DCIT ,CC- 8(4), MUMBAI V. ASHOK R. RUIA (HUF), MUMBAI

ITA 6309/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7874 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Capital asset; Business income; Search and seizure; Salary income; Loose papers; Document seized; Opportunity of cross examination; Source of fund; Question of law; Difference of opinion; Corroborative evidences; Block assessment; Surrender of tenancy right; Documents seized; Change of opinion; Set aside; Capital Gains
• Section: 69; 132; 69C; 40A(3); 14A; 201; 69A; 64; 48; 73; 13; 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) “A” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, HON'BLE JUDICIAL MEMBER ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) DCIT – Central Circle - 8(4) Room No. 659, 6th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Ashok R Ruia M/s. Market City Resources Pvt. Ltd., Shree Laxmi Woolen Mills Estate Off. Dr. Expenditure Moses Road Mahalaxmi (W), Mumbai - 400011 PAN: AAJPR8275M (Appellant) (Respondent) Assessee by : Shri Vijay Mehta Department by : Shri Shailja Rai Date of Hearing : 06.01.2022 Date of Pronouncement : 28.02.2022 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the Revenue against orders of the Learned Commissioner of Income Tax (Appeals)–50, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 16.07.2019 for the A.Y. 2008-09. 2. Brief facts of the case are that, a search and seizure operation u/s.132 of Income-tax Act, 1961 (in short “Act”) was carried out on the 2 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Phoenix Group of cases on 20.02.2008. During the course of the said search operation at the Corporate Office of M/s Phoenix Mill Ltd (for short “PML”). situated at 462, Senapati Bapat Marg, Lower Parel, Mumbai certain loose papers containing financial details of the family settlement between the Ashok Ruia Group and the Bharat Ruia Group were seized. In this regard, the relevant impounded papers are Page No. 2, 4 and 5 of Annexure A-1 seized on 28.03.2008 and Page No.99 to 103 of Annexure A-1 seized on 14.03.2008. In the assessment order, the Assessing Officer had concluded that as no satisfactorily reply was coming from the assessee about the meaning of the symbol ‘#’ used in the seized material, it was presumed to mean ‘cash’. Accordingly, the Assessing Officer made an addition of ₹.17,26,55,984/- after scrutinizing the seized Pg. No.99 to 103 of Annexure A-1 and Pg.No.2, 4 & 5 of Annexure A-1. 3. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions which is reproduced in the first appellate order at Page No. 28 to 53, it was submitted that a family settlement had happened by way of share transactions between the Ashok Ruia Group (Assessee Group) and Bharat Ruia Group. The Assessee Group had purchased the share of M/s Phoenix Mills Limited amounting to ₹.256,82,11,894/-, M/s Galaxy Entertainment Ltd amounting to 3 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia ₹.2,90,33,040/-, M/s RR Pvt. Ltd amounting to ₹.101,99,96,001/- and M/s. Senior Holding Pvt. Ltd amounting to ₹.4,000/-. The said shares were purchased by M/s Ashok Apparels Pvt. Ltd and M/s Bellona Developers Ltd. of Ashok Ruia Group, the details of which are as under: - Share M/s Ashok Apparels Pvt. Ltd M/s Bellona Finevest Limited A.Y. 2007-08 A.Y. 2008-09 A.Y.2007-08 A.Y.2008-09 Phoenix Mills Limited 160,92,19,626 95,89,92,268 Galaxy Entertainment Ltd. 2,90,33,040 R R Pvt. Ltd 1,01,99,96,001 - Senior Holding Pvt. Ltd 4,000 Total 2,62,92,19,627 95,89,92,268 - 2,90,33,040 4. The Bharat Ruia Group had sold it's stake in M/s Phoenix Mills Limited, M/s Galaxy Entertainment Ltd., M/s RR Pvt. Ltd. and M/s Senior Holding Pvt. Ltd. to the Ashok Ruia Group for a total consideration of ₹.3,61,72,44,935/-. The Assessee has not directly entered into any share transaction with the Bharat Ruia Group, M/s Ashok Apparels Pvt Ltd and M/s Bellona Developers Ltd., are concerns of Ashok Ruia Group, which had purchased the stake from the Bharat Ruia Group. It is pertinent to note from the records that assessee has not entered into any transaction in his individual capacity. The entire submission are summarized as below: “13. Conclusion of Entire Submission For the sake of convenience, we would like to summarize our submission as under: 4 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia • This is the case of search and in the search cases, additions can be made on the basis of cogent materials. • Neither the payer nor the recipient has ever admitted that the cash of such magnitude has been passed on in family settlement. • Paper seized during the course of the search and relied by the Ld A.O. itself given the three different considerations. Hence, it is clear that the said papers are nothing but estimation/ projection made by the recipient. Hence, the additions cannot be made on the estimated/projected figure. • There is no iota of evidence that the appellant had paid the alleged amount to the recipient. • There is no undisclosed source found out by the department which substantiated that the such huge alleged cash has been generated by the appellant. • Further, there is no undisclosed huge amount of cash/ investment/ assets find out by the department in the case of the recipient which substantiated that the utilization of alleged cash. • There is no evidence to establish that the appellant in the assessment year 2008-09 had paid the huge sum as alleged by the department. • The said documents on the basis of which the impugned additions had been made mere 'dumb documents' and has no relevance to make an additions. • The entire addition is based on the assumption of the Ld AO that sign '#' rhyme with cash. In this regards we submitted that in the case of the block assessment where the addition has to be made on the evidence found during the course of the search and one cannot go on assumptions and presumptions. • Total consideration has not been paid by the appellant in his individual capacity but through the companies. Than can how the alleged payment has been added in the appellant's income without evidence. • The figure of Rs.381 crores and odd mentioned in the seized papers is not only figure which is estimated by the recipient. Besides, there are two more figure i.e. 360 crores and 377 croes and odd. Hence, then can how the figure Rs 381 crores and odd is finalized by the department. Hence, we request your honour that a mere entry on loose sheet of papers and where the appellant claims that it was just an estimation done, but not supported by the actual cash when there is no documentary evidence to support the passing of cash and further there is no evidence about the existence of the amount mentioned in the loose sheet of papers as embedded in either cash, jewelry or investment, then the explanation of 5 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia the appellant cannot be rejected and additions made by the Ld A.O. would, therefore, is not justified." 5. After considering the submissions of the assessee, Ld.CIT(A) allowed the ground raised by the assessee with the following observation: “12.0 I have considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. 12.1 The facts are that a search and seizure operation u/s 132 of the Act was carried out on the Phoenix Group of cases on 20.02.2008. During the course of the said search operation at the Corporate Office of M/s Phoenix Mill Ltd. situated at 462, SenapatiBapat Marg, Lower Parel, Mumbai certain loose papers containing financial details of the family settlement between the Ashok Ruia Group and the Bharat Ruia Group were seized. In this regard, the relevant impounded papers are Page No. 2, 4 and S of Annexure A-i seized on 28.03.2008 and Page No.99 to 103 of Annexure A- i seized on 14.03.2008. 12.2 In the assessment order, the AO had concluded that as no satisfactorily reply was coming from the Appellant about the meaning of the symbol '#' used in the seized material, it was presumed to mean 'cash'. Accordingly, the A.O. made an addition of Rs.17,26,55,984/- after scuritinizing the seized Pg. No.99 to 103 of Annexure A-i and Pg.No.2, 4 & 5 of Annexure A-1. 12.3 The facts of the case are that a family settlement had happened by way of share transactions between the Ashok Ruia Group (Appellant Group) and Bharat Ruia Group. The Appellant Group had purchased the share of M/s Phoenix Mills Limited amounting to Rs 256,82,11,894/-, M/s Galaxy Entertainment Ltd amounting to Rs. 2,90,33,040/-, M/s RR Pvt. Ltd amounting to Rs. 101,99,96,001/- and M/s Senior Holding Pvt. Ltd amounting to Rs. 4,000/-. It is to be noted that the said shares were purchased by M/s Ashok Apparels Pvt. Ltd and M/s Bellona Developers Ltd. of Ashok Ruia Group, the details of which are as under:- Share Ashok Apparels Pvt. Ltd Bellona Finevest Limited A.Y. 2007-08 A.Y. 2008-09 A.Y.2007-08 A.Y.2008-09 Phoenix Mills Limited 160,92,19,626 95,89,92,268 - - Galaxy Entertainment Ltd. 2,90,33,040 R R Pvt. Ltd 1,01,99,96,001 - Senior Holding Pvt. Ltd 4,000 Total 2,62,92,19,627 95,89,92,268 - 2,90,33,040 12.4 To sum up, the undisputed fact on record is that the Bharat Ruia Group had sold it's stake in M/s Phoenix Mills Limited, M/s Galaxy Entertainment Ltd., M/s RR Pvt. Ltd. and M/s Senior Holding Pvt. Ltd. to 6 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia the Ashok Ruia Group for a total consideration of Rs. 3,61,72,44,935/-. However, it may be noted that the Appellant has not directly entered into any share transaction with the Bharat Ruia Group. It is clarified here that M/s Ashok Apparels Pvt Ltd and M/s BeIlona Developers Ltd., are concerns of Ashok Ruia Group, which had purchased the stake from the Bharat Ruia Group. Hence, at the outset, the Appellant had contended that since no transaction had been entered into by him in his individual capacity, the question of making an addition of cash in his hands doesn't arise at all. 12.5 A perusal of the seized material placed on record clearly reveals that there are three amounts mentioned at various places viz. Rs.381,39,58,713/-, Rs.360,69,71,895/- and Rs. 321,33,45,697/-. None of these entries match with the actual payment made by the concerns of the Ashok Ruia Group to the Bharat Ruia Group on account of sale of stake. It may be noted that the actual consideration for sale of stakes is amounting to Rs. 3,61,72,44,935/-. This in itself conclusively proves that the entries recorded in the seized material are rough in nature and hence, they are not matching with the actual payment. 12.6 I have also noted that the A.O. had picked up the highest figure mentioned on the said seized page of Rs.381,39,58,713/- in an arbitrary mariner without assigning any reason. There is no modicum of reasoning as to why the other two figures noted on the same seized pages had been rejected by him? I am constrained to note that the AO had not at all applied mind on the entries recorded in the said seized pages, while making the impugned addition under dispute. In the assessment order, the AO had taken the difference between the highest figure of Rs. 381,39,58,713/- and the actual payment of Rs. 364,00,00,000/-and treated the excess amount, as unaccounted cash payment. 12.7 It is pertinent to note that the said seized material was duly confronted to Shri AtulRuia, son of the Appellant. Shri AtulRuiain his statement recorded on 26.05.2008 has stated that the noting on the seized material have been made by the Accountant/Advisor of Shri Bharat Ruia and all the figures mentioned in the said seized documents are only rough working related to the family settlement, During the course of assessment proceedings even Bharat Ruia, the Karta of the Bharat Ruia (1-IUF) has also stated that entries mentioned in the seized documents are only rough workings. For the sake of ready reference, the relevant extract of the statement of Shri AtulRuiadated 26.05.2008 is reproduced, as under:- "Q22 I am showing you page no 99 to 103 Annexure A-1 (total pages 103) seized on 14.03.2008 during the course of operation of prohibitory order at Corporate office of M/s Phoenix Mills Ltd at 462, SenapatiBapat Marg, Lower Parel, Mumbai-400012. Please explain the nature and quantum of transactions noted on these pages and substantiate that the same are duly recorded in the books of account. Also explain what does the sign '#' indicate? Ans. These statements are prepared by Shri B.R.Ruia's staff member/advisor. The statement show rough calculation/working of the amount BRR to receive as per family settlement and sale of 7 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Phoenix Shares, R.R. Ltd. Shares etc. The # items are additional claims BRR has raised, which were agreed to be settled by taking over BRR's liabiHties to sisters (i.e. 50% of 34CR.) This is explained as below: Late RR Ruia had 6 children of which 4 are daughters and 2 are sons namely, Shri Ashok Ruia and Shri Bharat Ruia. In the family settlement implemented under a signed Memorandum Of Family Settlement the sisters have been paid Rs. 34 crores i.e. Rs. 8.50 crores each by cheque. Bharat Ruia was refusing to pay Rs.1 7 crores which was 50% of the amount to be paid to sisters. Ashok Ruia paid the full Rs. 34 crores. Theoretically, each brother should have paid 50% of Rs.34 crores, or 17 crores so Bharat Ruia's accountants notionally set off Rs. 17crores in their internal working. Based on this, BRR's accountant/ advisor showed receipt of Rs. 381 crores i.e. Rs. 364 crores which is paid in cheque to BharatRuia Group from time to time plus Rs.1 7 crores which is notionally considered by the accountant/advisor as received by Bharat Ruia Group as explained above setting off against the # items. The broad summary of Rs. 381 Cr. is as under: a) Sale of shares of RR Pvt Ltd and M/s.Phoenix Mills Ltd Rs. 364.00 Crores b) Payment to sister Rs. 34 crore of which Rs.17 crores was theoretically share of BRR (which he was refusing to pay) Rs. 17.00 crores Total Rs. 381.00 crores Q. 23 I am drawing your attention to Page no. 103 of Annexure A- i seized from Corporate office of Phoenix Mills Ltd on 14.03.2008. On this page the detailed working of the amount received and to be received by Shri Bharat Revenue Ruia on account of sale of his stake in Phoenix Mills Ltd. has been given. The working given on this page clearly mention the head under which the amount is to be received by Shri Bharat Ruia. The most important feature of notings made is that there are 2 separate workings given on this page with the narration "As per old deal" and "Additional deal". As per 'Old deal', Shri Bharat Ruia had to receive total amount of Rs. 3,21,33,45,6971- out of which amount of Rs.2,81,58,79,6751- had been received till the time when new deal came into picture. As per' Additional Deal' i.e. new deal given on this page, Shri Bharat R. Ruia became entitled for further sum of Rs.59,91,13,0161-. The further notings on this page clearly mention that Shri Bharat R Ruia had received entire balance of old deal i.e Rs. 39,74,66,201/- and entire amount of additional deal, i.e Rs.59,91,13,016/- at the time of preparation of the statement on the said page no. 103. It is also 8 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia clearly mentioned on this page that total deal value is Rs.381,39,58,713/- as per final statement. This page also contains the breakup of additional amount to be received by Shri Bharat Ruia on account of new deal. You have claimed that the amount shown along with sign'#' represent the additional claim by Shri Bharat R Ruia which was not granted to him and instead such amount was given to sisters. This claim is without any basis because of the fact that use of the phrase 'total received' in the statement signifies that the balance part of old deal and amount as per additional deal has actually been received by Shri Bharat R Ruia as on preparation of the statement. Further there is no mention of any word/ phrase, such as, 'draft', 'provisional', etc. on this statement, signifying that this statement is final in nature. The sign'#'(pronounced as hash) clearly signifies that it has been used for showing the amount received in 'cash'. This meaning is also evident from the various phrases used in this statement, such as 'received in # 'share account in #', 'monthly compensation up Sept 07 #' and'50% Saki Naka in # 4,40,00,0000'. It is also important to note that nowhere in this statement anything about share of sisters is mentioned. In light of above, it is evident that total amount received by Shri Bharat R Ruia group on account of family settlement is Rs.381,39,58,7131- as mentioned in the said statement. Please comment on this. Ans. As already stated in my earlier reply, the statements had been prepared by the Accountant/B ha rat Ruia in connection with family settlement though you have raised the query in detail, quoting various figures given on Page 103 in nutshell, Bharat R Ruia and family was ultimately paid Rs.364 crores out of Rs.381 crones payable to him (including additional claim) after duly adjusted his share of Rs. 17 crores towards the amount payable to four sisters as per the family settlement agreement. As regards the word 'received' mentioned in the said paper, it is submitted that the same has been considered as notionally received against the amount of Rs. 17 crores adjusted by us explained earlier. I am not aware as to why Bharat Ruia has not mentioned about the share of four sisters. It seems the same is internal working of his staff based on their internal calculation. However, the same has been considered in the family settlement agreement." 12.8 The above statement of Shri Atul Ruia recorded during the course of search operation clearly reveals that the seized pages reflect rough calculation/working of the amount Bharat Ruia Group is to receive, as per family settlement. The '#' items are stated by him to be additional claims the Bharat Ruia Group has raised, which were agreed to be settled by taking over Bharat Ruia Group's liabilities to sisters, which amounted to 50% of Rs. 34 Crore, which have been paid by Shri Ashok Ruia. As per the family settlement, the 4 sisters have been paid Rs. 34 crores i.e. Rs. 8.50 crores each by cheque by Shri Ashok Ruia. Since, each brother was 9 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia required to pay 17 crores, so Bharat Ruia's accountant had notionally set off Rs. 17 Crores in their internal working. 12.9 I have noted that the complete reconciliation between the figure of Rs. 381 Crore reflected in the seized record and the actual payment of Rs. 364 Crore had been provided at the time of search itself, before the Inv. Wing by Shri Atul Ruia and hence, the same can't be stated to be an afterthought. The said reconciliation is reproduced hereunder, for ready reference:- a) Sale of shares of M/s Phoenix Mills Ltd. and M/s.RR Pvt Ltd. etc, Rs. 364.00 crores b) Payment to sisters of Rs. 34 crore, with Share of BRR being Rs. 17 crores Rs. 17.00 crores Total Rs. 381.00 crores 12.10 I have also noted that Shri Atul Ruia had clearly stated on oath that Shri Bharat R Ruia and family was ultimately paid Rs. 364 crores, out of Rs. 381 crores payable to him, after duly adjusting his share of Rs. 17 crores payable to four sisters, as per the family settlement agreement. From the Para 4 of the settlement deed, it is evident that the 4 sisters were paid a sum of Rs. 34 crores (Rs. 8.50 crores to each sister). The said payment was made by the Appellant, which is evident from the ledger accounts submitted by the Appellant. 12.11 Since, it is a family settlement, it is customary that the two brothers would have to bear equal cost on account of payments to sister. The family settlement documents read along-with the seized material in a coherent manner reveals that the partition of the assets had been done in an extremely fair manner. The assets had been divided on a 50: 50 basis between the two brothers and each of the sister had been paid Rs. 8.5 Crore. It belies logic as to why only one brother shall bear the cost of payments to the sisters. The documents placed on records supports the argument of the Appellant that an amount of Rs. 17 crores was adjusted against the amount paid to the sisters. I have noted that the said argument of the Appellant duly corroborated by material on record has not at all been refuted or rebutted by the Assessing Officer. 12.12 I have also taken note of the fact that during the course of search and seizure proceedings, the statements of various persons have been recorded, including that of Shri Atul Ruia and none of them have stated that cash has been paid to Shri Bharat Ruia (HUF). I have also noted that no corroborating incriminating document was found during the course of the search operation in support of receipt / payment of cash. 12.13 I am also constrained to note that if '#' represent unaccounted cash transactions, then several transactions noted in the said seized pages had 10 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia not been taxed by the AO, which are of similar nature. In this regard, a few entries on the bottom of the seized Page No. 103 are reproduced hereunder, for ready reference:- Received in # towards short received in share transfer 800,974 towards monthly compensation 74,00,000 towards interest 52,62,346 towards chandu 15,00,000 Total 14,963,320 12.14 Thus, the AO had shown an incoherent approach, as some of the '#' entries were held to be representing unaccounted cash and some were held to be explained. 12.15 There are several judicial pronouncements on the issue that a document found in the search/survey has to be relied upon as a whole and can't be read in bits and pieces. There is no discretion available with the Revenue or the assessee to rely upon a part of the document favourable to it and plead for rejection of the other part which is not favourable to it, or in respect of which no supporting material is found. Thus, in general, the contents of the document seized have to be accepted as true irrespective of whether it is favourable to assessee or Revenue. 12.16 In the case of ACIT vs. Hotel Harbour View [2009] [184 taxman 421 (Cochin), it had been held as under:- "45. Therefore it is very necessary on the part of the revenue to make out a case on the basis of the search materials so that the revenue can argue that the assessee is liable for capital gains tax. The whole events leading to the present case were occurred before the date of search and it was very evident for anybody reading the details that by the time search was conducted, the full picture of the transaction was clear. The picture is that the agreement to sell was never culminated into a contract of sale and the deed of conveyance was never executed and the proposed transfer of capital asset was aborted. When this final fate of the proposed transaction is apparently clear on the date of search itself, we are unable to understand that how it is possible for the Assessing Officer to read the chronology of events in piece-meal and stop on 31-3-1999. The events up-to 31-3-1999 and the events after 1-4- 1999 should be read together. The whole chain of events is open before the authorities at the time of search on 6-8-2003. By the time of search, it is clear that the agreement to sell was not reached to its logical conclusion and the agreement was rescinded and part of the money received from the vendee was returned and the subject property was let out to another third party and the whole 11 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia transaction was aborted. When the whole chain of events are available in the course of search and all the agreements were very well before the authorities, how it is possible for the Assessing Officer to read the events in a piece-meal manner instead of reading it in a logical and a continuous manner from the beginning to the end. The Assessing Officer has stopped on 31-3-1999 to make out a case that there is a transfer of asset within the meaning of section 2(47) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act for the impugned assessment year 1999- 2000. In order to make out such a case, the Assessing Officer has refused to look into the events, which followed after 31-3-1999. If the Assessing Officer read the entire episode as a whole, the Assessing Officer would know that there was no actual transfer of any capital asset from the assessee to MAPL. That is the normal conclusion available on reading the chronology of events in the present case. In order to make a case of capital gains tax, the Assessing Officer is cutting the chain of events into two parts; one part upto 31-3-1999 and the other part after 31-3-1999. This approach adopted by the Assessing Officer is against law. When the Assessing Officer is relying on the materials collected in the course of search for making an assessment, the Assessing Officer should read the materials in a wholesome and continuous manner, which ultimately leads to a lawful conclusion. Therefore, we find that the order of the Assessing Officer is without the support of law." 12.17 In the case of The Dhanvarsha Builders v. DCIT [2006] [102 lTD 3751 (Pune), it had been held as under:- "6.2 It was also the argument of the learned counsel that the impugned papers not only to show the receipts but also the expenditure. Therefore, it was argued that the document should be read as a whole and deduction for the expenditure incurred should be given to the assessee while computing undisclosed income. We have considered this argument also. We are of the view that the seized document should be read as a whole if it has to be relied upon. It cannot be read only to the extent it is advantageous to the revenue and not read when it becomes disadvantageous to the revenue. In other words, if we do not read the figure of expenditure of Rs. 4,200 against the name of Rajender by doubting the expenditure, then all the receipts mentioned therein also comes under cloud of doubt. It is an accepted principle of interpretation of documents that they should be read as a whole as persons of common prudence will read them. They cannot be read in bits and parts to suit the convenience of one or other party. Therefore, the expenditure of 4,200 will also have to be read on proper appreciation of the document. Such reading gets further fortified by the fact that one Mr. Rajender Agrawal was one of the contractor of the assessee and his bill was placed on page 112 of the paper book. Though the figure of Rs. 4,200 is qualified by the remark approximately in the said papers, the expenditure on that basis will have to be estimated. Such conclusion also gets strength from the 12 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia fact that the figure is a round figure. Accordingly, it is held that the expenditure of round some of Rs. 40 lakhs becomes admissible to the assessee as cash expenditure in relation to cash receipts of the assessee. Thus, the excess of receipts over the expenditure can be worked out at Rs. 8.95 lakhs. The matter does not end here. It has been pointed out earlier that there are certain other figures of cash amount to be received by the assessee. The two sums of 400, being old and 179 from Dhawal, aggregating to 579, are to be received in cash. Therefore, this amount will have to be added to the undisclosed income. Thus, the undisclosed income, by reading the document as a whole is calculated at Rs. 14.74 lakhs (Rs. 8.95 lakhs + Rs. 5.79 lakhs). The argument of the learned DR in this matter may also be considered here. His case was that the expenditure has to be proved by the assessee. We are unable to agree with this submission if the impugned seized material is to be considered for the purpose of computation of the undisclosed income. The learned DR had pointed out that the Assessing Officer had verified some of the cash receipts from the customers. It appears that no opportunity of cross examination has been given by the Assessing Officer to the assessee in this behalf. Therefore, the evidence gathered by him in respect of receipt of 'on money' is only a tentative evidence on which no firm conclusion can be drawn. If the learned DR's arguments regarding expenditure were to be accepted, then, the figures of cash receipts mentioned in the seized paper will also have to be ignored. Such course of action will be against the tenor of the evidence seized in the course of search operation, more particularly, when the evidence gives clear picture of the undisclosed income of the assessee. The other argument of the learned counsel was that provisions of section 40A(3) should be applied in respect of expenditure. It may be pointed out that we are on the issue of computation of income of the assessee de hors the books of account and on the basis of seized material. In such computation, provisions of section 40A(3) are not applicable because this is not the case of the assessee or the revenue that the computation of undisclosed income is on an exact basis as per seized documents and the books of account. The result of the aforesaid discussion is that the undisclosed income is to be quantified at Rs. 14.74 lakhs." 12.18 For the proposition that a seized document should be read as a whole, reference may be made to the following Authorities- Asstt. CIT v Omprakash & Co. [2003] 132 Taxman 99 (Mag.)1[2004] 2 SOT 1 (Mum); Vivek Kumar Kathotia v. Dy. CIT [2013] 32 taxniann.com 3311142 lTD 394 (Kol.- Trib.); CIT v. D.D. Gears Ltd. [2012] 25 taxmann.coni 5621211 Taxman 8 (DeThi)(Mag.). 12.19 To sum up, the seized document should be read as a whole if it has to be relied upon. It cannot be read only to the extent it is advantageous to the revenue and not read when it becomes disadvantageous to the revenue. It is an accepted principle of interpretation of documents that they should be read as a whole, as persons of common prudence will read 13 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia them. They cannot be read in bits and parts to suit the convenience of one party or the other. 12.20 I have noted that the transactions mentioned against the '#' sign have been duly explained during the course of search, as being with reference to the sisters. In order to understand the meaning of the '#' sign, reference may be made to the bottom of the seized Page No. 103, which reflects certain payments received in '#' towards chandu. The Appellant had explained that the said #' payment was made to one Shri Chandru by cheque. It had been clarified by the Appellant that the said amount of Rs. 15,00,000/- was transacted through banking channels and pertains to reimbursements made by Phoenix Mills Ltd. to M/s. B.R. International. Thus, the theory of the AO that '#' represent cash payments is merely based on conjectures and surmises. 12.21 Mere suspicion, however strong or probable it maybe, is no effective substitute for the legal proof required to substantiate a charge, which the learned AO has failed to furnish. There is a long mental distance between 'may be true' and 'must be true' and this basic and golden rule helps to maintain the vital distance between conjectures and sure conclusions to be arrived at, on the touchstone of a dispassionate judicial enquiry based upon a complete and comprehensive appreciation of all features of the case, as well as the quality and credibility of evidence brought on record. Reliance is placed on Ashish Bathani V. State of MP, AIR 2002 SC 3206. 12.22 It is a trite law that the suspicion howsoever strong cannot partake the character of legal evidence. Reference in this regard is made to the decision of Hon'ble Supreme Court in the case of Laichand Bhagat Ambica Ram vs. CIT [37 ITR 288 (SC)]. 12.23 In this context, further reference is made to judgment of Hon'ble Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd. v. ACIT [164 lTD I (Mum)'SB)], wherein the Hon'ble Tribunal observed as under:- "Ultimately the entire case of revenue hinges upon the presumption that assessee is bound to have some large share in so called secret money in the form of premium and its circulation. However, this presumption or suspicion how strong it may appear to be true but needs to be corroborated by some evidence to establish a link that GTC actually had some kind of share in such secret money. It is quite trite suspicion howsoever strong may be but cannot be the basis of addition except for some material evidence on record. The theory of preponderance of probability is applied to weigh the evidence of either side and draw a conclusion in favour of party which has more favourable factors in his side. The conclusion have to be drawn on the basis of certain admitted facts and material and not on the basis of presumption of facts that might go against the assessee. Once nothing has been proved against the assessee with the aid of any direct material especially when various round of investigation have been carried out, then nothing can be implicated against the assessee". 14 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia 12.24 Reliance is also placed on the decision of Hon'ble Calcutta High Court in the case of M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 201 2(Cal)]. In this case, the Assessing Officer found that the evidences produced by the appellant to support huge losses claimed in the transactions of purchase and sale of shares were stage managed. The Hon'ble High Court held that the opinion of the Assessing Officer that the assessee generated a sizeable amount of loss out of prearranged transactions so as to reduce the quantum of income liable for tax might have been the view expressed by the Assessing Officer but he miserably failed to substantiate the same. The High Court held that the transactions were at the prevailing price and therefore the suspicion of the Assessing Officer was misplaced and unsubstantiated. 12.25 Raising of presumption itself does not amount to proof. Presumption however strong, cam-lot take the place of evidence. Reliance is placed on the decisions of Pooja Bhatt 66 TTJ (Mum) 817& D. M. Kamani (HUF) 65 TTJ (Pat) 504. It is well settled by the Hon'ble Supreme Court in more than one decision that courts have to be watchful and avoid the danger of suspicion to take place of legal proof for sometime, unconsciously it may happen to be a short step between moral certainty and legal proof. In this regard, reference may be made to the judgment in the case of Narendra Singh v. State of MP, 2004 SCC 1893. 12.26 It is well settled proposition of law that the court should safeguard itself against the danger of basing its conclusions on suspicions, howsoever strong they may be. It is equally well settled that the Courts decision must rest not upon suspicion but upon legal grounds established by legal testimony. Mere suspicion, however strong, cannot take the place of proof. Reliance is placed upon State v. Guizari Lal Tandon AIR 1979 S.C. 1382 and J.A. Naidu v. State of Maharashtra AIR, 1979 S.C. 1537. 12.27 The above stated principles of the Indian Evidence Act are equally applicable and have been applied with full force in Income-tax proceedings. The Hon'ble Supreme Court in Chuharmal v. CIT [1988] 172-ITR-250 stated:- 'what was meant by saying that the Evidence Act did not apply to proceedings under the Income-tax Act, 1961, was that the rigour of the rules of evidence contained in the evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented from doing so.' 12.28 It is settled law that suspicion, howsoever, strong cannot take the place of legal proof, as has been held by the Hon'ble Supreme Court in the case of Urnacharan Shaw and Bros. v. CIT [1959] 37-ITR -271. Further reliance is placed upon:  Krishnand v. State of Madhya Pradesh: AIR 1977 SC 796  Jayadayal Poddar v. Mst. Bibi Hazra: AIR 1974 SC 171 • CIT v. K Mahitn (Jdrna[2000] 158 CTR (Ker.) 100:12000] 242 ITR 133 (Ker.)  Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) 15 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia  Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) • Asstt. CIT v. Jindal Saw Pipes Ltd. [2008] 118 TTJ 228 [2008] 11 DTR (Delhi)(Trib.) 281.  Dhiraj Lal Girdhari Lal Vs. CIT 26 ITR 736  LalehandBhagatArnbika Rain Vs. CIT 37ITR288 12.29 The Hon'ble Supreme Court in Dhakeshwari Cotton Mills v. CIT 11954] 26 ITR 775 at 782had observed, as under:- "As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income Tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurinukh Singh v. Commissioner of Income-tax, Punjab." 12.30 The Punjab & Haryana High Court in CIT v. Anupam Kapoor [2008] 299 ITR 1 79did not believe on the allegation: A cheque had been taken by the beneficiary i.e. by paying cash equivalent to the cheque amount and the premium thereon". The Hon'ble Court at page 182 observed: There was no material before the Assessing Officer, which could have led to a conclusion that the transaction was, simpliciter a device to camouflage activities, to defraud the Revenue. No such presumption could be drawn by the Assessing Officer, merely on surmises and conjectures". 12.31 The Hon'ble Supreme Court in Parimisetti Seetharamamma v. CIT [1965] 57-ITR-532 at 536-537 observed:- 'By sections 3 and 4, the Indian Income-tax Act, 1922, imposes a general liability to tax upon all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax In all cases, in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee'. 12.32 In such a situation, the seized documents can only be held as rough dumb documents, as these documents do not provide any conclusive evidence. I have noted that the complete details of the transaction, the parties involved, the date of transaction etc. are not noted on the said 16 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia seized page and hence, the documentsare not speaking one. Reference may be made to the following decisions, wherein the Hon'ble Courts have held that no addition can be made on the basis of dumb documents:- • No decoding is permissible on suspicion, surmise, conjecture and imagination. Arnar Natwarlal Shah v. Asstt. CIT [1997] 60 ITD 560, 564565(Ahd.). • In the absence of any evidence about the nature of figures noted on loose paper seized, date, name of party etc., no addition can be made merely upon suspicion. Asstt. CIT. v. Shailesh S.Shah [1997163 ITD 153 (Born.). • Vague noting on loose paper found during the course of search proceedings of sister concern and there being no material on record to suggest that the assessee has in fact received the amounts written on the loose paper, apart from and in addition to the amount received by the assessee per account payee cheques and entered in its account books, addition was deleted. Malabar Oil Marketing Co. V. Asstt. CIT [2004] 91 TTJ 348 (Mum.) • Loose papers containing jotting of certain figures even if seized from the possession of assessee would not come within the compass of the word 'document' and cannot be the basis for treating certain income as undisclosed income of the assessee. D.D. Malijan V. Dy. CIT [2004] 91 TTJ 947(Del.) • Addition could not be made on the basis of an unnamed loose paper found at the business premises of the husband of the assessee by treating part of the items noted in the said paper as transactions relating to assessee. Smt. Boni manaSwarnaRekha v. AsstLCIT [2005] 147 Taxman 59 (Visakha.) (Mag.) • Dumb documents or documents with no certainty have no evidentiary value for purpose of resorting to deeming provisions of sections 68, 69, 69A to 69D. In the absence of adequate material as to nature and ownership of transaction, undisclosed income cannot be assessed in hands of assessee merely by arithmetically totalling various figures jotted down on loose documents found during search. Bansal Strips (P) Ltd. vs. Asstt. CIT [2006] 99 ITD 177 (Del.) • Addition on the basis of loose paper which cannot be treated as books of account cannot be made under section 68. Asstt.CIT v. SatyapaiWassan [2007] 295 ITR (AT) 352 (Jabalpur) [2008] 5 DTR (Jab.) (Trib.)202. • Additions made by the Assessing Officer, inter-alia, on the basis of loose papers found during search by making certain presumptions which are found to be inconsistent or contrary to other evidence on record cannot be upheld, especially when no significant asset outside the books or no evidence of ostensible 17 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia expenditure outside the books is found. Nirnial Fashions (P) Ltd. V. Dy.CIT [2009] 23 DTR 386 (Kol.)(Trib.). • Assessee's undisclosed income could not be taken as Rs. 48 lakhs on the basis of seizure of a dumb document which showed certain unexplained entries totally '48' in the absence of any material on record to come to the conclusion that the figure '48' is to be read as Rs. 48 lacs. The Tribunal having rightly deleted the addition of Rs.48 lakhs, the order of the Tribunal does not give rise to a question of law, much less a substantial question of law. CIT v. Girish Choudhary [2008] 6 ITR 619 ('Del.). • Loose papers found at assessee's premises indicating money lending transactions without mentioning assessee's name have no evidentiary value and cannot by itself form the basis of addition. Chander Mohan Mehta V. Asstt. CIT [1999] 71 ITD 245 (Pune). 12.33 In Bansal Strips P. Ltd. v. ACIT (2006) 99 lTD 177 (Del.), the AO has found certain loose papers during the course of search which indicated that certain figures against certain names were written. They were decoded to make the total to Rs. 53,69,260. The assessee submitted before the Tribunal that (i) the impugned seized papers are dumb documents and no addition can be made on their basis in the absence of corroborative materials. No circumstantial evidence in the form of unaccounted cash, jewellery or investment outside the books was found in the search, (ii) The assessee from the very inception denied having any nexus with the seized papers, (iii) The impugned papers did not constitute books of accounts, (iv) The said papers are unsigned and therefore, not sufficient to fasten the liability on the assessee. (v) The AO did not carry out any enquiry by summoning the persons named in the seized papers although the assessee has furnished their addresses, (vi) Some of the documents did not specify the year. The Revenue did not discharge the onus lying on them to prove that the documents pertained to the block period. On this basis, the Tribunal held that no addition could be made on the basis of seized papers as material available with the AO is grossly inadequate. 12.34 In Elite Developers v. DCIT (2000) 73 lTD 379, it was held that where seized documents evidencing receipt of on money by the assessee were not speaking documents as they did not contain any narration or description about different figures noted thereon and department having failed to bring on record any material or evidence to corroborate allegation regarding receipt of on money, then presumption on the basis of documents could not be raised. 12.35 The crux of the various judicial decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant assessment year. Any gap in various components, as mentioned in Section 4 of the I.T. Act must be filled up by the AO through investigations and correlations. It is also a settled law that addition cannot be made on the basis of loose documents, unless and until there are corroborative evidences. 18 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia 12.36 In the case of CIT vs. Anil BJialla [(2010) 38 DTR (Del) 113: (2010) 322 ITR 191, the Hon'ble Tribunal held that until independent evidences exist, the addition on the basis of notings and jottings cannot be upheld. The relevant extracts of this decision are reproduced hereunder:- "The third dispute in the present appeal is with regard to the addition of Rs. 35 lakhs made by the Assessing Officer as unexplained expenditure of the appellant under section 69C of the Income-tax Act, 1961. The Commissioner of Income-tax (Appeals) in this behalf observed that no independent material or evidence had been brought on record by the Assessing Officer to establish that the notings/jottings recorded on the loose sheet of paper represented an unaccounted transaction. The Commissioner of Income-tax (Appeals) accepted the explanation of the appellant that the sum of Rs. 35 lakhs represented requirement of funds for different purposes and did not represent any receipt or outgoing for any such purpose. The Commissioner of Income-tax (Appeals) considered the material on record at length and came to the following conclusion: "4.2 I have considered in detail the material on record. From the notings on page 47 of annexure A-2, it cannot be said that any actual expenditure is represented by such notings which is not recorded in the books of account. To support the addition on account of unexplained expenditure on the basis of jottings on a loose sheet of paper, it is necessary to establish that the notings represent unaccounted transaction, with the help of independent corroborative evidence. In this case apart from the notings, on the said paper, no other independent material or evidence has been brought on record. Moreover, the explanation submitted by the appellant is supported by relevant entries in the books of account of VTPL. Accordingly, the allegation of unexplained expenditure outside the books of account has not been established in the assessment order. The addition of Rs. 35 lakhs is, therefore, deleted." The Tribunal upheld the deletion made by the Commissioner of Income- tax (Appeals) in this behalf by holding that the entries in question belonged to M/s. Vatika Township Private Limited (VTPL) inasmuch as the appellant could explain from the books of VTPL that these projects were undertaken by it. The Tribunal further held that the loose sheet does not represent any expenditure incurred by the appellant and dismissed this ground of the Revenue by holding as follows : "27. A propos ground No. 2, we find that the inscription contained various names like farms house, resort, Mussoorie project, office, etc. There is neither any description of any expenditure in respect of any particular head or item, the figures are round figures and do not bear description of lakhs or thousands. The Commissioner of Income-tax (Appeals) has considered the explanation of the appellant against each and every entry. We have already indicated 19 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia that each and every paper found may not represent undisclosed income or expenditure. The entries in question belonged to VTPL inasmuch as the appellant could explain from the books of VTPL that these projects were under taken by it. In view thereof, we uphold the findings of the Commissioner of Income-tax (Appeals) holding that the loose sheet does not represent any expenditure incurred by the appellant. This ground of the Revenue is dismissed." 12.37 The matter went to Hon'ble Delhi High Court in CIT vs. Anil Bhalla (2010) 38 DTR 0113 : (2010) 322 ITR 0191, wherein the Hon'ble High Court has upheld, the following observations of the CIT(A):- "4.2 I have considered in detail the material on record. From the notings on p. 47 of Annex. A2, it cannot be said that any actual expenditure is represented by such notings which is not recorded in the books of account. To support the addition on account of unexplained expenditure on the basis of jottings on a loose sheet of paper, it is necessary to establish that the notings represent unaccounted transaction, with the help of independent corroborative evidence. In this case apart from the notings on the said paper, no other independent material or evidence has been brought on record. Moreover, the explanation submitted by the appellant is supported by relevant entries in the books of account of VTPL. Accordingly, the allegation of unexplained expenditure outside the books of account has not been established in the assessment order. The addition of Rs. 35 lacs is, therefore, deleted." 12.38 The Hon'ble High Court of Delhi in the case of CIT Central II Vs S.M. Aggarwal [2007] 62 TAXMAN 3 (DELHI)hzd held that the dumb document could not be considered as a documents representing undisclosed income of the assessee. The relevant extract of the same are reproduced as below:- "12. It is well-settled that the only person competent to give evidence on the At truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or hand writing of that person, on such document by itself cannot prove the contents of the document. These are the findings of fact recorded by both the authorities, i.e., Commissioner of Income-tax (Appeals) and the Tribunal............... 15. Similarly, in the present case as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of Commissioner of Income- tax (Appeals) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration." 20 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia 12.39 It has been held by the Hon'ble Delhi High Court in the case of CIT vs. Gangeshwari Metal Pvt. Ltd. (2013) 96 DTR (Del) 299 that in case of lack of enquiry on the part of the AO where assessee has furnished all the details, no addition can be made. 12.40 The Hon'ble ITAT, Delhi, in the case of Amarjit Singh Bakshi (HUF) vs. ACIT in 263 ITR 75, held that there is no documentary evidence to support the passing of cash and further there is no evidence about the existence of the amount mentioned in the loose sheets of paper as embedded in other cash, jewellery or investment. 12.41 In view of the above facts and circumstances as also the several judicial precedents, the addition of Rs.17,26,55,984/- made by the AO is hereby deleted. Accordingly, the Ground No.2 raised by the appellant is allowed. 6. With regard to Ground No. 2, during the assessment proceedings AO observed that cash amount ₹.15 lakhs belonged to the company M/s. PML evident from the Scrap Deposit account produced during the proceedings, the assesse could not produce evidences for the rest of the amount i.e., (₹.18,32,415 – ₹.15,00,000) ₹.3,32,415. Assessing Officer observed that during the statement u/s. 132(4) of the Act, the assessee stated that the cash amounting to ₹.3 lacs belonged to his wife Mrs. Amla Ruia and the balance to his personal savings. On perusal of the balance sheet of Mrs. Amla Ruia, the wife of Mr. Ashok Ruia, it is observed that the cash in hand reflected is only at Rs.NIL for AY 2008-09 and Rs.NIL for AY 2007-08. Assessing Officer observed that this clearly indicate that the cash ₹.3,32,415 is not reflected in any books of accounts. Accordingly, he made addition as undisclosed cash found and seized in the hands of Mr. Ashok Ruia in terms of provisions u/s. 69A of the Act. 21 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia 7. Aggrieved assessee preferred an appeal before CIT(A) and filed detailed submissions before him. The same are reproduced below: - “15.0 During the course of appellate proceedings, the AR of the appellant had submitted written submissions on this issue which are reproduced, as under:- "In the above ground, the appellant has challenged the addition of Rs.3,32,415/- to the appellant's income as income from other sources under section 69A of the Income Tax Act, 1961. The A.O. has discussed the above addition in para 13 onwards in the assessment order. The contentions of the AO in respect of the entire addition is based upon the fact that since the appellant had not produced any evidence for substantiated cash found during the course of the search proceeding and the same were not reflected in his books of account as cash in hand. Accordingly, before discussing the various contentions in respect of the addition, we would like to present to your honour the facts of said addition. The same would be essential as it is germane to the entire addition made by the AO. In respect to the same we would like submit that in the course of search proceedings, cash amounting to Rs. 17 lacs was found at appellant's residential premises and the same was seized by the Income Tax Department. During the course of the assessment proceeding Ld A.O. asked to appellant to provide the source of the cash seized. In this regard, appellant submitted that an amount of Rs.15 lacs was received by the appellant from the employees of M/s. Phoenix Mills Ltd, for the safe custody as it was a huge amount received on account of scrap deposits, to substantiated the claim of the appellant that the cash does not belong to the appellant, he submitted the ledger account 'Scrap Deposit' of M/s.Phoenix Mills Ltd. reflecting the said amounts. From submitted ledger it was evident that the cash was received from on various dates on account of scrap deposits during the year. It was also submitted and stated that the amount of Rs.15 lacs (approx) was kept by the appellant on account of Security reasons, since it was a huge amount. Further, appellant stated that the said amount had been accounted in the books of M/s. Phoenix Mills Ltd. and further the same had already belong offered to tax in the future years as and when the scrap sales were made. The said contention of the appellant has accepted by the department and no addition on account of cash seized amounting to Rs 15 lacs had been made. In relation to balance amount of Rs.3 lacs (approx.) it was submitted that the same belong to appellant and Mrs. Amla Ruia, who is the wife of the appellant and this amount was his and her 22 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia saving over the years. However, the contention of the appellant has not been accepted by the department and made the addition on account of unaccounted cash u/s 69A. In regards to the above addition we would like to submit that since the seized cash was the saving of appellant and his wife, we need to discuss the appellant and his wife's source of income, there status in the society. Further, we would also like to discuss the additions made by the department in the earlier years of the appellant. The appellant is well reputed person in the society. He is the Director in various companies and is also partner of R R Hoisery and R R textiles. He is also engaged in the business of share trading and investment. Further, he also manages his own HUF. Accordingly, appellant is earning his income by way of salary, business income, capital gains and income from other sources. Further, he has also received dividend income from the investments. Further, we would like to submit that Mrs. Amla Ruia, the wife of the appellant is earning her income by way of salary, business income, capital Moreover, as mentioned earlier that appellant is the Karta's of HUF. The said HUF earns income by way of Income from House Propriety, Business, Capital Gain and other source. Hence, from the above it is clear that in appellant family, there are three persons who have its individual source of income and each person regularly filed its return of income. Before going further it is very essential to discuss the additions made by the department in the earlier assessment years as well as captioned assessment year. In respect to the same we would like to submit the assessed income of the appellant in the earlier year as under: COMPUTATION OF TAXABLE INCOME Rs. Rs. INCOME FROM SALARY 6,93,380/- INCOME FROM HOUSE PROPERTY 1, 05,95,668/- PROFITS FROM BUSINESS 3,04,49,144/- Add: Disallowance U/S.14A 13,32,674/- 3,17,81,818/- INCOME FROM CAPITAL GAINS 7,82,80,920/- INCOME FROM OTHER SOURCES 2,46,525/- GROSS TOTAL INCOME 12,15,98,311/- LESS DEDUCTIONS U/S.CHAPTER VI-A 10,90,000/- TOTAL INCOME ROUNDED OFF U/S.288A 12,05,08,311/- For the A.Y. 2007-08 - Computation of Income as per Assessment Order dated 29.12.2010 23 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia COMPUTATION OF TAXABLE INCOME Rs. Rs. INCOME FROM SALARY 6,93,380/- INCOME FROM HOUSE 1,30,92,615/- PROPERTY PR OFITS FROM BUSINESS (-)25,17,43,549/- Add: Disallowance U/S.14A 5,18,699/- (-)25,12,24,850/- INCOME FROM CAPITAL GAINS 5,51,10,245/- INCOME FROM OTHER SOURCES 16,500/- GROSS TOTAL INCOME 6,93,380/- TOTAL INCOME ROUNDED OFF U/S.288A 6,93,380/- For the A.Y. 2008-09 - Computation of Income as per Assessment Order dated 29.12.2010 COMPUTATION OF TAXABLE INCOME Rs. Rs. INCOME FROM SALARY 24,01,245/- INCOME FROM HOUSE PROPERTY 1,25,02,636/- PROFITS FROM BUSINESS 5,88,83,762/- Add: Disallowance U/S.14A 4,63,56,102- 10,52,39,864/- Less: Brought forward losses set off 10,52,39,864/- NIL INCOME FROM CAPITAL GAINS (STCG) 8,91,68,208/- INCOME FROM OTHER SOURCES 1,16,341/- Add: Addition on account of family settlement 17,26,55,984/- 17,27,72,325/- Add: Undisclosed Cash seized u/s.69A 3,32,415 GROSS TOTAL INCOME 27,71,76,8297- Less: Deduction under Chapter VIA 12.90.000/- TOTAL INCOME 27,58,86,829/- Total INCOME ROUNDED OFF U/S.288A 27,58,86,8307- From the above tables it can be easily depicted that appellant has offered substantial incomes amounting to Rs 11,91,75,637 which assessed at Rs. 12,05,08,311 for the A.Y. 2006-07. Further, the appellant has earned the exempt dividend income of Rs. 2,66,53,472 during the A.Y. 2006-07. Hence, we can say that the appellant has earned the total income including dividend of Rs 14,58,1 9,1 09 (11,91,75,637 + 2,66,53,472). In respect to the A.Y. 2007-08 we would like to submit that the appellant had earned the income of Rs 1,38,02,495 and suffered with business losses of Rs, 25,17,43,459. Further, the appellant has earned the exempt dividend income of Rs. 1,03,73,985 during the A.Y. 2007-08. In relation to the A.Y. 2008-09 we would like to submit that the appellant had earned the income of Rs 10,28,98,430 (16,17,82,192 - 5,88,83,762 set off previous year loss). Further, the appellant has earned the exempt dividend income of Rs. 1,10,46,113 during the year 2008-09. It is further submitted that in respect to the AY 2006-07 and A.Y. 2007-08, the addition was made on the tune of disallowance u/s 14A r.w.r 3D. In this regards, it is submitted that the disallowance u/s 14A r.w.r 8D is nothing but the disallowance on the basis of change of opinion. 24 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia At this juncture we would like to submit that from the observation of the Assessment Orders, it can be concluded that the appellant does not have any other undisclosed income/undisclosed investments. From the above narrated facts, it can be safely depicted that the appellant has not been taxed for any income from any undisclosed sources in any of the preceding years and in view of the same it can be inferred that the cash found during the year is not from any undisclosed sources but from regularly filed returns of the appellant and his wife. Hence, we request to your honour to consider the fact that cash found during the search proceeding is nothing but the saving of the appellant and her wife. From the above facts and circumstances of the case, we would like to further submit that when an assessee declares his substantial income approximately Rupees 10.28 crores during the year under consideration, it can be very well expected that a sum of 3 lakhs would be savings from the same. In this regards, it is submitted that at the time of the assessment, the appellant clarified that the cash found at the appellant's premises is the personal savings made by the appellant and his wife from the earlier years. Hence, the cash found during the search was nothing but personal cash. Further, we would like to request your honour that the status of the appellant in a society and the income of the appellant must be considered. As mentioned earlier that appellant is a director of a Phoenix Mills Limited, partner in firms and owner of a HUF. The brief discussion on the activities carried out by her wife is also mentioned which clearly shows that the financial position of the appellant and his family are very sound. However, the Ld. AO did not accept the fact that the cash found during the course of search is nothing but the savings of the appellant as well as his wife over the years. Quantum of the cash is very nominal. It is nothing but pin money of her wife. The fact relating to savings was clearly stated by the appellant in his statement of oath. It is pertinent to note that in the search action department did not find any impounding material which shown that the appellant had any undisclosed source of Income. Hence, if there is no any undisclosed source of income than how the assessing officer made the addition on account of unaccounted cash. Further, the section 69A is a deeming section. Any amount should be proved to be the income of the appellant. In this provision, it was for the Revenue to prove that any sum, not disclosed by the appellant but which is sought to be taxed as income of the appellant, income of the appellant for the previous year relevant to the assessment year. Hence, the Ld AO nothing find out in the assessment proceeding. Further, the Ld. AO in his assessment order, only narrated that the cash balance as showed in the balance sheet in the year of search stood at Rs. NIL. Hence, the entire cash is out of undisclosed source. In respect to the same, we would like to submit that from very beginning the appellant had contended that the cash found during search is out of 25 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia personal saving of the appellant and his wife from the various years. Therefore, the said cash nowhere belonged to his business operation. It is further submitted that cash reflected in the balance sheet consist only business related cash. Hence, the Ld. AO has erred in comparing the balance of cash as stood in balance sheet and the cash found at the residence of the appellant. At this juncture, we would like to draw your honour's kind attention to the normal journal accounting practice followed by the each and every appellant of India in the case of drawing. In India double accounting entry system has been followed. Thus, in the case when the appellant withdraw the amount from its business then as per the method of double accounting entries system, capital as well as cash both should be reduce from the books of account. Therefore, the view of the AO that the cash in hand is Rs NIL is incomprehensible to the appellant. Therefore, we request to your Honour to consider the above factual position and request your Honour's that the substantiation of such cash can be judged from the surrounding circumstances and in such cases no direct evidence can be produced and accordingly in the instant case, addition cannot be sustain. We hope your Honour will consider our above submissions favorably and oblige." 8. After considering the detailed submissions, Ld.CIT(A) allowed the ground raised by the assessee with the following observation: - “16.0 I have considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials on record on this issue. 16.1 I have noted that during the course of search at the Appellant's premises, a sum of Rs.18,32,415/- was found. The A.O. during the course of assessment proceedings had accepted a sum of Rs.15,00,000/- out of Rs.18,32,415/- as explained. For the remaining amount of Rs.3,32,415/- the A.O. has held it as unaccounted cash and added the same to the Appellant's income. 16.2 After going through the material placed on record as well as the status of the family; sources of income of the appellant and his wife which is in crores every year, I find that the availability of cash of Rs.3,32,415/- at the residential premises is not unreasonable and this amount is therefore personal savings of the appellant and his wife & it cannot be treated as unexplained in nature. I therefore find that there is no merit in addition of the said cash to the Appellant's income. Accordingly, the addition of Rs. 3,32,415/- made by the AO is deleted. In the result, Ground No.3 raised by the appellant is allowed. 26 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia 9. Aggrieved with the above order, revenue is in appeal before us raising following grounds in its appeal: - “1. The Ld. CIT(A) erred in deleting the addition of ₹.17,26,55,984/- made on account of cash payment and ignored the findings of the Assessing Officer that there is no reference to the settlement between the two brothers (Shri Ashok Ruia and Shri Bharat Ruia as stated in the loose papers in the deed of family settlement dated 26.09.2006. 2. The Ld. CIT(A) erred in holding that cash found at residential premises is not unreasonable and it cannot be treated as unexplained in nature and not appreciating the fact the assessee failed to explain the source of cash and deleted the addition of ₹.3,32,415/- made on account of unaccounted cast u/s 69A of the Act.” 10. At the time of hearing, Ld. DR submitted a detailed submissions and filed a written copy by email. It is reproduced below: - “During the course of search on 20/02/2008 in the Phoenix Group, managed and controlled by the Ruia Family, certain loose papers were seized from the corporate office of Phoenix Mill Ltd. on 14/03/2008 and 28/03/2008, which were numbered as page numbers 99-103 of Annexure 1 and page numbers 2,4,5 of A-1, respectively. These pages are reproduced on page number 10-17 of the assessment order. A brief narration of the contents of these papers is also available on page 18 of the assessment order. To put it briefly, the details and noting made on these papers are pertaining to the consideration received / receivable towards family settlement between the two groups of the Ruia family, one of them led by Shri Ashok R Ruia and the other led by his brother Shri Bharat R Ruia. As emanating from the facts on record, the assessee and his brother has entered into a family settlement whereby the assessee had purchased the share of Shri Bharat R Ruia in Phoenix Mill Ltd and other entities as well. Perusal of the seized documents show that the settlement was initially agreed at Rs. 321.33 crore which was subsequently enhanced by Rs. 59.91 crore to Rs. 381.39 crore. Reference may be made to page no.103 and page no. 2 on page no. 14 and 15 of the assessment order, which are actually duplicate of the same page. There were certain entries marked with the sign # (read as hash) . After discussing his reasons for treating the amount marked with the # sign as indicating cash payments, the AO made an addition of Rs. 17.26 crore as unexplained expenditure in the hands of the assessee. 27 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia To have a synchronized understanding of the entire matter, and since the assessee’s objections filed before the AO against the proposed addition are reiterated before the CIT(A), attention of the Hon’ble members is invited directly to the CIT(A)’s order, to the reasons and arguments forwarded by the assessee against the said additions and the CIT(A)’s reasonings for accepting the assessee’s explanation before directing the AO to delete the entire addition of Rs. 17 odd crore made by the AO. Reference in this regard may be made to pages 53 and 54 of the CIT appeals order where in the assessee has summarised its submission in 12 bullet points. For the sake of convenience these submissions of the SSC are being further categorized under 5 heads i) The documents relied upon by the assessing officer are dumb documents and the noting there in are nothing but estimation or projection made by the recipient. Further the documents themselves reflect different figures at different places and hence are not reliable Further, the entire addition is made on the assumption that # rhymes with cash. ii) no undisclosed source was found by the department to substantiate the generation of the alleged cash. Further no undisclosed assets were found by the department in the case of recipient to substantiate the utilization of alleged cash. iii) neither the payer nor the recipient has ever admitted that the cash of such magnitude has been passed on in family settlement iv) Since the total consideration in terms of the settlement is paid through the company, there is no rationale behind making the addition in the name of the appellant. v) Neither any section is mentioned under which the addition is made nor any co-relation is established by the AO regarding the year of taxability Reference be made to para 7.3 of the CIT(A)’s order on page 34 , wherein the assessee states that the learned AO briefly states that “the seized documents reflect the actual transactions”, but fails to support the said statement with any further evidences. No demonstrative and actual link between the seized papers and the actual transactions has been stated by the learned AO in the assessment order and accordingly it is very unclear as to how he proceeds to declare that the seized documents reflect the actual transactions " In this regard , attention is drawn to the number of shares purchased by the ARR group of Galaxy Entertainment Ltd. and Phoenix Mills Ltd., which as per the details of shares purchased provided on page 18 of the paper book are 275488 shares of Galaxy transferred in April 2007;and 601580 shares of Phoenix Mill Ltd transferred in April 2007. 28 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Same figures are reflected on page 99(10 of AO), 101(12),103(14),2(15),&4(17)( (Galaxy); page 100(11) ( PML) The documents also mention certain amounts against the narration 50% Sakinaka in by inflation in price 8,15,50,000: reference may be made to pages:4(17),2(15),102(13),101(12) and 99(10). 50% Sakinaka in # 4,40,00,000, ref: pages 2(15), 4(17),103(14), 102(13) The attention of the Bench is drawn to reply to question no. 10 of the statement of Shri Atul A Ruia, the son of the assessee and the Managing Director of the Phoenix Mill Ltd., which is available at page 45 of the paperbook. As mentioned by him, the group had received Rs.16.45 crore against the surrender of tenancy right of property described as Sakinaka. Thus, the fact that the assessee group entered into an agreement wrt the tenancy rights in the property described as Sakinaka is not disputable. Further, the total cheque consideration was Rs. 16 odd crore. Hence, it can be safely inferred that 50% of the same was to be received by the BRR group. The above facts establish beyond doubt that the documents relied upon by the AO for making the addition are not dumb documents as contended by the assessee and as accepted by the CIT(A). These documents contain very specific and elaborate notings which are supported by transactions admitted to have been undertaken by the assessee and his group. As regards the contention of the assessee that the AO had no justification to interpret # (hash) as cash, reference is made to the entries containing these # signs on page 4(17): SHARES ACCOUNT IN # 100,000,000.00 Monthly Compensation up Sept 07 # 28,655,984.00 50% Sakinaka in # 44,000,000.00 As such the narration of the entries would lead any layman to decode the # as cash in the first instance. However, one needs to consider the 4- page submission filed by the assessee before the CIT(A) as to why # can be anything but cash. The assessee has contended that the AO’s observations and presumptions that sign # represents cash are without any corroborative evidences. Therefore, the Bench’s attention is drawn once again to question no. 13,14 and 15 of the statement of Shri Atul Ruia available on page 47- 49 of the assessee’s paperbook. The facts brought out by these questions conclusively prove that the assessee and his group are engaged in cash transactions out of books, and that the quantum 29 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia of the cash transaction is nearly one third of the actual transaction amount. Shri Atul Ruia also disclosed an amount of Rs 3.85 crore as the additional income of M/s Phoenix Mills Ltd. If the same ratio of cash and cheque transactions is applied to the surrender of tenancy rights of Sakinaka, since the total consideration received by cheque is Rs. 16.45 crore, the cash component works to around Rs. 8 .20 crore approximately and the share of the BRR group being half of the same would be around 4 crore. This figure coincides with the amount of Rs. 4.40 crore mentioned as 50% Sakinaka in # 44,000,000.00. Thus, it can be concluded that # is cash. The above findings also counters the assessee’s contention that no undisclosed source was found by the department to substantiate the generation of the alleged cash. As regards the assessee’s assertion that no undisclosed assets were found by the department in the case of recipient to substantiate the utilization of alleged cash, it may be mentioned that in the case of Bharat R Ruia HUF, the recipient, additions were made on account of unexplained cash deposits and unexplained jewellery for AY 2008-09 and earlier years. Moreover, Bharat R Ruia Karta of the BRR (HUF) admitted undisclosed income on account of interest received on loans provided by the proprietary concern of BRR (HUF) , which was to the tune of Rs. 5.70 crore for AY 2008-09. It may be further noted that as per information obtained from the AO, BRR(HUF) has opted for VsV scheme for AY 2008-09. Further, the assessee’s contention that neither the payer nor the recipient has ever admitted that the cash of such magnitude has been passed on in family settlement is also rendered irrelevant in view of the transactions which have taken place in cash, outside the books. The doer of the wrong should not be expected to come forward to own up to his wrong doing. And since, one of the entries, in respect of Sakinaka, marked as # is established as representing cash transaction, there is no error on the AO’s part to consider the other two entries marked with # as representing cash transactions. The assessee in its submissions before the CIT(A), produced in para 9.6 on page 41 of the CIT(A)’s order, has tried to demonstrate that the # sign denotes cheque payments since as per him the payment wrt Chandu was made through cheque. The explanation given by the assessee is outrightly rejectable as it will lead to the conclusion that only the entries marked as # are towards cheque transactions. Then what about the mode of transaction of all other entries, which do not bear the # symbol? Should those be considered as indicative of cash transactions? Moreover, no supporting documents were placed by the assessee either before the 30 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia assessing officer or before the CIT(A) to substantiate the above transactions being made vide cheque. Reference may also be made to the question no. 16 of the statement of Shri Atul Ruia, on page 49 of the paperbook, wherein he states that the symbol # or * have different meanings depending in which context it is used.” Thus, it can be concluded that # is not a random symbol used by the accountant/advisor of the BRR group, but is used by both the ARR Group and the BRR group and serves a definite purpose of denoting the cash component of any transaction. One of the arguments forwarded by the assessee is that since there are three different figures arrived at on different pages, the documents are unreliable and cannot form the basis for making addition. Attention is invited to para 7.4 on page 35 of the CIT(A)’s order where in the assessee mentions three figures regarding the stake sale: 1. Rs. 377,46,60,021/- as per page 102(13). The paper is dated 13/04/2017. As per the details available on this page, the total amount to be received is shown as Rs. 321,33,45,696.50, out of which the amount already received by the BRR Group is Rs. 283,58,79,675.49 and the balance to be received is shown as Rs. 37,74,66,021.01.it however seems that the assessee has inadvertently read the balance receivable amount of Rs. 37.746 crore as 377.46 crore. 2. Rs. 360,69,71,895/- as per page 101(12) 3. Rs. 381,39,58,713/- as per page 103(14). Though no date is mentioned on this page, it may be noted that the figure is similar to that reflected on page 5&4 which are dated 21/06/2007. Hence it reflects the total stake consideration including the additional deal. Firstly, it needs to be appreciated that not all the documents are dated. Secondly the share price changes over a period of time. The documents seem to be prepared during April to June 2007. Hence, the difference in the figures in the absence of any date being specified is not a very relevant argument so as to negate the inferences drawn by the AO on the basis of these documents. It need not be ignored that the assessee has not placed any document on record to explain the exact terms and conditions attached to the buy out of the stake of the BRR group by the ARR Group. As per the notings of the order sheet dated 10/12/2010, reproduced on page 23 of the assessment order, the assessee denied entering into any written agreement for the sale of the share of BRR group 31 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia to the ARR Group and stated that the shares were transferred between the parties as per ORAL UNDERSTANDING. The fact that the transfer was only on the basis of mutual understanding is reiterated in para 8.4 on page 38 of the CIT(A)’s order. Further, despite reiterating it over and over that the notings are made by the advisor/ accountant of Shri Bharat Ruia as per his own references and do not reflect the actual transactions, the assessee never bothered to produce the said person for examination by the Assessing Officer. In such a scenario, the notings reflected on the seized documents, become all the more relevant for arriving at an intelligent and explainable inference regarding the true nature of the transactions which took place. In the instant case, it is already established that the documents relied upon by the AO are not dumb documents but important piece of evidences. The relevance and the veracity of the notings are further strengthened by the findings posed to Shri Atul Ruia, the assessee’s son regarding out of books transactions, the admission of undisclosed income and assets by BRR (HUF). One of the explanations given by the assessee for the figure of Rs. 17.26 crore added by the AO as unexplained expenditure is that it represents the liability of Shri Bharat R Ruia towards his sisters. As per the terms of the Family Settlement Deed dated September 2006, Rs. 8.5 crore is to be paid to each of the 4 sisters. Hence, Shri Bharat R Ruia was to contribute Rs. 17 crore and Shri Ashok R Ruia was to contribute Rs. 17 crore for the same. However, since Shri Bharat R Ruia refused to meet his liability, the entire payment of Rs. 34 crore was made by Shri Ashok R Ruia. The accountant / advisor of BRR Group may have considered the said amount of Rs. 17 crore and odd in the internal working. The said argument of the assessee was not accepted by the AO for reasons reproduced on page 37 of the CIT(A)’s order. Moreover, nothing has been placed by the assessee to support the above contention that the payment to the sisters were made by Ashok Ruia on behalf of Shri Bharat Ruia. Perusal of the Family Settlement deed, which is submitted by the assessee as part of its paper book does not indicate any such liability towards the sisters on the BRR Group. The Ld. AR may kindly be asked to point out the relevant clauses of the Family Settlement Deed in support of his contention. Attention of the Bench is drawn to clause 13&15 of the Family Settlement Deal, available on page 14 of the paper book. The assessee has also put forward an argument that since the acquisition of the shares held by Bharat Ruia and the signing of the Family Settlement Deed was contemporaneous, it can be fairly inferred that the 32 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Rs. 17 crore was considered as notional payment out of the total deal value of Rs. 381 crore. One however fails to understand that when the family members had the wisdom of having a written deed for the division of assets of their deceased parents and for settling the claim of their sisters for eternity, what prevented them from reducing the terms of the share stake deal worth 381 crore in black and white. Reference is also made to szd. Page no. 5 (16), wherein there is working of fund flow- dated21/06/2007- the amount received is shown as 381 crore. The paper also has details of the investments. Why would investments be planned after considering rupees 381crore, if the difference as per the assessee was a notional difference of Rs 17 crore, factored in by the BRR Group. As regards the contention that the papers were seized from the company’s premise and hence the addition could not had been made in the hands of the individual- it is submitted that the assessee has repeatedly maintained that the transfer of shares took place as per mutual understanding. Does he mean to say that the discussion regarding the terms of transfer was mutually discussed between the company and Shri Bharat R Ruia.In fact no document is placed on record by the assessee which shows that the shares were decided to be purchased by Ashok Apparels Pvt. Ltd. & M/s Bellona Developers Ltd. The family settlement deed also mentions about settlement between group of individuals, one headed by Shri Ashok Ruia and the other by Bharat R Ruia. So, it’s reasonable to conclude that the cash payments were made by Shri Ashok R Ruia. Moreover, the assessee has repeatedly stated that the payment of Rs. 17 crore, out of the total agreed deal amount of Rs. 381 crore was made by Shri Ashok Ruia. Hence, the cash component of the entire transactions can be considered to have been provided by the individual assessee and not the company. The assessee has also raised the contention that no year or section is mentioned by the AO. This is a complete misrepresentation of facts, as the AO in para 12.7 of the assessment order has specified that the amount of Rs. 17.26 crore is added as unexplained expenditure u/s 69 C of the Act. As regards the contention that the AO has failed to establish that the said alleged consideration was paid by the appellant in the captioned year, it is to be noted that the documents seized and relied upon by the assessee are dated 13/04/2007 and 21/06/2007. Further, as per the statement of Shri Atul Ruia, in response to query no. 10, the agreement pertaining to the surrendering of tenancy rights of the Sakinaka property was also executed on 03.07.2007. Therefore, the addition is rightly made in the A.Y.2008-09 by the AO. 33 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Summary of CIT(A)’s decision: para page CIT(A)’s Observations DR’s remarks 12 54 No addition can be made in the hands of the individual It is reiterated that in the absence of any written deed or terms of settlement presented by the assessee, there's nothing to support the assessee’s contention that the cash payment is to be met by the companies. In fact, no document is placed on record by the assessee which shows that the shares were decided to be purchased by Ashok Apparels Pvt. Ltd. & M/s Bellona Developers Ltd. the family settlement deed, also mentions about settlement between group of individuals, one headed by a ARR and the other by BRR. So it’s very logical to conclude that the cash payments were made by Shri Ashok R Ruia. 12.5 56 3 different figures reflected in the seized documents itself conclusively proves that the entries recorded are rough in nature the difference between 321 crore and 381 crore is on account of additional deal, apparent from noting on szd. paper 103(14) 12.6 the AO has picked up the highest figure of ₹381.39 crore and has added the difference between it and the actual settlement value of 364 crore the inference drawn by the CIT(A) is completely incorrect as the quantum of addition of RS. 17.26 crore is not the difference between the 2 figures of 381 crore and 364 crore, but the sum of the three entries marked with the # sign. Moreover, the figure of 364 crore is also one suggested by the assessee. Reference be made to reply of Atul Ruia to question number 22 reproduced on page 57 of the CIT(A)’s order wherein he attempts to provide an explanation regarding the quantum of rupees 17 crore under reference. As per the details of share purchase provided by the assessee, the shares were quired for a consideration of Rs. 361.72 crore and not 364 crore. The CIT(A) did not even feel the necessity of seeking assessee’s clarification regarding the break up of Rs. 364 crore allegedly made by cheque, as against ₹361.72 crore reflected in the statement available on page 18 of the assessee’s paper book. 12.8- 12.11 59 On going through the observations of the CIT appeal, it is apparent that the CIT(A), instead of drawing his own conclusion regarding the facts of the case, blindly accepted whatever was stated by Shri Atul 34 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia para page CIT(A)’s Observations DR’s remarks Ruia as the truth, which was never corroborated by any kind of documents. 12.13 61 several entries noted in hash not added by the ao The observation of the CIT(A) is incorrect as (i) monthly compensation of 74 lacs is already included in the figure of 2.89 crore reflected on seized document no. 2 &103 available on page 14 &15 of the assessment order and is considered for making the addition . (ii) Rs. 800974/- towards short received in share transfer, is also reflected as the last entry on seized page 101, available on page 12 of the assessment order.Accordingly, it has been considered in the Rs. 10 crore# received in cash on account of shares. (iii) since no # was marked against entry related to Chandu, on seized document 4(page 17 of the assessment order) or in the main table on seized document no. 103(Page 14 of the assessment order), the sum of Rs. 15 lacs was not considered for addition by the AO. (iv) as regards payment of Rs.52, 62, 346/- towards interest, here again since no # was marked against the said entry in the main table on seized document no. 103(Page 14 of the assessment order), the same was not considered for addition by the AO. 12.15- 12.19 61-64 a seized document should be read as a whole 12.20 64 hash sign has been duly explained during the course of search as being with reference to sisters No corroborative document filed by the assessee in support of his explanation. attention of the benches once again drawn to the clauses of the family settlement deed and earlier arguments 12.21 12.31 65- 68 mere suspicion is no effective substitute for legal proof It is proved that the notings on the seized documents reflect actual transactions, hence the conclusion drawn by the AO is not on mere suspicion. 12.32- 12.38 68- 74 The seized papers are Dumb documents Sufficiently demonstrated that the documents are not dumb but contain relevant noting which become all the more important in the absence of any written terms and conditions in respect of the mode and quantum of settlement between the two groups. 12.39 74 where assessee has furnished all the details No details except the details of share purchase and the family settlement deed are provided by the assessee. 35 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia para page CIT(A)’s Observations DR’s remarks no addition can be made 12.40 74 no documentary evidence to support the passing of cash. Both the recipient and the payer are indulged in generation and application of cash out of book is already established before the Hon’ble Bench. To conclude, the findings of the search and the narrations on the 8 seized documents under reference, substantiate the existence of cash transaction between ARR and BRR. On the contrary, the assessee has failed to substantiate his contention with any sort of documents. Further, the CIT(A) miserably failed to appreciate the documents and facts available before him and has directed to delete the addition merely on the basis of the statement of Shri Atul Ruia and the un-corroborated theory presented by the assessee regarding the difference of Rs.17 crore. Regarding the revenue’s second ground of appeal, reliance is placed on the AO’ order, with special reference to para 13.4 of the assessment order. Hence, it is prayed that the order of the CIT(A) be set aside and that of the AO be confirmed.” 11. On the other hand, Ld. AR submitted that he relies on the findings of Ld.CIT(A) and he brought to our notice the submissions made by the assessee before Ld.CIT(A) from the appellate order. He rebutted the submissions made by Ld.DR in the following table: Sr.No Ld. CIT DR’s arguments Ld. AR’s rebuttal 1. The entries of seized material ‘not hypothetical It is not the case of the assessee that all the entries on the seized material are imaginary and hypothetical. The manner in which the notings have been made on various pages are as per the understanding of the person preparing the same and hence the same cannot be completely relied upon without having corroborative evidence. 36 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Sr.No Ld. CIT DR’s arguments Ld. AR’s rebuttal 2. Nowhere it is mentioned that the respondent is liable to discharge the liability of Bharat Ruia towards his sisters. In case of family settlement it was mutually agreed that the liability of the sisters to be shared by both the brothers. That way it is nowhere written on the seized page that # is cash. 3. Bharat Ruia had declared undisclosed income and opted for VSV scheme These facts are not relevant. Since allegation is that the assessee has paid cash, there ought to be source of income in the hands of the assessee. 4. Q.15 (PB pg 49) shows transactions related to Phoenix Mills Ltd (PML) where cash component was involved. The said transaction pertain to Phoenix Mills Ltd and not the assessee. The transaction was accepted and offered to tax by Phoenix Mills Ltd to buy peace of mind. Equally important is that there is no such confessional statement in respect of the addition under consideration. 5. Q. 10 (PB pg 45) mentions about deal pertaining to surrender of sakinaka tenancy and on reading Q. 13 of the paperbook it can be said that 1/3rd of total consideration of 16.45 crores was received in cash by respondent In this statement it has been unequivocally stated that the transaction of 16.45 crores has been done through cheque. The said fact has not been disputed by Department at any stage and no addition has been made in this regard. Before the Tribunal, it has been stated for the first time that Rs. 8 crore would be in cash. There is absolutely no material or base to say this except imagination. 6. The assessee has not given break up of Rs. 364 crores. The amount of Rs. 364 crores was given by the assessee at the time of search as a rough figure of valuation of shares at the time when seized page no. 2 (page 15 of assessment order) was prepared. This figure was taken as base by wing as well as A.O. For the first time before Tribunal Department is questioning this figure. For issuing Show Cause Notice, A.O. has relied upon this figure (para ix on page 22 of A.O.). This was figure of valuation based on market rates at particular point of time and since A.O. has acted upon the same, it can not be disputed now. 37 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia 12. Considered the rival submissions and material placed on record. We also considered the submissions of both counsels and their counter submissions on the issues raised in the grounds of appeal. We observe that there was a family settlement between the Ashok Ruia Group and Bharat Ruia Group and it is fact on record that both parties agreed to exchange the shares of companies in which cross holding of shares held between the groups. Accordingly, the Ashok Ruia Group agreed to acquire the share of Phoenix Mills Limited, Galaxy Entertainment Limited, RR Private Limited and Senior Holding Private Limited. These shares were initially valued for a consideration of ₹.361.72 crores and these transactions were entered thru the two companies of the Ashok Ruia Group i.e., Ashok Apparels Pvt Limited and Bellona Developers Ltd. No individuals were involved in the above said acquisition of shares of Bharat Ruia Group. During Search operation, revenue officials came across certain loose sheets which contained the details of settlement between the groups. These sheets were seized and it contained the details of three settlement amounts like ₹.381.39 crores, Rs. 360.69 crores and ₹.321.33 crores. It is claimed that the actual settlement amount between the group is ₹.364 crores. The Assessing Officer considered the various working contained in the above said seized documents and came to 38 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia conclusion that the assessee has settled the difference between the highest value found in the seized papers and the actual settlement amount i.e., ₹.381 crores and ₹.364 crores in the form of cash, which according to him coincides with the documents found during the search, which are marked and identified with the mark ‘#’. We observe from the findings of Ld.CIT(A) and record submitted before us as under: a) The seized pages could have been prepared by the accountant of Shri Bharat Ruia. It seems different workings have been made at different point of time as per the understanding of the transactions. b) As per seized page no. 2 (page 15 of A.O.) the total deal value was Rs. 381 crores. The actual value for settlement was Rs 364 crores, the difference value of Rs. 17 crores may be adjusted against the claim of Ashok Ruia for payments made to sisters and balance amount of Rs. 364 crores (the then value of shares) is discharged by transfer of shares. It is evidence from the family settlement deed (PB page 1, 7), assessee had paid 34 crores (ledger accounts on PB pages 19 to 22). Out of this, assessee had claimed Rs.17 crores (50%) from Bharat Ruia, which claim was accepted and hence it can be observed that entire Rs. 381 crores were not paid. c) The case of the AO is that all figures on page no. 15 of the Assessment order are actual figures and transactions marked as # is in cash and therefore, the AO added a sum of Rs.17.26 crores, summary of which is reproduced on page no 38 of the Assessment order. d) We observe that on account of shares amounting to Rs.361 crores (share value on the dates of transactions) and there 39 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia are no separate payments in respect of different figures comprised in Rs. 381 crores. Balance amount of Rs.17 crores is an adjustment of the claim of payment made to sisters. There is possibility of above adjustment particularly when there is no investigation or findings of the revenue authorities either in search proceedings or in assessment proceedings. e) We also observe that the said fact was also stated by the parties during the course of search itself. f) The seized document page no. 102 (page 12 of A.O.) which indicates that the payment of Rs.360.69 crores is ‘amount payable excluding sisters’. 13. We also observe that the figures mentioned in the seized papers are inconsistent and hence not reliable based on our below observations: - a) The figures written on various pages keep on changing and there is no consistency and hence figures cannot be taken as gospel truth. The same was observed by Ld CIT(A) in his order at page no 55 (para 12.5). b) Similarly, the amount of sale consideration of 2,75,488 shares of galaxy has been recorded at Rs. 6,88,72,000/- (pg. 15 of assessment order) whereas actual amount is Rs. 2,90,33,040/- (PB page 18). 14. We observe from the observations made by Assessing Officer, who developed the theory “# equals to Cash” and found that to be based on presumption, we formed our view from the following points: 40 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia (i). At the time of search itself, explanation about # sign was given by the searched parties. (PB page no. 49, Q. no 16) It was stated that “The symbol # or * have different meaning depending on the context in which they are used’. The said explanation, which was pertaining to the transaction of Vamona Developers Pvt Ltd, has been accepted and no addition has been made, Further, no evidence has been brought on record by AO to disprove this explanation except a presumption that # is cash. (ii). As per page no 37 of the Assessment order, AO considered the # transactions did not have any underlying cheque transactions, it is cash transaction. As rightly observed by the Ld CIT(A) that none of the amounts aggregating Rs. 381 crores (page 15 of A.O.) has underlying cheque transactions. There is only one mode of discharge i.e. sale of shares. (iii). We observe, amount on account of Chandu is appearing on page no 15 of the assessment order in the first table without # whereas in the second table on the same page, same transaction appears with #. Thus, the theory of # is cash is not only based on presumption, it has inherent contradiction. (iv). Similarly, out of the total amount of Rs. 265,28,07,728, an amount of Rs.10 crores is appear with # on page no 15 of the Assessment order but the same amount of Rs. 265,28,07,728 recorded on page no. 12 of the Assessment order is without any #. This is another self-contradiction in the theory of #. (v). Further, all transactions with # sign has not been considered as cash transactions by the AO. We observe from the discussion made by CIT(A) in para 12.13 (pg. 60), which clearly addresses the discrepancies in the 41 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia presumptions of cash transactions by the AO. Thus, the theory is full of contradictions. (vi). Further, the A.O. has also not interpreted the document consistently. In the show cause notice it was proposed to consider the payment of Rs.17.39 crores (i.e. Rs.381.39 crores ~ Rs.364 crores) as payment made in cash. However, actual addition was made of Rs. 17.26 crores which is aggregation of 3 transactions with # on page no. 15 of assessment order. (vii). The allegation of the A.O. is not supported with any undisclosed money or source of income found during the course of search. (viii). The shares have been purchased by Ashok Apparels Pvt Ltd and Bellona Finevest Ltd and not a single share has been purchased by the assessee. In our view, no addition can be made in the case of the assessee and even Ld CIT(A) has given the said finding in his order in para 12.3 and 12.4 on page 54, 55. (ix). It appears that the fund flow statement on pg 16 of the Assessment order has been made by the accountant of Shri Bharat Ruia based on his understanding. It is quite likely that like the notional receipt of Rs. 17 crores included in the receipt side, there could be notional payment included in the payment side (refer see expenditure item of Rs. 51.04 crores). 15. We observe that Ld.CIT(A) has elaborately discussed the various issues in his order and in summary, he came to conclusion that no definite information from seized pages, no inquiry by Investigation wing or the 42 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia Assessing Officer, no confessional statement available with the department, inconsistent approach of the Assessing Officer i.e., some other transactions with # has not been treated as cash transactions, no corroboration of evidence to support the theory of # equals cash and no unaccounted cash or undisclosed income which was found. On the basis of the above factual finding by the Ld.CIT(A), we can say that the addition was based on the 'rough working and estimates which is prepared by the staff of the brother of the assessee. The presumption made by the Assessing Officer is not self-sufficient and is contradictory to the other seized papers. Thus, the addition made by the Assessing Officer on account of alleged cash payment on family settlement is factually incorrect and we do not see any reason to interfere with the findings of Ld.CIT(A). Accordingly, we dismiss the ground no.1 raised by the revenue. 16. With regard to ground no.2, We observe that the Assessing Officer made the addition of ₹.332,415/- based on the cash found during search ie., ₹.18,32,415 and Assessing Officer accepted ₹.15 lakhs, which is out of funds from Scrap Deposit Account, the difference as undisclosed income in the hands of the assessee, observing that assessee could not produce any evidence to substantiate the difference amount. Ld.CIT(A) considered the overall situation and gave relief to the assessee on the 43 ITA NOs. 6309/MUM/2019 (A.Y. 2008-09) M/s. Ashok R Ruia basis of his social status and income declared by the assessee over the years. We are incline to agree with the above findings and do not see any reason to interfere with the above. Therefore, the ground no 2 raised by revenue is accordingly dismissed. 17. In the result, appeal filed by the Revenue is dismissed. Order pronounced on 28.02.2022 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board. Sd/- Sd/- (AMARJIT SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 28/02/2022 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum