Asian Capital Services Ltd., New Delhi V. ACIT, New Delhi

ITSSA 22/DEL/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3551 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-06-2017
• Assessment Year: misc
• Appeal Filed On: 13-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S K CHATURVEDI
• Keywords: Unexplained expenditure; Income from undisclosed sources; Document seized; Opportunity of being heard; Source of fund; Additional evidence; Question of law; Documents seized
• Section: 132; 144; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER IT (SS) A NO. 22 /DE L/ 2013 BLOCK PERIOD : 1989 - 90 TO 1999 - 2000 M/S. ASIAN CAPITAL SERVICES LTD., A - 13/1, VASANT VIHAR, NEW DELHI VS. ACIT, CENTRAL CIRCLE - 9, ARA CENTRE, E - 2, JHANDEWALAN EXTENSION, NEW DELHI PAN : AAACA0791P ( APPELLANT ) (RESPONDENT) AND IT (SS) A NO. 23/DEL/2013 BLOCK PERIOD : 1989 - 90 TO 1999 - 2000 ITO, WARD - 2(2), ROOM NO. 389A, C.R. BUILDING, I.P. ESTATE, NEW DELHI VS. M/S. ASIAN CAPITAL SERVICES LTD., A - 13/1, VASANT VIHAR, NEW DELHI PAN : AAACA0791P ( APPELLANT ) (RESPONDENT) ASSESSEE BY SH. S.K. CHATURVEDI, CA DEPARTMENT BY SMT. APARNA KARAN, CIT(DR) DATE OF HEARING 11.12.2017 DATE OF PRONOUNCEMENT 21.12.2017 ORDER PER O.P. KANT , A. M. : THESE CROSS A PPEALS BY THE ASSESSEE AND BY THE R EVENUE RESPECTIVELY ARE DIRECTED AGAINST ORDER DATED 28/03/2013 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) - XXXII, NEW DELHI [IN SHORT THE LD. CIT - (A) ] FOR BLOCK PERIOD FROM 1989 - 90 TO 1999 - 2000. THE ASSESSEE FILED CONCISE GROUNDS OF APPEAL DURING THE HEARING, WHICH ARE REPRODUCED AS UNDER: 2 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 1. LD CIT (A) - XXXII, NEW DELHI HA S ERRED BY CONFIRMING THE ADDITION OF RS. 2543192/ - ADDED TO INCOME BY ASSESSING OFFICER IN ASSESSMENT YEAR 1997 - 98 ON THE BASIS OF SEIZED DOCUMENT MARKED AS PAGE NO. 6 OF ANNEXURE - A - 1 IS UNEXPLAINED EXPENDITURE, WHICH IS UNJUST, ARBITRARY, ILLEGAL AND IN SHEER DISREGARD OF THE FACTS AND DOCUMENTARY EVIDENCES. 2. LD CIT(A) - XXXII, NEW DELHI HAS ERRED BY CONFIRMING THE ADDITION OF RS. 4078000/ - IN ASSESSMENT YEAR 1994 - 95 ON THE BASIS OF A ROUGH NOTING ON PAGE NO. 2 OF ANNEXURE A - 2, ADDED BY ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED ICDS WHICH IS ARBITRARY, UNJUST AND AGAINST THE FACTS OF THE CASE. 3. CIT(A) - XXXII, NEW DELHI HAS ERRED BY CONFIRMING THE ADDITION OF RS. 133,22590/ - IN ASSESSMENT YEAR 1996 - 97 ON THE BASIS OF ANNEXURE A - 40, ADDED BY ASS ESSING OFFICER ON ACCOUNT OF UNEXPLAINED SOURCE OF REPAYMENT OF LOAN WHICH IS ARBITRARY, UNJUST AND AGAINST THE FACTS OF THE CASE. 4. CIT(A) - XXXII, NEW DELHI HAS ERRED BY CONFIRMING THE ADDITION OF RS. 37 50000/ - (IN ASSESSMENT YEAR 1996 - 97 RS. 1500000/ - AND IN 1997 - 98 RS. 225000 0 / - ) ON THE BASIS OF A NOTIONAL CALCULATION OF INTEREST ON THE BASIS THAT THE LOAN AMOUNT WAS UTILIZED FOR ILLEGAL PURPOSES WHICH IS ARBITRARY, UNJUST AND AGAINST THE FACTS OF THE CASE. 5. THE APPELLANT CRAVES LEAVE TO ADD, DELET E, MODIFY ANY GROUND OF APPEAL WITH THE PERMISSION OF HON'BLE BENCH. 2. THE GROUNDS OF APPEAL OF THE R EVENUE ARE REPRODUCED AS UNDER: 1 . WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) HAS ERRED: A. IN DELETING THE ADDITION OF RS.1,76,29,450/ - MADE BY THE AO ON ACCOUNT OF SALE AGREEMENT SEIZED DURING THE COURSE OF SEARCH, WITHOUT THE ASSESSEE SUBSTANTIATING EITHER BEFORE THE ASSESSING OFFICER OR THE CIT(A) THAT THE SO CALLED EXPORT SALES HAS BEEN SHOW N IN THE BOOKS OF ACCOUNT. B. WITHOUT THE ASSESSEE PROVIDING ANY EVIDENCE BEFORE THE ASSESSING OFFICER AND THE CIT(A) THAT THE IMMOVABLE PROPERTY 3 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 REFERRED TO ABOVE WAS TRANSFERRED BY THE PARTY IN CONSIDERATION OF THE AMOUNT DUE RELATING TO THE EXPORTS SA LES. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT A SEARCH A CTION UNDER SECTION 132 OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) WAS CONDUCTED ON 02/07/1999 AT THE PREMISES OF THE ASSESSEE COMPANY ALONG WITH THE OTHER ENTITIES OF THE JAIPRAKASH I NDUSTRIES LTD G ROUP . ACCORDING TO THE LD. ASSESSING OFFICER, JAY PRAKASH I NDUSTRIES LTD . G ROUP WAS LARGELY CONTROLLED BY SH. S . K . DIXIT, SON - IN - LAW OF SH. J . P . GAUR, CHAIRMAN OF THE G ROUP. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE COMPANY WAS FILING ITS REGULAR RETURN OF INCOME SINCE ASSESSMENT YEAR 19 96 - 97 GENERALLY CL AIMING LOSS EXCEPT DURING FINANCIAL YEAR 19 95 - 96. IN VIEW OF THE NON - COMPLIANCE BY THE ASSESSEE OF NOTICE ISSUED UNDER SECTION 15 8 BC OF THE ACT, THE ASSESSMENT WAS COMPLETED EX - PART E , I.E. , BEST JUDGMENT ASSESSMENT UNDER SECTION 144 READ WITH SECTION 158BC OF THE ACT BY THE ASSESSING OFFICER SITUATED AT LUCKNOW. LATER ON, THE CASE WAS DE - CENTRALI Z ED TO NEW DELHI AND THE ASSESSEE PREFERRED AN APPLICATION UNDER SECTION 264 OF THE ACT BEFORE THE LD. COMMISSIONER OF INCOME T AX, DELHI HAVING JURISDICTION OVER TH E CASE. THE LD. COMMISSIONER OF INCOME T AX, ALLOWED T HE APPLICATION OF THE ASSESSEE V IDE ORDER DATED 12/07/2010 AND SET ASIDE THE ORDER OF THE ASSESSING OFFICER DATED 30/07/2001 AND RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 3.1 COMPLYING THE DIRECT ION OF THE LD. COMMISSIONER OF INCOME T AX, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 158BC OF THE ACT WHICH WAS SER VED ON 12 /09/2011. IN RESPONSE, THE ASSESSEE SUBMITTED THAT RETURN ORIGINALLY FILED BY THE ASSESSEE MIGHT BE TREA TED AS RETURN FILED 4 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 UNDER SECTION 158 BC OF THE ACT. SUBSEQUENTLY , STATUARY NOTICES WERE ISSUED AND COMPLIED WITH. THE ASSESSMENT WAS COMPLETED ON 30/12/2011 DETERMINING TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD FROM 1989 - 90 TO 19 99 - 2000 A T RS.4,41,35, 7 32/ - . AGGRIEVED , THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT - ( A ) AND FIL ED CERTAIN ADDITIONAL EVIDENCES . THE LD. CIT - ( A ) FORWARDED THOSE ADDITI ONAL EVIDENCES TO THE ASSESSING OFFICER. THE ASSESSING OFFICER DID NOT OBJECT FOR ADMITTING THE ADDITIONAL EVIDE NCES AND ACCORDINGLY , AFTER TAKING INTO ACCOUNT THE ADDITIONAL EVIDENCES AND SUBMISSION OF THE ASSESSEE , THE LD. CIT - ( A ) ALLOWED PART RELIEF TO THE ASSESSEE. AGGRIEVED , BOTH THE ASSESSEE AND THE R EVENUE ARE IN APPEAL RAISING THEIR RESPECTIVE GROUNDS IN THEIR APPEAL. IT (SS)A NO. 22/DEL/2013 . 4. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE IN IT (SS) A NO. 22/DEL/2013. 5. THE GROUND NO. 1 RELATES TO ADDITION OF RS. 25,43,192/ - AS UNEXPLAINED EXPENDITURE BASED ON SEIZED DOCUMENT MARKED AS PAGE NO. 6 TO 8 OF ANNEXURE A - 1. T HE ASSESSING OFFICER OBSERVED THAT THE AMOUNT OF RS.25,43,192/ - CONSISTED OF AMOUNT OF RS. 22,67,896/ - SHOWN AS OUTSTANDING AS ON 05/12/1998 AND AMOUNT OF RS. 2, 75,296/ - AS INCOME FROM M/S PODDAR I NTERIORS , DELHI. ACC ORDI NG TO THE ASSESSING OFFICER, T HESE WERE UNJUSTIF IED CASH EXPENSES EXCEEDING RS. 20,000/ - . ON THE CONTRARY, THE ASSESSEE S UBMITTED THAT THE AMOUNT OF RS.22,67, 896/ - WAS AMOUNT OF OUTSTANDING FROM VARIOUS PART IES PERTAINING TO M/S RASHIVA I NTERNATIONAL LTD . I.E. A SISTER CONCERN AND ALL THOSE TRANSACTIONS ARE DULY ACCOUNTED. THE ASSESSEE FILED AN EXTRAC T OF TRIAL BALANCE AND GENERAL LEDGER OF M/S RASHIVA I NTERNATIONAL LTD . IN SUPPORT OF ITS CLAIM. THE 5 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 LEARNED CIT - ( A ) OBSERVED THAT EXTRACT O F THE TRIAL BALANC E OR GENERAL LEDGER OF M/S RASHIWA I NTERNATIONAL LTD COULD NOT EXPLAIN AND SUBSTANTIATE THE TRANSACTION IN QUESTION. THOUGH THE ASSESSEE SUBMITTED THAT IT WOULD FURNISH FURTHER EXPLANATION IN RESPECT OF THE TRANSACTIONS TO THE LD. CIT - ( A ) , HOWEVER , THE ASS ESSEE DID NOT FILE ANY FURTHER EXPLANATION/EVIDENCES BEFORE THE LEARNE D CIT - ( A ) AND ACCORDINGLY , HE UPHELD THE ADDITION OF RS.25,43, 192/ - . 5.1 THE LEARNED COUNSEL OF THE ASSESSEE FILED THE PAPER BOOK CONTAINING PAGES 1 TO 58 AND REFERRED TO PAGE 10 OF THE PAPER BOOK, WHICH IS A PHOTOCOPY OF PAGE NO. 6 OF ANNEXURE A - 1 SEIZED FROM THE PREMISES OF THE ASSESSEE. AS THE PHOTOCOPY WAS NOT LEGIBLE , THE LEARNED COUNSEL ALSO SUBMITTED A TYPED COPY OF THE SAID PAPER. THE LEARNED COUNSEL DRAWN OUR ATTENTION TO PAGE 1 1 TO 24 OF THE PAPER BOOK, WHICH ARE TRIAL BALANCE AND GENERAL LEDGERS OF M/S RASHIWA I NTERNATIONAL LTD . AND SUBMITTED THAT TRANSACTION IN QUESTION WERE APPEARING AS OUTSTANDING DEBTORS AS ON 05/12/1998 IN THE BOOKS OF M/S RASHIWA I NTERNATIONAL LTD. THE L D. COUNSEL SUBMITTED THAT LOWER AUTHORITIES HAVE NOT EXAMINED THE CLAIM OF THE ASSESSEE PROPERLY. HE FURTHER SUBMITTED THAT APPEAL OF M/S RASHIVA I NTERNATIONAL LTD . HAS ALREADY BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER BY THE TRIBUNAL, ACCORDINGL Y , HE REQUESTED THAT MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. 5.2 ON THE CONTRARY, LD. CIT (DR) , RELIED ON THE FINDING OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE ITSELF FAILED TO SUBMIT/PRODUCE FURTHER EXPLANATION IN SUPPORT OF ITS CLAIM BEFORE THE LEARNED CIT - (A) AND , THEREFORE , THE LD. CIT - (A) WAS JUSTIFIED IN SUSTAINING THE ADDITION. 6 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 5.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. ACCORDING TO THE ASSESSEE , THE AMOUNT IN DISPUTE IS OUTS TANDING DEBTORS OF M/S RASHIWA I NTERNATIONAL LTD . AS ON 05/12/1998, WHEREAS ACCORDING TO THE LOWER AUTHORITIES, THE ASSESSEE FAILED TO EXPLAIN WITH EVIDENCES THAT THE AMOUNT IN QUESTION IS OUTST ANDING DEBTORS OF M/S RASHIVA I NTERNATIONAL LTD. BEFORE THE LD. CIT - (A) , THE ASSESSEE PRODUC ED TRIAL BALANCE OF M/S RASIWA I NTERNATIONAL LTD . AS ON 05/12/1998 AND GENERAL L EDGE RS OF THE PARTIES APPEARING IN THE BO OKS OF ACCOUNTS OF M/S RASHIWA I NTERNATIONAL LTD, HOWEVER , THE LD. CIT - (A) OBSERVED THAT THE CLAIM OF THE ASSESSEE COULD NOT BE RECONCILED WITH THE DOCUMENTS SUBMITTED BY THE ASSESSEE. IN OUR OPINION, THE TRIAL BALANCE DATED 05/12/1998 AND LEDGER OF PARTIES, WHICH WERE NOT AUDITED BY ANY CHARTERED ACCOUNTANT , CANNOT BE RECONCILED IN ISOLATION. THE ASSESSEE WAS REQUIRED TO PRODUCE COMPLETE BOOKS OF ACCOUN TS AND VOUCHERS OF M/S RASHIWA I NTERNATIONAL LTD ., SO THAT THE REVEN UE A UTHORITIES COULD RECONCILE THE NAME OF THE PARTIES AND AMOUNT APPEARING IN PAGE NO. 6 OF ANNEXURE A - 1 WITH THE AMOUNT OUTSTANDING FROM THE RELEVANT PARTIES AS ON 05/12/1998 IN THE BOOKS OF ACCOUNTS OF M/ S. RASHIWA I NTERNATIONAL LTD. SINCE THIS EXERCISE OF RECONCILING THE AMOUNTS APPEARING IN SEIZED DOCUMENTS WITH THE BOOKS OF ACCOU NTS OF M/S RASHIWA I NTERNATIONAL LTD . HAS NOT BEEN CARRIED OUT BY THE LOWER AUTHOR ITIES DUE TO FAILURE ON ACCOUNT OF THE ASSESSEE AND NOW BEFORE US THE LEARNED COUNSEL HAS ASSURED THAT ALL RELEVANT DOCUMENTS SHALL BE PRODUCED BEFORE THE ASSESSING OFFICER, IF MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT TRUE FACTS SHOULD CO ME ON RECORD FOR DECIDING ISSUE - IN - DISPUTE JUDICIOUSLY . T HUS THE FACT, WHETHER THE AMOUNTS APPEARING IN PAGE NO. 6 OF ANNEXURE A - 1 ARE OUTSTAN DING 7 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 DEBTORS OF M/S RASHIWA I NTERNATIONAL LTD . , NEED TO BE EXAMINED THOROUGHLY. 5.4 AC CORDINGLY, WE RESTORE THE ISSUE - IN - DISPUTE TO THE FILE OF THE ASSESS I NG OFFICER FOR DECIDING AFRESH , WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE ALL THE NECESSARY DOCUMENT/EVIDENCE IN SUPPORT OF ITS CLAIM. THE ASSE SSING OFFICER MAY ALSO EXAMINE/ VERIFY THE BOOKS OF ACCOUNTS OF THE PARTIES APPEARING IN PAGE NO. 6 OF ANNEXUR E A - 1 OF SEIZED DOCUMENTS FOR CROSS - VERIFICATION OF THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE GROUND N O. 2 RELATES TO ADDITION OF RS. 40, 78,000/ - AS UNDISCLOSED I NTERCORPORATE DEPOSITS (ICDS) ON THE BASIS OF NOTING ON PAGE NO. 2 OF ANNEXURE A - 2 OF SEIZED DOCUMENTS. ACCORDING TO THE ASSESSING OFFICER, THE PAGE NO. 2 OF ANNEXURE A - 2 SEIZED FROM THE PREMISES D - 3/10, VASANT VIHAR NEW DELHI, INDICATED OU TSTANDING ICDS AMOUNTING TO RS. 52.60 CRORES ON 30/06/1 994 , WHICH WAS SUBSEQUENTLY REDUCED TO 40.78 CRORES. THE ASSESSEE MADE TWO - FOLD SUBMISSIONS. FIRSTLY, THESE TRANSACTION S DID NOT BELONG TO THE ASSESSEE. SECONDLY , THE FIGURES WERE NOT IN CRORES, AS WHEREVER THE FIGURES ARE IN CRORES IN SEIZED DOCUMENTS , IT IS MENTIONED SPECIFICALLY CRORES WITH THE FIGURES AND THE HANDWRITING APPEARING ON OTHER PAGES OF THE SEIZED MATERIAL FOR WHICH FIGURES HAD BEEN TAKEN TO IN LAKHS ARE SAME AS ON THIS PAGE. THE ASSESSING OFFICER CONSIDERED THE SUBMISSION OF THE ASSESSEE AND ACCEPTED THE AMOUNTS AS IN LAKHS . BUT HE DID NOT ACCEPT THE SUBMISSION THAT THESE PAPERS DID NOT BELONG TO THE ASSESSEE. IN VIEW OF THE ASSESSING OFFICER , IN TERMS OF SECTION 132(4A) THE PAPERS WERE PRESUMED TO BE BELONGING TO THE ASSESSEE AS SAME WERE FOUND FROM PREMISES OF THE ASSESSEE AND THE ONUS WAS ON TH E ASSESSEE TO ESTABLISH THAT THO SE TRANSACTION DID NOT BELONG TO THE ASSESSEE. THE ASSESSING OFFICER HELD 8 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE TO SUPPORT THE EXPLANATION THAT THE TRANSACTION DID NOT BELONG TO IT, ACCORDINGLY HE MADE ADDITION OF THE AMOUNT OF RS. 40.78 LACS TO THE INCOME OF THE ASSESSEE. BEFORE THE LD. CIT - (A) , THE ASSESSEE REPEATED THE SAME SUBMISSION THAT IT WAS A ROUGH DOCUMENT AND DID NOT BELONG TO THE ASSESSEE. THE L D. CIT (A) OBSERVED THAT THE LD. AR MERELY REPEATED THE EARLIER CONTENTION THAT THE TRANSACTION DID NOT BELONG TO IT. ACCORDING TO HIM, SUCH CONTENTION OF THE ASSESSE E WITHOUT ANY SUBSTANTIATION , WAS HAVING NO MEANING IN VIEW OF THE PROVISION OF SECTION 132(4A) OF THE ACT AND ACCORDINGLY UPHELD THE ADDITION. 6.1 BEFORE US , THE LEARNED COUNSEL REFERRED TO PAGE - 25 OF THE PAPER BOOK, WHICH IS A COPY OF PAGE NO. 2 OF AN NEXURE - A OF SEIZED DOCUMENTS. THE LEARNED COUNSEL TOOK TWOFOLD ARGUMENTS CHA LLENGING THE ADDITIONS. FIRSTLY , THE DATE AGAINST THE FIGURE OF 52.60 WAS APPEARING AS 30/06/94, WHEREAS THE ASSESSEE COMPANY WAS INCORPORATED ON 18/05/1994 AS PER MASTER DATA FRO M MINISTRY OF COMPANY AFFAIRS APPEARING AT PAGE NO. 26 OF THE PAPER BOOK. ACCORDING TO THE LD. COUNSEL IT WAS NOT POSSIBLE FOR A COMPANY TO HAVE ICD S OUTSTANDING OF RS. 40.78 LACS , WITHIN A PERIOD OF APPROXIMATELY ONE AND HALF MONTH AFTER ITS INCORPORATION. SECONDLY, IT WAS A DUMB DOCUMENT AND DID NOT GIVE RISE TO ANY INTELLIGIBLE INTERPRETATION. ACCORDING TO LEARNED COUNSEL , THE PAGE WAS NEITHER A PART OF BOOKS OF ACCOUNTS NOR A DOC UMENT AND THUS , IT SHOULD BE IGNORED AS DUMB DOCUMENT. IN SUPPORT OF THE CONTENTION, THE LD. COUNSEL RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: 1 . COMMISSIONER OF INCOME TAX VERSUS SM AGGARWAL (2007) 293 ITR 43 (DELHI). 9 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 2 . COMMISSIONER OF INCOME TAX VERSUS GIRISH CHOUDHARY (2008) 296 ITR 619 ( DELHI). 6.2 ON THE CONTRARY, LD. CIT(DR) SUBMITTED THAT THE ASSESSEE HAS NOT DISCHARGED ITS ONUS OF REBUTTAL OF PRESUMPTION UNDER SECTION 132(4A) WITH DOCUMENTARY EVIDENCES. ACCORDING TO HER, THE ASSESSEE WAS REQUIRED TO EXPLAIN WITH DOCUMENTARY EVIDENCE AS TO WHOM THE DOCUMENT IN QUESTION BELONGED TO. IN VIEW OF THE FAILURE OF THE ASSESSEE IN REBUTTING TH E PRESUMPTION UNDER SECTION 132 (4A) OF THE ACT, THE LD. ASSESSING OFFICER AND THE LD. CIT - (A) WAS JUSTIFIED IN MAKING /SUSTAINING ADDITION OF THE AMOUNT IN THE HANDS OF THE ASSESSEE. 6.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. SINCE THE PAGE NO. 2 OF THE ANNEXURE A - 2 HAS BEEN FOUND IN THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER INVOKING PROVISIONS OF SECTION 132(4A) PRESUMED THAT IT BELONG TO THE ASSESSEE AND IT WAS THE ASSESSEE WHO WAS REQUIRED TO EXPLAIN THE ENTRIES THEREIN. THE ASSESSEE ON THE ONE HAND SUBMITTED THAT THIS DOCUMENT DID N OT BELONG TO IT BUT ON THE OTHER HAND SUBMITTED THAT AMOUNT MENTIONED IN THE PAPER WAS IN LAKHS , AS AMOUNTS AND OTHER PAPERS IN SIMILAR HANDWRITING HAVING TAKEN IN LAKH S. THE ASSESSING OFFICER ACCEPTING THE SUBMISSION OF THE AS SESSEE FOR TAKING THE AMOUNTS IN LAKHS . IN OUR OPINION, ONCE THE ASSESSEE HAS ACCEPTED THAT HANDWRITING IN THE PAGE UNDER CONSIDERATION I S SIMILAR TO OTHER PAGES SEIZED DURING THE COU RSE OF SEARCH, IT IS THE ONUS OF THE ASSESSEE TO DISCLOSE TO WHOM THE PAPER BELONGS. MERELY BY STATING THAT THE SAID PAPER DID NOT BELONG TO THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE DISCHARGED ITS ONUS AND REBUTTED THE PRESUMPTION PROVIDED IN SECTION 132(4A) OF THE ACT. THE CONTENTION OF THE LD. COUNSEL THAT THE PAPER IN QUESTION IS A DUMB DOCUMEN T IS ALSO NOT CORRECT. THE DOCUMENT CONTAINS 10 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 AMOUNT, DATE AND PARTICULARS AS INTER - CORPORATE DEPOSITS (ICDS). NAME OF THE PARTIES ARE ALSO MENTIONED IN CODED FORM. THE JUDGMENTS RELIED UPON BY THE LD. COUNSEL ARE ALSO OF NO ASSISTANCE TO THE ASSESSEE. IN T HE CASE OF S . M . AGGARWAL (SUPRA), THE ASSESSEE STATED THAT ACCOUNTS BELONGS TO HIS DAUGHTER, THOUGH SHE DENIED IN HER STATEMENT. THE ASSESSEE WAS NOT ALLOWED THE OPPORTUNITY TO CROSS - EXAMINING HIS DAUGHTER AND THEREFORE THE TRIBUNAL HELD THAT IF THE EVIDENCE COLLECTED AGAINST THE PERSON HAS NOT BEEN CONFRONTED, IT COULD NOT BE UTILIZED AG AINST HIM. IN VIEW OF THE FACTS, THE HON BLE HIGH COURT HELD THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN T HE SAID CASE. IN THE SAID CASE FIGURES TOO WERE TOTALLY UNEXPLAINED AND THUS THE HON BLE HIGH COURT HELD THAT THE DOCUMENT W AS A DUMB DOCUMENT. IN THE INSTANT CASE , THE ASSESSEE HAS NOT STATED AS TO WHOM THE PA PER BELONGS AND ALSO THE AMOUNT , DATE PARTICUL ARS ETC . ARE CLEARLY MENTIONED IN THE DOCUMENT, THUS THE DOCUMENT CANNOT BE TREATED AS DUMB DOCUMENT. IN THE CASE OF GIRISH CHAUDHARY (SUPRA) , THE ASSESSING OFFICER ALLEGED THAT THE CONCLUSION THAT THE FIGURE 48 IS TO BE READ AS RS.48 LAKHS , WHICH THE HON BLE HIGH COURT HAS HELD TO BE A DUMB DOCUMENT. BUT IN THE INSTANT CASE, THE ASSESSEE ITSELF HAS ADMITTED THAT AMOUNT IN QUESTION ARE IN LAKHS, WHICH SHOWS THAT THE ASSESSEE IS AWARE OF THE TRANSACTIONS RECORDED IN THE PAPER AND IT CANNOT SHIFT ITS RES PONSIBILITY ONTO THE R EVENUE. WE ALSO NOTE THAT THE ASSESSING OFFICER HAS NOT RECORDED IN THE IMPUGNED ASSESSMENT ORDER , AS WHICH ARE THOSE SEIZED DOCUMENTS HAVING HANDWRITING SIMILAR TO THE PAPER IN QUESTION. 6.4 IN VIEW OF THE ABOVE CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE IN DISPUTE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH, WITH THE DIRECTION TO THE ASSESSEE TO FILE ALL DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM THAT THE PAPER DOES NOT BELONG TO THE ASSE SSEE OR TO WHOM IT BELONGS , FOR DISCHARGING ITS ONUS OF REBUT TING THE 11 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 PRESUMPTION AGAINST THE ASSESSEE UNDER SECTION 132(4A) OF THE ACT. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE G ROUND NO. 2 OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE GROUND NO. 3 RELATES TO ADDITION OF RS.1,33,22,590/ - AS UNEXPLAINED SOURCE OF REPAYMENT OF LOAN ON THE BASIS OF ANNEXURE A - 40 OF SEIZED DOCUMENT. 7.1 THE ASSESSING OFFICER OBSERVED THAT THE ANNEXURE A - 40 CONTAINED POST DATED CHEQUES ISSUED BY THE ASSESSEE COMPANY TO VARIOUS PARTIES ALONG WITH PROMISSORY NOTES AND RECEIPT OF LOAN/DEPOSITS IN VOLVING PRINCIPLE AMOUNT OF RS. 1,22,63,000/ - , INTEREST PAYMENT O F RS.6,91,700/ - FOR A PERIOD OF 90 DAYS AND FINANCIAL CHARGES PAID TO VARIOUS PARTIES AT THE RATE OF RS. 12 PER ANNUM FOR 90 DAYS, WHICH WORKED OUT TO RS.3,67, 890/ - . ACCORDING TO THE ASSESSING OFFICER , THE ASSESSEE HAD BORROWED THESE FUNDS FROM THOSE PARTIES AND ISSUED POST DATED CHEQUES FOR REPAYMENT OF THE SAME, HOWEVER , LATER THE ACCOUNT WAS SQUARED UP BY MAKING CASH PAYMENT FOR THE SAME AND THUS THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE CONFIRMATORY LETTER FROM THOSE PARTIES CONCERNED W ITH R ESPECT TO THE ADVANCE/LOAN RECEIVED AND HOW THOSE LOANS WERE SETTLED OR SQUARED UP. THE ASSESSEE SUBMITTED THAT THOSE DOCUMENTS WERE PREPARED IN CONNECTION WITH PROPOSAL FOR TAKING UNSECURED LOAN FROM THE PARTIES IN QUESTION AND FOR WHICH THE DOCUMENTS AS DESIRED BY THE PARTIES WERE PREPARED TO BE DELIVERED AT THE TIME OF ACTUAL DEAL/RECEIVE PAYMENT FROM THOSE PARTIES, HOWEVER , THOSE DEAL DID NOT MATERIALIZE AND AMOUNT WAS NOT RECEIVED. ACCORDING TO THE ASSESSEE DUE TO NON - MATERIALIZATION OF THE DEAL, ALL THE ORIGINAL POST DATED CHEQUES AS WELL AS PROMISSORY NOTE WERE FOUND AND S EIZED FROM THE PREMISES OF THE D IRECTOR OF THE COMPANY. THE ASSESSING OFFICER HELD THAT THE 12 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 ASSESSEE FAILED TO FURNISH THIRD - PARTY CONFIRMATION, DOCUMENTARY EVIDEN CE TO ESTABLISH THAT THE LOAN TRANSACTION DID NOT MATERIALIZE AND DOCUMENTARY EVIDENCE TO ESTABLISH THE SOURCE OF REPAYMENT TO THE PARTIES AND A CCORDINGLY, HE MADE ADDITION OF RS. 1,33,22,590/ - TO THE INCOME OF THE ASSESSEE. BEFORE THE LD. CIT - (A) ALSO , THE ASSESSEE REPEATED SAME ARGUMENTS AND SUBMITTED THAT THE ASSE SSING OFFICER DID NOT MAKE ANY I NQUIRY FROM THE RESPECTIVE PARTIES IN WHOSE NAME POST DATED CHEQUES WERE FOUND DURING THE SEARCH PROCEEDINGS. THE LD. CIT - (A) REJECTED THE ARGUMENTS OF THE ASSESSE E AND SUSTAINED THE ADDITION. THE RELEVANT FINDING OF THE LEARNED CIT - (A) IS REPRODUCED AS UNDER: 7.3 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 AO MADE AN ADDITION OF RS.1,33,22,590/ - ON THE BASIS 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 AN ONGOING PROPOSAL FOR TAKING UNSECURED LOAN AND WERE TO BE DELIVERED AT THE TIME OF ACTUAL DEAL WHICH DID NOT MATERIALIZE. HOWEVER, THE APPELLANT COULD NOT FURNISH ANY DETAILS ABOUT THE DEAL NOR DID IT FURNISH ANY EVIDENCE AS REGARDS THE NON - MATERIALIZATION OF THE PROPOSED DEAL. THE ARGUMENT THAT POST D ATED CHEQUES WERE PREPARED TO BE HANDED OVER AT THE TIME OF THE MATERIALIZATION OF THE DEAL IS NOT TENABLE AS IT IS UNFATHOMABLE THAT THE CHEQUES WOULD BE PREPARED SO MUCH IN ADVANCE WHEN ONLY NEGOTIATIONS FOR THE DEAL WERE GOING ON. PREPARING THE CHEQUES IS ONLY A FEW MINUTES JOB AND HENCE NO ONE WOULD PREPARE THEM AND STORE THEM FOR LONG BEFORE THE DEAL HAS BEEN FINALIZED. SIMILARLY, THE ARGUMENT THAT THE CHEQUES WERE CANCELLED INDICATES THAT THE DEAL DID NOT MATERIALIZE IS NOT ACCEPTABLE AS ON THE CONTRA RY, THE POSSESSION OF THE CANCELLED CHEQUES SHOWS THAT THE LOAN WAS ACTUALLY TAKEN AND THE CHEQUES OF THE SAME VALUE 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 13 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 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.1,33,22590/ - IS CONFIRMED AND THE GROUND NO. 6 IS REJECTED. 7.2 BEF ORE US , THE LD. COUNSEL REFERRED TO PAGES 54 TO 58 OF THE PAPER BOOK, WHICH CONTAIN SAMPLE COPIES OF POST DATED CHEQUES, LOAN AGREEMENT, RECEIPT OF LOAN TAKEN AND PROMISSORY NOTE ISSU ED BY THE ASSESSEE COMPANY AND SUBMITTED THAT THE ASSESSEE ENGAGED INTERM EDIARY / AGENTS FOR OBTAINING LOANS FOR TEMPORARY PERIOD AND ACCORDINGLY , PREPARED DOCUMENTS, HOWEVER , THE DEAL WAS NOT MATERIALIZED AND THEREFORE , THE QUESTION OF REPAYMENT OF LOANS IN CASH, DID NOT ARISE. HE SUBMITTED THAT THE POST DATED CHEQUES WERE ALREA DY CANCELLED AND ADDITION HAS BEEN MADE MERELY ON THE BASIS OF PRESUMPTION WITHOUT ANY EVIDENCE IN SUPPORT THEREOF. ACCORDING TO HIM NO CREDIT FOUND TO CORROBORATE THE RECEIPT OF LOANS AND ALSO NO EVIDENCE FOUND TO CORROBORATE THE REPAYMENT. HE ALSO SUBMIT TED THAT NO DIRECT ENQUIRY WAS MADE FROM THE PARTIES WHOSE NAME AND ADDRESS MENTIONED ON THOSE PAPERS. 7.3 THE LD. CIT (DR), ON THE OTHER HAND , SUBMITTED THAT ORIGINAL ASSESSMENT PROCEEDING, THE ASSESSEE DID NOT COMPLY VARIOUS NOTICES ISSUED AND THE ASSESS MENT WAS COMPLETED EX PARTE. SHE SUBMITTED THAT ASSESSMENT WAS SET ASIDE IN TERMS OF SECTION 264 OF THE ACT BY THE COMMISSIONER OF INCOME TAX AFTER A PERIOD OF ALMOST 10 YEARS AND THUS IT WAS THE ONUS OF THE ASSESSEE TO PRODUCE THOSE PARTIES FOR CONFIRMING THE FACTS APPEARING IN SEIZED DOCUMENTS. SHE FURTHER SUBMITTED THAT IN THOSE DOCUMENTS ONLY NAMES OF THE PARTIES ARE APPEARING AND ADDRESS ARE NOT MENTIONED AND THEREFORE IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO 14 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 CARRY OUT FURTHER ENQUIRIES FOR CON FIRMATION OF REPAYMENT OF LOANS. SHE ACCORDINGLY SUBMITTED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING ADDITION ON THIS ACCOUNT. 7.4 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. FROM THE SAMPLE COPY OF D OCUMENTS CONTAINING POST DATED CHEQUE, LOAN AGREEMENT, RECEIPT OF LOAN AND PROMISSORY NOTE ISSUED BY THE ASSESSEE , PRODUCE D BEFORE US, WHICH ARE AVAILABLE ON PAGE 54 TO 58 OF THE PAPER BOOK, IT PRIMA FACIE MANIFESTS THAT THESE DOCUMENTS ARE IN RELATION TO THE LOAN TAKEN BY THE ASSESSEE. IN THE RECEIPT ISSUED, WHICH IS AVAILABLE ON PAGE 57 OF THE PAPER BOOK, IT IS CLEARLY MENTIONED THAT AMOUNT OF RS. 5 LAKH WAS RECEIVED BY THE ASSESSEE FROM M/S USHANK SONS PRIVATE LIMITED FOR A PERIOD OF 90 DAYS. THIS RECEIPT IS DULY SIGNED BY THE DIRECTOR OF THE ASSESSEE COMPANY. NOW , IF THE ASSESSEE CONTRADICTS AND CLAIM S THAT NO LOAN OR DEPOSIT WAS TAKEN FROM THE PARTIES MENTIONED IN THE DOCUMENTS SEIZED AT ANNEXURE A - 40, THEN THE ONUS LIES ON THE ASSESSEE TO PRODUCE CONFIRMATION FROM THOSE PARTIES OR PRODUCE THE PARTIES BEFORE THE ASSESSING OFFICER FOR CROSS - EXAMINATION. THE ASSESSEE HAS SQUARELY FAILED IN PRODUCING THOSE PARTIES. BEFORE US NOW THE LD. COUNSEL HAS CO NTENDED THAT THESE DOCUMENTS WERE PREPARED BY INTERMEDIARY OR AGENTS ENGAGED IN PROVIDING SUCH LOANS/DEPOSITS. THE LD. COUNSEL HAS ASSURED BEFORE US THAT IF MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER, THE INTERMEDIARY AS WELL AS THE PARTIES WO ULD BE PRODUCED BEFORE THE ASSESSING OFFICER. 7.5 IN OUR OPINION , TO ASCERTAIN THE FACTS WHETHER ANY LOANS OR DEPOSITS WERE TAKEN BY THE ASSESSEE FROM THOSE PARTIES AND SUBSEQUENTLY , RE - PAYMENT THEREOF IF ANY, INQUIRY FROM THOSE PARTIES IS ESSENTIAL. IN V IEW OF THE FACTS AND CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER 15 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 TO THE FILE FOR ASSESSING OFFICER FOR DECIDING AFRESH , WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE INTERMEDIARY /AGENT AND PARTIES MENTIONED IN THE ANNEXURE A - 40 BEFORE THE A SSESSING OFFICER. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY , GROUND NO. 3 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. THE GROUND NO. 4 RELATES TO ADDITION OF RS.37,50,000/ - SUSTAINED BY THE LEARNED CIT - (A) OUT OF THE ADDITION OF RS.65,62,500/ - MADE BY THE ASSESSING OFFICER FOR DISALLOWANCE OF INTEREST CORRESPONDING TO THE LOAN UTILIZ ED FOR ILLEGAL PURPOSES. 8.1 FROM THE PAGES 27 TO 28 OF ANNEXURE A - 2 SEIZED FROM A9/27 , VASANT VIHAR, NEW DELHI, THE ASSESSIN G OFFICER OBSERVED THAT FOR GETTING PACKING CREDIT LIMIT FROM THE B ANK OF RAJASTHAN , THE ASSESS EE COMPANY MADE DEPOSITS OF RS. 1.5 CRORES AS INTERCORPORATE DEPOSITS TO PRIVATE CO MPANIES OF THE CHAIRMAN OF THE B ANK I.E. MR . KESHAV B ANGER. THE SEIZED DOCUMENT IS A COPY OF LETTER WRITTEN BY THE DIRECTOR OF THE ASSESSEE COMPANY TO CRIME AND VIGILANCE, NEW DELHI. THE ASSESSING OFFICER WAS OF THE VIEW THAT THIS DEPOSIT ADVANCED OUT OF THE PACKING CREDIT LIMIT AVAILED WAS FOR ILLEGAL PURPOSES AND THEREFORE , THE INT EREST CORRESPONDING TO THE INTERCORPORATE DEPOSIT OF RS. 1.5 CRORES WAS DISALLOWED BY THE ASSESSING OFFICER IN VARIOUS YEARS AS UNDER: F.Y. 1996 - 97 RS.15,00,000 F.Y.1997 - 98 RS.22,50,000 F.Y.1998 - 99 RS.22,50,000 F.Y.1999 - 2000 UPTO 2.7.99 RS.5,62,500 8.2 THE LD. CIT - (A) UPHELD THE DISALLOWANCE OF RS.37, 50,000/ - FOR FINANCIAL YEAR 19 96 - 97 AND 1997 - 98 , HOLDING THE AMOUNT OF RS. 1.5 CRORES 16 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 DIVERTED FOR NON - BUSINESS PURPOSES. THE FINDING OF LD. CIT - (A) ARE REPRODUCED AS UNDER: 8.4 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE LEARNED AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE LD. AR AND THE FACTS OF THE CASE ON RECORD. AS PER THE ASSESSMENT ORDER, THE LD. AO HAS RECORDED A FINDING THAT AN AMOUNT OF RS.1.5 CRORES WA S ADVANCED BY THE APPELLANT FOR ILLEGAL/NON - BUSINESS PURPOSES. ACCORDINGLY, HE MADE A DISALLOWANCE OF RS.65,62,500/ - BEING INTEREST @ 15% PER ANNUM ON THE AFORESAID AMOUNT FOR THE F.YS. 1996 - 97 TO 1999 - 2000. DURING THE APPELLANT PROCEEDINGS, THE LEARNED AR POINTED OUT THAT AS PER THE COPY OF ACCOUNT AND THE BANK STATEMENT OF THE BANK OF RAJASTHAN, WHICH WERE ALSO SUBMITTED BEFORE THE AO, IT CAN BE SEEN THAT THE PACKING CREDIT LIMIT OF RS.4.50 CRORES TAKEN FROM THE SAID BANK WAS REDUCED TO RS.3,466/ - AS ON 31.03.1998. THE APPELLANT, THEREFORE, CONTENDED THAT THE DISALLOWANCE OF RS.22,50,000/ - AND RS.5,62,500/ - FOR THE FINANCIAL YEARS 1998 - 99 AND 1999 - 2000 WERE NOT CALLED FOR. FROM THE FACTS OF THE CASE ON RECORD, IT IS SEEN THAT THE LD. AO RIGHTLY MADE THE D ISALLOWANCE OF INTEREST AS AN AMOUNT OF RS.1.5 CRORES WAS DIVERTED BY THE APPELLANT FOR NON - BUSINESS PURPOSES. TO THIS EXTENT, THE ACTION OF THE AO WAS CORRECT, HOWEVER, HE WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE FOR THE FINANCIAL YEARS 1998 - 99 AND 19 99 - 2000 WHEN THE PACKING CREDIT LIMIT OF RS.4.50 CRORES WAS REDUCED TO ALMOST NIL AS ON 31.03.1998 AND THEREFORE, NO DISALLOWANCE WAS CALLED FOR AFTER THE SAID DATE. ACCORDINGLY, THE DISALLOWANCE OF RS.37,50,000/ - FOR THE FINANCIAL YEARS 1996 - 97 AND 1997 - 9 8 IS UPHELD WHEREAS, THE ADDITION OF RS.28,12,500/ - IS DIRECTED TO BE DELETED. THE GROUND NO. 7 IS THUS, PARTLY ALLOWED TO THE APPELLANT. 8.3 B EFORE US , THE LD. COUNSEL SUBMITTED A COPY OF PAGES 27 TO 28 OF ANNEXURE A - 2 AND SUBMITTED THAT INTERCORPORATE DEPOSITS OF RS. 1.5 CRORE MADE TO THE COMPANIES OF MR . BANGAR , WAS FOR BUSINESS PURPOSES AND INTEREST - BEARING. HE FURTHER SUBMITTED THAT SAID DEPOSITS WERE OUT OF THE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE COMPANY AND THEREFORE , NO DISALLOWANCE CO ULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE COMPANY. 17 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 8.4 ON THE CONTRARY, LD. CIT (DR) REFERRED THE RELEVANT PARAGRAPH OF THE SAID LETTER ADDRES SED BY THE D IRECTOR OF THE ASSESSEE COMPANY TO CRIME AND VIGILANCE AND SUBMITTED THAT THE PACKING CREDIT LIM IT WAS GRANTED ON THE CONDITION THAT ASSESSEE WOULD DEPOSIT RS.1.5 CRORE AS INTERCORPORATE DEPOSITS INTO THE COMPANIES OF CHAIRMAN OF THE B ANK , I.E., MR K ESHAV BANGUR . ACCORDING TO HER, SINCE THE INTERCORPORATE DEPOSIT OF RS. 1.5 CRORE HAS BEEN MADE AS PART OF THE DEAL OF THE PACKING CREDIT OBTAINED FROM THE BANK OF RAJASTHAN, IT WAS IN THE NATURE OF ILLEGAL ADVANCES . SHE SUBMITTED THAT ASSESSEE HAS FAILED TO ESTABLISH THAT THIS INTERCORPORATE DEPOSIT WAS FOR ANY BUSINESS PURPOSE. ACCO RDING TO HER, IN VIEW OF THE FACT THE DISALLOWANCE SUSTAINED BY THE LD. CIT - (A) WAS JUSTIFIED. 8. 5 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE RELE VANT PART OF THE LETTER OF THE D IRECTOR OF THE ASSESSEE COMPANY SEIZE D DURING THE COURSE OF SEARCH AT PAGE 27 TO 28 OF THE ANNEXURE A - 2 IS REPRODUCED AS UNDER: OURS IS AN EXPORT TRADING HOUSE ESTABLISHED IN 1995. TO EXECUTE ORDERS, WE HAVE BEEN GRANTED PACKING CREDIT LIMIT FACILITIES BY THE BANK OF RAJASTHAN LTD., KAMLA N AGAR BRANCH, DELHI 11000 7 OF RS.3.0 CRORES ON 08.11.95 AND THE FIRST ORDER WAS EXECUTED IN DECEMBER, 1995. THIS PACKING CREDIT LIMIT WAS GRANTED TO US AGAINST MORTGAGE OF OUR PROPERTY AT D - 3/10, VASANT VIHAR, NEW DELHI - 1110057, MEASURING 600 SQ. YARDS S ITUATED IN SOUTH DELHI. SUBSEQUENTLY, WE WERE GRANTED RS.1.50 CRORES ON 4.2.96 AND RS.0.50 CRORES ON 26.7.96 AS PACKING CREDIT LIMIT FACILITIES FOR EXECUTING LARGE ORDERS. THEREAFTER, WE HAVE APPROACHED THE BANK FOR ADDITIONAL PACKING CREDIT LIMIT FACILITIES OF RS.2.5 CRORES FOR EXECUTING LARGE ORDERS AND THE SAME WAS GRANTED TO US. HOWEVER, THIS LIMIT WAS GRANTED ON THE CONDITION THAT WE DEPOSIT RS.1.5 CRORES AS INTER CORPO RATE DEPOSIT IN IN - HOUSE PRIVATE COMPANIES OF THE CHAIRMAN OF THE BANK, MR. KESHAV BANGUR. WE WERE GRANTED RS.2.5 CROES AS ADDITIONAL 18 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 PACKING CREDIT FACILITIES ON 6.5.96 AND ON THE SAME DAY, OUT OF THIS RS.2.5 CRORES, RS.80 LACS WERE GIVEN AS INTER CORPOR ATE DEPOSIT TO ONE OF THE COMPANIES OF THE CHAIRMAN OF THE BANK. THEREAFTER, FURTHER RS.70 LACS WERE GIVEN AS INTER CORPORATE DEPOSIT. THESE AMOUNTS WERE GIVEN ON THE VERBAL ASSURANCE THAT THE TOTAL AMOUNT WITH INTEREST THEREON SHALL BE RETURNED WITHIN TWO MONTHS I.E. IN OCTOBER, 1996. 8.6 T HUS , IT IS EVIDENT THAT ABOVE INTERCORPORATE DEPOSITS OF RS. 1.5 CRORE HAS BEEN MADE OUT OF THE PACKING CREDIT AVAILED BY THE ASSESSEE COMPANY FOR EXPORT BUSINESS. THE LD. COUNSEL OF THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE TO SUPPORT ITS CONTENTION THAT SUFFICIENT INTEREST FREE FUNDS WERE AVAILABLE WITH THE COMPANY FOR EXTENDING INTERCORPORATE DEPOSITS OF RS. 1.5 CRORE TO THE COMPANIES OF SRI KESHAV BANGUR. THE LD. COUNSEL ALSO FAILED TO ESTABLISH THAT THE INTERCORPORATE DEPOSIT MADE WAS A BUSINESS TRANSACTION IN REGULAR COURSE. IN SUCH CIRCUMSTANCES WE AGREE WITH THE FINDING OF THE LD. CIT(A) THAT THE DEPOSIT OF RS. 1.5 CRORE WAS FOR NON - BUSINESS PURPOSES AND THE CORRESPONDING INTEREST CLAIMED AS EXPEND ITURE ON PACKING CREDIT LIMITS BY THE ASSESSEE COMPANY WAS NOT ALLOWABLE. THE ORDER OF THE LEARNED CIT - (A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY ERROR IN THE SAME, ACCORDINGLY WE UPHOLD THE SAME. THE GROUND NO. 4 OF THE APPEAL IS ACCORDINGLY DISMISSED. 9. THE GROUND NO. 5 OF THE APPEAL BEING GENERAL IN NATURE, WE ARE NOT REQUIRED TO ADJUDICATE UPON AND ACCORDINGLY DISMISSED AS INFRUCTUOUS. IT(SS)A NO. 23/DEL/2013 10. NOW, WE TAKE UP THE APPEAL OF THE R EVENUE IN I T (SS) A NO 23/DEL/2013. THE SOLE GROUND RELATES TO ADDITION OF RS.1,76,29,450/ - MADE BY THE AO ON ACCOUNT OF SALE AGREEMENT SEIZED DURING THE COURSE OF SEARCH. 19 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 11. ACCORDING TO THE ASSESSING OFFICER, ANNEXURE - 36 AND - 37 SEIZED DURING TH E COURSE OF SEAR CH AT C - 2, SDA C OMPLEX, NEW DELHI ARE A COPY OF SALE AGREEMENT OF FIRST FLOOR OF BHARDWAJ PLAZA, NEW DELHI VALUING RS. 4.9 L ACS AS AGAINST DUES OF M /S TARTANS I NFOMARK LTD. ASSESSING OFFICER HAS FURTHER MENTIONED THAT PRINTOUT TAKEN FROM THE LAPTOP COMPUTER REVEALED THAT TOTAL CONSIDERATION OF RS.1,81,19,450/ - WA S DUE TO THE ASSESSEE FROM M/S T ARTANS INFOMARK LTD. 12. THE ASSESSEE EXPLAINED THAT IT EXPORTED GOODS TO SINGAPORE THROUGH M/S TARTAN INFOMARK LTD . , WHO WAS AN EX PORT AGENT AND DUE TO NON - R EALIZ ATION OF THE SALE PROCEEDS, THE ASSESSEE TRIED TO TAKING CONTROL OF THE PROPERTY OWNED BY M/S TARTAN INFOMARK LTD . BUT HAD BEEN UNSUCCESSFUL. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SUBMISSION AND HE MADE THE ADDITION FOR THE AMOUNT OF RS. 1, 7 6,29, 450/ - (1,81,19,450 - 4,90,000) . 13. BEFORE THE LD. CIT - (A) , THE ASSESSEE SUBMITTED DETAIL OF THE TRANSACTIONS. THE ASSESSEE ALSO SUBMITTED THAT PROPERTY IN QUESTION WAS IN CONTROL OF THE ASSESSEE UNDER GENERAL POWER OF ATTORNEY AND NOT S OLD TO THE ASSE SSEE. THE LEARNED CIT - (A) DIRECTED THE ASSESSING OFFICER TO CONFIRM THE FACT OF THE SALE OF THE PROPERTY FROM CONCERNED SUB - REGISTRAR FOR SALE OF PROPERTIES. THE LD. CIT - (A) AFTER TAKING INTO ACCOUNT THE REMAND REPORT OF THE ASSESSING OFFICE R AND REJOINDER OF THE ASSESSEE DELETED THE ADDITION WITH FOLLOWING FINDINGS: 6.6 I HAVE CONSIDER ED THE FINDINGS RECORDED BY THE ID. AO AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE ID. AR, THE REMAND REPORT SUBMITTED BY THE AO AND THE REJOINDER THEREON AND THE FACTS OF THE CASE ON RECORD. AS PER THE ASSESSMENT ORDER, THE ID. AO MADE AN ADDITION OF RS. 1.76 CRORES ON THE BASIS OF AN AGREEMENT TO SELL OF A PROPERTY. THE FACTS OF THE CASE ARE THAT THE APP ELLANT GOT AN EXPORT ORDER FROM SINGAPORE THROUGH M/S. TARTAN INFOMARK LIMITED, AN EXPORT AGENT. AFTER SHIPMENT OF THE GOODS, THE 20 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 APPELLANT COULD NOT REALIZED THE SALE PROCEEDS, THEREFORE, IT TRIED TO RECOVER THE AMOUNT BY TAKING CONTROL OF THE PROPERTY OW NED BY M/S. TARTAN INFOMARK LIMITED, BUT REMAINED UNSUCCESSFUL. THE APPELLANT FURTHER EXPLAINED THAT THE EXPORT WAS DONE THROUGH BANKING CHANNELS AND HENCE THE SAME IS A PART OF ITS BOOKS OF ACCOUNTS. THE LD. AR ARGUED THAT THE AMOUNT OF RS.1,76,29,450/ - R EPRESENTED LOSS SUFFERED BY THE APPELLANT COMPANY IN EXPORT TRANSACTION AND IN NO CASE IT REPRESENTED ITS INCOME. AS PER THE REMAND REPORT, THE LD. AO HAS CONFIRMED THE FACT THAT PROPERTY WAS AGREED TO BE SOLD. THERE IS NO MENTION OF ANY PAYMENT OF ANY SA LE CONSIDERATION IN THE REGISTERED DOCUMENT . IT IS NOT THE CASE OF THE AO THAT THE PROPERTY UNDER CONSIDERATION WAS EVER TRANSFERRED IN THE NAME OF THE APPELLANT OR ITS DIRECTORS OR ANY OF THE GROUP CONCERNS AS PER THE ASSESSMENT ORDER, THE AO HIMSELF HAS STATED THAT RS.4.90 LACS IS A RECOVERY AGAINST THE RECEIVABLE AMOUNT OF RS1,81,19,450/ - , THEREFORE, THE BALANCE OF RS. 1,76,29,450/ - IS OBVIOUSLY IN THE NATURE OF A RECEIVABLE; AND HENCE CANNOT BE ADDED BACK AS UNDISCLOSED INCOME. FROM THE ABOVE IT IS CLE AR THAT THE ADDITION WAS MADE BY THE AO DUE TO WRONG APPRECIATION OF THE FACTS. ACCORDINGLY, THE ADDITION MADE IS DIRECTED TO BE DELETED AND THE GROUND NO. 5 IS ALLOWED TO THE APPELLANT. 14. I N VIEW OF THE REMAND REPORTS OF THE ASSESSING OFFICER, REJOINDER OF THE ASSESSEE AND THE FACTUAL FINDING OF THE LD. CIT(A), IT EMERGE THAT ASSESSEE COMPANY PROCUR ED AN EXPORT ORDER THROUGH M/S T ARTANS I NFOMARK LTD . , BUT AFTER EXPORT OF THE GOODS WORTH RS.1,81,19,450/ - , THE A SSESSEE COMPANY COULD NOT REALIZ E TH E SALE AMOUNT. ACCORDING TO THE ASSESSEE, THE AMOUNT OF RS.1,81,19,450/ - WAS APPEAR ING AS DEBTOR . ON THE BASIS OF THE SEIZED DOCUMENT, THE ASSESSING OFFICER REDUCED RS. 4.90 LACS FROM THIS AMOUNT AS RECEIVED ( EVEN THOUGH ACCORDING TO THE ASSESSEE THIS AMOUNT WAS NOT RECEIVED) AND MADE ADDITIO N FOR THE BALANCE FIGURE OF RS. 1,76,29,450/ - . 21 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 15. IN OUR OPINION, IF THE ASSESSEE HAS A LREADY CREDITED THE SALE OF RS.1, 81,19,450/ - IN ITS BOOKS OF ACCOUNTS, NO FURTHER ADDITION COULD BE MADE IN RESPECT OF THE AMOU NT RECEIVABLE. SINCE FROM THE FACTS MENTIONED BY THE ASSESSING OFFICER AND THE LEARNED CIT - (A) , IT IS NOT CLEAR WHETHER THE FACT OF SALE OF RS. 1,81,19,450/ - AND APPEARING OF THE SAID AMOUNT AS RECEIVABLE IN THE BALANCE SHEET HAS BEEN VERIFIED BY THE LOWER AUTHORITIES. IF THIS FACT COULD BE VERIFIED FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE OR FINANCIAL STATEMENTS, THEN NO ADDITION COULD BE MADE FOR THE AMOUNT OF RS.1,76,29,450/ - WHICH HAS BEEN HELD BY THE ASSESSING OFFICER AS UNEXPLAINED . 16. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS STATED ABOVE AND DECIDE THE ISSUE IN DISPUTE, IN VIEW OF OUR DIRECTIONS ABOVE. THE ASSESSEE IS DIRECTED TO PRODUCE FOLLOWING DOCUMENTS BEFORE THE ASSESSING OFFICER: 1 ) PROFIT & LOSS ACCOUNT FOR RELEVANT YEAR. 2 ) SALES LEDGER ACCOUNT CONTAINING SALES OF RS.1,81,19,450/ - TO SINGAPORE BUYER (THROUGH M/S. TARTAN INFOMARK LTD.) 3 ) EXPORT INVOICE OF RS.1,81,19,450/ - SINGAPORE PARTY DULY STAM PED BY CUSTOM AUTHORITIES. 4 ) BALANCE SHEETS OF RELEVANT YEAR ENDING CONTAINING DETAILS OF RECEIVABLE INCLUDING RECEIVABLES FROM SINGAPORE PARTY. 16.1 THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. THE GROUND OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 22 IT(SS)A NO. 22/DEL/2013 & IT(SS)A NO. 23/DEL/2013 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 21 ST DEC . , 201 7 . SD/ - SD/ - ( AMIT SHUKLA ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST DECEMBER , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI