Suhas Mantri, Pune V. Commissioner of Income-tax - IV,

ITA 916/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1039 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B; S K RASTOGI; RAJESH DAMOR HEERAJ JAIN
• Assessee Lawyers: V L JAIN
• Keywords: Reopening of assessment; Unexplained investment; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Principle of natural justice; Opportunity of cross examination; Source of fund; Question of law; Tangible material; Difference of opinion; Corroborative evidences; Validity of assessment; Assessment record; Block assessment; Retraction; Documents seized; Change of opinion; Reassessment proceedings
• Section: 153A; 147; 148; 132; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1016/PN/2014 '% % / ASSESSMENT YEAR : 2004-05 SHRI SUHAS MANTRI, MANTRI PROMOTERS, 929, MANTRI HOUSE, F.C. ROAD, SHIVAJINAGAR, PUNE 411 005 PAN NO.AAXPM1907F . / APPELLANT V/S ACIT, CIRCLE-7, PUNE . / RESPONDENT . / ITA NO.916/PN/2014 '% % / ASSESSMENT YEAR : 2005-06 SHRI SUHAS MANTRI, MANTRI PROMOTERS, 929, MANTRI HOUSE, F.C. ROAD, SHIVAJINAGAR, PUNE 411 005 PAN NO.AAXPM1907F . / APPELLANT V/S CIT-IV, PUNE . / RESPONDENT / APPELLANT BY : SHRI V.L. JAIN / DEPARTMENT BY : SHRI S.K. RASTOGI & SHRI RAJESH DAMOR HEERAJ JAIN & B / DATE OF HEARING :28.07.2015 / DATE OF PRONOUNCEMENT:23.09.2015 2 ITA NOS.1016 & 916/PN/2014 / ORDER PER R.K. PANDA, AM : ITA NO.1016/PN/2014 FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 20-03-2014 OF THE CIT(A)-III, PUNE REL ATING TO ASSESSMENT YEAR 2004-05. ITA NO.916/PN/2014 FILED BY TH E ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25-03-2014 PASSED U/S.263 OF THE I.T. ACT FOR THE A.Y. 2005-06. THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1016/PN/2014 (A.Y. 2004-05) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL CARRYING ON THE BUSINESS OF PROMOTERS AND BUILDERS. THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 27-10-2004 DECLARING TOTAL INCOME OF RS.9,61,055/-. SUBSEQUENTLY THE ASSESSMENTS FOR THE IMPU GNED A.Y. 2004-05 AND A.Y.S 2005-06, 2006-07 AND 2007-08 WERE RE OPENED BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FRO M ACIT CENTRAL CIRCLE- 1(2), PUNE ACCORDING TO WHICH CERTAIN ENTRIES IN ASSESSEES NAME WERE FOUND FROM DOCUMENTS SEIZED DURING THE SEARCH ACTION BY THE INCOME TAX DEPARTMENT ON SHRI SOHANRAJ MEHTA, C & F AGENT OF RMD GUTKHA GROUP. THE SEIZED DOCUMENT INCLUDED A SUMMARY OF UNACCOUNTED SALES CARRIED OUT BY SHRI SOHANR AJ MEHTA FOR THE PERIOD APRIL 2003 TO AUGUST 2006 AND ALSO INDICATED R ECEIPT OF AN AMOUNT OF RS. 1 CRORE BY THE ASSESSEE OUT OF SUCH UNAC COUNTED SALE PROCEEDS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE WAS PROVIDED WITH THE REASONS OF REOPENING ON 09-11-201 1. THE ASSESSEE WAS ALSO PROVIDED A COPY OF THE SEIZED MATERIAL AND WAS 3 ITA NOS.1016 & 916/PN/2014 REQUESTED TO EXPLAIN AS TO WHY THE PAYMENT OF RS. 1 CRO RE MADE TO HIM BY SHRI SOHANRAJ MEHTA SHOULD NOT BE TREATED AS HIS INCOME. 3. IN RESPONSE TO THE QUERY RAISED BY THE AO THE ASS ESSEE MADE THE FOLLOWING SUBMISSION WHICH HAVE BEEN REPRODUCED BY THE AO IN THE ASSESSMENT ORDER AND WHICH READ AS UNDER : 1. THE SEIZED DOCUMENT HANDED OVER TO ME COMPROMISE S OF TWO PAGES-ONE ON THE LETTER HEAD OF AL INDIA SHWETAMBAR JAIN CONFERENCE MAHILA SHAKHA KARNATAKA WHICH CONTAINS A SUMMARY OF SO ME RECEIPTS AND PAYMENTS AND THE OTHER IS A SUMMARY OF RECEIPTS BROKEN INTO THREE PERIODS. THE COPIES OF SAME ARE ENCLOSED HEREWITH. 2. ON PERUSAL OF THE SASME, I DO NOT FIND ANY SPECIFIC MENTION OF WHO THE SAID PAPERS BELONG OR OF THE NAME OF SHRI SOHANRA J MEHTA REFERRED TO IN THE REASONS PROVIDE BY YOU. 3. FURTHER, THE DOCUMENT DOES NOT EVEN STATE THAT THI S AMOUNT IS PAID TO ME AND ON WHAT ACCOUNT. 4. FURTHER, THE DOCUMENT DOES NOT BEAR MY SIGNATURE A S ACKNOWLEDGE OF THE RECEIPT OF THE SAID AMOUNT. 5. FURTHER, THE DOCUMENT BY ITSELF DOES NOT INDICATE THAT ANYBODY OR FOR THAT MATTER SHRI SOHANRAJ MEHTA HAS STATED THAT M Y AMOUNT HAS BEEN PAID TO ME. 6. THE DOCUMENT REFLECTS THE NAME AS SUVAAS MANTRI W HICH IS NOT MY NAME AND IN NO WAY CONFIRMS THAT IT IS ME WHO IS A LLEGED TO HAVE BEEN GIVEN THE AMOUNT. 7. LASTLY, THE DOCUMENT REFLECTS THE NAME IN THE PERI OD 01-07-2004 TO 31-07-2004 WHICH FALLS IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2005-06. IT IS THEREFORE APPARENT THAT, IN ANY EVENT, THE REOPENIN G FOR THE YEARS OTHER THAN A.Y. 2005-06 IS WITHOUT JURISDICTION. 8. THERE IS NO SCOPE FOR CONJECTURES AND SURMISES. THE DOCUMENT MAY RAISE A STRONG SUSPICION OF RECEIPT BY ASSESSEE BUT IT CANN OT BE HELD AS CONCLUSIVE EVIDENCE WITHOUT BRINGING IN ANY CORROBOR ATIVE EVIDENCE OR MATERIALS ON RECORD, TO INFER THAT IT IS INCOME AND T HAT TOO MINE. 9. IT IS THEREFORE CONTENDED THAT THE DOCUMENT WHICH FORMS THE BASIS FOR ADDITION IS A DUMB DOCUMENT AND CANNOT BE THE BA SIS FOR ANY ADDITION. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS FOR THE AFORESAID PROPOSITION: A. ACIT VS. ASHOK KUMAR VIG (106 TTJ 422) RANCHI B. SMS SHARE BROKERS VS. DCIT (109 TTJ 700) DELHI C. BHAJAN DAS & BROS VS. ACIT (123 TTJ 865) AGRA (TM) D. ASHWANI KUMAR VS. ITO (42 TTJ 644) DELHI E. N.K. MALHAN VS. DCIT (91 TTJ 938 DELHI 4 ITA NOS.1016 & 916/PN/2014 10. I THEREFORE STRONGLY DISOWN ANY SUCH TRANSACTION UNDER THE CIRCUMSTANCES, THERE IS NO MERIT IN YOUR PRO POSING TO MAKE AN ADDITION OF RS.ONE CRORE IN MY HANDS MUCH LESS WHEN IT IS NOT EVEN KNOWN WHETHER IT IS IN THE NATURE OF INCOME. SHOULD YOU CHOOSE TO TAKE A DIFFERENT VIEW EVEN AFTE R THIS SUBMISSION, I REQUEST YOU TO LET ME KNOW THE GROUNDS FOR REBUTTAL SO AS TO ALLOW ME AN OPPORTUNITY TO BUTTRESS MY CLAIM. 4. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO THE AO ALTHOUGH THE ASSESS EE HAS STATED THAT HE HAS NOT ENTERED INTO ANY TRANSACTION OF SUCH TYPE, HOWEVER , THE FACTUAL CONTENTS OF THE SEIZED DOCUMENT CANNOT BE IGNORE D AS THE NAME OF THE ASSESSEE IS CLEARLY MENTIONED IN THE SEIZED D OCUMENT WHICH PROVES HIS INVOLVEMENT IN THE SAID TRANSACTION. HE NOTED THAT DHARIWAL INDUSTRIES THROUGH THEIR C&F AGENT OF RMD GUTK HA GROUP OF KARNATAKA REGION SHRI SOHANRAJ MEHTA HAS CARRIED OUT U NACCOUNTED SALE OF GUTKHA FOR THE PERIOD APRIL 2003 TO AUGUST 2006 W ORTH RS.345.85 CRORES AND HAS DISTRIBUTED A PART OF SUCH UNAC COUNTED SALE PROCEEDS TO HIS FRIENDS WHO ARE INTO REAL ESTATE BUSINES S. IN THE SEIZED DOCUMENT, IT IS CLEARLY MENTIONED THAT THE ASSESSEE SHRI SUHAS MANTRI HAS RECEIVED CASH WORTH RS.1 CRORE IN JULY 2004 FOR WHICH NO REPAYMENT LIABILITY IS MENTIONED IN THE SEIZED DOCUMENT. HE THEREFORE TREATED THIS AMOUNT OF RS.1 CRORES AS UNEXPLAINED MONEY U/S.69A OF THE I.T. ACT AND MADE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. 5. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDITY OF ASS UMPTION OF JURISDICTION BY THE AO U/S.148. IT WAS STATED THAT IT IS APPARENT FROM THE REASONS RECORDED FOR REOPENING WHERE IT HAS BE EN STATED THAT OUT OF THE UNACCOUNTED SALES CARRIED OUT BY SHRI SOHANR AJ MEHTA AN AMOUNT OF RS.1 CRORE HAS BEEN DEPLOYED TO SHRI SUHAS M ANTRI. HOWEVER, THE AO FAILED TO PROVIDE ANY REASON FOR TREATING SUCH 5 ITA NOS.1016 & 916/PN/2014 DEPLOYMENT AS INCOME WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. IT WAS ARGUED THAT THERE WAS NO TANGIBLE MATERIAL BEFORE THE AO ON THE BASIS OF WHICH HE COULD FORM A REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT W AS ARGUED THAT POWERS FOR REOPENING OF ASSESSMENT CANNOT BE EXERCISED FOR MERE VERIFICATION OF THE CLAIM. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT THE REOPENING PROCEEDINGS INITIATED BY THE AO ARE NULL AND VOID. 6. SO FAR AS THE ADDITION OF RS.1 CRORE MADE BY THE AO U /S.69A OF THE I.T. ACT IS CONCERNED, IT WAS SUBMITTED THAT THE ADD ITION OF HUGE AMOUNT OF RS.1 CRORE CANNOT BE MADE ON THE BASIS OF A M ERE DOCUMENT FOUND AT THE PREMISES OF A THIRD PARTY AND WITHOUT BRINGIN G ANY OTHER SUPPORTING EVIDENCE ON RECORD THAT IT IS RECEIPT OF INCOME IN THE HANDS OF THE ASSESSEE. IT WAS ARGUED THAT NEITHER THE ASSES SEE HAS ANY TRANSACTION WITH THE SAID THIRD PARTY NOR HE HAS BEEN A LLOWED AN OPPORTUNITY OF CROSS EXAMINATION. IT WAS FURTHER SUBMITTE D THAT THE TRANSACTION WHICH IS RELEVANT FOR A.Y. 2005-06 CANNOT BE T AXED IN THE IMPUGNED ASSESSMENT YEAR. IT WAS ARGUED THAT THE SEIZ ED DOCUMENT WHICH FORMS THE BASIS FOR THE ADDITION DOES NOT MENTION WH OM THEY BELONG TO, WHETHER THE MONEY HAS BEEN PAID AND ON WHAT ACCOUNT. IT WAS ARGUED THAT THE SAID DOCUMENT DOES NOT BEAR THE SIGNATURE OF THE ASSESSEE AS ACKNOWLEDGEMENT OF RECEIPT OF THE SAID AMOU NT WHICH REFLECTS THE NAME OF SUVASS MANTRI WHICH IS NOT THE NAM E OF THE ASSESSEE. IN SHORT, THE DOCUMENT BY ITSELF DOES NOT IND ICATE ANYBODY. FURTHER, SHRI SOHANRAJ MEHTA HAS NOT STATED THAT THE SAID AMOUNT HAS BEEN PAID TO THE ASSESSEE. THEREFORE, THIS BEING A DUMB DOCUMENT THE SAME CANNOT BE RELIED UPON AS THE BASIS FOR ADDITION. TH E ASSESSEE ALSO ARGUED THAT THE ADDITION MADE BY THE AO IS NOT IN A CCORDANCE WITH LAW. NO EVIDENCE HAS BEEN FOUND TO SHOW THAT THE A SSESSEE HAD 6 ITA NOS.1016 & 916/PN/2014 ACTUALLY RECEIVED THE SAID AMOUNT OR THAT THE ASSESSEE HAS ENTER ED INTO ANY TRANSACTION WITH DHARIWAL INDUSTRIES GROUP. THE AO HAS MERELY ASSUMED THE AMOUNT REFLECTED TO BE THE INCOME OF THE AS SESSEE WHICH IS NOT CORRECT IN VIEW OF THE CLEAR NOTINGS AND ADMISSION O F ITS AUTHOR EXPLAINING EACH AND EVERY NOTING RECORDED ON THE SEIZED DOCUMENTS . 7. HOWEVER, THE LD.CIT(A) WAS NOT CONVINCED WITH THE ARGU MENTS ADVANCED BY THE ASSESSEE REGARDING VALIDITY OF THE REASS ESSMENT PROCEEDINGS AND UPHELD THE ACTION OF THE AO. WHILE DOING S O HE NOTED THAT THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR WAS ONLY PROCESSED U/S.143(1) AND NO ASSESSMENT WAS MADE U/S.143 (3) PRIOR TO THE ISSUE OF NOTICE U/S.148 AND THEREFORE IT CANNOT BE SA ID THAT THE ASSESSMENT WAS REOPENED ON MERE CHANGE OF OPINION. FOR THE ABOVE PROPOSITION HE RELIED ON THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. R EPORTED IN 291 ITR 500. HE NOTED THAT SINCE THE AO HAS RECEIVED INFORMATION FROM ACIT, CENTRAL CIRCLE-1(2), PUNE REGARDING CERTAIN ENTRIES IN ASESSEES NAME FOUND IN THE DOCUMENTS SEIZED DURING THE SEARCH ACTION BY THE INCOME-TAX DEPARTMENT ON SHRI SOHANRAJ M EHTA, C&F AGENT OF RMD GUTKHA GROUP, THEREFORE, THE AO HAD PRIMA-FA CIE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. THEREFORE, THERE IS NO INFIRMITY OR ILLEGALITY IN THE REASSESSMENT PROCE EDINGS INITIATED BY THE AO. 8. THE CIT(A) WAS ALSO NOT SATISFIED WITH THE EXPLANATION GIV EN BY THE ASSESSEE SO FAR AS THE ADDITION OF RS.1 CRORE IS CONC ERNED. HE OBSERVED THAT AN ANALYSIS OF THE SEIZED DOCUMENTS FILED B Y THE ASSESSEE IN THE PAPER BOOK SHOW THAT THE ASSESSEES NAME FIGURES IN BOTH THE PAGES, I.E. ONE BEING SUMMARY OF CASH RECEIPTS AN D PAYMENTS 7 ITA NOS.1016 & 916/PN/2014 FOR THE PERIOD APRIL 2003 TO AUGUST 2006 AND THE SECON D BEING THE MONTH-WISE SUMMARY OF CASH RECEIPTS AND PAYMENTS FOUND DURING THE COURSE OF SEARCH. AS PER THE SAID DOCUMENT, THE ASSESS EE COULD BE SAID TO BE THE OWNER OF MONEY OF RS.1 CRORE AND SUCH MO NEY COULD BE DEEMED AS HIS INCOME U/S.69A IF THE SAME IS NOT RECORDED ON THE BOOKS OF ACCOUNT AND THERE IS NO EXPLANATION ABOUT NATU RE AND SOURCE OF ACQUISITION OF MONEY. THE NAME OF THE ASSESSEE IS CLEARL Y MENTIONED ALTHOUGH IN THE COLLOQUIAL MARWADI LANGUAGE OF THE SEARCHED PERSON AND BESIDE THE NAME OF THE ASSESSEE, THE PLACE, I.E. PUNE IS MENTIONED. FURTHER, THE ASSESSEE IS ALSO ONE OF THE PROMINE NT PERSONS OF PUNE. THE DATE OF HANDING OVER OF THE MONEY IS ALSO MENTIONED. THEREFORE, IT CANNOT BE SAID THAT THE SAID DOCU MENT IS A DUMB DOCUMENT. HE FURTHER NOTED THAT THE LOOSE PAPERS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED OUT IN T HE CASE OF SHRI SOHANRAJ MEHTA, C&F AGENT OF DHARIWAL INDU STRIES GROUP CONTAIN THE DETAILS OF PAYMENTS OF UNACCOUNTED MONEY TO THE PERSONS WHOSE NAMES ARE APPEARING ON THE SAID DOCUMENT. THE NAME OF THE ASSESSEE APPEARS ON BOTH THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH ACTION AND GIVES A VERY DETAILED AND MINUTE NOTIN GS OF THE TRANSACTIONS ENTERED INTO BY THE DHARIWAL GROUP. 9. AS REGARDS THE CONTENTION OF ASSESSEE THAT NO EVIDE NCE HAS BEEN FOUND TO SHOW THAT THE ASSESSEE HAS ACTUALLY RECEIVED SUCH AMOUNT OR THAT THE ASSESSEE HAS ENTERED INTO ANY TRANSACTION WIT H DHARIWAL GROUP AND THAT THE ADDITION HAS BEEN MADE MERELY ON A SSUMPTIONS IS CONCERNED, HE NOTED THAT THE AUTHOR OF THE DOCUMENT H AS CLEARLY ADMITTED AND EXPLAINED EACH AND EVERY NOTING RECORDED O N THE SEIZED DOCUMENTS AND HAS ALSO EXPLAINED MODUS OPERANDI OF THE B USINESS AND THE MANNER IN WHICH THE AMOUNTS WERE GIVEN TO PERS ONS INCLUDING 8 ITA NOS.1016 & 916/PN/2014 THE ASSESSEE. ACCORDING TO HIM THE APPARENT IS REAL UNLE SS CONTRARY IS PROVED. IN THE INSTANT CASE CONSIDERATION RECEIVED BY T HE ASSESSEE IN RESPECT OF THE SALE CONSIDERATION WAS RECORDED ON THE LO OSE PAPER AND CONSIDERATION RECEIVED WAS APPARENT AND IT WAS THEREFORE FOR THE ASSESSEE TO ESTABLISH THE CONTRARY. RELYING ON VARIOUS DECISIONS THE LD.CIT(A) HELD THAT THERE ARE ENOUGH CIRCUMSTANTIAL EVIDEN CES AND PREPONDERANCE OF PROBABILITIES IN THIS CASE NAMELY, THE OWN ERSHIP OF THE DOCUMENTS, THE ENTIRE MODUS OPERANDI REGARDING RECE IPT IN CASH OF THE UNACCOUNTED SALE PROCEEDS WHICH HAS BEEN CORROBOR ATED BY THE STATEMENT OF THE AUTHOR OF THE SEIZED DOCUMENTS WHICH C LEARLY POINTS THE FINGERS AT THE ASSESSEE. DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM THE LD.CIT(A) UPHELD THE ADDITION MADE BY THE A O U/S.69A OF THE I.T. ACT. 10. HOWEVER, SINCE THE DOCUMENTS SHOW THAT THE AMOUNT HAS BEEN PAID TO THE ASSESSEE ON 09-07-2004 AND THE AO HAS ASS ESSED THE SAME IN A.Y. 2004-05, THEREFORE, HE DIRECTED THE AO TO ASSESS T HE INCOME FOR THE A.Y. 2005-06 BY TAKING RECOURSE TO THE PROVISIONS OF SECTION 150(1) OF THE I.T. ACT. 11. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING THE ASSESSING OFFICERS ASSUMPTION OF JURISDICTION U/S.148. 2. THE LD.CIT(A) HAS FURTHER ERRED IN FACTS AND IN LA W IN NOT PROVIDING A PROPER OPPORTUNITY OF HEARING AND THUS VIOLATING T HE LAWS OF NATURAL JUSTICE. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN INV OKING THE PROVISIONS OF SECTION 292C OF THE INCOME TAX ACT, 1961 FOR A DOCUMENT NOT SEIZED FROM THE APPELLANTS PREMISES. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ADDITION OF RS. ONE CRORE U/S.69A OF THE INCOME TAX A CT, 1961. 9 ITA NOS.1016 & 916/PN/2014 5. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ISSU ING DIRECTIONS TO ASSESS THE INCOME OF RS.ONE CRORE U/S.69A OF THE INCOME T AX ACT, 1961 FOR A.Y. 2005-06. 6. THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER OR MODIFY ANY OF THE GROUNDS OF APPEAL, IF DEEMED NECESSARY. 12. SO FAR AS FIRST GROUND OF APPEAL IS CONCERNED, I.E., VALID ITY OF REASSESSMENT PROCEEDINGS, THE LD. COUNSEL FOR THE ASSES SEE DREW THE ATTENTION OF THE BENCH TO PAGE 44 OF THE PAPER BOOK WH ICH IS THE NOTICE ISSUED U/S.148. REFERRING TO PAGE 55 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE REASONS RECORDED. HE SU BMITTED THAT THERE IS NO SATISFACTION OF THE AO THAT INCOME HAS ESCAP ED ASSESSMENT. FURTHER, FOR THE SAID RS. 1 CRORE NOTICE U/S.148 HAS BEE N ISSUED FOR A.YRS. 2004-05 TO 2006-07. THEREFORE, THE AO IS NOT SURE FOR WHICH ASSESSMENT YEAR THE MONEY HAS BEEN DEPLOYED. FURTHER , HE IS NOT SAYING THAT THIS IS AN INCOME. THEREFORE, ASSUMPTION OF JU RISDICTION U/S.148 OF THE I.T. ACT IS NOT WARRANTED. FOR THE ABOVE PROPOSITION, THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SFIL STOCK BROK ING LTD. REPORTED IN 325 ITR 285. 13. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BE NCH TO THE HELD PORTION OF THE ORDER WHICH READS AS UNDER : HELD, DISMISSING THE APPEAL, THAT THE FIRST SENTENCE OF THE REASONS RECORDED BY THE ASSESSING OFFICER WAS MERE INFORMATION R ECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION). THE SECOND SENTENCE WAS A DIRECTION GIVEN BY THE SAME DEPUTY DIRECTOR OF INCO ME TAX (INVESTIGATION) TO ISSUE A NOTICE U/S.148 AND THE THIRD SENTENCE AGAIN COMPRISED A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INC OME-TAX TO INITIATE PROCEEDINGS U/S.148 IN RESPECT OF CASES PERTAINING TO TH E RELEVANT WARD. THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND T HE TWO DIRECTIONS AS REASONS ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE U/S.148. THESE COULD NOT BE THE REASONS FOR PROCEEDING U/S.147/148 OF THE ACT. AS THE FIRST PART WAS ONLY AN INFORMATION AN D THE SECOND AND THE THIRD PARTS OF THE REASONS WERE MERE DIRECTIONS, IT WAS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLI ED HIS MIND TO THE INFORMATION AND INDEPENDENTLY ARRIVED AT A BELIEF T HAT, ON THE BASIS OF THE 10 ITA NOS.1016 & 916/PN/2014 MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. THERE WAS NO SUBSTANTIAL QUESTION OF LAW FOR CONSIDERATION. 14. AS REGARDS GROUND OF APPEAL NO.2 IS CONCERNED, THE LD . COUNSEL FOR THE ASSESSEE REFERRING TO PAGES 49,57,59 AND 74 SU BMITTED THAT ALTHOUGH THE ASSESSEE HAD MADE VARIOUS SUBMISSIONS DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, HOWEVER, THE AO HAS N OT DEALT WITH ANY OF HIS OBJECTIONS. NEITHER THE STATEMENT OF SHRI SOHA NRAJ MEHTA WAS PROVIDED TO THE ASSESSEE NOR CROSS EXAMINATION OF T HE PERSON WAS ALLOWED. REFERRING TO THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHARE BROKERS LTD. VS. DCIT REPORTED IN 109 TTJ 700 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD T HAT ADDITION IN BLOCK ASSESSMENT AGAINST ASSESSEE HAVING BEEN MADE O N THE BASIS OF STATEMENT OF M&N RECORDED AT THE BACK OF THE ASSESS EE WITHOUT GIVING ASSESSEE AN OPPORTUNITY OF CROSS EXAMINING THEM DE SPITE REPEATED REQUESTS, THE BLOCK ASSESSMENT SUFFERS FROM VIOLA TION OF PRINCIPLES OF NATURAL JUSTICE. HE ACCORDINGLY SUBMITTED T HAT SINCE THE ASSESSEE WAS NOT PROVIDED WITH PROPER OPPORTUNITY OF HE ARING AND VIOLATES THE PRINCIPLE OF NATURAL JUSTICE, THEREFORE, THE ENTIR E ORDER SHOULD BE QUASHED. 15. SO FAR AS GROUND OF APPEAL NO.3 IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO TH E PROVISIONS OF SECTION 292C AND SUBMITTED THAT THE CIT(A) HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 292C OF THE I.T. ACT FOR A DOCUMENT NOT SEIZED FROM THE PREMISES OF THE ASSESSEE. HE SUBMITTED THAT IT IS ONLY FOR THE SEARCHED PERSON THAT THE SAID PROVISION WILL BE APPLICABLE A ND NOT TO A THIRD PARTY LIKE THE ASSESSEE. 11 ITA NOS.1016 & 916/PN/2014 16. SO FAR AS GROUND OF APPEAL NO.4 IS CONCERNED, HE SUBMIT TED THAT HERE THE ENTRY IS IN THE BOOKS OF THE SEARCHED PERSON . REFERRING TO THE PROVISIONS OF SECTION 69A HE SUBMITTED THAT AS PER THE S AID SECTION WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE TH E OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE AND SU CH MONEY, BULLION, JEWELLERY OR VALUABLE ARTICLE IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE A RTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY ACCORDING TO THE AO, SUCH MONEY AND THE VALUE OF THE BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. HOWEVER, IN THE INSTANT CASE THE ASSESSEE IS NOT THE OWNER. IT IS AN ENTRY IN THE BOOKS OF ANOTHER PERSON. THEREFORE, THE PROVISIONS OF SECTION 69A CANNOT BE APPLIED TO THE CASE OF THE ASSESSE E. 17. SO FAR AS THE DIRECTION OF THE LD.CIT(A) TO ASSESSEE THE INCOME OF RS.1 CRORE U/S.69A IN A.Y. 2005-06 IS CONCERNED THE LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT SUCH DIRECTION BY THE LD.C IT(A) IS WITHOUT ANY JURISDICTION. REFERRING TO THE DECISION OF THE PUNE BEN CH OF THE TRIBUNAL IN THE CASE OF PRADEEP AMRUTLAL RUNWAL VS. ITO REP ORTED IN 112 DTR 7 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DEC ISION HAS HELD THAT ADDITION U/S.69A MADE IN THE HANDS OF ASSESSEE ONLY ON THE BASIS OF DOCUMENTS RECOVERED IN SEARCH OF THIRD PARTY WIT H WHICH THE ASSESSEE HAD NO BUSINESS TRANSACTIONS AND WITHOUT ANY CORROBORATIVE EVIDENCE WAS INVALID. IT HAS FURTHER BEEN HELD THAT THE P RESUMPTION U/S.132(4A) IS AVAILABLE ONLY IN RESPECT OF THE PERSON FROM WHOM THE PAPER IS SEIZED. IT COULD NOT BE APPLIED AGAINST A THIRD PARTY AND HENCE NO ADDITION COULD BE MADE ON THE BASIS OF THE EVIDE NCE FOUND 12 ITA NOS.1016 & 916/PN/2014 WITH THIRD PARTY. IT HAS BEEN HELD THAT PRESUMPTION U/S .132(4A) COULD BE USED ONLY AGAINST THE PERSON FROM WHOSE PREMISES TH E DOCUMENTS ARE FOUND AND NOT AGAINST THE PERSON WHOSE NAME APPEA RED IN THE SEIZED PAPERS. HE ACCORDINGLY SUBMITTED THAT THE FACTS OF THE CASE BEING IDENTICAL TO THE FACTS IN THE CASE OF PRADEEP AMRUT LAL RUNWAL (SUPRA) DECIDED BY THE PUNE BENCH OF THE TRIBUNAL, THEREFO RE, THE ADDITION MADE BY THE AO SHOULD BE DELETED. HE ALSO RELIED ON THE FOLLOWING DECISIONS : 1. GENERAL MOTORS INDIA (P) LTD VS. DCIT 354 ITR 244 2. JAWAHARBHAI ATMARAM HATHIWALA VS. ITO 128 TTJ 36 3. N.K. MALHAN VS. DCIT 91 TTJ 938 4. ACIT VS. ASHOK KUMAR VIG 106 TTJ 422 5. CONSOLIDATED DOFFEE LTD. VS. ITO 155 ITR 729 6. PEICO ELECTRONICS & ELECTRICALS & ELECTRICALS LTD. VS. DCIT & OTHERS 210 ITR 991 18. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). SO FAR AS THE DECISION O F THE TRIBUNAL IN THE CASE OF PRADEEP AMRUTLAL RUNWAL (SUPRA) IS CONCERNED HE SUBMITTED THAT IN THE SAID DECISION THERE WAS NO NEXUS B ETWEEN THE ASSESSEE AND RASIKLAL M. DHARIWAL. BUT HERE IN THE INSTAN T CASE, THE LD.CIT(A) HAS GIVEN CATEGORICAL FINDINGS THAT THE SEIZED DOCU MENTS REFLECTS THE NAME OF THE ASSESSEE. THE DATE OF HANDING OVER OF THE MONEY IS ALSO MENTIONED. THEREFORE, THE DECISION OF THE PU NE BENCH OF THE TRIBUNAL CANNOT BE APPLIED TO THE CASE OF THE ASSESSEE. 19. SO FAR AS THE VALIDITY OF THE REOPENING OF THE ASSESS MENT IS CONCERNED, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SINCE THE ORIGINAL ASSESSMENT WAS MADE U/S.143(1), THEREFORE, CHAN GE OF OPINION DOES NOT ARISE. THERE WAS SPECIFIC INFORMATION THAT SOME UNDISCLOSED TRANSACTION HAS TAKEN PLACE. THE COURTS CAN ALWAYS 13 ITA NOS.1016 & 916/PN/2014 EXAMINE THE EXISTENCE OF EVIDENCE. ADEQUACY OF EVIDENCE IS NOT REQUIRED. HOWEVER, SINCE THE ADDITION WAS WRONGLY MADE IN A.Y. 2004- 05 NO INJUSTICE HAS BEEN CAUSED TO THE ASSESSEE. THER EFORE, THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE. HE ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A). 20. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE AO REOPENE D THE ASSESSMENT BY ISSUING NOTICE U/S.148 ON THE GROUND THAT THE DOCUMENTS SEIZED DURING THE SEARCH ACTION BY THE INCOME -TAX DEPARTMENT OF SHRI SOHANRAJ MEHTA, C&F AGENT OF RMD GR OUP INDICATE RECEIPT OF AN AMOUNT OF RS.1 CRORE BY THE ASSESS EE OUT OF THE UNACCOUNTED SALE PROCEEDS. REJECTING THE VARIOUS EXPLAN ATIONS GIVEN BY THE ASSESSEE THE AO MADE ADDITION U/S.69A IN THE HAN DS OF THE ASSESSEE. HOWEVER, THE LD.CIT(A) WHILE UPHOLDING THE ADDITION OF RS. 1 CRORE U/S.69A OF THE I.T. ACT IN PRINCIPLE, DIRECTED THE AO TO ASSESS THE SAME IN A.Y. 2005-06 SINCE THE SEIZED DOCUMEN TS SHOW THAT THE AMOUNT HAS BEEN PAID TO THE ASSESSEE ON 09 -07-2004. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN T HE CASE OF SHRI VINIT RANAWAT VS. ACIT VIDE ITA NOS. 1005 AND 1106/P N/2013 ORDER DATED 12-06-2015 WHEREIN ADDITIONS WERE MADE ON THE BASIS OF SEIZED DOCUMENTS FOUND FROM THE RESIDENCE OF SHRI SOHANRA J MEHTA, C&F AGENT OF RMD GUTKHA GROUP DURING THE COURSE OF SEA RCH. AFTER CONSIDERING THE VARIOUS SUBMISSIONS MADE BY BOTH THE SIDE S, THE TRIBUNAL DELETED THE ADDITION BY OBSERVING AS UNDER : 14 ITA NOS.1016 & 916/PN/2014 37. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A ) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE A SEARCH U/S.132 OF THE I.T. ACT WAS CONDUCTED AT THE PREMISES OF MR. MITT ULAL AT BANGALORE ON 09-10-2009 WHEREIN CERTAIN INCRIMINATING DOCUMENTS W ERE FOUND BELONGING TO THE DHARIWAL GROUP. THOSE DOCUMENTS WER E MAINTAINED BY ONE SHRI SOHAN RAJ MEHTA, C&F AGENT OF M/S. DHARIWA L INDUSTRIES LTD. IN HIS STATEMENT RECORDED U/S.132(4) MR. MEHTA HAD STATED THAT HE WAS EFFECTING UNACCOUNTED SALES OF GUTKHA OF DHARIWAL IN DUSTRIES LTD. AND THE SALE PROCEEDS WERE DEPLOYED AS PER THE INSTRUCTIONS OF S HRI RASIKLAL M. DHARIWAL AND HIS SON SHRI PRAKASH M. DHARIWAL. IN SOME OF THE SEIZED PAPERS NAME OF CERTAIN PERSONS ARE APPEARING WHICH CON TAIN THE NAME EITHER VINIT OR VINIT RANAWAT. ON THE BASIS OF THOSE NAMES AND ENTRIES AGAINST SAID NAMES, THE ASSESSING OFFICER DECIPHERED THE AMOUNT AS RS. 1 CRORE FOR A.Y. 2006-07 AND RS.20 CRORES FOR A.Y. 2007 -08 AS RECEIVED BY THE ASSESSEE SHRI VINIT RANAWAT. ALTHOUGH MR. MEHTA IN HIS STATEMENT RECORDED U/S.132(4) HAS STATED THAT THIS AMOUNT WAS PAID BY DHARIWAL INDUSTRIES TO SHRI VINIT RANAWAT THROUGH HIM, HOWEVER , THE STATEMENT APPEARS TO HAVE BEEN RETRACTED AS PER THE FINDINGS GIV EN BY THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF MUSTAF AMIYA H. SHEIKH. 38. IT IS THE CASE OF THE ASSESSING OFFICER THAT THE ASSESS EE WAS ASSOCIATED WITH DHARIWAL GROUP FOR A LONG TIME AND TH E ASSESSEES NAME APPEARING IN THE SEIZED DOCUMENT TALLY WITH THE REGU LAR BUSINESS ASSOCIATION WITH M/S. DHARIWAL INDUSTRIES LTD. AND IF TE ST OF HUMAN PROBABILITY IS APPLIED TO THE FACTS OF THE CASE IT B ECOMES EVIDENT THAT ASSESSEE WAS PART OF THE ENTIRE SCHEME OF UNACCOUNTED BUSI NESS CHAIN OF M/S. DHARIWAL INDUSTRIES LTD. THE ROLE OF THE ASSESSEE WA S THAT OF A CO- CONSPIRATOR. DURING THE COURSE OF SEARCH AND POST SEARC H PROCEEDINGS MR. SOHAN RAJ MEHTA HAD STATED THAT THE SEIZED BOOKS OF AC COUNT, LOOSE SHEETS AND OTHER DOCUMENTS, I.E. A/M/01 AND A/M/29 WERE ACT UALLY BELONGING TO THE C&F BUSINESS OF M/S. DHARIWAL INDUSTRIES LTD. HE H AD CATEGORICALLY STATED THAT PAGE 34 OF A/M/08 AND OTHER RELATED DOCU MENTS WERE WRITTEN BY HIM AND MOST OF THE PAGES WERE IN MARWADI LANGUAGE . THE STATEMENT OF MR. MEHTA CLEARLY EXPLAINS THE ENTIRE UNACCOUNTED BU SINESS CHAIN AND UNACCOUNTED BUSINESS TRANSACTIONS OF M/S. DHARIWAL INDUSTR IES LTD. MR. SOHAN RAJ MEHTA, THE AUTHOR OF THE SEIZED DOCUMENT I N HIS STATEMENT U/S.132(4) HAS EXPLAINED TRUE IMPACT OF THE CONTENTS O F THE SEIZED DOCUMENTS AND HAS ALSO ACKNOWLEDGED AND SUBSTANTIATED TH E FACT THAT THE SEIZED DOCUMENTS BELONG TO M/S. DHARIWAL INDUSTRIES LTD. AND THEREFORE HIS STATEMENT HAS IMMENSE EVIDENTIARY VALUE. BASED ON T HE ABOVE AND ON THE BASIS OF VARIOUS OTHER OBSERVATIONS IN THE ASSESSMENT OR DER THE ASSESSING OFFICER MADE ADDITION OF RS. 1 CRORE FOR A.Y. 2006-07 AND RS.20 CRORES FOR A.Y. 2007-08 AS UNDISCLOSED INCOME OF THE ASSE SSEE WHICH HAS BEEN UPHELD BY THE CIT(A). 39. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FROM THE VERY BEGINNING THE ASSESSEE WAS DENYING TO HAVE RECEIVE D ANY SUCH AMOUNT FROM MR. SOHAN RAJ MEHTA. ACCORDING TO HIM, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PAPERS FO UND IN THE PREMISES OF THIRD PARTY. FURTHER, THE ASSESSEE BEING A SMALL TAXPAYER, SOME EVIDENCE SHOULD HAVE BEEN FOUND FROM THE RESIDENC E OF THE ASSESSEE TO SHOW THAT IN FACT HE HAS RECEIVED SUCH HUGE AMOUNT. IT IS ALSO THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DEPARTMENT ITSELF IS TREATING THIS AS SHORT TERM ADVANCE DURING THE COURSE OF SEARCH ACTION. SIMILARLY, 15 ITA NOS.1016 & 916/PN/2014 THE STATEMENT OF MR. RASIKLAL M. DHARIWAL IS CONTRARY TO THE FINDING OF THE DEPARTMENT. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DIFFERENT BENCHES OF THE TRIBUNAL UNDER IDENTIC AL FACTS AND CIRCUMSTANCES HAVE DELETED THE ADDITION MADE BY THE A SSESSING OFFICER ON THE BASIS OF NOTINGS FOUND FROM THE PREMISES OF MR. SOHA N RAJ MEHTA. 40. WE FIND SOME FORCE IN THE SUBMISSION OF THE LD. COU NSEL FOR THE ASSESSEE. THE ASSESSEE IN THE INSTANT CASE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. S. CHAINS WHICH IS ENGAGED IN THE BUSINESS OF JOB WORK IN GOLD ORNAMENTS. M/S. S.D.D. AGENCIES IS THE C&F AGENT OF M/ S. DHARIWAL INDUSTRIES LTD. IN THE STATE OF MAHARASHTRA FOR THEIR GUTKHA AND PAN MASALA BUSINESS. A SEARCH AND SEIZURE ACTION ON THE PRE MISES OF MR. MITTULAL AT BANGALORE WAS CARRIED ON 09-10-2009 WHER EIN DOCUMENTS MAINTAINED BY MR. SOHAN RAJ MEHTA, C&F AGENT OF M/S. DHARIWAL INDUSTRIES LTD WERE FOUND. THE ASSESSEES PREMISES WAS ALSO SE ARCHED ON 20-01-2010, I.E. AFTER A PERIOD OF ABOUT 3 MONTHS AN D 10 DAYS. DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE HE WAS QUEST IONED ABOUT THE DOCUMENTS FOUND FROM THE PREMISES OF MR. MITTULAL WHICH CONTAIN DOCUMENTS MAINTAINED BY MR. SOHAN RAJ MEHTA. THE ASS ESSEE AT THE TIME OF SEARCH HAD COMPLETELY DENIED TO HAVE RECEIVED ANY SUCH AMOUNT FROM MR. SOHAN RAJ MEHTA. RELEVANT QUESTION AND ANSWER OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH U/S.132(4) ARE AS UNDER (PAPER BOOK PAGE 41 AND 42) : Q.33 A SEARCH ACTION U/S.132 WAS CARRIED OUT ON 0-10- 2009 IN THE CASE OF SHRI MITTULAL BY INVESTIGATION WING OF BANGALORE. I N COURSE OF THE SEARCH ACTION CERTAIN INCRIMINATING DOCUMENTS RELATED TO SH RI SOHANRAJ MEHTA WERE FOUND IN CONNECTION WITH C&F AGENCY OF RMD GRO UP OF PAN MASALA AND GUTKHA PRODUCTS. SHRI SOHANRAJ MEHTA WAS ALSO COV ERED BY THE INVESTIGATION WING OF BANGALORE AND ON BEING CONFRON TED WITH THESE INCRIMINATING DOCUMENTS, SHRI SOHANRAJ STATED THAT TH E SAID PAGES INTERALIA CONTAIN THE NOTINGS REGARDING HANDING OVER OF RS.21.2 2 CRORES TO SHRI VINIT RANAWAT OF MUMBAI WHICH IS C&F AGENT OF RMD GROUP. SHRI SOHANRAJ ALSO STATED THAT THE SAID PAYMENTS IN CASH WERE MADE AS PER T HE DIRECTION OF SHRI R.M. DHARIWAL AND SHRI PRAKASH DHARIWAL. PLEAS E STATE WHETHER THE SAID CASH OF RS.21.22 CR RECEIVED FROM SHRI SOHANRAJ M EHTA ON ACCOUNT OF RMD GROUP ARE REFLECTED IN YOUR BOOKS OF ACCOUNTS. A.33 I HAVE GONE THROUGH THE DOCUMENTS SHOWN TO ME AN D SAY THAT I HAVE NEVER RECEIVED THIS AMOUNT FROM SHRI SOHANRAJ M EHTA. HENCE, THE SAID PAYMENTS ARE NOT REFLECTED IN MY BOOKS OF ACCOUNT . Q.34 A SEARCH ACTION U/S.132 WAS CARRIED OUT ON 26-1-2 010 IN THE CASE OF DHARIWAL GROUP. IN THE COURSE OF STATEMENT RECORDED U/S.132(4) SHRI PRAKASH DHARIWAL HAS EXPLICITLY STATED THAT THE ABOVE REFERRED PAYMENTS HAVE BEEN MADE BY SHRI SOHANRAJ MEHTA AT THE INSTRUC TION OF MY FATHER SHRI RASIKLAL DHARIWAL AS SHORT TERM ADVANCE. I AM SH OWING YOU THE RELEVANT PORTION OF THE SAID STATEMENT. PLEASE GO TH ROUGH THE SAME AND STATE WHETHER THE PAYMENTS IN CASH RECEIVED FROM SOHAN RAJ MEHTA AT THE DISCRETION OF SHRI R.M. DHARIWAL ARE RECORDED IN YOU R BOOKS OF ACCOUNT. A.34 I HAVE GONE THROUGH THE STATEMENT SHOWN TO ME OF SHRI PRAKASH DHARIWAL RECORDED ON 20-01-2010, HOWEVER, I HAVE NE VER RECORDED THE AMOUNT MENTIONED FROM SHRI SOHANRAJ MEHTA HENCE THE SAID PAYMENT ARE NOT RECORDED IN MY BOOKS. 16 ITA NOS.1016 & 916/PN/2014 Q.35 THE STATEMENT OF SHRI SOHANRAJ MEHTA RECORDED U /S.132(4) ON 09- 10-2009 HAS BEEN CONFIRMED BY SHRI PRAKASH DHARIWAL I N THE STATEMENT RECORDED U/S.132(4) ON 20-01-2010. THUS, BOTH SHRI S OHANRAJ MEHTA AND SHRI PRAKASH R. DHARIWAL HAVE STATED ON OATH THAT PAY MENTS IN CASH OF RS.21.22 CR HAS BEEN MADE TO YOU AT THE DIRECTION OF SHRI RASIKLAL DHARIWAL BY SHRI SOHANRAJ MEHTA. AS THE STATEMENTS HAVE BEEN G IVEN BY THEM ON OATH, YOU ARE THEREFORE ONCE AGAIN REQUESTED TO GO T HROUGH THE ABOVE REFERRED DOCUMENTS/STATEMENT AND STATE WHETHER THE SAID CASH RECEIPTS ARE REFLECTED AND RECORDED IN YOUR REGULAR BOOKS OF ACCOUNTS. A.35 AS ALREADY STATED EARLIER, I HAVE NEVER RECEIVED ANY CASH FROM SOHANRAJ MEHTA AT THE INSTANT OF SHRI RASIKLAL DHARIW AL OR PRAKASH DHARIWAL. HENCE, NO SUCH CASH IS RECORDED IN MY REGUL AR BOOKS OF ACCOUNTS. 41. IT IS ALSO PERTINENT TO NOTE HERE THAT THE SEARCH PARTY DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE HAS NOT FO UND ANY EVIDENCE WHATSOEVER TO SUBSTANTIATE THAT THE ASSESSEE HAS IN FACT R ECEIVED ANY AMOUNT EITHER FROM MR. SOHAN RAJ MEHTA OR FROM MR/ RASIKLAL MANIKCHAND DHARIWAL/MR. PRAKASH M. DHARIWAL OR M/S. DHARIWAL IND USTRIES LTD. NO UNACCOUNTED ASSET, INVESTMENT OR LOOSE PAPER EVIDENCING SUCH HUGE RECEIPT HAS BEEN FOUND. FURTHER, WE FIND FROM THE QUERY RAI SED DURING THE COURSE OF SEARCH THAT THE AUTHORISED OFFICER HAS TREATED THE SAME AS SHORT TERM ADVANCE GIVEN TO THE ASSESSEE. THEREFORE, WE FIND SOME FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IF THE AMOUNT IS A SHORT TERM ADVANCE THE QUESTION OF THE SAME CONSTITUTING INC OME IN THE HANDS OF THE ASSESSEE DOES NOT ARISE. WE FIND FROM THE STATEMENT O F MR. SOHAN RAJ MEHTA RECORDED DURING THE COURSE OF SEARCH PROCEEDING S U/S.132 ON 09-10- 2009 WHERE MR. SOHAN RAJ MEHTA IN HIS ANSWER TO QUESTI ON NO.31 HAS REPLIED AS UNDER : Q.31 PLEASE STATE HOW THESE TRANSACTIONS ARE UNACCOU NTED? ANS: M/S DHARIWAL INDUSTRIES LTD HAS A MANUFACTURING UNIT IN SINGSANDRA, BANGALORE. OUR FIRM M/S MEHTA ASSOCIATES IS A SOLE C & F AGENT OF THE COMPANY FOR THEIR PRODUCT RMD GUTKA SINCE 1994-95. I HAVE VERY LONG BUSINESS AND PERSONAL ASSOCIATION WITH MR. RASKILAL MANIKC HAND DHARIWAL. HE CONSIDERS ME AS CLOSE CONFIDENT. AS PER THE REQUIREME NT OF THE DISTRIBUTORS, I PLACE ORDER FOR DISPATCH OF STOCK EITH ER WITH MR. PRASHANT BAFNA OR MR. JEEVAN SANCHETI, WHO ARE INCHARGE OF T HE FACTORY AT BANGALORE. TO SEND A DISPATCH WITH BILL OR WITHOUT BILL IS DECIDE D AS PER THEIR CHOICE AND THE STOCK OF GUTKA IS SENT BY MATADOR VAN TO THIS OFFI CE. THE STOCK THAT COMES WITHOUT BILL IS IMMEDIATELY DISPATCHED TO OUR CUSTOMER S. WE KEEP ONLY THE STOCK THAT COMES WITH BILL IN OUR OFFICE. THE STOCK TH AT COMES WITHOUT BILL IS DISPATCHED IMMEDIATELY TO OUR CUSTOMERS. I HAVE BEEN I NVOLVED IN THESE TRANSACTIONS FOR LONGTIME AND I AM RESPONSIBLE FOR ALL THE DESPATCHES AND ALSO FOR THE COLLECTIONS FROM OUR CUSTOMERS; NORMALLY, WE EXTEND CREDIT OF 7- 10 DAYS TO OUR CUSTOMERS. THEY REMIT CONSIDERATION FOR THE GUNTKA STOCK RECEIVED BY THEM. PERIODICALLY, I SEND THESE COLLECTI ONS TO MR. RASIKLAL OR HIS SON MR. PRASHANT AS PER THEIR INSTRUCTIONS. 42. SIMILARLY, IN HIS ANSWER TO QUESTION NOS. 33 AND 34 HE HAS REPLIED AS UNDER : 17 ITA NOS.1016 & 916/PN/2014 Q.33 I AM SHOWING YOU EXHIBIT MARKED AS A/M/29, SEI ZED FROM THE RESIDENCE OF MR. MITULAL, NO. 219, 68 TH , CROSS, 5 TH BLOCK, RAJAJI NAGAR, BANGALORE. PLEASE GO THROUGH THESE LOOSE SHEETS SERIALLY NUMBERED 1-61 AND STATE THE CONTENTS WRITTEN OVER THESE LOOSE SHEETS? ANS : I HAVE GONE THROUGH THE EXHIBIT MARKED A/M/2 9. I HAVE PLACED MY SIGNATURE ON PAGE HO. 24 OF THIS EXHIBIT IN CONFIRMAT ION OF HAVING SEEN IT. THIS EXHIBIT CONTAINS LOOSE SLIPS SERIALLY NUMBER 1-61. S LIPS MARKED AS SL.NO. 4 TO 8, 49 TO 50, 58 ARID 59 CONTAIN THE NOTI NGS OF MR.RASKILAL MANIKCHAND DHARIWAL AND HIS SON MR; MR. PRAKASH. THE N OTINGS ON THESE SLIPS CONTAIN THEIR DIRECTIONS TO ME TO HANDOVER THE A MOUNT MENTIONED IN THE SLIP TO THE PERSON WHO BRINGS THE SLIP. SOMETIMES, THEY DO NOT WRITE ANY NAME ON THE SLIP, I HAVE TO HANDOVER THE MONEY M ENTIONED IN THE SLIP TO THE BEARER OF THE SLIPS. MOST OF THE TIMES, I MAY N OT KNOW THE PERSON BUT STILL I MAKE PAYMENT TO THEM AS I HAVE STANDING INSTRUC TIONS FROM MR.RASKILAL MANIKCHAND DHARIWAL AND HIS SON MR. PRAKASH TO HANDOVER THE MONEY TO THE BEARER OF THE SLIP. THE MONEY IS PA ID OUT OF THE COLLECTIONS RECEIVED FROM THE DISTRIBUTORS TOWARDS UNAC COUNTED SALES. Q.34 DO YOU OBTAIN ANY RECEIPT FROM THE PARTIES TO WHOM YOU HAND OVER CASH AS PER THE INSTRUCTIONS OF MR.RASKILAL MANIKCHAND D HARIWAL AND HIS SON MR. PRAKASH ANS : NO. IT IS NOT REQUIRED. AFTER RECEIPT OF CASH, THEY LEAVE THE SLIP WITH ME. THAT IS CONSIDERED AS EVIDENCE. 43. FROM THE ABOVE IT IS SEEN THAT MR. SOHAN RAJ MEHT A HAS NEVER IDENTIFIED THE ASSESSEE. IT IS ALSO AN ADMITTED FACT THA T THE REQUEST OF THE ASSESSEE TO CROSS EXAMINE MR. SOHAN RAJ MEHTA WAS NOT GRAN TED ON THE GROUND THAT THE SAME WILL NOT SERVE ANY PURPOSE. 44. WE FURTHER FIND MR. RASIKLAL MANIKCHAND DHARIWA L IN HIS STATEMENT RECORDED U/S.132(4) ON 21-01-2010 IN REPLY TO QUESTIO N NO. 9, 11 AND 12 HAS ANSWERED AS UNDER (PAGE 124 OF PAPER BOOK FILED BY LD. DR) : Q9. SIMILARLY, I AM SHOWING YOU PAGE NO.34 OF BUNDL E NO.A/M/29 SEIZED ON 9/10/2009. KINDLY GO THROUGH THE CONTENTS A ND PLEASE EXPLAIN. ANS. THIS IS A SIGNED CHIT IN MY HANDWRITING DT.20/2/20 07 WHEREIN I HAVE INSTRUCTED SHRI VINIT RANAWAT TO HAND OVER AN A MOUNT OF RS.500000- 00 (FIVE LAKHS). Q11. SIMILARLY, I AM SHOWING YOU PAGE NO.24 OF BUNDL E NO.A/M/29 SEIZED ON 9/10/2009. KINDLY GO THROUGH THE CONTENTS AND PLEASE EXPLAIN. ANS. THIS IS A SIGNED CHIT IN MY HANDWRITING DT.10/11/2 006 WHEREIN I HAVE INSTRUCTED SHRI VINIT RANAWAT TO HAND OVER AN A MOUNT OF RS.500000- 00 (FIVE LAKHS). Q.12 SIMILARLY, I AM SHOWING YOU PAGE NO.22 OF BUNDL E NO.A/M/29 SEIZED ON 9/10/2009. KINDLY GO THROUGH THE CONTENTS AND PLEASE EXPLAIN. ANS. THIS IS A SIGNED CHIT IN MY HANDWRITING WHEREIN I HAVE INSTRUCTED SHRI VINIT RANAWAT TO HAND OVER AN AMOUNT OF RS.5000 0-00 (FIFTY THOUSAND). 45. FROM THE ABOVE, IT IS SEEN THAT AT ONE PLACE THE DEPARTMENT IS TREATING THE AMOUNT AS SHORT TERM ADVANCE BY MR. RASI KLAL MANIKCHAND DHARIWAL TO THE ASSESSEE (QUESTION NO.34 TO ASSESSEE U/S.132( 4) ON 20- 18 ITA NOS.1016 & 916/PN/2014 01-2010). SIMILARLY, MR. RASIKLAL MANIKCHAND DHARIW AL IN HIS REPLY TO QUESTION NOS. 9, 11 AND 12 RECORDED U/S.132(4) OF THE I.T. ACT HAS STATED THAT HE HAS INSTRUCTED MR. VINIT RANAWAT TO HAND OVER THE VARIOUS AMOUNTS. THEREFORE, IT IS NOT CLEAR AS TO WHETHER THE ASSESSING OFFICER IS CORRECT OR THE INVESTIGATION WING AT THE TIME OF EXA MINING THE ASSESSEE ARE CORRECT OR THE ANSWER OF MR. RASIKLAL MANIKCHAND DHAR IWAL IS CORRECT. 46. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF AZ IENDE COLORI NAZIONALI AFFINI, ITALY (SUPRA) HAS HELD THAT THE AG REEMENT HAD TO BE CONSIDERED AS A WHOLE AND THAT THE DIFFERENT CLAUSES IN THE AGREEMENT COULD NOT BE CONSIDERED SEPARATELY. THEREFORE, WHEN THE DEPARTMENT ITSELF IS TREATING THE SAME AT ONE PLACE AS SHORT TERM A DVANCE, THEREFORE, THE QUESTION OF TREATING THE SAME AS INCOME OF THE ASSESSE E DOES NOT ARISE. IT IS ALSO AN ADMITTED FACT THAT THE PAPERS WERE FOUND WITH MR. SOHAN RAJ MEHTA AT BANGALORE. THEREFORE U/S.132(4A) THEY CAN B E PRESUMED TO BE TRUE, GENUINE AND CORRECT ONLY IN THE CASE OF THE SEA RCHED PERSON, I.E. MR. SOHAN RAJ MEHTA WHO HAS ADMITTED THAT THE PAPERS BELO NG TO HIM. THEREFORE, WE FIND FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ON THE BASIS OF THE PAPERS FOUND WITH SOME TH IRD PARTY ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE PAR TICULARLY WHEN THERE IS NO BUSINESS CONNECTION BETWEEN THE ASSESSEE AND T HAT PARTY. 47. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ADD L.CIT VS. LATA MANGESHKAR REPORTED IN 97 ITR 696 HAS HELD THAT MERE ENTRIES IN THE ACCOUNTS REGARDING PAYMENT TO THE ASSESSEE WAS NOT SUFFICI ENT AS THERE WAS NO GUARANTEE THAT THE ENTRIES WERE GENUINE IN ABSE NCE OF ANY CORROBORATIVE EVIDENCE. IN THAT CASE, THE INCOME-TA X AUTHORITIES SOUGHT TO ASSESSEE CERTAIN INCOME AS INCOME FROM UNDISCLOSED SOURCES R ECEIVED BY THE ASSESSEE ON THE BASIS OF STATEMENT BY 2 PERSONS THAT THE Y HAD PAID MONEY IN BLACK TO THE ASSESSEE AND ENTRIES IN BOOKS BELON GING TO THEM REGARDING ALLEGED PAYMENT TO THE ASSESSEE. THE TRIBUNA L EXAMINED THE STATEMENT MADE BY THE 2 PERSONS AND FOUND THAT THE EVI DENCE TENDERED BY THEM SUFFERED FROM SERIOUS INFIRMITIES. IT HELD THAT M ERE ENTRIES IN THE ACCOUNTS REGARDING PAYMENTS TO THE ASSESSEE WAS NOT SUFFICI ENT AS THERE WAS NO GUARANTEE THAT THE ENTRIES WERE GENUINE. THE TRIBUNAL THEREFORE HELD THAT THERE WAS NO PROOF THAT THE AMOUNT IN QUEST ION REPRESENTED INCOME FROM UNDISCLOSED SOURCES BELONGING TO THE ASSESSEE. ON FURTHER APPEAL BY THE REVENUE, THE HONBLE HIGH COURT HELD THAT THE CONCLUSION OF THE TRIBUNAL HAD BEEN REACHED BY IT ON A PROPER APP RECIATION OF THE EVIDENCE. THIS WAS FINDING OF FACT BY THE TRIBUNAL A ND NO QUESTION OF LAW AROSE AND NO REFERENCE WOULD LIE FROM THE DECISION OF THE TRIBUNAL. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE WAS DISM ISSED. 48. THE HONBLE SUPREME COURT IN THE CASE OF CBI VS. SHRI V. C. SHUKLA REPORTED IN 3 SCC 410 HAS OBSERVED AS UNDER : THE RATIONALE BEHIND ADMISSIBILITY OF PARTIES' BOOKS O F ACCOUNT AS EVIDENCE IS THAT THE REGULARITY OF HABIT, THE DIFFIC ULTY OF FALSIFICATION AND THE FAIR CERTAINTY OF ULTIMATE DETECTION GIVE THEM IN A SUFFICIENT DEGREE A PROBABILITY OF TRUSTWORTHINESS (WIGMORE ON EVIDENCE $ 1546). SINCE, HOWEVER, AN ELEMENT OF SELF INTEREST AND PARTISANSHIP O F THE ENTRANT TO MAKE A PERSON - BEHIND WHOSE BACK AND WITHOUT WHOSE KN OWLEDGE THE ENTRY IS MADE - LIABLE CANNOT BE RULED OUT THE ADDIT IONAL SAFEGUARD OF INSISTENCE UPON OTHER INDEPENDENT EVIDENCE TO FASTEN HIM WITH SUCH LIABILITY, HAS BEEN PROVIDED FOR IN SECTION 34 BY IN CORPORATING THE WORDS 19 ITA NOS.1016 & 916/PN/2014 SUCH STATEMENTS SHALL NOT ALONE BE SUFFICIENT TO CHARGE ANY PERSON WITH LIABILITY. THE PROBATIVE VALUE OF THE LIABILITY CREATED BY AN ENTRY IN BOOKS OF ACCOUNT CAME UP FOR CONSIDERATION IN CHANDRADHAR VS. GAUHATI BANK [1967 (1) S.C.R. 898]. THAT CASE AROSE OUT OF A SUIT FILED BY GA UHATI BANK AGAINST CHANDRADHAR (THE APPELLANT THEREIN ) FOR RECOVERY O F A LOAN OF RS. 40,000/-. IN DEFENCE HE CONTENDED, INTER ALIA, THAT NO LOAN W AS TAKEN. TO SUBSTANTIATE THEIR CLAIM THE BANK SOLELY RELIED UPON C ERTIFIED COPY OF THE ACCOUNTS MAINTAINED BY THEM UNDER SECTION 4 OF THE B ANKERS' BOOK EVIDENCE ACT, 1891 AND CONTENDED THAT CERTIFIED COP IES BECAME PRIMA FACIE EVIDENCE OF THE EXISTENCE OF THE ORIGINAL ENTR IES IN THE ACCOUNTS AND WERE ADMISSIBLE TO PROVE THE PAYMENT OF LOAN GIVEN. T HE SUIT WAS DECREED BY THE TRIAL COURT AND THE APPEAL PREFERRED AGAINST IT WAS DISMISSED BY THE HIGH COURT. IN SETTING ASIDE THE DECREE THIS COURT OBSE RVED THAT IN THE FACE OF THE POSITIVE CASE MADE OUT BY CHANDRADHAR THAT HE DID NOT EVER BORROW ANY SUM FROM THE BANK, THE BANK HAD TO PROVE THAT FA CT OF SUCH PAYMENT AND COULD NOT RELY ON MERE ENTRIES IN THE BOOKS OF AC COUNT EVEN IF THEY WERE REGULARILY KEPT IN THE CORSE OF BUSINESS IN VIEW O F THE CLEAR LANGUAGE OF SECTION 34 OF THE ACT. THIS COURT FURTHER OBSERVED THAT WHERE THE ENTRIES WERE NOT ADMITTED IT WAS THE DUTY OF THE BANK, IF IT RELIED ON SUCH ENTRIES TO CHARGE ANY PERSON WITH LIABILITY, TO PRODUCE EVIDENC E IN SUPPORT OF THE ENTRIES TO SHOW THAT THE MONEY WAS ADVANCED AS INDICATE D THEREIN AND THEREAFTER THE ENTRIES WOULD BE OF USE AS CORROBORATIV E EVIDENCE. THE SAME QUESTION CAME UP FOR CONSIDERATION BEFORE DIF FERENT HIGH COURT ON A NUMBER OF OCCASIONS BUT TO ESCHEW PROLIXITY WE WO ULD CONFINE OUR ATTENTION TO SOME OF THE JUDGEMENTS ON WHICH MR. SIBA L RELIED. IN YESUVADIYAN VS. SUBBA NAICKER [A. I. R. 1919 MADRAS 13 2] ONE OF THE LEARNED JUDGES CONSTITUTING THE BENCH HAD THIS TO SAY: S.34, EVIDENCE ACT, LAYS DOWN THAT THE ENTRIES IN BOO KS OF ACCOUNT, REGULARLY KEPT IN THE COURSE OF BUSINESS ARE RELEVANT, BUT SUCH A STATEMENT WILL NOT ALONE E BE SUFFICIENT TO CHARGE ANY PERSON W ITH LIABILITY. THAT MERELY MEANS THAT THE PLAINTIFF CANNOT OBTAIN A DECR EE BY MERELY PROVING THE EXISTENCE OF CERTAIN ENTRIES IN HIS BOOKS OF ACCOUN T EVEN THOUGH THOSE BOOKS ARE SHOWN TO BE KEPT IN THE REGULAR COURSE OF BU SINESS. HE WILL HAVE TO SHOW FURTHER BY SOME INDEPENDENT EVIDENCE THAT THE ENTRIES REPRESENT REAL AND HONEST TRANSACTIONS AND THAT THE MONEYS WERE P AID IN ACCORDANCE WITH THOSE ENTRIES. THE LEGISLATURE HOWEVER DOES NOT RE QUIRE ANY PARTICULAR FORM OR KIND OF EVIDENCE IN ADDITION TO ENTRIES IN BOOKS OF ACCOUNT, AND I TAKE IT THAT ANY RELEVANT FACT S WHI CH CAN BE TREATED AS EVIDENCE WITHIN THE MEANING OF THE EVIDENCE ACT WOU LD BE SUFFICIENT CORROBORATION OF THE EVIDENCE FURNISHED BY ENTRIES IN BOOKS OF ACCOUNT IF TRUE.' WHILE CONCURRING WITH THE ABOVE OBSERVATIONS THE OTHE R LEARNED JUDGE STATED AS UNDER: ' IF NO OTHER EVIDENCE BESIDES THE ACCOUNTS WERE GIVE N, HOWEVER STRONGLY THOSE ACCOUNTS MAY BE SUPPORTED BY THE PROBABILITIES, AND HOWEVER STRONG MAY BE THE EVIDENCE AS TO THE HONESTY OF THOSE WHO KEP T THEM, SUCH CONSIDERATION COULD NOT ALONE WITH REFERENCE TO S.34, EVIDENCE ACT, BE THE BASIS OF A DECREE.'(EMPHASIS SUPPLIED) 20 ITA NOS.1016 & 916/PN/2014 IN BENI VS. BISAN DAYAL [ A. I. R 1925 NAGPUR 445] IT WAS OBSERVED TAT ENTRIES IN BOOK S OF ACCOUNT ARE NOT BY THEMSELVES SUFF ICIENT TO CHARGE ANY PERSON WITH LIABILITY, THE REASON BEING THAT A MAN CA NNOT BE ALLOWED TO MAKE EVIDENCE FOR HIMSELF BY WHAT HE CHOOSES TO WRITE IN HIS OWN BOOKS BEHIND THE BACK OF THE PARTIES. THERE MUST BE INDEPEN DENT EVIDENCE OF THE TRANSACTION TO WHICH THE ENTRIES RELATE AND IN ABSENCE OF SUCH EVIDENCE NO RELIEF CAN BE GIVEN TO THE PARTY WHO RELIES UPON SUCH ENTRIES TO SUPPORT HIS CLAIM AGAINST ANOTHER. IN HIRA LAL VS. RAM RAKHA [ A. I. R. 1953 PEPSU 113] THE HIGH COURT, WHILE NEGATIVING A CONTENTION THAT IT HAVING BEEN PROVED THAT THE BOOKS OF ACCOUNT WERE REGULARLY KEPT IN THE ORDINARY COURSE OF BUSINESS AND THAT, THEREFORE, ALL ENTRIES THEREIN SHOULD BE CONSIDERED TO BE RELEVANT AND TO HAVE BEEN PROVE, SAID THAT THE RULE AS LAID DOWN IN SECTION 34 OF THE ACT THAT ENTRIES IN THE BOOKS OF ACCOUNT RE GULARLY KEPT IN THE COURSE OF BUSINESS RE RELEVANT WHENEVER THEY REFER TO A MATTER IN WHICH THE COURT HAS TO ENQUIRE WAS SUBJECT TO THE SALIENT PRO VISO THAT SUCH ENTRIES SHALL NOT ALONE BE SUFFICIENT EVIDENCE TO CHAR GE ANY PERSON WITH LIABILITY. IT IS NOT, THEREFORE, ENOUGH MERELY TO PR OVE THAT THE BOOKS HAVE BEEN REGULARLY KEPT IN THE COURSE OF BUSINESS AND THE E NTRIES THEREIN ARE CORRECT. IT IS FURTHER INCUMBENT UPON THE PERSON RELY ING UPON THOSE ENTRIES TO PROVE THAT THE WERE IN ACCORDANCE WITH FACTS. THE EVIDENTIARY VALUE OF ENTRIES RELEVANT UNDER SECT ION 34 WAS ALSO CONSIDERED IN HIRALAL MAHABIR PERSHAD (SUPRA ) I.D. DU A, ]. (AS HE THEN WAS) SPEAKING FOR THE COURT OBSERVED THAT SUCH ENTRIES THOU GH RELEVANT WERE ONLY CORROBORATIVE EVIDENCE AND IT IS TO BE SHOWN FUR THER BY SOME INDEPENDENT EVIDENCE THAT THE ENTRIES REPRESENT HONE ST AND REAL TRANSACTIONS AND THAT MONIES WERE PAID IN ACCORDANCE W ITH THOSE ENTRIES. A CONSPECTUS OF THE ABOVE DECISIONS MAKES IT EVIDENT TH AT EVEN CORRECT AND AUTHENTIC ENTRIES IN BOOKS OF ACCOUNT CANNOT WITHOUT INDEPENDENT EVIDENCE OF THEIR TRUSTWORTHINESS, FIX A LIABILITY UPO N A PERSON. KEEPING IN VIEW THE ABOVE PRINCIPLES, EVEN IF WE PROCEED ON THE ASSUMPTION THAT THE ENTRIES MADE IN MR 71/91 ARE CORRECT AND THE ENTRIES IN THE OTHER BOOKS AND LOOSE SHEETS WHICH WE HAVE ALREADY FOUND TO BE NOT ADMISSIBLE IN EVIDENCE UNDER SECTION 34) ARE ADMISSIBLE UNDER SECTI ON 9 OF THE ACT TO SUPPORT AN INFERENCE ABOUT THE FORMERS' CORRECTNESS STIL L THOSE ENTRIES WOULD NOT BE SUFFICIENT TO CHARGE SHRI ADVANI AND SH RI SHUKLA WITH THE ACCUSATIONS LEVELLED AGAINST THEM FOR THERE IS NOT AN I OTA OF INDEPENDENT EVIDENCE IN SUPPORT THEREOF. IN THAT VIEW OF THE MAT TER WE NEED NOT DISCUSS, DELVE INTO OR DECIDE UPON THE CONTENTION RAISE D BY MR. ALTAF AHMED IN THIS REGARD. SUFFICE IT TO SAY THAT THE STATE MENTS OF THE FOUR WITNESSES, WHO HAVE ADMITTED RECEIPTS OF THE PAYMENTS AS SHOWN AGAINST THEM IN MR 71/91, CAN AT BEST BE PROOF OF RELIABILIT Y OF THE ENTRIES SO FAR THEY ARE CONCERNED AND NOT OTHERS. IN OTHER WORDS, TH E STATEMENTS OF THE ABOVE WITNESSES CANNOT BE INDEPENDENT EVIDENCE UNDER SECTION 34 AS AGAINST THE ABOVE TWO RESPONDENTS. SO FAR AS SHRI ADVAN I IS CONCERNED SECTION 34 WOULD NOT COME IN AID OF THE PROSECUTION FOR ANOTHER REASON ALSO. ACCORDING TO THE PROSECUTION CASE ITSELF HIS NAME FINDS PLACE ONLY IN ONE OF THE LOOSE SHEETS (SHEET NO. 8) AND NOT IN MR 71/ 91. RESULTANTLY, IN VIEW OF OUR EARLIER DISCUSSION, SECTION 34 CANNOT AT AL L BE PRESSED INTO SERVICE AGAINST HIM. (UNDERLINE PROVIDED BY US) 21 ITA NOS.1016 & 916/PN/2014 49. WE FURTHER FIND IDENTICAL ISSUE HAD COME UP BEFOR E VARIOUS BENCHES OF THE TRIBUNAL ON THE BASIS OF THE NOTINGS OF MR.SOHA N RAJ MEHTA FOUND DURING THE COURSE OF SEARCH. WE FIND THE AHMEDABAD B ENCH OF THE TRIBUNAL IN THE CASE OF SHRI MUSTAFAMIYA H. SHEIKH (S UPRA) HAS OBSERVED AS UNDER: 7. ON A PERUSAL OF THE SEIZED MATERIALS RECEIVED FR OM THE INVESTIGATION WING, PUNE, THE AO HAD NOTICED THAT PA GE 34 WAS A SUMMARY OF THE CASH PAYMENT MADE BY SHRI SOHANRAJ MEHTA FOR THE PERIOD FROM APRIL 2003 - AUGUST 2006 AS PER THE DIRECTION OF RMD GROUP. AS PER THIS VERSION, AN AMOUNT OF RS.57.50 LAKHS PERTAINED TO SHRI SHEIKH MUSTAFMIYA HUSSAINMIYA OF AHMEDABAD AND PAGE 47 WAS THE MONTHLY SUMMARY FOR THE MONTH OF JANUARY - MARCH 2004 OF THE UNACCOUNTE D TRANSACTION CARRIED OUT BY SHRI SOHANRAJ MEHTA C & F OF KARNATAKA REGIO N OF RMD GROUP. AFTER ANALYZING THE ISSUE EXHAUSTIVELY AS DETAILED IN THE ASSESSM ENT ORDER AS WELL AS IN THE APPELLATE ORDER UNDER DISPUTE, A SUM OF RS.57.5 LAKHS IN CASH AS EVIDENCED BY THE SEIZED DOCUMENTS WAS TREATED AS UNAC COUNTED RECEIPT IN THE HANDS OF THE ASSESSEE AND, ACCORDINGLY, ADDED TO THE INCOME OF THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATION BY THE AO WH ICH HAS BEEN SUBSEQUENTLY SUSTAINED BY THE LEARNED CIT (A) FOR THE D ETAILED REASONS RECORDED IN HIS APPELLATE ORDER WHICH IS UNDER SCRUTIN Y. 7.1. ADMITTEDLY, THE WHOLE PROCEEDINGS WERE INITIAT ED ON THE STRENGTH OF A STATEMENT OF A THIRD PARTY (SHRI SOHANRAJ MEHTA ). THE PURPORTED SEIZURE OF SLIPS, LOOSE SHEETS ETC. AT THE PREMISES OF A T HIRD PARTY CONTAINED ONLY THE NAMES, BUT, NOT OTHER DETAILS SUCH AS THEIR ID ENTITY, ADDRESSES, CONTACT NUMBERS ETC. ON A PERUSAL OF THE STATEMENT, IT IS CLEAR THAT THE PAYMENTS MADE WERE TO THE PERSONS WHOSE NAMES WERE APPEA RING ON THE RIGHT SIDE OF THE PAPERS (SHEETS) WHICH WERE PAID TO TH OSE PERSONS ON THE INSTRUCTIONS OF PRD & RD. MOREOVER, AGAINST THE NAMES O F MUSTUFA & TAUFIK, IT WAS SPECIFICALLY WRITTEN AS (PRD) EXPENDITU RE IN RESPECT OF PRD WAS GIVEN BY SHRI SOHANRAJ MEHTA AS PER THE TELEPHONI C AND WRITTEN INSTRUCTION OF PRAKASH RASIKAL DHASRIWAL AND RASIKLAL M ANIKCHAND DHARIWAL AS PER THE STATEMENT OF SRI SOHANRAJ MEHTA DATED 21.10.2009 [REFER: PAGE 99 OF PB AR]. TO A QUESTION NO.14 EXHIB IT A/M/8/DATED 9.10.2009 WHICH CONTAINED A BUNCH OF LOOSE SHEETS SERIA LLY NUMBERED FROM 01 TO 58 TO EXPLAIN THE CONTENTS, SHRI SOHANRAJ MEHTA ANSWERED THUS - 'PAGE 34 RECORDS RECEIPT OF GUTKHA CONSIGNMENT FROM D HARIWAL INDUSTRIES LTD., DURING APRIL 2003 TO JAN. 2006 TOTALLING TO R S.218,00,91,198/- (WHICH IS RECORDED ON THE LEFT HAND SIDE OF THE PAGE). ON TH E RIGHT HAND SIDE OF THE PAGE, PARTIES TO WHOM CASH PAYMENTS WERE MADE HAVE BEE N RECORDED, ON INSTRUCTIONS FROM DHARIWAL INDUSTRIES LTD., THE INSTRUCT IONS WERE IN THE FORM OF SLIPS OF PAPER AND THEY CONTAIN THE SIGNATURES OF MR. RASHIKLAL MANIKCHAND DHARIWAL AND HIS SON MR. PRAKASH DHARIWAL. SUCH PAYMENTS TOTALING TO RS.206,76,54,463/- WERE MADE IN 2003-20 06. THE BALANCE OF RS.11,24,36,739/- WAS SETTLED BY ME SUBSEQUENTLY OVER A PERIOD OF TIME.' 7.2. CONSIDERING THE STATEMENT OF THE SAID PERSON, THE RE IS STRONG FORCE IN THE CONTENTION OF THE ASSESSEE THAT EVEN ASSUMING THAT THE RECEIPT OF SUCH AMOUNT WAS MERELY A COLLECTION FOR ON BEHALF OF THE COMPANY AND SUCH AMOUNT CANNOT PAR TAKE THE CHARACTER OF INCOME IN THE HANDS OF THOSE PERSONS. 22 ITA NOS.1016 & 916/PN/2014 7.3. MOREOVER, ACCORDING TO THE ASSESSEE, THE SEARCHED PERSON BEING A THIRD PARTY HAD RETRACTED ALL THE STATEMENTS RECORDED DURING THE SEARCH PROCEEDINGS IN THE FOLLOWING WORDS: '1. I REFERRED MY AFORESAID STATEMENT RECORDED BY DEP UTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(2), BANGALORE ON 10 .8.2011. 2. IN THIS STATEMENT DATED 10.8.2011 SENSE CONVEYS THAT MY DETAILED LETTER DT.23.12.2009 FILED WITH THE ASST. DIRECTOR OF INCOME -TAX (INVESTIGATION) UNIT 2(1), BANGALORE IS NEGATED WHICH IS INCORRECT AN D UNTRUE. 3. TODAY ON 3.12.2011, SATURDAY I DEPOSE IN THE NAME OF ALMIGHTY GOD THAT UNDER WRONG PROMISES, MISTAKEN BELIEFS, INADEQUATE GUID ANCE AND IMPROPER ADVISE, I SIGNED THE LETTER DT. 10.8.2011 IN THE INCOME-TAX DEPARTMENT, BANGALORE WHICH IS ABSOLUTELY WRONG AND N OT THE CORRECT VERSION OF WHAT I WANTED TO CONVEY TO THE INCOME-TAX DEPARTMENT AT THAT POINT OF TIME. 4. WITH MY THIS LETTER SPECIFICALLY ADDRESSED TO YOU, I ONCE AGAIN STATE THAT ALL MY STATEMENTS RECORDED DURING THE SEARCH PROCEEDIN GS ON 10.9.2009 AND MY STATEMENT DATED 10.8.2011 RECORDED AT BANGALO RE BEFORE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(2), BANG ALORE IS RETRACTED UN- CONDITIONALLY BY ME, IT BEING IMPROPER.'[REFER: PAGES 225 - 27 OF THE ASSESSEE'S SUBMISSION DT.12.12.2012]. 7.4. THUS, THERE IS FORCE IN THE ASSESSEE'S CONTENTION TH AT HE SHOULD HAVE BEEN AFFORDED AN OPPORTUNITY TO CROSS-EXAMINE THE TH IRD PARTY [ SHRI SHOHANRAJ MEHTA] SINCE HIS STATEMENTS ON OATH WERE COUP LED WITH INCONSISTENCY, HE RETRACTED HIS EARLIER STATEMENTS AND, THUS, NOT ABOVE THE BOARD. 7.5. MOREOVER, THE ASSESSEE'S PLEA FOR PERMISSION TO CROSS EXAMINE SHRI SOHANRAJ MEHTA AT THE ASSESSMENT STAGE WAS NOT CONCEDED B Y THE AO ON THE GROUND THAT - '[ON PAGE 9 CIT (A)] 2.8........................... ................................................ CO MMENTS OF THE AO: (II) OPPORTUNITY OF CROSS EXAMINATION OF SHRI SOHANRA J MEHTA: 'THE ASSESSEE WAS PROVIDED WITH THE COPY OF THE STATEMENT OF S HRI SOHANRAJ MEHTA RECORDED BY THE ADIT (INV), PUNE, ALONG WITH DOCUMENTS ON WHICH HIS STATEMENT WAS RECORDED. DUE TO PAUCITY OF TIME THE CROSS EXAMINATION COULD NOT BE GRANTED.' 7.6. THE CIT (A) HAD ALSO TURNED DOWN THE ASSESSEE'S REQU EST FOR CROSS- EXAMINATION ON THE GROUND THAT - '(ON PAGE 53) 2.25................IT HAS ALSO BEEN IN DICATED, AS BORNE OUT ON RECORDS, THAT THE APPELLANT HAD ASKED FOR CROSS EXAMIN ATION OF THE PARTY FOR THE FIRST TIME ONLY ON 14.12.2011. THE APPELLANT WAS ALSO FULLY AWARE THAT THE LIMITATION TO PASS REASSESSMENT ORDER IN THE CASE EXPIRES ON 31.12.2011. THUS, BETWEEN 29.3.2011 TILL 14.12.2011, THE APPELLANT DID NOT MAKE ANY REQUEST TO THE AO THAT AN OPPORTUNITY OF CR OSS EXAMINATION IS REQUIRED BY HIM. FULLY KNOWING THAT IT WOULD NOT BE POSSIBLE FOR THE AO TO CALL A PARTY FROM DISTANT BANGALORE AND AFFORD THE FACILITY OF CROSS EXAMINATION DURING A SHORT PERIOD OF JUST 12 WORKING DAYS, THE APPELLANT MAKES REQUEST FOR CROSS EXAMINATION. THERE IS NO DENYIN G THE FACT THAT CROSS EXAMINATION IS AN INALIENABLE RIGHT OF AN AGREED PARTY BUT IT IS ALSO TRUE THAT THERE HAS TO BE A JUSTIFIABLE TIME FRAME IN WHICH SUCH RIGHT CAN BE 23 ITA NOS.1016 & 916/PN/2014 EXERCISED. IT IS AS SETTLED PRINCIPLE OF LAW THAT RIGHT S AND DUTIES UNDER A STATUTE GO HAND IN HAND AND CANNOT BE EXERCISED IN ISO LATION. THE APPELLANT TRULY HAD THE RIGHT TO CROSS EXAMINATION BUT AT THE SA ME TIME HAD THE DUTY TO ASK FOR IT WITHIN A REASONABLE TIME FRAME. A RIGHT EXERCISED WITH ULTERIOR MOTIVES DOES NOT POSSESS THE SANCTION OF LAW. FACTS OF T HE CASE CLEARLY INDICATE THAT THE APPELLANT HAD PURPOSEFULLY DEMANDE D CROSS EXAMINATION AT A TIME WHEN IT WAS CONSIDERED IMPRACTICAL AND UNFE ASIBLE.....' 7.7. IN ESSENCE, THE PRINCIPLES OF NATURAL JUSTICE ON THE LEGITIMATE REQUEST OF THE ASSESSEE, TO CROSS EXAMINE THE THIRD PARTY ON THE BASIS OF WHOSE STATEMENT THE IMPUGNED ADDITION SOUGHT TO BE ADD ED TO HIS INCOME, HAS BEEN DENIED ON FLIMSY GROUNDS. 7.8. AT THIS POINT OF TIME, WE SHALL ANALYZE THE JUD ICIAL PRONOUNCEMENTS ON A SIMILAR ISSUE, AS UNDER (PB -184): (I) THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT V. MAHENDRA AMBALAL PATEL REPORTED IN (2010) 40 DTR (GUJ) 243 H AD HELD AS UNDER: 'FROM THE FINDINGS RECORDED BY THE TRIBUNAL IT IS AP PARENT THAT THOUGH IT IS THE CASE OF REVENUE THAT THE LAND HAS BEEN SOLD BY THE ASSESSEE TO GC THROUGH MV, THERE IS NO MATERIAL ON RECORD TO INDIC ATE THAT THE SAID LAND IN FACT BELONGS TO THE ASSESSEE. THOUGH THE AO HAS PLACED RE LIANCE UPON THE STATEMENTS OF MV AND GC FOR THE PURPOSE OF TAXING THE AMOUNT IN THE HANDS OF THE ASSESSEE, DESPITE SPECIFIC REQUEST BEING MADE BY THE ASSESSEE FOR CROSS- EXAMINING BOTH THE SAID PERSONS, THE AO HAS N OT PERMITTED THE ASSESSEE TO CROSS-EXAMINE THEM. IN THE CIRCUMSTANCES, NO R ELIANCE COULD BE PLACED UPON THE STATEMENTS OF THE SAID PERSONS AS THE ASSESSE E HAD NO OPPORTUNITY TO CROSS-EXAMINE THEM. THE STATEMENTS MADE BY THE AFORESAID PERSONS WOULD HAVE NO EVIDENTIARY VALUE AND AS SUCH, WO ULD NOT BE ADMISSIBLE IN EVIDENCE. FURTHER, THOUGH THE SAID MV HA S STATED THAT HE HAS PAID RS.60 LAKHS TO THE ASSESSEE ON BEHALF OF ONE GC, THE SAID AMOUNT HAS NOT BEEN TAXED IN THE HANDS OF GC. MOREOVER, NO EVID ENCE HAS BEEN ADDUCED TO INDICATE THAT ANY TRANSACTION IN RELATION TO THE LAND IN QUESTION HAS ACTUALLY TAKEN PLACE. THE TRIBUNAL HAS RIGHTLY FO UND THAT THE BASIS FOR MAKING THE ADDITION IN THE CASE OF THE ASSESSEE IS MERELY A BALD STATEMENT OF MV, WHICH IS NOT CORROBORATED WITH ANY DOCUMENTAR Y EVIDENCE FOUND AT THE TIME OF SEARCH, EITHER IN THE CASE OF S OR MV OR THE ASSESSEE. NO PLEA TO THE EFFECT THAT THE IMPUGNED ORDER OF THE TRIBUNAL SUFFERS FROM ANY PERVERSITY HAS BEEN RAISED. THE TRIBUNAL HAVING BASED I TS CONCLUSION ON FINDINGS OF FACT RECORDED BY IT AFTER APPRECIATION O F THE EVIDENCE ON RECORD, IT CANNOT BE STATED THAT THE IMPUGNED ORDER OF THE T RIBUNAL SUFFERS FROM ANY LEGAL INFIRMITY............' (II) DURING THE COURSE OF HEARING OF A REFERENCE AP PLICATION OF THE REVENUE IN THE CASE OF DCIT (ASST) V. PRARTHANA CONSTRU CTION PVT. LTD [TAX APPEAL NO.79 OF 2000 DATED 25.3.2001] BEFORE THE HO N'BLE JURISDICTIONAL HIGH COURT, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE DOCUMENTS IN QUESTION HAVE BEEN FOUND FROM THE PREMISE S OF A THIRD PARTY. THE LOOSE PAPERS CANNOT BE STATED TO BE BOOKS OF ACCOUNT IN THE LIGHT OF THE DECISION OF THE SUPREME COURT IN THE CASE OF C BI V. V.C. SHUKLA AND OTHERS (1998) 3 SCC 410 AS OBSERVED BY THE TRIBUNAL AN D SUBMITTED THAT THE TRIBUNAL HAS BASED ITS CONCLUSIONS ON THE FINDINGS OF FACT RECORDED BY IT UPON APPRECIATION OF THE EVIDENCE ON RECORD; THA T THE TRIBUNAL HAD EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE AND HA D COME TO THE CONCLUSION THAT THE REVENUE HAD NOT BEEN ABLE TO ESTA BLISH ITS CASE AGAINST 24 ITA NOS.1016 & 916/PN/2014 THE ASSESSEE AND AS SUCH, THE ORDER OF THE TRIBUNAL BEIN G BASED UPON FINDINGS OF FACT RECORDED BY IT, DOES NOT GIVE RISE TO ANY QUESTION OF LAW. IT WAS, FURTHER, SUBMITTED ON BEHALF OF THE ASSESSEE THAT TH E ENTIRE CASE OF THE REVENUE WAS BASED UPON DOCUMENTS RECOVERED DURING THE COURSE OF SEARCH FROM THE PREMISES OF THIRD PARTIES AND THE STATE MENTS OF THE THIRD PARTIES AND THAT THE ASSESSEE WAS NOT GRANTED AN OPPORTUN ITY TO CROSS EXAMINE THE THIRD PARTIES AND AS SUCH THEIR STATEMENTS H AVE NO EVIDENTIARY VALUE. AFTER DUE CONSIDERATION OF RIVAL SUBMISSIONS AND ALSO TAK ING INTO ACCOUNT THE RELIANCE PLACED BY THE ASSESSEE'S COUNSEL IN THE CASES OF (I) KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC) & (II) CIT V. S.C. SETHI (2007) 295 ITR 351 (RAJ), THE HON'BLE COURT HAD HE LD THUS: '[PB - 174] 16. THUS, IT IS APPARENT THAT THE CONCLUSI ONS ARRIVED BY THE TRIBUNAL ARE BASED UPON THE AFORESAID FINDINGS OF FACT RECORDED BY IT UPON APPRECIATION OF THE EVIDENCE ON RECORD. ON BEHALF O F THE REVENUE NOTHING IS POINTED OUT TO SHOW THAT THE FINDINGS RECORDED BY THE TRIBUNAL ARE IN ANY MANNER PERVERSE, NOR IS IT THE CASE OF THE REVENUE THA T THE TRIBUNAL HAS TAKEN INTO CONSIDERATION ANY IRRELEVANT MATERIAL OR THAT ANY RELEVANT MATERIAL HAS BEEN IGNORED. THE CONCLUSION ARRIVED AT BY THE TRIBUNAL ON THE BASIS OF THE FINDINGS OF FACT RECORDED BY IT CANNO T IN ANY MANNER BE SAID TO BE UNREASONABLE. IN THE AFORESAID PREMISES, THE IMPUGNED ORDER OF THE TRIBUNAL BEING BASED UPON FINDINGS OF FACT RECOR DED BY IT UPON APPRECIATION OF THE EVIDENCE ON RECORD, WHICH FINDI NGS HAVE NOT BEEN DISLODGED BY THE REVENUE BY POINTING OUT ANY EVIDENC E TO THE CONTRARY, THEREFORE, DOES NOT WARRANT ANY INTERFERENCE.' 7.9. TAKING INTO ACCOUNT THE SUBMISSIONS OF THE ASSESSEE, THE STAND OF THE AO, REASONING OF THE CIT (A) IN SUSTAINING THE ACT ION OF THE AO AND ALSO IN CONFORMITY WITH THE RULINGS OF THE HON'BLE JURISDI CTIONAL HIGH COURT (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THAT LEAR NED CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.57.5 LAKHS MA DE BY THE AO IN THE HANDS OF THE ASSESSEE FOR THE FOLLOWING REASONS: (I) THAT THE LEARNED AO HAD SOLELY DEPENDED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF PUNE; (II) THAT THE AO HAD FAILED TO SUBSTANTIATE THE SAME W ITH ANY CREDIBLE DOCUMENTARY EVIDENCE TO THE EFFECT THAT THE ASSESSEE H AD INDEED RECEIVED THE ALLEGED CASH PAYMENT OF RS.57.5 LAKHS FROM SHRI S OHANRAJ MEHTA AS THE ASSESSEE HAD CATEGORICALLY PLEADED BEFORE THE AO THAT H E WAS MAKING PURCHASES THROUGH AMBIKA DISTRIBUTORS WHO WERE THE C & F AGENTS FOR GUJARAT REGION; (III) THAT THE TOTAL UNACCOUNTED SALES EFFECTED BY SH RI SOHANRAJ MEHTA C & F OF RMD GUTKHA ON BEHALF OF DHARIWAL INDUSTRIES LIMITE D FOR THE PERIOD OF APRIL 2003 TO FEB 2008 WAS RS.345.72 CRORES (APPROX). THE UNACCOUNTED INCOME FOR THE AY 2004-05 WAS ARRIVED AT RS.40,88,32, 514/-, THE SAME WAS ADDED SUBSTANTIVELY IN THE CASE OF M/S. DHARIVAL IND USTRIES LIMITED AND CONCLUDED THE ASSESSMENT FOR THE AY 2004-05 U/S 153A R.W.S. 143 (3) OF THE ACT, DATED 29.12.2011 BY THE ACIT, C.C. 1(1) , PUNE [COURTESY: P 231 - 238 OF PB AR]; 25 ITA NOS.1016 & 916/PN/2014 (IV) THAT ONCE THE ALLEGED SUM OF RS.57.5 LAKHS WAS SUB JECTED TO TAX IN THE HANDS OF DHARIWAL INDUSTRIES LIMITED, THE SAME CANNOT BE SUBJECTED TO SUFFER FURTHER TAX. THIS VIEW HAS BEEN FAIRLY CONCEDED BY THE CIT (A) '(ON PAGE 54) 2.27.......THE APPELLANT IS RIGHT TO THE E XTENT THAT NO INCOME CAN BE TAXED TWICE......' (V) THAT THE AO HAD CANDIDLY ADMITTED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDING ITSELF THE ASSESSEE HAD SOUGHT PERMISSION TO CROSS EXAMINE SHRI SOHANRAJ MEHTA WHICH WAS SUMMARILY REJEC TED BY TAKING REFUGE '.....DUE TO PAUCITY OF TIME, THE CROSS EXAMIN ATION COULD NOT BE GRANTED' [REFER: PARA 2.8 (PAGE 10) OF THE CIT (A)'S ORDER]. THIS STAND OF THE AO, TO VIEW IT MILDLY, IS AGAINST THE SPIRIT OF JUDICIAL PRONOUNCEMENTS; (VI) THAT THE AO HAD MERELY COME TO A CONCLUSION BASE D ON A STATEMENT OF A THIRD PARTY, WITHOUT BRINGING ANY CREDIBLE DOCUMENT ARY EVIDENCE TO THE CONTRARY ON RECORD TO NAIL THE ASSESSEE; & (VII) NO RELIANCE CAN BE PLACED ON THE STATEMENTS OF A THIRD PERSON WHOSE PREMISES WERE SUBJECTED TO A SEARCH SINCE HE HAD RETRACT ED HIS OWN STATEMENT MADE EARLIER ON OATH AND PRECISELY THE ASSESSEE HAS BEEN DENIED TO CROSS-EXAMINE HIM TO BRING OUT THE TRUTH. 7.9.1 FOR THE ABOVE SAID REASONS, WE HEREBY HOLD THAT THE ADDITION MADE FOR RS.57,50,000/- BY THE LEARNED AO ON ACCOUNT OF U NDISCLOSED INCOME, WHICH WAS FURTHER SUSTAINED BY THE LEARNED CIT(A) REQ UIRES TO BE DELETED AND ACCORDINGLY, WE HEREBY DIRECT THE REVENUE TO DE LETE THE SAME. THUS, GROUND NO.1 RAISED BY THE ASSESSEE WITH RESPECT TO REOPEN ING OF THE ASSESSMENT U/S 148 OF THE ACT IS DISMISSED AND GROUND NO.2 W ITH RESPECT TO ADDITION ON ACCOUNT OF UNDISCLOSED INCOME IS ALLOWE D IN FAVOUR OF THE ASSESSEE. 50. WE FIND THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. H.S. CHANDRAMOULI (SUPRA) HAD ALSO AN OCCASION TO DEC IDE AN IDENTICAL ISSUE AND DELETED THE ADDITION BY OBSERVING AS UNDER : 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DR. IT IS SEEN THAT THE DOCUMENT IN QUESTION WAS SEIZED FROM THE POSSESS ION OF ONE MR. SOHANRAJ MEHTA. THE SEIZED DOCUMENT MAKES A REFERENC E TO THE NAME OF THE ASSESSEE AND A FIGURE OF RS.22.75 LAKHS APPEARS AGAIN ST HIS NAME. AS TO WHETHER THIS DOCUMENT EVIDENCES PAYMENT OF RS.22.75 LA KHS TO THE ASSESSEE IS A MOOT QUESTION. THERE IS NO BASIS SET OUT IN T HE ORDER OF THE AO FOR COMING TO THE CONCLUSION THAT THE SEIZED DOCUMENT EVIDENCES RECEIPT OF MONEY BY THE ASSESSEE FROM SOHANRAJ MEHTA. THE PRESUMPTI ON U/S. 292C OF THE ACT IS ONLY WITH REFERENCE TO THE PERSON SEARCH ED AND IT CANNOT BE EXTENDED TO THE ASSESSEE. THERE IS NO CORROBORATIVE EVID ENCE OR STATEMENT OF SOHANRAJ MEHTA RELIED UPON BY THE AO, TO THE EFF ECT THAT A SUM OF RS.22.75 LAKHS WAS PAID TO THE ASSESSEE. THE ASSESSEE HAS CATEG ORICALLY DENIED HAVING RECEIVED ANY PAYMENT FROM SOHANRAJ ME HTA. EVEN IN THE PROCEEDINGS BEFORE THE AO, WHEN THE ASSESSEE WAS EXAMINED , HE HAD TAKEN THE SAME STAND. THE DETAILS CALLED FOR IN THE SCRUTINY ASSESSMENT DID NOT CALL FOR ANY SPECIFIC DETAILS ON THE SEIZED DOCUMENT O R RECEIPT OF CASH BASED ON THE SEIZED DOCUMENT. 26 ITA NOS.1016 & 916/PN/2014 14. IN THE LIGHT OF THESE CIRCUMSTANCES, THE CIT(APP EALS) WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE RECEIVED THE SUM OF RS.22.75 LAKHS FROM SOHANRAJ MEHTA. THE ADDITION MADE BY THE AO WAS THER EFORE RIGHTLY DELETED BY THE CIT(A). WE DO NOT FIND ANY GROUND TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS). 51. WE FIND THE LUCKNOW BENCH OF THE TRIBUNAL IN TH E CASE OF M/S. MOHD. AYUB MOHD. YAKUB PERFUMERS PVT. LTD., (SUPRA) WHILE DELETING THE ADDITION UNDER IDENTICAL FACTS AND CIRCUMSTANCES AS HEL D AS UNDER : 2. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD AR E THAT DURING THE COURSE OF SEARCH CONDUCTED UPON SHRI. SOHANRAJ MEHTA, C&F OF RMD GUTKHA GROUP IN BANGALORE, STATEMENT OF ACCOUNT WAS SE IZED IN WHICH THERE WAS AN ENTRY OF RS.50 LAKHS IN THE NAME OF MALIK KANNAUJ. THIS ENTRY WAS INTERPRETED BY THE REVENUE AS THIS AMOUNT WAS GIVE N TO SHRI. ABDUL MALIK, MD OF THE ASSESSEE-COMPANY. ON THE BASIS OF SEIZED DOCUMENTS, THE ASSESSING OFFICER HAS FORMED A BELIEF IN THE ASSESSEE'S CASE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, AS THIS AMOUNT WA S NOT SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. ACCORDINGLY A NO TICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT 'THE ACT') WAS ISSUED AND ASSESSMENT WAS COMPLETED UNDER SECTION 147 OF T HE ACT READ WITH SECTION 144 OF THE ACT IN THE HANDS OF THE ASSESSEE , RESULTING INTO AN ADDITION OF RS.10.48 LAKHS AS PROFIT ON THIS UNACCOUNT ED SALE OF RS.50 LAKHS. 3. AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) WI TH THE SUBMISSION THAT NO DOCUMENT INDICATING PAYMENT OF RS.50 LAKHS TO THE ASSESSEE- COMPANY WAS FOUND DURING THE COURSE OF SEARCH. ONLY DU MB DOCUMENTS WERE FOUND IN WHICH THERE WAS A DEBIT ENTRY OF RS.50 LAKHKS IN THE NAME OF MALIK KANNAUJ. EVEN IN THE STATEMENT OF SHRI. SOHANR AJ GUPTA, THERE WAS NO MENTION OF THE DIRECTOR OF THE ASSESSEE-COMPANY, SHRI. ABDUL MALIK. THEREFORE, THE LD. CIT(A) CAME TO THE CONCLUSION THA T IN THE ABSENCE OF ANY EVIDENCE INVOLVING THE ASSESSEE TO THE ALLEGED RECEIPT OF RS.50 LAKHS, REOPENING IN THE HANDS OF THE ASSESSEE UNDER SECTION 147 OF THE ACT IS NOT PROPER AND HE ACCORDINGLY ANNULLED THE ASSESSMENT. 4. AGGRIEVED THE REVENUE HAS PREFERRED AN APPEAL BE FORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS. DURING THE COURSE OF HEARING, A SPECIFIC QUERY WAS RAISED FROM THE LD. D.R. AS TO WHAT EVIDENCE THEY HAVE COLLECTED DURING THE COURSE OF SEARCH OR THEREAFTER, ON THE BASI S OF WHICH THE ASSESSING OFFICER HAS FORMED A BELIEF THAT THE INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. NO SATISFACT ORY ANSWER WAS FURNISHED BY THE LD. D.R. WE HAVE ALSO CAREFULLY P ERUSED THE SEIZED DOCUMENTS AND WE FIND THAT THERE IS A DEBIT ENTRY OF RS.50 LAKHS IN THE NAME OF MLIK KANNAUJ, BUT THIS ENTRY DOES NOT INDICAT E THAT THE AMOUNT OF RS.50 LAKHS WAS GIVEN TO THE MANAGING DIRECTOR OF THE ASSESSEE. THERE MAY BE HUNDRED OF MALIK IN KANNAUJ BUT ON THE BASIS OF TH IS DUMB DOCUMENT, THE REOPENING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE I S NOT PERMISSIBLE. MOREOVER, THE SEARCHED PARTY HAS ALSO EXAM INED SHRI. SOHANRAJ GUPTA AND THE STATEMENT IS ALSO PLACED ON REC ORD AND AT NOWHERE SHRI. SOHANRAJ GUPTA HAS DEPOSED ABOUT PAYMENT OF RS.5 0 LAKHS TO THE ASSESSEE. IN THE ABSENCE OF ANY RELEVANT MATERIAL, THE R EOPENING OF ASSESSMENT IN THE HANDS OF THE ASSESSEE IS NOT PROPER. THE LD . CIT(A) HAS GIVEN VALID REASONS WHILE HOLDING THAT THE REOPENING IS BAD. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDE R:- 27 ITA NOS.1016 & 916/PN/2014 '5.1.6 FROM ALL THE AFORESAID CORRESPONDENCE, IT IS O BVIOUS THAT THERE IS NO CLUE AS TO HOW THE IDENTITY OF 'MALIK KANNAUJ' AS APP EARING IN THE SEIZED DOCUMENT (SUPRA) WAS INTERPRETED AS SHRI ABDUL MALIK, MD OF THE APPELLANT COMPANY. IN THE STATEMENT GIVEN BY SHRI SO HANRAJ GUPTA, THERE IS NO MENTION OF ANY MALIK. FURTHER, IN HIS STATEMENT U NDER OATH BEFORE THE ADIT(LNV), KANPUR, SHRI ABDUL MALIK, THE M.D. OF TH E APPELLANT COMPANY HAD DENIED SUCH TRANSACTION. IN THESE CIRCUMSTANCES, I F AIL TO UNDERSTAND AS TO HOW, THE A.O. FORMED THE BELIEF THAT THE ENTRY IN THE NAME OF 'MALIK KANNAUJ' (AS APPEARING IN THE SEIZED DOCUMENT) REFERR ED TO SHRI 'MALIK, M.D. OF THE APPELLANT COMPANY. FURTHER, EVEN FOR AR GUMENT SAKE IF 'MALIK KANNAUJ' INDEED REFERRED TO SHRI ABDUL MALIK, THE M .D. OF THE APPELLANT COMPANY, THERE WAS NO EVIDENCE/MATERIAL ON RECORD WH ICH COULD LINK THAT PAYMENT TO THE ASSESSEE COMPANY. JUST BECAUSE THE ADIT ( INV), KANPUR HAD INFORMED THE A.O. THAT THE ENTRY OF PAYMENT OF RS. 50 LAKHS (AS MENTIONED IN THE SEIZED DOCUMENT) TO ONE 'MALIK KANN AUJ' RELATED TO THE APPELLANT COMPANY (WITHOUT ANY SUPPORTING IN THIS REG ARD), TO SAME COULD NOT HAVE BEEN THE BASIS FOR THE A.O. TO INITIATE THE REASSESSMENT PROCEEDINGS IN THE CASE OF THE APPELLANT COMPANY. IT IS A TRITE LAW THAT THE 'REASONS TO BELIEVE' FOR REOPENING THE CASE SHOULD BE T HAT OF THE A.O. ALONE AND COULD NOT BE FORMED AT THE DICTATES OF OTHERS OR ON SUSPICION, CONJECTURES OR SURMISES. 5.1.7 IN THE INSTANT CASE, IN MY CONSIDERED VIEW, THE A.O. HAD NO MATERIAL BEFORE HIM WHICH COULD LINK THE SAID PAYMENT TO THE APPELLANT COMPANY. THE 'REASONS TO BELIEVE' IN THE CASE HAVE BEEN RECORDE D ON IRRELEVANT MATERIAL. ON THE BASIS OF SUCH MATERIAL, NO PRUDENT MA N COULD HAVE FORMED THE BELIEF THAT INCOME HAD ESCAPED ASSTT. IN THE HANDS OF THE APPELLANT COMPANY. ACCORDINGLY, I HOLD THAT THE VERY ASSUMPTIO N OF JURISDICTION BY THE A.O. UNDER SECTION 147 OF THE ACT WAS ILLEGAL AND , THEREFORE, ANY ASSTT. FRAMED PURSUANT TO SUCH ILLEGALITY CANNOT BE SUSTAINED. THUS, THE WHOLE ASSTT. FRAMED U/S 147 IS HEREBY ANNULLED, WHILE TAKING THIS VIEW, I AM FORTIFIED BY THE DECISIONS OF THE HON'BLE APEX COURT IN FIE CASE OF CIT VS DAULAT RAM RAWAT MULL (87 ITR 349) WHEREIN, IT WAS H ELD: 'THERE SHOULD, IN OUR OPINION, BE SOME DIRECT NEXUS BE TWEEN THE CONCLUSION OF FACT ARRIVED AT BY THE AUTHORITY CONCE RNED AND THE PRIMARY FACTS UPON WHICH THE CONCLUSION IS BASED. THE USE OF EXT RANEOUS AND IRRELEVANT MATERIAL IN ARRIVING AT THAT CONCLUSION W OULD VITIATE THE CONCLUSION OF FACTS..............................' IN THE RESULT, THE APPEAL IS ALLOWED.' 5. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WE CONFIRM HIS ORDER. 52. SIMILARLY THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PAWAN KUMAR AGARWAL (SUPRA) HAS HELD AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND TH AT THE ISSUE IN DISPUTE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 7 & 7.1 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFER ENCE:- 7. THAT VIDE GROUNDS NO. 3 TO 7, ASSESSEE HAS CHALLENGED THE ADDITIONS OF RS.1,13,40,000/- MADE ON ACCOUNT OF ALLEGED UNDISCLOSE D INCOME. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. I HAVE ALSO GONE THROUGH THE ORDER OF THE A. O. IT WAS CONTENDED BY THE LEARNED AR BEFORE ME THAT MERE JOTTINGS AND NOTI NGS SHOULD NOT BE THE 28 ITA NOS.1016 & 916/PN/2014 BASIS FOR MAKING ANY ADDITION IN THE RETURNED INCOME, MORE PARTICULARLY WHEN A.O HAS NOT ALLOWED THE OPPORTUNITY OF CROSS EXAM INATION OF MR. SHOBHAN RAJ MEHTA. THE MATERIAL PROVIDED/GATHERED B Y THE DEPARTMENT HAS ALSO BEEN PRODUCED BEFORE ME. IN THIS PAPER, IT IS SEEN THAT NAME OF ASSESSEE IS APPEARING. IT WAS VEHEMENTLY ARGUED BEFORE ME THAT HOW THE DEPARTMENT COMES INTO CONCLUSION THAT NAME PAWAN AGAR WAL AS APPEARING IN THE SEIZED MATERIAL IS APPELLANT. THE NAME OF APPE LLANT IS VERY COMMON AND IT IS POSSIBLE TO BE SOME OTHER PAWAN AGARWAL INSTEA D OF APPELLANT. THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED. ON EXAM INATION OF THE ASSESSMENT RECORD IT IS SEEN THAT THE APPELLANT CATEGORIC ALLY DENIED HAVING ANY FINANCIAL OR BUSINESS TRANSACTION WITH SHRI. SHOBHA N RAJ MEHTA. A REQUEST WAS ALSO MADE TO PROVIDE COMPLETE STATEMENTS ON THE BASIS OF WHICH ADDITION WAS BEING CONTEMPLATED BY THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER DID NOT PROVIDE THE COPIES OF THOSE STATEMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER DID NOT THROW ANY LIGHT ON ANY INQUIRY/ INVESTIGATION CARRIE D OUT BY HIM THAT COULD JUSTIFY THE ADDITIONS MADE BY HIM. THAT ASSESSEE HA S VEHEMENTLY STATED THAT THE DEPARTMENT HAS NOT PROVED THAT THE ID ENTITY OF SHRI PAWAN AGARWAL WITH THE ASSESSEE AND NO SLIP, LETTER, DOCUMENT ETC. SHOWING ANY RELATIONSHIP OF ASSESSEE WITH SHRI SHOBHAN RAJ MEHTA WER E NOT FOUND FROM THE POSSESSION OF SHRI SHOBHAN RAJ METHA. THE A.O HAS RE QUIRED ASSESSEE'S COPY OF ACCOUNTS IN THE BOOKS OF M/S. DHARIWAL INDUSTRI ES, PUNE AND THIS WAS FOUND VERIFIED FROM THE ASSESSEE'S BOOKS OF A/C. IT I S CLEAR THAT THE ASSESSEE HAS BUSINESS RELATIONSHIP WITH M/S. DHARIWAL INDUST RIES, PUNE AND NOT WITH THE SHOBHAN RAJ MEHTA. THEREFORE, IT I S CLEAR THAT THE ADDITION MADE BY THE ASSESSING OFFICER PURELY BASED ON GUESS WORK W ITHOUT ANY EVIDENCE, THEREFORE THIS ADDITION DESERVES TO BE DELET ED. 7.1 FROM THE FACTS ENUMERATED ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER FAILED TO ESTABLISH ANY CASE AGAINST THE APPELLANT. FUR THER INQUIRY/ INVESTIGATION WAS REQUIRED TO BE CARRIED OUT ON THE I NFORMATION PASSED BY THE ADIT(INV.)- III, KANPUR BUT EVIDENCES ARE NOT CO LLECTED OR PLACED. COPIES OF THE STATEMENTS, ON THE BASIS OF WHICH ADDITION S HAS BEEN MADE, WERE NOT PROVIDED NOR WAS THE OPPORTUNITY OF CROSS- E XAMINATION GIVEN TO THE APPELLANT. THE ASSESSING OFFICER MERELY SUMMARIZED THE SALIENT FEATURES OF THE REPORT OF THE ADIT (INV.)-III, KANPU R AND THEREAFTER SUMMARILY REJECTED THE REPLY OF THE APPELLANT AS NOT SATISFACTORY. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, CONTENDS THA T NEITHER THE SAID SHRI SHOBHAN RAJ MEHTA WAS ALLOWED TO BE CROSS-EXAMIN ED NOR A COPY OF HIS STATEMENT WAS GIVEN DESPITE SEVERAL REQUESTS. THE AO'S CONTENTION TO THE EFFECT THAT THE CONTENTS OF THE STATEMENT WERE MA DE KNOWN TO THE ASSESSEE, IS NOT A COMPLIANCE OF MANDATORY REQUIREMENT T O PROVIDE THE ASSESSEE INCRIMINATING MATERIAL TO DEFEND ITS OWN CASE A ND THEREFORE IT CAN CATEGORICALLY BE HELD THAT: (I) STATEMENT OF SHRI SHOBHAN RAJ MEHTA WAS NOT GIVE N TO THE ASSESSEE. (II) BEYOND THE BELIEF OF PRESUMPTION ON THE INFORMA TION SUPPLIED BY THE ADIT(INV.)-III, KANPUR, FURTHER EVIDENCES ARE NOT FOUND TO CORROBORATE THE ADDITIONS. (III) CROSS-EXAMINATION OF SHRI SHOBHAN RAJ MEHTA WA S NOT ALLOWED. (IV) THE ASSESSEE FIRM HAD STRONGLY DENIED HAVING ANY FI NANCIAL AND BUSINESS TRANSACTIONS WITH MR. SHOBHAN RAJ MEHTA. IN VIEW OF THESE FACTUAL EXIGENCIES, IT IS HELD THAT T HE ADDITION MADE BY THE AO, WITHOUT ANY CORROBORATIVE EVIDENCE, WAS UNJUSTIFI ED AND ACCORDINGLY DELETED. ACCORDINGLY, GROUND NO. 3 TO 7 RAISED BY AP PELLANT ARE ALLOWED. 29 ITA NOS.1016 & 916/PN/2014 5.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), W E FIND THAT A CATEGORICAL FINDING HAS BEEN GIVEN BY HIM THAT STATEM ENT OF SHRI SHOBHAN RAJ MEHTA WAS NOT GIVEN TO THE ASSESSEE AND BEYOND THE B ELIEF OF PRESUMPTION ON THE INFORMATION SUPPLIED BY THE ADIT(I NV.)-III, KANPUR, FURTHER EVIDENCES ARE NOT FOUND TO CORROBORATE THE A DDITIONS. HE HAS ALSO GIVEN A FINDING THAT CROSS-EXAMINATION OF SHRI SHOBH AN RAJ MEHTA WAS NOT ALLOWED AND THE ASSESSEE FIRM HAD STRONGLY DENIED HAVING ANY FINANCIAL AND BUSINESS TRANSACTIONS WITH MR. SHOBHAN RAJ MEHTA. TH ESE FINDINGS OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE AND MOREOVER, THE NAME OF THE ASSESSEE I.E. PAWAN KUMAR AGA RWAL IS VERY COMMON NAME AND MERELY BECAUSE THIS NAME IS MENTIONED IN A SEIZED PAPER FOUND DURING THE COURSE OF SEARCH AT BANGALORE AT THE PREMISES OF SHRI SHOBHAN RAJ MEHTA, WITH WHOM THE ASSESSEE WAS NOT H AVING ANY DIRECT TRANSACTION, IT CANNOT BE SAID THAT THE SAID PA WAN KUMAR AGARWAL, OF WHOM THE NAME WAS MENTIONED IN THE SEIZED PAPER IS TH E ASSESSEE. WITHOUT ESTABLISHING THIS ASPECT THAT THE NAME MENTIONE D IN THE SEIZED PAPER IS THAT OF THE ASSESSEE, NO ADDITION CAN BE MADE I N THE HANDS OF THE PRESENT ASSESSEE ON THE BASIS OF SUCH SEIZED PAPER. CONSIDER ING THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 53. WE FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF M/S. BHOLA NATH RADHA KRISHAN (SUPRA) WHILE DELETING AN IDENTIC AL ISSUE HAS OBSERVED AS UNDER : 7. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDE S AND THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ABOVE ORDER OF LEARNED 7 ITA- 5149/DEL/2012 CIT(A). THE ADDITION HAS BEEN MADE ON THE BASIS OF CERTAIN CHITS FOUND FROM SHRI SOHAN RAJ MEHTA AND HI S STATEMENT. ADMITTEDLY, THE ASSESSEE HAS NO DEALING WITH SHRI SOHAN RAJ MEHTA. THE ASSESSEE IS SUPPLYING GOODS (SUPARI) TO RMD GROUP WHO ARE MANUFACTURING GUTKHA. SHRI SOHAN RAJ MEHTA IS C&F AG ENT FOR KARNATAKA REGION OF RMD GROUP. THE SEARCH HAD TAKEN PLACE AT T HE ASSESSEE'S BUSINESS PREMISES AS WELL AS AT THE BUSINESS PREMISES OF RMD GR OUP. NO EVIDENCE OF ANY UNRECORDED SALE BY THE ASSESSEE OR UNRE CORDED PURCHASE BY RMD GROUP WAS FOUND. THUS, WHEN, DESPITE SEARCH AT T HE PREMISES OF SELLER AND BUYER, NO EVIDENCE OF ANY UNRECORDED SALE OR PURCHASE IS FOUND, IN OUR OPINION, MERELY BECAUSE IN THE CHITS FOUND AT THE PREMISES OF SOME THIRD PARTY WITH WHOM THE ASSESSEE HAS NO BUSINESS DEALING , IT CANNOT BE PRESUMED THAT THE ASSESSEE IS MAKING SALES OUTSIDE BOOKS. MO REOVER, AS PER CHITS FOUND FROM SHRI SOHAN RAJ MEHTA, THE PAYME NT MADE TO THE ASSESSEE IS ONLY RS.9 LAKHS AND NOT RS.9 CRORES. THE DEPARTM ENT HAS ALSO RELIED UPON THE STATEMENT OF SHRI SOHAN RAJ MEHTA. I T WAS POINTED OUT BY THE LEARNED COUNSEL THAT SHRI SOHAN RAJ MEHTA RETRAC TED HIS STATEMENT. HOWEVER, AS PER REVENUE, SHRI SOHAN RAJ MEHTA HAS RE TRACTED HIS RETRACTION AFFIRMING THE ORIGINAL STATEMENT. ON THESE FACTS, THE LEARNED CIT(A) HAS COME TO THE CONCLUSION THAT THE STATEMENT OF SHRI SOHAN RAJ MEHTA CANNOT BE RELIED UPON BECAUSE HE IS FREQUENTLY RETRACTING HIS STATEMENT. MOREOVER, A STATEMENT OF A THIRD PARTY CAN NOT BE USED AGAINST THE ASSESSEE UNLESS THE ASSESSEE IS ALLOWED AN OPPORTUNITY T O CROSS- EXAMINE HIM. NOW, WE FIND THAT DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSEE SPECIFICALLY REQUESTED FOR ALLOWING OPPORTUNITY TO CROSS-EXAMINE SHRI SOHAN RAJ MEHTA ALSO AND REQUESTED THE ASSESSING OFF ICER TO SUPPLY THE COPY OF RETRACTION OF HIS STATEMENT. THE ASSESSING OF FICER HAS REPRODUCED THE ASSESSEE'S LETTER, PARAGRAPH NO.11 OF WH ICH, READS AS UNDER:- 30 ITA NOS.1016 & 916/PN/2014 '11. THE ASSESSEE HAD REQUESTED YOUR GOOD SELF TO PROVID E THE FOLLOWING DOCUMENTS: (A) COPY OF THE SWORN STATEMENT OF SH. SOHANRAJ ME HTA. (B) COPY OF WRITTEN STATEMENTS OR AFFIDAVITS OBTAINED FROM SH. MEHTA WHEREIN HE HAS MENTIONED THAT RS.9 CRORE WAS PAYABLE T O THE ASSESSEE. (C) COPY OF SUBSEQUENT RETRACTION OF THE STATEMENTS MAD E AT THE TIME OF SEARCH OPERATION, IF ANY. (D) COPY OF RECEIPTS OBTAINED FROM THE ASSESSEE BY SH. S OHANRAJ MEHTA ON PAYMENT TO THE ASSESSEE, IF ANY. THE ASSESSEE HAS BEEN PROVIDED STATEMENT OF SH.SOHAN RAJ MEHTA. HOWEVER, IT IS FURTHER SUBMITTED THAT THE ASSESSEE SHOULD BE GIVEN THE OPPORTUNITY TO CROSS EXAMINE THE GENUINENESS OF THE STAT EMENTS OF SH. SOHAN RAJ MEHTA AND SHOULD BE GIVEN REASONABLE OPPOR TUNITY TO VERIFY THE CLAIMS MADE BY HIM. IN THE CASE OF KISHAN CHAND CHELAR AM (125 ITR) IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT OF INDIA THA T BEFORE TAKING A DECISION THE ASSESSEE HAS TO BE ALLOWED A CHANCE OR AN OP PORTUNITY OF REBUTTAL WITH RESPECT TO THE DOCUMENTS WHICH ARE TO B E USED AGAINST THE ASSESSEE. THE ASSESSEE HAS GONE THROUGH THE ENTIRE STATEMENTS OF SH. SOHAN RAJ MEHTA RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT. NOWHERE THERE IS ANY MENTION OF BHOLA NATH RADHA KISH AN OR ANY OF ITS PARTNER IN THE SAID STATEMENT. THE ASSESSEE CANNOT BE HEL D LIABLE FOR ANY ACT OF THE OMISSION OR COMMISSION DONE BY HIM. MR. SOHA N RAJ MEHTA'S STATEMENT REGARDING DECODING OF FIGURES IS ALSO NOT APP LICABLE ON THE ASSESSEE SINCE THIS HAS NO BEARING OR NEXUS OF CONNECTION WITH THE ASSESSEE FIRM OR ITS BUSINESS TRANSACTION. NO ADDITION OR ADVERSE DECISIONS CAN BE TAKEN ON THE B ASIS OF SURMISES AND/OR CONJECTURES. THERE HAS TO BE SPECIFIC MENTION O F M/S BHOLA NATH RADHA KISHAN, 6377, NAYA BANS, KAHRI BAOLI, NEW DELHI IN ORDER TO LINK ANY PAYMENT TO IT FROM MR. SOHAN RAJ MEHTA OR ANYBODY E LSE...........' (EMPHASIS BY UNDERLINING SUPPLIED BY US) 8. THE ASSESSING OFFICER HAS DEALT WITH THIS LETTER BUT HE HAS NOT GIVEN ANY REASON FOR NOT ALLOWING THE ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE SHRI SOHAN RAJ MEHTA. SIMILARLY, HE HAS NEITHER SUPPL IED THE COPY OF RETRACTION OF HIS STATEMENT NOR DEALT WITH THE RETRAC TION IN THE 9 ITA- 5149/DEL/2012 ASSESSMENT ORDER. IT IS ONLY IN THE REMAN D REPORT HE HAS MENTIONED THAT SHRI SOHAN RAJ MEHTA HAS RETRACTED HI S RETRACTION ALSO. CONSIDERING THE TOTALITY OF ABOVE FACTS, WE ENTIRELY AGREE WITH THE LEARNED CIT(A) THAT THE STATEMENT OF SHRI SOHAN RAJ MEHTA CA NNOT BE USED AGAINST THE ASSESSEE AND, SIMILARLY, THE CHITS FOUND FROM THE TH IRD PARTY, WITH WHICH THE ASSESSEE HAS NO DEALING, CANNOT BE USED AGAINST THE ASSESSEE IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE. THAT MERE LY BECAUSE SOME EXCESS STOCK WAS FOUND IN THE SURVEY FOR WHICH SEPARATE A DDITION HAS ALREADY BEEN MADE, IT CANNOT BE FURTHER PRESUMED THA T THE ASSESSEE MADE SALES OUTSIDE THE BOOKS, SPECIALLY WHEN THE SURVEY WAS FOL LOWED BY THE SEARCH AND NEITHER DURING THE COURSE OF SURVEY NOR DUR ING THE COURSE OF SEARCH, ANY EVIDENCE OF SALE OUTSIDE THE BOOKS WAS FOUN D. IN VIEW OF THE TOTALITY OF ABOVE FACTS, WE DO NOT FIND ANY JUSTIFICA TION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). THE SAME IS SUSTAINED. 54. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF PRADEEP AMRUTLAL RUNWAL REPORTED IN 149 ITR 548 WHILE DELET ING ADDITION UNDER IDENTICAL FACTS AND CIRCUMSTANCES HAS OBSERVED AS UNDER : 31 ITA NOS.1016 & 916/PN/2014 5. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATE RIAL ON RECORD, WE FIND THAT THE ISSUE BEFORE US IS REGARDING THE ADD ITION OF RS.5,10,00,000/-. AS STATED EARLIER, DURING THE SEARCH PROCEEDINGS IN THE CASE OF DHARIWAL GROUP, SOME LOOSE PAPERS WERE SEIZED WH EREIN CERTAIN AMOUNTS WERE WRITTEN AGAINST THE NAME OF 'PRADEEP RUN WAL'. HENCE, THE CASE OF THE ASSESSEE WAS REOPENED U/S 148 OF THE INCOME T AX ACT. IT WAS EXPLAINED TO THE LEARNED ASSESSING OFFICER THAT THE ASSESS EE HAD NOT EARNED ANY SUCH INCOME OF RS. 5.10 CRS. AND THEREFORE, NO ADDITION SHOULD BE MADE. HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE. 5.1 THE ASSESSING OFFICER HAS STATED THAT THE PAPERS WERE SEIZED FROM DHARIWAL GROUP. THE SAID PAPERS WERE SEIZED FROM THE R ESIDENCE OF SHRI SOHANRAJ MEHTA. ACCORDING TO THE ASSESSING OFFICER, TH E ASSESSEE COULD NOT DISOWN THE EXISTENCE OF SUCH DOCUMENTS. THE ASSESSING OFFIC ER OBSERVED THAT THE MONEY HAS BEEN PASSED ON BY DHARIWAL GROUP TH ROUGH THEIR STAFF. HENCE, THE ASSESSEE MUST HAVE RECEIVED THE AMOUNT NOTED ON THE SEIZED PAPERS. THE ASSESSING OFFICER HAS PROCEEDED TO MAKE THE ADDITION OF RS.5.10 CRS. BY STATING THAT AS PER SECTION 114 OF THE I NDIAN EVIDENCE ACT, IT IS AN ACCEPTED RULE OF EVIDENCE THAT IF A PERSON POSSESSI NG AN EVIDENCE DOES NOT PRODUCE IT, THE INFERENCE IS THAT SUCH EVIDEN CE IF PRODUCED IS DETRIMENTAL TO HIM. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT THE SAID RECEIPTS WERE THE INCOME OF THE ASSESSEE. 5.2 THE ASSESSING OFFICER HAS FURTHER HELD THAT ACCORDI NG TO THE PROVISIONS OF SECTION 80 OF THE INDIAN EVIDENCE ACT, T HERE IS A PRESUMPTION AS TO THE DOCUMENTS PRODUCED AS RECORD OF EVIDENCE ARE GENUINE. HENCE, HE HAS HELD THAT THE DOCUMENTS SEIZED FROM DHARIWAL GR OUP COULD BE RELIED UPON FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE DECISIONS OF SUMATI DAYAL VS. CIT [(1995) 214 ITR 801(SC)], CIT VS. DURGA PRASAD MO RE [(1969)72 ITR 807(SC], HIMMATRAM LAXMINARAIN VS. CIT [(1986)161 IT R 7(P&H)], CIT VS. GANAPATHI MUDALIAR [(1964)53 ITR 623(SC)] AND CIT V S. LACCHMAN DASS OSWAL [(1980)126 ITR 446(P&H)]. 5.3 ACCORDING TO US, THE ADDITIONS MADE BY THE ASSESSIN G OFFICER WERE NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES VIS--VIS O F THE ASSESSEE. AS DISCUSSED EARLIER, DURING THE COURSE OF SEARCH IN THE CA SE OF DHARIWAL GROUP, THE ONLY DOCUMENTS FOUND ON THE BASIS OF WHICH THE ADDITION U/S 69A HAS BEEN MADE IN THE CASE OF THE ASSESSEE ARE IN THE FORM OF TWO LOOSE PAPERS WHEREIN AMOUNTS OF RS. 4.80 CRORES AND RS. 30 LACS WERE NOTED AGAINST THE NAME 'MR. PRADEEP RUNWAL'. APART FROM TH IS, NO EVIDENCE HAS BEEN FOUND TO SUGGEST THAT THE ASSESSEE HAD ACTUALLY REC EIVED THE SAID AMOUNT OR THAT THE ASSESSEE HAD ENTERED INTO ANY TRANSAC TION WITH DHARIWAL GROUP. THERE IS NO EVIDENCE ON RECORD TO SUG GEST THAT THE ASSESSEE HAS PREVIOUS BUSINESS RELATIONS WITH THE DHARIWAL GROUP. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE TO SUGGEST THE SAM E, IT COULD NOT BE PRESUMED THAT THE AMOUNTS REFLECTED IN THE LOOSE PAPER S WERE THE INCOME OF THE ASSESSEE RECEIVED FROM DHARIWAL GROUP. IT HAS BEE N THE CONSISTENT STAND OF THE ASSESSEE THAT THERE MAY BE MANY PERSONS OF TH E NAME PRADEEP RUNWAL IN PUNE AND THERE WAS NO SPECIFIC EVI DENCE TO SUGGEST THAT THE SAID NOTINGS PERTAINED TO THE ASSESSEE. HENCE, IT WAS NOT JUSTIFIED AS TO HOW, IN THE ABSENCE OF ANY OTHER CORROBORATIVE DETAILS, THE ASSESSING OFFICER HAS ASSUMED THAT THE AMOUNTS REFLECTED THE INCO ME OF THE ASSESSEE HIMSELF, WHILE THE ASSESSEE HAS NO BUSINESS DEALINGS OF HIS WI TH DHARIWAL GROUP. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD A NY EVIDENCE TO 32 ITA NOS.1016 & 916/PN/2014 SUGGEST THAT DHARIWAL GROUP HAS ADMITTED THAT THE AMOU NTS WERE PAID TO THE ASSESSEE. HENCE, SIMPLY BECAUSE THE NAME OF THE ASSESSEE IS NOTED ON THE SEIZED PAPERS DOES NOT MEAN THAT THE ADDITION COU LD BE MADE IN THE HANDS OF THE ASSESSEE. SINCE NO EVIDENCE WAS FOUND RELATI NG TO THE EXISTENCE OF ANY TRANSACTION BETWEEN THE ASSESSEE AND D HARIWAL GROUP AND IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUGGEST THAT THE ASSESSEE HAD ACTUALLY RECEIVED THE SAID AMOUNT, NO ADDIT ION COULD BE MADE MERELY ON THE BASIS OF NOTING IN LOOSE PAPERS FOUND DUR ING THE SEARCH PROCEEDINGS IN THE CASE OF DHARIWAL GROUP AGAINST THE NAME OF THE ASSESSEE. 5.4 THE PRESUMPTION U/S 132(4A) IS AVAILABLE ONLY IN RESPECT OF THE PERSON FROM WHOM THE PAPER IS SEIZED. IT COULD NOT BE APPLIED AGAINST A THIRD PARTY AND HENCE, NO ADDITION COULD BE MADE ON THE BASIS OF THE EVIDENCE FOUND WITH THIRD PARTY. THE PRESUMPTION U/S. 132(4A) COULD BE USED ONLY AGAINST THE PERSON FROM WHOSE PREMISES THE DOCU MENTS ARE FOUND AND NOT AGAINST THE PERSON WHOSE NAME APPEARS IN THE SEIZED PAPERS. 5.5 IN THIS CASE, THE ADDITION HAS BEEN MADE ON THE B ASIS OF THE DOCUMENTS FOUND WITH DHARIWAL GROUP AND THUS, THE PRE SUMPTION U/S. 132(4A) COULD NOT BE USED AGAINST THE ASSESSEE SINCE NO IN CRIMINATING DOCUMENTS WERE FOUND WITH IT. IN THE CASE OF ACIT VS. LATA MANGESHKAR (MISS) (1974) 97 ITR 696 (BOM), THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE ENTRIES IN THE BOOKS OF TH IRD PERSONS. HON'BLE BOMBAY HIGH COURT HELD THAT SUCH ADDITION CO ULD NOT BE MADE ONLY ON THE BASIS OF THE NOTINGS IN THE BOOKS OF THIRD PERSONS. THE FACTS OF THE PRESENT CASE ARE COVERED BY THE DECISION OF LATA M ANGESHKAR (SUPRA). IT IS A SETTLED LEGAL POSITION THAT THE DECISION OF JUR ISDICTIONAL HIGH COURT IS BINDING ON ALL AUTHORITIES BELOW IT. THUS, THE RELIAN CE PLACED BY THE ASSESSING OFFICER ON THE LOOSE PAPERS IS NOT JUSTIFIED AT A LL. THEREFORE, THE QUESTION OF MAKING ANY ADDITION IS NOT JUSTIFIED IN TH E ABSENCE OF OTHER CORROBORATIVE EVIDENCE TO THAT EFFECT. 5.6 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED AU THORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER WAS NO T JUSTIFIED IN MAKING THE ADDITIONS BY RELYING ON THE PROVISIONS OF SECTION 114 OF THE INDIAN EVIDENCE ACT. THE CONCERNED ASSESSING OFFICER HA S REFERRED THE AFORESAID SECTION WHICH STATES THAT THE COURT MAY PRESUM E THAT THE EVIDENCE WHICH COULD BE AND IS NOT PRODUCED WOULD, I F PRODUCED BE UNFAVOURABLE TO THE PERSON WHO WITHHOLDS IT. IT IS PER TINENT TO MENTION THIS RULE APPLIES TO THE CASES WHEREIN IT IS EVIDENT OR AN ESTABLISHED FACT THAT A PARTICULAR EVIDENCE OR DOCUMENT WAS IN POSSESSION OF THE ASSESSEE. FOR EXAMPLE, AN OWNER OF A LAND MAY WELL BE EXPECTE D TO BE IN POSSESSION OF A 7/12 EXTRACT OF THE SAID LAND IN ORDER TO CHECK WHETHER THE SAID LAND WAS USED FOR AGRICULTURAL PURPOSES. IN THE PRESENT CASE, THE PROVISIONS RELIED BY THE ASSESSING OFFICER ARE NOT APPLICABLE, THE ASSESSEE IS NOT WITHHOLDING ANY DOCUMENTS. THE CASE OF DEPARTMENT IS T HAT THE AMOUNT MENTIONED ON THE SEIZED PAPER FOUND WITH THE DHARIWA L GROUP INDICATES THAT THE ASSESSEE HAS RECEIVED THE AMOUNT, THEREFORE, T HE BURDEN WAS ON THE ASSESSING OFFICER TO ESTABLISH THE SAME. THE RELIANCE PLACED ON THE PROVISIONS OF SECTION 114 OF INDIAN EVIDENCE ACT IS MISP LACED. 5.7 AS STATED ABOVE, IT HAS BEEN CONSISTENT STAND OF THE ASSESSEE THAT THE ASSESSEE HAS HAD NO BUSINESS RELATIONS WHATSOEVER WITH T HE DHARIWAL GROUP. FURTHER, APART FROM THE NOTING ON PAPER WITH THE NAME 'PRADEEP 33 ITA NOS.1016 & 916/PN/2014 RUNWAL, THERE IS NO CORROBORATIVE EVIDENCE IN THIS RE GARD AGAINST THE ASSESSEE. IN SUCH CIRCUMSTANCES, WHERE THE ASSESSEE HAS NOT EN TERED INTO ANY TRANSACTION WITH THE DHARIWAL GROUP, ONE CERTAIN LY COULD NOT EXPECT THE ASSESSEE TO BE IN POSSESSION OF ANY EVIDENCE TO SUGGEST T HAT IT HAS NOT ENTERED INTO ANY SUCH TRANSACTION EXCEPT FOR HIS BOOKS OF ACCOUNT WHICH HAVE ALREADY BEEN VERIFIED BY THE CONCERNED ASSESSING O FFICER. HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN PLACING RELIANCE ON THE PROVISION OF SECTION 114 OF THE INDIAN EVIDENCE ACT. 5.8 IT WAS FURTHER SUBMITTED ON BEHALF OF ASSESSEE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION BY R ELYING ON THE PROVISIONS OF SECTION 80 OF THE INDIAN EVIDENCE ACT WH ICH STATES THAT THERE IS A PRESUMPTION THAT THE DOCUMENTS PRODUCED BEFORE TH E COURT AS RECORD OF EVIDENCE ARE GENUINE. IN THIS REGARD, THE STAND OF THE ASSESSEE IS THAT IN THE CASE OF ASSESSEE, DOCUMENT PRODUCED WAS MERELY IN THE FORM OF A ROUGH NOTING WHEREIN CERTAIN AMOUNTS WERE WRITTEN AG AINST THE NAME 'PRADEEP RUNWAL'. AS DISCUSSED EARLIER, THERE MAY BE MA NY PEOPLE OF THAT NAME IN PUNE AND IN THE ABSENCE OF ANY OTHER CORROBO RATIVE EVIDENCE TO THAT EFFECT. IN SUCH A SITUATION, IT CANNOT BE INFERR ED THAT IT BELONGS TO THE ASSESSEE. 5.9 WHILE MAKING THE ADDITION OF RS. 5.10 CRORES AS ST ATED ABOVE, THE CIT(A) RELIED ON THE FOLLOWING DECISIONS OF SUMATI DA YAL VS. CIT [(1995) 214 ITR 801(SC)], CIT VS. DURGA PRASAD MORE [(1969)72 ITR 807(SC], HIMMATRAM LAXMINARAIN VS. CIT [(1986)161 ITR 7(P&H)] , CIT VS. GANAPATHI MUDALIAR [(1964)53 ITR 623(SC)] AND CIT V S. LACCHMAN DASS OSWAL [(1980)126 ITR 446(P&H)]. IN THIS REGARD, THE ST AND OF THE ASSESSEE HAS BEEN THAT THE CASE LAWS RELIED BY THE ASSESSING OFFICE R ARE DIFFERENTIABLE ON FACTS AND HENCE, THE SAME ARE NOT A PPLICABLE TO THE CASE OF THE ASSESSEE. IN ALL THE CASES RELIED BY THE ASSESSING OFFIC ER, THE FACT THAT THE ASSESSEE HAD ACTUALLY EARNED INCOME OR RECEIVED AMO UNTS BY WAY OF CASH CREDITS, UNEXPLAINED INVESTMENT ETC. WAS NOT UNDER DISPUTE. THE ISSUE RELATED TO WHETHER THE RECEIPTS WERE RECEIVED FROM G ENUINE LENDERS OR WHETHER THE INVESTMENTS OR RECEIPTS WERE A PART OF THE DISCLOSED SOURCES OF INCOME OF THE ASSESSEE. WE FIND THAT IN THE PRESENT C ASE, THE ISSUE IN QUESTION ITSELF IS WHETHER ROUGH NOTING ON LOOSE PAPER FOUND IN THE COURSE OF SEARCH AT THE PREMISES OF THIRD PERSON COULD BE ASSUME D THE INCOME FROM THE ASSESSEE AS IN THE CASES RELIED BY THE ASSESSING OF FICER. THIS FACT HAS NOT BEEN ESTABLISHED IN THE CASE OF ASSESSEE, THEREFOR E, THE CASE LAWS RELIED BY THE ASSESSING OFFICER ARE CLEARLY DISTINGUISHAB LE ON FACTS AND HENCE, NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 5.10 ACCORDING TO CIT(A), THE NAME OF THE ASSESSEE AP PEARS ON THE SEIZED PAPERS AND SEIZED DOCUMENTS GIVE A DETAILED AND MINUTE NOTING OF THE TRANSACTIONS OF DHARIWAL GROUP. HE HAS STATED THAT SHRI SOHANRAJ MEHTA HAS ADMITTED THAT THE DOCUMENTS WERE WRITTEN BY HIM AND MOST OF THE PAPERS WERE WRITTEN IN MARWADI LANGUAGE. THE CIT (A) REFERRED TO THE FACT THAT SHRI MEHTA HAD ADMITTED THAT THE PAPERS BE LONGED TO DHARIWAL GROUP. IN PARA 4.3, THE CIT(A) STATES THAT WHEN THE A UTHOR OF THE PAPER HAS ACCEPTED THE NOTINGS MADE BY HIM, IN THAT EVENT, THE DOCUMENT IS HAVING GREAT EVIDENTIARY VALUE AND COULD NOT BE REJECTED. AS REGARDS, THE OBJECTION OF THE ASSESSEE THAT NO EVIDENCE WAS FOUND TO INDICATE T HAT THE ASSESSEE HAD RECEIVED THE AMOUNT, THE CIT(A) REFERRED TO THE FACT OF ACCEPTANCE OF THE PAPER BY SHRI MEHTA AND CONSIDERING THE FACT THA T THE MODUS OPERANDI WAS CLARIFIED BY SHRI MEHTA, THE ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER, HAS BEEN HELD BY CIT(A). HE HAS REFERR ED TO VARIOUS 34 ITA NOS.1016 & 916/PN/2014 DECISIONS IN SUPPORT OF THE ADDITION MADE. FIRSTLY, HE HAS RELIED UPON THE DECISION OF ITAT THIRD MEMBER IN THE CASE OF KHOPADE KISANRAO MANIKRAO [74 ITD 25]. IN THIS REGARD, THE STAND OF ASSESSEE IS THA T THE DECISION IN THE CASE BEFORE THIRD MEMBER WAS NOT APPLICABLE TO THE FA CTS OF THE PRESENT CASE. IN THE SAID CASE, THE ASSESSEE WAS SEARCHED AND DOCUME NTS WERE FOUND INDICATING ON MONEY RECEIVED ON SALE OF PLOTS. ON THE BASIS OF THE DOCUMENTS FOUND, THE ASSESSING OFFICER ESTIMATED THE INC OME FROM ON MONEY WHICH WAS HELD TO BE VALID. IN THAT CASE, THE ISSUE THAT NO ADDITION COULD BE MADE ON THE BASIS OF DOCUMENTS FOUND WITH THI RD PARTY WAS NEITHER RAISED NOR APPLICABLE. THUS, ACCORDING TO US, THE SAID DECISION HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE'S CASE. 5.11 THE CIT(A) IN PARA 2.5 HAS PLACED RELIANCE UPO N ITAT, PUNE DECISION IN THE CASE OF DHANVARSHA BUILDERS AND DEVELOP ERS PVT. LTD. [102 ITD 375]. IN THE SAID CASE, THE ASSESSEE WAS SEARCHED AND DOCUMENTS WERE FOUND INDICATING ON MONEY RECEIVED BY THE ASSESSEE. IT WAS HELD THAT THE DOCUMENT WAS FOUND WITH THE ASSESSEE AND THEREFORE, THE A.O. WAS JUSTIFIED IN MAKING THE ADDITION. EVEN IN THIS CASE, T HE ISSUE OF NO ADDITION CAN BE MADE ON THE BASIS OF DOCUMENTS FOUND WITH THIRD PARTY WAS NOT RAISED. THE CIT(A) HAS FURTHER REFERRED TO THE DECISIO N OF ITAT, MUMBAI IN THE CASE OF P. R. PATEL VS. DCIT [(2001) 78 ITD 51 (M UM)] FOR THE PROPOSITION THAT SEIZED PAPERS CANNOT BE CALLED DUMB P APER BECAUSE THEY INDICATE DATE, AMOUNT AND CALCULATION. THERE IS NO D ISPUTE WITH THE ABOVE PROPOSITION. THE PAPERS ARE FOUND PERTAINING TO DHARI WAL GROUP AS ADMITTED BY SHRI MEHTA AND THEREFORE, THESE DOCUMENT S MAY BE RELEVANT FOR DECIDING THE ISSUE IN THE CASE OF DHARIWAL GROUP. HOWEVER, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE, THE ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE SAID PAPERS. 5.12 THE CIT(A) HAS FURTHER RELIED UPON ITAT THIRD MEMBER DECISION IN THE CASE OF DHUNJIBHOY STUD AND AGRICULTURAL FARM VS. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], IN THIS CASE, THE ASSESSEE WAS A BUIL DER AND HAD SOLD FLAT TO ONE MR. TANNA. THERE WAS SEARCH ON MR. TANNA WHEREIN A DOCUMENT WAS FOUND INDICATING FLAT PURCHASED FROM THE ASSESSEE FIR M AND THE AMOUNT OF CHEQUE AND CASH PAID. THE AMOUNT OF CHEQUE PAID WAS TALLYING WITH THE BOOKS AND THEREFORE, IT WAS HELD THAT CASH WA S PAID AS NOTED ON THE PAPER. MR. TANNA HAD ALSO ACCEPTED THE FACT THAT CASH WAS PAID TO THE ASSESSEE. IN THESE FACTS, ITAT HELD THAT SINCE THERE WAS T RANSACTION BETWEEN ASSESSEE AND SHRI TANNA AND ALSO THE FACT THAT T HE AMOUNTS PAID BY CHEQUE TALLIED, THE ADDITION WAS RIGHTLY MADE. TH E ASSESSEE RIGHTLY SUBMITTED THAT THE SAID DECISION IS NOT APPLICABLE TO T HE FACTS OF THE PRESENT CASE. FIRSTLY, THERE IS NO TRANSACTION BETWEEN T HE ASSESSEE AND DHARIWAL GROUP. SECONDLY, THERE IS NO CORROBORATIVE EVIDENCE FOUND WHICH COULD SUGGEST THAT THE ASSESSEE HAD RECEIVED ANY AMOUNT. THE ASSESSING OFFICER AND CIT(A) HAVE ALSO NOT BROUGHT ON RECORD A NY EVIDENCE TO SUGGEST THAT THE PAYMENT WAS MADE TO THE ASSESSEE. ACCORDI NGLY, CONSIDERING THE FACTUAL POSITION, THE DECISION IN THE CASE OF DHUNJIBHOY STUD AND AGRICULTURAL FARM IS NOT APPLICABLE IN THE CASE OF ASSESSEE. 5.13 THE CIT(A) HAS RELIED ON THE DECISION IN THE C ASE OF VASANTIBAI N. SHAH VS. CIT [(1995) 213 ITR 805 (BOM)]. IN THIS CASE, THE ISSUE WAS REGARDING VALIDITY OF REASSESSMENT PROCEEDINGS. THE ASSESSEE HAD MADE A FALSE DISCLOSURE. SUBSEQUENTLY, THE CASE WAS REOPENED. HO N'BLE HIGH COURT HELD THAT THE REOPENING WAS VALID SINCE THE ASSESSEE HERSE LF HAD MADE A FALSE DISCLOSURE. THUS, THE FACTS ARE TOTALLY DIFFERENT FROM THE PRESENT CASE AND HENCE, THE RATIO OF VASANTIBAI N. SHAH (SUPRA) IS NOT APPLICABLE TO THE 35 ITA NOS.1016 & 916/PN/2014 ASSESSEE'S CASE. THE CIT(A) FURTHER RELIED ON THE DECISION IN THE CASE OF GREEN VALLEY BUILDER V. CIT [(2008) 296 ITR 225 (KE R)]. IN THE SAID CASE, THE ASSESSEE WAS ENGAGED IN REAL ESTATE BUSINESS AND IT HAD SOLD CERTAIN PLOTS. THE ASSESSEE STATED THAT THE PLOTS WERE SOLD AT RS.17 50/- PER CENT WHILE THE ASSESSING OFFICER ON THE BASIS OF EVIDENCES HELD THAT ACTUALLY THE LANDS WERE SOLD AT RS.4,000/- PER CENT. HON'BLE HIGH C OURT HELD THAT THE ADDITIONS MADE WERE CORRECT. THE SAID DECISION IS NOT A PPLICABLE TO THE FACTS OF THE PRESENT CASE. THE CIT(A) HAS FURTHER RELI ED UPON THE DECISION IN THE CASE OF CHUHARMAL VS. CIT [(1988) 172 ITR 250 (SC)] FOR THE PROPOSITION THAT DOCUMENTARY EVIDENCE PLAYS AN IMPORT ANT PART. THERE IS NO DISPUTE TO THE SAID PROPOSITION BUT IN THE ABSENCE O F ANY CORROBORATIVE EVIDENCE NO ADDITION COULD BE MADE IN THE HANDS OF T HE THIRD PARTY. 5.14 WE FIND THAT IN THAKKAR DEVELOPERS LTD. [IT A N O. 581/PN/08], ITAT IN PARAS 3 AND 4 HELD AS UNDER:- 'THE ABOVE SAID SHRI KOLHE WAS EXAMINED, CROSS EXAMINED AND RE- EXAMINED AND NO EVIDENCE WAS GATHERED FROM HIM TO EST ABLISH THAT THE CONTENTS OF THE SEIZED DOCUMENTS WERE CORRECT AND TRUE . THUS, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE IN THE PRESENT CASE, THE SAID SEIZED DOCUMENT HAS TO BE TREATED AS A DUMB DOCUMENT AS RIGHT LY OBSERVED BY THE CIT(A). THE A.O. DISMISSED THE RETRACTION OF THE ST ATEMENT DATED 29.03.2003 BY FILING AN AFFIDAVIT AS AN AFTER THOUGH T AND SELF SERVING. THE A.O. CONCLUDED THAT THE FACTS MENTIONED IN THE SEIZED DOCUMENTS CLEARLY INDICATED THAT THE STATEMENT GIVEN ON 29.03.2003 WAS TRUE AND CORRECT. THE A.O. HAS NOT BROUGHT ON RECORD ANY MATERIAL OR C ORROBORATIVE EVIDENCES TO COME TO THESE CONCLUSIONS. THE REASONS GIVEN BY THE A.O. IN THIS REGARD ARE WITHOUT ANY BASIS AND SUPPORT. THE AFFI DAVIT FILED BY SHRI KOLHE REMAINED UNCONTROVERTED AND WHICH IS AGAINST TH E SETTLED LEGAL POSITION ON THE ISSUE THAT THE CONTENTS OF THE AFFIDAVI T BE REJECTED BY CONFRONTING THE SAME TO THE DEPONENT WHICH IS MISSING I N THIS CASE. NOTHING WAS SHOWN BY THE A.O. THAT THERE WAS ANY OTHER MATERIAL CO RELATED TO THE SEIZED DOCUMENTS. THE A.O. WAS NOT JUSTI FIED IN REJECTING THE CONTENTS OF THE AFFIDAVIT AS MENTIONED ABOVE. THE A.O . FURTHER RELIED ON THE PRESUMPTIONS U/S 132(4A) OF THE ACT ON THE GROUND THAT THIS SECTION WAS VERY CLEAR THAT THE CONTENTS OF BOOK OF ACCOUNT AND OTHER DOCUMENTS MAY BE PRESUMED TO BE TRUE AND PRESUMPTION CAN BE DRAWN E VEN ON THE THIRD PERSON WHO WAS NOT SEARCHED U/S 132 OF THE ACT. THE A.O . FURTHER REJECTED THE SUBMISSIONS GIVEN BY THE ASSESSEE IN HIS PAPER BOOK DAT ED 28.12.2007 REITERATING THE SAME STAND. THE A.O. HAS DRAWN INFEREN CES AND PRESUPPOSES RELYING ON SURMISES AND CONJECTURES. THE ITAT MUMBAI BENCH IN THEIR DECISION IN THE CASE OF STRAPTEX (INDI A) PVT. LTD. [84 ITD 320 (MUM), CLEARLY HELD THAT THE PRESUMPTION U/S 132(4A) IS APPLICABLE ONLY AGAINST THE PERSON FROM WHOM POSSESSION THE BOOKS OF ACCOU NTS OR OTHER DOCUMENTARY WERE FOUND AND NOT AGAINST ANY OTHER PER SON. IT IS HELD THAT AS PER SECTION 132(4A) WHERE ANY BOOKS OF ACCOUNT OR DOCUMENT IS FOUND IN THE POSSESSION AND CONTROL OF ANY PERSON IN THE COURSE OF THE SEARCH, IT IS TO BE PRESUMED THAT THEY BELONG TO ' SUCH PERSON'. THU S, CLEARLY THE PRESUMPTION IS IN RESPECT OF THE PERSON FROM WHOM THEY WERE FOUND. THE USE OF THE WORD 'TO SUCH PERSON' IN THE SAID SECTION ME ANS THE PERSON FROM WHOM THE BOOKS OF ACCOUNT OR DOCUMENTS WERE FOUN D. CLAUSE (II) OF SECTION 132 (4A) PROVIDES THAT THE CONTENTS OF SUCH BO OKS OF ACCOUNT OR DOCUMENTS ARE TRUE. THIS PRESUMPTION CAN BE APPLIED ON LY AGAINST THE PERSON FROM WHOSE POSSESSION THE BOOKS OF ACCOUNT OR THE DOCUMENT WERE FOUND. THEREFORE, THE A.O. WAS NOT JUSTIFIED IN APPLY ING THE PROVISIONS OF SECTION 132(4'A) TO THE ASSESSEE IN THE PRESENT CASE WHO WAS NOT SEARCHED 36 ITA NOS.1016 & 916/PN/2014 U/S 132 OF THE ACT NOR THE DOCUMENT WAS FOUND AND SEIZ ED FROM, THEIR POSSESSION. EVEN, OTHERWISE, SUCH PRESUMPTION U/S 132(4A) O F THE ACT IS NOT CONCLUSIVE AND REBUTTABLE ONE'. 6. SIMILAR VIEW HAS BEEN TAKEN BY ITAT, PUNE IN AM IT D IRSHID [ITA NO.988/PN/11] THAT PRESUMPTION U/S. 134(4A) IS AVAILAB LE ONLY AGAINST THE PERSON FROM WHOSE POSSESSION THE DOCUMENT IS FOUND AND NOT AGAINST THE THIRD PERSON. IN THE ABSENCE OF CLINCHING EVIDENC E AGAINST THE THIRD PERSON AS STATED ABOVE, NO ACTION COULD BE TAKEN AGAIN ST HIM. IN SUCH A SITUATION, THE ASSESSING OFFICER WAS NOT JUSTIFIED TO MAKE ADDITION IN QUESTION IN ASSESSEE'S CASE. IN VIEW OF ABOVE, WE ARE OF T HE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED A ND THE SAME IS DIRECTED TO BE DELETED. IT IS PERTINENT TO MENTION H ERE THAT THIS CASE IS BEING DECIDED IN ITS FACTS AND CIRCUMSTANCES; IT CANNOT BE APPLIED TO OTHER CASES AS SUCH. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . 55. SINCE IN THE INSTANT CASE THE ASSESSEE FROM THE VER Y BEGINNING HAS DENIED TO HAVE RECEIVED ANY SUCH PAYMENT FROM M/S. DH ARIWAL GROUP THROUGH MR. SOHAN RAJ MEHTA AND SINCE NO INCRIMINATI NG MATERIAL WAS FOUND FROM THE RESIDENCE OF THE ASSESSEE DURING THE COUR SE OF SEARCH AND SINCE THE ASSESSEE IS NOT DEALING WITH M/S. DHARIWAL GROU P IN HIS INDIVIDUAL CAPACITY, THEREFORE, RESPECTFULLY FOLLOWI NG THE DECISIONS CITED ABOVE AND IN VIEW OF OUR REASONINGS GIVEN EARLIER, WE ARE OF THE CONSIDERED OPINION NO ADDITION IN THE HANDS OF THE ASSE SSEE CAN BE MADE. SINCE IT IS HELD THAT THE ASSESSEE HAS NOT RECEIVED ANY AMOUNT, THEREFORE, THE QUESTION OF TAXING THE SAME U/S.56(2)(VI) AS HELD B Y CIT(A) DOES NOT ARISE. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE O RDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.1 CRORE FOR A.Y. 2006-07 AND RS. 20 CRORES FOR A.Y. 2007-08. GROUNDS R AISED BY THE ASSESSEE ON THIS ISSUE ARE ACCORDINGLY ALLOWED. 56. SINCE THE ASSESSEE SUCCEEDS ON MERIT, THEREFORE, THE GROUND RELATING TO VALIDITY OF ASSESSMENT U/S.143(3) R.W.S. 153A BECOME A CADEMIC IN NATURE AND THEREFORE THE SAME IS NOT BEING ADJUDICAT ED. 57. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 21. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO TH E FACTS IN THE CASE OF SHRI VINIT RANAWAT (SUPRA) TO WHICH BOTH OF U S ARE PARTIES, THEREFORE, FOLLOWING OUR DECISION, WE HOLD THAT ADDITION U/S.6 9A IS NOT WARRANTED IN THE HANDS OF THE ASSESSEE EITHER FOR A.Y. 20 04-05 OR FOR A.Y. 2005-06. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDE R OF THE CIT(A). 37 ITA NOS.1016 & 916/PN/2014 22. SINCE THE ASSESSEE SUCCEEDS ON MERIT THE OTHER GRO UNDS RAISED BY THE ASSESSEE BEING ACADEMIC IN NATURE ARE NOT BEING ADJUDICATED . ITA NO.916/PN/2014 (A.Y.2005-06) : 23. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN ASSUMIN G THE JURISDICTION U/S.263 OF THE INCOME TAX ACT, 1961. 2. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN TREAT ING THE AMOUNT OF RS.100,00,000/- AS INCOME OF THE APPELLANT. 3. THE APPELLANT MAY KINDLY BE PERMITTED TO ADD TO OR ALTER ANY OF GROUNDS OF APPEAL, IF DEEMED NECESSARY. 24. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 28-10-200 5 DECLARING TOTAL INCOME OF RS.9,34,847/-. THE AO REOPENED THE ASSES SMENT U/S.148 ON THE BASIS OF SEIZED DOCUMENTS FOUND DURING TH E COURSE OF SEARCH IN THE CASE OF SHRI SOHANRAJ MEHTA, C&F AGENT O F RMD GUTKHA GROUP WHICH INDICATED DEPLOYMENT OF RS.1 CRORES TO SHRI S OHANRAJ MEHTA OUT OF THE UNACCOUNTED SALE PROCEEDS. THE AO CO MPLETED THE ASSESSMENT U/S.143(3) R.W.S. 147 ON 17-12-2011 BY OBSERV ING AS UNDER : 3. THE ASSESSEES CASE WAS RE-OPENED FOR A.Y. 2004-05, 20 05-06, 2006-07 & 2007-08 ON THE BASIS OF A SEIZED DOCUMENT DU RING THE COURSE OF SEARCH ACTION CONDUCTED BY INVESTIGATION WING OF BANG ALORE IN THE CASE OF SHRI SOHANRAJ MEHTA, C&F OF RMD GUTKHA GROUP. THE ASSESSEE WAS ASKED TO PRODUCE BANK ACCOUNT DETAILS, RETURN OF INCOME, B ALANCE SHEET, P&L FOR A.Y. A.Y. 2004-05, 2005-06, 2006-07 & 2007-08 WHICH HAVE BEEN VERIFIED AND PLACED ON RECORD. 4. AS THE AMOUNT OF RS.1 CRORE IS ALREADY ADDED BACK T O THE TOTAL INCOME OF THE ASSESSEE FOR THE A.Y. 2004-05, NO ADDITIO N IS MADE IN THIS ASSESSMENT YEAR. 25. SUBSEQUENTLY, THE LD.CIT CALLED FOR THE RECORDS AND N OTED THAT THE SEIZED PAPER INDICATED THAT AN AMOUNT OF RS.1 CRORE HAD BEEN DEPLOYED TO THE VENDOR SUVAAS MANTRI ON 09-07-2004. HOWEVER, 38 ITA NOS.1016 & 916/PN/2014 ASSESSMENT ORDER DATED 17-12-2011 FOR A.Y. 2005-06 WITN ESSES NO ADDITION OF AN AMOUNT OF RS.1 CRORE FOR THE REASON THAT THE SAID AMOUNT HAD ALREADY BEEN ADDED TO THE TOTAL INCOME OF TH E ASSESSEE FOR A.Y. 2004-05. THE AO HAS ACCEPTED THE RETURNED INCOME FOR A.Y. 2005-06. SINCE THE AO HAS FAILED TO MAKE ANY ENQUIRY AND MADE ADDITION DURING THE YEAR DESPITE THE FACT THAT THE SEIZE D MATERIAL INDICATED DEPLOYMENT OF RS.1 CRORE IN FAVOUR OF THE ASSESSE E ON 09-07- 2004 RELEVANT TO A.Y. 2005-06, THEREFORE, THE ASSESSMENT SO FRAMED WAS CONSIDERED BY HIM AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. HE ACCORDINGLY ISSUED A NOTICE U/S.263 DAT ED 06-03- 2014 ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSE SSMENT FOR A.Y. 2005-06 DATED 17-12-2011 SHOULD NOT BE SET ASIDE AND FRESH ORDER BE PASSED. THE ASSESSEE MADE ELABORATE SUBMISSIONS STATING THAT VARIOUS DETAILS CALLED FOR DURING THE ASSESSMENT PROCEEDINGS WERE PROVIDED VIDE SUBMISSION DATED 23-11-2011. IT WAS BROUGHT TO THE NOTICE OF THE AO THAT THE DEPLOYMENT OF FUNDS RELATES TO THE PERIOD 01 -07-2004 TO 31-07-2004 WHICH FALLS IN THE PREVIOUS YEAR RELEVANT TO A .Y. 2005-06 AND THEREFORE THE REOPENING FOR THE OTHER YEARS IS WITHOUT JURIS DICTION. 26. THE AO HAS IN HIS WISDOM AFTER DUE CONSIDERATION OF T HE MATERIAL PRODUCED BEFORE HIM BROUGHT THE AMOUNT TO TAX IN A.Y. 2004- 05 VIDE ORDER PASSED ON 17-12-2011, I.E. ON THE SAME DA Y ON WHICH THE ORDER WAS PASSED FOR A.Y. 2005-06. THUS, THERE IS CLE AR APPLICATION OF MIND ON THE PART OF THE AO IN SO FAR AS THE YEAR OF TAXATION IS CONCERNED HAVING CHOSEN TO TAX IT IN THE EAR LIER YEAR. IT WAS ARGUED THAT THE SEIZED DOCUMENT MERELY INDICATES ONLY DEPLOYMENT OF FUNDS AND IT DOES NOT INDICATE THAT INCOME HAS ACCRUED O R ARISEN TO THE PRESENT ASSESSEE. RELYING ON VARIOUS DECISIONS IT WA S SUBMITTED THAT ALTHOUGH THE ORDER CAN BE TERMED AS ERRONEOUS B UT THE SAME IS 39 ITA NOS.1016 & 916/PN/2014 NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE SINCE THE AMOUNT HAS ALREADY BEEN BROUGHT TO TAX IN THE PRECEDING ASSESSMENT YEAR . 27. HOWEVER, THE LD.CIT WAS NOT SATISFIED WITH THE EXPLANA TION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE RELEVANT DATE FOR DEPLOYING FUNDS AS PER THE SEIZED PAPER WAS 09-07-2004 AND THER EFORE ADDITION CANNOT BE MADE IN THE A.Y. 2004-05 AND HAS TO BE MADE IN A.Y. 2005- 06. FURTHER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) FOR A.Y. 2004-05 CONTENDING THAT THE TRANSACTION IS RELATING TO A .Y. 2005-06 AND CANNOT BE TAXED IN A.Y. 2004-05. RELYING ON VARIOUS DECISIONS THE LD.CIT HELD THAT THE AO BY ASSESSING THE AMOUNT OF RS.1 CRORE IN A.Y. 2004-05 HAS MADE THE ASSESSMENT ORDER DATED 17-12-2 011 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE ADDITION, IF ANY, HAS TO BE MADE ONLY IN A.Y. 2005-06 AND ADDITION IN OTHER YEARS IS UNSUSTAINABLE. HE THEREFORE HELD THAT THE ORDER PASSED BY THE AO IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. HE ACCORDINGLY SET ASIDE THE ORDER OF THE AO AND DIRECTED HIM TO PASS FRESH ORDER AFTER RECONSIDERING ALL ASPECTS. 28. AGGRIEVED WITH SUCH ORDER OF THE CIT THE ASSESSEE IS IN APPEAL BEFORE US. 29. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED THE ORD ER OF THE CIT. HE SUBMITTED THAT THE OBSERVATION OF THE CIT THAT NO ENQUIRY HAS BEEN MADE BY THE AO IS FACTUALLY INCORRECT SINCE THE AO HAS APPLIED HIS MIND AND TAXED THE AMOUNT OF RS. 1 CRORE U/S.6 9A IN A.Y. 2004-05. POSSIBLY HE IS TAXING FOR THE INVESTMENT WHICH IS GIVEN BACK IN THIS ASSESSMENT YEAR. THEREFORE, SAYING THAT THERE IS ERROR IS ALSO INCORRECT. REFERRING TO THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT REPOR TED IN 243 40 ITA NOS.1016 & 916/PN/2014 ITR 83 HE SUBMITTED THAT FOR INVOKING THE JURISDICTION U/S .263 THE TWIN CONDITIONS, I.E. (A) THE ORDER IS ERRONEOUS AND (B) PREJU DICIAL TO THE INTEREST OF THE REVENUE MUST BE SATISFIED. HOWEVER, IN THE INSTANT CAS E, THERE CANNOT BE PREJUDICE TO THE INTEREST OF THE REVEN UE SINCE IT HAS ALREADY BEEN BROUGHT TO TAX IN THE PRECEDING ASSESSMEN T YEAR AND THEREFORE THERE CANNOT BE ANY LOSS TO THE REVENUE. RE FERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF G RASIM INDUSTRIES LTD. VS. CIT REPORTED IN 321 ITR 92 HE SUBMIT TED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HELD THAT WHEN THE AO TAKES A POSSIBLE VIEW WHILE PASSING AN ORDER OF ASSESSMENT, THE CI T CANNOT INVOKE JURISDICTION U/S.263. THEREFORE, WHEN THE AO HAS AD OPTED ONE OF THE COURSE PERMISSIBLE IN LAW OR WHERE TWO VIEWS ARE P OSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTA INABLE IN LAW. HE ACCORDINGLY SUBMITTED THAT THE ORDER PASSED BY THE LD.CIT U/S.263 HAS TO BE SET ASIDE. 30. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND STRONGLY SUPPORTED THE ORDER OF THE CIT. HE SUBMITTED THAT THE AO WHILE PASSING THE ASSESSMENT ORDER HAS NOT GIVEN ANY REASON AT ALL AS TO WHY HE IS MAKING THE ADDITION IN A.Y. 2004-05 INSTEAD OF A.Y. 2005 -06. THEREFORE, THE ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL T O THE INTEREST OF THE REVENUE. THE AO IN THE INSTANT CASE HAS OMITTED TO MAKE PR OPER APPLICATION OF MIND. EVEN THE CIT(A) HAS ALSO HELD THAT THE INCOME PERTAINS TO A.Y. 2005-06. THEREFORE, THE ORDER OF THE CIT INVOKING JURISDICTION U/S.263 IS JUSTIFIED. 41 ITA NOS.1016 & 916/PN/2014 31. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE AO DID NOT MAKE ANY ADDITION IN THE HANDS OF THE ASSESSEE IN THE IMP UGNED ASSESSMENT YEAR HOLDING THAT HE HAS ALREADY MADE THE A DDITION OF RS.1 CRORE IN A.Y. 2004-05. THIS WAS DONE BY THE AO DESP ITE THE FACT BROUGHT BEFORE HIM THAT THE SEIZED DOCUMENTS RELATES TO A.Y. 2005-06 AND NOT A.Y. 2004-05. THEREFORE, THE AO IN A CLEAR APPLICA TION OF MIND AND IN A CONSCIOUS MANNER MADE THE ADDITION IN A.Y. 2 004-05 AND NOT IN A.Y. 2005-06. THEREFORE, IT CANNOT BE SAID THA T THERE IS NO APPLICATION OF MIND. SINCE THE AMOUNT HAS ALREADY BEEN TAX ED IN A.Y. 2004-05, THEREFORE, NO PREJUDICE CAN BE SAID TO HAVE CAU SED TO THE REVENUE. IN ANY CASE WE HAVE ALREADY HELD IN THE PRECE DING PARAGRAPHS WHILE DECIDING THE APPEAL FOR A.Y. 2004-05 THAT NO ADDITION IS CALLED FOR IN THE HANDS OF THE ASSESSEE ON THE BASIS OF SEIZED DOCUMENTS FOUND DURING THE COURSE OF SEARCH OF S HRI SOHANRAJ MEHTA, C&F AGENT OF RMD GUTKHA GROUP EITHER IN A.Y. 2004- 05 OR A.Y. 2005-06. THEREFORE, THE ORDER OF THE CIT INVOKING JU RISDICTION U/S.263 CANNOT BE SUSTAINED EVEN ON MERIT. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE CIT AND THE GRO UNDS RAISED BY THE ASSESSEE ARE ALLOWED. 32. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-09-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ' / JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE ; DATED : 23 RD SEPTEMBER, 2015. 42 ITA NOS.1016 & 916/PN/2014 ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. & ( ) , / THE CIT(A)-III, PUNE 4. & / THE CIT-III, PUNE 5. 6. ) ,,-, -, / DR, ITAT, A PUNE; 1 / GUARD FILE. / BY ORDER , ) , //TRUE C ) , //TRUE COPY// 34 , - / SR. PRIVATE SECRETARY -, / ITAT, PUNE