Sequence Estate Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITSSA 21/DEL/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3836 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 26-04-2017
• Assessment Year: misc
• Appeal Filed On: 13-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: SATYENDRA CHATURVEDI
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Document seized; Share purchase agreement; Source of fund; Documents seized
• Section: 132; 144

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER IT(SS) NO. 18/DEL/2013 ( BLOCK PERIOD : 1989 - 90 TO 1999 - 2000 ) ITO, WARD - 8(1), ROOM NO. 197A, C.R. BUILDING, NEW DELHI VS. SEQUENCE ESTATES PVT. LTD, A - 13/1, VASANT VIHAR, NEW DELHI PAN: AABCS6285M (APPELLANT) (RESPONDENT) IT(SS) NO. 21/DEL/2013 ( BLOCK PERIOD : 1989 - 90 TO 1999 - 2000 ) SEQUENCE ESTATES PVT. LTD, A - 13/1, VASANT VIHAR, NEW DELHI PAN: AABCS6285M VS. ITO, WARD - 8(1), ROOM NO. 197A, C.R. BUILDING, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.S.RANA, CIT DR ASSESSEE BY: SHRI SATYENDRA CHATURVEDI, CA DATE OF HEARING 03/07 / 2018 DATE OF PRONOUNCEMENT 2 0 / 07 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1 . THESE ARE THE CROSS APPEALS FILED BY THE INCOME TAX OFFICER, WARD - 8(1), NEW DELHI (THE LD AO) AND THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XXXII, NEW DELHI ( THE LD CIT(A)) DATED 28.03.2013 FOR THE BLOCK PERIOD OF 1989 - 90 TO 1999 - 2000. 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN IT(SS)A NO. 18/DEL/2013: - 1. THE LD CIT( A) HAS ERRED IN DELETING THE ADDITION OF RS. 9184917/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES. 3 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN IT(SS)A NO. 21/DEL/2013: - ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 2 1. THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS ILLEGAL AND AGAINST THE FACTS OF THE CASE. 2. THE LEARNED ASSESSING OFFICER HAS MADE VARIOUS IRRELEVANT OBSERVATIONS WHICH ARE NOT BASED ON ANY ADMISSIBLE EVIDENCE, NOR THEY ARE RELEVANT TO THE FACTS OF THE APPELLANT ASSES SEE OR TO THE CONCLUSIONS/FINDINGS ARRIVED AT BY HIM. 3. THE LEARNED ASSESSING OFFICER HAS FURTHER ERRED IN MAKING ADDITION OF R S . 5,48,285/ - IGNORING THE SUBMISSION OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION DID NOT EITHER RELATE TO THE ASSESSEE OR THEY HAD NEVER MATERIALIZED. THE LEARNED ASSESSING OFFICER FAILED TO DISCHARGE ITS OWN BURDEN IN THIS REGARD. THE SAME HAS BEEN UPHELD BY THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) 4. THE LEARNED ASSESSING OFFICER HAS ALSO ERRED IN MAKING ADDITION O F RS. 18,48 , 25/ - BEING THE VALUE OF THE SHARES OF JAIPRAKASH INDUSTRIES LIMITED IGNORING THE FOLLOWING FACTS: - ' I) THAT THE SHARES IN QUESTION WERE FOUND AT 1172/C - L, VASANT KUNJ WHICH WAS NEITHER THE OFFICE PREMISES OF THE ASSESSEE COMPANY, NOR THE RESIDE NCE OF ITS DIRECTORS; II) THAT THE ASSESSEE WAS NOT PROVIDED WITH THE LIST OF DETAILS OF ABOVE SHARES THAT COULD ENABLE IT TO RECONCILE THE DETAILS OF SHARES. III) THAT THE APPELLANT ASSESSEE EVEN OTHERWISE, POSSESSED SHARES VALUING RS. 1,39,79,232/ - WHICH COVERED THE VALUE OF SHARES IN QUESTION. THE SAME HAS BEEN UPHELD BY THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) 5. THE LEARNED ASSESSING OFFICER HAS ALSO ERRED IN CHARGING INTEREST U/S 158BFA(1) OF THE I.T. ACT, 1961. THIS GROUND HAS BEEN REJECTED. 6. THE LEARNED ASSESSING OFFICER HAS FURTHER ERRED IN INITIATING PENALTY PROCEEDINGS U/S 158BFA(2) OF THE INCOME TAX ACT, 1961. 4 . THE GROUND NO 1 ,2,5 AND 6 OF THE APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE AND NO SEPARATE ARGUMENTS WERE ADVANCES BY T HE LD AR AND THEREFORE SAME ARE DISMISSED. 5 . FACTS LEADING TO THE ISSUES IN DISPUTE ARE THAT THE ASSESSEE M/S. SEQUENCE ESTATES PVT. LTD IS AN INVESTMENT COMPANY FILING ITS RETURN OF INCOME ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 3 REGULARLY. IT IS HOLDING SHARES OF VARIOUS GROUP OF COMPANIES OF JA I PRAKASH GROUP AND IS ALSO TRADING IN THEM REGULARLY. SEARCH WAS CONDUCTED ON 02.07.1999 AT JAI PRAKASH INDUSTRIES LTD AT DELHI AND OFFICE S OF VARIOUS GROUP COMPANIES AS WELL AS RESIDEN CE OF ITS DIRECTORS AND SOME OF ITS EMPLOYEES. SOME SHARE BROKERS AT M UMBAI WERE ALSO COVERED IN THE SEARCH. THE ASSESSEE IS ONE OF THE CONCERNS WHERE SEARCH TOOK PLACE. ASSESSEE COMPANY IS CONTROLLED BY ONE SHRI S. K. DIXIT , WHO IS ALSO COVERED IN THE SEARCH AND THE ASSESSEE HAS SAME REGISTERED OFFICE ADDRESS AS THAT OF A SIAN CAPITAL SERVICES LTD . DURING THE COURSE OF SEARCH, THE STATEMENT OF ACCOUNTANT OF M/S. ASIAN CAPITAL SERVICE LTD WAS RECORDED WHERE HE STATED THAT THIS COMPANY DEAL S IN THE SHARE TRANSACTIONS. THE ASSESSEE REMAINED LARGELY NON COOPERATIVE AND DID NOT FILE THE RETURN OF INCOME IN RESPONSE TO THE SEARCH AND THEREFORE, THE ASSESSMENT ORDER U/S 158BC READ WITH SECTION 144 OF THE ACT WAS PASSED AT TOTAL UNDISCLOSED INCOME OF RS. 82 , 47 , 75 , 435/ - FOR THE BLOCK PERIOD. 6 . SUBSEQUENTLY, THE ASSESSEE PREFERRED AN A PPLICATION U/S 264 OF THE ACT BEFORE CIT - V , NEW DELHI AND VIDE ORDER DATED 12.07.2010, WHO SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD AO. CONSEQUENT TO THAT NOTICE U/S 158B C ONCE AGAIN ISSUED ON 12.09.2011. THE ASSESSEE SUBMITTED THAT IT IS NOT IN A POSITION TO FILE ITS RETURN OF INCOME FOR THE BLOCK PERIOD. CONSEQUENT TO THAT THE LD AO PROCEEDED TO MAKE THE ASSESSMENT. 7 . DURING THE COURSE OF SEARCH, LARGE NUMBER OF SHARES AND TRANSFER DEEDS PERTAINING TO S HAREHOLDING IN JAI PRAKASH INDUSTRIES LTD IN VARIOUS NAMES WERE FOUND FROM THE REGISTERED OFFICE OF THE TWO COMPANIES NAMELY THE ASSESSEE AND ASIAN CAPITAL SERVICES LTD. SOME OF THE SHARE CERTIFICATES WERE FOUND ALONG WITH THE LETTERS FROM M/S. JAI PRAKASH INDUSTRIES LTD THAT THEY CANNOT BE TRANSFERRED IN THE NAME OF THE PERSONS HOLDING THE TRANSFER DEED FOR VARIOUS REASONS. THE LD AO NOTED THAT TH ESE SHARES WERE FOUND FROM THE ABOVE PREMISES. HE STATED THAT THERE IS NO RELATIONSHIP OF THESE COMPANIES I.E. THE ASSESSEE COMPANY WITH JAI PRAKASH INDUSTRIES LTD AND FURTHER MR. SK DIXIT HAD ALREADY RESIGNED AS MANAGING DIRECTOR OF JAI ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 4 PRAKASH INDUSTRIES LTD. THE LD AO PERUSED THE RETURN OF INCOME AS WELL AS THE ACCOUNTS OF THE ASSESSEE AND NOTED THAT AS ON 31.03 .1996, THE ASSESSEE IS HOLDING SHARE OF JAI PRAKASH INDUSTRIES LTD VALUED AT RS. 1 , 01 , 71 , 679/ - . THE LD AO (DCIT) (OSD) ENQUIRED VIDE LETTER DATED 22.06.20 0 1 FROM JAI PRAKASH INDUSTRIES LTD ABOUT THE NAME AND ADDRESS OF HOLDERS OF THESE SHARES AND ALSO TH E REASON AS TO WHY THEY ARE LYING IN THE POSSESSION OF SHRI SK DIXIT. ACCORDING TO THE LD ASSESSING OFFICER THEY SHOULD HAVE BEEN LYING WITH THE SHARE TRANSFER DEPARTMENT OF THE JAIPRAKASH INDUSTRIES LIMITED . THE ASSESSEE WAS ASKED TO FURNISH THE MARKET VA LUE OF THESE SHARES ON THE DATE MENTIONED IN THE TRANSFER DEED. THE JAIPRAKASH INDUSTRIES LTD REPLIED THAT THE HOLDERS OF THESE SHARES HAVE SOLD THESE SHARES WITH THE B LANK TRANSFER DEED AND THE BUYERS HAVE NOT LODGED THE SAME WITH THE COMPANY FOR TRANSFER IN TIME COULD BE THE ONE OF REASON FOR THE SAME. SIGNATURE DIFFERENCE WAS ANOTHER REASON. BASED ON THIS THE LD AO FOUND THAT 127283 SHARES OF JAIPRAKASH INDUSTRIES LTD FOUND FROM THE ADDRESS OF THE ASSESSEE ARE NOT RECONCILED WITH THE FACT THAT THE ONLY RS. 10171679/ - IS THE VALUE OF THOSE SHARES AS PER BOOKS OF ACCOUNTS . THE ASSESSEE WAS ASKED TO RECONCILE THE DIFFERENCE. THE LD AO DETERMINED THE VALUE OF SUCH SHARES AT RS. 9184917/ - . THE ASSESSEE SUBMITTED THAT THESE SHARES WERE NOT PURCHASED BY THE A SSESSEE AND ARE NOT HELD BY THE ASSESSEE . THESE SHARES WERE NEVER ALLOTTED TO THIS COMPANY. THIS EXPLANATION WAS REJECTED AND LD AO CAME TO THE CONCLUSION THAT PERHAPS THESE SHARES WERE PURCHASED BY THE ASSESSEE FROM THE SECONDARY MARKET AS THERE ARE NOT IN THE NAME OF THE ASSESSEE. BASED ON THIS HE DETERMINED RS. 9184917/ - AS UNDISCLOSED INVESTMENT IN THOSE SHARES OF THE ASSESSEE. CON SEQUENTLY, THE ADDITION WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 8 . THE ASSESSEE CHALLENGED THE ABOVE ADDITION BEFORE THE LD CIT(A) WHO DELETED THE SAME AS PARA NO 4 OF HIS ORDER AS UNDER: - 4 UNEXPLAINED INVESTMENT IN SHARES ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 5 4.1 AS PER THE ASSESSMENT ORDER, THE ID. AO MADE AN ADDITION OF RS.91,84,917/ - BEING UNEXPLAINED INVESTMENT IN THE SHARES OF M/S JAI PRAKASH INDUSTRIED LTD., OBSERVING AS UNDER: DURING THE COURSE OF SEARCH AT PREMISE D - 3/10 VASANT VIHAR; NEW DELHI, A LARGE NUMBER OF SHARES AND TR ANSFERS DEEDS PERTAINING TO JAIPRAKASH INDUSTRIES LTD. IN VARIOUS NAMES WERE FOUND. THIS PREMISE AT D - 3/10 VASANT VIHAR, NEW DELHI, IS THE REGISTERED OFFICE OF THE TWO COMPANIES I.E. M/S SEQUENCE ESTATES PVT. LTD. AND ASIAN CAPITAL SERVICES LTD. SOME OF T HESE SHARES WERE ANNEXED WITH A LETTER FROM, M/S JAI PRAKASH INDUSTRIES LTD. THAT THE CONCERNED SHARES COULD NOT BE TRANSFERRED IN THE NAME OF TRANSFEREE (ASMENTIONED IN THE TRANSFER DEED) FOR VARIOUS REASONS AS STATED BY THE COMPANY. IT IS VERY SURPRISING THAT WHY THESE SHARES OF M/S JAI PRAKASH INDUSTRIES LTD. WERE TO BE FOUND IN THE REGISTERED OFFICE OF M/S SEQUENCE ESTATES PVT. LTD. AND M/S ASIAN CAPITAL SERVICES LTD. FOR PRIMA FACIE THERE IS NO RELATIONSHIP OF THESE COMPANIES WITH M/S JAI PRAKASH INDUS TRIES LTD. AFTER SHRI S. K. DIXIT RESIGNED AS MANAGING DIRECTOR OF M/S JAI PRAKASH INDUSTRIES LTD. A PERUSAL OF THE RETURN OF INCOME OF M/S SEQUENCE ESTATES PVT. LTD. INDICATE THAT THE COMPANY HAD A HOLDING OFJIL SHARES VALUED AT RS. 1,01,71,679/ - ON 31.03 .96 AND M/S ASIAN CAPITAL SERVICES LTD. HAD A HOLDING OF JIL SHARES AMOUNTING TO RS. 14,66,673/ - ON 31.03.97. THE RETURNS OF INCOME OF LATER YEARS ARE NOT AVAILABLE FROM WHICH THE NUMBER OF SHARES HELD BY THESE TWO COMPANIES CAN BE FOUND. 4.2 BASED ON TH E ABOVE FINDINGS, THE ID. AO CONFRONTED THE ASSESSEE WITH THE SOURCES OF INVESTMENT IN THE SHARES OF M/S. JAI PRAKASH INDUSTRIES LTD. WORTH RS.91,84,917/ - AND WENT AHEAD WITH THE PROPOSED ADDITION RECORDING THE FOLLOWING FINDINGS: THE ASSESSEE FILED ITS R EPLY IN THIS REGARD, THE ASSESSEE FILED A LETTER FROM JAIPRAKASH ASSOCIATES LIMITED, HEREAFTER REFERRED AS JAL, ( EARLIER KNOWN AS JAIPRAKASH INDUSTRIES LIMITED, HEREAFTER REFERRED AS JIL) STATING THAT THESE SHARES, WHOSE DISTINCTIVE NUMBERS WERE MENTIONED BY THE ASSESSEE, WERE NEVER HELD BY SEQUENCE ESTATES PVT. LTD. THE ASSESSEE ALSO SUBMITTED THAT THESE SHARES WERE DISCLOSED IN BALANCE SHEET. FURTHER, THE ASSESSEE FILED AN AFFIDAVIT TO THE EFFECT THAT THESE SHARES WERE NEVER ALLOTTED EITHER TO SEQUENCE E STATES PVT. LTD., OR TO ASIAN CAPITAL SERVICES LTD., OR RASHIVA INTERNATIONAL LTD. THE SUBMISSIONS OF THE ASSESSEE WAS CONSIDERED BUT CANNOT BE ACCEPTED IN THE LIGHT OF THE FOLLOWING: ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 6 1. THESE SHARES WERE NOT PURCHASED BY THE ASSESSEE FROM THE JIL . RATHER THESE SHARES WERE PURCHASED BY THE ASSESSEE FROM THE SECONDARY MARKET AS THESE SHARES WERE NOT IN THE NAME OF THE ASSESSEE. 2. THE POSSIBILITY THAT UNDISCLOSED INVESTMENT IN THESE SHARES WOULD HAVE BEEN MADE CANNOT BE RULED OUT ON THE BASIS OF AN AFFIDAVIT. FURTHER, THE LETTER FROM JAL ONLY SHOWS THAT, AS PER THE RECORDS OF JAL, THESE SHARES WERE NOT TRANSFERRED IN THE NAME OF THE ASSESSEE. IT DOES NOT RULE OUT THE POSSIBILITY THAT THE ASSESSEE WOULD HAVE PURCHASED THE SHARES FROM MARKET AND HAD N OT GOT THEM TRANSFERRED IN ITS NAME. 3. THE ASSESSEE HAS NOT FILED COMPLETE DETAILS. THE ASSESSEE HAS ALSO NOT PRODUCED COMPLETE BOOKS OF ACCOUNT. IT CANNOT BE HELD THAT THE VALUE OF SHARES OF JIL, AS APPEARING IN THE COPY OF BALANCE SHEET, COMES FROM THE SAME VERY SHARES THAT HAVE BEEN FOUND AT THE TIME OF SEARCH. IN VIEW OF THE ABOVE DISCUSSED FACTS ASSESSEE CLAIM DO NOT HOLD ANY GROUND. IT IS CLEAR THAT THE ASSESSEE HAD MADE INVESTMENT IN THESE SHAPES FROM UNDISCLOSED SOURCES. HENCE , AN ADDITION OF RS. 9 1, 84, 917/ - DURING THE RELEVANT FINANCIAL YEARS, AS DISCUSSED ABOVE, IS HEREBY MADE TO THE INCOME OF THE ASSESSEE . 43. DURING THE APPELLANT PROCEEDINGS, THE APPELLANT FILED THE FOLLOWING WRITTEN SUBMISSION: THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING AN ADDITION OF RS. 91,84,917/ - (F.Y. 1989 - 90 RS. 81,000/ - , F.Y. 1990 - 91 RS. 2,11,250/ - , F.Y. 1991 - 92 RS. 29,03,312/ - , F.Y. 1992 - 93 RS. 52,11,754/ - , F.Y. 1993 - 94 RS. 4,81.821/ - , F.Y. 1996 - 97 RS. 2,95,780/ - ) TO THE TOTAL INCOME OF THE ASSESSEE COMPAN Y AS INVESTMENT FROM UNDISCLOSED SOURCE IGNORING THE FOLLOWING FACTS AMONG OTHER FACTS: I. THE SHARE CERTIFICATES STOOD IN VARIOUS NAMES OTHER THAN THE ASSESSEE COMPANY OR ITS DIRECTOR OR ANY CONNECTED PERSON OR PERSONS. II. THE ADDITION HAD BEEN MADE ON M ERE PRESUMPTIONS AND POSSIBILITIES. ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 7 III. THE MERE FACTS THAT THE SHARE CERTIFICATES WERE FOUND AT THE PREMISES OF THE ASSESSEE COMPANY, CANNOT LEAD TO THE CONCLUSION THAT THEY ALSO BELONG TO THE ASSESSEE AS INVESTMENT, UNLESS PROPER ENQUIRIES WERE MADE WHI CH HAS NOT BEEN DONE IN THIS CASE. IV. THE LEARNED A.O. HAS WRONGLY IGNORED THE AFFIDAVITS AND OTHER EVIDENCE PLACED BEFORE HIM IN THIS REGARD. WE ARE EXPLAINING HEREBY THAT DURING THE SEARCH AT PREMISE D - 3/10, VASANT VIHAR, NEW DELHI A LARGE NUMBER OF SHA RE AND TRANSFER DEEDS PERTAINING TO JAIPRAKASH INDUSTRIES LIMITED IN VARIOUS NAMES WERE FOUND D - 3/10 VASANT VIHAR, NEW DELHI IS THE REGISTERED OFFICE OF M/S SEQUENCE ESTATES PRIVATE LIMITED ALSO CONTENDED THAT ASSESSEE HAS NOT FILED COMPLETE DETAILS. THE A SSESSEE HAS ALSO NOT PRODUCED COMPLETE BOOKS OF ACCOUNT. IT CANNOT BE HELD THAT THE VALUE OF THE SHARES OF JAIPRAKASH INDUSTRIES LIMITED AS APPEARING IN THE COPY OF BALANCE SHEET, COMES FROM THE VERY SAME SHARES THAT HAVE BEEN FOUND AT THE TIME OF SEARCH. OUR REPLY TO THAT IS IF YOU PROVIDE US THE LAPTOPS AND COMPUTERS, AS SEIZED BY THE DEPARTMENT DURING SEARCH PROCEEDINGS, WHICH CONTAINS OUR BOOKS OF ACCOUNT AND OTHER DOCUMENTS, WE WILL PROVIDE FULL EXPLANATION REGARDING THE MATTER. HENCE AO ERRED IN MAKIN G THE ADDITION OF RS. 91,84,917/ - IN THE INCOME OF THE ASSESSEE COMPANY. WE ARE HEREBY CONCLUDING THAT THESE SHARES ARE NEITHER IN THE NAME OF THE ASSESSEE COMPANY NOR ANY ENDORSEE ON THE BACK OF SHARES CONTAIN NAME M/S SEQUENCE