ACIT 16(2), MUMBAI V. PARVEZ KHODAYAR RAISI, MUMBAI

ITSSA 19/MUM/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0352 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-04-2014
• Assessment Year: misc
• Appeal Filed On: 08-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: CULLA MUMBAI PANADPPRR
• Keywords: Unexplained investment; Search and seizure; Document seized; Opportunity of cross examination; Non compliance; Block assessment; Retraction; Documents seized
• Section: 131; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; JH FOT; IKY JKO U;KF;D LNL; ,OA ,OA ,OA ,OA JH JH JH JH MH D:.KKDJ JKO MH D:.KKDJ JKO MH D:.KKDJ JKO MH D:.KKDJ JKO] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K BEFORE SHRI. VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER IT(SS)A NO.19/MUM/2012 BLOCK PERIOD- 1.4.1996 TO 21.01.2003 ASST. COMMISSIONER OF INCOME TAX 16(2) 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007. VS. SHRI PARVEZ KHODAYAR RAISI BLOCK A, RUSTOM BAUG, SANT SAVTA MARG, BYCULLA, MUMBAI 400 027. PAN:-ADPPR2000R APPELLANT RESPONDENT REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI. A.C, TEJPAL ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI SANJIV M. MISHRA ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 6.3.2012 OF CIT(A) ARISING FROM THE BLOCK ASSESSMENT U/S 158BC/ 143(3)/254 OF THE INCOME TAX ACT FOR BLOCK PERIOD 1.4.1996 TO 21.01.2003. THE RE VENUE HAS RAISED FOLLOWING GROUNDS:- 1. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS 4.50,00,000/- ADDED BY THE AO IN THE ASSESSMENT ORDER. DATE OF HEARING 17.07.2014 DATE OF PRONOUNCEMENT 06.08.2014 SHRI PERVEZ KHODAYAR RAISI 2 | P A G E 2. THE L.CIT (A) FAILED TO APPRECIATE THE FACT THAT THE AFFIDAVITS FOUND DURING THE COURSE OF SEARCH ON THE ASSESSEE INDICATED THAT CAS H LOAN WAS GIVEN BY THE ASSESSEE TO SHRI. SULTAN MERCHANT AND THAT THE SOUR CE OF THE SAID CASH REMAINS UN- ACCOUNTED. 3. THE L.CIT (A) OUGHT TO HAVE APPRECIATED THAT IN THE STORY MADE OUT BY THE ASSESSEE, THE BASIC FACT THAT CASH WAS GIVEN HAS NO T BEEN REFUTED. 4. THE L.CIT (A) FAILED TO APPRECIATE THAT THE STOR Y ADVANCED BY THE ASSESSEE IS ALSO DEVOID OF LOGIC. 5. THE L.CIT (A) OUGHT TO HAVE APPRECIATED THAT IF THE ASSESSEE WAS TO PURCHASE THE PROPERTY FROM THE SAID SHRI. CHIBB THEN WHY WOULD T HE LATTER GIVE CHEQUES TO THE ASSESSEE AND VICE VERSA, IF THE ASSESSEE WAS TO SEL L THE PROPERTY THEN WHY WOULD THE ASSESSEE GIVE 4.5 CRORE TO THE SAID SHRI. SULTA N MERCHANT WHO IN TURN WAS PURPORTED TO HAVE PROVIDED COLLATERAL TO THE SAID S HRI. CHIBB. 6. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT IN THE STORY THAT WAS ADVANCED BY THE ASSESSEE, SHRI CHIBB AND SHRI. SULTAN BECOME WITNES SES FOR THE ASSESSEE AND COULD NOT BE THE WITNESSES FOR THE DEPARTMENT. THE ONUS TO SUBSTANTIATE THE STORY SO ADVANCED LIES ON THE ASSESSEE AND NOT ON THE DEPART MENT. THIS ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE. UNLESS THIS ONUS IS DIS CHARGED, THE LIABILITY OF RS 4.5 CRORE CASH LOAN WOULD REMAIN WITH THE ASSESSEE. 2. THIS IS THE SECOND ROUND OF LITIGATION AS IN THE FIRST ROUND, THE TRIBUNAL HAD SET ASIDE THE MATTER TO THE RECORD OF THE ASSESSING OFF ICER TO PASS AFRESH ORDER AFTER EXAMINING THE FACTUAL POSITION AND ALLOWING THE ASS ESSEE AN OPPORTUNITY TO CROSS EXAMINE MR. CHIBB AND MR. MERCHANT. THE BRIEF FACTS EMERGING FROM RECORD AND GIVING RISE TO THE CONTROVERSY ARE THAT THE ASSESSE E IS A PROPRIETOR OF M/S TOPAZ BAR & RSTAURANT, ENGAGED IN THE BUSINESS OF DANCING ACT IVITY, LIQUOR & NON-LIQUOR SALE ETC. UNDER THE NAME AND STYLE OF M/S TOPAZ BAR & RE STAURANT. A SEARCH & SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT WAS CONDUCTED ON 21.01.2003. THE SEARCH AND SEIZURE ACTION WAS CARRIED ON AT NINE PLACES CO MPRISING OFFICES, RESIDENCE, BANK LOCKERS ETC. DURING THE SEARCH AND SEIZURE ACT ION, CASH AMOUNTING TO RS.1.77 CRORE WAS SEIZED APART FROM THE OTHER ASSET AND IN CRIMINATING DOCUMENTS. THE ISSUE BEFORE US IS REGARDING THE ADDITION OF RS. 4. 5 CRORES MADE TO THE INCOME OF THE ASSESSEE TOWARDS THE CASH LOAN ADVANCE BY THE A SSESSEE TO ONE MR. SULTAN SHRI PERVEZ KHODAYAR RAISI 3 | P A G E MERCHANT AND THE BASIS OF WHICH ARE NINE AFFIDAVITS FOUND IN THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH. AS PER THESE NINE AFFIDAVITS MR. SULTAN MERCHANT DECLARED THAT HE HAS TAKEN A FRIENDLY CASH LOAN TOTAL AMOUNTING TO RS. 4.5 CRORES FROM ASSESSEE. IN THE STATEMENT RECORDED U/S 132(4), THE ASSESSEE CONFIRMED THE CASH LOAN OF RS. 4.5 CRORE AND ALSO A DMITTED THAT THESE TRANSACTIONS WERE NOT RECORDED IN THE BALANCESHEET FILED ALONG W ITH THE RETURN OF INCOME. HOWEVER ON THE VERY NEXT DAY THE ASSESSEE RETRACTED HIS STATEMENT GIVEN DURING THE SEARCH AND RECORDED U/S 132(4). DURING THE ASSE SSMENT PROCEEDINGS, THE ASSESSEE CLAIMED THAT THESE AFFIDAVITS ARE PART OF MOU FOR SALE OF PROPERTY AT 113- A, IRLA LANE, S.V. ROAD, VILE PARLE (WEST), MUMBAI 57 TO MR. BALBIR SINGH CHIBB FOR A CONSIDERATION OF RS. 4.5 CRORES. THE ASSESSEE EXP LAINED THAT THE DECLARATION RECEIVED BY THE ASSESSEE FROM MR. SULTAN MERCHANT A RE IN PURSUANCE TO THE SAID AGREEMENT AND A COPY OF THE SAID AGREEMENT WAS AVAI LABLE IN THE PREMISE AT LAXMI BUILDING, WHERE THE SEARCH & SEIZURE ACTION WAS CAR RIED OUT BY THE DEPARTMENT. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER DURING THE BLOCK ASSESSMENT ON THE REASON THAT NO SUCH MOU AS CLAIMED BY THE ASSESSEE WAS FOUND FROM THE BUSINESS PREMISE DURING THE SEAR CH. IT IS NOT A SPECIFIC CONTRACT OR PERFORMANCE OF AGREEMENT AS NO POSSESSION WAS GI VEN OR NO MONEY WAS RECEIVED AS CONSIDERATION UNDER THE SAID MOU. THE A SSESSEE HAS ALSO NOT REVEALED THE EXISTENCE OF MOU DURING THE STATEMENT RATHER THE ASSESSEE STATED IN THE STATEMENT RECORDED U/S 132(4) THAT HE HAD GIVEN A CASH LOAN AS MENTIONED IN THE AFFIDAVITS FOUND DURING THE SEARCH. ACCORDINGLY THE ASSESSING OFFICER HELD THAT EXPLANATION OF THE ASSESSEE IS AN AFTERTHOUGHT AND TREATED THE AMOUNT OF RS. 4.5 CRORE AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND ADDED AS UNDISCLOSED INCOME. SHRI PERVEZ KHODAYAR RAISI 4 | P A G E 3. THE MATTER WAS CARRIED TO THIS TRIBUNAL BY THE A SSESSEE AGAINST THE INTER ALIA ADDITION OF RS. 4.5 CRORES TOWARDS CASH LOAN GIVEN TO MR. SULTAN MERCHANT. BEFORE THE TRIBUNAL THE ASSESSEE HAD CONTENDED THAT THE AS SESSEE PRODUCED THE AFFIDAVIT OF MR. BALBIR SINGH CHIBB WHO HAD CONFIRMED THE CLA IM OF EXEMPTION OF THE ASSESSEE AND FURTHER CONFIRMED THAT MOU WAS PREPARE D IN RESPECT OF THE TRANSACTION OF TRANSFER OF THE PROPERTY BY THE ASSE SSEE TO MR. BALBIR SINGH CHIBB AND THESE AFFIDAVITS FOUND DURING THE COURSE OF SEA RCH WERE ONLY FOR COLLATERAL SECURITY THROUGH HIS FRIEND MR. SULTAN MERCHANT. TH US THE ASSESSEE CONTENDED BEFORE THE TRIBUNAL THAT THE MATTER NEEDS APPROPRIA TE SCRUTINY WHICH WAS NOT CARRIED OUT BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMEN T. THE ASSESSEE SPECIFICALLY PRAYED FOR CROSS EXAMINATION OF MR. BALBIR SINGH C HIBB AND MR. SULTAN MERCHANT THIS TRIBUNAL VIDE ORDER DATED 16.12.2009 RESTORED THE ISSUE OF ADDITION OF RS. 4.5 CRORE TOWARDS CASH LOAN GIVEN TO MR. SULTAN MERCHAN T TO THE RECORD OF THE ASSESSING OFFICER FOR EXAMINING THE FACTUAL POSITIO N AND DECIDE THE SAME AFRESH AFTER ALLOWING OPPORTUNITY TO CROSS EXAMINE MR. BAL BIR SINGH CHIBB AND MR. SULTAN MERCHANT. IN THE SET ASIDE PROCEEDINGS, THE ASSESSI NG OFFICER ISSUED SUMMONS U/S 131 OF THE INCOME TAX ACT TO MR. SULTAN MERCHANT AN D MR. BALBIR SINGH CHIBB. THE SUMMONS WERE SENT TO THE ADDRESS OF MR. BALBIR SING H CHIBB BUT IT COULD NOT BE SERVED AS IT WAS REPORTED BY THE INSPECTOR THAT NO SUCH PERSON IS RESIDING AT THIS ADDRESS FOR LAST SIX YEARS. IN THE CASE OF MR. SULT AN MERCHANT, IT WAS REPORTED THAT HE WAS OUT OF COUNTRY AND WILL BACK ONLY IN THE YEA R 2011. ACCORDINGLY THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE SE TWO PERSONS FOR CROSS EXAMINATION. THE ASSESSEE HAS REPLIED THAT THESE PA RTIES ARE WITNESS OF THE DEPARTMENT AND IT IS PRIMARY OBLIGATION OF THE DEPA RTMENT TO PRODUCE THE WITNESS FOR CROSS EXAMINATION. ACCORDINGLY THE ASSESSEE SUBMITT ED THAT IT IS NOT THE ASSESSEES OBLIGATION TO PRODUCE BOTH THE PARTIES BEFORE THE A SSESSING OFFICER. THE ASSESSING OFFICER DID NOT ACCEPT THE REPLY OF THE ASSESSEE AN D OBSERVE THAT MR. SULTAN MERCHANT IS THE PERSON WHO HAS GIVEN NINE AFFIDAVIT S WHICH WERE FOUND IN THE SHRI PERVEZ KHODAYAR RAISI 5 | P A G E PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARC H. SINCE THESE TWO PERSONS WERE NOT AVAILABLE AT THE ADDRESS AVAILABLE ON RECO RD, THEREFORE, AS PER THE ASSESSING OFFICER THE ASSESSEE SHOULD HAVE MADE EFF ORTS TO PRODUCE THEM INTERMS OF DIRECTION OF THIS TRIBUNAL TO THE ASSESSEE TO CO OPERATE WITH THE DEPARTMENT. THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED TO DISCHARGE HIS RESPONSIBILITY. CONSEQUENTLY THE ASSESSING OFFICER HAS REAFFIRMED T HE ADDITION OF RS. 4.5 CRORES AS LOAN GIVEN TO MR. SULTAN MERCHANT VIDE ASSESSMENT O RDER PASSED U/S 158BC/143(3) R.W.S 254 OF THE INCOME TAX ACT ON 31.12.2011. 4. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSES SING OFFICER BEFORE THE CIT()A. THE CIT(A) DELETED THE ADDITION ON THE GROU ND THAT THE ASSESSING OFFICER FAILED TO GIVEN THE OPPORTUNITY TO ASSESSEE TO CROS S EXAMINE MR. BALBIR SINGH CHIBB AND MR. SULTAN MERCHANT AS PER THE DIRECTIONS OF TR IBUNAL. 5. BEFORE US, THE LD DR HAS SUBMITTED THAT THOUGH T HE TRIBUNAL HAS RESTORED THE MATTER TO THE RECORD OF THE ASSESSING OFFICER FOR D ECIDING THE SAME AFRESH AFTER ALLOWING OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMI NE MR. BALBIR SING CHIBB AND MR. SULTAN MERCHANT, HOWEVER, WHEN NO STATEMENT WAS RECORDED BY THE ASSESSING OFFICER DURING THE BLOCK ASSESSMENT THEN THESE TWO PERSON ARE NOT THE WITNESS OF THE DEPARTMENT RATHER THE ASSESSEE HAS PRODUCED THE AFFIDAVIT OF THESE PERSONS IN SUPPORT OF HIS CLAIM. THEREFORE, IT WAS THE DUTY OF THE ASSESSEE TO PRODUCE THESE PERSONS BEFORE THE ASSESSING OFFICER. THE LD. DR HA S FURTHER CONTENDED THAT THE TRIBUNAL HAS ALSO DIRECTED THE ASSESSEE TO COOPERAT E WITH THE DEPARTMENT WHICH MEANS THAT IN CASE THE ASSESSING OFFICER COULD NOT SUMMON THESE TWO PERSONS FOR WANT OF THEIR AVAILABILITY AT THE GIVEN ADDRESSES, THE ASSESSEE WAS SUPPOSED TO MAKE THE EFFORTS TO PRODUCE THEM FOR THE PURPOSE OF CROSS EXAMINATION. HE HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MA DE THE ADDITION ON THE BASIS OF SEIZED MATERIAL AND STATEMENT OF THE ASSESSEE RECOR DED U/S 132(4) AND NOT ON THE SHRI PERVEZ KHODAYAR RAISI 6 | P A G E BASIS OF ANY STATEMENT OF THESE TWO PERSONS NAMELY MR. SULTAN MERCHANT AND MR. BALBIR SINGH CHIBB, THEREFORE, EVEN IF THERE IS NO EXAMINATION OR CROSS EXAMINATION OF THESE WITNESSES, IT IS IRRELEVANT FOR THE PURPOS E OF DECIDING THE ISSUE OF ADDITION ON ACCOUNT OF CASH LOAN OF RS. 4.5 CRORE GIVEN TO M R. SULTAN MERCHANT. THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS PLACED MUCH REL IANCE ON THE RETRACTION STATEMENT AND THE CIT(A) HAS ACCEPTED THE SAME BY O BSERVING IN PARA 9.6 OF THE IMPUGNED ORDER AS IT IS ALWAYS OPEN TO THE ASSESSE E TO RETRACT THE ASSESSEE FROM ANY SURRENDER WHICH WAS MADE IN ANY DURESS OR PRESS URE IF HE COULD PROVE THAT THE RETRACTION IS IN ORDER BECAUSE WHATEVER WAS SURREND ERED IS NOT OR WAS NOT THE FACT. THE LD. DR HAS SUBMITTED THAT THIS OBSERVATION OF T HE CIT(A) IS CONTRARY TO THE CLAIM MADE IN THE RETRACTION DATED 23.01.2003 WHER EIN THE ASSESSEE NOWHERE HAS STATED THAT STATEMENT RECORDED ON OATH U/S 132(4) W AS MADE BY THE ASSESSEE UNDER DURESS OR PRESSURE. THE LD. DR HAS FURTHER CO NTENDED THAT ONUS IS ON THE ASSESSEE TO PROVE THE CONTRARY TO THE EVIDENCE FOUN D DURING THE SEARCH. WHEN THERE IS A MATERIAL EVIDENCE SHOWING THE UNDISCLOSE D INCOME THEN AS PER THE EVIDENCE ACT THE PRESUMPTION IS RAISED AGAINST THE ASSESSEE ABOUT THE FACTS RECORDED IN THE EVIDENCE FOUND DURING THE SEARCH. T HE LD. DR HAS FURTHER CONTENDED THAT WHEN THE ADDITION IN QUESTION IS NOT BASED ON ANY STATEMENT OF THESE TWO PERSONS THEN THERE IS NO OBLIGATION ON TH E ASSESSING OFFICER TO MAKE AVAILABLE THESE PERSONS FOR CROSS EXAMINATION BY TH E ASSESSEE. THE ASSESSEE IS RATHER RELYING UPON THE AFFIDAVITS OF THESE PERSONS AND, THEREFORE, THE EXAMINATION OF THESE PERSONS IS REQUIRED BY THE ASSESSEE ONLY T O PROVE THE ASSESSEES VERSION AND NOT TO DISAPPROVE THE CASE OF THE DEPARTMENT. H E HAS FURTHER POINTED OUT THAT IN THE STATEMENT U/S 132(4), THE ASSESSEE HAS GIVEN AL L CORRECT FACTUAL INFORMATION WHICH IS NOT DISPUTED IN THE RETRACTION STATEMENT A ND, THEREFORE, THE RETRACTION STATEMENT DOES NOT NULLIFY THE STATEMENT RECORDED O N OATH U/S 132(4). IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF T HIS TRIBUNAL IN THE CASE OF HIRALAL SHRI PERVEZ KHODAYAR RAISI 7 | P A G E MAGANLAL & CO. VS. DCIT ( 96 ITD 113) . HE HAS ALSO RELIED UPON THE FOLLOWING DECISIONS. (I) RAMANLAL KACHARULAL TEJMAL VS. CIT ( 146 ITR 36 8) (II) DEWAM BAHADUR SETH GOPAL DAS MOHTA VS. THE UNI ON OF INDIA & ANR. (26 ITR 722) (SC) 6. LD. DR HAS POINTED OUT THAT WHEN NO ALLEGATION W AS MADE BY THE ASSESSEE IN THE RETRACTION STATEMENT THAT THE STATEMENT RECORDE D U/S 132(4) WAS GIVEN UNDER DURESS OR PRESSURE THEN THE ASSESSEE IS ESTOPPED FR OM TAKING THE CONTRARY STAND AS ADMITTED IN THE STATEMENT. THUS THE LD. DR HAS SUB MITTED THAT NON AVAILABILITY OF THESE TWO PERSONS RESULTING NON CROSS EXAMINATION B Y THE ASSESSEE DOES NOT AFFECT THE CASE OF THE DEPARTMENT WHEN THE ADDITION IN QUE STION WAS NOT BASED ON THE STATEMENT OF THESE TWO PERSONS. HE HAS RELIED UPON THE ORDERS OF ASSESSING OFFICER. 7. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE HAS SUBMITTED THAT IN THE FIRST ROUND OF LITIGATION THE TRIBUNAL HAS RESTORED THE MATTER TO THE RECORD OF THE ASSESSING OFFICER WITH SPECIFIC D IRECTION TO ALLOW THE ASSESSEE TO CROSS EXAMINE MR. SULTAN MERCHANT AND MR. BALBIR S INGH CHIBB. THE ASSESSING OFFICER HAS FAILED TO GIVE THE ASSESSEE OPPORTUNITY FOR CROSS EXAMINATION OF THESE TWO PERSONS, THEREFORE, AS OBSERVED BY THE TRIBUNAL , THE ADDITION OF RS. 4.5 CRORE ON ACCOUNT OF CASH LOAN IS NOT SUSTAINABLE FOR WANT OF CORROBORATIVE EVIDENCE. THE LD. AUTHORIZED REPRESENTATIVE HAS FURTHER SUBMITTED THA T THE REVENUE HAS CHALLENGED THE ORDER OF THIS TRIBUNAL IN THE FIRST ROUND BEFOR E THE HONBLE HIGH COURT BUT HAS NOT RAISED THE ISSUE PERTAINING TO THE RESTORATION OF T HE MATTER TO THE ASSESSING OFFICER AND GIVING AN OPPORTUNITY OF CROSS EXAMINATION TO T HE ASSESSEE. HE HAS REFERRED THE QUESTION ADMITTED BY THE HON'BLE HIGH COURT IN THE APPEAL FILED BY THE REVENUE AND SUBMITTED THAT NO SUCH QUESTION WAS RAISED IN THE A PPEAL OF THE REVENUE, THEREFORE, THE ASSESSING OFFICER IS BOUND TO COMPLY WITH THE D IRECTIONS OF THIS TRIBUNAL. HE HAS SHRI PERVEZ KHODAYAR RAISI 8 | P A G E FURTHER SUBMITTED THAT THE ASSESSEE CANNOT BE PUNIS HED FOR NON PRODUCTION OF THE PARTIES WHEN IT WAS DIRECTED BY THIS TRIBUNAL THAT THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THESE T WO PERSONS. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF BHOPAL SUGAR INDUSTRIES LTD. V. ITO ( 40 ITR 618 .). HE HAS FURTHER SUBMITTED THAT IN THE REMAND PROCEEDINGS THE SCOPE OF REMAND IS LI MITED AND THE ASSESSING OFFICER CANNOT ENLARGE IT. THE ASSESSMENT CANNOT BE MADE BE YOND THE SCOPE OF REMAND. THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO GIVE AN OPPORTUNITY TO CROSS EXAMINE MR. BALBIR SINGH CHIBB AND MR. SULTAN MERCHANT AND THEN DECIDE THE ISSUE, THEREFORE, WHEN THE ASSESSING OFFICER FAILED TO COM PLY WITH THE DIRECTION OF THIS TRIBUNAL THEN THE ADDITION IN QUESTION IS NOT SUSTA INABLE FOR WANT OF JURISDICTION OF THE ASSESSING OFFICER BEYOND THE SCOPE OF ORDER OF THIS TRIBUNAL. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HON BLE KOLKATA HIGH COURT IN THE CASE OF BASUDEO PRASAD AGARWALLA VS. ITO (180 ITR 388). THE LD. AUTHORIZED REPRESENTATIVE HAS FORCEFULLY CONTENDED THAT THE RE TRACTED STATEMENT CANNOT BE RELIED UPON FOR THE PURPOSE OF ADDITION IN THE BLOC K ASSESSMENT. FURTHER MERE NON COMPLIANCE OF SOMEONE/NON PRODUCTION OF PARTIES CAN NOT DEFEAT THE CLAIM OF THE ASSESSEE AS HELDBY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.ORBITAL COMMUNICATION (P) LTD. (327 ITR 560). IN THIS CASE THE ASSESSING OFFICER HAS MADE THE ADDITION ON ACCOUNT OF UNDISCLOSED INVESTM ENT IN THE SHAPE OF CASH LOAN GIVEN TO MR. SULTAN MERCHANT UNDER THE PROVISIONS O F SECTION 69 BUT NO ADDITION U/S 69 CAN BE MADE MERELY ON THE BASIS OF DECLARATIONS. THERE MUST BE INDEPENDENT AND CORROBORATIVE EVIDENCE TO STRENGTHEN THE REVENU ES/DEPARTMENT/S CASE THAT FUND HAS BEEN TRANSMITTED FROM ASSESSEE TO MR. SULT AN MERCHANT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HONB LE HIGH COURT IN THE CASE OF AUROBINDO SANITARY STORES VS. CIT (276 ITR 549) . HE HAS FURTHER CONTENDED THAT ADDITION IS NOT SUSTAINABLE BASED ON THE XEROX COPI ES OF DECLARATION SIGNED BY MR. SULTAN MERCHANT WHEN THERE IS NO CORROBORATIVE AND INDEPENDENT EVIDENCE TO SHRI PERVEZ KHODAYAR RAISI 9 | P A G E SUBSTANTIATE THE SAME. THERE IS NO RECEIPT OR OTHER ACKNOWLEDGEMENT FOUND NEITHER THE ASSESSEE SIGNED THESE DOCUMENTS NOR THEY ARE WI TNESSED BY ANY PERSON. THEREFORE, SOLELY ON THE BASIS OF SUCH TYPE OF DOCU MENT ADDITION CANNOT BE MADE. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THA T THE ASSESSING OFFICER WAS AWARE OF THE WHEREABOUTS OF MR. BALBIR SINGH CHIBB AS HE HAS RECORDED IN THE ORIGINAL BLOCK ASSESSMENT THAT MR. BALBIR SINGH CHI BB IS RUNNING A BAKERY SHOP AND A MEDICAL SHOP AND HIS ANNUAL INCOME IS RS. 1.8 LAC S. THEREFORE, THE ASSESSING OFFICER CANNOT SHIFT HIS OWN BURDEN OF PRODUCING TH ESE TWO PERSONS FOR ALLOWING THE ASSESSEE TO CROSS EXAMINE. THE LD. AUTHORIZED REPRE SENTATIVE HAS SUBMITTED THAT PHOTOCOPIES OF THE AFFIDAVITS FOUND DURING THE SEAR CH CANNOT BE ADMITTED AS EVIDENCE AND NO PRESUMPTION CAN BE RAISED AGAINST T HE ASSESSEE AS THE PROVISIONS OF EVIDENCE ACT ARE NOT APPLICABLE IN THE INCOME TA X PROCEEDINGS. HE HAS FURTHER CONTENDED THAT THE CIT(A) HAS PASSED TWO REMAND ORD ERS GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO PRODUCE THESE TWO PERSONS FOR CROSS EXAMINATION BY THE ASSESSEE BUT DESPITE THE TWO REMAND ORDERS, THE ASS ESSING OFFICER FAILED TO DISCHARGE HIS DUTY AND COMPLY WITH THE DIRECTIONS O F THIS TRIBUNAL. HE HAS RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN T HE CASE OF CIT VS. S. KHADER KHAN SON (300 ITR 157) WHICH HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT . THUS THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSES SEE HAS SUBMITTED THAT THE STATEMENT RECORDED U/S 132(4) HAS BEEN RETRACTED BY THE ASSESSEE ON THE VERY NEXT DAY, THEREFORE, THE SAID STATEMENT CANNOT BE RELIED UPON IN THE ABSENCE OF ANY INDEPENDENT AND COGENT EVIDENCE TO CORROBORATE THE SAME. HE HAS RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS. UTTAMCHAND JAIN (320 ITR 455). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE CORE ISSUE BEFORE US IS THE SUSTAINABIL ITY OF THE ADDITION OF RS. 4.5 CRORE SHRI PERVEZ KHODAYAR RAISI 10 | P A G E MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCL OSED INVESTMENT IN THE SHAPE OF CASH LOAN GIVEN TO MR. SULTAN MERCHANT. DURING T HE COURSE OF SEARCH APART FROM CASH AND OTHER INCRIMINATING MATERIALS/RECORD, NINE AFFIDAVITS WERE FOUND. AS PER THESE NINE AFFIDAVITS THE DECLARATION WERE MADE BY SHRI SULTAN MERCHANT REGARDING THE CASH LOAN OF RS. 4.5 CRORES FROM THE ASSESSEE. THE DETAILS OF THESE NINE AFFIDAVITS ARE REPRODUCED BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT IN PARA 50 AS UNDER:- PAGE NO. NOTARYPUBLIC'S RECORD DATE AMOUNT 17 3759 30.8.1999 RS.50 LAKHS 18 3760 30.8.1999 RS. 50LAKHS 19 3761 3.0;8.1999 RS.50 LAKHS 20 3795 30.8.1999 RS.50 LAKHS 21 3796 30.8.1999 RS.50 LAKHS 22 3800 30.8.1999 RS.50 LAKHS 23 3799 30.8.1999 RS.50 LAKHS . 24 3798 30.8.1999 RS.50 LAKHS 25 3797 30.8.1999 RS.50 LAKHS 9. THE STATEMENT OF THE ASSESSEE WAS RECORDED U/S 1 32(4) OF THE INCOME TAX ACT DURING THE COURSE OF SEARCH & SEIZURE PROCEEDIN GS. IN THE SAID STATEMENT THE ASSESSEE HAS ADMITTED THAT THESE AFFIDAVITS PERTAIN ED TO THE CASH LOAN GIVEN TO MR. SULTAN MERCHANT. THERE IS NO DISPUTE THAT THE ASSES SEE CONFIRMED THE CASH LOAN OF RS. 4.5 CRORE AND THE TRANSACTION RECORDED IN THE A FFIDAVITS WERE ADMITTED BY HIM IN THE STATEMENT RECORDED U/S 132(4). SUBSEQUENT TO TH E SAID STATEMENT U/S 132(4), THE ASSESSEE THOUGH RETRACTED THE EARLIER STATEMENT VIDE LETTER DATED 23.01.2003 WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER WHI LE FRAMING THE BLOCK ASSESSMENT AND MADE THE ADDITION OF THE SAID AMOUNT OF RS. 4.5 CRORE AS UNEXPLAINED INVESTMENT. IN THE FIRST ROUND OF LITIG ATION THE TRIBUNAL ACCEPTED THE REQUEST OF THE ASSESSEE FOR CROSS EXAMINATION OF MR . SULTAN MERCHANT AND MR. SHRI PERVEZ KHODAYAR RAISI 11 | P A G E BALBIR SINGH CHIBB AND ACCORDINGLY RESTORED THIS IS SUE TO THE RECORD OF THE ASSESSING OFFICER IN PARA 14 AS UNDER:- 14 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDER ED THEM CAREFULLY. WE HAVE HAVE ALSO PERUSED THE RELEVANT MATERIAL AND THE SUB MISSIONS OF THE LD AR AND FOUND THAT THIS MATTER NEEDS RE-VERIFICATION. NO DOUBT, 9 DOCUMENTS WERE FOUND BY WHICH IT WAS FOUND THAT THE ASSESSEE HAS GIVEN A CASH LOAN O F RS.50 LACS EACH TO ONE MR SULTAN MERCHANT. THOSE DOCUMENTS WERE PHOTOCOPY OF THE ORIGINAL AFFIDAVITS. THERE WAS NO SIGNATURE OF THE ASSESSEE ON THOSE AFFIDAVI TS. NEITHER ANY WITNESS IS THERE. IT IS FURTHER SEEN THAT A AS SALE AGREEMENT WAS EXE CUTED FOR SALE OF PROPERTY AT 113- A, IRLA LANE, S.V. ROAD, VILE PARLE (W) MUMBAI TO S HRI BALBIR SINGH CHIBB FOR CONSIDERATION OF RS. 4.50. AS PER TERMS OF MOU, PAY MENT WAS TO BE MADE IN 9 INSTALLMENTS OF RS. 50 LACS EACH WITHIN SIX MONTHS OF THE DATE OF MOU AND SHRI SULTAN MERCHANT SHALL PROVIDE 3RD PARTY COLLATERAL SECURITY. MR BAL SINGH CHIBB AGREED FOR THIS SECURITY AND ALSO AGREED TO GRVE 9 POST DATED CHEQUES AS COLLATERAL SECURITY. THIS MOU WAS NOT FOUND DURING THE COURSE OF SEARCH, HOWEVER, THE ASSESSEE HAS STATED THAT IT WAS AVAILABLE BUT IT WA S NOT SEIZED. IT IS ALSO SEEN THAT THE STATEMENT OF M.R CHIBB RECORDED BY THE AO. HOWE VER THE ASSESSEE WAS NOT CONFRONTED WITH THE STATEMTN BY SUPPLYING A COPY O F THE SAME OR PROVIDING AN OPPORTUNITY TO CROSS EXAMINATION. NEITHER MR S MERC HANT WAS CONTACTED TO ASCERTAIN THE FACTUAL ASPECT THAT WHETHER HE HAD TAKEN ANY CA SH LOAN FROM THE ASSESSEE OR NOT. THOUGH AT ONE STAGE THE ASSESSES HAS STATED TH AT HE HAS GIVEN CASH LOAN TO A FRIEND PUT IMMEDIATELY AFTER ONE DAY THE SSESSEE 'H AS RETRACTED THAT DUE TO INADVERTENT THIS STATEMENT WAS GIVEN. HOWEVER, THE FACTS REMAIN THAT THERE WAS A MOU AND THE DEAL WAS NOT MATERIALIZED; THEREFORE, N EITHER ANY CHEQUE WAS TAKEN FROM MR CHIIB. MERELY ON THE BASIS OF ADMISSION THA T HE HAS GIVEN CASH LOAN, ADDITION CANNOT BE MADE IF THERE IS NO CORROBORATIV E EVIDENCE FOUND OR GATHERED. THEREFORE, IN OUR CONSIDERED VIEW, THIS MATTER NEED S RE-VERIFICATION AT THE END OF THE AO. ACCORDINGLY, WE RESTORE THIS ISSUE TO THE FILE OF THE AO TO EXAMINE THE FACTUAL POSITION AND DECIDE THE SAME AFRESH AFTER ALLOWING OPPORTUNITY TO CROSS EXAMINE MR CHIBB AND MR MERCHANT. THE AO IS FREE TO CALL MR ME RCHANT FOR ASCERTAIN THE FACTUAL POSITION. THE ASSESSEE IS EXPECTED TO COOPERATE WIT H THE DEPARTMENT. IN VIEW OF THESE FACTS AND CIRCUMSTANCE, WE RESTORE THIS ISSUE TO THE FILE OF THE AO TO PASS A FRESH ORDER Y' IN THE LIGHT OF THE ABOVE DIRECTIONS . WE ORDER ACCORDINGLY . 10. THE MATTER WAS REMANDED TO ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER ALLOWING OPPORTUNITY TO CROSS EXAMINE MR. SUL TAN MERCHANT AND MR. BALBIR SINGH CHIBB. IT WAS ALSO EXPLAINED BY THE TRIBUNAL THAT THE ASSESSING OFFICER IS FREE TO CALL MR. SULTAN MERCHANT FOR ASCERTAINING THE FA CTUAL POSITION. THE ASSESSEE WAS SHRI PERVEZ KHODAYAR RAISI 12 | P A G E ALSO EXPECTED TO COOPERATE WITH THE DEPARTMENT. SIN CE THE MATTER WAS RESTORED TO THE ASSESSING OFFICER WITH THE DIRECTION TO ALLOW O PPORTUNITY TO CROSS EXAMINE THESE TWO PERSONS BY THE ASSESSEE, THEREFORE, THE ASSESSI NG OFFICER IN THE REMAND PROCEEDINGS WAS BOUND TO COMPLY WITH THE DIRECTIONS OF THIS TRIBUNAL. THE QUESTION ARISES IS WHETHER ON FAILURE ON THE PART OF THE ASS ESSING OFFICER TO BRING THESE PERSONS AVAILABLE FOR CROSS EXAMINATION BY THE ASSE SSEE WOULD AUTOMATIC CEASE THE JURISDICTION OF ASSESSING OFFICER TO PROCEED WI TH THE REMAND PROCEEDINGS. IT IS PERTINENT TO NOTE THAT IN THE ORIGINAL BLOCK ASSESS MENT THE ASSESSING OFFICER HAS NOWHERE STATED THAT THE STATEMENT OF MR. BALBIR SIN GH CHIBB AND MR. SULTAN MERCHANT WAS RECORDED BY HIM OR WERE RELIED UPON FO R THE PURPOSE OF ADDITION OF RS. 4.5 CRORES. THE ONLY REFERENCE IN RESPECT OF M R. BALBIR SINGH CHIBB IS MADE BY THE ASSESSING OFFICER WHILE REJECTING THE CONTENTIO N OF THE ASSESSEE THAT THESE AFFIDAVITS WERE RECEIVED BY THE ASSESSEE FROM SHRI SULTAN MERCHANT IN PURSUANCE TO THE MOU AS A COLLATERAL SECURITY. THE CONTENTION OF THE ASSESSEE AND REJECTION OF THE SAME ARE RECORDED BY THE ASSESSING OFFICER IN T HE BLOCK ASSESSMENT IN PARA 52 AND 53 AS UNDER:- 52. HOWEVER AS PER THE ASSESSEE THESE AFFIDAVITS ARE THE PART OF MOU FOR SALE OF PROPERTY AT 113-A, IDA LANE, S.Y. ROAD, VILE PARLE (WEST), MUMBAI 57 TO SHRI BALBIR SINGH CHIBB FOR A CONSIDERATION OF RS.4.50 CRORES. AS PER ASSESSEE THE DECLARATION RECEIVED BY THE ASSESSEE FROM SHRI SULTAN MERCHANT ARE IN PURSUANCE TO THE SAID AGREEMENT AND A COPY OF THE SAID AGREEMENT WAS AVAI LABLE IN THE PREMISES AT LAXMI BUILDING, WHERE THE DEPARTMENT HAD CARRIED OU T PROCEEDINGS U/S. 132. THE ASSESSEE FURTHER STATES DURING THE COURSE. OF RECOR DING OF STATEMENT U/S. 132(4), IN RESPONSE TO THE QUESTION POSED WITH REFERENCE TO TH E AFORESAID PAPERS, HE HAD GIVEN A PLAIN REPLY THAT THESE PAPERS PERTAIN TO TH E CASH LOAN GIVEN. THE STATEMENT GIVEN BY HIM THEN WAS IN A TIRED AND FATIGUED STATE OF MIND AND ESPECIALLY SO SINCE THE AGREEMENT WAS THEN NOT FOUND. 53. THE CONTENTION OF THE ASSESSEE CLEARLY REFLECTS AN AFTER THOUGHT ON THE FOLLOWING REASONS: 1. NO SUCH MOU AS CLAIMED BY THE ASSESSEE WAS FOUN D FROM THE BUSINESS PREMISES OF THE ASSESSEE AT THE TIME OF SE ARCH. SHRI PERVEZ KHODAYAR RAISI 13 | P A G E 2. MOU MERELY MEANS MEMORANDUM OF UNDERSTANDING ARR IVED AT BY THE PARTIES TO THE MOU. IT IS NOT A SPECIFIC CONTRACT O R PERFORMANCE OF AGREEMENT. NO PROPERTY OR ASSETS HAVE PASSED BETWEE N THE PARTIES TO THE MOU AND THESE APPEARS TO BE NO REASON WHY ANY S ECURITIES IN THE NATURE OF CASH LOAN WAS GIVEN AS STATED BY THE ASSE SSEE. 3. HOWEVER NO POSSESSION IS GIVEN, NO TOKEN MONEY IS GIVEN WITHOUT THIS WHY A PERSON WILL UNDERTAKE COLLATERAL SECURITY WIT HOUT ANY BENEFIT COMING TO PURCHASING PARTY. 4. EVEN NON-DETECTION OF THE SO CALLED MOU CANNOT LEAD THE ASSESSEE TO STATE THAT THESE REPRESENT THE CASH LOAN ADVANCED B Y HIM WHEN HE ONLY WAS KNOWING THE SO CALLED PURPOSE OF EXECUTION OF THE SAID AFFIDAVITS. 5. WHEN PROPERTY IS BEING SOLD TO MR. BALBIR SINGH CHIBB THEN IT IS NOT POSSIBLE THAT MR. SULTAN MERCHANT WILL EXECUTE THE AFFIDAVITS. IT MIGHT HAD SERVED THE SAME PUR RPOSE IF MR. BALBIR SINGH C HIBB HAD SIGNED ALL SUCH AFFIDAVITS INSTEAD OF MR. SULLTAN MERCHANT . RATHER IT MIGHT HAD BEEN MORE LOGICAL LOOKING FROM THE POINT OF VIEW TH AT MR. BALBIR SINGH CHIBB IS CLAIMED TO BE THE PROSPECTIVE BUYER OF THE SAID PROPERTY THEN HE MIGHT BE HAVING SUFFICIENT SOND FINANCIAL BACKIN G VIS A VIS MR. SULTAN MERCHANT WHO IS NO WAY CONCERNED TO THE WHOL E DEAL. 6. THE WORDING OF AFFIDAVITS ARE CRYSTAL CLEAR TH AT CASH LOAN OF RS. 4.50 CRORE ARE GIVEN AND NO WHERE THERE IS ANY MENTION O F SAID PROPERTY OF MR. BALBIR SINGH CHIBB. 7. MR. BALBIR SINGH IS RUNNING BAKERY SHOP AND MED ICAL SHOP AT JOGESHWARI (E) SINCE 1987 AND HIS ANNUAL INCOME IS RS. 1.80 LAKH. 11. AS PER POINT NO. 7 OF PARA 53, THE ASSESSING OF FICER STATED THAT MR. BALBIR SINGH CHIBB IS RUNNING BAKERY SHOP AND MEDICAL SHOP AT JOGESHWARI (E) SINCE 1987 AND HIS ANNUAL INCOME IS RS. 1.80 LAKH. THIS REFERE NCE OF THE FINANCIAL POSITION AND ANNUAL INCOME OF MR. BALBIR SINGH CHIBB IS ONLY IN RESPECT OF DISBELIEVING THE ALLEGED MOU FOR TRANSFER OF PROPERTY BY THE ASSESSE E TO THE MR. BALBIR SINGH CHIBB FOR A CONSIDERATION OF RS. 4.5 CRORES. THERE ARE NO OTHER AVERMENTS OR CONTENTS OR ANY OTHER OBSERVATION OF THE ASSESSING OFFICER IN T HE BLOCK ASSESSMENT TO INDICATE ANY STATEMENT OF SHRI BALBIR SINGH CHIBB HAS EVER B EEN RECORDED BY THE ASSESSING OFFICER. THEREFORE, THE FACT OF NON ALLOWING THE CR OSS EXAMINATION OF MR. BALBIR SINGH CHIBB IS ONLY TO THE EXTENT THAT HIS FINANCIA L STATUS AND INCOME AS STATED IN SHRI PERVEZ KHODAYAR RAISI 14 | P A G E PARA 53 CANNOT BE CONSIDERED AS A PROVEN FACT. THE ASSESSING OFFICER ITSELF HAS MENTIONED THAT SHRI SULTAN MERCHANT IS NOT A PARTY TO THE MOU, THEREFORE, THE INFERENCE DRAWN BY THE ASSESSING OFFICER IS BASED O N THE MOU AND NOT BASED ON ANY STATEMENT OF MR. SULTAN MERCHANT. THIS INFERENC E AND OBSERVATION OF THE ASSESSING OFFICER THAT MR. SULTAN MERCHANT WAS NOT PARTY TO THE MOU CAN BE EXAMINED IN THE LIGHT OF THE CONTENTS OF THE MOU IT SELF. IT IS THE ASSESSEE WHO HAS RELIED UPON THE MOU WITH SHRI BALBIR SINGH CHIBB AN D TRIED TO EXPLAIN THE AFFIDAVITS FOUND DURING THE SEARCH ARE IN RELATION TO THE SAID MOU. TO SUBSTANTIATE ITS STAND THAT THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT DATED 23.04.2003 OF MR. BALBIR SINGH CHIBB. THUS SHRI BALBIR SINGH CHIBB WAS PROJECTED A S A WITNESS OF THE ASSESSEE IN SUPPORT OF ASSESSEES CLAIM THAT THERE WAS AN MOU B ETWEEN THE ASSESSEE AND MR. BALBIR SINGH CHIBB AND THE AFFIDAVITS FOUND DURING THE SEARCH WERE GIVEN ONLY IN CONNECTION WITH THE SAID MOU AS A COLLATERAL SECURI TY. THOUGH FROM THE UNDISPUTED FACT AS PER THE RECORD MR. BALBIR SINGH CHIBB WAS W ITNESS OF THE ASSESSEE AND NOT OF THE DEPARTMENT, THEREFORE, AS PER THE STANDARD R ULE OF PROCEDURE ON EXAMINATION OF WITNESS THE BURDEN AND ONUS IS ON THE PARTY TO P RODUCE THE WITNESS WHO HAS RELIED ON THE STATEMENT OF THE WITNESS TO SUPPORT OF CASE AND OTHER PARTY WOULD HAVE A RIGHT TO CROSS EXAMINE THE WITNESS PRODUCED BY SUCH PARTY. THOUGH THE TRIBUNAL IN THE EARLIER ROUND DIRECTED THE ASSESSIN G OFFICER TO ALLOW THE ASSESSEE OPPORTUNITY TO CROSS EXAMINE THESE TWO PERSONS, HOW EVER, BECAUSE OF NON CROSS EXAMINANATION OF THESE TWO PEOPLE BY THE ASSESSEE W OULD NOT RESULT THE DEMOLITION OF THE CASE OF THE ASSESSING OFFICER THAT WAS NOT T HE BASE ON ANY OF THE STATEMENT OF THESE TWO PERSONS. ALTHOUGH THE ASSESSING OFFICE R MADE THE POSSIBLE EFFORTS TO SUMMON THESE TWO PERSONS BUT DUE TO NON AVAILABILIT Y OF THESE TWO PERSONS AT THE GIVEN ADDRESS AND ONE WAS FOUND OUT OF INDIA IT WAS NOT POSSIBLE TO PRODUCE THE SAME FOR CROSS EXAMINATION BY THE ASSESSEE. ACCORDI NGLY THE MATTER HAS TO BE EXAMINED IN THE CONTEXT OF THE EVIDENCE/MATERIAL FO UND DURING THE SEARCH & SEIZURE ACTION WITHOUT CONSIDERING ANY OTHER STATEMENT OR I NFORMATION IN RESPECT OF THESE SHRI PERVEZ KHODAYAR RAISI 15 | P A G E TWO PERSONS NAMELY MR. SULTAN MERCHANT AND MR. BAL BIR SINGH CHIBB AS THESE TWO PERSONS WERE NEITHER EXAMINED NOR CROSS EXAMINED IN THE CONTEXT OF THIS CASE AND PARTICULARLY ON THE ISSUE OF CASH LOAN OF 4.5 CRORE . 12. THE FIRST ASPECT IS REGARDING RETRACTION OF THE STATEMENT MADE U/S 132(4) BY THE ASSESSEE BY FILING A LETTER DATED 23.01.2003. T HERE IS NO DISPUTE THAT THE ASSESSEE IN THE SAID STATEMENT RECORDED U/S 132(4) CONFIRMED AND ADMITTED THE LOAN AMOUNT OF RS. 4.5 CRORE TO MR. SULTAN MERCHANT AS IT WAS RECORDED IN THOSE NINE AFFIDAVITS FOUND DURING THE COURSE OF SEARCH. IN THE RETRACTION VIDE LETTER DATED 23.01.2003 THE ASSESSEE HAS STATED AS UNDER:- DURING THE COURSE OF ACTION UNDER SECTION 132 OF T HE INCOME TAX ACT, 1961 ON 21- 01-2003, YOU HAD SEIZED CERTAIN LOOSE PAPER AT FIRS T FLOOR, FALLING ON THE LEFT SIDE OF STAIRCASE.LAXRNI BUILDING, GRANT ROAD, MUMBAI. SOME OF THE PAPERS SEIZED PERTAIN TO A DECLARATION GIVEN BY SHRI SULTAN MERCHANT, 2. DURING THE COURSE OF RECORDING OF MY STATEMENT O N OATH UNDER SECTION 132(4), I WAS CALLED UPON TO EXPLAIN THE SAID PAPER AND DOCUM ENTS, IN THIS CONNECTION I HAVE TO SUBMIT AS UNDER : (A) I IN A CONFUSED AND TIRED STATE OF MIND GAVE TH E STATEMENT RECORDED ON OATH UNDER SECTION 132(4) AND I HAVE TO STATE THAT I WAS UNDER TERRIBLE TENSION AND PRESSURE. I AM SUFFERING FROM A NUMBER OF DISEASE L IKE HYPER TENSTION, EN11ARGED HEART ETC. DURING THE COURSE OF SEARCH, AS YOU ARE WELL AWARE, I HAD TAKEN REPEATED DOSES OF MEDICINES TO KEEP MY BLOOD -PRESSURE UNDER CONTROL. DUE TO THE INTAKE OF THE MEDICINES AND PHYSICAL FATIGUE. I WAS MENTALLY NOT ALERT AND AGILE TO ANSWER TRULY AND FULLY THE CONTENT OF THE SEIZED DOCUMENTS. 13. IT IS CLEAR FROM THE RETRACTION STATEMENT THAT THE ASSESSEE HAS STATED THAT HE WAS IN A CONFUSED AND TIRED STATE OF MIND WHEN THE STATEMENT U/S 132(4) WAS RECORDED. THERE IS NO ALLEGATION IN THE RETRACTION STATEMENT VIDE LETTER DATED 23.01.2003 THAT THE STATEMENT U/S 132 (4) WAS RECOR DED UNDER DURESS OR ANY COERCION. FURTHER THE ASSESSEE HAS NEITHER DENIED T HE FACT RECORDED IN THE STATEMENT U/S 132(4) NOR HAS BROUGHT OUT OR STATED THE CORRECT FACT IF ANY IN THE RETRACTION STATEMENT. THUS IT IS CLEAR THAT IN THE RETRACTION STATEMENT EXCEPT EXPLAINING THE STATE OF MIND AND HEALTH, THE ASSESS EE HAS NOT STATED THAT THE FACTS STATED IN THE SAID STATEMENT U/S 132(4) ARE NOT COR RECT AND THE CORRECT FACTS ARE SHRI PERVEZ KHODAYAR RAISI 16 | P A G E EXPLAINED IN THE RETRACTION STATEMENT. THERE IS NO AMBIGUITY ABOUT THE PURPOSE OF THE DECLARATION IN THE SAID AFFIDAVITS OF MR. SULT AN MERCHANT AS IT WAS CASH LOAN, THE ASSESSEE HAS NOT MENTIONED IN HIS STATEMENT RECORDE D U/S 132(1) OR IN THE RETRACTION STATEMENT ANYTHING ABOUT THE MOU WHICH I S MAIN DEFENSE IN THE ASSESSMENT PROCEEDINGS. THEREFORE, THE SAID RETRACT ION STATEMENT VIDE LETTER DATED 23.01.2003 IS VERY VAGUE AND IT DOES NOT DISPUTE TH E FACTS STATED IN THE STATEMENT U/S 132(4). ACCORDINGLY THE SAID RETRACTING STATEME NT DOES NOT OBLITERATE THE EVIDENTIARY VALUE OF THE STATEMENT MADE U/S 132(4) WHICH UNAMBIGUOUS AND SPECIFIC ON THE FACTS AND DULY CORROBORATED BY THE AFFIDAVITS FOUND OR SEIZED DURING THE SEARCH. 13. TURNING TO THE MEMORANDUM OF UNDERSTANDING (MOU ) AND THE EXPLANATION OF THE ASSESSEE THAT THESE AFFIDAVITS WERE GIVEN AS A COLLATERAL SECURITY ON BEHALF OF MR. BALBIR SINGH CHIBB AGAINST THE TRANSACTION OF T RANSFER OF PROPERTY BEARING NO. 130A, IRLA LANE, VILE PARLE (W), MUMBAI, BY THE ASS ESSEE TO MR. BALBIR SINGH CHIBB. FOR READY REFERENCE AND BETTER UNDERSTANDING WE REP RODUCE THE CONTENTS OF MOU AS UNDER:- THIS MEMORANDUM OF UNDERSTANDING MADE AT BOMBAY O N 19 TH DAY OF JUNE, 1999 IN BETWEEN PERVEZ K. RAISI, AGED 45 YEAR S RESIDING AT A-8, RUSTOM BAUG, SANT SAVATA MARG, BYCULLA, BOMBAY 400 027 ( WHICH EXPRESSIN SHALL UNLESS REPUGNANT TO CONTEXT BE DEEMED TO INCLUDE HIS SUCCE SSORS AND ASSIGNS) OF THE ONE PART; AND MR. BALBIR SINCH CHIBB, AGED 41 YEARS, RE SIDING AT 307, DHOLAKIA APARTMENT, S.V.P. ROAD, ANDHERI (EAST) BOMBAY ( WHI CH EXPRESSION SHALL UNLESS REPUGNANT TO CONTEXT, BE DEEMED TO INCLUDE HIS SUCC ESSORS AND ASSIGNS OF THE OTHER PART; AND WHEREAS THE PARTY OF THE ONE PART IS THE OWNER AND OCCUPANT OF IMMOVABLE PROPERTY AT 113-A, IRLA LANE, S.V. ROAD, VILE PARLE (WEST), BOMBAY 400 057 MORE PARTICULARLY DESCRIBED IN THE SCHEDULE ANNEXED HERE TO (HEREINAFTER REFERRED TO AS THE SAID PROPERTY) SHRI PERVEZ KHODAYAR RAISI 17 | P A G E WHEREAS THE PARTY OF THE FIRST PART IS DESIROUS OF SELLING THE SAID PROPERTY ON AS IS WHERE IS CONDITION. WHEREAS THE PARTY OF THE OTHER PART IS DESIROUS OF PURCHASING THE SAID PROPERTY FROM THE PARTY OF ONE PART. AND WHEREAS THE PARTIES TO THE MEMORANDUM OF AGREEM ENT ARE DESIROUS OF RECORDING THE TERMS AND CONDITIONS TO GIVE EFFEC T TO THE SALE OF THE SAID PROPERTY. NOW IT IS MUTUALLY AGREED BY AND BETWEEN THE PARTIE S AS FOLLOWS: (1) SUBJECT TO THE TERMS AND CONDITIONS OF THIS MEM ORANDUM OF UNDERSTANDING, THE PARTY OF THE FIRST PART AGREES T O SELL TO THE PARTY OF THE OTHER PART THE SAID PROPERTY SUBJECT TO THE SPECIFI C UNDERSTANDING AND CONDITION THAT THE PARTY OF THE OTHER PART PAYS AND DELIVERS TO THE PARTY OF THE ONE PART THE ENTIRE CONSIDERATION AS AGREED AND RECORDED HEREIN UNDER; (2) THE PARTY OF THE OTHER PART AGREES TO PAY A CON SIDERATION OF RS. 4,50,00,000/- (RUPEES FOUR CRORES FIFTY LAKHS ONLY) IN NINE EQUAL INSTALLMENTS OF RS. 50,00,000/- (RUPEES FIFTY LAKHS ONLY) WITHIN A PERIOD OF SIX MONTHS. (3) THIS MEMORANDUM OF UNDERSTANDING SHALL BE GIVEN EFFECT TO ONLY AFTER THE PARTY OF THE OTHER PART MAKES PAYMENT OF TWO INSTAL LMENTS BY 30.09.1999. (4) THE PARTY OF THE OTHER PART SHALL ALSO PROVIDE THIRD PARTY COLLATERAL SECURITY. (5) THE PARTY OF THE OTHER PART HAS OFFERED TO GIVE COLLATERAL SECURITY THROUGH HIS FRIEND MR. SULTAN MERCHANT AND THE PARTY OF THE ONE PART HAS AGREED TO ACCEPT THE SECURITY REFERRED TO HEREINABOVE OF MR. SULTAN MERCHANT. THE PARTY OF THE OTHER PARTY AND MR. SULTAN MERCHANT HA VE AGREED TO GIVE NINE POST DATED CHEQUES OF RS. 50,00,000/- (RUPEES FIFTY LAKHS ONLY) EACH ALONGWITH NINE PROMISSORY NOTES ON STAMP PAPER STA TING THEREIN THAT THE PARTY OF ONE PART HAS GIVEN A FRIENDLY LOAN TO MR. SULTAN MERCHANT. (6) IT IS SPECIFICALLY UNDERSTOOD THAT TIME IS ESSE NCE OF THIS UNDERSTANDING AND IN CASE THE PARTY OF THE OTHER PART FAILS TO MAKE T HE PAYMENT OF THE TWO INSTALLMENTS BY 30.09.1999 AND THE BALANCE AMOUNT O F INSTALLMENTS WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF HIS UNDERST ANDING, THE PARTY, OF THE FIRST PART SHALL BE ENTITLED TO TREAT THIS UNDE RSTANDING AS CANCELLED AND TERMINATED. (7) THE PARTIES TO THIS UNDERSTANDING AGREE THAT TH E PARTY OF THE OTHER PART SHALL BE ENTITLED TO POSSESSION AND OCCUPATION OF T HE PREMISES ONLY AFTER THE PARTY OF THE OTHER PART MAKES THE ENTIRE PAYMEN T OF CONSIDERATION AS STATED HEREINABOVE; (8) THE PARTY OF THE ONE PART ON RECEIPT OF THE ENT IRE CONSIDERATION AGREES TO ENTER INTO THE AGREEMENT FOR SALE AND EXECUTE ALL S UCH NECESSARY DOCUMENTS AS MIGHT BE REQUIRED BY THE PARTY OF THE OTHER PART TO GIVE EFFECT TO THE SALE OF THE SAID PROPERTY; SHRI PERVEZ KHODAYAR RAISI 18 | P A G E (9) IT IS SPECIFICALLY UNDERSTOOD THAT IN CASE THE ENTIRE CONSIDERATION AS AGREED TO IS NOT PAID BY THE PARTY OF THE OTHER PAR T, NO PART OF THIS UNDERSTANDING SHALL BE TREATED AS GIVING RISE TO AN Y RIGHT, TITLE OR INTEREST OF WHATSOEVER NATURE IN FAVOUR OF THE PARTY OF THE OTHER PART. 14. THIS MEMORANDUM IS NOTHING BUT THE EXPRESSION O F DESIRE OF THE ASSESSEE TO SELL HIS PROPERTY AND SIMILARLY THE OTHER PARTY HAS EXPRESSED HIS DESIRE TO PURCHASE THE PROPERTY. THIS MOU DOES NOT CREATE ANY RIGHT OR OBLIGATION ON THE PARTIES MUCH LESS THE LEGAL AND ENFORCEABLE RIGHT OR OBLIGATION TO BE PERFORMED IN RESPECT OF PARTIES. THEREFORE, WHEN NO RIGHT IS CREATED IN THE SAID MOU THEN AT THE TIME OF THIS MOU THERE IS NO REQUIREMENT OF ANY THIRD PARTY COLL ATERAL SECURITY. MOREOVER WHEN THERE IS NO TRANSFER OF PROPERTY OR ANY RIGHT IN TH E IMMOVABLE PROPERTY THEN PROVIDING THE COLLATERAL SECURITY IS BEYOND ANY STRETCH OF IM AGINATION OF SUCH REQUIREMENT. EVEN OTHERWISE IF FOR THE SAKE OF ARGUMENT IF IT IS PRESUMED THAT THE MOU AND AFFIDAVITS/DECLARATIONS GIVEN BY MR. SULTAN MERCHAN T ARE SIMULTANEOUS AND CONNECTED WITH THE TRANSACTION OF SALE AND PURCHASE OF PROPERTY THEN THE AFFIDAVITS OUGHT TO HAVE MANIFESTED THE PURPOSE OF SUCH DECLAR ATION AS COLLATERAL SECURITY IN RESPECT OF THE TRANSFER OF PROPERTY UNDER MOU AND NOT FOR CASH LOAN. THERE IS NO SUCH FACT EVEN REMOTELY CONNECTED WITH MOU AS HAS B EEN STATED IN THE AFFIDAVITS. THEREFORE, THE EXPLANATION OF THE ASSESSEE AS WELL AS MOU MILITATE WITH THE SURROUNDING CIRCUMSTANCES AND UNDISPUTED FACT OF EX ECUTION OF AFFIDAVITS FOUND DURING THE SEARCH. 15. THE ASSESSEE NEVER DISPUTED THE EXISTENCE OF NI NE AFFIDAVITS AND DECLARATION BY MR. SULTAN MERCHANT EVEN THE CONTENTS OF THE AFF IDVATIS WERE ADMITTED BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4). THER EFORE, THE EXPLANATION OF THE ASSESSEE IS AGAINST PREPONDERANCE OF PROBABILITY KE EPING IN VIEW OF THE MATERIAL EVIDENCE FOUND DURING THE SEARCH. THE ADDITION IN Q UESTION HAS BEEN MADE BY THE ASSESSING OFFICER DURING THE BLOCK ASSESSMENT BASED ON THE STATEMENT RECORDED SHRI PERVEZ KHODAYAR RAISI 19 | P A G E U/S 132(4) WHICH HAS BEEN DULY CORROBORATED BY THE COGENT MATERIAL IN THE FORM OF UNDISPUTED EXISTENCE OF AFFIDAVITS. THEREFORE, THE CASES RELIED UPON BY THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ARE NOT A PPLICABLE IN THE FACTS OF THE PRESENT CASE. THE AFFIDAVITS FOUND DURING THE SEARC H AND THE STATEMENT RECORDED U/S 132(4) OF THE ASSESSEE ARE CONSISTENT AND UNAMB IGUOUS AND LEAD TO ONLY POSSIBLE CONCLUSION THAT THE SUBSEQUENT EXPLANATIO N OFFERED BY THE ASSESSEE IS CONTRARY TO THE FACTS SUPPORTED BY THE EVIDENCE AS WELL AS THE ATTENDING CIRCUMSTANCES AND, THEREFORE, THE SAME CANNOT BV E ACCEPTED. IN VIEW OF THE ABOVE, DISUCSSION AND FACTS AND CIRCUMSTANCES OF TH E CASE, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 16. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 06-8- 2014 SD/- SD/- ( D. KARUNAKARA RAO ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 06-8 -2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, I BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI