MILAN B. DALAL, MUMBAI V. DCIT OSD-II CR -7, MUMBAI

ITA 6762/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7671 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2014
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers
• Section: 54F; 234B; 131; 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 6762 /MUM/ 2014 (ASSESSMENT YEAR 20 07 - 0 8 ) SHRI MILAN B. DALAL 42, CHITRAKOOT 4 TH FLOOR ALTAMOUNT ROAD MUMBAI - 400 026. VS. DCIT OSD - II CIRCLE - 7 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAUPD0935H ASSESSEE BY SHRI VIPUL JOSHI DEPARTMENT BY SHRI N.P.SINGH DATE OF HEARING 2 3 .3 . 201 7 DATE OF PRONOUNCEMENT 23 .3 . 201 7 O R D E R PER B.R. BASK ARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 8.7.2014 PASSED BY THE LEARNED CIT(A) - 40, MUMBAI AND IT RELATES TO A.Y. 2007 - 08. 2. AT THE TIME OF HEARING, LEARNED AR DID NOT PRESS GROUND NO. 1 RELATING TO EXEMPTION CLA IMED U/S. 54F OF THE ACT. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS NOT PRESSED. 3. GROUND NO.2 & 3 RELATE TO ADDITION OF ` 65,00,000/ - MADE BY THE ASSESSING OFFICER AS UNACCOUNTED CASH RECEIPTS FROM SHRI VINOD FARIA. REMAINING GROUNDS ARE GENERAL/CONS EQUENTIAL. 4. FACTS RELATING TO THE ADDITION OF ` 65,00,000/ - ARE STATED IN BRIEF. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT IN THE HANDS OF THE ASSESSEE AS WELL AS ANOTHER PERSON NAMED SHRI VINOD FARIA. THE ASSESSEE IS O NE OF THE D IRECTOR S OF M/S. GRISHMA CONSTRUCTION & TRADING CO. SHRI MILAN B. DALAL 2 PVT. LTD. , WHICH IS ENGAGED IN CONSTRUCTION BUSINESS. THE ASSESSEE IS ALSO PROPRIETOR OF M/S. S. RAMDAS, WHICH IS ENGAGED IN THE BUSINESS OF FINANCE AND FINANCIAL CONSULTANCY. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED IN THE HANDS OF SHRI VINOD FARIA , CERTAIN INCRIMINATING DOCUMENTS WERE SEIZED. THE NOTING MADE IN LO O S E PAPERS NO. 43 & 44 OF ANNEXURE A - 1 AND PAGE NO. 16 OF ANNEXURE A - 4 INDICATE D THAT THE ASSESSEE HA S BEEN PAID CASH BY SHRI VINOD FARIA. FIGURES NOTED IN THOSE LOOSE PAPERS WERE IN TWO DIGITS AND SINGLE DIGIT. THE ASSESSING OFFICER INTERPRETED THE SAME TO BE IN LAKHS. SINCE THE NAME MILANBHAI WAS WRITTEN AGAINST THE FIGURES NOTED IN THOSE LOOSE SHEETS, THE ASSES SING OFFICER INTERPRETED THAT THE ASSESSEE HAS RECEIVED THE ABOVE SAID AMOUNTS , WHICH AGGREGAT ED TO ` 65 LAKHS FROM SHRI VINOD FARIA IN CASH. THE ASSESSING OFFICER TOOK THE VIEW THAT THE SAME REPRESENTS UNACCOUNTED INCOME OF THE ASSESSEE AND ACCORDINGLY AS SESSED THE ABOVE SAID AMOUNT OF ` 65 LAKHS IN THE HANDS OF THE ASSESSEE. THE LEARNED CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. LEARNED AR SUBMITTED THAT THE ASSESSEE AS WELL AS SHRI VINOD FARIA HA S NOT ACCEP TED THE INTERPRETATION GIVEN BY THE ASSESSING OFFICER TO THE NOTING MADE IN THE LOOSE PAPERS , I.E. BOTH OF THEM HAVE DENIED THE PASSAGE OF MONEY BETWEEN HANDS AS INTERPRETED BY THE AO . HE SUBMITTED THAT SHRI VINOD FARIA HAS ADMITTED IN THE STATEMENT TAKEN FROM HIM U/S. 131 OF THE ACT ON 27.6.2008 THAT THESE LOOSE SHEETS WERE IN HIS HANDWRITING AND THAT THEY REPRESENT HIS PERSONAL TRANSACTIONS. HE FURTHER SUBMITTED THAT THE TERM MILANBHAI IS TOO GENERAL IN NATURE AND THE TAX AUTHORITIES ARE NOT JUSTIFIED IN HOLDING THAT THE SAME INDICATE ASSESSEES NAME ONLY. HE SUBMITTED THAT THE ASSESSEE HAD SOME BUSINESS DEALINGS WITH SHRI VINOD FARIA, BUT THOSE DEALINGS DID NOT FRUCTIFY. HENCE THERE IS NO SCOPE TO INTERPRET THAT THE ASSESSEE HAS RECEIVED ANY FEES FRO M SHRI VINOD FARIA OUTSIDE THE BOOKS. HE SUBMITTED THAT TH E SE DOCUMENTS ARE TO BE CONSIDERED AS DUMB DOCUMENTS AND HENCE NO ADDITION CAN BE MADE BY THE ASSESSING OFFICER ON THE BASIS OF THESE LOOSE SHEETS. THE LD A.R ALSO ADVANCED AN ALTERNATIVE CONTENT ION. HE FURTHER SHRI MILAN B. DALAL 3 SUBMITTED THAT THE PAGE NO.16 OF ANNEXURE 4 CONTAINS THE DATES AGAINST THE ENTRIES MADE IN THE EARLIER PART OF THE DOCUMENT, I.E., THE DATES NOTED THEREIN ARE 31.08.2007, 13.08.2007 AND 18.09.2007. HE SUBMITTED THAT THE AO HAS CULLED OUT RS.55.00 LAKHS OUT OF THIS LOOSE SHEET. THE LD A.R SUBMITTED THAT, CONSIDERING THE DATES MENTIONED ABOVE, THE TRANSACTIONS RELATING TO RS.55.00 LAKHS, IF ANY, WOULD HAVE OCCURRED ONLY AFTER AUGUST 2007/SEP. 2007, IN WHICH CASE, THE ADDITION OF RS.55.00 LA KHS COULD NOT HAVE BEEN MADE IN ASSESSMENT YEAR 2007 - 08, I.E., THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING. 6. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE AND SHRI VINOD FARIA WERE HAVING GOOD BUSINESS RELATIONSHIPS. IN THIS REGARD, LEARNED DEPARTMENTAL REPRESENTATIVE TOOK US TO VARIOUS STATEMENTS RECORDED FROM SHRI VINOD FARIA AS WELL AS THE ASSESSEE TO PROVE THAT BOTH WERE HAVING GOOD BUSINESS RELATIONSHIP S. ACCORDINGLY, HE SUBMITTED THAT THE ASSESSEE COULD NOT PLEAD IGNORANCE ABOUT THE TRANSACTIONS NOTED DOWN IN THE LOOSE PAPERS , AS THEY RELATED TO THE BUSINESS DEALINGS CARRIE D BETWEEN THE PARTIES . HE SUBMITTED THAT SHRI VINOD FARIA HAS ADMITTED THAT THE ENTRIES MADE IN THESE SHEETS OF HIS HANDWRITING AND HENCE AUTHOR OF THESE DOCUMENTS HAS BEEN IDENTIFIED. HE FURTHER SUBMITTED THAT THE NAME MILANBHAI HAS BEEN WRITTEN AGAINST THE IMPUGNED ENTRIES AND MILANBHAI SHALL REFER TO THE ASSESSEE ONLY. ACCORD INGLY HE SUBMITTED THAT THESE LOOSE PAPERS CANNOT BE CONSIDERED AS DUMB DOCUMENTS AND HENCE THE CONTENTS THEREOF SHOULD BE TAKEN AS TRUE. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. SINCE THE DISPUTE REVOLVES AROUND THE LOOSE SHEETS FO UND DURING THE COURSE OF SEARCH, WE PREFER TO EXTRACT THEM BELOW: - SHRI MILAN B. DALAL 4 SHRI MILAN B. DALAL 5 SHRI MILAN B. DALAL 6 SHRI MILAN B. DALAL 7 PAGE NO.43 IS NOT RELEVANT HERE, SINCE THE ADDITION HAS BEEN MADE ON THE BASIS OF ENTRIES FOUND IN PAGE NO.44 AND PAGE NO.16. IN PAGE NO.44, THE DATE & MONTH HAVE BEEN NOTED, BUT THE YEAR HAS NOT BEEN NOTED. THE ONLY ENTRY RELEVANT HERE IS 10.00 MILAN BHAI. IN PAGE NO.16, THREE ENTRIES ARE AVAILABLE AGAINS T THE NAME MILAN BHAI, VIZ., 2 0, 30 AND 5. THOUGH NO DATE HAS BEEN MENTIONED AGAINST THESE THREE ENTRIES, THE EARLIER PO RTION OF THE PAGE NO.16 MENTIONS THE DATES AS 31.8.07, 13.8.07 AND 18 - 9 - 07. 8. WE HAVE NOTICED EARLIER THAT THE ASSESSING OFFICER HAS TAKEN THE FIGURES NOTED IN THESE LOOSE SHEETS AS REPRESENTING LAKHS. IN THIS REGARD, IT IS RELEVANT TO EXTRACT THE FOLLOWING QUESTION AND ANSWERS FROM THE STATEMENT RECORDED FROM SHRI VINOD K FARIA ON 27.06.2008. THE RELEVANT PORTION OF THE STATEMENT WAS FURNISHED BY LD D.R DURING THE COURSE OF HEARING. Q 8 I AM SHOWING YOU PAGES 1 TO 48** OF ANNEXURE A - 1 SEIZED F ROM THE PREMISES OF M/S MAYUR PLY N VENEERS, GROUND FLOOR, FERNHILL HOUSE, BAZARGATE STREET, FORT, MUMBAI. YOU ARE REQUESTED TO GO THROUGH THESE PAGES AND OFFER YOUR PAGE - WISE EXPLANATION. (IT INCLUDES PAGES 43 & 44) ANS.: PAGES 21 TO 44 IS TH E CASH ACCOUNT ABOUT MY PERSONAL TRANSACTIONS. THE SAME ARE WRITTEN IN MY HANDWRITING. THOUGH THE CONTENTS ARE SELF EXPLANATORY, PAGE - WISE EXPLANATION WILL BE FURNISHED SEPARATELY. THESE PAGES ARE COPIES OF THE NOTE BOOK WHICH HAS BEEN SEIZED AS PER AN NEXURE A - 4, PAGES 1 TO 23 SEPARATELY. . Q. 11 I AM SHOWING YOU PAGES NO.1 TO 23 OF ANNEXURE A - 4 SEIZED FROM THE PREMISES OF M/S MAYUR PLY N VENEERS, GROUND FLOOR, FERNHILL HOUSE, BAZARGATE STREET, FORT, MUMBAI. YOU ARE REQUESTED TO GO THROUGH THESE P AGES AND OFFER YOUR PAGE - WISE EXPLANATION. ANS. IN THIS NOTE BOOK, PAGES NO.1 TO 8, 11, 14, 15, 17, 18, 19, 20 - 21, 22 & 23 ARE IN MY HANDWRITING. THIS IS MY VIRTUAL CASH ACCOUNT OF RECEIPTS AND PAYMENTS FOR THE PERIOD FROM MARCH 2006 TO MAY 2008. THESE FIGURES ARE WRITTEN IN THOUSANDS, I.E., RS.10,000/ - IS WRITTEN AS 10.00. THE RECEIPTS AND PAYMENTS OF THE CASH IS ON VARIOUS COUNTS. THESE TRANSACTIONS ARE NOT RECORDED IN MY BOOKS OF ACCOUNTS. AS REGARDS PAGES NO.9, 10, 12, 13 & 16, THE SAME ARE IN THE HANDWRITING OF MR. HARESH PATEL, WHO IS MY EMPLOYEE. HE HAS WRITTEN THE TRANSACTIONS OF THESE PAPERS IN RESPECT OF CASH TRANSACTIONS DONE IN MY ABSENCE BUT THE TRANSACTIONS BELONGED TO ME ONLY. SHRI MILAN B. DALAL 8 A CAREFUL PERUSAL OF THE ABOVE SAID STATEMENT GIVEN BY S HRI VINOD FARIA WOULD REVEAL THAT SHRI VINOD FARIA HAS STATED THAT THE FIGURES HAVE BEEN NOTED DOWN BY HIM IN THOUSANDS, I.E., RS.10,000/ - IS WRITTEN AS 10.00. IT IS PERTINENT TO NOTE THAT T HE PAGE NO.44 HAS BEEN WRITTEN BY SHRI VINOD FARIA . HOWEVER PA GE NO.16 OF ANNEXURE 4 WAS WRITTEN BY THE EMPLOYEE OF SHRI VINOD FARIA. A CAREFUL PERUSAL OF THE SAME WOULD SHOW THAT A SUM OF RS.50.0 WAS WITHDRAWN ON 18.9.07 WITH THE NARRATION DRAWINGS. THE DRAWINGS COULD NOT BE NORMALLY IN LAKHS, BUT ONLY IN THOUSA NDS. HENCE THE STATEMENT GIVEN BY SHRI VINOD FARIA, IN OUR VIEW, WOULD STAND CORROBORATED BY THIS ENTRY. HENCE WE ARE OF THE VIEW THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN INTERPRETING THE FIGURES AS IN LAKHS. WHEN THIS POINT WAS PUT TO LD D.R, HE ALSO ADMITTED THAT THE POSSIBILITY OF TAKING THE FIGURES IN THOUSANDS IS MORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE THE AGGREGATE AMOUNT FOR CONSIDERATION SHOULD BE TAKEN AS RS.65,000/ - AND NOT RS.65,00,000/ - AS PRESUMED BY TAX AUTHORITIES. 9. NEXT POINT THAT REQUIRES CONSIDERATION IS ABOUT THE NATURE OF PAYMENT OF RS.65,000/ - . THE CONTENTION OF THE ASSESSEE IS THAT HE HAS NOT RECEIVED ANY PAYMENT AS ALLEGED BY THE TAX AUTHORITIES. IN THE SWORN STATEMENT ALSO, SHRI VINOD FARIA HAS STATED THAT THE NOTING MADE THEREIN ARE HIS PERSONAL TRANSACTIONS. WE HAVE NOTICED THAT THE ASSESSEE AND SHRI VINOD FARIA HAD HELD BUSINESS RELATIONSHIPS ONLY. THERE IS NO EVIDENCE TO SHOW THAT THERE WERE CERTAIN BUSINESS TRANSACTIONS WHICH RESULTED IN PAYME NT OF ANY INCOME BY SHRI VINOD FARIA TO THE ASSESSEE. HENCE, EVEN IF IT IS CONSIDERED FOR A MOMENT THAT THE PAYMENTS HAVE BEEN MADE TO THE ASSESSEE UNDER THE NAME MILAN BHAI, YET THE QUESTION WOULD REMAIN AS TO WHETHER THOSE PAYMENTS CAN BE CONSIDERED AS ASSESSEES INCOME?. IN THE ABSENCE OF ANY OTHER MATERIAL TO S HOW THAT THESE PAYMENTS HAVE BEEN MADE TOWARDS BUSINESS DEALINGS, WE ARE OF THE VIEW THAT THE ALLEGED PAYMENTS CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE. IN ANY CASE, THE NOTING MADE IN PAGE NO.16 PERTAIN S TO THE PERIOD RELEVANT TO AY 2008 - 09 AS PER THE DATES NOTED AGAINST OTHER TRANSACTIONS. HENCE, ON A CONSPECTUS OF THE MATTER, WE ARE OF THE VIEW THAT THE TRANSACTIONS SHRI MILAN B. DALAL 9 NOTED IN THESE LOOSE SHEETS CANNOT BE CONSI DERED AS REPRESENT ING IN COME OF THE ASSESSEE. IN VIEW OF OUR FINDING GIVEN ABOVE, WE DO NOT FIND IT NECESSARY TO GO INTO THE QUESTION OF RELIABILITY OF THE LOOSE SHEETS. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND D IRECT THE AO TO DELETE THE ADDITION OF RS.65.00 LAKHS, REFERRED ABOVE. 11. THE ONLY REMAINING GROUND RELATES TO CHARGING OF INTEREST U/S 234B OF THE ACT. THE CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 3 .3. 201 7. SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 3 / 3 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI