Appeal Details
Counselvise Citation
[2021] 109 COUNSELVISE.COM (IT) 5144 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 6 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-02-2021
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
05-01-2021
Assessment Year
2011-2012
Appeal Filed On
09-08-2019
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.809/IND/2019 ASSESSMENT YEAR: 2011-12 REVENUE BY SHRI HARSHIT BARI , SR.DR APPELLANT BY SHRI MAHESH AGRAWAL, ADV. DATE OF HEARING 05.01.2021 DATE OF PRONOUNCEMENT . 0 2 .202 1 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2011-12 IS DIRECTED A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3 (IN SHORT LD.CIT], BHOPAL DATED 08/05/2019 WHICH IS ARISING OUT OF THE ORDER U/S 147 R.W.S. 143(3) OF THE INCOME TAX ACT 1961(IN SHORT T HE ACT) DATED 30.11.2018 FRAMED BY ACIT CENTRAL-1, INDORE. ACIT (CENTRAL)-1, INDORE VS. DILIP KUMAR MAH E NDRA KUMAR JAIN, 6, NEAR JAGDALE SCHOOL, JANKI NAGAR, INDORE (REVENUE ) (APPELLANT) PAN NO. AAEHD1394J ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 2 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL : - 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD . CIT(A) ERRED IN DELETING THE ADDITION OF RS.L,85,72,100/- OUT OF -T OTAL ADDITION OF RS.L,86,OO,OOO/-- MADE BY ASSESSING OFFICER U/S 69 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THEIR CONFIRMATION DESPITE OPPORTUNIT IES BEING THE IDENTITY, CREDIBILITY AND GENUINENESS OF THE SO CALLED LENDERS OF THE FUNDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TILE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,03,610/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INTEREST INCOME AND ALSO ERRED IN PRESUMPTIVELY HOLDING THAT THE INTEREST WAS RECEIVED BY LENDERS DESPITE THE FACT THAT THE LENDERS THEMSELV ES HAVE NOT GIVEN CONFIRMATION OF PROVIDING SUCH LOANS AND HAVE NOT BEEN PRODUCED DUR ING THE ASSESSMENT PROCEEDINGS BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE AS CULLED OUT FRO M THE RECORDS ARE THAT THE ASSESSEE IS A HINDU UNDIVIDED FAMILY DERIV ING INCOME FROM PROFIT AND GAINS FROM BUSINESS AND PROFESSION INCOM E FROM OTHER SOURCES. THE APPELLANT FILED ITS INCOME TAX RETURN ON 11.02.2012 DECLARING TOTAL INCOME OF RS.4,66,890/-. A SEARCH U /S 132 OF THE ACT WAS CONDUCTED IN THE CASES OF MRJ GROUP ON 23.03.20 18 AND THE ASSESSEE BEING ONE OF THE MAIN CONCERNS OF THIS GRO UP WAS ALSO COVERED. CASE SELECTED U/S 147 OF THE ACT ON THE RE ASON THAT APPELLANT HAD GIVEN LOAN TO VARIOUS PARTIES IN CASH . IN RESPONSE TO THE NOTICES U/S 142(1)/143(2) OF THE ACT ASSESSEE S UBMITTED SUBMISSIONS ALONG WITH THE SUPPORTING DOCUMENTS AND THE ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 3 REASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT ON 30.11.2018 ASSESSING INCOME AT RS.1,92,70,500/- ADD ING UNEXPLAINED INVESTMENT U/S 69 R.W.S. 115BBE AT RS. 1,86,00,000/- AND UNACCOUNTED INTEREST INCOME AT RS.2,03,610/-. A GGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND PAR TLY SUCCEEDED. 4. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDING OF LD. CIT(A) DELETING THE ADDITION OF RS.1 ,85,72,100/- AND RS.2,03,610/-. 5. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D SUPPORTING THE ORDER OF LD. A.O AND CONTENDED THAT THE SEIZED MATERIAL WAS SHOWING CLEAR NEXUS OF THE CASH LOAN G IVEN BY THE ASSESSEE. 6. PER CONTRA LD. COUNSEL FOR THE ASSESSEE ALONG WI TH PLACING RELIANCE ON THE FINDINGS OF LD. CIT(A) AS WELL AS S UBMISSIONS MADE BEFORE THE FIRST APPELLATE AUTHORITY SUBMITTED THAT THE ASSESSEE IS A FINANCE BROKER AND EARNS INCOME FROM BROKERAGE FOR ARRANGING LOANS ON BEHALF OF LENDER AND BORROWER. THE BUSINE SS WAS FOUNDED BY THE FATHER OF THE KARTA IN THE YEAR 1965 AND HAS BEEN CONSISTENTLY CARRIED ON BY THE FAMILY. TO SUBSTANTI ATE THIS FACT ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 4 REFERENCE WAS MADE TO THE STATEMENTS GIVEN DURING T HE COURSE OF SEARCH WHEREIN THE ASSESSEE HAS CLEARLY ADMITTED OF CARRYING OUT BUSINESS AS FINANCE BROKER AND SOURCE OF INCOME IS MAINLY BROKERAGE/COMMISSION. IT WAS ALSO STATED THAT THE MOVEMENT OF FUNDS WAS DIRECTLY FROM LEND OR TO THE BORROWER AND THE APPELLANT ACTS PURELY AS BROKER AND BORROWING AND LENDING TOO K PLACE ON MEMBER TO MEMBER BASIS AND ALL THE TRANSACTIONS WER E CARRIED OUT THROUGH ACCOUNT PAYEE CHEQUE ONLY. IT WAS ALSO SUB MITTED THAT THE REVENUE HAS FAILED TO ESTABLISH THAT THE ASSESSEE HAD GIVEN CASH LOAN TO BORROWER. FOR INVOKING OF SECTION 69 OF TH E ACT REVENUE HAS TO PROVE THAT THE OWNERSHIP OF THE INVESTMENT IS OF THE ASSESSEE. IN ORDER TO DISCHARGE ITS ONUS ASSESSEE HAD SUBMITTED VARIOUS DOCUMENTS SHOWING THAT REGULAR TRANSACTIONS OF ACCO UNT PAYEE CHEQUE HAS BEEN CARRIED OUT BETWEEN THE LENDERS AND BORROWERS. NO CORROBORATIVE EVIDENCE WAS BROUGHT ON RECORD BY LD. A.O TO SUBSTANTIATE THE FALSE ALLEGATION MADE ON THE ASSE SSEE. NO ENQUIRY WAS MADE WITH RESPECT TO THE PARTIES MENTIONED IN T HE SEIZED DOCUMENTS APPEARING IN THE ASSESSMENT ORDER. FURTH ER DURING THE SEARCH PROCEEDINGS ASSESSEE HAS OFFERED REAL ESTATE BROKERAGE AND ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 5 FINANCE BROKERAGE TO THE TUNE OF RS. 4 CRORES IN TH REE INDIVIDUAL ACCOUNTS WHICH HAVE BEEN ACCEPTED DURING THE SEARCH ASSESSMENT. LD. CIT(A) HAS ACCEPTED ASSESSEES CLAIM BY CONFIRM ING THE ADDITION FOR BROKERAGE OF RS.2,70,100/-. AS REGARDS THE DEL ETION OF ADDITION OF INTEREST INCOME OF RS.2,03,610/- LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE FINDING OF LD. CIT(A). 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND GONE THROUGH THE FINDING OF LD . CIT(A) AS WELL AS THE SUBMISSIONS MADE BY LD. COUNSEL FOR THE ASSE SSEE. 8. AS REGARDS GROUND NO.1 THROUGH WHICH THE REVENUE HAS CHALLENGED THE FINDING OF LD. CIT(A) DELETING THE A DDITION OF RS.1,85,72,100/- OUT OF THE TOTAL ADDITION MADE BY LD. A.O U/S 69 OF THE ACT AT RS.1,86,00,000/-. WE OBSERVE THAT DUR ING THE COURSE OF SEARCH CARRIED OUT U/S 132OF THE ACT ON 23.03.2018 AT MRJ GROUP WHICH INCLUDED THE ASSESSEE ALSO BEING MAIN CONCER N OF THE GROUP AND VARIOUS DOCUMENTS WERE SEIZED. THE STATEMENTS GIVEN BY THE ASSESSEE DURING THE COURSE OF SEARCH PROCEEDINGS AL SO MATCHES WITH THE RETURN OF INCOME FILED DURING THE ASSESSMENT YE AR UNDER APPEAL IN WHICH IT IS CLAIMED TO HAVE CARRIED OUT THE BUSI NESS OF FINANCE ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 6 BROKER WHEREIN THE ASSESSEE ACT AS A BROKER BETWEEN THE LENDER AND BORROWER AND RECEIVES BROKERAGE ON THE TRANSACTIONS SO HAPPENING BETWEEN THE TWO. 9. LD. A.O. HAS REFERRED TO THE SEIZED DOCUMENT BS- 28 ON THE BASIS OF WHICH THE ASSESSEE HAS BEEN ALLEGED TO HAV E GIVEN CASH LOANS. WHEN THE ASSESSEE WAS SHOW CAUSED FOR MAKING ADDITION U/S 69 OF THE ACT, IT WAS SUBMITTED DURING THE ASSESSME NT PROCEEDINGS THAT THE ALLEGATION IS NOT CORRECT BECAUSE THE TRAN SACTIONS WITH THE DETAILS MENTIONED IN BS-28 WERE WRITTEN ON THE REQU EST OF THE BORROWER WHICH ARE MOSTLY FROM OUTSTATION AND WHO R EQUESTED TO ARRANGE FINANCE FOR THEM. CHEQUE DETAILS IN FRONT OF THE TRANSACTION THESE ARE POST DATED CHEQUE DETAILS TAKEN BY THE AS SESSEE FROM THE BORROWER IF THE FINANCE IS ARRANGED. ALL THE TRANS ACTIONS MENTIONED IN THESE DOCUMENTS ARE WITH REGARD TO THE LOAN GIVE N BY THE LENDERS AND RECEIVED BY THE BORROWER. HOWEVER THESE SUBMIS SIONS OF THE ASSESSEE WERE NOT SUFFICIENT TO CONVINCE THE LD. A. O AND HE MADE THE ADDITION FOR UNDISCLOSED INVESTMENT U/S 69 OF T HE ACT. IT IS NOT IN DISPUTE THAT NO ENQUIRY WHATSOEVER WAS MADE BY T HE LD. A.O ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 7 WITH THE CONCERNS/NAME OF PERSONS APPEARING IN THE SEIZED DOCUMENT. 10. WE FURTHER OBSERVE THAT LD. CIT(A) AFTER CONSID ERING THE FACTS OF THE CASE AS WELL AS REFERRING TO THE STATEMENTS GIVEN BY THE ASSESSEE DURING THE COURSE OF SEARCH AND PLACING RE LIANCE ON JUDICIAL PRECEDENTS DELETED THE ADDITION OF RS.1,85 ,72,100/- AND SUSTAINED THE ADDITION OF RS.27,900/- BEING THE BRO KERAGE @0.15% OF THE ALLEGED ADDITION OF RS.1,86,00,000/- OBSERVI NG AS FOLLOWS:- 4.2 GROUND NO 2 TO 5:- THROUGH THESE GROUNDS OF APPEAL, THE APPELLANT HAS CHALLENGED ADDITIONS OF RS. 1,86,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENTS U/S 69 R.W.S 115BBE AND RS. 2,03,610/- ON ACCOUNT OF UNACCOUNTED INTEREST INCOME. DURING THE COURSE OF S EARCH IN THE CASE OF MRJ GROUP ON 23.03.2018, VARIOUS DOCUMENTS PERTAINING T O THE APPELLANT WAS FOUND AND SEIZED. THE AO ON PERUSAL OF THESE DO CUMENTS TRANSPIRED OUT THAT THE ASSESSEE DURING FY 2010-11 HAS GIVEN C ASH LOANS AMOUNTING TO RS, 1.86 CRORES TO VARIOUS PERSONS AND HAS EARNE D INTEREST THEREON. THE AO REQUIRED THE ASSESSEE TO EXPLAIN THESE TRANSACTI ONS, IN REPLY THE ASSESSEE-'-SUBMITTED THAT THESE ARE OUTSTATION LOAN S AND HAS BEEN GIVEN THROUGH ACCOUNT PAYEE CHEQUES. THE AO AFTER CONSIDE RING REPLY OF THE ASSESSEE DOES NOT FIND THE SAME ACCEPTABLE AND STAT ED THAT THE ASSESSEE FAILED TO PRODUCE ANY KIND OF CONFIRMATIONS FROM TH E PERSONS WHO HAS GIVEN LOANS AND THE ASSESSEE FAILED TO PRODUCE THE PARTIES FOR EXAMINATION ON OATH. FURTHER, THE AO OBSERVED THAT THE ASSESSEE HAS EARN ED INTEREST INCOME OF ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 8 RS. 2,03,610/- FROM VARIOUS PARTIES IN CASH AND THEREFORE REQUIRED THE ASSESSEE TO EXPLAIN THESE TRANSACTIONS. THE ASSESSE E IN REPLY SUBMITTED THAT IT HAS BEEN ACTING AS A FINANCE BROKER AND THE ENTIRE INTEREST AMOUNT OF RS. 2,03,310/- HAS BEEN PAID TO LENDER BY THE BENEFICIARY THROUGH ACCOUNT PAYEE CHEQUES AND NO CASH TRANSACTION HAS E VER MATERIALIZED. THE AO AFTER CONSIDERING REPLY OF THE ASSESSEE STAT ED THAT ACCORDING TO THE LOOSE PAPERS THE ASSESSEE HAS BEEN RECEIVING PART O F THE INTEREST IN CASH AND PART THROUGH CHEQUES. 4.2.1 THE APPELLANT DURING THE COURSE OF APPELLATE PROCEE DINGS SUBMITTED THAT THE APPELLANT IS A FINANCE BROKER AND EARNING BROKERAGE INCOME ON ARRANGEMENT OF LOANS ON BEHALF OF LENDER AND BORROW ERS. DURING THE COURSE OF SEARCH, STATEMENT OF SHRI DILIP JAIN WAS RECORDE D ON OATH ON 16.05.2018, WHEREIN HE HAS CLEARLY STATED THAT HE H AS BEEN ARRANGING FUNDS FOR BORROWERS AND EARNING HIS COMMISSION WHIC H VARIES BETWEEN 10 TO 15 PAISE/HUNDRED. THE APPELLANT HAS MAINTAINED A DIARY FOR KEEPING TRACK OF THESE TRANSACTIONS AND ITS BROKERAGE. FURT HER, ALL THE TRANSACTIONS WERE DONE THROUGH ACCOUNT PAYEE CHEQUES. THE APPELL ANT HAS ALSO STRONGLY CONTENTED THAT THE ADDITION MADE BY THE AO AMOUNTING TO RS. 2,03,610/- ON ACCOUNT OF INTEREST INCOME IS MERELY ON SUSPICION, CONJECTURES AND SURMISES. 4.2.2 I HAVE CONSIDERED THE FACTS OF THE CASE, PLEA RAISE D BY THE APPELLANT AND FINDINGS OF THE AO . THE APPELLANT IN ORDER TO EXPLAIN MODUS OPERANDI OF THE BUSINESS SUBMITTED THAT THE BUSINESS OF FINA NCING BROKERAGE IS AN ANCESTRAL BUSINESS OF THE APPELLANT. THE BUSINESS W AS STARTED BY LATE SHRI ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 9 MAHENDRA KUMAR JAIN IN THE YEAR 1965 ALONG WITH SHR I DILIP JAIN AND SHRI HEMANT JAIN AND THE BUSINESS CONTINUED TILL THE YEA R 2012. THEREAFTER SHRI DILIP JAIN AND SHRI HEMANT JAIN GOT SEPARATED AND SHRI DILIP JAIN ALONG WITH HIS TWO SONS SHRI MIKESH JAIN AND SHRI R ISHAB JAIN CONTINUED THE BUSINESS IN THE NAME OF MRJ GROUP FROM THE YEAR 2012-13. THE PARTIES WISHING TO BORROW MONEY USUALLY APPROACH THE APPELL ANT AND THE APPELLANT ACCORDING TO THEIR REQUIREMENT FINDS A PR OSPECTIVE LENDER. SIMILARLY, THE PARTIES HAVING EXCESS FUNDS APPROACH ES THE APPELLANT AND THE APPELLANT WOULD FIND A SUITABLE BORROWER AND TH E TRANSACTIONS BETWEEN THE NW TAKES PLACE. THE APPELLANT ACTED LIK E A MEDIATOR/BROKER AND FUNDS WERE DIRECTLY GIVEN BY THE LENDER TO THE BORROWER. OUT OF THE FULLY MATERIALIZED TRANSACTIONS APPELLANT WOULD GET HIS COMMISSION/BROKERAGE @ 10 TO 15 PAISE PER HUNDRED. THE SIMILAR MODUS OPERANDI WAS EXPLAINED BY SHRI DILIP J AIN IN HIS S TATEMENT RECORDED ON OATH ON 16.05.2018 DURING THE COURSE OF SEARCH. THE REAFTER STATEMENT OF SHRI MIKESH J AIN WAS ALSO RECORDED ON OATH WHEREIN , HE HAS CLEARLY EXPLAINED THAT THE MODUS OPERANDI OF THE BUSINESS. THE RELEVANT EXTRACT OF STATEMENT OF SHRI MIKESH JAIN IS AS UNDER.- ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 10 ON A SIMPLE AND PLANE READING OF THE STATEMENT IT C AN BE CULLED OUT THAT THE APPELLANT HAS BEEN ACTING AS A BROKER WHO RECEI VES FUNDS THROUGH CHEQUE FROM LENDER/CREDITOR AND GIVE THE SAME TO BO RROWER/DEBTOR AND DOCUMENTS ARE PREPARED SUCH AS RECEIPT OF CHEQUE. S IMILARLY, FOR REPAYMENT OF LOAN OR FOR PAYMENT OF INTEREST, BROKE RAGE CHEQUES WERE ISSUED BY THE BORROWER. SECURITY DEPOSITS WERE ALSO ACCEPTED IN THE FORM OF PDCS (POST DATED CHEQUES). 4.23 THE APPELLANT H AS ALSO MAINTAINED DIARY/REGISTER WHICH ALSO CONTAINS DETAILS OF LOAN WHICH DID NOT MATERIALIZED. THE DETAILS OF ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 11 CHEQUES AS MENTIONED IN IM PUGNED LOOSE PAPERS (BS-28) ATE POST DATED CHEQUES TAKEN BY THE APPELLANT FROM THE BORROWER AND IF THE TRANSACTION IS MATERIALIZED THE SAME W ERE RECORDED IN HUNDI PAPERS AND WERE ALSO USED IN REPAYING LOAN. THE APPELLANT BEFORE THE AO AND BEFORE ME HAS FILED COPY OF LEDGER ACCOUNT REFLECTING NAME OF BOR ROWERS AND BROKERAGE EARNED. THE APPELLANT HAS ALSO SUBMITTED CONFIRMATI ON OF SOME OF THE BORROWERS TO WHOM FUNDS WERE ARRANGED BY THE APPELL ANT. 4.2.4 AFTER CONSIDERING THE ENTIRE FACTS INTERALIA SUBMIS SIONS OF THE APPELLANT I REACHED TO THE CONCLUSION THAT THE APPE LLANT FROM DAY ONE I.E. FROM THE DATE OF SEARCH TILL THE COMPLETION OF ASSE SSMENT PROCEEDINGS HAS CLEARLY EXPLAINED THE MANNER IN WHICH BROKERAGE IS EARNED BY THE APPELLANT. FURTHER, APPELLANT IN SUPPORT HAS FILED COPIES OF LEDGER ACCOUNT OF SHRI VIRCHAND NARSI (01.04.2010 TO 31.03.2012), M / S SACHIN COTTON FIBERS (01.04.2009 TO 31.03.2012), M / S MAA KAMLA COTTON LRIDUSTRIES (01.04.2009 TO 31.03.2013), NAVIN COTTON INDUSTRIES SENDHWA (01.04.2010 TO 31.03.2011) SHOWING ALL THE TRANSACT ION SUCH AS RECEIPT OF LOAN, REPAYMENT OF LOAN, INTEREST RECEIVED AND TDS DEDUCTED ON INTEREST. APPELLANT HAS FILED COPIES OF CONFIRMATIONS OF M / S AGRAWAL COTEX, M / S SHREE ANNAPU RN A GINNING FACTORY AND M/S SHIV SHAKTI TRADING CO. O N PERUSAL OF THE EVIDENCES FILED BY THE APPELLANT IT IS ALSO OBSERVED THAT NO AMOUNT WAS GIVEN IN CASH AND ALSO THE INTEREST PAID WAS THROUGH CHEQUES DIRECTLY TO THE LENDER BY THE BORROWER. APPELLANT H AS PROVIDED VARIOUS DETAILS SUCH AS NAME AND. ADDRESS OF BOTH LENDER AN D BORROWER, PAN NO IN FEW OF THE CASES, FURTHER FEW OF THE DETAILS SUCH A S CHEQUE NO AND BANK DETAILS ARE ALSO MENTIONED IN THE IMPUGNED DIARY, H OWEVER, THE AO EXCEPT PUTTING BASELESS BLAMES ON THE APPELLANT DID NOT BR OUGHT ANY CORROBORATIVE EVIDENCE WHICH COULD PROVE HIS ALLEGA TIONS WORTHY. THE APPELLANT HAS CLEARLY EXPLAINED THAT THE INTEREST A S WELL AS PRINCIPLE WAS ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 12 PAID DIRECTLY TO THE LENDER BY THE BORROWER AND APP ELLANT WAS JUST A MATCH MAKER ACCORDING TO THE NEEDS OF BOTH LENDER AND BOR ROWER AND EARNED HIS COMMISSION INCOME WHICH IS DULY RECORDED IN BOOKS O F ACCOUNTS AND HAS BEEN DULY TAKEN INTO CONSIDERATION BEFORE FILING RE TURN OF INCOME. THUS, THE AO EXCEPT HIS THEORY OF ASSUMPTION AND PRESUMPTION HAS NOTHING ON RECORD WHICH COULD CREATE A DIRECT NEXUS OF THE IMP UGNED INVESTMENT AND RECEIPT OF INTEREST AS ALLEGED BY THE AO. IT IS WEL L SETTLED THAT NO ADDITION CAN BE MADE AS A LEAP IN THE DARK: THE AO IS NOT EN TITLED TO MAKE A GUESS WITHOUT EVIDENCE. THE ASSESSMENT OF ANY PARTICULAR YEAR CANNOT BE BASED ON MERE SUSPICION OR BARE GUESS, BUT ON A, LEGITIMA TE MATERIAL FROM WHICH A REASONABLE INFERENCE OF ANY UNEXPLAINED CASH CRED IT CAN BE MADE. HON'BLE SUPREME COURT IN THE CASE OF DHAKESHWARI C O TTON MILLS-LTD. V / S C I T (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL A SSESSMENT CANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HELD IN THE CASE OF UMACHARAN SAHA & BROS C O. V / S CL'T 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVID ENCE. SIMILAR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL V / S CIT (1954) 26 ITR 736 (SE). ALSO, ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THAT THE PARTIES UNDER CONSIDER ATION ARE GENUINE, NOW THE BALL LIES IN THE COURT OF AO TO PROVE THAT THE CLAIM OF APPELLANT IS FALSE. 4.2.5 NEVERTHELESS, NO INDEPENDENT ENQUIRY WAS CARR IED OUT BY THE AO EITHER FROM THE CONCERNED LENDER/BORROWER OR FROM T HE BANKS WHOSE NAMES ARE MENTIONED IN THE SEIZED DIARY. IN FEW OF THE CASES THE APPELLANT HAS EVEN PROVIDED PAN NO OF THE LENDER / BORROWER. THE AO HAS ALSO STATED THAT IN THE CASE OF PRADEEP COTTON CORPORATION' SUM OF RS. 9 LACS HAS BEEN BORROWED FOR TWO MONTHS FOR WHICH 1% PER MONTH IS TO BE RECEIVED BY CHEQUE AND 0. 3 % IN CASH SIMILARLY IN THE CASE OF SHRI ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 13 ASHOK KUMAR MOHANLAL LOAN OF R S. 3 LACS HAS BEEN GIVEN FOR 5 MONTHS @ 1.5 % PER MONTH OUT OF WHICH 0.50 % IS TO BE RECEIVED IN CASH. I FIND IT UTMOST IMPORTANT TO QUOTE THE DECISION OF HON'BLE I TAT MUMBAI IN THE CASE OF BIREN V SAVLA VS ACIT CENTRAL-LL (2006) 155 TAXM AN 270 (MUM) WHEREIN IT HAS BEEN HELD THAT:- SECTION 69 OF THE INCOME-TAX ACT, 1961 - UNEXPLAINED INVESTMENTS _ ASSESSMENT YEARS 1993-94 TO 1995-96 - SEARCH AND SEIZURE OPERATION UNDER SECTION 132 LED TO SEIZURE OF CERTAIN INCRIMINATING DOCUMENTS INCLUDING A-2IA-4 DIARIES AND A-3 AND A-5 DIARIES _ WHILE REVENUE ACCEPTED TRANSACTIONS RECORDED IN A- 2/A-4 AS TRUE, IT REJECTED SAME TRANSACTIONS RECORDED IN A-3/A-5 BECA USE SAME REFLECTED CASH TRANSACTIONS AND WERE OUTSIDE BOOKS OF ACCOUNT _ REVENUE, THUS, MADE ADDITIONS UNDER SECTION 69 ON G ROUND THAT OUTGOINGS RECORDED IN A-3/A-5 DIARIES WERE ASSESSEE 'S MONEY WHICH WAS UNEXPLAINED - ASSESSEE'S CASE WAS THAT ASSESSEE WAS ONL Y A F INANCE BROKER AND MONE Y RE F LECTED IN DIARIES A-3 AND A-5 BELONGED TO OTHERS I. E. BORROWERS/LENDERS F INANCE BROKERA G E ON SUCH LENDING AND BORROWIN G IN NO CASE F UNDS WERE BROU G HT TO BOOKS OF ASSESSEE _ WHETHER SINCE ONUS CAST ON REVENUE UNDER SECTION 69 TO ESTABLISH THAT OUTGOINGS BELONGED TO ASSESSEE HAD NOT BEEN DI SCHARGED, DEEMING PROVISION OF SECTION 69 COULD NOT BE INVOKE D IN INSTANT CASE - HELD, YES FURTHER HON'BLE ITAT CHANDIGARH BENCH 'A' IN THE CA SE OF ACIT VS V.KISHORE LAL BALWANT RAI [2007] 17 SOT 380 (CHD.) HAS HELD AS UNDER:- SECTION! 58BD, READ WITH SECTION 158BC, OF THE INCO ME-TAX ACT, 1961 _ BLOCK ASSESSMENT IN SEARCH CASES - UNDISCLOSED INCO ME OF ANY OTHER PERSON _ PURSUANT TO A SEARCH CONDUCTED A T PREMISES OF A DALAL (FINANCE BROKER), A RED BOUND BAHI WAS SEIZED - STATEMENT O F DALAL WAS RECORDED TO ASCERTAIN NATURE OF E NTRIES CONTAINED IN BAHI _ DALAL EX P LAINED THAT BALD CONTAINED A RECO RDING OF MONIES LENT AND BORROWED B Y VARIOUS PEOPLE UNDERTAKEN THROU G H HIM AND THAT HE WAS EARNIN G DALALI INCOME / !COMMISSION INCOME F ROM BUSINESS OF BROKING - N BASIS OF SAID STATEMEN T , ASSESSING OFFICER DEDUCED THAT ASSESSEE HAD BORROWED MONEY FROM SAID BROKER AND HA D LENT MONIES TO VARIOUS BORROWERS AND EARNED INTEREST THE REON _ FURTHER, ASSESSING OFFICER HE ID THAT ENTRIES RECORDED IN BA HI WERE NOT FOUND ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 14 RECORDED IN REGULAR BOOKS OF ACCOUNT OF ASSESSEE AN D, THEREFORE, AMOUNT OF LOAN ALONG WITH INTEREST EARNED THEREON R EPRESENTED UNDISCLOSED INCOME OF ASSESSEE CHARGEABLE TO TAX IN TERMS OF SECTION 158BD, READ WITH SECTION 158BC, AND, ACCORDINGLY, M ADE CERTAIN ADDITION - WHETHER SINCE SOLE BASIS FOR MAKING ADDI TION TO INCOME OF ASSESSEE WAS STATEMENT OF DALAL WHICH WAS NOT SUPPO RTED BY ANY INDEPENDENT AND CORROBORATIVE EVIDENCE AND, MOREOVE R, THERE WAS NO SUCH EVIDENCE AVAILABLE WITH REVENUE WHICH COULD ESTABLISH THAT ENTRIES IN BAHI REPRESENTED HONEST AND REAL TO BE D ELETED - HELD, YES . 4.2.6 APPELLANT DURING THE COURSE OF APPELLATE PROC EEDINGS AS WELL AS DURING APPELLATE PROCEEDINGS HAS FILED CONFIRMATION S AND LEDGER ACCOUNT OF FEW OF THE INDIVIDUALS/FIRMS/COMPANIES. SINCE THE A PPELLANT FAILED TO FURNISH CONFIRMATIONS AND OTHER EVIDENCES OF ALL TH E LENDERS / BORROWERS, IN SUPPORT OF HIS CON T ENTION, INVESTMENT OF MONEY OF THE APPELLANT CANNOT BE RULED OUT AND THEREFORE, PROFIT EARNED BY APPELLANT FROM ITS INVESTMENT SHOULD BE CHARGED TO TAX. THUS, IN VIEW OF THE ABOV E DISCUSSION AND CASE LAWS CITED, THE ADDITION MADE BY THE AO AMOUNTING T O RS. 27,900/- (0.15% OF RS. 1,86,00,000/-) IS CONFIRMED AND APPELLANT WILL GET A RELIEF OF RS. 1,85,72,100/-. 11. WE FIND THAT THE DECISION OF THE CO-ORDINATE BE NCH IN THE CASE OF BIREN V SAVLA VS ACIT CENTRAL-II (2006) 155 TAXMAN 270 (MUM) AND THE DECISION OF COORDINATE BENCH OF CHANDIGARH IN THE CASE OF ACIT VS V.KISHORE LAL BALWANT RAI [2007] 17 SOT 380 (CHD.) ARE SQUARELY APPLICABLE ON THE FACTS OF THE ASSESSEE WH ICH HAS BEEN REPRODUCED IN THE FINDING OF LD. CIT(A) STATED ABOV E. ON PERUSAL OF THE ABOVE FINDING AND THE JUDICIAL PRECEDENTS REFER RED HEREIN ABOVE AND ALSO CONSIDERING THE FACT THAT THE ASSESSEES B USINESS IS ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 15 CONFINED TO THAT OF FINANCE BROKER AND THIS BUSINES S IS CONSISTENTLY BEEN FOLLOWED SINCE MANY YEARS AND FURTHER SINCE TH E LD. A.O HAS NOT BROUGHT ANY CORROBORATIVE EVIDENCE ON RECORD BY CALLING FOR NECESSARY INFORMATION FROM THE VARIOUS PARTIES WHOS E NAMES ARE MENTIONED IN THE SEIZED DOCUMENT, THE CASE OF THE R EVENUE BECOMES WEAK. FURTHER IN THE PAPER BOOK ASSESSEE HAS FILED LEDGER ACCOUNT OF VARIOUS PARTIES AND THE NAMES OF MOST OF THEM AR E ALSO APPEARING IN THE SEIZED DOCUMENT BS-28 AND THESE CONFIRMATION ACCOUNTS ARE PLACED AT PAGE 79 TO 114 AND CLEARLY REVEALS THAT T HERE WERE REGULAR TRANSACTIONS WITH THESE PARTIES THROUGH ACCOUNT PAY EE CHEQUES WITH REGARD TO THE LOAN GIVEN BY THE LENDERS AND RE CEIVED BY THE BORROWERS AND THE REPAYMENT THERE AFTER. NO EVIDEN CE HAVE BEEN BROUGHT ON RECORD THAT ANY OF THESE PARTIES HAVE AC CEPTED TO HAVE TAKEN LOAN IN CASH FROM THE ASSESSEE. 12. IN THESE GIVEN FACTS AND CIRCUMSTANCES OF THE C ASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS REFERRED HEREIN ABOVE, WE FIND NO REASON TO INTERFERE IN THE FINDIN G OF LD. CIT(A) DELETING THE ADDITION OF RS.1,85,72,100/-. IN THE RESULT GROUND NO.1 OF REVENUE IS DISMISSED. 13. AS REGARDS GROUND NO.2 OF THE REVENUE DELETING THE ADDITION OF ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 16 RS.2,03,610/- MADE BY THE LD. A.O ON ACCOUNT OF UNA CCOUNTED INTEREST INCOME, WE OBSERVE THAT THIS ADDITION WAS MADE BY LD. A.O ON THE BASIS OF SEIZED DOCUMENT BS-28 OBSERVING THA T THE ALLEGED INTEREST INCOME IS RECEIVED BY THE ASSESSEE ON MONT HLY BASIS ON CASH LOAN GIVEN. THIS ALLEGATIONS OF THE LD. A.O W AS REBUTTED BY THE ASSESSEE SUBMITTING THAT THERE WAS NO CASH LOAN GIV EN AND ALL THE TRANSACTIONS WERE THROUGH ACCOUNT PAYEE CHEQUES WHI CH HAVE BEEN DULY ACCOUNTED IN THE BOOKS. LD. CIT(A) HAS RIGHTL Y DELETED THE IMPUGNED ADDITION OBSERVING AS FOLLOWS:- 4.2.7 FURTHER, REGARDING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INTEREST INCOME I FIN D IT IMPORTANT TO MENTION THAT THE AO HAS PICKED UP TRANSACTI ONS WHICH HAVE NARRATION AS INTEREST RECEIVED IN CA SH, HOWEVER, DID =.0. E EN DISCUSS ABOUT THE INTEREST PORTION RECEIVED TH ROUGH CHEQUES. THE INTEREST PORTION RECEIVED THROUGH CHEQ UES IS ALSO NOT RECORDED IN BOOKS OF APPELLANT, IF THE AO HAS TREATED INTERE ST RECEIVED IN CASH AS UNDISCLOSED INTEREST INCOME THEY WHY THE INTEREST R ECEIVED THROUGH CHEQUES IS NOT CHARGED TO TAX. THE ONE AND ONLY REA SON FOR NOT MAKING ADDITION ON ACCOUNT OF INTEREST RECEIVED THROUGH CH EQUE WAS THAT THE INTEREST HAS BEEN ACTUALLY RECEIVED BY THE LENDER A ND NOT BY THE APPELLANT. THUS, THE AO WAS NOT JUSTIFIED IN MAKING ADDITIONS ON ASSUMPTION AND PRESUMPTION BASIS AND THEREFORE, THE ADDITIONS MADE BY THE AO AMOUNTING TO RS. 2 , 03,610/- IS DELETED. THEREFORE, APPEAL ON THESE GROUNDS IS PARTLY ALLOWED . ITA NO.809/IND/2019 DILIP KUMAR MAHENDRA KUMAR 17 14. LD. DEPARTMENTAL REPRESENTATIVE FAILED TO REBUT THE FINDING OF LD. CIT(A) BY PLACING ANY MATERIAL IN ITS FAVOUR AN D THUS WE FIND NO REASON TO INTERFERE IN THE FINDING OF LD. CIT(A) DE LETING THE ADDITION OF RS.2,03,610/- AND THE SAME STANDS CONFIRMED. GRO UND NO.2 OF REVENUES APPEAL IS DISMISSED. 15. IN THE RESULT REVENUES APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.02. 2021. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 09 FEBRUARY, 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE
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