ESTATES PRIVATE LIMITED. FU RTHER, WE ARE EXPLAINING THAT ASSESSEE COMPANY IS AN INVESTMENT COMPANY THEREFORE THESE SHARES WERE GIVEN TO US BY SOME BROKER (REQUESTING US TO REQUEST JAIPRAKASH INDUSTRIES LIMITED REFUSED TO TRANSFER THESE SHARES), SO THESE SHARES WERE LYING AT OUR PREM ISE AND FOUND BY THE DEPARTMENT DURING SEARCH BUT NEITHER THE ASSESSEE COMPANY PURCHASED THE SHARE NOR THERE WAS ANY TRANSFER DEED WHICH SHOWS THAT THE TRANSFER WAS MADE IN THE NAME OF THE ASSESSEE COMPANY. MOREOVER NO SHARE WAS FOUND IN THE ASSESSEE COMPA NYS NAME SO IT IS CLEAR THAT THESE SHARES DID NOT BELONG TO ASSESSEE COMPANY IN ANY WAY. IT WAS ALSO CONFIRMED THAT THE SHARE FOUND DURING THE SEARCH WAS NOT IN THE NAME OF THE SEQUENCE ESTATES PRIVATE LIMITED, BY A LETTER FROM JAIPRAKASH ASSOCIATES LIMIT ED, WHICH MENTIONS THAT AS PER THE RECORDS OF JAIPRAKASH INDUSTRIES LIMITED THE SHARES, AS MENTIONED IN THE ASSESSMENT, WERE ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 8 NEVER HELD BY SEQUENCE ESTATES PVT LTD (AS PER ATTACHED LETTER). , THE SEARCH WAS CONDUCTED IN THE YEAR 1999, IF WE HAD THE INTENTI ON TO TRANSFER THE SHARE IN OUR NAME THEN DEPARTMENT WOULD HAVE SURELY FORMED SHARE TRANSFER FORM IN THE ASSESSEE COMPANY NAME DURING THE SEARCH PROCEEDINGS SOME OF THESE SHARES WERE ANNEXED WITH A LETTER FROM M/S JAIPRAKASH INDUSTRIES LIMITED THAT THE CON CERNED SHARE COULD NOT BE TRANSFERRED IN THE NAME OF TRANSFEREE AS MENTIONED IN THE TRANSFER DEED FOR VARIOUS REASON AS STATED BY THE COMPANY. FURTHER ASSESSEE FILED AN AFFIDAVIT TO THE EFFECT THAT THESE SHARES WERE NEVER ALLOTTED EITHER TO SEQUENCE ESTATE PRIVATE LIMITED OR TO ASIAN CAPITAL SERVICES LIMITED OR RAHIVA INTERNATIONAL LIMITED. AO CONTENDED THAT THESE SHARES WERE NOT PURCHASED BY THE ASSESSEE FROM JAIPRAKASH INDUSTRIES LIMITED, RATHER THESE SHARES WERE PURCHASED BY THE ASSESSEE FROM SECONDARY M ARKET AS THESE SHARE WERE NOT IN THE NAME OF THE ASSESSEE. OUR REPLY TO THAT IS, IF THESE SHARE WERE PURCHASED BY THE ASSESSEE FROM SECONDARY MARKET THEN THE SHARE TRANSFER FORM WOULD HAVE ALSO BE FOUND THERE DURING THE TIME OF SEARCH BY THE INCOME TAX DEP ARTMENT SO THE AO CONTENTION THAT THESE WERE SHARE PURCHASED BY THE ASSESSEE FROM SECONDARY MARKET WAS WRONG. AO ALSO CONTENDED THAT UNDISCLOSED INVESTMENT IN THESE SHARE WOULD HAVE BEEN MADE CANNOT BE RULED OUT ON THE BASIS OF AN AFFIDAVIT AND THE LETTER FROM JAIPRAKASH ASSOCIATES LIMITED. THESE ONLY CONFIRM THAT THESE SHARE WAS NOT TRANSFERRED IN ASSESSEE NAME, THIS DOES NOT RULE OUT THE POSSIBILITY THAT THE ASSESSEE WOULD HAVE PURCHASED THE SHARE FROM THE SECONDARY MARKET AND HAD NOT GOT THEM TRANSFERRED IN ITS OWN NAME. WE ARE EXPLAINING TO THIS THAT FIRSTLY IT IS CONFIRMED BY THE JAIPRAKASH ASSOCIATES LIMITED THAT THE SHARE IS NOT IN NAME OF ASSESSEE COMPANYS. SECONDLY WE HAVE ALSO FILED AN AFFIDAVIT IN THIS REGARD THAT THESE SHARE DID NOT BELONG TO AS SESSEE AND NO TRANSFER FORM REGARDING THESE SHARE, CONTAIN THE NAME OF THE ASSESSEE COMPANY. FURTHER IF THE AO IS SAYING THAT THESE SHARE BELONGS TO THE ASSESSEE COMPANY THEN WE ARE REQUESTING TO YOU THAT PLEASE PROVIDE THESE SHARE TO US AND ALSO ANY RIGHT SHARE, BONUS SHARE FROM THE STARTING SHOULD BE GIVEN TO US THEN WE WILL ACCEPT THE OWNERSHIP AND WILL PAY TAX AS DESIRED BY THE AO REGARDING THIS ADDITION.' ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 9 4.4 FURTHER, THE APPELLANT SUBMITTED THE FOLLOWING EXPLANATION TO THE CONTENTIONS RAISED BY THE ID . AO AS PER THE ASSESSMENT ORDER: A) THE SHARES CERTIFICATES STOOD IN VARIOUS NAMES OTHER THAN THE ASSESSE COMPANY OR ITS DIRECTOR OR ANY CONNECTED PERSON OR PERSONS. B) THESE SHARES WERE GIVEN TO US BY SOME BROKER REQUESTING US TO REQUEST JAIPRAKASH INDUSTRIES LIMITED (JIL) TO TRANSFER THE RESPECTIVE SHARES AS REQUESTED BY BROKERS, AS JIL REFUSED TO TRANSFER THESE SHARES. MOREOVER, THE SHARES THAT WERE FOUND AT OUR PREMISES HAD THE COVERING LETTER FROM JIL ATTACHED TO THEM AND THESE COVERING LETTERS DID NOT BEAR OUR NAME ON IT, BUT NAMES OF OTHER OUTSIDE PARTIES. THEREFORE, THESE SHARES, NOT BEING OURS, WERE ONLY LYING AT OUR PREMISES AND FOUND BY THE DEPARTMENT DURING SEARCH BUT NEITHER THE ASSESSEE COMPANY PURCHASED THESE SHARES NOR WERE THERE ANY T RANSFER DEEDS WHICH SHOWS THAT THE TRANSFER WAS MADE IN THE NAME OF THE ASSESSEE - COMPANY. IF THERE IS NO TRANSFER DEED THEN THE SHARES DOES NOT HAVE ANY VALUE TO THE ASSESSEE - COMPANY. MOREOVER NONE OF THESE SHARES WERE ENDORSED IN FAVOR OF THE ASSESSEE - CO MPANY. A. AO CONTENDS THAT ASSESSEE MIGHT PURCHASED THESE SHARES FROM THE MARKET AND HAD NOT GOT THEM TRANSFERRED IN HIS NAME. A) FIRST, IF THE ASSESSEE HAD PURCHASED THESE FROM THE SECONDARY MARKET THEN THESE SHARES EITHER CONTAIN A TRANSFER DEED IN FAVO R OF THE ASSESSEE OR THERE MUST BE ENDORSEMENT ON THE BACK SIDE OF THE SHARE CERTIFICATES IN FAVOR OF THE ASSESSEE COMPANY. B) WE HAD ALSO PRODUCED CONFIRMATION FROM THE JIL THAT THE SHARES WHICH APPEARED IN OUR BALANCE SHEET HAS DISTINCTIVE NUMBERS OTHER THAN THOSE OF THE SHARES FOUND DURING THE SEARCH PROCEEDINGS. THIS CLEARLY INDICATES THAT THESE SHARES DO NEVER BELONG TO ASSESSEE. C) FURTHER NO BONUS SHARES OR RIGHT SHARES WERE TRANSFERRED TO THE ASSESSEE AT ANY TIME BEFORE THE SEARCH OR AFTER THE SEA RCH; AND IF THESE SHARES BELONGED TO THE ASSESSEE THEN WE REQUEST THE AO TO PLEASE HAVE THE ENTIRE BONUS AND RIGHT ISSUE TRANSFERRED TO US AND WE WILL PAY ALL THE TAXES RELATED TO THESE SHARES ONCE TRANSFERRED TO US. B. AO ALSO CONTENDS THAT THE ASSESSEE H AS NOT FILE COMPLETE DETAILS AND THE ASSESSEE HAS ALSO NOT PRODUCED COMPLETE BOOKS OF ACCOUNTS AND IT CANNOT BE HELD THAT THE VALUE OF SHARES OF ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 10 JIL, AS APPEARING IN THE COPY OF BALANCE SHEET, COME FROM THE VERY SAME SHARES THAT HAVE BEEN FOUND AT THE TIME OF SEARCH. REPLY: A) AS WE ALREADY REQUESTED DURING ASSESSMENT PROCEEDINGS, THAT ALL THE LAPTOPS AND COMPUTERS WHICH WERE SEIZED BY THE DEPARTMENT DURING SEARCH PROCEEDINGS, SHOULD HAVE BEEN PROVIDED TO US SO THAT WE CAN SHOW PROPER DETAILS OF THE TRANSAC TION. B) SECONDLY WE HAD ALSO FILED A LETTER FROM THE JAIPRAKASH ASSOCIATES LIMITED WHICH CLEARLY INDICATES THAT THE SHARES WHICH APPEARED IN OUR BALANCE SHEET WERE DIFFERENT FROM THE SHARES WHICH WERE FOUND DURING THE SEARCH PROCEEDINGS. C) SEQUENCE ESTAT ES DEALS IN SALE PURCHASE OF SHARES THROUGH BROKERS AND THE MAIN BROKER OF THE ASSESSEE COMPANY WAS MR SIKANDAR LAI. [HERE WE WOULD LIKE TO BRING TO YOUR NOTICE THAT MR SIKANDAR LAI HAS EXPIRED, AND IT IS NOT POSSIBLE TO OBTAIN CONFIRMATION OF ACCOUNT OF M R SIKANDAR LAI; HOWEVER WE CAN PROVIDE HIS PAN, WHICH IS ACRPK7611E AND ADDRESS WHICH IS D - 124, SAKET, NEW DELHI - 17.] SO SOME OF THE BROKERS REQUESTED US TO REQUEST JAIPRAKASH INDUSTRIES LIMITED TO TRANSFER THESE SHARES IN THE NAME OF THE RESPECTIVE BROKER S. SINCE JAIPRAKASH INDUSTRIES LIMITED REFUSED TO TRANSFER THESE SHARES IN THE NAME OF BROKERS, THESE SHARES REMAINED LYING AT THE ASSESSEE PREMISES. AND AFTER THE CHANGE OF NAME OF COMPANY FROM JAIPRAKASH INDUSTRIES LIMITED TO JAIPRAKASH ASSOCIATES LIMITE D NEW SHARES WERE ISSUED TO DIFFERENT PERSONS AND THESE SHARES REMAIN LYING AS IT IS THESE SHARES DOES NOT HAVE ANY VALUE AS THE COMPANY SEND NEW SHARE TO THE ADDRESS OF THE RESPECTIVE PERSONS AS PER THEIR RECORD. 4.5 I HAVE CONSIDERED THE FINDINGS RECOR DED BY THE ID. AO AS PER THE ASSESSMENT R, THE SUBMISSIONS MADE BY THE ID. AR AND THE FACTS OF THE CASE ON RECORD. AS PER THE ASSESSMENT ORDER, THE ID. AO MADE AN ADDITION OF RS. 91,84,917/ - ON ACCOUNT OF THE SHARES OF M/S. JAYAPRAKASH INDUSTRIES LTD, FOUN D AND SEIZED FROM THE PREMISES OF THE APPELLANT BEFORE ME, THE LD. AR SUBMITTED THAT THE SHARES CERTIFICATES UNDER QUESTION STOOD IN VARIOUS NAMES OTHER THAN THE APPELLANT COMPANY OR ITS DIRECTOR OR ANY CONNECTED PERSONS OR CONCERNS. IT WAS AVERRED THAT TH E APPELLANT IS AN INVESTMENT COMPANY AND THEREFORE, THESE SHARES WERE HANDED OVER BY SOME BROKER WITH A REQUEST TO GET THEM TRANSFERRED FROM M/S. JAIPRAKASH INDUSTRIES LIMITED, WHICH REFUSED TO TRANSFER THEM FOR CERTAIN REASONS, HENCE, THE SAID SHARE CERTI FICATES WERE LYING THE APPELLANTS PREMISE. IT WAS VEHEMENTLY ARGUED THAT NEITHER THE APPELLANT ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 11 COMPANY PURCHASED THE SAID SHARE NOR WAS THERE ANY TRANSFER DEED ATTACHED THEREWITH IN THE NAME OF THE APPELLANT. IT WAS SUBMITTED THAT M/S JAIPRAKASH INDUSTRIE S LIMITED HAD CONFIRMED THAT THE SHARES AS MENTIONED IN THE ASSESSMENT ORDER, WERE NEVER HELD BY M/S SEQUENCE ESTATES PVT. LTD. THE APPELLANT FURTHER SUBMITTED THAT SOME OF THE SHARES WERE ANNEXED WITH A LETTER FROM M/S JAIPRAKASH INDUSTRIES LIMITED THAT T HE SAID SHARE COULD NOT BE TRANSFERRED IN THE NAME OF TRANSFEREES AS MENTIONED IN THE TRANSFER DEED FOR VARIOUS REASONS. THE APPELLANT HAD ALSO FILED AN AFFIDAVIT TO THE EFFECT THAT THESE SCARES WERE NEVER ALLOTTED EITHER TO M/S SEQUENCE ESTATE PRIVATE LIM ITED OR ANY OF ITS GROUP COMPANIES. IT WAS EXPLAINED BY THE LD. AR THAT THE SHARES UNDER QUESTION WERE MOSTLY RECEIVED THROUGH ONE OF THEIR MAIN BROKERS I.E. SHRI SIKANDAR LAI WHO HAS SINCE EXPIRED AND HENCE, HIS CONFIRMATION COULD NOT BE OBTAINED. THE LD AR HAS ALSO SUCCESSFULLY EXPLAINED/COUNTERED THE CONTENTIONS RAISED BY THE LD. AO. WHICH FORMED THE BASIS OF THE ADDITION OF RS. 91,84,917/ - . 4.6 IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE SHARE CERTIFICATES WERE FOUND ATTACHED WITH THE TRANSFER DEEDS WHICH WERE IN VARIOUS NAMES OTHER THAN THE APPELLANT, ITS GROUP COMPANIES OR THEIR DIRECTORS OR ANY OTHER CONNECTED PERSON, NO TRANSFER DEED WAS FOUND IN THE NAMES OF ANY OF THE AFORESAID PERSONS AND THE FACT THAT M/S JAYPRAKASH IN DUSTRIES LTD, WHOSE SHARES WERE FOUND AND SEIZED, HAS CONFIRMED THAT THE SHARES UNDER QUESTION WERE NEVER TRANSFERRED IN THE NAMES OF ANY OF THE AFORESAID PERSONS AND ALSO THE FACT THAT IN MANY CASES THE REASONS FOR NON - TRANSFER OF SHARES IN THE NAMES OF T HE TRANSFEREES WERE FOUND ATTACHED WITH THE TRANSFER DEEDS, I DO NOT FIND ANY JUSTIFICATION BEHIND THE ADDITION MADE ON THIS ACCOUNT. IT IS UNFATHOMABLE THAT ANY PRUDENT BUSINESSMAN WOULD KEEP AND INVESTMENT IN THIS FORM WHICH WILL RESULT INTO HIS FOREGOIN G ALL KINDS OF BENEFITS THEREON, INCLUDING DIVIDENDS, BONUS/RIGHTS SHARES ETC. NO PRUDENT INVESTOR WOULD LIKE TO FORGO SUCH BENEFITS WHICH ARE ONE OF THE MAIN ATTRACTIONS BEHIND ANY INVESTMENT. IT IS A MATTER RECORD THAT NO BONUS/RIGHT SHARES ARISING ON TH E ORIGINAL SHARES WERE EVER ALLOTTED TO THE APPELLANT OR ANY OF CONNECTED PERSONS/CONCERNS. IN THE LIGHT OF THE AFORESAID DISCUSSION, THE ADDITION OF RS.91,84,917/ - IS DIRECTED TO BE DELETED AND ACCORDINGLY, THE GROUND NO. 3 IS ALLOWED TO THE APPELLANT. 9 . TH EREFORE, REVENUE IS CONTEST ING DELETION OF THE ABOVE ADDITION. THIS IS THE ONLY ISSUE IN APPEAL OF THE REVENUE. THE GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS WITH RESPECT TO THE ADDITION OF RS. 9184917/ - WITH RESPECT TO THE UNEXPLAINED INVESTMENT IN SHARES OF M/S. JAIPRAKASH INDUSTRIES LTD. ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 12 10 . THE LD DR VEHEMENTLY CONTESTED THAT THE ASSESSEE HAS NOT FILED ANY RETURN O F INCOME AND THE LD AO HAS GIVEN THE DETAILED REASONS FOR MAKING THE ADDITION. IT WAS FURTHER STATED THAT THE DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND THEREFORE, THE PRESUMPTION U/S 292C OF THE ACT SHOWS THAT THESE DOCUMENTS PERTAINS TO THE ASS ESSEE. IN VIEW OF THIS, HE SUBMITTED THAT THE ADDITION HAS CORRECTLY BEEN MADE BY THE LD AO. HE ALSO PLACED ON RECORD HIS WRITTEN SUBMISSION STATING THAT THE PROVISION OF SECTION 132(4)(A) AND SECTION 292C OF THE ACT, THE LD AO HAS JUSTIFIED IN HOLDING THA T THE SEIZED PAPERS FOUND FROM THE PREMISES OF THE ASSESSEE BELONGED TO THE ASSESSEE. HE FURTHER STATED THAT THE LD CIT(A) HAS WRONGLY DELETED THE ADDITION WHEN THE ASSESSEE FAILED TO DISCHARGE ITS ONUS AS TO WHO WAS THE OWNER OF THE SEIZED PAPERS OF SHARE S AND WHETHER THE SOURCE OF SUCH INVESTMENT IN THOSE SHARES ARE EXPLAINED OR NOT. 11 . THE LD AR CONTESTED THE CLAIM OF THE AO AND SUBMITTED THAT THE DOCUMENTS ARE DUMB DOCUMENTS AND DO NOT SHOW ANY INCOME OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE SHARE C ERTIFICATE FOUND DURING THE COURSE OF SEARCH AS WELL AS THE TRANSFER DEEDS ATTACHED WITH THOSE CERTIFICATES ALSO SHOWS THE NAME OF THE BUYER, HIS ADDRESS, HIS BUSINESS, THEREFORE, IT CANNOT BE SAID THAT THESE SHARES ARE INCOME OF THE ASSESSEE. HE SUBMITTED THAT EVEN IN THE LETTERS OF JAIPRAKASH INDUSTRIES LTD REFUSING TO TRANSFER SHARES ALSO SHOWS WHO IS THE OWNER OF THESE SHARES. THE LETTERS OF THE COMPANY JAYPRAKASH INDUSTRIES ITSELF SHOWS THAT THESE SHARES ARE BELONGING TO THIRD PARTIES AND WHO HAVE APPROACHED THE ASSESSEE TO FIND A SOLUTION AS THE SHARES WERE NOT TRANSFERRED IN THEIR NAME WHICH WERE LEGALLY BOUGHT BY THEM. ASSESSEE WAS APPROACHED AS THE ASSESSEES DIRECTOR WAS ONCE THE ASSOCIATES OF THE GROUP. HE SUBMITTED THAT THESE DOCUMENTS DO NOT SHOW ANY INCOME OF THE ASSESSEE. HE FURTHER STATED WHATEVER SHARES THE COMPANY IS HOLDING IS ALREADY SHOWN IN THE BALANCE SHEET OF THE ASSESSEE. HE FURTHER SUBMITTED THAT PROVISION OF SECTION 292C DOES NOT GIVE A REBUTTABLE PRESUMPTION OF INCOME. I N VIEW THIS HE STATED ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 13 THE ADDITION HAS BEEN WRONGLY MADE BY THE LD AO AND RIGHTLY DELETED BY THE LD CIT(A). 12 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION. THE ADDITION HAS BEEN MADE BASED ON THE SEIZED MATERIAL IN THE FORM OF SHARE CERTIFICATES, SHARE TRANSFER DEED AND LETTER OF M/S. JAIPRAKASH INDUSTRIES LTD ADDRESSED TO THE OWNER OF THE SHARES REFUSING TO TRANSFER THOSE SHARES IN THE NAME OF THE PERSONS WHO ARE BUYER OF THOSE SHARES FOR SIGNATURE MISMATCH IN THE TRANSFER DEED. EMPHATICALLY REA SON STATED IS SIGNATURE DIFFERENCE. THE SAMPLE DOCUMENTS ATTACHED IN THE PAPER BOOK AND SEIZED DOCUMENTS PRODUCED BEFORE US SHOWS THAT THERE WAS LETTER OF ALLOTMENT OF SHARES WHERE THE TRANSFEROR IS PRAK A SH KUMAR BHATIA AND KUSUM BHATIA VIDE CERTIFICATE NO. 5 56371 WHO WERE ALLOTTED THE SHARES ORIGINALLY ON 07.04.1992. THESE SHARES WERE SOLD BY THEM TO THE BUYER MR HARIKESH PANDEY FOR A CONSIDERATION OF RS. 2600/ - . S EIZED TRANSFER DEEDS SHOWS BUSINESS AND ADDRESS OF BUYER AT PLOT NO. 155, SECTOR 28, M HALSA MAHALASKAN CHOWK, PRADHIKARARAN, PUNE 411031. THIS IS ALSO EVIDENT BY LETTER DATED 09.03.1996 ADDRESSED BY JAIPRAKASH INDUSTRIES LTD SENT BY REGISTERED POST TO MR. HARIKESH PANDEY REJECTING THE REQUEST TO TRANSFER THE ABOVE SHARES IN HIS NAME FOR TH E REASON THAT SIGNATURE OF THE TRANSFEROR IS NOT ACCORDING TO SPECIMEN LODGED WITH THE COMPANY. THEREFORE, ON READING OF THESE DOCUMENTS IT IS APPARENT THAT THE SHARES WERE SOLD BY ONE PARTY AND PURCHASED BY ANOTHER PARTY WHOSE COMPLETE DETAILS ARE AVAILAB LE WITH THE CONSIDERATION IN THOSE DOCUMENTS. THE DOCUMENTS SHOW THE TRANSACTION OF SALE AND PURCHASE OF THE SHARES. THEREFORE, THEY ARE NOT DUMB DOCUMENTS. FURTHER, THE PROVISION OF SECTION 132(4A) AS WELL AS SEC TION 292C OF THE ACT CREATES A REBUTTABLE P RESUMPTION ABOUT THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH FOR ALL THE PROCEEDINGS UNDER THE ACT THAT SUCH DOCUMENTS BELONG TO PERSONS FROM WHOM IT IS FOUND AND THEY ARE TRUE. HOWEVER, IF SUCH DOCUMENTS SHOWS THE COMPLETE DETAILS ABOUT THE WHOLE TRAN SACTION AND THE EXPLANATION OF THE ASSESSEE IS ALSO PROVIDED THAT TO WHOM THESE DOCUMENTS BELONG TO , THESE TWO SECTIONS DO NOT GIVE A ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 14 PRESUMPTION THAT IT SHOWS THE INCOME OF THE ASSESSEE. THERE IS DENYING THE FACTS THAT CONTENTS OF THESE DOCUMENTS ARE TRUE. BUT AS THE INSTRUMENTS FOUND CLEARLY SHOWS THAT TO WHOM THEY BELONG THE PRESUMPTION IS REBUTTED BY THE ASSESSEE. IN THE PRESENT CASE, THE TRANSACTION IS BETWEEN TWO PARTIES NOT RELATED TO THE ASSESSEE. THE TRANSACTION ARE ALSO SHOWN FOR CONSIDE RATION WHICH HAS NOT BEEN DISPUTED AS WITHOUT SOURCE, ALSO THE LETTER OF THE COMPANY WHOSE SHARES ARE SUBJECT MATTER OF TRANSFER ALSO SHOWS WHO IS THE OWNER OF THE SHARE. THE ASSESSEE HAS ALSO EXPLAINED THAT JUST BECAUSE OF THE REASON THAT THIS SHARES WERE NOT TRANSFERRED IN THE NAME OF THOSE PERSONS WHO BOUGHT IT AND THAT ASSESSEE WAS DIRECTOR AT ONE POINT OF TIME AND ASSOCIATED WITH THE JAIPRAKASH INDUSTRIES LTD , THOSE PERSONS APPROACHED TO GET THEM TRANSFERRED, AND THEREFORE, THESE SHARES WERE FOUN D FROM THE ASSESSEE. THE LD AO HAS MADE THE ADDITION MERELY ON THE PRESUMPTION THAT THE ASSESSEE MIGHT HAVE PURCHASED THOSE SHARES IN S ECONDARY MARKET. THOSE SHARES HAVE NOT BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE COMPANY OR THESE SHARES WERE NOT ALSO TRANSFERRED IN ANY OTHER NAME THAN PERSON WHOSE TRANSFER FORM WAS REJECTED BY THE COMPANY. FURTHER THE NAME AND ADDRESS OF THE BUYER AND SELLER AS WELL AS NAME OF THE BROKER IS FOUND IN THE SEIZED DOCUMENTS. IF THE SHARES WERE PURCHASED BY THE ASSESSEE IN SECONDARY MARKET EVEN THEN, UNLESS SIGNATURE DEFECT CURED BY THE BUYER FROM WHO ASSESSEE MIGHT HAVE PURCHASED THOSE SHARES , THESE SHARE CANNOT BE SOLD. NO SUCH INFORMATION WAS GIVEN BY THE JAYPRAKASH INDUSTRIES EVEN WHEN SPECIFICALLY ENQUIRED B Y THE OTHER AO. THE LD AO ALSO MAKE ANY INQUIRY FROM THE ORIGINAL SELLERS WHETHER THE TRANSFER DEED WERE RENEWED BY THEM AFTER PUTTING SIGNATURES AS PER THE COMPANY RECORDS. THEREFORE, WE DO NOT FIND ANY REASON TO HOLD THAT ASSESSEE HAS PURCHASED THOSE S HARES FROM SECONDARY MARKET. THEREFORE, THERE IS NO INCOME BELONGING TO THE ASSESSEE IN THOSE SEIZED DOCUMENTS. THE LD CIT ( A) HAS ALSO HELD THAT THE ADDITION WAS WRONGLY MADE BY THE LD AO IN THE HANDS OF THE ASSESSEE FOR THE ABOVE REASON. IN VIEW OF THIS WE DO NOT FIND ANY REASON TO DISPUTE THE FINDING OF THE LD ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 15 CIT(A) IN DELETING THE ABOVE ADDITION OF RS. 9184917/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES OF JAIPRAKASH INDUSTRIES LTD. ACCORDINGLY, GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS DISMISSED. 13 . THIS BEING THE SOLITARY GROUND IN APPEAL OF THE REVENUE IN IT(SS)A NO. 18/DEL/2013 FILED BY THE LD AO HENCE, APPEAL OF THE REVENUE IS DISMISSED. 14 . NOW WE COME TO THE APPEAL OF THE ASSESSEE. THERE ARE TWO ISSUES IN THE APPEAL OF THE ASSESSEE. AS PER GROUND NO 3 OF THE APPEAL OF THE ASSESSEE IS THAT AS PER SEIZED MATERIAL AT PAGE 78 TO 82 OF ANNEXURE A - 40, THE LD AO NOTED THAT THE ASSESSEE HAS BORROWED RS. 5 LACS FROM SHRI RAVI TANDON ON INTEREST @27% FOR 90 DAYS PERIOD ON 14 .06. 1997. THE LD AO NOTED THAT PAGE 78 IS A PROMISSORY NOTE ISSUED BY THE ASSESSEE, PAGE 79 IS THE RECEIPT AND PAGE 80 IS A LETTER ACKNOWLEDG ING THE ABOVE TRANSACTION. HE FURTHER NOTED THAT THE ASSESSEE HAS ALSO ISSUED POST DATED CHEQUE S OF RS. 5 LACS AND ANOTHER CHEQUE OF RS. 33285/ - FOR INTEREST IN FAVOUR OF SHRI RAVI TANDON. IT IS THE CONTENTION OF THE LD AO THAT ASSESSEE BORROWED THIS SUM AND LA TER ON REPAID ALSO THE ABOVE SUM BEFORE THE DATE OF SEARCH IN CASH. THE ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE TRANSACTION TO WHICH THE ASSESSEE SUBMITTED THAT THE ABOVE TRANSACTION WAS TO TAKE PLACE AND THEREFORE, THESE DOCUMENTS WERE PREPARED. HOWEVER, THE TRANSACTION NEVER HAPPENED AND THE AMOUNT WAS NOT RECEIVED FOR THE REASON THAT ALL THE ORIGINAL POST DATED CHEQUES AS WELL PROMISSORY NOTE WAS SEIZED DURING THE COURSE OF SEAR CH. IT WAS FURTHER STATED THAT THOSE WERE CANCELLED CHEQUES. THE LD AO REJE CTED THE EXPLANATION OF THE ASSESSEE AND FOR THE REASON THAT THE ASSESSEE HAS FAILED TO FILE ANY CONFIRMATION FROM THE LENDER AS WELL AS THE RELEVANT BANK STATEMENT, THEREFORE, HE MADE AN ADDITION OF RS. 548285/ - TO THE INCOME OF THE ASSESSEE. 15 . THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD CIT(A) WHO CONFIRMED THE ABOVE ADDITION VIDE PARA NO. 5 AS UNDER: - 5.1 AS PER THE ASSESSMENT ORDER, THE ID. AO MADE AN ADDITION OF RS. 5,48,285/ - BEING REPAYMENT OF LOAN AND PAYMENT OF INTEREST FROM UNDISCLOSED SOURCES OBSERVING AS UNDER: ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 16 A PERUSAL OF THE SEIZED MATERIAL - PAGES 78 - 82 OF ANNEXURE A - 40, FOUND AND SEIZED AT C - 2, S. D A. COMPLEX, NEW DELHI, REVEAL THAT THE ASSESSEE HAD BORROWED RS.5 LAKHS FROM ONE SHRI RAVI TANDON @ 27% FOR A PERIOD OF 90 DAYS ON 14. 06.97. THE ASSESSEE HAD ISSUED A PROMISSORY NOTE (PAGE 78), RECEIPT (PAGE 79) AND A LETTER (PAGE 80) ACKNOWLEDGING THE TRANSACTION. THE ASSESSEE HAD ALSO ISSUED POST DATED CHEQUES OF RS. 5,00,000/ - AND RS. 33,285/ - FOR INTEREST PURPOSES TO SHRI RAVI TANDON . IN ALL SUCH TRANSACTIONS THE ASSESSEE HAS BEEN PAYING FINANCIAL CHARGES @12% P. A. TO THE BORROWEE. THE PERUSAL OF THESE DOCUMENTS REVEALS THAT RS.5 LAKHS WERE BORROWED AND HAD ISSUED POST DATED CHEQUES FOR THE SAME, HOWEVER LATER THE ACCOUNT WAS SQUARED UP BY TRANSACTION IN CASH. THE ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE TRANSACTION THE ASSESSEE SUBMITTED ITS REPLY. THE RELEVANT PORTION OF WRITTEN SUBMISSION MADE BY THE ASSESSEE IN THIS REGARD IS REPRODUCED HERE AS BELOW: - A) THESE PAGES REFLECT THE D OCUMENT PRE PARED IN CONNECTION WITH THE ON GOING PROPOSAL FOR TAKING UNSECUR ED LOAN BY M/S ASIAN CAPITAL SERVICES LTD (ACSL). AS WELL AS M/S SEQUENCE ESTATE PVT. LTD. (SEPL) FROM THE PARTIES IN QUESTION FOR WHICH THE DOCUMENT AS DESIRED BY THE PARTIES WAS P REPARED WHICH IS TO BE DELIVERED AT THE TIME OF ACTUAL DEAL / RECEIPTS OF PAYMENT FROM THAT PARTIES. THE DEAL WAS NEVER MATERIALIZED AND AMOUNT WAS NOT RECEIVED WHICH ALSO FIND SUPPORT FROM THE FACTS THAT ALL THE ORIGINAL POST DATED CHEQUES AS WELL AS PROM ISSORY NOTE AS GOT PREPARED WAS SEIZED DURING THE COURSE OF SEARCH FROM THE PREMISES OF S. K. DIXIT GROUP (COPY ENCLOSED AT PAGE NO 99 TO 102). B) IT IS ALSO IMPORTANT TO NOTE HERE THAT THESE CHEQUES WERE ALSO CANCELLED CHEQUES. WRITTEN SUBMISSION OF ASSE SSEE IS DULY CONSIDERED BUT IT CANNOT BE ACCEPTED AS THE ASSESSEE FAILED TO ESTABLISH THE IDENTITY AND CAPACITY OF THE PERSON AND THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS FAILED TO FILE ANY CONFIRMATION FROM THE LENDER. THE ASSESSEE HAS ALSO N OT PROVIDED THE RELEVANT BANK STATEMENTS TO ESTABLISH GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM THAT THE DEAL DID NOT MATERIALIZE. CONSIDERING THE ABOVE FACTS THE ADDITION OF RS. 5,48,285 / - IS HEREBY MADE TO THE INCOM E OF THE ASSESSEE FOR F. Y. 1997 - 98. ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 17 5 . 2 DURING THE APPELLANT PROCEEDINGS, THE APPELLANT FI LED THE FOLLOWING WRITTEN SUBMISSION: 'THE LEARNED AO HAS FURTHER ERRED IN MAKING ADDITION OF RS. 5,48,285/ - IGNORING THE SUBMISSION OF THE ASSESSEE COMPANY THAT TH E TRANSACTION IN QUESTION DID NOT EITHER RELATE TO IT OR IT HAD NEVER MATERIALIZED. THE LEARNED ASSESSING OFFICER FAILED TO DISCHARGE ITS OWN BURDEN IN THIS REGARD. THE AO CONTENDED THAT PERUSAL OF SEIZED MATERIAL PAGES 78 - 82 OF ANNEXURE A - 40, FOUND AND S EIZED AT C - 2, SDA COMPLEX. NEW DELHI REVEAL THAT THE ASSESSEE HAD BORROWED RS. 5 LAKHS FROM SHRI RAVI TONDON @ 27% FOR A PERIOD OF 90 DAYS FROM 14.06.1997. THE ASSESSEE HAD ISSUED A PROMISSORY NOTE (PAGE 78), RECEIPT (PAGE 79) AND A LETTER (PAGE 80) ACKNOW LEDGING THE TRANSACTION. THE ASSESSEE HAD ALSO ISSUED POST DATED CHEQUE OF RS. 5,00,000/ - AND RS. 33,285 FOR INTEREST PURPOSE TO SHRI RAVI TONDON. IN ALL SUCH TRANSACTION ASSESSEE HAS BEEN PAYING FINANCIAL CHARGES @ 12% P.A. TO THE BORROWEE AND PERUSAL OF THESE DOCUMENT REVEAL THAT RS. 5 LAKHS WERE BORROWED AND POST DATED CHEQUE HAD BEEN ISSUED FOR THE SAME. HOWEVER, LATER ACCOUNT WAS SQUIRED UP BY TRANSACTION IN CASH. AS THE ASSESSEE ALREADY EXPLAINED IN THE ASSESSMENT THAT THESE PAGES REFLECT THE DOCUMENT PREPARED IN CONNECTION WITH THE ONGOING PROPOSAL FOR TAKING UNSECURED LOAN BY M/S. SEQUENCE ESTATES PRIVATE LIMITED. FROM THE PARTIES IN QUESTION FOR WHICH THE DOCUMENTS AS DESIRED BY THE PARTIES WAS PREPARED WHICH IS TO BE DELIVERED AT THE TIME OF ACTUAL DEAL/RECEIPTS OF PAYMENT FROM THE PARTIES. THE DEAL NEVER MATERIALIZED AND THE AMOUNT WAS NOT RECEIVED WHICH ALSO FIND SUPPORT FROM THE FACTS THAT ALL THE ORIGINAL POST DATED CHEQUE AS WELL AS PROMISSORY NOTE AS GOT PREPARED WAS SEIZED DURING THE COURSE O F SEARCH WERE CANCELLED CHEQUE. IF THE PURPOSE OF THE CHEQUES WAS PAYMENT FOR LOAN, AS SAID BY THE ASSESSING OFFICER, THEN THE CHEQUES WOULD HAVE NEVER BEEN FOUND AS CANCELLED CHEQUE. FURTHER THE AO CAN CONFIRM ABOUT THIS PROPOSAL FROM MR. RAVI TONDON DIRE CTLY AND MAKE ENQUIRY TO CONFIRM ABOUT THE PROPOSAL. THE AO ALSO CONTENDED THAT THE ASSESSEE DID NOT PROVIDE BANK STATEMENT, BUT IF ALL THE CHEQUES WERE FOUND AT THE PREMISE AND ALL THESE CHEQUES WERE CANCELLED, THEN IT IS VERY CLEAR THAT THESE TRANSACTION S WILL NEVER APPEAR IN THE BANK STATEMENTS. 5.3 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE ID. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. AR AND THE ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 18 FACTS OF THE CASE ON RECORD. THE AO MADE AN ADDITION OF RS. 5,48,285/ - ON THE BA SIS OF CANCELLED CHEQUES SEIZED DURING THE SEARCH OPERATION FROM THE PREMISES OF THE APPELLANT HOLDING THE SAID AMOUNT TO BE REPAYMENT OF LOAN FROM UNDISCLOSED SOURCES OF INCOME. THE APPELLANT ARGUED THAT THE SAID CHEQUES WERE PREPARED IN CONNECTION WITH A N ONGOING PROPOSAL FOR TAKING UNSECURED LOAN AND WERE TO BE DELIVERED AT THE TIME OF ACTUAL DEAL WHICH DID NOT MATERIALISE. HOWEVER, THE APPELLANT COULD NOT FURNISH ANY DETAILS ABOUT THE DEAL NOR DID IT FURNISH ANY EVIDENCE AS REGARDS THE NON - MATERIALISATI ON OF THE PROPOSED DEAL. THE ARGUMENT THAT POST DATED CHEQUES WERE PREPARED TO BE HANDED OVER AT THE TIME OF THE MATERIALISATION OF THE DEAL IS NOT TENABLE AS IT IS UNFATHOMABLE THAT THE CHEQUES WOULD BE PREPARED SO MUCH IN ADVANCE WHEN ONLY NEGOTIATIONS F OR THE DEAL WERE GOING ON. PREPARING THE CHEQUES IS A JOB OF ONLY A FEW MINUTES AND HENCE NO ONE WOULD PREPARE THEM AND STORE THEM FOR LONG BEFORE THE DEAL HAS BEEN FINALIZED. SIMILARLY, THE ARGUMENT THAT SINCE THE CHEQUES WERE CANCELLED, IT IS CLEAR THAT THE DEAL DID NOT MATERIALISE IS NOT ACCEPTABLE, AS ON THE CONTRARY, THE POSSESSION OF THE CANCELLED CHEQUES SHOWS THAT THE LOAN WAS ACTUALLY TAKEN AND FOR THE VALUE OF THE SAME, CHEQUES WERE ISSUED AS A SECURITY AND THE SAID CHEQUES WERE LATER ON CANCELLED WHEN THE LOAN WAS RETURNED. THIS IS A NORMAL PRACTICE IN THE MARKET. NOT ONLY THIS, THE APPELLANT DID NOT FURNISH ANY THIRD PARTY CONFIRMATION IN SUPPORT OF ITS CONTENTION THE ARGUMENT THAT THE AO DID NOT CARRY OUT ANY ENQUIRY FROM THE RESPECTIVE PARTIES IS LIABLE TO BE REJECTED FOR THE SIMPLE REASON THAT THE PRIMARY ONUS WAS ON THE ASSESSEE AND ONLY WHEN THE INITIAL ONUS WAS DISCHARGED IT WAS THE DUTY OF THE AO TO FURTHER INVESTIGATE THE SAME. IN THE LIGHT OF THE AFORESAID DISCUSSION, THE ADDITION OF RS.5 ,48,285/ - IS CONFIRMED AND THE GROUND NO. 4 IS REJECTED. 16 . THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US VIDE GROUND NO 3. ASSESSEE CHALLENGES THE ADDITION OF RS. 548285/ - CONFIRMED BY THE LD CIT(A). 17 . THE LD AR SUBMITTED A PAPER BOOK STATING THAT THOSE DOCUMENTS WERE FOUND AT THE PREMISES OF THE ASSESSEE, HOWEVER NO TRANSACTION TOOK PLACE. HE SUBMITTED THAT THE CHEQUES WERE ALSO CANCELLED AS EVIDENT FROM THE SEIZED MATERIAL. IN THESE CIRCUMSTANCES THERE IS NO REASON TO PROVIDE ANY CONFIRMATION OF MR. RAVI TANDON. HE RELIED UPON HIS SUBMISSION BEFORE THE LOWER AUTHORITIES. ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 19 18 . THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS SQUARED UP THE ABOVE BORROWING OUT OF BOOKS OF ACCOUNTS AND THEREFORE, THE ADDITION IS RIGHTLY MADE. 19 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE SEIZED MATERIAL SHOWED THAT A PROMISSORY NOTE HAS BEEN ISSUED BY THE ASSESSEE ALONG WITH THE RECEIPT AND A LETTER FOR BORROWING OF RS. 5 LACS, TWO POST DATED CHEQUES OF THE PRINCIPLE SUM OF RS. 5 LACS AND INTEREST OF RS. 33285/ - IN FAVOUR OF MR. RAVI TANDON. THESE CHEQUES WERE CANCELLED. ON THE BASIS OF THESE DOCUMENTS THE LD AO MADE THE ADDITION AND THE LD CIT(A) CONFIRMED IT IN ABSENCE OF ANY CONFIRMATION FROM MR. RAVI TANDON. 20 . IN THE PRESENT CASE THE RECEIPT SHOWED DATE OF TRANSACTION AS 14.06.1997 WHEREAS, THE CHEQUES IS DATED 12.07.1997 THE LETTER IS DATED 14.06.1997 SHOWS THAT THE TRANSACTIONS WERE OLD AS DATE OF SEARCH IS 02.07.1999. WE COULD VISUALIZE TWO SITUATION S BASED ON THE ABOVE DOCUMENTS: - I . THE TRANSACTIONS NEVER HAPPENED AS PER THE VERSION OF THE ASSESSEE. II . THE TRANSACTION DID HAPPEN AND TH E ORIGINAL DOCUMENTS ON REPAYMENT OF LOAN TO MR. RAVI TANDON WERE RETURNED TO THE ASSESSEE. THUS, THE CHEQUES WERE CANCELLED AND FOUND FROM THE POSSESSION OF THE ASSESSEE. THIS DOCUMENTS WERE NOT DESTROYED FOR SOME REASON. 21 . WE ANALYSE BOTH THE SITUATIONS. I F THE TRANSACTION HAD TAKEN PLACE OF BORROWING OF RS. 5 LACS FROM MR. RAVI TANDON BY THE ASSESSEE AND SUCH BORRIWNGS ARE SUBSISTING THE POST DATED CHEQU ES WHICH ARE DULY SIGNED BY THE ASSESSEE COULD NOT HAVE BEEN FOUND FROM THE POSSESSION OF THE ASS ESSEE BUT THEY SHOULD HAVE BEEN FOUND IN THE POSSESSION OF RAVI TANDON, THE LENDER. FURTHER, THOSE CHEQUES WERE ALSO CANCELLED CHEQUES. THEREFORE, IT IS APPARENT THAT THEY DO NOT HAVE ANY VALUE AS VALID INSTRUMENT AS THE CHEQUES SHOULD HAVE BEEN HANDED OVE R TO RAVI TANDON. THERE IS NO REQUIREMENT OF OBTAINING ANY CONFIRMATION FROM THAT PARTY BECAUSE THE ORIGINAL REASON AS WELL AS THE LETTER DATED 14.06.1997 WAS ALSO FOUND IN ORIGINAL WITH THE ASSESSEE. THEREFORE, IT IS APPARENT THAT SUCH ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 20 TRANSACTION IS NO T SUBSISTING / CONTINUING BUT EITHER GOT OVER BEFORE THE DATE OF SEARCH OR NEVER HAPPENED. IF THESE TRANSACTIONS NEVER HAPPENED, THERE IS NO ADDITION REQUIRED TO BE SUSTAINED IN THE HANDS OF THE ASSESSEE. 22 . ONLY IN THE CASE THE LOAN IS CONTINUING THE DOC UMENTS WHCH WERE FOUND FROM THE POSSESSION OF THE ASSESSEE, SHOULD HAVE BEEN FOUND FROM MR RAVI TENDON. THERFPORE IT IS CLEAR THAT THIS TRANSACTION OF LOAN IS ALSO NOT CONTINUING. 23 . IN THE THIRD POSSIBILITY THAT TRANSACTION IS OVER BY THE DATE OF THE SEARCH AND DOCUMENTS ARE RETURNED BY MR RAVI TENDON AND LYING WITH THE ASSESSEE FOR SOME PURPOSES. THIS IS ALOS THE VIEW OF THE LOWER AUTHORITIES AND WE TEND TO AGREE WITH THE SAME. NOW THE ISSUE ARISES IS WHAT ADDITION IS REQUIRED TO BE SUSTAINED IN THE HA NDS OF THE ASSESSEE. EVEN IF IT IS ASSUMED THAT THE ASSESSEE BORROWED THE MONEY IN JUNE 1997 OF RS. 5 LAC AND FURTHER THE SAME IS REPAID WITHIN 90 DAYS AND THUS CANCELLED CHEQUE WERE FOUND FROM THE PREMISES OF THE ASSESSEE , THEN UNLESS THE UTILIZATION OF THE LOAN OF RS. 5 LACS IS SHOWN FOR SOME OTHER PURPOSES AND REPAYMENT OF SUCH LOAN FROM SOME OTHER SOURCES OTHER THAN THE ORIGINAL LOAN TAKEN IS ESTABLISHED , ASSESSEE DESERVES THE CREDIT OF LOAN TAKEN AS SOURCES OF REPAYMENT ALSO. HENCE, ADDITION OF PRINCIPAL SUM OF RS. 5 LAKHS CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. IN VIEW OF THIS, WE DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION OF RS 5 LAKHS IN THE HANDS OF THE ASSESSEE . FURTHER, IF THE LOAN HAS BEEN REPAID OUT OF ORIGINAL LOAN TAKEN BY THE ASSESSEE, STILL ASSESSEE NEEDS TO SHOW THE SOURCE OF INTEREST PAYMENT OF RS. 33285/ - . THERE IS NO EXPLANATION FOR THIS. THEREFORE, SAME DESERVES TO BE CONFIRMED. IN VIEW OF OUR ABOVE FINDING , WE REVERSE THE ORDERS OF THE LOWER AUTHORITIES TO THE EXTENT OF ADDITION MADE OF RS. 5 LAKHS BUT CONFIRM THE BALANCE ADDITION OF RS. 33285/ - . ACCORDINGLY, GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 24 . THE SECOND ISSUE IN APPEAL OF THE ASSESSEE VIDE GROUND NO 4 IS WITH RESPECT TO THE ADDITION ON A CCOUNT OF UNDISCLOSED INVESTMENT IN THE SHARE OF JAIPRAKASH INDUSTRIES LTD OF RS. 1848025/ - . ON THE BASIS OF THE SEIZED ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 21 PAPER AT PAGE 22 TO 25 OF ANNEXURE A1 IT WAS NOTED THAT THE ASSESSEE HAS MADE AN INVESTMENT OF RS. 1658125/ - IN THE SHARES OF JAIPRAKASH INDUSTRIES LTD AND FURTHER AT PAGE NO. 23, 24, 25 REFLECTED THE INVESTMENT OF RS. 54052/ - AND RS. 135850/ - IN THOSE SHARES. THE ASSESSEE WAS ASKED TO RECONCILE THE ABOVE TRANSACTION WITH THE BOOKS OF ACCOUNT AND FURNISH SOURCE OF THE SAME. THE ASSESSEE DI D NOT FILE THE COMPLETE DETAILS BUT SUBMITTED THAT THE INVESTMENT SHOWN IN THE BOOKS OF ASSESSEE IS FAR MORE THAN THE AMOUNT SHOWN IN THOSE PAPERS. THE LD AO CONSIDERED THE EXPLANATION OF THE ASSESSEE, HOWEVER, REJECTED THE SAME AS THE ASSESSEE DID NOT FIL E THE COMPLETE DETAILS. THEREFORE, THE ADDITION OF RS. 1848025/ - IS MADE TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD CIT(A) WHO UPHELD THE ABOVE ADDITION VIDE PARA NO. 6 OF HIS ORDER AS UNDER: - 6 UNDISCLOSED INVESTMENT IN SHARES 6.1 AS PER THE ASSESSMENT ORDER, THE ID. AO MADE AN ADDITION OF RS. 18,48,025/ - BEING UNDISCLOSED INVESTMENT IN THE SHARES OF M/S JAIPRAKASH INDUSTRIES LTD, OBSERVING AS UNDER: D. PAGE 22 - 25 OF ANNEXURE A - 1 SEIZED FROM 1172/C - 1, VASANT KUNJ, NEW D ELHI, INDICATE THAT THE ASSESSEE HAS MADE THE FOLLOWING INVESTMENT DURING F. Y. 1991 - 92: - A) PG.22 REVEALS TRANSACTIONS IN JP SHARES, SHOWING AN INVESTMENT OF RS. 16,58,125/ - . B) PG.23 REFLECTS AN INVESTMENT OF RS. 54,050/ - IN JP SHARES. C) PG - 24 - 25 REFLECTS AN INVESTMENT OF RS. 1,35,850/ - IN THE PURCHASES/SALE OF JP SHARES. THE ASSESSEE WAS ASKED TO RECONCILE THE ABOVE TRANSACTIONS WITH THE BOOKS OF ACCOUNTS AND FURNISH THE SOURCE OF THESE INVESTMENTS AND SHOW CAUSE WHY THE SAME SHOULD NOT BE TREATED AS ITS UNDISCLOSED INVESTMENT. THE ASSESSEE FURNISHED ITS REPLY STATING THAT IT HAS INVESTMENT IN SHARES OF M/S JAIPRAKASH INDUSTRIES LTD. WHICH IS MORE THAN THE VALUE OF INVESTMENT REFLECTED IN THE MATERIAL SEIZED REFERRED ABOVE. ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 22 THE SUBMISSION OF THE AS SESSEE WAS CONSIDERED BUT CANNOT BE ACCEPTED IN THE LIGHT OF THE FOLLOWING: THE ASSESSEE HAS NOT FILED COMPLETE DETAILS. THE ASSESSEE HAS ALSO NOT PRODUCED COMPLETE BOOKS OF ACCOUNT. IT CANNOT BE HELD THAT THE VALUE OF SHARES OF JIL, AS APPEARING IN THE CO PY OF BALANCE SHEET, COMES FROM THE SAME VERY SHARES THAT HAVE BEEN FOUND AT THE TIME OF SEARCH WHICH WERE ANNEXED AT PAGE 22 - 25 OF ANNEXURE A - 1 SEIZED FROM 1172/C - 1, VASANT KUNJ, NEW DELHI,. THEREFORE, AN ADDITION OF RS.1848025/ - IS HEREBY MADE TO THE INC OME OF THE ASSESSEE. 6.2 DURING THE APPELLANT PROCEEDINGS, THE APPELLANT FILED THE FOLLOWING WRITTEN SUBMISSION: THE LEARNED ASSESSING OFFICER HAS ALSO ERRED IN MAKING ADDITION OF RS. 18.48,025/ - BEING THE VALUE OF SHARES OF JAIPRAKASH INDUSTRIES LIMITE D IGNORING THE FOLLOWING FACTS: I. THAT THE SHARES IN QUESTION WERE FOUND AT 1172/C - 1, VASANT KUNJ, WHICH WAS NEITHER THE OFFICE PREMISE OF THE ASSESSEE COMPANY, NOR THE RESIDENCE OF ITS DIRECTORS. II. THE ASSESSEE COMPANY WAS NOT PROVIDED WITH THE LIST O F DETAILS OF ABOVE SHARES, THAT COULD ENABLE IT TO RECONCILE THE SHARES, BY THE INCOME TAX DEPARTMENT. III. THAT THE APPELLANT ASSESSEE COMPANY EVEN OTHERWISE, POSSESSED SHARES VALUING RS. 1,39,79,232 WHICH COVERED THE VALUE OF SHARES IN QUESTION. AO CONTE NTED THAT DURING THE SEARCH PAGES 22 - 25 OF ANNEXURE A - 1 SEIZED FROM 1172/C - 1, VASANT KUNJ, NEW DELHI INDICATE THAT THE ASSESSEE HAS MADE THE FOLLOWING INVESTMENT DURING THE F. Y. 1991 - 92: A) PAGE 22 REVEALS TRANSACTION IN JP SHARES, SHOWING AN INVESTMENT OF RS. 16,58,125/ - B) PAGE 23 REFLECTS AN INVESTMENT OF RS. 54,050 IN JP SHARES. C) PAGES 24 - 25 REFLECTS AN INVESTMENT OF RS. 1,35,850/ - IN THE PURCHASE/SALE OF JP SHARES. THE ASSESSEES REPLY TO THAT IS, IT HAS INVESTMENT IN SHARES OF M/S JAIPRAKASH I NDUSTRIES LIMITED WHICH IS MORE THAN THE VALUE OF INVESTMENT REFLECTED IN THE MATERIAL SEIZED REFERRED ABOVE. ' ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 23 THE AO MADE ADDITION BY SAYING THAT ASSESSEE DID NOT PRODUCED COMPLETE BOOKS OF ACCOUNT. IT CANNOT BE HELD THAT THE VALUE OF SHARES OF JAIPRAKAS H INDUSTRIES LIMITED, AS APPEARING IN THE COPY OF BALANCE SHEET COMES FROM THE SAME VERY SHARES THAT HAVE BEEN FOUND AT THE TIME OF SEARCH WHICH WERE ANNEXED AT PAGES 22 - 25 OF ANNEXURE A - 1 SEIZED FROM 1172/C - 1, VASANT KUNJ, NEW DELHI FIRSTLY ALL THE LAPTOP S, COMPUTER THAT CONTAIN BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE SEIZED BY THE INCOME TAX DEPARTMENT THEN HOW CAN ASSESSEE PROVIDE COMPLETE BOOKS OF ACCOUNT, SO WE ARE REQUESTING YOU TO PROVIDE US ALL THE LAPTOPS AND COMPUTERS, WHICH WERE SEIZED BY THE D EPARTMENT AT THE TIME OF SEARCH, SO THAT WE CAN PROVIDE YOU COMPLETE BOOKS OF ACCOUNT. SECONDLY, WE ARE REQUESTING YOU TO PROVIDE COMPLETE DETAILS OF THE SHARES, WHICH WERE SEIZED BY THE DEPARTMENT, INCLUDING DISTINCTIVE NUMBER OF SHARES SO THAT WE CAN PRO PERLY RECONCILE THE SHARES SEIZED BY THE DEPARTMENT WITH THE SHARES AVAILABLE WITH US. 6.3 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE ID. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. AR AND THE FACTS OF THE CASE ON RECORD. THE DOCUM ENTS FOUND AND SEIZED THE COURSE OF THE SEARCH INCLUDED THE SHARES OF M/S JAIPRAKASH INDUSTRIES LTD WORTH RS.18,48,025/ - . ON BEING CONFRONTED, THE APPELLANT STATED THAT THE INVESTMENT DOES NOT BELONG TO IT AND MOREOVER THAT THE VALUE OF THE SHARES FOUND AN D SEIZED WAS LESS THAN WHAT HAS BEEN SHOWN IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. HOWEVER, NOT SATISFIED WITH THE EXPLANATION, THE LD. AO MADE THE ADDITION OF THE AFORESAID AMOUNT AS UNDISCLOSED INCOME OF THE APPELLANT. DURING THE PROCEEDINGS BEFORE ME , THE APPELLANT MERELY REPEATED THE EARLIER CONTENTION THAT THE INVESTMENT DOES NOT BELONG TO IT WITHOUT FURNISHING ANY DETAILS/EVIDENCES IN SUPPORT OF THE CONTENTION THAT THE SHARES ARE PART OF THE SAME AS APPEARING IN ITS BALANCE SHEET. SUCH CONTENTION O F THE APPELLANT WITHOUT ANY SUBSTANTIATION CARRIES NO MEANING IN VIEW OF THE PROVISIONS OF SECTION 132 (4A) OF THE ACT WHICH READ AS UNDER: WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON, ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 24 (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSU MED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURP ORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. FROM THE ABOVE IT CAN BE SEEN THAT THE LAW IS VERY CLEAR ON THIS POINT. AS PER THE PROVISIONS OF SECTION 132 (4A), ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE OR THIN G IS FOUND IN THE POSSESSION/CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT SHALL BE PRESUMED THAT THE CONTENTS OF SUCH DOCUMENTS ARE TRUE AND THE SAME ARE IN THE HANDWRITING OF THE PERSON WHO MAY REASONABLY BE ASSUMED TO HAVE WRITTEN THE SAME AND ALS O THAT THE RELEVANT ASSETS ARE OWNED BY THE PERSON IN WHOSE POSSESSION THE SAME WERE FOUND. IN VIEW OF THE ABOVE, THE ONUS WAS ON THE APPELLANT TO EXPLAIN THE TRANSACTIONS HOWEVER, THE SAME WAS NEITHER DONE DURING THE ASSESSMENT PROCEEDINGS NOT SUBSEQUENTL Y DURING THE APPELLATE PROCEEDINGS IN VIEW OF THE AFORESAID POSITION OF THE LAW AND IN - THE ABSENCE OF ANY WORTHWHILE EXPLANATION/SUBSTANTIATION OF ITS CONTENTION, THE ARGUMENT TAKEN BY THE APPELLANT IS LIABLE TO BE REJECTED. UNDER THE CIRCUMSTANCES, THE AD DITION OF RS.18,48,025/ - IS UPHELD AND ACCORDINGLY, THE GROUND NO. 5 IS DISMISSED. 25 . THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US ON THIS ISSUE VIDE GROUND NO. 4 OF THE APPEAL. THE ISSUE INVOLVED IS ADDITION OF RS. 1848025/ - BECAUSE OF THE VALUE OF THE SHARES OF JAIPRAKASH INDUSTRIES LTD. THE LD AO NOTED THAT THREE SEIZED PAPERS SHOWS THE INVESTMENT OF RS. 16.58 LACS AND RS. 54050 / - AND RS. 135850 / - AS INVESTMENT IN THE SHARES OF JAIPRAKASH INDUSTRIES LTD RESPECTIVELY. LD AR PRO DUCED BEFORE US THE BALANCE SHEET OF THE ASSESSEE WHEREIN, THE INVESTMENT OF RS. 5232250/ - OF 452500 EQUITY SHARES OF JAIPRAKASH INDUSTRIES LTD WERE SHOWN IN THE INVESTMENT SCHEDULE AS ON 31.03.20 9 1. HE FURTHER EXPLAINED THAT AS ON 31.03.1992 THE ASSESSEE WAS HAVING 285600 EQUITY SHARES OF THE ABOVE COMPANY AT COST OF RS. 3303607/ - . HE THEREFORE, SUBMITTED THAT THE ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 25 VALUE OF SHARES SHOWN IN THE SEIZED DOCUMENTS ARE LESS THAN THOSE ARE SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE LD AO AND THE LD CIT(A) CONFIRMED THE ABOVE ADDITION FOR THE REASON THAT THE SEIZED DOCUMENTS SHOWS THE INVESTMENT AND THE ASSESSEE COULD NOT EXPLAIN AND RECONCILE IT HOLDING SHOWN IN ITS BOOKS OF ACCOUNT. ON PERUSAL OF THE BALANCE SHEET IT IS APPARENT THAT THE ASSESSEE HAS SHOWN HOLDING OF 452500 EQUITY SHARES OF RS. 10 EACH OF JAIPRAKASH INDUSTRIES LTD AT COST OF RS. 5234250/ - . OUT OF THESE SHARES AS ON 31.03.1991 , THE ASSESSEE SO LD SOME OF THE SHARES DURING THE FY 1991 - 92 AND HAS DISCLOSED PROFIT OF RS. 3876769/ - IN ITS PROFIT AND LOSS ACCOUNT. THEREFORE, WITHOUT VERIFYING THE ORIGINAL HOLDING AS WELL AS THE AMOUNTS SHOWN IN THE SEIZED DOCUMENTS QUA NUMBER OF SHARES, IT IS NOT FAIR TO SAY THAT THE TRANSACTION SHOWN IN THE SEIZED DOCUMENTS IS UNACCOUNTED INVESTMENT OF THE ASSESSEE . TO TAX THE SUM AS PER SEIZED DOCUMENTS IN THE HANDS OF THE ASSESSEE , IT IS NECESSARY TO SHOW THAT THESE ARE THE SHARE BOUGHT BY THE ASSESSEE OVE R AND ABOVE INVESTMENT DISCLOSED I N ITS BOOKS OF ACCOUNT. THE ASSESSEE SUBMITS THAT THE TRANSACTIONS SHOWN IN SEIZED DOCUMENTS ARE ALREADY RECORDED IN THE BOOKS OF ACCOUNTS AND DOES NOT REPRESENT UNDISCLOSED INCOME. THE LD AO ALSO MADE ADDITION WI THOUT FINDING OUT THE NUMBER OF SHARE PURCHASED LOOKING AT THE PREVAILING MARKET RATES OF THOSE SHARES. THEREFORE, IT IS NOT ASCERTAINABLE THAT HOW MANY SHARES DO THE ASSESSEE AND WHETHER ANY FURTHER SHARES WERE PURCHASED WHICH ARE NOT RECORDED IN THE BOOK S AS PER SEIZED DOCUMENTS HOLD . THIS FACTS NEEDS VERIFICATION FROM THE SHARE TRANSFER DEPARTMENT OF THE JAY PRAKASH INDUSTRIES LIMITED ALSO FROM THE SHAREHOLDERS FOLIO NUMBERS TO VERIFY WHETHER ON THE DATES SHOWN IN THE SEIZED DOCUMENTS OR THEREAFTER SUCH SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSE. ANYWAY, WE DO NOT WANT TO RESTRICT THE LEVEL OF INQUIRY OF THE LD AO AS WELL AS THE RIGHT OF THE ASSESSEE TO ADDUCE THE EVIDENCE IN ITS SUPPORT. THEREFORE , IN THE INTEREST OF JUSTICE , WE SET ASIDE THIS GROUND OF APPEAL BACK TO THE FILE OF THE LD AO FOR EXAMINATION AFRESH. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE THE RELEVANT DETAILS OF THE SHARES HELD BY IT AS WELL ITO VS. SEQUENCE ESTATES PVT. LTD, IT(SS) NO. 18 AND 21/DEL/2013 (ASSESSEE) IT(SS) NO. 21/DEL/2013 (REVENUE) (BLOCK PERIOD: 1989 - 90 TO 1999 - 2000) PAGE | 26 AS TRANSACTION CONTAINED IN THOSE SEIZED DOCUMENTS WITH RECONCILIATION. IN THE RESUL T GROUND NO. 4 OF THE APPEAL OF THE ASSESSEE IS ALLOWED ACCORDINGLY. 26 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 27 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 2 0 / 07 / 2018 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 0 / 07 / 2018 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI