Sgri Harminder Singh Bhatia, Indore V. The ACIT,Central-1, Bhopal

ITSSA 143/Ind/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4744 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 17-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Business income; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Opportunity of cross examination; Maximum Marginal Rate; Fair market value; Documents seized; TDS; Set aside
• Section: 145; 37; 132; 2; 143(3); 153A; 40(a)(ia); 133(6); 37(1); 69B; 264; 192; 139(1); 64; 142(2A); 44AB; 113; 48; 2(A); 73; 13; 145(3); 119; 153C

Judgement Text

आयकरअपील यअ धकरण,इंदौर यायपीठ,इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIALMEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A No.142 to 148/Ind/2020 Assessment Year: 2010-11 to 2016-17 Shri Harminder Singh Bhatia Indore बनाम/ Vs. ACIT, Central-1 Bhopal (Appellant) (Respondent ) P.A. No.ACFPB4293H IT(SS)A No.11/Ind/2021 Assessment Year: 2010-11 & IT(SS)A No.37 to 42/Ind/2021 Assessment Years: 2011-12 to 2016-17 ACIT, (OSD) Central-1 Bhopal बनाम/ Vs. Shri Harminder Singh Bhatia Indore (Appellant) (Respondent ) P.A. No.ACFPB4293H Appellant by S/Shri Anil Kamal Garg & Arpit Gaur, CAs Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 2 Respondent by Shri P.K. Mitra, CIT-DR Date of Hearing: 19.01.2022 Date of Pronouncement: 18.04.2022 आदेश / O R D E R PER BENCH The above captioned appeals filed at the instance of the Revenue and cross appeals filed by the Assessee are directed against the Common Order of the Ld. Commissioner of Income Tax (Appeals)-3, Bhopal (in short ‘CIT(A)’), dated 01.07.2020, which is arising out of the Common Assessment Order u/s. 153A r.w.s. 143(3) of the Income-Tax Act, 1961 (in short, ‘the Act’) dated 10.08.2018 framed by the ACIT (Central) -I, Bhopal. As submitted by the Ld. Counsel for the assessee and also duly accepted by the Ld. Departmental Representative that the issues raised in these appeals are common pertaining to same assessee and inter- linked and as also, are arising out of the similar facts, for the sake of convenience and brevity, all these appeals were heard together on the request of both the parties and are being disposed off by this common order. 2.1 Grounds of appeal raised by the Revenue for AY 2010-11 in IT(SS)A No.11/Ind/2021: “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 6,10,54,917/- made by the Ld.AO on account of undisclosed income from liquor trade business.” 2.2 Grounds of appeal raised by the Revenue for AY 2011-12 in IT(SS)A No.37/Ind/2021: Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 3 “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,19,81,104/- made by the Ld.AO on account of undisclosed income from liquor trade business. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.3,76,69,432/- made by the Ld.AO on account of undisclosed investment” 2.3 Grounds of appeal raised by the Revenue for AY 2012-13 in IT(SS)A No. 38/Ind/2021: “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 7,56,07,095/- made by the Ld.AO on account of undisclosed income from liquor trade business.” 2.4 Grounds of appeal raised by the Revenue for AY 2013-14 in IT(SS)A No. 39/Ind/2021: “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 18,19,55,961/- made by the Ld.AO on account of undisclosed income from liquor trade business. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.13,18,377/- made by the Ld.AO on account of undisclosed interest income” 2.5 Grounds of appeal raised by the Revenue for AY 2014-15 in IT(SS)A No. 40/Ind/2021: “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 14,79,62,331/- made by the Ld.AO on account of undisclosed income from liquor trade business.” 2.6 Grounds of appeal raised by the Revenue for AY 2015-16 in IT(SS)A No.41/Ind/2021: “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 20,79,11,158/- made by the Ld.AO on account of undisclosed income from liquor trade business.” 2.7 Grounds of appeal raised by the Revenue for AY 2016-17 in IT(SS)A No. 42/Ind/2021: Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 4 “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 2,73,91,093/- made by the Ld.AO on account of undisclosed income from liquor trade business. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 2,55,670/- made by the Ld.AO on account of unexplained cash found and seized during the course of search. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.1,79,60,968/- made by the Ld.AO on account of undisclosed investment. 4. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.1,58,60,050/- made by the Ld.AO on account of undisclosed investment. 5. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.4,38,75,000/- made by the Ld.AO on account of undisclosed investment.” 2.8 Grounds of appeal raised by the Assessee for AY 2010-11 in IT(SS)A No.142/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alearnedne. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the LD.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 5 of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 3. That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in uphoLding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 5a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in uphoLding the Ld.AO’s action of making allegation upon the appellant for deriving share of profit from various so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 5b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant’s contention made before him that corresponding to the undisclosed income determined by the Ld.AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation of Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 6 appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the Ld.AO that the alleged syndicates had incurred inadmissible expenses. 7. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.9 Grounds of appeal raised by the Assessee for AY 2011-12 in IT(SS)A No.143/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alearnedne. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the LD.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 7 nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 3. That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4. That, without prejudice to the above, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.6,00,000/- made by the Ld.AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 5. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation upon the appellant for deriving share of profit from various so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant’s contention made before him that corresponding to the undisclosed income determined by the Ld.AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 7a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially sustaining the addition to the extent of Rs.6,00,000/- in the appellant’s income on account of alleged undisclosed investment in capital of some M/s. Mahakal Traders merely on the basis of some loose papers found and seized Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 8 from the premises of a third person and that too, without properly considering and appreciating the explanation of the appellant. 7b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially sustaining the addition to the extent of Rs.6,00,000/- in the appellant’s income without considering and appreciating the material fact that the appellant neither carried out any financial transaction with the so-called M/s. Mahakal Traders nor he made any investment therein. 7c) That, without prejudice to the above and without admitting any alleged unexplained investment in capital of M/s. Mahakal Traders and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. 8. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.10 Grounds of appeal raised by the Assessee for AY 2012-13 in IT(SS)A No. 144/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alearnedne. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the Ld.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 9 appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 2c) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for making proposal for referring the case of the appellant to Special Audit under s.142(2A) of the Act without considering and appreciating the material fact that the same sets of books of account of the appellant had also undergone scrutiny assessment under s.143(3) of the Act for the relevant assessment year and the then Ld.AO has passed the assessment order in the case of the appellant after verification of such books of account only. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 5a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation upon the appellant for deriving share of profit from various so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 10 5b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant’s contention made before him that corresponding to the undisclosed income determined by the Ld.AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation of appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the Ld.AO that the alleged syndicates had incurred inadmissible expenses. 7. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.11 Grounds of appeal raised by the Assessee for AY 2013-14 in IT(SS)A No. 145/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alearnedne. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the Ld.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 11 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.1,12,708/- made by the Ld.AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 5 That, without prejudice to the above, the learned CIT(A) grossly erred, both on acts and in law, in upholding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation upon the appellant for deriving share of profit from various so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 12 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant’s contention made before him that corresponding to the undisclosed income determined by the Ld.AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 7a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the LD.AO’s action of making allegation of appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 7b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the Ld.AO that the alleged syndicates had incurred inadmissible expenses. 8a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.1,12,708/- made by the Ld.AO in the appellant’s income on account of alleged undisclosed capital investment of the appellant in so-called Syndicates without considering and appreciating the appellant’s submission made before him to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 8b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the impugned addition of Rs.1,12,708/-, merely on some incomplete and fictitious accounts, documents and datas, the veracity whereof by themselves were not getting established. 8c) That, without prejudice to the above and without in any manner admitting the existence of any Syndicate and making of any investment by the appellant in such Syndicates, even if for the sake of presumption, it is assumed that the appellant had formed some association of persons, in the form of Syndicates, for carrying out the business of liquor and also made some investments in such Syndicates, then also working of the amount of alleged undisclosed investment so determined by the Ld.AO at Rs.1,12,708/- and confirmed by the learned CIT(A) is not correct but excessive. 8d) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the impugned addition of Rs.1,12,708/- as the appellant’s undisclosed investment in liquor business without considering and Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 13 appreciating the investment, by way of own capital as well as borrowed funds, already recorded in the regular books of account maintained by the appellant and duly shown in the audited financial statements furnished along with the return of income. 9 That, the learned CIT(A) grossly erred, both on facts and in law, in making a finding that the appellant had formed some syndicate named and titled as ‘M/s. Mahakal Traders, Dhar’. 10. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.12 Grounds of appeal raised by the Assessee for AY 2014-15 in IT(SS)A No. 146/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the Ld.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 14 correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 5a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation upon the appellant for deriving share of profit from various so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 5b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant’s contention made before him that corresponding to the undisclosed income determined by the Ld.AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation of appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 15 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the Ld.AO that the alleged syndicates had incurred inadmissible expenses. 7. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.13 Grounds of appeal raised by the Assessee for AY 2015-16 in IT(SS)A No.147/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the Ld.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 16 other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 5a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation upon the appellant for deriving share of profit from various so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 5b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not appreciating the appellant’s contention made before him that corresponding to the undisclosed income determined by the Ld.AO for various assessment years, no undisclosed assets or investments or expenditure were detected during the course of search and seizure operations under s.132(1) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation of appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the Ld.AO that the alleged syndicates had incurred inadmissible expenses. 7. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 17 2.14 Grounds of appeal raised by the Assessee for AY 2016-17 in IT(SS)A No. 148/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the action of the Ld.AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the LD.AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the Ld.AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates, seized from premises of third parties, only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the Ld.AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 18 contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.2,15,09,730/- made by the Ld.AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 5 That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the Ld.AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the Ld.AO’s action of making allegation of appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the Ld.AO that the alleged syndicates had incurred inadmissible expenses. 7a) That, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.43,84,730/- made by the Ld.AO in the appellant’s income on account of alleged undisclosed investment in capital of some ‘MR-10 Shop’ merely on the basis of some loose papers found and seized from the premises of a third person and that too, without properly considering and appreciating the explanation of the appellant. 7b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the impugned addition of Rs.43,84,730/- made by the Ld.AO in the appellant’s income without considering and appreciating the material fact that the appellant neither carried out any financial transaction with the so-called ‘MR-10 Shop’ nor he made any investment therein. 7c) That, without prejudice to the above and without admitting any alleged unexplained investment in capital of ‘MR-10 Shop’ and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 19 8a) That, the learned CIT(A) grossly erred, both on facts and in law, in partially maintaining an addition to the extent of Rs.1,71,25,000/- out of the total addition of Rs.6,10,00,000/- made by the Ld.AO in the appellant’s income on allegation of unexplained investment in purchase of shares of a company namely ‘M/s. Agrawal Distilleries Pvt. Ltd.’ (ADPL) merely on the basis of some loose paper impounded during the course of survey under s.133A in the premises of some other person. 8b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially maintaining an addition to the extent of Rs.1,71,25,000/- out of the total addition of Rs.6,10,00,000/- made by the Ld.AO in the appellant’s income on allegation of unexplained investment in purchase of shares of ADPL without properly considering and appreciating the explanation of the appellant made along with necessary evidences and without having any corroborative cogent material on record to give any iota of evidence that the appellant made any unexplained investment in purchase of shares of ADPL. 8c) That, without prejudice to the above and without admitting any unexplained investment in purchase of shares of ADPL, the learned CIT(A) grossly erred, both on facts and in law, in partially maintaining an addition to the extent of Rs.1,71,25,000/- out of the total addition of Rs.6,10,00,000/- made by the Ld.AO in the appellant’s income on allegation of unexplained investment in purchase of shares of ADPL without considering and appreciating the material fact that no investment, whatsoever, in the subject shares was made by the appellant during the previous year relevant to the assessment year under consideration. 8d) That, without prejudice to the above and without admitting any alleged unexplained investment in purchase of shares in ADPL and as also, without admitting any receipt of income by the appellant from any Syndicate, the learned CIT(A) grossly erred in not granting benefit of telescoping to the appellant in respect of the alleged unexplained investment against the alleged receipt of income by the appellant from various Syndicates in various years. 9. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 3.1 The brief facts of the case as culled out from the records are that the assessee is an individual carrying out the business of liquor. Besides, the assessee also derives income from certain partnership firms in which he is one of the partner. The assessee furnished his original returns of income u/s. 139(1) of the I.T. Act, 1961(in short “the Act” for the years under appeal before us. Search and seizure operations u/s. 132 was Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 20 carried out at various premises of Shivhare group and the assessee on 07/01/2016. Consequently, notices u/s. 153A were issued to the assessee for A.Y. 2010-11 to A.Y. 2015-16 on 06/01/2017. In response to the above notices, the assessee filed returns of income for A.Ys. 2010- 11 to 2015-16 on 13/06/2017. The details of returns of income for A.Y. 2010-11 to 2016-17 are as under: A.Y. Date of filing of Return u/s. 139 Returned income (in Rs.) Date of filing of Return in response to the notice u/s. 153A Income declared in Return u/s. 153A (In Rs.) Additional Income offered, if any (In Rs.) 2010-11 14/10/2010 85,31,440/- 13/06/2017 85,31,440/- Nil 2011-12 27/09/2011 1,06,56,430/- 13/06/2017 1,06,56,430/- Nil 2012-13 27/02/2013 1,32,79,980/- 13/06/2017 1,32,79,980/- Nil 2013-14 27/01/2014 1,72,42,970/- 13/06/2017 1,72,42,970/- Nil 2014-15 26/11/2014 95,05,380/- 13/06/2017 95,05,380/- Nil 2015-16 27/10/2015 93,65,440/- 13/06/2017 93,65,440/- Nil 2016-17 31/03/2017 1,43,61,540/- N.A. N.A. Nil 3.2 In the case of the assessee, a reference was made for special audit u/s. 142(2A) of the Act and accordingly, the special auditors submitted their report on 18.07.2018. The report of the special auditors, as produced by the assessee, was duly perused and considered by the Ld.AO and also by the Learned Commissioner of Income Tax(Appeals) [in short Ld.CIT(A)]. A copy of the Special Auditors Report is also placed before us. 3.3 After considering the submissions made by the assessee from time to time , assessments were completed by Learned Assessing Officer [in short Ld.AO] after making additions of Rs.6,10,54,917/- in A.Y. 2010-11, Rs.3,91,81,104/- in A.Y. 2011-12, Rs.7,56,07,095/- in A.Y. 2012-13, Rs.18,19,55,961/- in A.Y. 2013-14, Rs.14,79,62,331/- in A.Y. 2014-15, Rs. 20,79,11,158/- in A.Y. 2015-16 and Rs.2,73,91,093/- in A.Y. 2016- 17 on account of share of assessee in undisclosed income of some Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 21 syndicates, share in inadmissible expenses incurred by such syndicates and some undisclosed capital invested by the assessee in various syndicates (para 9); Undisclosed investment in M/s. Mahakal Traders at Rs.3,82,69,432/- in A.Y. 2011-12 (para 15), Undisclosed interest income from capital in M/s. Mahakal Traders, Dhar at Rs.13,18,377/- in A.Y. 2013-14 (para 10), Undisclosed investment in MR-10 Shop at Rs. 43,84,730/- in A.Y. 2016-17 (para 12), Undisclosed investment in Indore Syndicate at Rs. 1,79,60,968/- in A.Y. 2016-17 (para 13), Undisclosed investment in Khajrani Group at Rs. 1,58,60,050/- in A.Y. 2016-17 (para 14), Rs.6,10,00,000/- in A.Y. 2016-17 on account of undisclosed investment in purchase of shares (para 11) and Rs.2,55,670/- in A.Y. 2016-17 on account of unexplained cash found during the course of Search (para 8). 4. Aggrieved assessee preferred separate appeals for all the assessment years under consideration before Ld. CIT(A). 5. The Ld. CIT(A), vide his common Order dated 01.07.2020 adjudicated the appeals of the assessee thereby giving substantial relief and also confirming certain additions for the assessment years under consideration. 6. Now, aggrieved by the relief granted by the Ld. CIT(A) to the assessee, the revenue is in appeal before this Tribunal for the assessment years under consideration and against the additions confirmed by the Ld. CIT(A), the assessee has preferred cross appeals before us. 7. Ground No. 1 of the Revenue for A.Ys. 2010-11 to 2016-17; Ground Nos. 5(a), 5(b), 6(a) & 6(b) of the Assessee for A.Ys. 2010-11, 2012-13, 2014-15 & 2015-16; Ground Nos. 6(a) & 6(b) of the Assessee for A.Ys. 2011-12 & 2016-17 and Ground Nos. 6(a), 6(b), 7(a) & 7(b) of the Assessee for A.Y. 2013-14 7.1 Through the Ground No. 1, common for all the assessment years under consideration, the revenue has challenged the action of the Ld. CIT(A) in deleting the additions made by the Ld.AO in the assessee’s income in all the assessment years, on account of undisclosed income from liquor trade business through Syndicates. Further, through the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 22 grounds of appeal for various assessment years, the assessee has challenged the action of the Ld. CIT(A) in confirming the finding of the Ld.AO that the assessee was carrying out the business through formation of Syndicates. The assessee has also agitated that the Ld. CIT(A) did not appreciate that corresponding to the undisclosed income determined by the Ld.AO, no undisclosed asset or investment or expenditure was detected during the course of search and seizure operations u/s. 132 of the Act. 7.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee’s group on 07.01.2016, various incriminating documents were seized from which it was revealed that to operate liquor trading business, the assessee had formed syndicates/cartels/group in different districts as self organizing group formed to transact specific business, to pursue or promote a shared interest. As per theLd.AO, from the seized documents it was evident that the assessee was one of the key members of multiple syndicates. The Ld.AO further taking support from dictionary clarified that such syndicates were formed by individuals or organizations to promote common interest of profit. According to the Ld.AO, the existence of syndicates was beyond doubts as the same was accepted by the various members of the group in their statements given during the search/post search investigation. Further, according to the Ld.AO, the term ‘syndicate’ was taken from the seized material in which they have used this term to explain their modus operandi. Ld.AO made a clear and unequivocal finding that various investigations strengthened the contention that there existed a syndicate and various assessee(s) are part of such syndicates. The Ld.AO also found that incriminating documents seized during the course of the search also contained some bank transactions which were carried out by the assessee from his bank accounts. The Ld.AO further made reference of various incriminating data which inter alia include, tally accounts, balance sheet, profit and loss account etc. of various syndicates in which the assessee was found to be one of the members. The Ld.AO further made a finding that the seized data reflect the correct income of the syndicates and as also share of profit of the assessee in such syndicates as mentioned in such data. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 23 The Ld.AO further found, from the seized data and documents, that the aforesaid syndicates had incurred certain expenditure for payment of illegal gratification which were not allowable under the Act. The Ld.AO while examining the tally data of the syndicates also found that such syndicates had incurred expenses on payment of rents without making any TDS u/s. 194-IA of the Act. Further, some seized documents reveal that these syndicates have made payments towards commission which were not allowable. Likewise, expenses on gifts, donation, personal expenses, breakage and leakages, etc. were not permissible. The Ld.AO also noted that some expenditure exceeding amount of Rs. 20,000/- were incurred by the syndicates in violation of the provisions of section of 40A(3)/(3A) of the Act. The Ld.AO also relied upon the findings of the special auditors given in their report. At the same time, the LD.AO also found that the assessee had made investment in various syndicates,the sources whereof were not satisfactorily explained by the assessee. After giving detailed findings, reproducing various seized data and drawing the syndicate wise details in tabular form, the Ld.AO made additions, for various assessment years under appeal, under three sub heads viz. (i) share of assessee in the undisclosed income from the syndicates; (ii) share of assessee in inadmissible expenditure incurred by the syndicates; and (iii) sum of undisclosed capital invested by the assessee in syndicates, by drawing various tables at para 9.7. In such table, based upon the seized documents, the Ld,AO also mentioned the assessee's share in profit in each and every syndicate. Finally, after fairly giving set- off for the assessee’s share in the losses incurred by the syndicates for various assessment years, the Ld.AO made the addition, for various assessment years. Against such addition, the assessee has taken the above grounds. The details of the assessment year wise additions made by the Ld.AO, as summarized by the Ld. CIT(A) at para (3.5.1) of his Order, are as under: A.Y. Share of profit of the assessee in syndicates (A) Share of loss of the assessee in syndicates (B) Net Share of Profit of the assessee in syndicates (C=A-B) Share of the assessee in inadmissible expenses incurred by the syndicates Undisclosed Capital Invested by the assessee in syndicates (E) Total (F = C+D+E) Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 24 (D) 2010- 11 1,38,48,319 - 1,38,48,319 4,72,06,598 - 6,10,54,917 2011- 12 3,91,81,104 - 3,91,81,104 - - 3,91,81,104 2012- 13 6,90,02,469 - 6,90,02,469 66,04,625 - 7,56,07,095 2013- 14 10,17,30,425 1,04,26,621 9,13,03,804 9,05,39,449 1,12,708 18,19,55,961 2014- 15 4,02,17,803 1,23,46,193 2,78,71,610 12,00,90,720 - 14,79,62,331 2015- 16 3,44,65,533 12,32,550 3,32,32,983 17,46,78,176 - 20,79,11,158 2016- 17 1,68,91,989 1,79,48,464 Nil [(-)10,56,475] [Net Loss not considered] 2,73,91,093 - 2,73,91,093 Total 31,53,37,642 4,19,53,828 27,44,40,289 46,65,10,661 1,12,708 74,10,63,659 7.3 Aggrieved with the Order of Assessment, the assessee preferred separate appeals for the subject assessment years before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the Ld.AO. Before the Ld. CIT(A), the assessee also produced copy of Special Auditors’ Report. The Ld. CIT(A), on the basis of the various datas seized from the premises of third person, dismissing the grounds raised by the assessee to the effect that he was carrying out his liquor business in his individual capacity and had not formed any syndicate, came to the conclusion that the assessee had certainly formed Syndicates with various persons. The Ld. CIT(A) has given the relevant findings at para (3.5.3) and (3.5.4) of his order which are reproduced as under: “3.5.3 I have considered the facts of the case, the Ld.AO’s findings, special auditor’s report, appellant’s submission, copies of the seized documents as produced before me, written and oral submissions made by the appellant before Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 25 me from time to time and documents furnished by the appellant in the paper books. After considering all, I am of the view that the appellant had formed various syndicates/groups with other persons, in various years under appeal, for carrying out the business of liquor with a view to share the profit derived by such syndicates, in certain agreed ratio. I find that ample of documentary evidences, in the form of tally data and financial statements were found either from the appellant’s own premises or from the premises of the associates of the appellant and such seized data clearly reveal that the appellant along with others had formed AOPs in the shape of syndicates and such syndicates had carried out businesses as independent entities and from such entities the appellant had derived substantial amount of income by way of his share in profit. I also found from the seized tally data and other incriminating documents that all such syndicates had incurred substantial expense towards payment of gratification, charity, donation, commission, personal expenses etc. which are not legally deductible under the provisions of section 37(1) of the Act. I also found that the appellant could not establish any positive evidence that the syndicates had made due compliance of provisions of TDS before making payment of rent. Further, the possibilities of violation of provisions of section 40A(3)/(3A) which prohibits cash payments exceeding Rs. 20,000/- cannot be overruled and the appellant miserably failed to prove by any positive evidence that there was no such violation. From the seized documents, it was observed that the appellant had made investment in various syndicates, as his capital contribution, the sources whereof were not explained. The special auditors, in their report submitted u/s. 142(2A) of the Act and as also the Ld.AO has made a very detailed working for arriving at the figures of the addition. However, in my view, share of the appellant in inadmissible expenditure incurred by various syndicates is of the same nature as his share in the income of the syndicates. In my view, share of profit of the appellant from each of the syndicates, for various years, was required to be computed after working out the taxable income of the syndicates as per the various provisions of the IT Act, 1961. Further, in my view, undisclosed investment made by the appellant towards capital contribution in various syndicates cannot be regarded as income of the appellant from the syndicates business, but, the same has to be regarded as undisclosed investment of the appellant in such syndicates which is taxable u/s. 69/69B of the Act. Such undisclosed investment cannot be regarded as the business income of the appellant from syndicates. 3.5.4 I do not find any substance in the contentions raised by the appellant that since he was carrying out the business of liquor in his individual capacity and was also showing income from carrying out such business in his returns of income, from year to year, no further income can be considered on the ground of share of his profit in the syndicates. From the records and seized material, it is evident that the appellant was carrying out liquor business by forming different Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 26 syndicates and therefore, there cannot be two views that the appellant had derived income from such syndicates. The appellant has vehemently claimed that factually, he had not formed any syndicate. In support of his contention, the A.R. of the appellant was heavily harping upon the license policy of the State Government and according to the A.R. of the appellant, the syndicates were not granted any separate licenses for carrying out the business of liquor and without having the licenses, such syndicates could not have carried out any business. However, such an argument of the A.R. of the appellant has no stand for the reason that merely because the appellant and other members of the syndicates have violated Excise Laws, it cannot be said that factually no syndicates were formed by them in a situation where the seized data and incriminating documents clearly reveal formation of such syndicates. Looking into totality of the facts, I hold that the appellant along with other persons had formed syndicates to carry out the business of liquor in which the appellant and other members were having certain share as agreed upon between themselves. I also hold that such syndicates had incurred certain expenses which were either prohibitory or inadmissible in the nature u/s. 37 of the Act or were not allowable for non compliance of the provisions of section 40(a)(ia) or section 40A(3)/(3A) of the Act. I also hold that the appellant had made undisclosed investment towards his capital contribution in the various syndicates and in various years.” However, after giving the aforesaid findings, the Ld. CIT(A) held that although, the assessee had undisputedly formed various syndicates/groups with various persons for carrying out the business of liquour, for a definite share of profit, but, in any case, the share of the assessee in the profit of these syndicates and as also, in the inadmissible expenses incurred by such syndicates cannot be added to the income of the assessee in view of the specific provisions of section 86 of the Income-Tax Act, 1961 r.w.s. 67A of the Act. According to the Ld. CIT(A), the status of these syndicates is that of Assosciation of Persons (AOP) or Body of Individuals (BOI) which are included in the definition of the expression 'Person' as described in section 2(31) of the Act. According to the Ld. CIT(A), such syndicates are separate taxable legal entities and separately charged to tax u/s. 4 of the Act at the maximum marginal rate (MMR). The Ld. CIT(A) futher held that income derived by various syndicates, in which the assessee was one of the members, was required to be assessed in the hands of such syndicates only and the direct assessment in the hands of the assessee could not have been made in respect of such income derived by the syndicates. The Ld. CIT(A) also held that even the question of admissibility or inadmissibility of any Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 27 expenditure could have been raised only while making the assessment in cases of such syndicates. The Ld. CIT(A) further held that the assessee could have, at the best, been assessed in respect of his share in taxable income of such syndicates but provisions of section 86 of the Act provides that Income Tax is not payable in respect of share in the income of the Association of Persons or Body of Individuals. Thus, relying upon the decisions of the Hon'ble Supreme Court in the case of ITO vs. CH. Atchaiah (1996) 218 ITR 239 (SC), the Ld. CIT(A) deleted the entire additions made by the LD.AO in the assessee's income, for various assessment years, on the grounds of assessee's share in profit of various syndicates and as also, share in the inadmissible expenses incurred by such syndicates. The relevant findings have been given by the Ld. CIT(A) at para (3.5.5) & (3.5.6) and again at para (3.7.1) to (3.7.5) of his Order. The same are being reproduced as under: “3.5.5 Having given the findings as aforesaid, now, it has to be adjudicated here that whether the share of profit of the appellant in the syndicates’ income, even if it remained undisclosed in the returns furnished by him, can legally be added to the income of the appellant and whether any tax, effectively, be levied on such income. As discussed in above paras, the nature of share of appellant in the inadmissible expenses incurred by the syndicates is the same as that of share in profit from such syndicates, the tax treatment for both the additions in the hands of the appellant would remain the same. Thus, in my considered view, the appellant had derived undisclosed income in the form of share of profit from some syndicates, which are nothing but Association of Persons (AOP) or Body of Individuals (BOI) formed by the appellant along with various other persons for the purpose of carrying out the liquor business with a motive to earn profit from such business in an agreed ratio. In my view, under the provisions of section 2(31) of the Act which gives the definition of the expression ‘Person’, a person includes, an association of persons or a body of individuals, whether incorporated or not. It is therefore, in my view, the syndicates formed by the appellant along with others is a separate taxable legal entity and separately chargeable to tax u/s. 4 of the IT Act. Further, in my view, such syndicates (AOPs/BOIs) are chargeable to tax at the Maximum Marginal Rate (MMR). Thus, in the instant case, any assessment of income, on the basis of the seized incriminating material and data, ought to have been made in the hands of the respective syndicates, a separate taxable entity, either u/s. 153C of the Act or under Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 28 any other legal recourse available to the Department. However, in view of the specific provisions of section 86 of the IT Act, 1961 r.w.s. 67A, in computing the total income of the appellant, his share, as member of the AOP/BOI, was not liable to be included. The appellant has also taken separate grounds taking the aforesaid plea and therefore, a detailed separate adjudication has been made elsewhere in the present order, while adjudicating the relevant grounds. However, since, in the Ground Nos. 6(a),6(b), 7(a) & 7(b), the appellant is agitating the additions on account of share of profit of the appellant in the various syndicates and share of appellant in inadmissible expenses of the syndicates, without having recourse to the provisions of section 86 and section 67A of the Act, these Grounds of Appeal of the appellant, for various assessment years, are held as academic in the nature only, requiring no specific adjudication and therefore, appeal on these grounds is Dismissed. 3.5.6 However, in respect of appellant’s undisclosed investment in various syndicates, in the assessment year 2013-14, for which the appellant has taken Ground Nos. 8(a) and 8(b), there is no substance in the appellant’s contention. Before me, it has been argued that first of all there was no syndicate and even if there was any such syndicate, the investments were made out of the explained sources only. It has also been argued that the amount of unexplained investments determined by the AO is not correct and suffer from various errors. In respect of incorrect determination of amount of undisclosed investment in syndicates, the appellant has also taken separate grounds of appeal bearing ground nos. 8(c) & 8(d) for A.Y. 2013-14. I have already given the finding that the appellant had formed syndicates with various persons for carrying out the business of liquor. From the ample of seized material, it is also evident that the appellant had made investment towards capital contribution in such syndicates. The appellant, neither during the course of the assessment proceedings nor before me, could explain the sources of making investments in such syndicates. Hence, the ground nos. 8(a) & 8(b) for A.Y. 2013-14 raised by the appellant, so far as they relate to his denial of forming any syndicates and making of any undisclosed investment in such syndicates are concerned, have no merit. However, since for quantum of undisclosed investments, the appellant has raised separate grounds viz. ground nos. 8(c) & 8(d) for A.Y. 2013-14, the issue relating to quantum of addition on these grounds of undisclosed investment has been adjudicated separately while dealing with such grounds. Therefore, appeal on these grounds is Dismissed.” Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 29 “3.7.1 I have duly considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. As discussed in above paras, the appellant had formed syndicates with various persons, in various years and such syndicates had carried out liquor business for deriving profits to be shared by the appellant and other members of the syndicates in certain agreed ratio. The Special Auditors nominated under section 142(2A) of the Act have also given the same finding in their report. Further, the AO, at various places in the Order, has given clear findings that (i) the appellant had formed syndicates with various persons for carrying out the liquor business; (ii) from carrying out such businesses, the appellant had derived share of profit; (iii) such syndicates had incurred certain expenditure which were not permissible under the provisions of the Income Tax Act, 1961; and (iv) the appellant had made investment by way of capital contribution in such syndicates the sources thereof were not explained. Even, while adjudicating the ground nos. 6(a), 6(b) for A.Ys. 2010-11 to A.Y. 2016-17, 7(a) & 7(b) for A.Y. 2010-11 to A.Y. 2015-16 and Ground Nos. 8(a) & 8(b) for A.Y. 2013-14, supra, have held that the appellant had formed syndicates for carrying out the liquor business. Once such findings are given, it becomes apparent that under the scheme of the Income Tax Act, 1961, such syndicates would fall within the definition of ‘Persons’ as ascribed to under clause (31) of section 2 of the Act either as ‘Association of Persons’ or ‘Body of Individuals’. Consequently, in respect of any income derived by such syndicates, such syndicates alone would be chargeable to tax under section 4 of the Act. The Syndicates would be chargeable to tax independent from the members forming such syndicates. Needless to say, the income of such syndicates either under the head ‘Income from profits or gains from Business or Profession’ or under any other head would be required to be computed in accordance with the provisions of the Act only. Consequently, income under the head ‘Income from Profits or Gains from Business or Profession’, would be required to be computed in the manner provided under Part-D of the Chapter-IV of the Act which, inter alia, provides for disallowance of certain expenditure on various grounds. Such assessments in the hands of the syndicates, are to be made in accordance with the provisions of section 167B of the Act. Section 167B contemplates two situations. Sub-section (1) of section 167B deals with those cases in which individual shares of the members of an Association of Persons or Body of Individuals in the whole or any part of the income of such AOP/BOI are indeterminate or unknown. In such a situation, it has been provided that the tax shall be charged on the total Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 30 income of the AOP or BOI at the maximum marginal rate and if any member of the AOP or BOI is chargeable to tax at a rate higher than maximum marginal rate, then, tax on the AOP or BOI shall be charged at such higher rate. Sub-section (2) of section 167B deals with other cases, viz. those cases which do not fall under sub-section (1) of section 167B of the Act. Accordingly, it envisages those cases in which the shares of the members of AOP or BOI are determinate and known. In such cases, if income of any of the members of the AOP or BOI exceeds the maximum amount which is not chargeable to tax, in the case of that member, such AOP or BOI would be chargeable to tax at the maximum marginal rate and where income of any member or members is chargeable at a rate or rates higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the AOP or BOI which is relatable to the income of such member or members and for the balance income, the tax shall be charged at the maximum marginal rate. In other words, irrespective of the status of the AOP/ BOI, it is required to pay tax atleast at maximum marginal rate on its income. 3.7.2 I find a significant force in the contention of the appellant that if there existed any syndicates, then income earned by such syndicates from carrying out businesses would be required to be assessed in the hands of such syndicates and such income cannot directly be assessed to tax in the hands of its members forming the syndicates. The investigation wing during the course of search found that the appellant is doing liquor business along with other persons by forming syndicates. The investigation wing has emphasized the formation of syndicates (group) to carryout the liquor business. The emphasis is on that there exists an entity syndicate which is carrying out the business. Statements of key persons of the syndicates were also recorded wherein, they has accepted the existence of syndicates. The Ld.AO during the course of assessment proceedings has referred the matter to special auditor u/s 142(2A) of the Act for special audit in the case of appellant. The Auditor has also emphasized the formation of the syndicate and has given a finding that the syndicate is carrying out the business independently. The syndicates are functioning from separate offices and are preparing accounts separately. Further, the Ld.AO while passing the impunged assessment order from page no 7 to 47 of the assessment order has elaborately dealt that there exists a syndicate. The Ld.AO has also dealt with ingredients of the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 31 syndicates. Also, the Ld.AO has accepted the statements of key persons of the syndicates wherein they had accepted existence of the syndicate. Nevertheless, the appellant during appellate proceedings has brought to my knowledge that the Ld.AO’s of the syndicates in other group concern has made addition of the undisclosed income in the hands of syndicate for respective assessment years. In support appellant has filed copies of assessment orders passed in the case of syndicates (AOP). The brief details of assessment orders passed by ACIT 2(1), Indore/DCIT 3(1), Gwalior/ITO, Shivpuri are as under:- S.No Name of AOP Order under section AYs Income assessed 1 Shri Ramesh Chand Rai and manish Rai & Others, AOP(mandi Bamora) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2013- 14, 2015-16 & 2016-17 (Rs. Nil.) AY 2014-15 (Rs. (-) 46,49,448/- 2 Shri Ramesh Chand Rai and manish Rai & Others, AOP (Rau group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2013- 14 & 2016-17 (Rs. Nil.) AY 2014-15 (Rs. 44,79,831/- AY 2015-16(Rs. 1,17,71,839/- 3 Shri Ramesh Chand Rai and manish Rai & Others,.AOP (Mahakal Traders Dhar Group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2014- 15 & 2016-17 (Rs. Nil.) AY 2015-16 (Rs. 9,30,92,022/- 4 Shri Ramesh Chand Rai and manish Rai & Others,.AOP (Gulabganj group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11, 2011-12, 2013-14 to 2016-17 (Rs. Nil.) AY 2012-13 (Rs. 32,78,188/- 5 Shri Ramesh Chand Rai and manish Rai & Others, AOP (Dhar Group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2014- 15 & 2016-17 (Rs. Nil.) AY 2015-16 (Rs. 2,03,89,740/- 6 Shri Ram Swaroop Shivhare & Others, AOP (Gwalior Group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2012- 13, 2015-16 & 2016-17 (Rs. Nil.) AY 2013-14 (Rs. 8,60,26,366/- AY 2014-15 (Rs. 2,51,72,607/- 7. Narwar & Magroni Group (through Lalji Shivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11, 2011-12, 2013-14, & 2016-17 (Rs. Nil.) AY 2012-13 (Rs. 38,48,080/- AY 2014-15 (Rs. 45,90,173/- AY 2015-16 (Rs. 6,86,038/- 8. Hazira Group (through members Prem Narayan 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2015- 16 (Rs. Nil.) Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 32 Shivhare and others) AY 2016-17 (Rs. 39,84,558/- 9. Bhauti group (through members Lalji Shivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11, 2011-12, 2013-14, & 2016-17 (Rs. Nil.) AY 2012-13 (Rs. 1,28,04,240/- AY 2014-15 (Rs. 1,67,78,920/- AY 2015-16 (Rs. 1,05,55,480/- 10. Agar Malwa Group (through members Ravindra Shivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2015- 16 (Rs. Nil.) AY 2016-17 (Rs. 7,95,010/- 11. Barra Group (through members Ravindra Shivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 202-13 (Rs. Nil.) AY 2013-14 (Rs. 26,36,970/- AY 2014-15 (Rs. 60,14,360/- AY 2015-16 (Rs. 27,64,300/- AY 2016-17 (Rs. 22,72,590/- On perusal of these assessment orders, it is found that the concerned Ld.AO i.e. ACIT 2(1), Indore/DCIT Circle-3(1), Gwalior/ITO, Shivpuri in the cases of AOP’s has made additions on account of undisclosed business income from carrying out the liquor business have been assessed on the basis of various materials which were seized during the course of the search carried out in the case of Shivhare Group. Further, in these assessment orders, it has been held that these AOPs being the liquor syndicates, had carried out business of liquor in various years and as per the Special Auditors Report given under s.142(2A) of the Act in the case of Shivhare Group, these syndicates had earned profit and had also incurred some expenses which were liable for disallowance. The amount of profits/ inadmissible expenses, considered by the Ld.AO framing the separate assessments of the syndicates, were the same as were considered while making the assessment in the hands of the appellant and other members of Shivhare group. In view of the findings of the investigation wing, special auditor and Ld.AO of the appellant, the income earned by the syndicates is taxable in the hands of syndicate and not in the hands of appellant. Therefore, making any addition on account of income earned by syndicate in the hands of appellant is nothing but double taxation of the same income. The settled Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 33 law is that right income should be added in the hands of the right person and in the right year. Under the new scheme of the law, there is no option available to an Assessing Officer either to make the assessment in the hands of the AOP/BOI or in the hands of the members of the AOP/BOI. The similar view was expressed by the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 239 (SC). The relevant findings of the Hon’ble Apex Court are reproduced as under: “4. In our opinion, the contention urged by Dr. Gauri shanker merits acceptance. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By "right person", we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression "wrong person" is obviously used as the opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the Revenue. In our opinion, the language of the relevant provisions of the present Act is quite clear and unambiguous. Sec. 183 shows that where the Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is no doubt entitled to be relieved of it in accordance with law but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the AO (ITO) has taxed the said income in the hands of another person contrary to law. We may proceed to elaborate. 5. Sec. 3 of the Indian IT Act, 1922, as amended by the Indian IT (Amendment) Act, 1939, read as follearnedws : "3. Charge of Income-tax.—Where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, HUF, company and local authority, and of every firm and other AOP or the partners of the firm or the members of the association individually." (Emphasis, italicised in print, supplied) The expression "person" was defined in cl. (9) of s. 2 in the following words : "9. `Person' includes an HUF and a local authority". As against the above provisions, s. 4 of the Present Act [before it was amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989] read thus : "4(1). Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income tax at that rate Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 34 or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-s. (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act." (The amendments made by the aforesaid Amendment Act of 1987 do not make any difference so far as the present controversy is concerned.) The expression "person" is defined in cl. (31) of s. 2 in the following words : "`Person' includes— (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm, (v) anAOP or a BOI, whether incorporated or not, (vi) alocal authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses." A comparison of the provisions of both enactments immediately bring out the difference between them. Sec. 3 of the 1922 Act provided that in respect of the total income of a firm or an AOP, the income tax shall be charged either on the firm or the AOP or on the partners of the firm or on the members of the AOP individually. It is evident that this option was to be exercised by him keeping in view of the interest of Revenue. Whichever course was more advantageous to Revenue, he was entitled to follow it. In such a situation, it was generally held that once the ITO opted for one course, the other course was barred to him. But no such option is provided to him under the present Act. Sec. 4 extracted hereinabove says that income-tax shall be charged on the total income "of every person" and the expression "person" is defined in cl. (31) of s. 2. The definition merely says that expression "person" includes inter alia a firm and an AOP or a BOI whether incorporated or not. There are no words in the present Act which empower the ITO or give him an option to tax either the AOP or its members individually or for that matter to tax the firm or its partners individually. If it is the income of the AOP in law, AOP alone has to be taxed; the members of the AOP cannot be taxed individually in respect of the income of the AOPs. Consideration of the interest of revenue has no place in this scheme. When s. 4(1) of the present Act Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 35 speaks of levy of income-tax on the total income of every person, it necessarily means the person who is liable to pay income-tax in respect of that total income according to law. The tax has to be levied on that person, whether an individual, HUF, Company, Firm, AOP/BOI, a local authority or an artificial juridical person. From this, it follows that if income of A is taxed in the hands of B, A may be legitimately aggrieved but that does not mean that B is exonerated of his liability on that account. B cannot say, when he is sought to be taxed in respect of the total income which is lawfully taxable in his hands, that since the ITO has taxed very same income in the hands of A, he himself cannot be taxed with respect to the said total income. This is not only logical but is consistent with the provisions of the Act. In this connection, it may be pointed out that where the Parliament wanted to provide an option, a discretion, to the ITO, it has provided so expressly. Sec. 183 [which has since been omitted w.e.f. 1st April, 1993 by the Finance Act, 1992] provided that in the case of an unregistered firm, it is open to the ITO to treat it, and make an assessment on it, as if it were a registered firm, if such a course was more beneficial to Revenue in the sense that such a course would fetch more tax to the public exchequer. Sec. 183 read as follearnedws : "183. Assessment of unregistered firms.—In the case of an unregistered firm, the Assessing Officer— (a) may determine the tax payable by the firm itself on the basis of the total income of the firm, or (b) if, in his opinion, the aggregate amount of the tax payable by the firm if it were assessed as a registered firm and the tax payable by the partners individually if the firm were so assessed would be greater than the aggregate amount of the tax payable by the firm under cl. (a) and the tax which would be payable by the partners individually, may proceed to make the assessment under sub-s. (1) of s. 182 as if the firm were a registered firm; and, where the procedure specified in this clause is applied to any unregistered firm, the provisions of sub-ss. (2), (3) and (4) of s. 182 shall apply thereto as they apply in relation to a registered firm." It may be mentioned that s. 183 corresponded to s. 23(5)(b) of the 1922 Act. The 1922 Act not only provided an option to the ITO in the matter of firm and AOP under s. 3 but also expressly enabled him to assess an unregistered firm as a registered firm [s. 23(5)(b)], if by doing so, more tax accrued to the State. The 1961 Act has omitted the first option, while retaining the second. 6. In this connection, it would be relevant to notice the relevant provisions of the draft Bill proposed by the Law Commission in its XIIth Report, which constitutes the basis for the 1961 Act. Clause Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 36 (27) of s. 2 of the draft (definition of "person") did expressly provide an option similar to the one contained in s. 3 of the 1922 Act. Clause 27 read thus : "(27) `Person' includes— (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm or other AOPs, whether incorporated or not, or the partners of the firm or the members of the association individually, (v) a body of individuals, whether incorporated or not, (vi) alocal authority, and (vii) every artificial juridical person, not falling within sub-cl. (i) to (vi)" [Emphasis, italicized in print, supplied] In the "Notes on Clauses" appended to the draft, the Commission stated : "27. Person. The definition of `person' in existing s. 2(9) has been amplified. The existing definition includes (a) HUF and (b) a local authority. The General Clauses Act, defines `person' as including a company or AOP or BOI whether incorporated or not. The charging section (s. 3) of the IT Act enumerates the units for taxation as `individual, HUF, company, local authority, firm and other AOPs or the partners of a firm or the members of the association individually'. Sec. 4 of the Act refers to a `person'. It seems desirable to have a comprehensive definition of the word `person' in the Act so as to cover all entities mentioned in— (i) the existing definition [s. 2(9)]. (ii) the existing charging provisions [ss. 3 and 4], and (iii) the General Clauses Act. The definition has therefore been amplified on the above lines." The Parliament, however, chose not to accept the suggested definition in toto; it deleted the words indicating the option. The Committee, which drafted the draft Bill comprised Sri P. Satyanarayana Rao, Sri G.N. Joshi and Sri N.A. Palkhivala, who was specifically appointed as a member for the purpose of the revision of the IT Act. [Extracts are taken from the XIIth Report of the Law Commission of India, published by Govt. of India, Ministry of Law.] 7. This question has also been troubling the High Courts in the country. As a matter of fact, Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawalla vs. ITO 1975 CTR (Pat) 33 : (1976) 103 ITR 688 (Pat), Punjab and Haryana High Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 37 Court in Rodamal Lalchand vs. CIT (1977) 109 ITR 7 (P&H), Andhra Pradesh High Court in Choudry (supra) and Delhi High Court in Punjab Cloth Stores vs. CIT 1978 CTR (Del) 257 : (1980) 121 ITR 604 (Del) have taken the view which we have taken. On the other hand, Madras High Court in CIT vs. Blue Mountain Engg.Corpn. 1978 CTR (Mad) 142 : (1978) 112 ITR 839 (Mad) and Patna High Court in its earlier decision in CIT vs. Pure Nichitpur Colliery Co. 1975 CTR (Pat) 83 : (1975) 101 ITR 79 (Pat) have taken the opposite view. The Andhra Pradesh High Court first expressed the other view, then in Choudry it took the view which we have taken and again in B.R. Constructions (FB) (supra) it has gone back to the other view and reiterated the view taken in the judgment under appeal. In Ramanlal Madanlal vs. CIT (1979) 116 ITR 657 (Cal), Sabyasachi Mukharji, J., speaking for a Bench of the Calcutta High Court, recognised the distinction in the language employed in s. 3 of the 1922 Act and s. 4 of the present Act but that was a case of an unregistered firm where the ITO had assessed the incomes in the hands of the partners individually. In such a situation, the learned Judge he, the ITO cannot, at the same time, bring the unregistered firm to tax in respect of the very same income. Sec. 183 was also referred to in that connection. The decision of the High Courts taking the contrary view appears to have been influenced largely by the decisions of this Court in CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) : TC 6R.197 and CIT vs. Murlidhar Jhawar & Purna Ginning & Pressing Factory (1966) 60 ITR 95 (SC) which were rendered under the 1922 Act and have not given due weight to the marked difference in the language of the relevant provisions in the two enactments.” 3.7.3 In view of the specific finding of the Hon’ble Supreme Court, I am of the firm view that income derived by various syndicates, in which the appellant was found one of the members, was required to be assessed in the hands of such syndicates only and a direct assessment in the hands of the appellant could not have been made in respect of such income derived by the syndicates. Even the question of admissibility or inadmissibility of any expenditure could have been raised only while making the assessment in the cases of such syndicates. In my view, the appellant could have, at the best, been assessed in respect of his share in taxable income of such syndicates but for the provisions of section 86 of the Income Tax Act, 1961, which provide that income tax shall not be payable by an assessee in respect of his share in the income of the association of persons or body of individuals. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 38 3.7.4 The AO while making the addition in the hands of the appellant, has worked out the appellant’s share in each of the syndicates under consideration. It is thus evident that the syndicates formed as AOP or BOI are such in which the shares of their members are determinate and known. In such circumstances, the share of the appellant, being a member of such AOP/ BOI, would be required to be computed in accordance with the provisions of section 67A of the Act. However, in view of the specific provisions of clause (a) of the proviso to section 86 of the Act, where the Association of Persons or Body of Individuals is chargeable to tax on its total income at the maximum marginal rate or at any higher rate under any of the provisions of Act, the share of a member in the income of such AOP/BOI as computed under section 67A shall not be included in the total income of such member. In the instant case, all the conditions for invoking the clause (a) to section 86 of the Act are getting explicitly fulfilled. For a ready reference, the provisions of section 86 are being reproduced as under: “S. 86: Share of member of an association of persons or body of individuals in the income of the association or body.-Where the appellant is a member of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India), income-tax shall not be payable by the appellant in respect of his share in the income of the association or body computed in the manner provided in Section 67A. Provided that,- (a) where the association or body is chargeable to tax on its total income at the maximum marginal rate or any higher rate under any of the provisions of this Act, the share of a member computed as aforesaid shall not be included in his total income; (b) in any other case, the share of a member computed as aforesaid shall form part of his total income: Provided further that where no income-tax is chargeable on the total income of the association or body, the share of a member computed as aforesaid shall be chargeable to tax as part of his total income and nothing contained in this section shall apply to the case." 3.7.5 Further, it was observed that (i) the appellant was a member of an Association of Persons or Body of Individuals; (ii) share of the members of Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 39 such Association of Persons or Body of Individuals were determinate and known; and (iii) such Association of Persons or Body of Individuals were chargeable to tax on their total income at the maximum marginal rate or any higher rate. In such circumstances, the appellant’s case would squarely fall under substantive provisions of section 86 of the Act read with clause (a) of the first proviso to such section 86 and the other clause (b) of the first proviso and as also, the second proviso would have no application. Accordingly, there was no justification for the AO in making the addition in the appellant’s income on account of his share in profit of the syndicates and as also, on account of his share in inadmissible expenses incurred by the syndicates. Accordingly, the additions made by the AO amounting to Rs. 6,10,54,917/- in AY 2010-11, Rs. 3,91,81,104/- in AY 2011-12, Rs. 7,56,07,095/- in AY 2012-13, Rs. 18,19,55,961/- in AY 2013-14, Rs. 14,79,62,331/- in AY 2014-15, Rs. 20,79,11,158/- in AY 2015-16 and Rs. 2,73,91,093/- in AY 2016-17 are Deleted. Therefore, appeal on these grounds are Allowed.” 7.4 Aggrieved with the additions deleted by the Ld. CIT(A), the revenue is in appeal before us. Further, aggrieved with the findings of the Ld. CIT(A) in holding that the assessee had carried out business through formation of Syndicates, the assessee has raised separate grounds before us. 7.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the Ld.AO on this issue. The learned CIT(DR) argued that in the instant case, ample of documentary evidences and tally data were found during the course of the search and from such material, it was evident that the assessee had carried out unaccounted business of liquor by forming syndicates and groups with other persons. It was further contended that many of the syndicates could not be subjected to tax and therefore, for collecting the due tax for the ex-chequer, the tax should be collected from its members and assessee is one of the members. It was submitted that if the action of the learned CIT(A) is confirmed, then, it would result into a huge revenue loss. Finally, the learned CIT(DR) placed the reliance on the detailed findings given by the AO in the Assessment Order. 7.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The assessee's counsel at the first place, in support of his Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 40 grounds raised before us, agitated the findings given by the AO, which was also confirmed by the Ld. CIT(A), that the assessee had formed the syndicates with various other persons for carrying out the business of liquor with a definite share of profit in the syndicates. The relevant part of the assessee's submission for this contention is being reproduced as under: D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Books: In this context, it is submitted as under : 1.01 The assessee and his family members are carrying out the retail trading of Country liquor (CL) and Indian-made Foreign liquor (IMFL), for the last many years. 1.02 That, except operating few liquor shops in the state of Punjab, Rajasthan & Haryana, during the entire period covered under the assessment proceedings carried out under s. 153A, the assessee’s principle area of operation of business remained restricted to the territory of state of Madhya Pradesh only. 1.03 That, in any State, liquor business has to be carried out only in accordance with the relevant laws of Excise legislated by the concerning state and as also, in accordance with the rules, regulations and policies framed under such legislations from time to time. Accordingly, in the state of Madhya Pradesh, as per the policies prevailing for the last 8-10 years, first the State Excise Authorities, identifies the areas/ shops where from the retail sale of intoxicant, which inter- alia, includes liquor, can be sold. The right or privilege to sell liquor is given by grant of a liquor license. These licenses are granted for a period of one year. Such license is given for a consideration and is granted to the person who gets himself agreed for payment of highest local Excise duty, during the period of license, for any particular shop. For such purpose, the State Excise Authorities, by paper publications and gazette notifications, invites tenders from the interested bidders who wish to obtain right to sell liquor from any particular shop, commonly known as liquor license. The person bidding is commonly known as Liquor Contractor. Before participating in the bid, the liquor contractor is required to deposit a certain percentage of the license value for which he intends to bid. After bidding, the liquor contract for any liquor shop, in any specified area, is awarded to the highest bidder. Thus, the highest bidder for any shop, gets the license for one year to sell the liquor, in retail, subject to his agreeing to pay a minimum amount by way of duty for which he had made the bid. After bidding, the successful liquor contractor has to furnish bank guarantee of the stipulated amount in favour of the Excise Authorities. After getting the license, the liquor contractor has to identify any shop in the specified area at his own. After opening the shop, the contractor is required to procure the material (liquor), from the district warehouse of the Excise department (hereinafter referred to as the designated warehouse). For procuring material every time, over and above payment of duty at the prescribed rate, he is also required to make payment for the material, which in Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 41 the case of purchase of country liquor is also known as Ceiling Charges. The IMFL is also uplifted from the designated warehouse by the liquor contractor. The designated warehouse obtain such IMFL from the various liquor manufacturing units, who have been so licensed and authorized on this behalf. After procuring the material from time to time, the liquor contractor effects sale thereof strictly in cash from his shop. As per Rule XV of General License Conditions under Other Madhya Pradesh Rules under the Madhya Pradesh Excise Act, 1915, all sales under license for the sale of country liquor or for the retail sale of intoxicating drugs shall be for cash only, and such cash shall be paid over at the time of sale only. After collection of cash from sales, from time to time, either the cash is deposited into the Bank by the liquor contractor or it is utilized for making payment to the Excise Authorities towards duty or to the warehouses towards purchase of material. It is submitted that many a times, on the insistence of the designated warehouses and the State Excise Authorities, the liquor contractor is required to make direct payment to the liquor manufacturing company on behalf of the Department of Excise, State Government. 1.04 That, in a particular financial year, a liquor contractor may hold several licenses for retail sale of liquor in various areas through various shops. Such sales are effected by the salesmen deputed on each shop by the liquor contractor himself. At the end of each day, every shop incharge use to send one daily consolidated report of a day to head office. In such daily report, the shop incharge, specifies the quantity of sales, rate of sales and as also amount of sales made on a particular day. In such report, the utilization of sales proceeds, in the form of cash, is also mentioned such as whether it was deposited in bank account or it was used for payment of duty or for payment to warehouse or for incurring day to day petty expenses. After obtaining daily sales report, in respect of various shops, a consolidated entry for sales is made by the liquor contractor in his regular cash book. Likewise, consolidated entries in respect of purchases, payment of duties, deposits in bank accounts and expenses etc. are made by the liquor contractor in the regular cash book maintained by him on day to day basis. From such cash book, in the computerized system, entries automatically get posted to concerning accounts. At the end of every financial year, the books of accounts are finalized on the basis of trial balance extracted and thereafter Financial Statements are drawn. It is submitted that the assessee was also regularly maintaining such accounts and maintenance of such accounts was also verified by the search party. During the course of search under s. 132 in assessee’s premises, the search party had also found these regular accounts maintained in his computer system and soft copies of all such accounts were also taken by them and such soft copies were placed on record of the assessing officer. 1.05 That after drawing the financial statements from year to year, the assessee used to get his books of accounts, regularly maintained in the ordinary course of business, duly audited from some qualified Chartered Accountants and also used to get Audit Reports, in the prescribed form no. 3CB and 3CD, under the provisions of section 44AB of the Income Tax Act, 1961. A copy of the Audited Financial Statements along with the Tax Audit Report, pertaining to the previous year under consideration, was already placed on record of the assessing officer. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 42 Such Audited Financial Statements are placed at page no. 86 to 108 of our paper book. 1.06 That, after obtaining Tax Audit Report under s. 44AB of the Act, the assessee used to furnish his returns of income, quite regularly, under the provisions of section 139(1) of the Act and in such returns, for year to year, the assessee, inter-alia, incorporated his income from liquor trade. It is submitted that for the assessment year under consideration, the assessee had shown an income of Rs.40,31,445/-, from carrying out the liquor trade business, in his Return of Income furnished for the year under consideration [kindly refer PB Page No. 48 & 51]. 2.01 That, as noted by the learned AO herself at para No.(vi) at page No.10 of the impugned assessment order, the license granted to a liquor contractor in respect of any particular shop or area cannot be sold, transferred or sub-leased to any other contractor, without the written permission of the Collector. It can also not be transferred to any partnership without the written permission of the Collector. Any such transfer is duly endorsed on the license. 2.02 That, during the course of the assessment proceedings, it was submitted before the learned AO that in the liquor trade, no purchase could be made from any private party. All the purchases have to be made only from the State Government, through its State Excise Department, after making payment of duties and cost of materials. The State Excise Authorities, while receiving the payment, are compulsorily required to collect tax at source in accordance with the provisions of section 206C of the Income Tax Act, 1961. It was further submitted that in the assessee’s case, no variation of even a single penny had arisen between the purchases and TCS thereon shown by the assessee in his regular books of accounts and that shown by the State Excise Authorities in their annual returns submitted before the Income Tax Authorities in respect of TCS made by them. Thus, in other words, purchases and payment of duties shown by the assessee in his Audited Financial Statements were fully verifiable and in such circumstances, there could not have been any slightest doubt as regard to suppression of any purchases in his Audited Books of accounts. 2.03 It was also submitted before the learned Ld.AO that, in response to the returns of income furnished by the assesse under s. 139(1) of the Act, in respect of one of the assessment years, i.e. for A.Y. 2012-13, assessment was completed under s. 143(3) of the Act, after full verification of books of accounts and other records of the assesse. It is submitted that, during the course of such assessment, neither the books of account of the assesse were rejected, nor the trading results shown by the assesse in his books were disturbed. Further, during the course of such assessment under s. 143(3), not a single finding as regard to formation of any syndicate by the assesse or deriving of any income by the assesse from any such syndicate was given. 3.00 The learned Ld.AO has made the allegation that the assesse was carrying out business of liquor trade by forming syndicates/ groups with various persons and in support of such allegation, the learned Ld.AO has made various findings Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 43 in the body of the assessment order. In this regard, it is submitted that none of the findings of the learned Ld.AO is justifiable for the basic reason that without seeking the prior approval of the license granting authority, no one is permitted to assign the license in favor of anyone else or to any syndicate or group. It is submitted that the findings of the learned Ld.AO are based only upon some loose papers/ documents/ data recovered from the premises of third person without taking into consideration various documentary evidences placed on his record. As has been demonstrated in the subsequent paras, all the findings of the learned Ld.AO are incorrect and not sustainable in the eyes of the law. 3.01 That, the first averment made in the impugned assessment order, on the subject issue, to the effect that during the course of search under s. 132 carried out at various premises, incriminating evidences pertaining to the assesse were seized, which to the best of the knowledge and belief of the assesse, is factually incorrect. It is submitted that, a similar averment was also made by the Ld.AO, in his final show cause notice dated 10-07-2018, in which he had given the list of 13 premises. However, the assessee, vide his submission letter dated 30-07- 2018 [kindly refer PB Page No. 170 to 221] had clearly rebutted the averment of the Ld.AO by demonstrating that out of the 13 premises, mentioned in the notice, only one premise serialized in the table at no. 7 i.e. the residential house at AD- 306, Scheme No. 74-C, Vijay Nagar, Indore belonging to the assessee and all other 12 premises were neither belonging to the assessee nor they were under his control. Even, from the residential premises situated at 306-AD, Scheme No. 74-C, Vijay Nagar, Indore, no incriminating material or document was found or seized. The fact remained that during the course of the entire search and seizure proceedings, not even a single document or loose paper or any other material was found from which it could have been inferred that the assessee was indulged in carrying out of books transactions. It is submitted that the whole assessment of the learned AO is hinging on the pivot of some loose papers/ datas which were not found in the premises of the assessee and there is no positive material on record that such loose papers/ datas were prepared either by the assessee or by anyone else on the instruction of the assessee. 3.02 It was submitted before the learned that the liquor retail trade is carried out on the basis of a periodical license granted by the State Excise Authorities. It was reiterated that the license so obtained by any liquor licensee was not transferable and it could not be transferred to any partnership firm or group even if the licensee himself was a partner or member of such firm or group. Such an exercise requires written permission of the concerning State Excise Authorities. It was also submitted that during the course of the entire Search, not even in a single premises any evidence of grant of any permission, for transfer of any license by any person to any firm or association or syndicate or group, by any Excise Authorities was found. 4.00 At para (9.3) of the impugned assessment order, the learned AO has made a reference of seizure of some documents from the assessee and his relatives’ premises. At the outset, we wish to submit that, in the case of the assessee, no documents were seized from the assessee’s premises. Even, on a perusal of the description of the seized documents, it shall be appreciated that all the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 44 documents referred to by the learned AO are the legal and regular documents which are supposed to be found in the premises of any person carrying out the liquor business. It shall be appreciated that the copies of the licenses issued by the Excise Authorities, copies of challans of license fees paid, documents relating to the running of liquor business, correspondences with Government authorities, documents relating to bank guarantees furnished, copies of the liquor policies announced by the Government Authorities, can by no stretch of imagination, be regarded as incriminating documents for drawing any adverse inference against the assessee. On the contrary, the documents referred to by the learned AO prove the stand of the assessee that he was carrying out liquor retail trade in his individual capacity without forming any group or syndicate with any person. 5.00 Your Honours, without prejudice to the above and without in any manner admitting that the assessee had formed any syndicate/ group for carrying out his liquor business, it is submitted that even for the sake of assumption, the allegation of the learned AO, on this count, is taken to be true on its face even then, the additions made by the learned AO on the various counts are not correct and sustainable in view of the foregoing discussion. 6.00 The learned AO, while framing the assessment for the year under consideration, has made an addition of Rs.6,10,54,917/- in the assessee’s income on the allegations of the assessee having formed various syndicates and derived share of profit from such syndicates. Besides, ironically, additions have also been made on the count of share of the assessee in the inadmissible expenses, allegedly incurred by the syndicates during the relevant previous year. The head-wise break-up of the above addition is given at para no. (2.02) supra. It is submitted that although in the assessment order the learned AO has not given a year-wise and head-wise break-up of the above said addition, however, it appears that such addition of the learned AO is based upon the table given at para (9.7) from page nos. 23 to 28 by partially considering the various discrepancies in such table pointed out by the assessee vide his letter dated 30- 07-2018 [kindly refer PB Page no. 170 to 221] The said table in its turn is based upon the table given in the final show-cause notice dated 10-07-2018 issued by the learned AO. 6.01 During the course of the assessment proceedings, the assessee, vide its letter dated 02-08-2018, had, without admitting formation of any syndicate and making of any investment therein, demonstrated that in the said table, some mistakes of principle had got crept-in. It was submitted that in the table, alleged share of profit of the assessee from various syndicates, in a year, was duly taken into consideration but on the other hand, the similar nature of share of loss from such syndicates had not been taken into consideration. It was submitted that even the Special Auditors, who worked out the share of profit of the assessee from various syndicates in various years, had worked out the share of loss of the assessee from such syndicates. A copy of the relevant summary of share income of the assessee from various liquor business during the period from 01-04-2009 to 31-03-2016, as prepared by the Special Auditors, is placed at PB Page No. 261 to 262. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 45 7.00 Based upon the table given by the then learned AO in his show cause notice and the Special Auditors Report, we have prepared a master statement showing syndicate-wise addition made by the learned AO, under the different heads, for the relevant assessment year. A copy of such master statement is placed at Page no. 263 of our Paper Book. 7.01 On a perusal of the master statement, it shall be observed that none of the incriminating documents, on the basis of which, huge additions have been made in the assessee’s income were found or seized from the assessee’s premises. It shall be observed that all such documents were found from the premises of third parties and therefore, the presumption under section 292C was not available to the learned AO against the assessee without first positively bringing on record that such documents contain the transactions relating to the assessee. 7.02 In the instant case, the learned AO has made additions on the allegation of assessee’s deriving income from as many as two syndicates. However, on a perusal of the column no. 13 of the said master statement, it shall be observed that the syndicates, as stated in the column no. 5 of master statement, both the places, during the relevant previous year, the assessee was not carrying out any liquor business activity. It is submitted that during the relevant previous year, the assessee was having liquor license only in respect of some territories in Scheme No. 54, Indore, Balwada, Badwah & Choral and income derived from carrying out business from such territories have duly been shown by the assessee, in his return of income, for the relevant assessment year. In evidence of the payment of the license fees, in respect of the aforesaid territories only, kind attention is invited to Schedule - 14 of ‘License Fess’ of the Audited Financial Statements, placed on record at Page No. 106 of our Paper Book. On a perusal of the details of license fees paid, it shall be observed that for the both places, in respect of whom the assessee has been alleged to have formed syndicates, the assessee was not holding any liquor license and therefore the question of assumption of forming of any syndicate at such places does not arise. At the cost of repetition, it is submitted that without holding any liquor license, no one is permitted to carry out any liquor business across the country. 6.03 The learned AO has made the subject additions on the basis of some loose papers, excel sheets etc.. These seized materials have been identified by the Special Auditors as well as the learned AO in the form of E-9 & E-12. Copies of such seized materials are placed at PB Page No.147 to 169. On a perusal of such seized materials, it shall be observed that while interpreting the contents of the seized materials, the learned AO has applied a great degree of guess work. The brief comments in respect of such seized materials have been given by us at column no. 14 of the master statement. On a perusal of such statement, it shall be observed that the finding and guess work of the learned AO do not match with the contents of such seized materials. It is submitted that the learned AO, at his own made a presumption as regard to percentage of share of profit of the assessee in the alleged syndicates despite the fact that there was no such mention in the concerning seized material. Further, in all the the seized materials, the name of the assessee has not been found appearing. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 46 7.00 The Ld. CIT(A) without appreciating the contention of the assessee, on the basis of the various datas seized from the premises of third person, came to the conclusion that the assessee had formed Syndicates with various persons. However, the fact remained that the assessee neither formed any Syndicate nor any tally data or other data in which his name is allegedly appearing pertains or relates to the assessee. The assessee has duly shown the entire income from carrying out the liquor retail business in his regular books of account and therefore, no adverse inference was deserved to be drawn against the assessee.” 7.6.1 The assessee after making submissions for grounds raised by him, also agitated the grounds raised by the revenue against the deletion of the addition made by the CIT(A) on account of assessee's share in profit and inadmissible expenses of the syndicates. The relevant abstracts of the assessee's submission are as under: “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Book: In this context, it is submitted as under: 1.00 In this context, without in any manner admitting that the assessee had formed any syndicate or group for carrying out any business even if, based upon the findings given by the learned AO in the assessment order itself, it is presumed that the assessee had formed various syndicates/ groups (AOPs) for carrying out the business of liquor with other persons and had derived share of income from such syndicates then also, no addition was warranted in the assessee’s hands in view of the foregoing submissions. 2.01 That, while passing the impugned assessment order, at various places such as at paras (9.1), (9.2), (9.3), (9.4), (9.6) in the body of the order, it has been alleged that the assessee had formed various syndicates/ groups with other persons for carrying out the liquor business. It has further been asserted that in such syndicates, the assessee made certain investments by way of contribution of capital and also derived certain share in profit of such syndicates. Besides, in the body of the assessment order, it has also been asserted by the learned AO that such syndicates incurred some expenses which were not admissible as deduction from the net profit of the syndicates, in accordance with provisions of the Income-Tax Act, 1961. 2.02 That, the working of the alleged undisclosed investments, alleged share of profit of the assessee in the syndicates and alleged share of the assessee in the inadmissible expenses incurred by such syndicates have been given, by way of a table, at para (9.7), page 23 to 28, of the subject assessment order. After considering the assessee’s submission on the issues, the final addition on this count has been determined at paras (9.11) & (9.12) of the subject assessment order. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 47 2.03 That, in the second table at page no. 45 of the order, the details of the additions have been given wherein it has explicitly been stated that what is being added is the assessee’s share in the profit of syndicates and as also share of profit in inadmissible expenses. Thus, undisputedly, both the items have been regarded as the share of profit of the assessee from syndicates. 2.04 That, as per findings given in the subject assessment order itself, the assessee had formed various syndicates/ groups with various persons for carrying out the business of liquor and in such syndicates/ groups the assessee was having a definite, determinate and known share. Thus, there cannot be two views that according to the subject assessment order, the assessee derived share of income as a member of an association of persons (AOP), with the determinate and known share. Accordingly, in the instant case, for the relevant lead assessment year, the assessee’s share in the income of the AOPs, as a member, in accordance with the provisions of section 67A would work out to be as under: Sno. Description Amount 1 Share of Profit in various syndicates (AOPs) 1,38,48,319 2 Share of Profit in inadmissible expenses (AOPs) 4,72,06,598 6,10,54,917 3 Less Share of Loss in various syndicates (AOPs) Nil Net Share of Profit in various AOPs u/s. 67A 6,10,54,917 2.05 That, undoubtedly, the entire share of income of the assessee in various AOPs, as determined in the assessment order itself, at Rs.6,10,54,917/- has duly been incorporated and included in the total assessed income of the assessee at Rs.6,95,86,357/-. 2.06 That, as per the provisions of section 86, as contained in Chapter VII of the Income-Tax Act, 1961, the entire share of the assessee in income of the Association of Persons, as computed in the manner provided in section 67A is not chargeable to income-tax. Further, since, undisputedly, such syndicates are separately chargeable to tax on their respective total income, at the maximum marginal rate, in accordance with the proviso (a) to section 86 of the Act, the share of the assessee, as a member in the syndicates, ought not to have been included in his total income. For a ready reference, the provisions of section 67A & 86 of the Income-Tax Act, 1961 are being reproduced as under: “CHAPTER VI AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD LEARNEDSS Aggregation of Income Method of computing a member’s share in income of association of persons or body of individuals. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 48 S. 67A(1) In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a co-operative society or society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :- (a) Any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body; (b) Where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member's share in the income of the association or body; (c) Where the amount apportioned to a member under clause (a) is a loss, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the member's share in the income of the association or body. (2) The share of a member in the income or loss of the association or body, as computed under sub-section (1), shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the association or body has been determined under each head of income. (3) Any interest paid by a member on capital borrowed by him for the purposes of investment in the association or body shall, in computing his share chargeable under the head "Profits and gains of business or profession" in respect of his share in the income of the association or body, be deducted from his share. Explanation : In this section "paid" has the same meaning as is assigned to it in clause (2) of section 43.” “CHAPTER VII INCOMES FORMING PART OF TOTAL INCOME ON WHICH NO INCOME-TAX IS PAYABLE Share of member of an association of persons or body of individuals in the income of the association or body. S. 86: "Share of member of an association of persons or body of individuals in the income of the association or body.- Where the assessee is a member of an association of persons or body of individuals (other than a company or a co- operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India), income-tax shall not be payable by the assessee in respect of his share in the income of the association or body computed in the manner provided in Section 67A[emphasis supplied] Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 49 Provided that,- (a) where the association or body is chargeable to tax on its total income at the maximum marginal rate or any higher rate under any of the provisions of this Act, the share of a member computed as aforesaid shall not be included in his total income; [emphasis supplied] (b) in any other case, the share of a member computed as aforesaid shall form part of his total income: Provided further that where no income-tax is chargeable on the total income of the association or body, the share of a member computed as aforesaid shall be chargeable to tax as part of his total income and nothing contained in this section shall apply to the case." 2.07 On a combined reading of the provisions of section 67A and section 86 of the Act, it shall be observed by Your Honours that the income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known shall be computed in accordance with the methodology provided in section 67A. However, after making the computation of share of a member in AOP or BOI, in view of the specific provisions of section 86, such share of income shall be excluded from the total income of the assessee. There are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body. 2.08 The necessary provisions, as regard to charging of tax on the total income of an association or body at the maximum marginal rate are contained in section 167B of the Act. For a ready reference, the relevant provisions of section 167B are reproduced, as under: “CHAPTER XV LIABILITY IN SPECIAL CASES – FIRMS, AOPs, BOIs Charge of tax where shares of members in association of persons or body of individuals unknown, etc. (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co- operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860 ), or under any law corresponding to that Act in force in any part of India) in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate: Provided that, where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum marginal rate, tax shall be charged on the total income of the association or body at such higher rate. (2) Where, in the case of an association of persons or body of individuals as aforesaid[ not being a case falling under sub- section (1)],- (i) the total income of any member thereof for the previous year (excluding his share from such association or body) exceeds the maximum amount Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 50 which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax shall be charged on the total income of the association or body at the maximum marginal rate; (ii) any member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the association or body which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum marginal rate. Explanation.- For the purposes of this section, the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body shall be deemed to be indeterminate or unknown if such shares (in relation to the whole or any part of such income) are indeterminate or unknown on the date of formation of such association or body or at any time thereafter.] 2.09 In the instant case, as per the findings given by the learned AO himself, the share of the assessee as a member of the syndicates (AOPs) was determinate and therefore, the assessee’s case would not fall under the provisions of sub- section (1) to section 167B of the Act. On the other hand, the case of the assessee would fall under the provisions of sub-section (2) to section 167B of the Act. In such a situation, the entire income of the alleged syndicates, of which the assessee is allegedly claimed to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of sub-section (2) to section 167B of the Act. 2.10 It is thus evident that the subject syndicates being liable for charge of tax at the maximum marginal rate, the first exclusion as contemplated in clause (b) read with clause (a) of proviso to section 86 of the Act would have no application. As regard the second proviso to section 86, it is submitted that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and therefore, the exclusion provision from operation of section 86 would not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it would be observed that the alleged share of profit of the assessee in various syndicates, which in the eyes of the law are nothing but Association of Persons, would be completely entitled for exclusion of total income of the assessee. However, in the instant case, the learned AO, in complete derogation of the scheme of law, has not taken such aspect into consideration and made the impugned addition. 2.11 In the instant case, the learned AO besides making addition on the allegation of the assessee’s having derived share of profit from various syndicates, has also made addition, to the extent of the assessee’s share in such syndicate, qua some alleged inadmissible expenses incurred by such syndicates. It is submitted that first of all, any disallowance for claim of any expenses can be made only in the hands of the person who claims it and not in the hands of the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 51 other persons. It is submitted that the assessee never claimed any alleged inadmissible expenses, in his audited books of account and therefore, the question of making any addition in the hands of the assessee does not arise. It is submitted that even if such disallowance was warranted then the additions ought to have been made, while making the assessment, in the hands of the syndicates only. It is submitted that after making such additions on account of disallowances of expenses, the income of the syndicates ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant share of income of the assessee in the total income of the syndicates was required to be apportioned. Thus, any share of the assessee in the inadmissible expenses of the syndicates ought to have been taken as in the nature of share of profit and that was required to be added under section 67A of the Act. Needless to say, after making the addition on account of share of profit, which in its turn ought to have been inclusive of share in inadmissible expenses, the necessary relief in accordance with the provisions of section 86 ought to have been granted to the assessee which has not been so done in the instant case. 3.00 It is submitted that the entire case of the Ld. AO in making the huge additions in the hands of the assessee and other liquor contractors, in whose cases too, simultaneous search operations under s.132 were carried out, is that the assessee and such other liquor contractors formed a group (syndicate) and carried out the liquor business jointly by contributing their shares in the capital of the group and in consideration, have received share of profit from such syndicates. It is submitted that in respect of the alleged syndicates, based upon the material seized during the course of the search in the assessee's group cases, some separate assessments have already been framed under s.153C of the Act subsequent to the passing of the subject assessment orders. The specimen details of some of the assessments made in the hands of the syndicates (group/AOP) have been given by the Ld. CIT(A) at para (3.7.2) at page no. 69 to 71 of his Order. Now, in the light of such vital fact, when the Syndicates have already been assessed/ under assessment, it would be appreciated that making of the subject additions in the hands of the assessee on the ground of his share in such Syndicates would tantamount to twice addition which is not permissible in the eyes of the law. 4.01 Even if it is presumed that in the case of syndicates, the Department failed to make any assessment, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the assessee. It is submitted that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available to an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is duty bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 52 4.02 In the similar circumstances, the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) [PB Page No. 264 to 270] was pleased to hold that under the present Act the right income has to be assessed in the hands of the right person. For a ready reference, the relevant paras of the judgment are reproduced, as below: “4. In our opinion, the contention urged by Dr. Gauri shanker merits acceptance. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By "right person", we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression "wrong person" is obviously used as the opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the Revenue. In our opinion, the language of the relevant provisions of the present Act is quite clear and unambiguous. Sec. 183 shows that where the Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is no doubt entitled to be relieved of it in accordance with law but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the AO (ITO) has taxed the said income in the hands of another person contrary to law. We may proceed to elaborate. 5. Sec. 3 of the Indian IT Act, 1922, as amended by the Indian IT (Amendment) Act, 1939, read as follows : "3. Charge of Income-tax.—Where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, HUF, company and local authority, and of every firm and other AOP or the partners of the firm or the members of the association individually."(Emphasis, italicised in print, supplied) The expression "person" was defined in cl. (9) of s. 2 in the followingwords : "9. `Person' includes an HUF and a local authority". As against the above provisions, s. 4 of the Present Act [before it was amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989] read thus : "4(1). Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income- tax shall be charged accordingly. (2) In respect of income chargeable under sub-s. (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act." (The amendments made by the aforesaid Amendment Act of 1987 do not make any difference so far as the present controversy is concerned.) The expression "person" is defined in cl. (31) of s. 2 in the followingwords : Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 53 "`Person' includes— (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm, (v) anAOP or a BOI, whether incorporated or not, (vi) alocal authority, and (vii) every artificial juridical person, not falling within any of the preceding sub- clauses." A comparison of the provisions of both enactments immediately bring out the difference between them. Sec. 3 of the 1922 Act provided that in respect of the total income of a firm or an AOP, the income tax shall be charged either on the firm or the AOP or on the partners of the firm or on the members of the AOP individually. It is evident that this option was to be exercised by him keeping in view of the interest of Revenue. Whichever course was more advantageous to Revenue, he was entitled to follow it. In such a situation, it was generally held that once the ITO opted for one course, the other course was barred to him. But no such option is provided to him under the present Act. Sec. 4 extracted hereinabove says that income-tax shall be charged on the total income "of every person" and the expression "person" is defined in cl. (31) of s. 2. The definition merely says that expression "person" includes inter alia a firm and an AOP or a BOI whether incorporated or not. There are no words in the present Act which empower the ITO or give him an option to tax either the AOP or its members individually or for that matter to tax the firm or its partners individually. If it is the income of the AOP in law, AOP alone has to be taxed; the members of the AOP cannot be taxed individually in respect of the income of the AOPs. Consideration of the interest of revenue has no place in this scheme. When s. 4(1) of the present Act speaks of levy of income-tax on the total income of every person, it necessarily means the person who is liable to pay income-tax in respect of that total income according to law. The tax has to be levied on that person, whether an individual, HUF, Company, Firm, AOP/BOI, a local authority or an artificial juridical person. From this, it follows that if income of A is taxed in the hands of B, A may be legitimately aggrieved but that does not mean that B is exonerated of his liability on that account. B cannot say, when he is sought to be taxed in respect of the total income which is lawfully taxable in his hands, that since the ITO has taxed very same income in the hands of A, he himself cannot be taxed with respect to the said total income. This is not only logical but is consistent with the provisions of the Act. In this connection, it may be pointed out that where the Parliament wanted to provide an option, a discretion, to the ITO, it has provided so expressly. Sec. 183 [which has since been omitted w.e.f. 1st April, 1993 by the Finance Act, 1992] provided that in the case of an unregistered firm, it is open to the ITO to treat it, and make an assessment on it, as if it were a registered firm, if such a course was more beneficial to Revenue in the sense that such a course would fetch more tax to the public exchequer. Sec. 183 read as follows : "183. Assessment of unregistered firms.—In the case of an unregistered firm, the Assessing Officer— (a) may determine the tax payable by the firm itself on the basis of the total income of the firm, or Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 54 (b) if, in his opinion, the aggregate amount of the tax payable by the firm if it were assessed as a registered firm and the tax payable by the partners individually if the firm were so assessed would be greater than the aggregate amount of the tax payable by the firm under cl. (a) and the tax which would be payable by the partners individually, may proceed to make the assessment under sub-s. (1) of s. 182 as if the firm were a registered firm; and, where the procedure specified in this clause is applied to any unregistered firm, the provisions of sub-ss. (2), (3) and (4) of s. 182 shall apply thereto as they apply in relation to a registered firm." It may be mentioned that s. 183 corresponded to s. 23(5)(b) of the 1922 Act. The 1922 Act not only provided an option to the ITO in the matter of firm and AOP under s. 3 but also expressly enabled him to assess an unregistered firm as a registered firm [s. 23(5)(b)], if by doing so, more tax accrued to the State. The 1961 Act has omitted the first option, while retaining the second. 6. In this connection, it would be relevant to notice the relevant provisions of the draft Bill proposed by the Law Commission in its XIIth Report, which constitutes the basis for the 1961 Act. Clause (27) of s. 2 of the draft (definition of "person") did expressly provide an option similar to the one contained in s. 3 of the 1922 Act. Clause 27 read thus : "(27) `Person' includes— (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm or other AOPs, whether incorporated or not, or the partners of the firm or the members of the association individually, (v) a body of individuals, whether incorporated or not, (vi) alocal authority, and (vii) every artificial juridical person, not falling within sub-cl. (i) to (vi)" [Emphasis, italicised in print, supplied] In the "Notes on Clauses" appended to the draft, the Commission stated : "27. Person. The definition of `person' in existing s. 2(9) has been amplified. The existing definition includes (a) HUF and (b) a local authority. The General Clauses Act, defines `person' as including a company or AOP or BOI whether incorporated or not. The charging section (s. 3) of the IT Act enumerates the units for taxation as `individual, HUF, company, local authority, firm and other AOPs or the partners of a firm or the members of the association individually'. Sec. 4 of the Act refers to a `person'. It seems desirable to have a comprehensive definition of the word `person' in the Act so as to cover all entities mentioned in— (i) the existing definition [s. 2(9)]. (ii) the existing charging provisions [ss. 3 and 4], and (iii) the General Clauses Act. The definition has therefore been amplified on the above lines." The Parliament, however, chose not to accept the suggested definition in toto; it deleted the words indicating the option. The Committee, which drafted the draft Bill comprised Sri P. Satyanarayana RAO, Sri G.N. Joshi and Sri N.A. Palkhivala, who was specifically appointed as a member for the purpose of the revision of the IT Act. [Extracts are taken from the XIIth Report of the Law Commission of India, published by Govt. of India, Ministry of Law.] Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 55 7. This question has also been troubling the High Courts in the country. As a matter of fact, Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawalla vs. ITO 1975 CTR (Pat) 33 : (1976) 103 ITR 688 (Pat), Punjab and Haryana High Court in Rodamal Lalchand vs. CIT (1977) 109 ITR 7 (P&H), Andhra Pradesh High Court in Choudry (supra) and Delhi High Court in Punjab Cloth Stores vs. CIT 1978 CTR (Del) 257 : (1980) 121 ITR 604 (Del) have taken the view which we have taken. On the other hand, Madras High Court in CIT vs. Blue Mountain Engg.Corpn. 1978 CTR (Mad) 142 : (1978) 112 ITR 839 (Mad) and Patna High Court in its earlier decision in CIT vs. Pure Nichitpur Colliery Co. 1975 CTR (Pat) 83 : (1975) 101 ITR 79 (Pat) have taken the opposite view. The Andhra Pradesh High Court first expressed the other view, then in Choudry it took the view which we have taken and again in B.R. Constructions (FB) (supra) it has gone back to the other view and reiterated the view taken in the judgment under appeal. In Ramanlal Madanlal vs. CIT (1979) 116 ITR 657 (Cal), Sabyasachi Mukharji, J., speaking for a Bench of the Calcutta High Court, recognised the distinction in the language employed in s. 3 of the 1922 Act and s. 4 of the present Act but that was a case of an unregistered firm where the ITO had assessed the incomes in the hands of the partners individually. In such a situation, the learned Judge held, the ITO cannot, at the same time, bring the unregistered firm to tax in respect of the very same income. Sec. 183 was also referred to in that connection. The decision of the High Courts taking the contrary view appears to have been influenced largely by the decisions of this Court in CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) : TC 6R.197 and CIT vs. Murlidhar Jhawar & Purna Ginning & Pressing Factory (1966) 60 ITR 95 (SC) which were rendered under the 1922 Act and have not given due weight to the marked difference in the language of the relevant provisions in the two enactments.” 4.03 Your Honours, in the instant case, having assessed the assessee in the capacity of member of syndicate, the revenue still had a valid right to assess separately the syndicates resulting into making assessment of the same income in two hands which is not permissible in the eyes of the law. It is submitted that in the similar circumstances, the Hon’ble High Court of Karnataka in the case of Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar) [A copy of the Order is placed at PB Page No. 271 to 283] relying upon the decision of Hon’ble Supreme Court of Ch. Atchaiah held the same view. The Hon’ble High Court further held that merely because the right person could not be taxed it would not be open to the Revenue to tax a wrong person. 4.04 The Hon’ble ITAT Delhi ‘G’ Special Bench, in the case of Pradeep Agencies – Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB) [PB Page No. 284 to 287] held that under the 1961 Act, ITO has no option to assess the members of the AOP. 4.05 Reliance is also placed on the judgment of Hon’ble ITAT Bangalore Bench, in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716 [PB Page no. 288 & 289]. 4.06 Reliance is also placed on the following judicial pronouncements: Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 56 i) CIT vs. Virendra Kumar Gupta (2013) 87 CCH 0010 (Del) ii) CIT vs. Murugesa Naicker Mansion (2000) 244 ITR 0461 (Chen) 5.00 Your Honours, the Ld. CIT(A) after considering the facts and circumstances of the case, assessee's submission, position of the law and as also, the decision of the Hon'ble Apex Court in Ch. Atchaiah supra, has rightly held that the entire share of profit of the assessee in various Syndicates and as also, share of assessee in inadmissible expenses incurred by the syndicates were liable to be assessed only in the hands of respective syndicates and not in the hands of the assessee. Since the findings given by the Ld. CIT(A) fully corroborate with the facts and circumstances of the case and statutory provisions of the law, no interference deserves to be called for in his findings. Consequently, the ground so raised by the Revenue, for all the assessment years under appeal, deserves to be dismissed.” E. Key Papers filed in the Paper Book (A.Y. 2010-11) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Copy of judgement in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) 264 to 270 Relevant paras 4 to 7 2 Copy of judgement in the case of Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar) 271 to 283 Relevant para 6 3 Copy of judgement in the case of Pradeep Agencies – Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB) 284 to 287 - 4 Copy of judgement in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716 288 to 289 - 5 Copy of statement showing the working of the inadmissible expenses of the syndicates and the assessee’s share therein. 290 - 8.1 We have heard rival contentions and perused the records placed before us and also duly considered the facts and circumstances and the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. 8.2 First we would take the assessee's grounds of Appeal challenging the action of the Ld. CIT(A) in confirming the AO's action of holding that the assessee had formed syndicates with various persons and had Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 57 derived share of profit from such syndicates. In our view, considering the voluminous tally datas and as also, financial statements of the various syndicates as seized during the course of search u/s. 132 of the Act in the different premises of the liquor group, there is absolutely no infirmity in the AO's action in holding that the assessee had carried out liquor business with various other persons by forming group, under the garb of syndicates, for a definite share of profit. We find that the AO has rightly placed reliance on the statements of various members of the syndicates who have also admitted to have formed syndicates. We find that the Special Auditors appointed u/s. 142(2A) of the Act, have made a very detailed working in which they have determined the various inadmissible expenses incurred by such syndicates and have also worked out the assessee's share in profit as well as inadmissible expenditure incurred by each of the syndicates. Before us, the counsel of the assessee could not establish that the seized material relied upon by the AO was not belonging to the syndicates in which he is clearly stated to be one of the members. In these circumstances, we do not find any substance in the assessee's ground that he had not formed any syndicate. We also do not find any merit in the assessee's ground to the effect that corresponding to the quantum of share of profit of the assessee in various syndicates, as determined by the AO, no corresponding asset or expenditure was found. We find that first of all, this assertion itself is factually incorrect and contrary to the assessee's own submissions before us in respect of other grounds of appeals through which it is canvassed that the sources of undisclosed investment/expenditure of the assessee is the share of profit from the said syndicates. Even otherwise, not finding of any corresponding asset/expenditure, ipso facto, cannot be a ground for presuming that the assessee had not derived undisclosed income, especially in a circumstance when such undisclosed income is evident from ample of documentary evidences found during the course of search. Accordingly, the Ground Nos. 5(a), 5(b), 6(a) & 6(b) of the Assessee for A.Ys. 2010-11, 2012-13, 2014-15 & 2015-16; Ground Nos. 6(a) & 6(b) of the Assessee for A.Ys. 2011-12 & 2016-17 and Ground Nos. 6(a), 6(b), 7(a) & 7(b) of the Assessee for A.Y. 2013-14, being without substance are Dismissed. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 58 8.3 Now, coming to the Revenue's Ground, through which they have agitated the action of the Ld. CIT(A) in deleting the additions, for various assessment years, made by the AO in the assessee's income on account of undisclosed income from liquor trade business. We find that undisputedly, the assessee had formed various Association of Persons (AOP), in form of syndicates/cartels/groups, with various other persons to carry out the business of liquor trade which is evident from the seized material/data and as also, report given by the Special Auditors. We also find ourselves in agreement with the findings given by the AO that the assessee was having specified percentage of share of profit in all such syndicates. We note that the AO at para (9.7), by way of drawing a table, has given the details of various syndicates and the assessee's share in such syndicates. Further, in the same table, the Ld. AO has also made a reference of the relevant seized documents. Thus, there cannot be two views that the assessee had formed the syndicates and had also derived share of profit from such syndicates. We find that while computing the income of the assessee from such syndicates, the AO at para (9.11) of his Assessment Order has taken into consideration the assessment year wise aggregate amount of share of profit/(loss) of the assessee from the syndicates and has also taken into consideration the assessee's share in inadmissible expenses found incurred by such syndicates. We find that while making the assessment year wise additions in the assessee's income, the AO has taken the sum of both the figures after giving set-off for share of loss in syndicates for each year. We are of the view that that having given a finding to the effect that the assessee had formed the syndicates and such syndicates had carried out the liquor business as separate entities there was absolutely no justification for the AO to subject the assessee in respect of profit of such syndicates which in the legal phraseology are nothing but Association of Persons/Body of Individuals. 8.3.1 We find that as per the provisions of section 86, as contained in Chapter VII of the Income-Tax Act, 1961, the entire share of an assessee in income of the Association of Persons or Body of Individuals, as computed in the manner provided in section 67A shall not be chargeable to income-tax. In our view, in the present case, the clause (a) of the first proviso to section 86 would apply, inasmuch, the syndicates are Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 59 chargeable to tax at the maximum marginal rate and consequently, the share of any member in the syndicates as computed in the manner provided in section 67A shall not be included in the total income of the member i.e. the assessee in the present case. 8.3.2 We find as per the provisions of section 67A of the Act, in computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known, after making certain adjustments share of each member is required to be computed. However, after making the computation of share of a member in AOP or BOI as per the provisions of section 67A, in view of the specific provisions of section 86, such share of income shall be excluded from the total income of the assessee. We find that there are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body, but, for the reasons discussed hereinbelow, none of the exceptions to sectino 86 are applicable in the present case. 8.3.3 We further find that in the instant case, as per the findings given by the AO himself, the share of the assessee as a member of the syndicates (AOPs) was determinate and therefore, the assessee’s case would not fall under the provisions of sub-section (1) to section 167B of the Act. On the other hand, the case of the assessee would fall under the provisions of sub-section (2) to section 167B of the Act. In such a situation, the entire income of the syndicates, of which the assessee was found to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of sub-section (2) to section 167B of the Act in the hands of such syndicates only. 8.3.4 We find that since all the subject syndicates are liable for charge of tax at the maximum marginal rate and therefore, the first exclusion as contemplated in clause (b) of the first proviso to the section 86 read with clause (a) of the first proviso thereof would have no application. For the second proviso to section 86, we find that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 60 therefore, such proviso would also not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it can be safely concluded that the share of profit of the assessee in various syndicates, which in the eyes of the law are nothing but Association of Persons, would be completely entitled for exclusion of total income of the assessee 8.3.5 In the light of the legal position, as observed hereinabove, in our considered view, income of all the syndicates, as determined by the Ld.AO, can be assessed in the hands of the respective syndicates only as these syndicates, being AOPs are classified as separate persons and tax entity u/s. 2(31) of the Act, but, in any circumstances, in the present case, any share of profit from such syndicates cannot be added as income chargeable to tax in the hands of assessee being member of such AOP. We find that, as per the findings given by the Ld. CIT(A) at para (3.7.2) which remained uncontroverted by the Revenue, even in respect of some of the syndicates, separate assesssments have already been framed by the various assessing officers u/s. 144/153C of Act and while making assessments in the hands of such syndicates, the amount of undisclosed income earned by these syndicates, have already been determined. It is well known maxim of the law that same income cannot be taxed twice in the multiple hands unless otherwise so warrnated by the specific provisions of the Act itself. 8.3.6 In the present case, we also find that the Ld.AO besides making addition on account of assessee’s having derived share of profit from various syndicates, has also made addition, to the extent of the assessee’s share in such syndicate qua some alleged inadmissible expenses incurred by such syndicates. We find full substance in the assessee's contention that since none of these inadmissible expenditure was claimed by the assessee himself, and therefore, any disallowance for claim of any such expenses can only be made in the hands of the syndicates which have actually incurred such expenditure. In our view, after making such additions on account of disallowances of expenses, the income of the syndicates ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 61 share of income of the assessee in the total income of the syndicates was required to be apportioned. Thus, any share of the assessee in the inadmissible expenses of the syndicates ought to have been taken as in the nature of share of profit and that was required to be added under section 67A of the Act, but again, after making such addition, the necessary relief in accordance with the provisions of section 86 ought to have been granted by the AO to the assessee which has not been so done in the instant case. 8.3.7 In our view, even if for any reason the Revenue failed to make any assessment in the hands of the syndicates, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the assessee. We find that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available with an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is statutorily bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. For such proposition, we rely on the decision of the the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) in which their Lordships were pleased to hold that under the present Act there is no discretion available to an AO either to assess the income in the hands of AOP or its members, but the same has to be assessed only in the hands of the AOP. The Apex Court further held that right income must be assessed in the hands of the right person. We also respectfully follow the decision of the the Hon’ble High Court of Karnataka in the case of Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar) in which the Hon’ble Courtrelying upon the judgement of Hon’ble Supreme Court of Ch. Atchaiah held that merely because the right person could not be taxed it would not be open to the Revenue to tax a wrong person. We find that the similar view was expressed by the Coordinate Delhi ‘G’ Special Bench, in the case of Pradeep Agencies – Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB) and as also, by the Bangalore Bench, in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 62 9. In view of the above findings, we find no infirmity in the findings given by the Ld. CIT(A) in deleting the entire additions made by the AO in the hands of the assessee on account of assessee's share in profit and inadmissible expenses of various syndicates, for various assessment years in the instant appeals. Accordingly, common Ground No. 1 of the Revenue for all the assessment years viz. A.Y. 2010-11 to A.Y. 2016-17, being devoid of any merit, are hereby Dismissed. 10. Ground Nos. 1(a), 1(b), 2(a) & 2(b) for A.Y. 2010-11 to A.Y. 2016-17 and Ground No. 2(c) for A.Y. 2012-13 of the Assessee 10.1 Through these grounds of appeal, the assessee has challenged the time limit for passing of the assessment order and as also auditing of books of account u/s. 142(2A) of the IT Act, 1961. 10.2 Before us, the counsel of the assessee did not press the grounds so raised and therefore, Ground Nos. 1(a), 1(b), 2(a) & 2(b) for A.Y. 2010-11 to A.Y. 2016-17 and Ground No. 2(c) for A.Y. 2012-13 of the Assessee are hereby Dismissed. 11. Ground No. 3 of the Assessee for A.Y. 2010-11 to A.Y. 2016-17 11.1 Through this ground of appeal taken for all the assessment years under consideration, the assessee has challenged the framing of the assessment on the basis of the report submitted by the special auditors without giving any opportunity to the assessee on such report. 11.2 Before us, the counsel of the assessee has not pressed this ground and therefore, the Ground No. 3 for A.Y. 2010-11 to A.Y. 2016-17 is hereby Dismissed. 12. Ground No. 4 of the Assessee for A.Y. 2010-11, A.Y. 2012-13, A.Y. 2014-15 & A.Y. 2015-16 and Ground No. 5 of the Assessee for A.Y. 2011- 12, A.Y. 2013-14 & A.Y. 2016-17 12.1 Through these grounds of appeal, taken for all the assessment years under consideration, the assessee has challenged the action of the Ld. CIT(A) in upholding the action of the AO for making trading additions in the business income of the assessee without first rejecting the regular books of account u/s. 145(3) of the Act. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 63 12.2 Aggrieved with the Order of Assessment, the assessee preferred separate appeals for the subject assessment years before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee agitated that in the impugned assessment order, the AO has made trading additions in the hands of the assessee but, before making such addition, she has not specifically rejected the books of account of the assessee. 12.3 The Ld. CIT(A) by way of giving his finding at para (3.4.1) of his Order dismissed the similar ground so raised by the assessee before him. The Ld. CIT(A) held that during the course of the search and seizure operation in the group, certain incriminating documents and tally data were recovered and from such seized material, it got emanated that the assessee had carried out the liquor business by forming some syndicates with the other persons and from such syndicates the assessee had derived income. The CIT(A) further found that income from such syndicates were not recorded by the assessee in his regular books of account. According to the Ld. CIT(A) since the AO had detected an altogether different source of income of the assessee, there was absolutely no necessity for the AO to first reject the books of account of the assessee u/s. 145(3) of the Act which was maintained in respect of individual business of liquor carried out by the assessee and in respect of syndicate businesses. Accordingly, the Ld. CIT(A) dismissed the Ground so raised. 12.4 Aggrieved with the Order of the Ld. CIT(A), the assessee is in appeal before us. 12.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the Ld. CIT(A) on this issue. 12.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Books: In this context it is submitted as under : Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 64 1.00 In the instant case, the substantial additions have been made by the learned AO on the allegation of unaccounted share of profit of the assessee in various syndicates. It is submitted that the assessee was maintaining regular books of account in ordinary course of his liquor business and in such books of account, his income from his proprietorship concern as well as income from other partnership firms in which he was one of the partners were duly incorporated. The books of accounts, so maintained, were subjected to audit by a firm of qualified chartered accountants. It is submitted that the assessee had obtained an Audit Report, in the prescribed form, from the Auditors in accordance with the provisions of s.44AB of the Act. The auditors conducting the audit had not found any defect or discrepancy in the maintenance of books of account of the assessee. It shall be worthwhile to note that during the course of the assessment proceedings, the assessee had furnished a copy of the aforesaid Audit Report before the learned AO and had also produced all his books of account, receipt books, bills, etc. before the learned AO for his verification. It is submitted that the learned AO has not found any defect or discrepancy in the books of account so maintained by the assessee. Since no defect or discrepancy was found, the learned AO has not rejected the books of account of the assessee by invoking the provisions of s.145(3) of the Act. Now, it is submitted that once the books of account of the assessee were accepted, the learned AO was duty bound to determine the business income of the assessee only as per the transactions shown in his regular books of account, in accordance with the provisions of sub- section (1) to section 145 of the Act. Consequently, without rejecting the books of account, the learned AOcould not have made any addition in the assessee’s income on the presumption of receipt of income by the assessee from any liquor syndicate. 2.00 For the aforesaid proposition, reliance is placed on the following judicial pronouncements: i) Pyarelal Mittal vs. ACIT (2007) 291 ITR 214 (Gau) ii) The ACIT vs. M/s. Narendra Industries (2008) 10 ITJ 88 (Ind) (Trib) iii) CIT vs. Maharaja Shree Umed Mills Ltd. (1991) 192 ITR 565(Raj) iv) ITO vs. Skyjet Aviation (P) Ltd. (2006) 66 TTJ (Ahd) (TM) 21. 3.00 The Ld. CIT(A) dismissed the issue raised before him on the ground that since the AO had found an altogether different source of income, there was no necessity for him to reject the books of account of the assessee under s.145(3) of the Act. However, the Ld. CIT(A) grossly erred in not appreciating the material fact that in the instant case, a reference for the Special Audit was made only on the allegation that the books of account maintained by the assessee was not reliable. Such a basis was also taken by the Ld. Pr. CIT (Central) in his show-cause notice dated 30-11-2017 [PB Page No. 109 to 118]. On a perusal of the show-cause notice issued by the Pr. CIT (Central) [refer PB Page No. 117], it may be gathered that the very basis taken by the Ld. Pr. CIT for making a reference for Special Audit was that the books of account of the assessee was incomplete. Thus, the Revenue has taken two different stands at two different points of time viz. one, at the time of giving the direction for Special Audit u/s. 142(2A) and the other, at the time of framing the assessment, which is not permissible in the eyes of the law.” Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 65 E. Key Papers filed in the Paper Book (A.Y. 2010-11) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Copy of show cause notice dated 30-11- 2017 issued by the Pr. CIT (Central), Bhopal for making a reference for Special Audit u/s. 142(2A) 109 to 118 Relevant page no. 113 (middle para) and page no. 117 (last two paras) 13. We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. In our considered view, the Ld.AO has not disturbed the trading results shown by the assessee in his books of accounts which were containing the records only in respect of the liquor business carried out by the assessee in his individual capacity. We find that the Ld.AO has made addition in the income of the assessee on a different ground i.e. the assessee's share of profit in various syndicates. Since, the addition has been made by way of discovering a new source of income by the assessee, without disturbing the results shown by the assessee in his regular books of account, there was absolutely no occasion for the Ld.AO to reject the regular books by invoking the provisions of s. 145(3) of the Act. Accordingly, the Ground No. 4 of the Assessee for A.Y. 2010-11, A.Y. 2012-13, A.Y. 2014-15 & A.Y. 2015-16 and Ground No. 5 of the Assessee for A.Y. 2011-12, A.Y. 2013-14 & A.Y. 2016-17, being devoid of any merit are hereby Dismissed. 14. Ground No. 2 of the Revenue and Ground Nos. 7(a) to 7(c) of the Assessee for A.Y. 2011-12 14.1 Through the ground no.2 for A.Y. 2011-12, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition to the extent of Rs.3,76,69,432/- out of the total addition of Rs.3,82,69,432/- made by the AO on account of undisclosed investment of capital in some Mahakal Traders for A.Y. 2011-12. For the addition sustained by the Ld. CIT(A) to the tune of Rs.6,00,000/-, the assessee has raised Ground Nos. 7(a) to 7(c) in his appeal for A.Y. 2011-12. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 66 14.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of Shri Ramesh Chandra Rai, Shri Manish Rai & Smt. Nidhi Rai at 501, 5th Floor, Shekhar Planet, Vijay Nagar, Indore, some incriminating documents pertaining to the assessee were seized and inventorized as IDS-4, LPS-4, Page No. 68-73. The AO, from the subject loose papers, noted that the assessee had made capital investment in some M/s. Mahakal Traders, Indore amounting to Rs.3,82,69,432/-. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation on the subject loose papers. In response, the assessee submitted that the subject loose paper in the form of some capital account in Mahakal Traders, Indore in the name of ‘Shree P. Bhaiya Ji’ does not pertain to him. The assessee claimed that he was neither known with such name nor he had any business connection with any Mahakal Traders. The AO, by discarding and disregarding the claim of the assessee, made an addition of Rs.3,82,69,432/- in the assessee’s income on account of undisclosed investment in Mahakal Traders. 14.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the AO. The Ld. CIT(A), while giving his findings at para (3.11.1) of his Order, found that the subject seized document was in the form of a Capital Ledger Account for the F.Y. 2010- 11 in which the name 'Shree P. (Bhaiya) Ji' is appearing and the CIT(A) held that such name pertains to the assessee only. The CIT(A) further found that in such ledger account, opening balance of capital investment of the assessee to the tune of Rs. 73,32,369/- was visible and further, in such ledger account, during the relevant previous year, the account of the assessee was credited with an aggregate sum of Rs. 3,09,37,063/- out of which, an aggregate sum of Rs. 31,55,000/- pertains to cash deposits made during the year and the remaining sum of Rs. 2,77,82,063/- is in the form of journal entries, whereby license fees, bank guarantee commission, bank charges, interest and other expenses have been debited and correspondingly, the assessee’s capital account Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 67 has been credited. The Ld. CIT(A) further found that the entries aggregating to a sum of Rs. 31,55,000/- shows cash payments made by the assessee to the syndicate and against such fresh cash introduction, the assessee had also made cash withdrawals, during the year, from the same syndicate amounting to Rs. 83,73,200/-. The Ld. CIT(A) found significant force in the contention of the assessee that the cash so withdrawn was available with the assessee for making re-deposition in the capital account. As per the Ld. CIT(A), out of the total additions of Rs. 3,82,69,432/-, the AO has made an addition of Rs. 73,32,369/- without taking into consideration the material fact that the assessee was having opening credit balance of Rs. 73,32,369/- in such syndicate. The Ld. CIT(A) held that investment made in relevant previous year are only to be taken into consideration and therefore, the addition has to be restricted only to the fresh cash deposits made during the year under consideration, sources whereof remained unexplained. Finally, the Ld. CIT(A) held that out of the cash deposits aggregating to a sum of Rs. 31,55,000/-, cash deposits to the extent of Rs. 25,55,000/- was explainable by way of sources of cash available in the hands of the assessee by making cash withdrawals from the syndicate whereas, for the remaining sum of Rs. 6,00,000/-, the assessee was not having any explained source. Accordingly, out of the total additions of Rs. 3,82,69,432/-, the Ld. CIT(A) confirmed the addition to the extent of Rs. 6,00,000/- by granting a relief of Rs. 3,76,69,432/- to the assessee. The CIT(A) has given his findings at para (3.11.1) of his Order, which for the sake of ready reference, is reproduced as under: “3.11.1 I have considered the AO’s findings, the appellant’s written as well as oral submissions and the documentary evidences placed on record. The appellant, who is also known by Pintu Bhaiya [in short, P. Bhaiya], had made capital investment in some syndicate and the sources of such capital investment were not satisfactorily explained by him before the AO. During the course of the appellate proceedings, the counsel of the appellant filed a copy of the seized document on the basis of which the AO has made the subject addition of Rs.3,82,69,432/-. On perusal of the said seized paper it was observed that the seized document is in the form of a capital ledger account, for the financial year 2010-11, in which the name ‘Shree P. (Bhaiya) Ji’ is pertaining to the appellant. As per the ledger account, opening balance of capital investment of the appellant in some syndicate was to the tune of Rs.73,32,369/- and during the relevant previous year, the capital account of the appellant has been credited with an Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 68 aggregate amount of Rs.3,09,37,063/- out of which an aggregate sum of Rs.31,55,000/- pertains to cash deposits made during the year and the remaining sum of Rs.2,77,82,063/- is in the form of journal entries whereby license fees, bank guarantee commission, bank charges, interest and other expenses have been debited and the appellant’s capital account has been credited. However, the remaining entries aggregating to a sum of Rs.31,55,000/- clearly show cash payments made by the appellant to the syndicate. However, on a perusal of the same ledger account, it is observed that as against the fresh cash introduction of Rs.31,55,000/- during the year, the appellant had also made cash withdrawals during the year from the same syndicate for an aggregate sum of Rs.83,73,200/-. I find a significant force in the contention of the appellant that the cash so withdrawn was available with the appellant for making re-deposition in the capital account. I also find that the AO has made an addition of Rs.3,82,69,432/- without taking into consideration the material fact that as per the capital account, the appellant was having opening credit balance of Rs.73,32,369/- in such syndicate. It is a settled law that investment made in relevant previous year are only to be taken into consideration. Thus, the addition has to be restricted only to the fresh cash deposits made during the year under consideration which works out to be Rs.31,55,000/- and against such cash deposits, the due credit is required to be given to the appellant for the cash withdrawals of Rs.25,55,000/- made before making of such cash deposition. I find that the appellant has also made a cash deposit of Rs.6,00,000/- on 06-04- 2010 which is not backed by any explained source. Thus, only net cash deposits amounting to Rs.6,00,000/- can be added to the appellant’s income on account of undisclosed investment in capital. In view of the above discussion, addition made by the AO amounting to Rs. 6,00,000/-is confirmed and appellant gets relief of Rs. 3,76,69,432/-. Therefore, appeal on this ground is Partly Allowed.” 14.4 Aggrieved with the relief granted by the Ld. CIT(A), the revenue is in appeal before us and against the addition confirmed by the Ld. CIT(A), the assessee has preferred a cross appeal before us. However, during the course of hearing before us, the assessee has not pressed his grounds looking to the magnitude of quantum involved from his side and therefore ground raised by assessee is dismissed. 14.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 14.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 69 “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Book: In this context, it is submitted, as under: 1.00 In the instant case, the learned AO has made an addition of Rs.3,82,69,432/- in the assessee’s income, on the allegation of assessee’s undisclosed investment in capital of some Syndicate named and titled as ‘M/s. Mahakal Traders’. 1.01 That, the entire addition has been made merely on the basis of some loose papers, found and seized, during the course of search, in the premises of a third person namely Shri Rameshchandra Rai at 501, 5 th Flearnedor, Shekhar Planet, Vijay Nagar, Indore, which was inventorized as IDS-4, LPS-4, Page No. 68 to 73 in the Panchnama drawn in the name of Shri Rameshchandra Rai. Copies of the subject Loose Papers, as provided to the assessee during the course of the assessment proceedings, are placed at PB Page No. 82 to 87 for A.Y. 2011-12. The scanned copies of the same have also been partially reproduced by the Ld. AO at page no. 63 to 67 of the subject assessment order. 2.01 During the course of the assessment proceedings, the Ld. AO, vide his final Show Cause Notice dated 10-07-2018, by providing a copy of the subject loose papers, required the assessee to show cause as to why an addition of Rs. 3,82,69,432/- be not made in his total income. In response to such notice, the assessee, through his counsel’s letter dated 30-07-2018 made his explanation. It was submitted before the learned AO that on such loose papers, the name of the assessee has not been mentioned anywhere and apparently, in the caption of such loose papers, the name of some ‘Shri P. (Bhaiya) Ji’ has been stated. It was submitted that such scribbling in the name of Shri P. (Bhaiya) could not be associated with the assessee. For a ready reference, the relevant abstract of the reply is being reproduced as under: “In this context, at the outset, it is submitted that the subject computerized loose sheets as referred by your good self in the captioned query have not been seized from my premises and do not belong to me. Such sheets have not been prepared by anyone under my instruction. It is submitted that in the subject sheets, merely copy of account of some ‘Shree P. (Bhaiya) Ji’ in books of some M/s. Mahakal Traders, Indore have been given. It is submitted that neither I am known as ‘Shree P. Bhaiya Ji’, nor I have any business connection with M/s. Mahakal Traders. Further, none of the transactions, as noted on such sheets, have been carried out at my end and therefore, no adverse inference on this count be drawn against me.” 2.02 Despite assessee’s complete denial of having any association or nexus either with the so-called syndicate or with the seized loose papers, the learned AOheld that the mentioning of ‘P. Bhaiya’ indicates Pintu Bhaiya and the assessee is also known by such name. On such presumption, the learned AOheld that such loose papers are in the form of ledger accounts of the assessee in the books of M/s. Mahakal Traders. The learned AO, without giving any basis, taken Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 70 the sum total of credit side transactions (including opening balance) as the undisclosed investment of the assessee in the said syndicate and made an addition of Rs.3,82,69,432/- in the assessee’s income. 3.00 On a perusal of the subject loose papers [kindly refer PB Page No. 82 to 87], it shall be observed that such loose papers are in the form of some ledger account of some ‘Shree P. (Bhaiya) Ji’ in the books of some Mahakal Traders, Indore for the period from 1-Apr-2010 to 31-Mar-2011. It shall thus be appreciated that such ledger account was not extracted from the books of the assessee but, allegedly from the books of some Mahakal Traders. It shall be appreciated by Your Honours that in the entire ledger account, nowhere the name of the assessee is getting discernible. 3.01 Now, as regard the credence and evidentiary value of such loose papers, at the outset, it is submitted that such loose papers had not been found either from the possession of the assessee or from any of the premises belonging to the assessee. Further, the subject loose papers had also not been prepared either by the assessee or by anyone on his instruction. As per the AO’s own findings given at para (15.1) of the impugned assessment order, the subject loose papers were found from the premises of Shri Rameshchandra Rai, Shri Manish Rai and Smt. Nidhi Rai, situated at A-501, 5 th Floor, Shekhar Planet, Vijay Nagar, Indore. In such circumstances, it is submitted that under the provisions of section 292C(1)(i) of the Act, the prima-facie presumption which prevails upon finding of any books of account or document in anyone’s possession does not operate against the assessee. On the contrary, it has to be presumed that such documents belong to the person from whose possession they were found. Accordingly, it was incumbent upon the assessing officer to first seek the explanation of the concerning person on the seized materials and then only, the assessee could have been asked to tender his explanation on the said material and that too, after apprising the assessee about the explanation of the person from whose possession such material was found and as also after giving due opportunity of cross examination of such person to the assessee. However, in the instant case, unfortunately, the learned AO has not undertaken all these exercises and instead, directly ventured to seek the assessee’s explanation on such material. As the assessee was not the author/ creater of these materials, he was unable to make his explanation on the said loose papers. It is further submitted that during the course of the simultaneous search operations carried out in the various premises of the assessee, not even a single loose paper or any other iota of evidence was found from which it could have been inferred that the assessee had made any investment in the subject syndicate. It is a settled law that merely on the basis of some computerized sheets found from the premises of a third person, without having any other corroborative evidence, no addition can be made in the hands of an assessee. Reliance is placed on the following judicial pronouncements: • CIT vs. Anil Khandelwal (2015) 93 CCH 0042 (Del.) • Smt. Bommana Swarna Rekha vs. ACIT (2005) TTJ 885 (Visakha) • Straptex (India) (P) Ltd. vs. DCIT (2003) 79 TTJ 228 (Mum) • Rama Traders vs. First ITO (1988) 32 TTJ 483 (Pat) Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 71 • Jaya S. Shetty vs. ACIT (1999) 64 TTJ 551 (Mum) • Ashwani Kumar vs. ITO (1992) 42 TTJ 644 (Del) • Sheth Akshay Pushpavadan vs. DCIT (2010) 130 TTJ (Ahd) (Uo) 42 • ACIT vs. Kishore Lal Balwant Rai & Ors. (2007) 17 SOT 380 (Chd) 3.02 Your Honours, in the instant case, while interpreting the belongingness of the loose papers, the Ld. AO imposed an assumption over an assumption. It is submitted that in the subject loose papers, being the copy of some ledger account, the name of the assessee has not been mentioned. It is submitted that on such loose papers, name of some ‘Shree P. (Bhaiya) Ji’ has been mentioned. The learned AO, firstly, without having any basis or matieral on record, presumed that the alphabet ‘P.’ represents the short form of some ‘Pintu’ and then, the learned AO superimposing another presumption, presumed that such ‘Pintu Bhaiya’ is the name attributed to the assessee only. Now, it is submitted that even if for a moment, it is presumed that ‘Pintu Bhaiya’ is the nick name of the assessee, then, the question arises that how any alphabet of ‘P’ can be interpreted as ‘Pintu’. It is submitted that there could be more than ten thousand names or nick names starting with the alphabet of ‘P’. It is further submitted that even during the course of simultaneous search operations, many persons such as Shri Vikram Singh were found to be using the same nickname of Pintu. It would be worthwhile to note that the actual name of the assessee is Harminder Singh Bhatia only and for carrying out his all business and financial affairs, the assessee used his such name only and therefore, if anywhere the name ‘Pintu’ or ‘Pintoo Bhaiya’ or for that matter, ‘P. Bhaiya’ was found stated, the same could not have been attributed to the assessee. 4.00 The learned AO made the impugned addition merely on the basis of such loose papers without bringing any other corroborative evidence on record, to support his assumption. It is submitted that the learned AO did not make any enquiry from Shri Ramesh Rai and his family members from whose possession such loose papers were found. The learned AO has also not made any attempt to identify M/s. Mahakal Traders or its functionaries in whose books, the said ledger account was allegedly appearing. It is submitted that it was incumbent upon the learned AO to make the necessary enquiries from M/s. Mahakal Traders to gather the necessary details such as the name of the person to whom such ledger account pertains, nature of transactions, etc. Further, the learned AO was required to make enquiry from the various persons whose names are getting appeared in the day to day transactions noted on such ledger account. The learned AO ought to have made the necessary enquiries from the state excise authorities to gather the details of the person(s) in whose name(s), the license fees were deposited. It is submitted that in the said ledger account, there is not a single entry from which it could have been inferred that such ledger account belong to the assessee. 5.00 Without prejudice to the above and without in any manner admitting that the said ledger account pertain to the assessee or for that matter, the assessee carried out any financial transaction with the so-called Mahakal Traders, Indore, it is submitted that even if for the sake of presumption, it is presumed to be so, Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 72 then also, no addition to the extent of Rs.3,82,69,432/- could have been made in the hands of the assessee. 5.01 In the instant case, the learned AO without assigning any basis, whatsoever, has made an addition of Rs.3,82,69,432/- in the assessee’s income. Although, the learned AO has not assigned any basis, but, it appears that the learned AO has made the impugned addition by taking the sum total of the credit side of the ledger account [refer PB Page No. 87], at Rs.3,82,69,432/-. It would be appreciated that by no stretch of imagination, all the transactions, found noted on the credit side of the ledger account could have been taken as the unexplained investment of the assessee. It is submitted that in the said ledger account, there are appearing transactions of both withdrawals (debits) and deposits (credits). Further, in the said ledger, there has been a mention of an opening balance of Rs.72,32,369/-. It would be appreciated that under any presumption, the opening balance shown at the credit side of such ledger account,could not have been taken as the investment made by the assessee during the relevant previous year. Thus, to such an extent, there is an apparent error of interpretation of account by the learned AO. Even in respect of the transactions which have taken place during the relevant previous year, as per the judicial pronouncements made by the various judicial authorities, the addition could have been made only to the extent of the peak investment and not the sum total of all the transactions shown at the credit side of the ledger account. 5.02 On a perusal of such ledger account, it shall be observed that in such ledger account, entries have been made in respect of divergent transactions. The transactions noted at the credit side are partially in the nature of journal entry transactions and partially, in the nature of cash transactions. For a ready reference, the summary of the various transactions noted in the subject ledger account is given, in a tabular form, as under: S.No. Particulars Amount Amount A. Opening Balance as on 01-04-2010 73,32,369 B. Total Credits made during the year -Cash Deposited during the year 31,55,000 -Credit given for License Fees deposited 2,32,89,667 -Credit for Bank Guarantee Commission 12,88,881 -Credit for Bank Charges 31,120 -Interest Credited 28,36,521 -Other Credit 3,35,874 3,09,37,063 C. Total Credits as at the year end [A+B] 3,82,69,432 D. Total Debits made during the year -Cash Withdrawals 83,73,200 -Other Debits 70,69,417 -Share of Loss Debited 24,33,179 1,78,75,796 E. Closing Balance [C-D] 2,03,96,636 5.03 The Ld. AO, has made an addition in respect of ‘License Fees deposited’ amounting to Rs. 2,32,89,667/-, which was paid to the Government Authorities, Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 73 by the License Holder through bank drafts only. Therefore, by any stretch of imagination, the question as to the sources of such payments should not have crept in. It is submitted that it is not the case of the learned AO that such payments for payment of license fees were made by the assessee from his bank accounts which were not recorded in the books of account. It is submitted that as per the norms of the banks, no demand draft exceeding a sum of Rs.50,000/- can be issued by a bank against tender of cash and it can be issued only against some cheque drawn on the bank account of the purchaser of the DD. It would thus be appreciated that there was no justification for the learned AO to form an adverse view in respect of the investments found made in the so-called syndicate by way of journal entries. 5.04 It shall also be appreciated that as per the subject ledger account, in the said syndicate, the concerning ledger account holder had contributed only a sum of Rs.31,55,000/- by way of cash and as against such deposits, the ledger account holder had made withdrawal of a substantially higher sum of Rs.83,73,200/-. It is submitted that from such ledger account, except the first transaction of deposit of cash on 06-04-2010 of Rs.6,00,000/-, all other cash deposits were made by the account holder out of the huge cash withdrawals made on an earlier occasion. In order to drive such point home, we have drawn a date-wise fund flow statement based upon the cash transactions found noted on the subject ledger account which is placed at Page No.88 of our Paper Book. On a perusal of such statement, it shall be observed that the peak amount of cash deposits by the account holder in the alleged syndicate was to the extent of Rs.6,00,000/- only. In such circumstances, by the application of peak investment theory, only a sum of Rs.6,00,000/- could have been added by the learned AO as against the addition of Rs.3,82,69,432/- in the assessment order. 6.00 It is submitted that in the assessee’s case, the learned AO framed the assessment for as many as 7 years commencing from A.Y. 2010-11 to A.Y. 2016- 17. It is submitted that for these 7 years, the learned AO determined the total income of the assessee at Rs.96,36,87,685/- as against the returned income for 7 years taken together at Rs.8,29,43,180/-. It is submitted that while framing the assessment for the earlier assessment years, the learned AO alleged that the assessee was member of various syndicates and from such syndicates, the assessee derived substantial amount of income. It is submitted that although none of the allegations made by the learned AO are factually correct. However, if for a moment, the allegations of the learned AO as regard to earning of income by the assessee by way of forming various syndicates in earlier years as well as in current year are taken to be correct, then, as a natural corollary, such income ought to have been regarded as available in the hands of the assessee for making investment in the alleged syndicate. It is submitted that on account of the share of profit from the syndicates, for A.Y. 2010-11 and for A.Y. 2011-12, the learned AO himself has presumed the assessee to have earned income amounting to Rs.1,38,48,319/- and Rs.3,91,81,104/- respectively and has also levied tax on such income. It would be appreciated that having taxed the income, the learned AO was not justified in taxing the assessee again in respect of deployment of the income so taxed. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 74 7.00 Your Honours, the Ld. CIT(A) has given the necessary findings on the subject issue at Para (3.11) on page no. 90 to Para (3.11.1) on page no. 98 of his Order. The Ld. CIT(A) has taken note of the fact that the AO has made addition even in respect of the opening balance amounting to Rs.73,32,369/- shown in the ledger account. The Ld. CIT(A) also found that major credits aggregating to sum of Rs.2,77,82,063/- have been made in the subject ledger account through journal entries and such journal entries pertain to deposition of license fees to the government authorities, bank guarantee commission, bank charges, interest and other expenses etc. The Ld. CIT(A) also found that as per the subject ledger account, during the relevant previous year, the assessee had deposited cash aggregating to a sum of Rs.31,55,000/- only in the said Syndicate and as against such deposition, in the same year, the assessee had made cash withdrawals aggregating to a sum of Rs.83,73,200/-. Thus, according to the Ld. CIT(A), except for initial cash deposition of Rs.6,00,000/- on 06-04-2010, for all other cash deposition, the assessee was having explained sources being the withdrawal of the cash from the same Syndicate and in the same year. Accordingly, the Ld. CIT(A) confirmed the addition to the extent of Rs.6,00,000/- only thereby granting a relief of Rs.3,76,69,432/- to the assessee. Considering the magnitude of the amount of addition confirmed, the assessee is not pressing his ground against confirmation of the addition. But, at any rate, the findings so given by the Ld. CIT(A) deserve to be held as logical and therefore, no interference is called for on this ground.” E. Key Papers filed in the Paper Book (A.Y. 2011-12) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Xerox Copy of Loose Paper inventorized as IDS-4, LPS-4, Page No. 68 to 73. 82 to 87 - 2 Statement Showing Date Wise Fund Flow based on Cash Transactions found in books of M/s. Mahakal Traders 88 - 15.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We find that during the course of search u/s. 132 of the Act in the premises of Shri Ramesh Chandra Rai, a member of the Shivhare Group, some incriminating documents were seized and inventorized as IDS-4, LPS-4, Page No. 68 to 73. Copy of such seized document has been placed at Page No. 82 to 87 of the Paper Book filed by the assessee for A.Y. 2011-12. The seized documents has also been scanned by the AO at page no. 63 to 67 of her Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 75 Assessment Order. On a perusal of such seized document, we find that such seized document is in the nature of some ledger account in the books of some 'Mahakal Traders, Indore', for the period from 01/04/2010 to 31/03/2011, of some 'Shree P. (Bhaiya) Ji'. We find that the nick name of the assessee is 'Pintu Bhatia' and therefore, the name 'Shree P.(Bhaiya) Ji, as has been mentioned on the seized ledger account, is nothing but the abbreviated nick name of the assessee. It is also an undisputed fact that the assessee was carrying out the business of liquor by forming various syndicates. Thus, in our considered view, the seized document seized and inventorized from the premises of Shri Ramesh Chandra Rai belongs to the assesseee and M/s. Mahakal Traders, Indore is one of the syndicates in which assessee was a member. Thus, we find no substance in the contention of the assessee that the seized documents do not pertain to him. 15.2 On going through the contents of the aforesaid ledger account, we find that in such ledger account, there is a opening credit balance amounting to Rs.73,32,369/-. We find full merit in the contention of the assessee that the opening balance of Rs.73,32,369/- could not be taken into consideration for arriving at the amount of investment made by the assessee during the relevant assessment year and therefore, in our view, no addition qua the amount of opening balance of Rs.73,32,369/- was warranted in the hands of the assessee for the relevant assessment year. We further find that in such seized ledger account, numerous journal entries for giving credit to the capital account of the assessee have been made by correspondingly debiting the account of the License Fees, Bank Guarantee Commission, Bank Charges etc. We find that major entries pertain to License Fees aggregating to a sum of Rs. 2,32,89,667/- paid to the State Government. We find that in the aforesaid capital account, there are cash deposits on various dates aggregating to a sum of Rs. 31,55,000/- and as against such cash deposits, there are also appearing cash withdrawals aggregating to a sum of Rs. 83,73,200/- as worked out by the assessee. We find merit in the contention of the assessee that the License Fees was paid by him in respect of Liquor License obtained by him for running various liquor shops. The assessee demonstrated that in respect of such shops and as also for other shops, during the relevant previous year, he had incurred a sum of Rs. 12,32,66,104/- towards Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 76 License Fees and such payment of License Fees was duly recorded by him in his regular and audited books of account for the year under consideration. In support of his contention, the assessee drew our attention to Schedule-12 of License Fees of his audited financial statements for F.Y. 2010-11, as placed at page no. 65 of the Paper Book, in which the payment of License Fees as claimed by the assessee was found reflected. We also find that in such financial statements, bank charges and bank guarantee commissions are also reflected. We find that it is not the case of the Revenue that the assessee was maintaining any undisclosed bank account and through such undisclosed account, the assessee paid License Fees or got Bank Guarantees issued. In our considered view, the AO has not brought on record that the credit found in the seized document by way of journal entries were not recorded anywhere in the regular books of account of the assessee. In our considered view, merely on the basis of journal entries and that too, found noted in a seized document, without bringing on record any undisclosed payment, no addition could have been made. Thus, in respect of the credits given to the assessee’s account in respect of journal entries, we absolutely find no justification in making the addition by the AO. 15.3 Now, in respect of the sources of cash deposits shown credited in the capital account of the assessee, aggregating to a sum of Rs. 31,55,000/-, we find that the assessee at page no. 88 of his Paper Book filed for A.Y. 2011-12 has filed a statement showing the details of the date wise cash deposits and cash withdrawals. From such statement it is evident that the assessee has made cash deposits of Rs. 6,00,000/- on 06.04.2010, Rs. 3,00,000/- from 06.04.2010 to 18.07.2010, Rs. 22,55,000/- from 30.09.2010 to 31.03.2011. Further, we find that the assessee has regularly made cash withdrawals on various dates, aggregating to a sum of Rs. 83,73,200/-. We further find that except for the cash deposits made by the assessee on 06.04.2010 amounting to Rs. 6,00,000/-, before making the balance cash deposits aggregating to Rs. 25,50,000/-, the assessee was having sufficient cash balance in his hands out of the cash withdrawn by him from such syndicate on various dates. Thus, we find no infirmity in the view taken by the Ld. CIT(A) that against the cash deposits of Rs. 31,55,000/-, due credit was required to Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 77 be given to the assessee for cash withdrawals made by him before making cash deposition and accordingly, only a sum of Rs. 6,00,000/- deposited by the assessee on 06.04.2010 can be treated as income of the assessee on account of undisclosed investment in capital. 15.4 From the seized ledger account, it emanates that in the capital account the account of the assessee has been credited with a sum of Rs. 28,36,521/- on account of interest on his capital invested in the said M/s. Mahakal Traders syndicate. We have already held that the assessee was one of the members of the syndicate and for making capital contribution in such syndicate, an interest amounting to Rs. 28,36,521/- has been credited to his account. In our considered view, as has been held by us while dealing with Ground No. 1 of the Revenue for all the assessment years, such interest on capital cannot be taxed in the hands of the assessee as the syndicate M/s. Mahakal Traders, Indore was liable for being taxed at the Maximum Marginal Rate and the assessee’s share in such syndicate was exempt under the provisions of ss. 67A, 86 and 167B of the Act. Thus, in our considered view, even in respect of the credit pertaining to the interest on capital, no addition was warranted in the hands of the assessee. Accordingly, we find no infirmity in the action of the Ld. CIT(A) in deleting the additions amounting to Rs. 3,76,69,432/- and sustaining the additions of Rs. 6,00,000/-. Consequently, the Ground No. 2 of the Revenue as well as Ground Nos. 7(a) to 7(c) of the Assessee for A.Y. 2011-12 are Dismissed. 16. Ground No. 4 of the Assessee for A.Y. 2011-12, A.Y. 2013-14 & A.Y. 2016-17 16.1 Through this ground of appeal, the assessee has challenged the additions confirmed by the Ld. CIT(A). In the written submissions, the assessee himself has submitted that in the Appeal Memos, he has taken separate grounds of appeal in respect of each and every addition confirmed by the Ld. CIT(A) and therefore, no separate adjudication on this Ground is warranted. Accordingly, this ground of appeal for A.Y. 2011-12, A.Y. 2013-14 & A.Y. 2016-17 is hereby Dismissed. 17. Ground No. 2 of the Revenue for A.Y. 2013-14 and Ground No. 9 of the Assessee for A.Y. 2013-14 Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 78 17.1 Through this ground of appeal, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition of Rs.13,18,377/- made by the AO on account of undisclosed interest income from capital in M/s. Mahakal Traders, Dhar for A.Y. 2013-14. 17.2 Briefly stated facts of the issue, as emanated from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of Shri Rameshchandra Rai, Shri Manish Rai & Smt. Nidhi Rai, situated at 5th Floor, Shekhar Planet, Vijay Nagar, Indore, some loose papers in the form of excel sheets of working of interest calculation on capital in M/s. Mahakal Traders, Dhar, were seized and inventorized as LPS-4 Page No. 79 & 80 (IDS-4). The AO, from the subject loose papers, noted that the assessee had made capital investment in the group and on such capital, the assessee had derived interest income to the tune of Rs.13,18,377/- during the financial year 2012-13 relevant to assessment year 2013-14. During the course of the assessment proceedings, the Ld.AO required the assessee to furnish his explanation on the subject loose papers. In response, the assessee submitted that the name ‘Shree P. Bhaiya’ as appearing in the subject loose paper in the form of some excel sheet does not pertain to him. The assessee claimed that he was neither known with such name nor he had any business connection with any Mahakal Traders. The AO, by discarding and disregarding the claim of the assessee, made an addition of Rs.13,18,377/- in the assessee’s income on account of undisclosed interest income from capital in M/s. Mahakal Traders, Dhar. 17.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the AO. The Ld. CIT(A) while holding that the seized document wherein the name 'Shree P. (Bhaiya) Ji' was appearing was pertaining to the assessee only. However, he found full force in the contention of the assessee that the interest income so earned by the assessee would partake the character of his share of profit from an association of person and accordingly, the same shall be wholly eligible for grant of rebate from payment of tax under s. 86 of the Act. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 79 Accordingly, the Ld. CIT(A) deleted the entire addition of Rs.13,18,377/- made by the AO on this count. The Ld. CIT(A) made the necessary findings at para (3.12.1) at page no. 102 & 103 of his Order. For a ready reference, the findings given by the Ld. CIT(A) are reproduced as under: “3.12.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. As far as the contention of the appellant to the effect that the subject seized papers have no nexus with his financial affairs, I do not find any substance as the papers were recovered from the persons with whom undisputedly, the appellant had formed liquor syndicates. I further find that the seized document wherein the name ‘Shree P. (Bhaiya) Ji’ is appearing is pertaining to the appellant only. However, I find merit in the legal plea of the appellant that even if the interest income of the appellant from capital invested in such syndicates is accepted as correct, then also the same having been derived from an AOP which is separately chargeable to tax, any interest income earned from such AOP cannot be charged to tax under section 86 read with section 67A of the Act. I find that under sub-section (1) to section 67A of the Act, any interest received by a member of an AOP is considered to be the share of income of that member in the AOP and the same is not chargeable to tax in accordance with the provisions of section 86 of the Act. A detailed findings as regard to the taxability of income of a member of AOP (Syndicate) from such AOP is not chargeable to tax in the hands of the members, has alredy been given in above paras. Thus, addition of Rs.13,18,377/- made by the AO on account of interest received by the appellant in his capital investment in Syndicate is Deleted. Therefore, appeal on this ground is Allowed.” 17.4 Aggrieved with the Order of the Ld. CIT(A), the revenue is in appeal before us. 17.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 17.6 Per Contra, Learned Counsel for the assessee vehemently argued relying on the finding of Ld.CIT(A) as well as the written synopsis and placed reliance on the following judicial pronouncements: • CIT vs. Anil Khandelwal (2015) 93 CCH 0042 (Del.) • Smt. Bommana Swarna Rekha vs. ACIT (2005) TTJ 885 (Visakha) • Straptex (India) (P) Ltd. vs. DCIT (2003) 79 TTJ 228 (Mum) • Rama Traders vs. First ITO (1988) 32 TTJ 483 (Pat) • Jaya S. Shetty vs. ACIT (1999) 64 TTJ 551 (Mum) • Ashwani Kumar vs. ITO (1992) 42 TTJ 644 (Del) • Sheth Akshay Pushpavadan vs. DCIT (2010) 130 TTJ (Ahd) (Uo) 42 Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 80 • ACIT vs. Kishore Lal Balwant Rai & Ors. (2007) 17 SOT 380 (Chd) 18.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We find that the seized document inventorized as IDS-4, LPS-4, Page No. 79 & 80 is in the form of excel sheets containing the details of calculation of interest in some Mahakal Traders, Dhar syndicate. On a perusal of such excel sheets, we find that it contains five columns viz. S.No., Name of the partners, Deposit Capital, Interest and Total Capital. We find that in the second column against the first row, the abbreviated nick name of the assessee ‘Shri P. Bhaiya’ is getting reflected and against such name, details of interest on capital earned by the assessee in such syndicate is getting reflected. Thus, we find no infirmity with the findings given by the Ld. CIT(A) that the seized documents wherein the name ‘Shree P. (Bhaiya) Ji’ is appearing is pertaining to the assessee only. However, we find full merit in the contention of the assessee that he had not formed any formal partnership, in accordance with the Indian Partnership Act, 1932 with the persons named in the said excel sheet. However, we have already given our finding, while adjudicating the Ground No. 1 of the Revenue for all the assessment years, that the assessee had formed syndicates/groups with various persons for carrying out the business of liquor and in our considered view, M/s. Mahakal Traders, Dhar was one of such syndicates. Since, we have given the finding that undisputedly, the assessee had formed syndicates, the Ground No. 9 raised by the assessee for A.Y. 2013-14 being without any substance is hereby Dismissed. 18.2 However, in our considered view, the interest income earned by the assessee from such syndicate which is in the form of an AOP/BOI, cannot be charged to tax in the hands of the assessee. We find that while dealing with the Ground No. 1 of the Revenue for all the assessment years, we have already discussed the legal position of law that if any AOP is chargeable to tax at the maximum marginal rate, then any income earned by any member from such AOP cannot be charged to tax in the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 81 individual hands of the member thereof. In the present case, we find that the M/s. Mahakal Traders, Dhar is an AOP which is a separate taxable entity and which is chargeable to tax at the maximum marginal rate and therefore, any interest income derived by the assessee from such Mahakal Traders, Dhar cannot be added to the taxable total income of the assessee. Thus, we find no infirmity in the action taken by the Ld.CIT(A) in deleting the entire addition of Rs. 13,18,377/- made by the AO on this count. Accordingly, the Ground No. 2 of the Revenue for A.Y. 2013-14 is hereby Dismissed. 19. Ground No. 8(a) to 8(c) of the Assessee for A.Y. 2013-14 19.1 Through these grounds of appeal, the assessee has challenged the action of the Ld. CIT(A) in confirming the partial addition to the extent of Rs.1,12,708/- on account of unexplained investment in capital of Syndicates. Before us, the assessee has expressed that although he is not concurring with the additions made by the AO but only due to the smallness of amount involved, he does not wish to press these grounds and therefore, the same are hereby Dismissed. 20. Ground No. 2 of the Revenue for A.Y. 2016-17 20.1 Through this ground of appeal, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition of Rs.2,55,670/- made by the AO on account of cash found and seized during the course of search. 20.2 Briefly stated facts of the issue, as emanated from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee situated at 306-AD, Scheme No. 74-C, Vijay Nagar, Indore, cash aggregating to a sum of Rs.2,55,670/- was found. During the course of the assessment proceedings, the AO required the assessee to furnish explanation on the sources of the cash so found. The assessee furnished his explanation on the subject issue which has also been reproduced by the AO at para (8.2) on page no. 6 of the impugned Order. Before the AO, the assessee claimed that the entire cash found was duly recorded in his regular books of account maintained by him in day to day course of his liquor business. The AO discarded and disregarded such explanation of the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 82 assessee and accordingly, an addition of Rs.2,55,670/- on account of unexplained cash has been made by the AO in the assessee’s income. 20.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the Ld. CIT(A). The Ld. CIT(A) stated to have verified the cash book of the assessee produced before him and found that the sources of cash of Rs.2,55,670/- were duly available in the regular cash book of the assessee. Accordingly, the Ld. CIT(A) deleted the entire addition of Rs.2,55,670/- made by the AO on this count. For a ready reference, the relevant para no. (3.16.1) at page no. 119 & 120 of the Ld. CIT(A)’s order is being reproduced as under: “3.16.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. The appellant before me has strongly contended that the sources of cash of Rs.2,55,670/- found from the residential premises of the appellant were out of the cash balance available with the appellant as per his regular cash book maintained by him in the ordinary course of liquor business. I have verified such fact from the copy of the regular cash book produced before me. It was submitted that such cash book was also produced before the AO during the course of the assessment proceedings. The AOcould not controvert such fact and has also not brought on record utilization of the cash so available with the appellant for any other purpose. In view of the documentary evidences on record, the appellant could explain the sources of cash found from his possession and therefore, addition made by the AO amounting to Rs.2,55,670/- is Deleted. Therefore, appeal on this ground is Allowed. 20.4 Aggrieved with the Order of the Ld. CIT(A), the revenue is in appeal before us. 20.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 20.6 Per Contra, Learned Counsel for the assessee has filed written synopsis mainly contending that the assessee is into liquor business and having substantial turnover and offering substantial income to tax which is well sufficient to explain the source of small amount of cash in hand of Rs.255670/- 21.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 83 the orders of lower authorities and written and oral submissions made from both the sides. Upon overall consideration, we find full substance in the contention of the assessee that the assessee is carrying out the business of retail liquor sales in which sales are normally made against cash only. We find that for the previous year relevant to the assessment year 2016-17, the assessee has shown Sales amounting to Rs. 35,81,45,829/- and as per the abstract of the regular cash book of the assessee as of 06/01/2016 i.e. the day immediately preceding the date of search, as placed at page no. 113 of the Paper Book for A.Y. 2016-17 filed by the assessee, the assessee was having cash balance amounting to Rs.50,01,290/-. We find that even in the audited balance sheet of the assessee as of 31/03/2016, the assessee had shown cash balance amounting to Rs. 63,61,736/-. In such circumstances, the claim of the assessee regarding availability of the cash balance of Rs. 50,01,209/- as per its regular cash book cannot be doubted. In such circumstances, the meager cash amount of Rs. 2,55,670/- cannot be regarded as the unexplained money of the assessee. Thus, we find no infirmity in the action of the Ld. CIT(A) in deleting the addition of Rs. 2,55,670/- made by the AO in the assessee’s income on account of unexplained cash found and seized. Accordingly, the Ground No. 2 of the Revenue for A.Y. 2016-17 is hereby Dismissed. 22. Ground No. 3 of the Revenue for A.Y. 2016-17 22.1 Through this ground of appeal, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition of Rs.1,79,60,968/- made by the AO on account of undisclosed investment of capital in Indore Syndicate. 22.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of M/s. Bharti DevbuiLd Pvt. Ltd. and M/s. Bharti Devcon Pvt. Ltd. at FH-322, Scheme No. 54, Vijay Nagar, Indore, some loose papers were found and seized. The AO, from the subject loose papers, noted that the assessee had made capital investment in some Indore Syndicate to the tune of Rs.1,79,60,968/-. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation on the subject issue. In response, the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 84 assessee furnished his reply. However, the AO, by discarding the reply of the assessee, made an addition of Rs.1,79,60,968/- in the assessee’s income on account of undisclosed investment in Indore Syndicate. 22.3 Aggrieved with the Order of Assessment, the assessee preferred appeal for the subject assessment year before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the AO. The Ld. CIT(A) while upholding the relationship of the assessee with the subject loose paper, held that such loose paper clearly suggests that the assessee was having opening capital of Rs.3,08,40,493/- as on 01-04-2015 in the Indore Syndicate and during the relevant previous year, the assessee had made withdrawals amounting to Rs.1,28,19,525/- from the opening capital, thereby leaving a closing capital of Rs.1,79,60,968/-. Thus, the Ld. CIT(A) has given a finding that during the previous year relevant to A.Y. 2016-17, the assessee has not made any fresh investment in the Indore Syndicate as alleged by the AO. Consequently, the Ld. CIT(A) deleted the entire addition of Rs.1,79,60,968/- so made by the AO. The relevant findings given by the Ld. CIT(A) at para (3.14.1) at page no. 110 & 111 are reproduced as under: “3.14.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. During the course of the search a loose paper was found and inventorized and as per such loose paper, the appellant was found to have made an investment of Rs.1,79,60,968/- in some Indore Syndicate. On such loose paper, with the description “Shri P.B. Ji” a capital of Rs.1,79,60,968/- has been clearly shown. During the course of the search and post search investigations, it has been established that the appellant is also known as “Shri P.B. Ji/ Pintu Bhaiya”. I found that subject loose paper, which is containing a table, is divided into five columns. In the first and second columns, serial number and name have been stated. Further, in column no. 3, the ‘Deposit Capital’ amount as on 01 April has been stated. At column no. 4, the ‘Pay Capital’ as on 16 December, 2015 has been mentioned. Finally, in column no. 5, the ‘Due Capital’ is stated. On a plain reading of the table itself, I could find that the appellant was having capital of Rs.3,08,40,493/- as on 1 st April 2015 in some Indore Syndicate and during the year, the appellant had withdrawn capital of Rs.1,28,19,525/-. After, reducing withdrawal amount of Rs.1,28,19,525/- from opening capital of Rs.3,08,40,493/-, a sum of Rs.1,79,60,968/- has been shown as ‘Due Capital’ against the name of the appellant. Thus, it is apparently clear Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 85 that there is no fresh capital introduction by the appellant during the year under consideration. The AO has made addition of Rs.1,79,60,968/- without taking into consideration that as per the capital account, the appellant was having opening credit balance of Rs.3,08,40,493/- in such syndicate and as per the loose paper, there was no fresh deposit of capital but, on the contrary, there was substantial amount of withdrawal of capital. It is a settled law that opening balance cannot be added to income of the appellant addition can be made only on account of investment made in relevant previous year only. As the appellant, he has not been found to have made any fresh unexplained investment in the capital of Indore Syndicate, no addition was warranted on this count. Thus, addition made by the AO amounting to Rs.1,79,60,968/- is Deleted. Therefore, appeal on these grounds is Allowed.” 22.4 Aggrieved with the Order of the Ld. CIT(A), the revenue is in appeal before us. 22.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 22.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Book: In this context, it is submitted as under : 1.00 That, the impugned addition of Rs.1,79,60,968/- has been made by the learned AO merely on the basis of one loose paper found and seized from the premises of third persons i.e. Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd. at FH-322, Scheme No. 54, Vijay Nagar, Indore. A copy of such loose paper is placed at PB Page No. 112 for A.Y. 2016-17. A copy of the same has also been scanned by the AO at page no. 58 of the subject assessment order. 1.01 That, neither the assessee nor any of his family members were in any manner, either by way of holding the position of directors or having shares or otherwise, associated with the above named Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd., from whose possession, the subject loose paper was found and seized. Further, the premises i.e. FH-322, Scheme No. 54, Vijay Nagar, Indore, from where the subject loose paper was found and seized, was not belonging to or inhabited by the assessee or any of his family members. Thus, in other words, the subject loose paper was found from a stranger to the assessee. 2.00 On a perusal of the subject loose paper, it shall be observed that nowhere from such loose paper the name of the assessee is discernible. In the instant Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 86 case, while interpreting the belongingness of the loose papers, the Ld. AO imposed an assumption over an assumption. It is submitted that in the subject loose papers, being some excel sheet, the name of the assessee has not been mentioned. It is submitted that on such loose paper, name of some ‘Shri P.B. Ji’ has been mentioned. The learned AO, firstly, without having any basis or matieral on record, presumed that the alphabets ‘P.B.’ represents the short form of some ‘Pintu Bhatia Ji’ and then, the learned AO superimposing another presumption, presumed that such ‘Pintu Bhatia’ is the name attributed to the assessee only. Now, it is submitted that even if for a moment, it is presumed that ‘Pintu Bhatia’ is the nick name of the assessee, then, the question arises that how any alphabets ‘P.B.’ can be interpreted as ‘Pintu Bhatia’. It is submitted that there could be more than ten thousand names or nick names with the alphabets ‘P.B.’. It is further submitted that even during the course of simultaneous search operations, many persons such as Shri Vikram Singh were found to be using the same nickname of Pintu. It would be worthwhile to note that the actual name of the assessee is Harminder Singh Bhatia only and for carrying out his all business and financial affairs, the assessee used his such name only and therefore, if anywhere the name ‘Pintu’ or ‘Pintoo Bhaiya’ or for that matter, ‘P.B.’ was found stated, the same could not have been attributed to the assessee. 2.01 Further, as regard the credence and evidentiary value of such loose papers, at the outset, it is submitted that such loose papers had not been found either from the possession of the assessee or from any of the premises belonging to the assessee. Further, the subject loose papers had also not been prepared either by the assessee or by anyone on his instruction. As per the AO’s own findings given at para (13.1) of the impugned assessment order, the subject loose papers were found from the premises of M/s. Bharti DevbuiLd Pvt. Ltd. and M/s. Bharti Devcon Pvt. Ltd. situated at FH-322, Scheme No. 54, Vijay Nagar, Indore. In such circumstances, it is submitted that under the provisions of section 292C(1)(i) of the Act, the prima-facie presumption which prevails upon finding of any books of account or document in anyone’s possession does not operate against the assessee. On the contrary, it has to be presumed that such documents belong to the person from whose possession they were found. Accordingly, it was incumbent upon the assessing officer to first seek the explanation of the concerning person on the seized materials and then only, the assessee could have been asked to tender his explanation on the said material and that too, after apprising the assessee about the explanation of the person from whose possession such material was found and as also after giving due opportunity of cross examination of such person to the assessee. However, in the instant case, unfortunately, the learned AO has not undertaken all these exercises and instead, directly ventured to seek the assessee’s explanation on such material. As the assessee was not the author/ creator of these materials, he was unable to make his explanation on the said loose papers. It is further submitted that during the course of the simultaneous search operations carried out in the various premises of the assessee, not even a single loose paper or any other iota of evidence was found from which it could have been inferred that the assessee had made any investment in the subject syndicate. It is a settled law that merely on the basis of some computerized sheets found from the premises of a third person, without having any other corroborative evidence, no addition can Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 87 be made in the hands of an assessee. Reliance is placed on the following judicial pronouncements: • CIT vs. Anil Khandelwal (2015) 93 CCH 0042 (Del.) • Smt. Bommana Swarna Rekha vs. ACIT (2005) TTJ 885 (Visakha) • Straptex (India) (P) Ltd. vs. DCIT (2003) 79 TTJ 228 (Mum) • Rama Traders vs. First ITO (1988) 32 TTJ 483 (Pat) • Jaya S. Shetty vs. ACIT (1999) 64 TTJ 551 (Mum) • Ashwani Kumar vs. ITO (1992) 42 TTJ 644 (Del) • Sheth Akshay Pushpavadan vs. DCIT (2010) 130 TTJ (Ahd) (Uo) 42 • ACIT vs. Kishore Lal Balwant Rai & Ors. (2007) 17 SOT 380 (Chd) 3.00 It is reiterated that the assessee has not formed any syndicate for carrying out liquor business at any point of time with other persons. It is submitted that during the periods covered under the assessment, the assessee had been carrying out liquor business, in his individual capacity only, on the basis of periodical licenses granted by the Excise Authorities in accordance with The M.P. Excise Act, 1915 and that too in respect of the shops for which he has been granted licenses. Thus, there is no question of formation of any syndicate or for that matter, making of any investment in any syndicate. 4.00 Even if the loose paper on the basis of which addition of Rs.1,79,60,968/- has been made by the learned AO is interpreted in the right manner, it would be observed that there was no justification for making any addition in the hands of the assessee on the ground of alleged unexplained investment. On a perusal of the said loose paper, which is in the form of a computerized table, it would be observed that the table is divided into five columns. In the first and second column, serial number and name has been stated. Further, in column no. 3, the capital deposit amount as on 01 April 2015 has been stated. At column no.4, the ‘Pay Capital’ as on 16 December 2015 has been given. Finally, in column no.5, the ‘Due Capital’ is mentioned. 4.01 It may be observed that as per the said table, the opening capital balance of ‘Shri P.B. Ji’, which has been interpreted by the Ld. AO as attributed to the assessee, as on 1 st April, 2015 was of Rs. 3,08,40,493/- which due to withdrawals made during the previous year relevant to the assessment year under consideration i.e. A.Y. 2016-17, by Rs. 1,28,19,525/- has got reduced to a sum of Rs. 1,79,60,968/-. Thus, in other words, during the relevant previous year, no person in the name of ‘Shri P.B. Ji’ had made any fresh contribution of capital in the alleged syndicate and on the contrary, there appears to be heavy withdrawals by such persons. It is submitted that, since during the relevant previous year, there is no case of any investment, the question of making any addition in the hands of the assessee under any of the provisions of the law, be it section 69 or section 69B or any other section of the Act, does not arise. It shall be appreciated that it is a settled law that the opening balances cannot be added to income of a person. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 88 5.00 Without prejudice to the above and without, again, admitting existence of any Indore Syndicate and; without admitting that the assessee had made any investment in such Indore Syndicate, as alleged by the learned AO in the impugned Order, it is submitted that even on the theory of telescoping, the alleged unexplained investment in Indore Syndicate shall get squarely covered by the alleged receipts of income, in cash, by the assessee from various syndicates. In such a situation too, the addition so made by the learned AO shouLd not be allearnedwed to survive. 6.00 Your Honours, the Ld. CIT(A) has given the necessary findings on the subject issue at Para (3.14.1) at page no. 110 & 111 of his Order. The Ld. CIT(A) while upholding the relationship of the assessee with the subject loose paper, held that such loose paper clearly suggests that the assessee was having opening capital of Rs.3,08,40,493/- as on 01-04-2015 in the Indore Syndicate and during the relevant previous year, the assessee had made withdrawals amounting to Rs.1,28,19,525/- from the opening capital, thereby leaving a clearnedsing capital of Rs.1,79,60,968/-. Thus, the Ld. CIT(A) has given a finding that during the previous year relevant to A.Y. 2016-17, the assessee has not made any investment in the Indore Syndicate as alleged by the AO. Consequently, the Ld. CIT(A) deleted the entire addition. It is submitted that since the finding of the Ld. CIT(A) is purely based upon the correct interpretation of the seized material, no intervention in his finding is called for.” E. Key Papers filed in the Paper Book (A.Y. 2016-17) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Copy of loose paper marked as Annexure F- 5 of the show-cause notice dated 10-07- 2018. 112 - 23.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We find no infirmity in the action of the Ld. CIT(A) in deleting the impugned addition of Rs. 1,79,60,968/- made by the AO on account of assessee’s undisclosed investment in Indore Syndicate. We have carefully perused the seized document inventorized as IDS-8, LPS-16, Page 10, a copy whereof has been filed by the assessee in his Paper Book at page no. 112. We find that such loose paper has also been scanned by the AO at page no. 58 of the assessment order itself. On a perusal of such seized document, we find that it is in the form of one excel sheet with the caption ‘Capital Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 89 Indore Syndicate 2015’. We further find that such excel sheet comprises of five columns, column no. 1 is for serial no., column no. 2 contains the name of various persons in the abbreviated form, column no. 3 is for deposit capital as of 01/04/2015, column no. 4 is titled as Pay Capital 16 December 2015, and column no. 6 is for due capital. In the column no. 2, at serial no. 4, the abbreviated nick name of the assessee read as ‘Shri P.B. Ji’ has clearly been mentioned. Thus, undisputedly, the seized document having been seized from one of the premises of the group assessee, pertains to the assessee only. However, from a holistic perusal of the seized document, we find that as per such document, the assessee was having opening capital of Rs. 3,08,40,493/- in some Indore Syndicate as on 01/04/2015 and as against such capital, the assessee had withdrawn a sum of Rs. 1,28,79,525/- from his capital account with the syndicate, with the result that as on 16/12/2015, the assessee was having capital balance of Rs. 1,79,60,968/- in such syndicate. Thus, in our considered view, from such seized document, it cannot be inferred that during the previous year relevant to A.Y. 2016-17, the assessee had made any fresh investment in the capital of the said Indore Syndicate. In our view, whatever investment was made by the assessee pertain to the year(s) prior to 01/04/2015. Thus in respect of the opening balances of investment, no addition can be made in subsequent years. In our considered view, for the purpose of invoking the provisions of ss. 69/69A/69B, making of the investment by the assessee in the concerning assessment year is sine-qua-non and in the instant case, evidently, the assessee had not made any fresh investment during the assessment year under consideration. We find that the impugned addition has been made by the AO merely on the basis of the above referred seized document without having any other corroborative material on record. Thus, we find no infirmity in the action of the Ld. CIT(A) in deleting the subject addition of Rs. 1,79,60,968/-. Accordingly, Ground No. 3 of the Revenue for A.Y. 2016-17 is hereby Dismissed. 24. Ground No. 4 of the Revenue for A.Y. 2016-17 24.1 Through this ground of appeal, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition of Rs.1,58,60,050/- made Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 90 by the AO on account of undisclosed investment of capital in some Khajrani Group. 24.2 Briefly stated facts of the issue, as emanated from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of M/s. Bharti DevbuiLd Pvt. Ltd. and M/s. Bharti Devcon Pvt. Ltd. at FH-322, Scheme No. 54, Vijay Nagar, Indore, some loose papers were seized and inventorised as IDS-8, Page No. 95 of LPS-12. The AO, from the subject loose papers, noted that the assessee had made capital investment in some Khajrani Group to the tune of Rs.1,58,60,050/-. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation on the subject issue. In response, the assessee furnished his reply. However, the AO, by discarding the reply of the assessee, made an addition of Rs.1,58,60,050/- in the assessee’s income on account of undisclosed investment in Khajrani Group. 24.3 Aggrieved with the Order of Assessment, the assessee preferred appeal for the subject assessment year before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the AO. The Ld. CIT(A) while upholding the relationship of the assessee with the subject loose paper, held that on the subject seized paper, there is no mention of any cash payment by the assessee or anyone else. The Ld. CIT(A) further held that all the jottings are in the nature of journal entries only. The Ld. CIT(A) also found that the assessee had shown much higher amount of license fees in his audited financial statements. Finally, the Ld. CIT(A) has held that the Ld. AO failed to bring on record that entries regarding such payments were not recorded in regular books of account of the assessee or the assessee made the payment through cash or some undisclosed bank account. In such circumstances, the Ld. CIT(A) deleted the entire addition of Rs.1,58,60,050/- so made by the AO. The Ld. CIT(A) had given his finding at para (3.15.2) at page no. 115 & 116 of his Order, which is being reproduced as under: “3.15.2 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. During the course of the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 91 search a loose paper was found and inventorized and as per such loose paper the appellant was found to have made an investment of Rs. 1,58,60,050/- in some Khajrani Group. On a perusal of such loose paper, on the top of such page, there is an account of ‘Shree Pintu Bhaiya’. In such account, there are entries appearing on both the debit and credit side. Such entries are pertaining to license fees of Khajrani and MIG Liquor shops. Further, in respect of such license fees, the payments through demand drafts and other expenses like DD Commission, Stamp Expenses, Bank Guarantee Commission, etc. have been shown as made. I find sufficient merit in the contention of the appellant that on the subject loose paper, there is no mention of any cash payment by the appellant or anyone else. All the jottings made on such loose papers are in the nature of journal entries only. This is also a matter of fact that the payment of license fees of Rs.1,47,92,300/-, the appellant has shown much higher amount of license fees in Schedule-14 of the audited financial statements in respect of MIG and Khajrani Shops. The AO has not brought on record any evidence to demonstrate that the demand draft of Rs.1,47,92,300/- was either made by the appellant in cash or from his undisclosed bank accounts and also failed to bring on record that the entries regarding such payments were not recorded in the regular books of account of the appellant. In such circumstances, I do not find any merit in the action of the AO in making the impugned addition. Thus, addition made by the AO amounting to Rs.1,58,60,050/- is Deleted. Therefore, appeal on these grounds is Allowed.” 24.4 Aggrieved with the Order of the Ld. CIT(A), the revenue is in appeal before us. 24.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 24.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Book: In this context, it is submitted as under: 1.00 That, the impugned addition of Rs.1,58,60,050/- has been made by the learned AO merely on the basis of one loose paper found and seized from the premises of third persons i.e. Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd. at FH-322, Scheme No. 54, Vijay Nagar, Indore. A copy of such loose paper has been scanned by the learned AO at page no.60 of the assessment order. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 92 1.01 That, neither the assessee nor any of his family members were in any manner, either by way of hoLding the position of directors or having shares or otherwise, associated with the above named Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd., from whose possession, the subject loose paper was found and seized. Further, the premises i.e. FH-322, Scheme No. 54, Vijay Nagar, Indore, from where the subject loose paper was found and seized, was not belonging to or inhabited by the assessee or any of his family members. Thus, in other words, the subject loose paper was found from a stranger to the assessee. 2.00 Your Honours, on a perusal of the subject loose paper, it shall be observed that nowhere from such loose paper the name of the assessee is discernible. Your Honours, in the instant case, while interpreting the belongingness of the loose paper, the Ld. AO had imposed an assumption. It is submitted that in the subject loose paper, the name of the assessee has not been mentioned anywhere, instead, name of some ‘Shree Pintu Bhaiya’ has been mentioned. The learned AO, without having any basis or matieral on record, presumed that such ‘Pintu Bhaiya’ is the name attributed to the assessee only. It is submitted that even during the course of simultaneous search operations, many persons such as Shri Vikram Singh were found to be using the same nickname of Pintu. It would be worthwhile to note that the actual name of the assessee is Harminder Singh Bhatia only and for carrying out his all business and financial affairs, the assessee used his such name only and therefore, if anywhere the name ‘Pintu’ or ‘Pintoo Bhaiya’ was found stated, the same could not have been attributed to the assessee. 2.01 Further, as regard the credence and evidentiary value of such loose papers, at the outset, it is submitted that such loose paper had not been found either from the possession of the assessee or from any of the premises belonging to the assessee. Further, the subject loose paper had also not been prepared either by the assessee or by anyone on his instruction. As per the AO’s own findings given at para (12.1) of the impugned assessment order, the subject loose paper was found from the premises of Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd. situated at FH-322, Scheme No. 54, Vijay Nagar, Indore. In such circumstances, it is submitted that under the provisions of section 292C(1)(i) of the Act, the prima-facie presumption which prevails upon finding of any books of account or document in anyone’s possession does not operate against the assessee. On the contrary, it has to be presumed that such documents belong to the person from whose possession they were found. Accordingly, it was incumbent upon the assessing officer to first seek the explanation of the concerning person on the seized materials and then only, the assessee could have been asked to tender his explanation on the said material and that too, after apprising the assessee about the explanation of the person from whose possession such material was found and as also after giving due opportunity of cross examination of such person to the assessee. However, in the instant case, unfortunately, the learned AO has not undertaken all these exercises and instead, directly ventured to seek the assessee’s explanation on such material. As the assessee was not the author/ creator of these materials, he was unable to make his explanation on the said loose paper. It is further submitted that during the course of the simultaneous search operations carried out in the various Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 93 premises of the assessee, not even a single loose paper or any other iota of evidence was found from which it could have been inferred that the assessee had made any investment in the subject syndicate. It is a settled law that merely on the basis of some loose paper found from the premises of a third person, without having any other corroborative evidence, no addition can be made in the hands of an assessee. Reliance is placed on the following judicial pronouncements: • CIT vs. Anil Khandelwal (2015) 93 CCH 0042 (Del.) • Smt. Bommana Swarna Rekha vs. ACIT (2005) TTJ 885 (Visakha) • Straptex (India) (P) Ltd. vs. DCIT (2003) 79 TTJ 228 (Mum) • Rama Traders vs. First ITO (1988) 32 TTJ 483 (Pat) • Jaya S. Shetty vs. ACIT (1999) 64 TTJ 551 (Mum) • Ashwani Kumar vs. ITO (1992) 42 TTJ 644 (Del) • Sheth Akshay Pushpavadan vs. DCIT (2010) 130 TTJ (Ahd) (Uo) 42 • ACIT vs. Kishore Lal Balwant Rai & Ors. (2007) 17 SOT 380 (Chd) 3.00 Your Honours, it is reiterated that the assessee has not formed any syndicate for carrying out liquor business at any point of time with other persons. It is submitted that during the periods covered under the assessment, the assessee had been carrying out liquor business, in his individual capacity only, on the basis of periodical licenses granted by the Excise Authorities in accordance with The M.P. Excise Act, 1915 and that too in respect of the shops for which he has been granted licenses. Thus, there is no question of formation of any syndicate or for that matter, making of any investment in any syndicate. 3.01 Without prejudice to the above, it is submitted that on the subject seized loose paper, there is no mention of any cash transaction and the entire seized paper contains the journal entries only. It is submitted that the impugned amount of Rs.1,58,60,050/- clearly relates to some license expenses carried out through banking channels only. It is submitted that all the transactions which were carried out by the assessee through bank are duly recorded in the regular books of account of the assessee. It is submitted that during the relevant previous year, the assessee had recorded payment of license fees to the extent of Rs.22,95,09,333/- in his books of acount which is evident from the copy of the Audited Trading and Profit &Loss Account for the relevant year placed at page no. 90 of the paper book for A.Y. 2016-17. In such circumstances, even if it is presumed that the jottings made on the seized paper pertain to the assessee only, then also the assessee having recorded all the expenses incurred on account of license fees in his books of account, no adverse inference ought to have been drawn by the Ld. AO. 6.00 Your Honours, the Ld. CIT(A) has given the necessary findings on the subject issue at Para (3.15.2) at page no. 115 & 116. The Ld. CIT(A) while upholding the relationship of the assessee with the subject loose paper, held that on the subject seized paper, there is no mention of any cash payment by the assessee or anyone else. The Ld. CIT(A) further held that all the jottings are in the nature of journal entries only. The Ld. CIT(A) also found that the assessee had shown much higher amount of license fees in his audited financial statements. Finally, the Ld. CIT(A) has held that the Ld. AO failed to bring on record that Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 94 entries regarding such payments were not recorded in regular books of account of the assessee or the assessee made the payment through cash or some undisclosed bank account. In such circumstances, the Ld. CIT(A) deleted the entire addition of Rs.1,58,60,050/-. It is submitted that the finding of the Ld. CIT(A) is based upon the correct appreciation of the facts and therefore, no interference is called for.” E. Key Papers filed in the Paper Book (A.Y. 2016-17) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Copy of the Audited Profit &Loss Account of the assessee for the F.Y. 2015-16(A.Y. 2016-17) 90 & 95 - 25.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We have carefully gone through the subject seized document which is in the hand written form and which has been scanned by the AO at page no. 60 of her Order. On a perusal of such seized document, we find that at the right hand side of the document, the nick name of the assessee along with some Shri Monu Bhaiya have been mentioned along with various jottings for an aggregate sum of Rs. 1,58,60,050/- and Rs. 82,24,600/- respectively. We find that at the left hand side of the document, there is a mention of various expenditure in the form of basic License Fees, Bank Commission, Bank Guarantee Commission etc. We find that at such seized document, there is no jotting of any cash transaction and all the jottings are in the nature of journal entries only. We find sufficient merit in the contention of the assessee that all the transactions of payment of License Fees to the treasury of the Government are carried out through banking channels only and therefore, there cannot be any room for presuming any unaccounted payment. It was further contended that bank charges and bank commissions were paid to the bankers with whom the assessee was maintaining his bank accounts. It was contended that it is not the case of the Revenue that the assessee was found maintaining any undisclosed account. Such assertion could not be controvert by the Ld. CIT(DR). The assessee further drawn our attention to his audited financial statements Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 95 placed at page no. 68 to 97 of his Paper Book for A.Y. 2016-17 and from such audited financial statements, at page no. 95, he has shown recording of License Fees of Rs. 22,95,09,333/-. Likewise, under the head Financial Expenses, the assessee has shown recording of bank charges and bank guarantee commission respectively to the extent of Rs. 1,32,406/- and Rs. 4,47,777/-. We find that except relying upon the seized document, the AO has not brought on record any other corroborative material. We also find that the assessing officer has not conducted any inquiry from the State Excise Authorities for revealing the sources of payment of Liquor License Fees as found mentioned in the seized document. Since, the entire capital of the assessee in the said Khajrani Group was found to be made in the form of License Fees, Bank Charges etc., and futher since, the assessee has shown recording of more expenditure on these counts in his regular audited books of account, in our considered view, the presumption against the assessee as regard to making of undisclosed investment on this count was not justifiable and warranted. Accordingly, we find no infirmity in the action of the Ld. AO in deleting the impugned addition of Rs.1,58,60,500/-. Resultantly, the Ground No. 4 of the Revenue for A.Y. 2016-17 is herebyDismissed. 26. Ground No. 5 of the Revenue and Ground Nos. 8(a) to 8(d) of the Assessee for A.Y. 2016-17 26.1 Through the ground no.5, the revenue has challenged the action of the Ld. CIT(A) in deleting the addition to the extent of Rs.4,38,75,000/- out of the total addition of Rs.6,10,00,000/- made by the AO on account of undisclosed investment of shares of M/s. Agrawal Distilleries Pvt. Ltd. in A.Y. 2016-17. For the addition sustained by the Ld. CIT(A) to the tune of Rs.1,71,25,000/-, the assessee has raised Ground Nos. 8(a) to 8(d) in his appeal for A.Y. 2016-17. 26.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the survey operations carried out under s.133A of the Act in the premises of M/s. Hotel Ambrosia, Nanak Ganj, Jhansi belonging to Shri Ramesh Chand Rai, some incriminating documents inventorized as LP-1, backside of Page-29, were found and impounded. The scanned copy of the seized document has been reproduced by the AO at page no. 51 of her Order. From such loose paper, the AO noted Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 96 that the assessee had made investment of Rs.11,70,00,000/- in shares of one company namely M/s. Agrawal Distilleries Pvt. Ltd. During the course of the assessment proceedings, the AO required the assessee to furnish his explanation on the subject issue. The assessee furnished his explanation which has also been reproduced by the AO at para (11.2) on page no. 52 to 55 of the impugned Order. The assessee claimed that since the subject loose paper was not found from his premises and further since, the same has neither been prepared by him or on his instructions and therefore, no adverse inference could have been drawn against him on the basis of such loose paper. The assessee further contended that as against the notings made on the subject loose paper for 40% sharehoLding to be bought by the assessee in the said company for a total consideration of Rs.11,70,00,000/-, the assessee along with two other persons namely Smt. Gurveen Kaur Bhatia and M/s. Encord Commosales Pvt. Ltd. had actually made an investment only in respect of 25% shares of the said company and even if the amounts noted in the said loose paper are taken to be correct, then too, as per pro-rata consideration, investment of the assessee at the most be considered to be at Rs.7,31,25,000/-. The assessee further claimed that since he along with his wife and associate company had already shown an amount of Rs.5,60,00,000/- having been made through banking channels and duly recorded in their respective books of account, the remaining addition to the tune of Rs.1,71,25,000/- could have been made in the hands of the assessee on this count. The AO, after partly considering the submission of the assessee, granted a credit of Rs.5,60,00,000/- as shown by the assessee and other two persons in their books but, did not accept the claim of the assessee for having invested in only 25% shares of the said company in place of 40% as noted in the subject loose paper. Accordingly, after giving credit of Rs.5,60,00,000/- from the total investment of Rs.11,70,00,000/- found noted on the said loose paper, the AO made an addition of Rs.6,10,00,000/- in the hands of the assessee on account of unexplained investment in purchase of shares of the company. 26.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 97 written submissions along with the documentary evidences which were also furnished by him before the AO. The Ld. CIT(A) while upholding the evidentiary value of the seized document, accepted the contention of the assessee to the effect that as against the mentioning of acquisition of 40% share in the company M/s. Agrawal Distilleries Pvt. Ltd., factually the assessee and his associates had purchased only 25% shares of the said company. Accordingly, the Ld. CIT(A), firstly by proportionately reducing the alleged amount of investment, as mentioned in the same loose paper, from Rs.11,70,00,000/- to Rs.7,31,25,000/-, and secondly, after granting the credit for investment aggregating to Rs.5,60,00,000/- which were duly recorded in the books of the assessee and his associates, confirmed the addition for the remaining sum of Rs.1,71,25,000/- which resulted into relief of a sum of Rs.4,38,75,000/- to the assessee. The relevant findings given by the Ld. CIT(A) vide para (3.17.1) at page no. 131 to 133 of his Order are reproduced as under: “3.17.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. As regard to the evidentiary value of the loose paper, I am in full agreement with the findings given by the AO in the body of the assessment order that authenticity of the incriminating seized loose paper cannot be doubted. It is undisputed fact that the subject seized paper was impounded from the business premises of Hotel Ambrosia, Jhansi, a concern of which Shri Ramesh Chandra Rai was the Proprietor. It is also clear from the subject loose paper that Shri Ramesh Chandra Rai alearnedng with other three persons, including the appellant, have made investment for purchases of some shares in a company named and titled as M/s. Agrawal Distelleries Pvt. Ltd., the name whereof has clearly been mentioned in the subject seized document. Since, the document was found from one of the purchasers, its evidential value cannot be doubted even in the case of the appellant. On a perusal of such loose paper, it transpires that the appellant had purchased 40% shares in the above named company for a total consideration of Rs.11,70,00,000/- and out of such consideration, a sum of Rs.5,60,00,000/- was required to be paid in the form of cheque and the remaining sum of Rs.6,10,00,000/- was required to be paid in cash. I found that the appellant has admitted to have made payments of Rs.5,60,00,000/- through cheques from explained sources of himself, his wife namely Smt. Gurveen Kaur Bhatia and his associate company namely M/s. Encord Comosales Pvt. Ltd. which have also been duly recorded in their respective books of accounts. However, the appellant is denying to have made payment of cash consideration of Rs.6,10,00,000/- which is not acceptable. Any document has to be read in its entirety and it cannot be presumed that the appellant has made the payment of cheque portion, as Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 98 noted down in the excel sheet but has not made payment of any single penny in cash as noted down in the same excel sheet. Thus, I find no substance in the appellant’s submission that he had not made any payment in cash towards purchase of shares. However, I find sufficient merit in the contention of the appellant that originally he had agreed for making investment for purchase of 40% shares in the above named Agrawal Distilleries Pvt. Ltd., but actually, such investment could take place only in respect of 25% of the shares of the above named company, as is evident from the Audited Balance Sheet of M/s. Agrawal Distilleries Pvt. Ltd. for the financial year ended on 31.03.2015 in which the total number of shares in the name of the appellant along with his wife namely Smt. Gurveen Kaur Bhatia and associate company namely M/s. Encord Comosales Pvt. Ltd. have been shown only at 25% of the total paid up capital of the company. So it has to be necessarily held that as against the total amount of investment by the appellant in purchase of shares of Agrawal Distilleries Pvt. Ltd., as stated in the said excel sheet at Rs.11,70,00,000/- for 40% share has to be proportionately scaled down to Rs.7,31,25,000/- only for 25% shares. In view of such position, I hold that the appellant had made investment to the extent of Rs. 7,31,25,000/- only in purchase of 25% shares in M/s. Agrawal Distilleries Pvt. Ltd. out of which a sum of Rs.5,60,00,000/- was paid by the appellant and other two persons through banking channels and out of their respective explained sources and therefore, the sources of the balance investment of Rs.1,71,25,000/- remained unexplained and is liable to be added to the total income of the appellant u/s. 69B of the Act. Therefore, addition made by the AO amounting to Rs. 1,71,25,000/- is Confirmed and appellant gets relief of Rs.4,38,75,000/-. Therefore, appeal on these grounds is Partly Allowed.” 26.4 Aggrieved with the relief granted by the Ld. CIT(A), the revenue is in appeal before us and against the addition confirmed by the Ld. CIT(A), the assessee has preferred a cross appeal before us. 26.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 26.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Book: In this context, it is submitted as under: 1.00 That, the impugned addition of Rs.6,10,00,000/- has been made by the learned AO merely on the basis of one loose paper found and impounded during Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 99 the course of a survey carried out under s.133A of the Act in the premises of a third person. A copy of the loose paper is placed at PB Page No. 114. Further, a table containing the details of such loose paper is also placed at Annexure-iii of Sub-Schedule-3 of the Special Auditors' Report, a copy whereof has separately been filed by us before this Hon'ble Bench. 1.01 That, a survey was conducted in the premises of M/s. Hotel Ambrosia, Sipri Bazar, Nanak Ganj, Jhansi (U.P.) on 07-01-2016. During the course of the survey, some alleged incriminating document was found which was inventorized as LP-1, back side of page no. 29. Such document is in the form of an excel sheet with the caption ‘Agrawal Distilleries Pvt. Ltd.’ ‘Investment Details’. Such loose paper has also been scanned by the learned AO herself at page no. 51 of the impugned Order. 2.00 On the basis of the subject excel sheet, the Ld. AO reached to the conclusion that during the previous year relevant to the assessment year under consideration, the assessee had made investment to the extent of Rs.11,70,00,000/- in purchase of 40% shares in a company named and titled as ‘Agrawal Distelleries Pvt. Ltd.’ (in short ‘ADPL’) and out of the investments so made, the payment for a sum of Rs.6,10,00,000/- was made in cash by the assessee out of his undisclosed income. Accordingly, the Ld. AO vide para (11.4) of the impugned assessment order, made an addition of Rs. 6,10,00,000/- in the assessee’s income. 3.01 It is submitted that, during the course of the assessment proceedings, the learned AO, vide Q. No. 7 of her show-cause Notice dated 10-07-2018, required the assessee to furnish his explanation on the aforesaid loose paper found and impounded from the premises of a third person. 3.02 That, in response to the same, the assessee, vide his letter dated 30-07- 2018, made his detailed explanation on the subject issue. The entire explanation of the assessee has also been reproduced by the learned AO at para (11.2) on page no. 52 to 55 of the impugned Order. For a ready referece, we are reproducing the relevant abstract of the explanation, as under : 8. EXPLANATION ON THE ISSUE OF PROPOSED ADDITION OF RS. 11,70,00,000/- IN RESPECT OF SOME ALLEGED INVESTMENT AND PROFIT SHARE IN M/S. AGRAWAL DISTILLERIES PRIVATE LIMITED In this context, it is submitted as under : • At the outset, it is submitted that the subject loose paper, which is in the form of an excel sheet neither belongs to me nor it was prepared on my instruction by anyone nor it was found from my possession. From such excel sheet, it is not clear as to when such excel sheet was prepared and what was the purpose of preparing such excel sheet. In these circumstances, merely on the basis of an uncorroborated excel sheet, no adverse inference deserves to be drawn against me. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 100 • Madam, the fact remained that during the financial year 2014-15 relevant to A.Y. 2015-16, I myself along with my wife Smt. Gurveen Kaur Bhatia and one company have purchased total 10,010 numbers of Equity Shares of face value of Rs.100/- each in a company named & titled as Agrawal Distilleries Pvt. Ltd. having its registered office at 45-A, Alaknanda Tower, City Centre, Gwalior for a total consideration of Rs.5,60,00,000/- only. It is submitted that we have not directly subscribed into the shares of the said company but such shares were purchased by us from its another sharehoLder namely M/s. Vivaswan Hotel (India) Pvt. Ltd. It shall be worthwhile to note that at the time of purchase, the total number of equity shares in the above named company were to the extent of 40,034 numbers only and thus, by way of purchase, only 25% (appx.) equity shares got to be acquired by us in the said company. • It is submitted that the excel sheet so referred to by your good self is not reliable and of any credence. It is submitted that in the subject excel sheet, we have been shown to have acquired 40% equity shares but it is a matter on record that in the said company, at any point of time, we never acquired shares exceeding 25% of the equity shares of the company. In evidence of such fact, I am submitting herewith a copy of Audited Financial Statements of the above named Agrawal Distilleries Pvt. Ltd., as of 31-03-2015, as Annexure C-6.01. On a perusal of Schedule -2 of the Audited Balance Sheet of the company, it shall be observed by your good self that total number of equity shares in the said company, on both the dates i.e. on 31-03-2015 as well as on 31-03-2014, was to the extent of 40,034 only. From para (e) of the same schedule no. 2, which gives the details of shareholding, it may further be observed by your good self that out of the aforesaid equity shares aggregating to 40,034 in numbers, we had been holding only 10,010 equity shares which accounts for only 25% of the total shareholding. In other words, the excel sheet so referred cannot be taken as an admissible evidence against myself for the reason of factual mistakes committed therein. The break-up of the above said 10,010 shares purchased by myself, my wife Smt. Gurveen Kaur Bhatia and the company namely M/s. Encord Commosales Pvt. Ltd., as given in the said Audited Balance Sheet, is as under : S.No. Name of the Shareholder Number of Shares 1 Shri Harminder Singh Bhatia [Self] 306-AD, Scheme No. 74-C, Vijay Nagar, Indore 5,100 2 Smt. Gurveen Kaur Bhatia [Wife] [PAN- ACFPB4433P] 306-AD, Scheme No. 74-C, Vijay Nagar, Indore 1,210 3 M/s. Encord Commosales Private Limited [PAN-3,700 Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 101 AACCE1193M] B-406,New Amritsar, Amritsar (Punjab) Total 10,010 • Madam, as said earlier, the shares in M/s. Agrawal Distilleries Pvt. Ltd. were purchased by all of us for a total consideration of Rs. 5,60,00,000/- only and over and above such consideration we have not made payment of any single penny. Such payments were made by us, in different tranches, through banking channels only. The details of payments made by us are tabulated, as under : Date of Payment Name of the person from whose account cheque was issued Cheque No. Name of the Bank, Branch and Account Number Amount of cheque 12-02-2014 Shri Harminder Singh Bhatia [Self] D.D. UCO Bank, New Palasia, Indore 70,00,000 27-05-2014 --do-- 895694 Punjab & Sind Bank, 13 P.Y. Road, Indore 85,00,000 29-05-2014 --do-- 895697 --do-- 70,00,000 25-06-2014 --do-- 895826 --do-- 50,00,000 16-07-2014 --do-- Cheque UCO Bank, New Palasia, Indore 10,00,000 SUB-TOTAL (A) 2,85,00,000 12-02-2014 Smt. Gurveen Kaur Bhatia [Wife] D.D. UCO Bank, New Palasia, Indore 30,00,000 27-05-2014 --do-- 514419 Punjab & Sind Bank, 13 P.Y. Road, Indore 45,00,000 SUB-TOTAL (B) 75,00,000 25-06- 2014 M/s. Encord Commosales Pvt. Ltd. Cheque Punjab & Sind Bank, 13 P.Y. Road, Indore 200,00,000 SUB-TOTAL (C) 2,00,00,000 GRAND TOTAL (A+B+C) 5,60,00,000 • Madam, it shall be worthwhile to note that the aforesaid transactions as well as the bank accounts, through which the payments have been made, are duly recorded in the regular books of accounts of myself, my wife as well as the above named company. • Madam, as out of total payments of Rs.5,60,00,000/-, jointly made by we three purchasers of the shares, payments to the extent of Rs.2,85,00,000/- only was made by me to M/s. Vivaswan Hotels Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 102 (India) Pvt. Ltd., in my regular books of accounts maintained in the course of liquor business. Such fact is evident from copy of account of M/s. Vivaswan Hotels Pvt. Ltd in my books of accounts for the F.Y. 2014-15. • Madam, I have shown to have purchased 10,010 equity shares of the above named company at the rate of Rs.5,594/- (appx.) per share for an aggregate value of Rs.5,60,00,000/-. It is submitted that the price so paid by me fully commensurate with the market price of shares of such company as on the date of purchase. It is submitted that the fair market value of equity share of the above named company, computed in accordance with the provision of Rule 11U and Rule 11UA of the Income Tax Rules, 1962 on the basis of audited Balance Sheet of the company as on 31-03-2014 (Annexure C-6.02), works out to be at Rs.862.60/- per share only i.e.[{Rs.40,03,400/-(Share Capital)+3,41,33,161/-(Reserves & Surplus)}/ 40,034(Number of Equity Shares)]. In such circumstances, when I myself have shown to have purchased the shares at a higher rate than the fair market value of these shares, there shouLd not be any room for any suspicion for making any payment over and above that claimed by me. • Madam, the veracity of my claim to the effect that I had purchased the 10,010 number of shares in M/s. Agrawal Distilleries Private Limited for a total consideration of Rs.5,60,00,000/- only can also be verified by your good self by way of issuance of summons under s. 131 or letter under s. 133(6) to the sellers of the shares at the following address : M/s. Vivaswan Hotels (India) Pvt. Ltd. Thatipur GAOn, Gandhi Nagar, Gwalior (M.P.) • Madam, in evidence of the payments having been made through explained sources, as shown above, I am submitting herewith the following documents: • Copy of relevant abstract of bank statement of myself, as Annexure C- 6.03. Showing the payments of Rs.2,85,00,000/- from my bank accounts. • Copy of relevant abstract of bank statement of my wife, Smt. Gurveen Kaur Bhatia, as Annexure C-6.04 Showing the payments of Rs.75,00,000/- from bank accounts of my wife Smt. Gurveen Kaur Bhatia. • Copy of relevant abstract of bank statement of the company, M/s. Encord Commosales Pvt. Ltd., as Annexure C-6.05 Showing the payments of Rs.2,00,00,000/- from the bank accounts of M/s. Encord Commosales Pvt. Ltd. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 103 • Copy of account of sellers of the shares namely M/s. Vivaswan Hotels (India) Pvt. Ltd., for the financial year 2014-15 in my books of accounts, as Annexure C-6.06 • Copy of account of sellers of the shares namely M/s. Vivaswan Hotels (India) Pvt. Ltd., for the financial year 2014-15 in the books of accounts of my wife Smt. Gurveen Kaur Bhatia, as Annexure C-6.07. • Copy of account of sellers of the shares namely M/s. Vivaswan Hotels (India) Pvt. Ltd., for the financial year 2014-15 in the books of accounts of M/s. Encord Commosales Pvt. Ltd., as Annexure C-6.08. • Copy of letter of confirmation duly given by Smt. Gurveen Kaur Bhatia to the effect of purchase of shares in the subject company, as Annexure C-6.09. • Copy of letter of confirmation duly given by M/s. Encord Commosales Pvt. Ltd. to the effect of purchase of shares in the subject company, as Annexure C-6.10. • Xerox copy of acknowledgement of Income-Tax return of Smt. Gurveen Kaur Bhatia, for A.Y. 2015-16, as Annexure C-6.11. • Xerox copy of acknowledgement of Income-Tax return of M/s. Encord Commosales Pvt. Ltd. for A.Y. 2015-16, as Annexure C-6.12. • Madam, without prejudice to the above and without in any manner admitting payment of any consideration, either in cash or otherwise, over and above the consideration of Rs.5,60,00,000/- shown by all of us in our respective books of accounts, it is submitted that even if for the sake of presumption the veracity of the excel sheet, referred to by your good self, is taken to be correct even in such a situation, the total amount of consideration payable by me towards purchase of shares in M/s. Agrawal Distilleries Pvt. Ltd. could not be taken to be more than a sum of Rs.7,31,25,000 /-. It is for the reason that in the subject excel sheet amount of consideration payable for acquisition of 40% shares in the company has been shown as 11,70,00,000/- whereas we have actually acquired only 25% shares in such company. Thus, taking the pro-rata consideration, our investment in the subject shares, by no stretch of imagination, could be presumed to be more than a sum of Rs.7,31,25,000/-. Since, undisputedly, we have already explained the sources of investment to the extent of Rs.5,60,00,000/-, as aforesaid, even if my genuine explanation of not making any payment in cash is brushed aside, the maximum amount of unexplained investment jointly made by all of us can worked out only at Rs.1,71,25,000/- as against the same of Rs.11,70,00,000/- proposed by your good self, in my name alone. Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 104 • Without prejudice to the above and without, again, admitting payment of any consideration in cash; without admitting existence of any syndicate and; without admitting that I had received any undisclosed income by way of my share in various liquor syndicates, as alleged by your good self in the captioned Notice, it is submitted that even on the theory of telescoping, the alleged unexplained investment in cash towards purchase of the subject shares shall get squarely covered by the alleged receipts of income, in cash, by me from such syndicates. In such a situation, the addition so proposed, herein, would not deserve to survive even on this count. In view of the above facts and circumstances of the case, it is submitted that no addition of Rs.11,70,00,000/-, as proposed in the captioned notice, deserves to be made in my income.” 3.03 Despite making the aforesaid explanation along with the documentary evidences, the Ld. AO, merely on the basis of the impounded excel sheet, which was found and impounded from the premises of a third person, presumed the total investment by the assessee in M/s. Agrawal Distilleries Pvt. Ltd. at Rs.11,70,00,000/- and after giving a set-off in respect of the investment shown and claimed by the assessee at Rs.5,60,00,000/-, made an addition of Rs.6,10,00,000/- in the hands of the assessee by holding the same as unexplained investment of the assessee. 4.00 Being aggrieved with the addition of Rs.6,10,00,000/- so made by the AO, as aforesaid, the asessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) adjudicated the issue by giving his findings at para (3.17.1) at page nos. 131 to 134 of the impugned Order. The Ld. CIT(A) while upholding the evidentiary value of the seized document, accepted the contention of the assessee to the effect that as against the mentioning of acquisition of 40% share in the company M/s. Agrawal Distilleries Pvt. Ltd., factually the assessee and his associates had purchased only 25% shares of the said company. Accordingly, the Ld. CIT(A), firstly by proportionately reducing the alleged amount of investment, as mentioned in the same loose paper, from Rs.11,70,00,000/- to Rs.7,31,25,000/-, and secondly, granting the credit for investment aggregating to Rs.5,60,00,000/- which were duly recorded in the books of the assessee and his associates, confirmed the addition amounting to Rs.1,71,25,000/- which resulted into relief of a sum of Rs.4,38,75,000/- to the assessee. Against the relief so granted, the Revenue is in appeal whereas against the partial addition so confirmed, the assessee is in appeal before this Hon'ble bench. 5.00 Before the Ld. CIT(A), it was submitted that the impugned addition had been made by the learned AO only on the basis of one loose paper which was not found from the possession of the assessee but from the premises of a third person during the course of survey. It was submitted the subject loose paper, which was in the form of an excel sheet neither belonged to the assessee nor it was prepared on the instruction of the assessee by anyone nor it was found from the possession of the assessee. Further, from such excel sheet, it was also not clear as to when such excel sheet was prepared and what was the purpose of Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 105 preparing such excel sheet. It was further submitted that in these circumstances, merely on the basis of an uncorroborated excel sheet, no adverse inference could have been drawn against the assessee. For such proposition, reliance was placed on the following judicial pronouncements: • Common cause (a registered society) and others vs. Union of India and others (2017) 98 CCH 0028 ISCC • C.B.I. vs. V.C. Shukla 1998 (3) SCC 410 • Lalita Kumari vs. State of U.P. 2014(2) SCC 1 6.00 On merits of the issue, it is submitted that during the previous year relevant to the assessment year under consideration, the assessee had not purchased any single share of the ADPL and therefore, the question of making of any unexplained investment, as alleged by the Ld. AO does not arise. It is submitted that the assessee along with his wife namely Smt. Gurveen Kaur Bhatia and his company M/s. Encord Commosales Pvt. Ltd., had purchased 10,010 numbers of Equity Shares of the said company only for a total consideration of Rs.5,60,00,000/- and the entire payment for purchase of such shares were made by the assessee along with his associates in different trenches through banking channels only. The entire payments have been made by the assessee and his associates only during the previous year relevant to the assessment year 2015-16 and not a single penny, either in the form of cheque or cash, was paid by the assessee during the previous year, relevant to the assessment year under consideration. It is submitted that, the payments towards purchase of 10,010 numbers of shares, have been made by the assessee and his associates, during the financial year 2014-15 relevant to preceeding assessment year i.e. A.Y. 2015-16, as per the details given below: S.No. Date of Payment Name of the person from whose account cheque was issued Cheque No. Name of the Bank & Branch Amount 1 12-02- 2014 Harminder Singh Bhatia [assessee] D.D. UCO Bank, New Palasia, Indore 70,00,000 2 27-05- 2014 ---do--- 895694 Punjab & Sind Bank, 13 P.Y. Road, Indore 85,00,000 3 29-05- 2014 ---do--- 895697 --do-- 70,00,000 4 25-06- 2014 ---do--- 895826 --do-- 50,00,000 5 16-07- 2014 ---do--- Cheque UCO Bank, New Palasia, Indore 10,00,000 SUB-TOTAL (A) 2,85,00,000 6 12-02-Smt. Gurveen D.D. UCO Bank, 30,00,000 Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 106 2014 Kaur Bhatia [Wife] New Palasia, Indore 7 27-05- 2014 ---do--- 514419 Punjab & Sind Bank, 13 P.Y. Road, Indore 45,00,000 SUB-TOTAL (B) 75,00,000 8 25-06- 2014 M/s. Encord Commosales Pvt. Ltd. Cheque Punjab & Sind Bank, 13 P.Y. Road, Indore 2,00,00,000 SUB-TOTAL (C) 2,00,00,000 GRAND TOTAL [A + B + C] 5,60,00,000 6.01 Your Honours, in evidence of the aforesaid fact, we have submitted the following documentary evidences before the lower authorities: • Copy of ledger account of the seller of the shares i.e. M/s. Vivashwan Hotel India Private Limited in the books of account of the assessee, as Annexure A-10.01 [PB Page no. 115 & 116]; • Copy of relevant bank statement of the assessee demonstrating the payments made and dates thereof, as Annexure A-10.02 [PB Page No. 117 to 120]; • Copy of ledger account of the seller of the shares i.e. M/s. Vivashwan Hotel India Private Limited in the books of account of Smt.Gurveen Kaur Bhatia along with a copy of relevant bank statement demonstrating the payments made, as Annexure A-10.03 & A-10.04 [PB Page no. 121 to 124]; • Copy of ledger account of the seller of the shares i.e. M/s. Vivashwan Hotel India Private Limited in the books of account of M/s. Encord Commosales Pvt. Ltd. along with a copy of relevant bank statement demonstrating the payments made, as Annexure A-10.05 & A-10.06 [PB Page no. 125 & 126]; • Copies of Confirmation letters of Smt. Gurveen Kaur Bhatia & M/s. Encord Commosales Pvt. Ltd. to the effect confirming the transaction of payment so made to the seller, as Annexure A-10.07 & A-10.08 [PB Page No. 127 & 128]; and • Xerox copies of Income Tax Return Acknowledgment of both the associates for the A.Y.2015-16, as Annexure A-10.09 & A-10.10 [PB Page No. 129 & 130]. 6.02 Your Honours, the purchase of the shares by the assessee, during the financial year 2014-15, is also evident from the audited financial statements of ADPL, for the year ended 31 st March, 2015, in which, under the Note No. 2 of the Share Capital, the shareholding of M/s. Vivaswan Hotels (India) Pvt. Ltd. have been shown to have reduced from 99.99% as on 31 st March 2014 to only 35% as Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 107 on 31 st March, 2015 and correspondingly, the number of shares of the assessee and his associates in ADPL, shown at NIL as on 31-03-2014 has been shown at 1010 Numbers as on 31-03-2015, which works out to be 25% of the total paid-up share capital of the Company. It is submitted that M/s. Vivaswan Hotels (India) Pvt. Ltd., besides selling shares to the assessee, had also sold shares to other persons which resulted into reduction of its shareholding from 99.99% to 35%. A copy of the Audited Financial Statements of ADPL, for the financial year 2014-15, is placed at PB Page No. 131 to 146 for A.Y. 2016-17. 6.03 The making of investment by the assessee and his associates in the shares of ADPL, during the financial year 2014-15, is also evident from their Audited Balance Sheets as at 31 st March, 2015. Copies of relevant abstract of such audited balance sheets are placed at PB Page No. 147 to 150 for A.Y. 2016- 17. 6.04 From the audited financial statements of ADPL, it is evident that the assessee and his associates have duly purchased the shares in ADPL, during the financial year 2014-15 only and after purchasing, such shares they had got transferred the same in their favour, in the statutory books of ADPL. It would be appreciated that, once it is established that the entire payments towards purchases of such shares were made only during the financial year 2014-15, and the shares had got transferred in their names during the financial year 2014-15 only, there could not be any room for presumption that the seller sold and transferred the shares in without receiving the full consideration and therefore, there could not be any presumption as regard to payment of any sale consideration by the assessee and his associates during the financial year 2015- 16, relevant to the assessment year under consideration. In view of such facts, no addition is called for on the subject issue, in the total income of the assessee for the assessment year under consideration. 7.00 It is submitted that the excel sheet so referred to by the learned AO is not reliable and of any credence. It is submitted that in the subject excel sheet, the assessee had been shown to have acquired 40% equity shares but it is a matter on record that in the said company, at any point of time, the assessee along with his associates never acquired shares exceeding 25% of the equity shares of the company. Such fact is evident from the Audited Financial Statements of the ADPL, as of 31-03-2015, in Note No. 2 of Share Capital [kindly refer PB Page no. 137]. 7.01 Your Honours, on a perusal of Schedule-2 of the Audited Balance Sheet of the company, it shall be observed that total number of equity shares in the said company, on both the dates i.e. on 31-03-2015 as well as on 31-03-2014, was to the extent of 40,034 only. From para (e) of the same schedule no. 2, which gives the details of shareholding, it may further be observed by Your Honours that out of the aforesaid equity shares aggregating to 40,034 in numbers, the assessee along with his associates have been holding only of 10,010 numbers of equity shares which accounts for only 25% of the total shareholding. 7.02 It shall thus be appreciated that no transaction as per the details given in the said excel sheet had taken place and therefore, there was absolutely no Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 108 justification, for the Ld. AO to make a presumption that the assessee might have made a cash payment of Rs. 6,10,00,000/- for purchase of shares in ADPL. It is reiterated that that the assessee had not made any single payment in the form of cash as alleged by the learned AO, over and above the payment of Rs. 5,60,00,000/- jointly with his associates, which is duly recorded by them in there regular books of accounts. It is submitted that the learned AO, except relying upon the said excel sheet, could not bring on record any other corroborative material or evidence which could establish the making of cash payment by the assessee and therefore, in such circumstances, no presumption ought to have been drawn against the assessee for making cash payment of Rs.6,10,00,000/- in respect of the purchase of shares in the company. It is more so in a circumstance when the actual transaction of transfer of shares had not taken place as per the notings made in the said excel sheet. 8.00 During the course of the assessment proceedings, the assessee had specifically requested to the learned AO that if he wish to make further verification or investigation in the matter, then a summons under s. 131 or letter under s. 133(6) to the sellers of the shares may be issued at the address M/s. Vivaswan Hotels (India) Pvt. Ltd., Thatipur Gaon, Gandhi Nagar, Gwalior (M.P.). However, despite making such specific request, the learned AO did not carry out any enquiry by herself and merely on the basis of some loose paper, the credence whereof cannot be relied upon, made the addition in the hands of the assessee. 9.00 It was also submitted before the Ld. CIT(A) that without, in any manner, admitting the making of any cash payment by the assessee towards purchase of shares in ADPL, as alleged by the Ld. AO on the basis of the subject excel sheet, even if for the sake of presumption, it is presumed that the assessee had made any cash payment for purchase of shares of ADPL, then also, there ought not to have been made the addition to the extent of Rs. 6,10,00,000/-. It was submitted that, if all the contents of the subject excel sheet, which has been relied upon by the Ld. AO for making the impugned addition, are considered to be correct, then it has to be taken that the sale value of 40% of shares in ADPL was agreed to be taken between the seller and the assessee at 11,70,00,000/-. Since, as against the agreed transfer of 40% of shares, factually, transfer of only 25% of shares could take place, the valuation of the 25% of shares, ought to have been proportionately taken at Rs.7,31,25,000/- only. In such a situation, since undisputedly, the assessee has been found to have made a payment of Rs.5,60,00,000/- through bank drafts, the addition, if any, on this count could have been made to the extent of Rs. 1,71,25,000/- only and not to the extent of Rs.6,10,00,000/- as made by the Ld. AO. It is a settled law that any seized or impounded document has to be interpreted in its entirety and it is not permissible for an assessing officer to rely upon only a part of the document by disregarding the other part. 10.00 Without prejudice to the above and without, again, admitting payment of any consideration in cash; without admitting existence of any syndicate and; without admitting that the assessee had received any undisclosed income by way of his share in various liquor syndicates, as alleged by the learned AO in the impugned Order, it is submitted that even on the theory of telescoping, the Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 109 alleged unexplained investment in cash towards purchase of the subject shares shall get squarely covered by the alleged receipts of income, in cash, by the assessee from such syndicates. In such a situation too, no addition was called for. 11.00 Your Honours, the Ld. CIT(A) grossly erred in not accepting the contention of the assessee that merely on the basis of some excel sheet found from the premises of a third person, no addition can be made in the hands of an assessee. The Ld. CIT(A) also erred in not appreciating the material fact that in the instant case, despite making a specific request, the Ld. AO did not conduct any enquiry by way of issuance of summons u/s. 131 or letter u/s. 133(6) to the seller of the shares. The Ld. CIT(A) also erred in not appreciating a very vital contention of the assessee that the subject transactions of purchase of shares was executed and completed during the previous year relevant to the A.Y. 2015-16 and therefore, for the assessment year 2016-17, no presumption as regard to making of any unexplained investment could have legally been made against the assessee for the assessment year under consideration. In such circumstances, the action of the Ld. CIT(A) in partially confirming the addition deserves to be set aside and entire addition deserves to be deleted.” E. Key Papers filed in the Paper Book (A.Y. 2016-17) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Copy of the loose paper inventorized as LP- 1. 114 - 2 Copy of ledger account of M/s. Vivashwan Hotels India Private Limited in the books of account of the assessee. 115 & 116 3 Copy of relevant abstract of bank statement of the assessee demonstrating the payments made for purchase of shares. 117 to 120 4 Copy of ledger account of M/s. Vivashwan Hotels India Private Limited in the books of account of Smt. Gurveen Kaur Bhatia. 121 to 122 5 Copy of relevant abstract of bank statement of Smt. Gurveen Kaur Bhatia demonstrating the payments made for purchase of shares. 123 & 124 6 Copy of ledger account of M/s. Vivashwan Hotels India Private Limited in the books of account of M/s. Encord Commosales Private Limited. 125 7 Copy of relevant abstract of bank statement of M/s. Encord Commosales Private Limited demonstrating the payment made for purchase of shares. 126 8 Copies of confirmation letters of Smt. Gurveen Kaur Bhatia & M/s. Encord Commosales Private Limited to the effect 127 & 128 Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 110 confirming the payments made to the seller of the shares i.e. M/s. Agrawal Distilleries Private Limited. 9 Copy of Income Tax Return Acknowledgment for the A.Y. 2015-16 of Smt. Gurveen Kaur Bhatia & M/s. Encord Commosales Private Limited. 129 & 130 10 Copy of Audited Financial Statements of M/s. Agrawal Distilleries Pvt. Ltd. for the year ended 31-03-2015. 131 to 146 11 Copies of relevant abstract of balance sheet of the assessee, Smt. Gurveen Kaur Bhatia & M/s. Encord Commosales Private Limited for March 2015 reflecting the investment in shares of M/s.Agrawal Distilleries Pvt. Ltd. 147 to 150 26.7 Before us, the Ld. counsel of the assessee, in addition to relying upon his written submissions, had raised an alternate plea that first of all the assessee along with his family members and associates had made investment in the shares of M/s. Agrawal Distilleries Private Limited (in short ADPL) only upto 25% and not 40%, as has been alleged by the AO, but, even otherwise, if it is presumed that the assessee has made investment in 40% shares of ADPL, then also, on the theory of telescoping, the alleged unexplained investment in cash towards purchase of the subject shares shall get squarely covered by the alleged receipts of income, in cash, by the assessee from various syndicates by way of share in profit as determined by the Ld. AO herself. It was contended by the Ld. counsel of the assessee that the Ld. AO herself has given a finding that the assessee has derived his net share of profit from various syndicates during the financial years relevant to A.Y. 2010-11 to A.Y. 2015-16, aggregating to a sum of Rs. 23,35,42,936/- (Share of Profit in Syndicates at Rs. 25,75,48,300/- (-) Share of Loss in Syndicates at Rs. 2,40,05,364/-) and as against such share of profit from various syndicates up till 31/03/2015, the assessee had made net investment in capital of various syndicates to the extent of Rs. 15,21,74,689/- up till 31/03/2015 thereby leaving funds to the extent of Rs. 8,13,68,247/- in the hands of the assessee out of share of his profit in various syndicates as on 31/03/2015. Such funds can be said to be available for making any investment and therefore, the alleged unaccounted investment amounting to Rs. 6,10,00,000/- as determined by the AO herself cannot Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 111 be said to be unexplained or without any source. In nutshell, as an alternate plea, the assessee has claimed availability of exempted income for explaining the sources of investment in shares of ADPL. 27.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We have carefully gone through the subject loose paper seized from the premises of Shri Ramesh Chandra Rai, a member of the Shivhare Group, inventorised as Page – 29, (UPO-2) LP-1, placed at Page No. 114 of the Paper Book filed by the assessee for A.Y. 2016-17. A copy of such loose paper has also been scanned by the AO herself at page no. 51 of her Assessment Order. We find that such loose paper is in the form of a computerized excel sheet with the title ‘Agrawal Distillaries Private Limited’ and heading ‘Investment Details’. We find that such excel sheet contains many columns with the headings ‘Name’, ‘Share’, ‘Amount Paid’, ‘Total Amount to Pay’, ‘Balance to Pay’, ‘Remarks’ etc. We further find that in the said excel sheet, at the first serial no. the name of the assessee along with his share ratio of 40% is getting clearly reflected. However, we find full merit in the contention of the assessee that initially he had agreed for making investment for purchase of 40% shares of ADPL but, afterwards, he, along with his family members and associates could only make investment upto 25% of the shares of ADPL. Upon going through the Audited Financial Statements of ADPL for the F.Y. 2014-15, placed at page no. 131 to 146 of the assessee’s Paper Book for A.Y. 2016-17, and particularly upon going through the Schedule 2 of the Share Capital at page no. 137, we find that the paid up share capital of the ADPL, as on 31/03/2015 comprises of 40,034 equity shares of Face Value of Rs. 100/- each thereby totaling to Rs. 40,03,400/- and out of such paid up capital the ADPL has shown shareholding of the assessee and his family members/associates, comprising of the assessee himself, his wife Smt. Gurveen Kaur Bhatia and one associate company namely M/s. Encord Comosales Pvt. Ltd., of 10,010 equity shares as on 31/03/2015, which works out be 25% only. Further, upon going through the reply of the assessee filed before the AO, scanned by the AO herself at page no. 53 of Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 112 the assessment order, we find that the assessee along with his family members and associates has made the investment in 25% shares of the ADPL for a total consideration of Rs. 5,60,00,000/- and that too, through banking channels only. We find that the AO has merely relied upon the subject loose paper without conducting any further inquiry and without bringing any other corroborative evidence. The Ld. CIT(DR) could also not bring on record any facts or evidences to controvert the assertion made by the assessee in this behalf. Thus, in light of the aforesaid, we find full merit in the contention of the assessee that he had only made investment in 25% of shares of ADPL and not 40% as alleged by the AO. From the seized excel sheet for making an investment of 40% in shares of ADPL, the assessee was required to make an investment of Rs. 11,70,00,000/-, either by way of cash or cheque and since, as against such 40%, the assessee has only acquired 25% share, the assessee’s share of investment will have to be re-computed on pro-rata basis which works out to be at Rs. 7,31,25,000/- and since, as per the AO’s own finding, the assessee had found to have made investments to the extent of Rs. 5,60,00,000/- through banking channels, the balance amount of the investment i.e. Rs. 1,71,25,000/- remained unexplained and therefore, such amount of unexplained investment was rightly determined by the Ld. CIT(A). 27.2 However, as regard to the year of making of the aforesaid amount of unexplained investment by the assessee, we find that during the previous year relevant to the assessment year under consideration, since, the assessee or his family members or associate concerns had not purchased any shares of ADPL therefore, no addition qua the investment made in shares of ADPL can be subjected to tax during the relevant assessment year. On careful examination of the Audited Financial Statement of the ADPL, as placed at page no. 137 of the assessee’s Paper Book for A.Y. 2016-17, we find that as per such balance sheet, the assessee and his associates had become shareholder in the ADPL holding 25% share in the company. We find that the assessee had purchased such shares from one company named as Vivashwan Hotels India Pvt. Ltd. and from the copies of the accounts of the assessee and his associates in the books of such selling company, it is evident that the assessee had made the entire investment during the financial year 2014- Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 113 15 only. From the copy of the relevant bank statements of the assessee for the financial year 2014-15, we also find that the assessee had made the payments through banking channels during such financial year only. We find that in the seized document, there is no mention of any date or period, so logically, in absence of any other contradictory material, it has to be inferred that the undisclosed investment was also made in the same year in which the disclosed investment was made. Before us, the Ld. CIT(DR) could not controvert the various documentary evidences furnished by the assessee in his Paper Book. In such circumstances, we are inclined to hold that the assessee had not made any investment in the shares of ADPL during the financial year 2015-16 relevant to A.Y. 2016-17 and therefore, the addition having been made by the AO in a wrong year, is not sustainable in the eyes of the law. Accordingly, in our view, on such count too, no addition was warranted in the income of the assessee. 27.3 Although, through the earlier paras, we have already held that the addition made by the AO in the income of the assesseee for the assessment year 2016-17 was not justified, but even, on merits, we find sufficient force in the contention of the assessee that as per the findings given by the AO herself, till the end of the financial year 2014-15, the assessee was having sufficient funds by way of his share in the profit of various syndicates, as determined by the Ld. AO herself. Though, while adjudiciating the Ground No. 1 of the Revenue for all the assessment years, we have already deleted the addition made by the AO in the hands of the assessee on account of his share in profit of various syndicates due to application of the provisions of ss. 86, 67A & 167B of the Act, but, at any rate, such income actually having been derived were available with the assessee for making other investments. We find that in the instant case, even after considering the investment in capital made by the assessee in various syndicates, as determined by the AO, the assessee was having sufficient funds to cover the unexplained amount of investment in shares of ADPL. Thus, in our considered view, even on this count also, no addition was warranted. Accordingly, the Ground No. 5 of the Revenue for A.Y. 2016-17 is hereby Dismissed, whereas the Ground No. 8(a) to 8(d) of the Assessee for A.Y. 2016-17 are Allowed. 28. Ground Nos. 7(a) to 7(c) of the Assessee for A.Y. 2016-17 Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 114 28.1 Through these ground of appeal, the assessee has challenged addition of Rs.43,84,730/- made on account of undisclosed investment of capital in some MR-10 Shop. 28.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of M/s. Bharti DevbuiLd Pvt. Ltd. and M/s. Bharti Devcon Pvt. Ltd. at FH-322, Scheme No. 54, Vijay Nagar, Indore, some loose paper, inventorized as IDS-8, LPS-16, Page No. 61, was found and seized. The AO, from the subject loose paper, noted that the assessee had made capital investment in some MR-10 Shop to the tune of Rs.43,84,730/-. Accordingly, the AO made an addition of Rs.43,84,730/- in the assessee’s income on account of undisclosed investment in MR-10 Shop. 28.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the Ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the AO. The Ld. CIT(A) held that the assessee could not controvert the notings made on such loose papers. The Ld. CIT(A) further held that the assessee was found carrying out the business of liquor in various Syndicates and according to the Ld. CIT(A), the jotting made in the subject loose paper also pertains to the capital investment of the assessee in MR-10 Shop. Accordingly, the Ld. CIT(A) has confirmed the action of the Ld. AO in making the impugned addition of Rs.43,84,730/- in the assessee’s income. The relevant findings of the CIT(A) are given as under: “3.13.1 I have considered the facts of the case, the Assessment Order and the written as well as oral submissions of the appellant. During the course of the search a loose paper was found and inventorized and as per such loose paper, the appellant was found to have made an investment of Rs. 43,84,730/- in some MR-10 Shop. On such loose paper, with the description “Shree Pintu Bhaiya” a capital of Rs. 43,84,730/- has been clearly shown. During the course of the search and post search investigations, it has been established that the appellant is also known as “Shree Pintu Bhaiya”. The appellant could not controvert the notings made Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 115 on such loose paper either before the AO or before me with any documentary evidence. It has been established that the appellant had formed various syndicates with various persons in various years for carrying out the business of liquor and in such syndicates, the appellant had made investment towards his capital, the sources whereof have not been explained. The seized document also reveals the investment in capital of MR-10 Shop by the appellant at Rs. 43,84,730/-. Thus, I find no infirmity in the action of AO in making the addition and therefore, the addition made by the AO amounting to Rs. 43,84,730/- is Confirmed. Therefore, appeal on these grounds is Dismissed.” 28.4 Aggrieved with the Order of the Ld. CIT(A), the assessee is in appeal before us. 28.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO as well as of the Ld. CIT(A) on this issue. 28.6 Per Contra, Learned Counsel for the assessee has filed written synopsis. The relevant portion of such synopsis is being reproduced as under: “D. Key Points of Assessee’s Submission and Relevant Pages of the Paper Book: In this context, it is submitted as under: 1.00 The impugned addition of Rs.43,84,730/- has been made by the learned AO merely on the basis of one loose paper found and seized from the premises of third persons i.e. M/s. Bharti DevbuiLd Pvt. Ltd. and M/s. Bharti Devcon Pvt. Ltd. at FH-322, Scheme No. 54, Vijay Nagar, Indore. A copy of such loose paper is placed at PB Page no. 111 for A.Y. 2016-17. 1.01 Neither the assessee nor any of his family members were in any manner, either by way of hoLding the position of directors or having shares or otherwise, associated with the above named Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd. , from whose possession, the subject loose paper was found and seized. Further, the premises i.e. FH-322, Scheme No. 54, Vijay Nagar, Indore, from where the subject loose paper was found and seized, was not belonging to or inhabited by the assessee or any of his family members. Thus, in other words, the subject loose paper was found from a stranger to the assessee. 2.00 On a perusal of the subject loose papers, it shall be observed that nowhere from such loose paper the name of the assessee is discernible. Further, as regard the credence and evidentiary value of such loose papers, at the outset, it is submitted that such loose paper had not been found either from the possession of Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 116 the assessee or from any of the premises belonging to the assessee. Further, the subject loose paper had also not been prepared either by the assessee or by anyone on his instruction. As per the AO’s own findings given at para (12.1) of the impugned assessment order, the subject loose paper was found from the premises of Bharti DevbuiLd Pvt. Ltd. and Bharti Devcon Pvt. Ltd. situated at FH- 322, Scheme No. 54, Vijay Nagar, Indore. In such circumstances, it is submitted that under the provisions of section 292C(1)(i) of the Act, the prima-facie presumption which prevails upon finding of any books of account or document in anyone’s possession does not operate against the assessee. On the contrary, it has to be presumed that such documents belong to the person from whose possession they were found. Accordingly, it was incumbent upon the assessing officer to first seek the explanation of the concerning person on the seized materials and then only, the assessee could have been asked to tender his explanation on the said material and that too, after apprising the assessee about the explanation of the person from whose possession such material was found and as also after giving due opportunity of cross examination of such person to the assessee. However, in the instant case, unfortunately, the learned AO has not undertaken all these exercises and instead, directly ventured to seek the assessee’s explanation on such material. As the assessee was not the author/ creator of these materials, he was unable to make his explanation on the said loose paper. It is further submitted that during the course of the simultaneous search operations carried out in the various premises of the assessee, not even a single loose paper or any other iota of evidence was found from which it could have been inferred that the assessee had made any investment in the subject syndicate. It is a settled law that merely on the basis of some loose paper found from the premises of a third person, without having any other corroborative evidence, no addition can be made in the hands of an assessee. Reliance is placed on the following judicial pronouncements: • CIT vs. Anil Khandelwal (2015) 93 CCH 0042 (Del.) • Smt. Bommana Swarna Rekha vs. ACIT (2005) TTJ 885 (Visakha) • Straptex (India) (P) Ltd. vs. DCIT (2003) 79 TTJ 228 (Mum) • Rama Traders vs. First ITO (1988) 32 TTJ 483 (Pat) • Jaya S. Shetty vs. ACIT (1999) 64 TTJ 551 (Mum) • Ashwani Kumar vs. ITO (1992) 42 TTJ 644 (Del) • Sheth Akshay Pushpavadan vs. DCIT (2010) 130 TTJ (Ahd) (Uo) 42 • ACIT vs. Kishore Lal Balwant Rai & Ors. (2007) 17 SOT 380 (Chd) 3.00 In the instant case, while interpreting the belongingness of the loose paper, the Ld. AO had imposed an assumption. It is submitted that in the subject loose paper, the name of the assessee has not been mentioned anywhere, instead, name of some ‘Shree Pintu Bhaiya Ji’ has been mentioned. The learned AO, without having any basis or matieral on record, presumed that such ‘Pintu Bhaiya’ is the name attributed to the assessee only. It is submitted that even during the course of simultaneous search operations, many persons such as Shri Vikram Singh were found to be using the same nickname of Pintu. It would be worthwhile to note that the actual name of the assessee is Harminder Singh Bhatia only and for carrying out his all business and financial affairs, the assessee used his such name only and therefore, if anywhere the name ‘Pintu’ or Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 117 ‘Pintoo Bhaiya’ was found stated, the same could not have been attributed to the assessee. 4.00 It is reiterated that the assessee has not formed any syndicate for carrying out liquor business at any point of time with other persons. It is submitted that during the periods covered under the assessment, the assessee had been carrying out liquor business, in his individual capacity only, on the basis of periodical licenses granted by the Excise Authorities in accordance with The M.P. Excise Act, 1915 and that too in respect of the shops for which he has been granted licenses. Thus, there is no question of formation of any syndicate or for that matter, making of any investment in any syndicate. It is further submitted that the assessee in preceding grounds has made detailed written submission on the allegation of formation of Syndicates by the learned AO and therefore, our written submission so made in the preceding paras may kindly be taken into consideration by Your Honours while adjudicating the issue of formation of Syndicates. 5.00 Without prejudice to the above, it is submitted that on a perusal of the subject loose paper (refer PB Page No. 111 for A.Y. 2016-17), it is clearly evident that in the subject loose paper, at the first place, there has been a break-up of some capital aggregating to a sum of Rs.1,75,38,920/- invested through different modes. Further, in the subject loose paper, there has been a jotting of some 25% share of some Pintu Bhaiya in some MR-10 Shop amounting to Rs.43,84,730/- in the aforesaid capital with a mention of 75% share amounting to Rs.1,31,54,190/- of some Shri Mukesh Namdev, but, side by side, there has been a specific note on the said loose paper which read as ' नोट- पूरीपूंजी炈ीमुकेशनामदेवनेजमाकरवाई' . It is submitted that if a holistic interpretation of the said loose paper is made, then it can be gathered that in the said MR-10 Shop, an investment of a sum of Rs.1,75,38,920/- was made by way of DD or otherwise and out of which some Pintu Bhaiya was required to contribute a sum of Rs.43,84,730/- as his 25% share but, on the date of preparation of the loose paper, the entire investment of Rs.1,75,38,920/- was made only by the other person namely Shri Mukesh Namdev and Shri Pintu Bhaiya had not made any investment in the said Shop. It shall be appreciated by Your Honours that it is a settled law that any seized material has to be read and considered in its entirety and therefore, if based upon certain loose paper, the Ld. AO had reached to the conclusion that some Pintu Bhaiya, allegedly the assessee, had made an investment of Rs.43,84,730/- as his 25% share in the MR-10 Shop, then at the same time, by taking a note of the jottings made on the same loose paper to the effect that the entire investment was made only by Shri Mukesh Namdev, then it was incumbent upon the Ld. AO to have reached to the conclusion that although the said Pintu Bhaiya was required to make the investment in MR-10 Shop, but factually, no such investment was made by him till the date of preparation of the loose paper. It is submitted that the Ld. AO was not having any other material or evidence in his possession from which it could have been inferred that the investment of Rs.43,84,730/- was so required to be made by Shri Pintu Bhaiya, was actually so made by him at any subsequent point of time. It is submitted that for making any addition on account of unexplained investment, the revenue is first required to establish, with some positive evidences, that the investment was actually so made. However, in Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 118 the instant case, the Ld. AO except partially placing the reliance on the said loosepaper, was not having any other corroborative material or evidence in his possession. In such circumstances, the addition so made by him was required to be deleted by the Ld. CIT(A). 5.01 Without prejudice to the above, it is submitted that as per the jottings made on the said loose paper, the investment was made through banking channels by way of a Demand Draft of Rs.1,67,00,000/-. It is submitted that it is not the case of the Ld. AO that such Demand Draft was purchased through any of the bank accounts maintained by the assessee. It is submitted that as per the norms of the RBI, the draft for such a substantial amount could not have been purchased in cash and therefore, it was incumbent upon the Ld. AO to first bring on record that the draft was purchased by the assessee from any of his undisclosed bank accounts and then only, probably any addition on the subject issue could have been made. However, in the instant case, the Ld. AO did not conduct any enquiry from the State Excise Authorities as to the Draft was issued from which bank account, as it was the claim of the Ld. AO himself that the alleged investment was made in respect of liquor business only. 6.00 Without prejudice to the above and without, again, admitting that the assessee had made any investment in the MR-10 Shop or MIG Shop, as alleged by the learned AO in the impugned Order, it is submitted that even on the theory of telescoping, the alleged unexplained investment in MR-10 Shop shall get squarely covered by the alleged receipts of income, in cash, by the assessee from various syndicates. In such a situation, the addition so made by the learned AOwould not deserve to survive. 7.00 The Ld. CIT(A) has confirmed the action of the Ld. AO in making the impugned addition merely on the ground that the assessee could not controvert the notings made on such loose papers. The Ld. CIT(A) further held that the assessee was found carrying out the business of liquor in various Syndicates and according to the Ld. CIT(A), the jotting made in the subject loose paper also pertains to the capital investment of the assessee in MR-10 Shop. However, the Ld. CIT(A) grossly erred in not appreciating the material fact that the assessee had, at the Assessment Stage as well as at the Appellate Stage, had clearly denied to have made any such alleged investment. Further, the Ld. CIT(A) grossly erred in not appreciating the material fact that the subject loose paper was not found from the possession or control of the assessee and therefore, the presumption under s.292C was not available to the revenue against the assessee. In the instant case, on the contrary, it was the obligation of the Ld. AO to establish with any corroborative material that the subject loose paper pertains to the transactions carried out by the assessee himself and further, to establish that the sum jotted down in the loose paper relates to some investment and that too of the assessee. The Ld. AO was further required to make the necessary enquiry from the other person named in the subject loose paper and was also required to verify whether or not the alleged investment was fully made by the other person named in the subject loose paper. However, the Ld. CIT(A) grossly erred in not considering the material fact that the Ld. AO did not undertake all Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 119 these exercises and merely on presumptions and assumptions, made the subject addition which was required to be deleted in its entirety.” E. Key Papers filed in the Paper Book (A.Y. 2016-17) on which the assessee wish to place reliance: S. No. Description of the document Page No. Remarks 1 Copy of the loose paper marked as Annexure A-4 found and seized from the premises of a third person namely M/s. Bharti DevbuiLd Pvt. Ltd. 111 - In view of the above, it is submitted that the addition of Rs.44,84,730/- so made by the learned AO on account of alleged investment in MR-10 Shop, may kindly be deleted in its entirety.” 29.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. We have carefully gone through the seized document which is in the handwritten form and which has been scanned by the AO herself at page no. 56 of her Order. On a perusal of such seized document, we found that in such document, some estimation of expenditure for running one MIG Shop has been jotted down. According to such estimation, capital required for running the business has been worked out to be at Rs. 1,97,94,188/- and such requirement has been distributed amongst three persons namely, Shri Pintu Bhaiya (assessee’s nick name), Shri Monu Bhaiya and some Shri Mukesh Namdev. We find that at the bottom of the document, a jotting of Rs. 43,84,730/- has been written against the nick name of the assessee but, alongside such noting, there has been a note read as ‘Puri Poonji Shri Mukesh Namdev ne Lagayi’ . Thus, if a holistic reading and interpretation of such seized document is taken, then, it would result into one interpretation that the entire capital even on the part of the assessee was invested by some other partner namely Shri Mukesh Namdev. We also find merit in the contention of the assessee that such seized document is not containing any details of cash transactions but, all the transactions relate to banking transactions. The assessee further contended that in its audited financial statements for the F.Y. 2015-16, as placed at page no. 68 to 97 of the Paper Book for A.Y. 2016-17, the assessee has shown Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 120 License Fees amounting to Rs. 22,95,09,333/-, Legal & Professional Fees at Rs. 47,000/-, Bank Charges and Commission at Rs. 1,32,406/- and Bank Guarantee Commission at Rs. 4,47,777/-. The assessee has contended that the amount of legal and professional expenses shown at Rs. 47,000/- in the Schedule 16 of the audited financial statements at page no. 96 of the Paper Book, fully tallies with the amount of Legal and Professional Expenses by way of stamp duty found recorded in such seized document and therefore, it cannot be said that the seized document represents any unaccounted payment made by the assessee. We also find force in the alternate plea of the assessee that as per the AO’s own findings, the assessee had derived substantial income from various syndicates up till A.Y. 2015-16 and if any inference for unexplained investment is drawn, then also, the assessee having sufficient accumulated funds through the abovementioned sources, no addition was warranted on account of unexplained investment. Accordingly, we find no substance in the addition of Rs. 43,48,730/- made by the AO in the assessee’s income on account of undisclosed income in MR-10 Shop. Resultantly, the Ground No.7(a) to 7(c) of the assessee are Allowed. 30. In the result, the appeals of the Revenue are dismissed and that of the assessee are partly allowed as per terms indicated above. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 18.04.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 18.04.2022 Patel/PS Shri Harminder Singh Bhatia AY 2010-11 to AY 2016-17 121 Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore