTION 132(4A) OF THE ACT WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MO NEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF SEARCH U/S 132(1) OF THE AC T, IT MAY BE PRESUMED THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY , BUL LION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON AND THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TR UE. THUS, DURING THE COURSE OF SEARCH U/S 132(1) OF THE ACT, THE REVENUE FOUND CASH OF RS. 20 LAKHS IN THE POSSESSION OF THE ASSESSEE WHICH WAS SEIZED FROM THE ASSESSEE THE PRESUMPTION AROSE U/S 132(4A) OF THE ACT THAT THE ASSESSEE IS THE OWNER OF THE SAID CASH OF RS 20 LACS BUT THIS PRESUMPTION IS REB UTTABLE. THE ASSESSEE HAS DULY REBUTTED THE PRESUMPTION BY BRINGING ON RECORD COGENT MATERIAL TO DISPROVE THE CONTENTIONS OF THE REVENUE THAT THIS CASH OF RS . 20 LACS FOUND AND SEIZED FROM THE ASSESSEE ON 28/29 TH NOVEMBER 2006 IS UNDISCLOSED INCOME OF THE ASSESSEE , WHEREAS THE SAID M/S LE SHARK EXPORTS P VT. LTD HAS DULY OWNED UP THE CASH OF RS 20 LACS AS BELONGING TO THEM . THE A SSESSEE HAS BROUGHT ON RECORD AUTHORITY LETTER FROM LE SHARK EXPORTS PVT. LTD. AT THE TIME OF HIS FLYING WHEN THE ASSESSEE WAS CARRYING THE CASH OF RS. 20 LACS WHILE TRAVELLING ON 28-11-2006 THAT THE MONEY BELONGED TO M/S LE SHARK EXPORTS PVT. LTD AND THE ASSESSEE WAS CARRYING THE SAME FOR THE PURPOSES OF PURCHASE OF M ACHINERY ON THEIR BEHALF. WHEN THE ASSESSEE WAS INTERCEPTED AND TAKEN TO OFFI CE OF THE REVENUE AT MUMBAI, HE HAS PRODUCED ALL THE RELEVANT DOCUMENTS WITHIN A SPAN OF FIVE HOURS FROM TIRUPUR OFFICE OF LE SHARK EXPORTS PRIVATE LIM ITED BY FAX BEFORE THE AUTHORITIES BELOW WHEREBY IT HAS CATEGORICALLY BEEN MENTIONED THAT THE MONEY CONSISTING OF CASH OF RS. 20 LACS BELONGED TO LE SH ARK EXPORTS PRIVATE LIMITED , THUS THE SAID COMPANY OWNED UP THE MONEY IMMEDIATEL Y ON BEING ASKED TO DO SO AS ALSO THE ASSESSEE WAS CARRYING WITH HIM THE AUTH ORITY LETTER WHILE TRAVELLING ITA 6048/MUM/2010 13 ON 28-11-2006 FROM DELHI TO MUMBAI WHEN THE MONEY W AS FOUND IN HIS POSSESSION WHICH HE IMMEDIATELY BROUGHT TO THE NOTI CE OF THE AUTHORITIES VIDE THE AUTHORITY LETTER OF LE SHARK EXPORTS PRIVATE LIMITE D DATED 28-11-2006 STATING THAT CASH BELONGED TO LE SHARK EXPORTS PRIVATE LIMI TED. ALL THE EVIDENCES WERE PRODUCED BEFORE THE AUTHORITIES BELOW IMMEDIATELY W ITH IN SHORT SPAN OF FIVE HOURS FROM THE TIME OF INTERCEPTION AT MUMBAI AND T HERE IS A CONSISTENCY IN THE STAND TAKEN BY THE ASSESSEE AS WELL LE SHARK EXPORT S PRIVATE LIMITED THROUGH OUT THAT THE SAID CASH BELONGED TO M/S LE SHARK EXP ORTS PVT. LTD. THE SAID CASH IS REFLECTED IN THE AUDITED BOOKS OF ACCOUNTS OF LE SHARK EXPORTS PRIVATE LIMITED FOR THE YEAR 2006-07 WHEREIN THE SAID CASH IS REFLE CTED AS ADVANCE TAX. THE SAID CASH WAS DECLARED AS ADVANCE FOR PURCHASE OF MACHIN ERY IN CASH BOOK ON 19-10- 2006 TO MR ANIL SHAH. DIRECTOR OF M/S LE SHARK EXPO RTS PVT. LTD WHO ULTIMATELY CARRIED THE CASH ON THE NEXT DATE I.E. 20-10-2006 T O MUMBAI FROM COIMBATORE FOR WHICH EVIDENCES ARE PLACED ON RECORD SUCH AS AI RTICKET , BANK STATEMENT AND CASH BOOK . IN OUR CONSIDERED VIEW, THE ASSESSEE H AS DULY EXPLAINED THE SAID CASH OF RS. 20 LAKHS WHICH WAS FOUND IN HIS POSSESS ION WHILE TRAVELLING FROM DELHI TO MUMBAI VIA JET AIRWAYS FLIGHT ON 28-11-200 6. THE ASSESSEE HAS DULY REBUTTED THE PRESUMPTION U/S 132(4A) OF THE ACT . T HE ASSESSEE HAS DULY BROUGHT ON RECORD THE AUDITED BOOKS OF ACCOUNTS OF LE SHARK EXPORTS PRIVATE LIMITED AND OTHER COGENT MATERIAL TO PROVE THAT INF ACT CASH BELONGED TO LE SHARK EXPORTS PRIVATE LIMITED WHO ALSO OWNED UP THE CASH . THE REVENUE HAS ALSO FRAMED ASSESSMENT IN RESPECT OF LE SHARK EXPORTS PV T. LTD. AND PASSED AN ASSESSMENT ORDERS U/S 143(3) OF THE ACT DATED 3 RD SEPTEMBER, 2009 FOR THE ASSESSMENT YEAR 2007-08 AND NO ADDITION OF RS. 20 L ACS W.R.T. CASH FOUND AND SEIZED OF RS 20 LACS FROM THE POSSESSION OF THE ASS ESSEE HAS BEEN MADE IN THE HANDS OF THE LE SHARK EXPORTS PRIVATE LIMITED. THE REVENUE WHILE FRAMING ASSESSMENT IN THE HANDS OF THE LE SHARK EXPORTS PVT . LTD. HAS MENTIONED IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT DATED 03-09- 2009 THAT THE CASH SEIZED HAS BEEN TAXED IN THE HANDS OF MR. AJAY B. SABHARWA L WHEREBY THE CONTENTION OF M/S LE SHARK EXPORTS PVT. LTD TO ADJUST THE SAID CA SH OF RS 20 LACS AGAINST ITA 6048/MUM/2010 14 ADVANCE TAX WAS REJECTED BY THE REVENUE. IN OUR OPI NION, ADDITION IS NOT SUSTAINABLE IN THE HANDS OF THE ASSESSEE AS THE AS SESSEE HAS DULY DISCHARGED HIS BURDEN AND HAS DULY REBUTTED THE PRESUMPTION W HICH AROSE U/S 132(4A) OF THE ACT WITH COGENT EVIDENCES BROUGHT ON RECORD AS SET OUT ABOVE THAT THE CASH OF RS 20 LACS WHICH THE ASSESSEE WAS CARRYING WHILE FL YING FROM DELHI TO MUMBAI ON 28-11-2006 IN-FACT BELONGED TO LE SHARK EXPORTS PVT . LTD WHO ALSO OWNED UP THE SAID CASH OF RS 20 LACS FOR WHICH COGENT MATERIAL I S BROUGHT ON RECORD. ADDITION OF RS 20 LACS MADE BY THE REVENUE IN THE HANDS OF T HE ASSESSEE AS UNDISCLOSED INCOME IS THEREFORE ORDERED TO BE DELETED. WE ORDE R ACCORDINGLY. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 6048/MUM/2010 FOR THE ASSESSMENT YEAR 2007-08 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH AUGUST, 2016. # $% &' 25-08-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 25-08-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 6048/MUM/2010 15 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI