R.K. Mittal, V. ACIT, Circle-37(1),

ITSSA 433/DEL/2004

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9927 (ITAT-DELHI)
• Duration Of Justice: 14 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 12-07-2017
• Assessment Year: misc
• Appeal Filed On: 23-12-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Loose papers; Block assessment
• Section: 260A; 37(1); 250; 37; 132; 139

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 434/DEL/2004 BLOCK PERIOD 1.4.1986 TO 10.1.1997 ITA NO. 433/DEL/2004 BLOCK PERIOD 1.4.1986 TO 10.1.1997 ITA NO. 435/DEL/2004 BLOCK PERIOD 1.4.1986 TO 10.1.1997 M/S. MITTAL CONSUL & CO. 1626/33, NAIWALA, 2 ND FLOOR, KAROL BAGH, NEW DELHI. VS. ACIT, CIRCLE - 37(1) NEW DELHI. (APPELLANT) (RESPONDENT) SHRI R.K. MITTAL, M/S. MITTAL CONSUL & CO. 1626/33, NAIWALA, 2 ND FLOOR, KAROL BAGH, NEW DELHI. VS. ACIT, CIRCLE 37(1) NEW DELHI. (APPELLANT) (RESPONDENT) M/S. TUSHAR STOCK & SHARE BROKERS PVT. LTD. 1626/33, NAIWALA, KAROL BAGH, NEW DELHI. VS. JCIT SPL. RANGE10 NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY: S HRI SALIL AGGARWAL, SHRI SHAILESH GUPTA DEPARTMENT BY : S HRI J.K. MISHRA, CIT(DR) 2 O R D E R PER AMIT SHUKLA, J.M THE AFORESAID APPEALS HAVE BEEN FILED BY THE ABOVE NAMED APPELLANTS/ASSESSEES, NAMELY M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD., M/S MITTAL CONSUL & CO. AND SHRI R. K. MITTAL FOR THE BLOCK PERIOD 01.04.1986 TO 21.01.1996. ALL THESE APPEALS EARLIER STOOD DISPOSED OFF BY THIS TRIBUNAL IN TERMS OF OUR ORDERS DATED 31.10.2007, 30.05.2005 AND 30.05.2005. HOWEVER, THESE APPEALS HAVE BEEN REMANDED BACK BY THE HONBLE HIGH COURT OF DELHI BY ITS JUDGMENT AND ORDER DATED 25.03.2011. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE INTER-CONNECTED, THEREFORE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. BRIEF BACKGROUND OF THESE APPEALS ARE THAT, IN CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD., IT WAS HELD BY THE TRIBUNAL BY ITS ORDER DATED 31.10.2007 THAT, THERE WAS NO VALID REQUISITION U/S 132A OF THE ACT BY INCOME TAX DEPARTMENT FROM FERA AUTHORITIES AND HENCE IT WAS HELD THAT THE PROCEEDINGS U/S 158BC INITIATED COULD NOT BE HELD TO HAVE BEEN VALIDLY INITIATED. IT WAS FURTHER HELD THAT, NEITHER ANY MATERIAL OR EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH CONDUCTED BY THE INCOME TAX DEPARTMENT FROM THE POSSESSION OF THE ASSESSEE NOR ANY MATERIAL WAS REQUISITIONED BY THE INCOME TAX DEPARTMENT FROM THE FERA DATE OF HEARING 21 /0 2 /201 9 DATE OF PRONOUNCEMENT 1 7 / 0 5 /2 01 9 3 AUTHORITIES TO FORM THE BASIS OF BLOCK ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT. EVEN OTHERWISE ALSO, ON MERITS IT WAS HELD THAT SUSTENANCE OF ADDITION OF RS. 1,06,23,044/- MADE ON SUBSTANTIVE BASIS IN THE CASE OF M/S MITTAL CONSUL & CO. AND ON PROTECTIVE BASIS IN THE CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD., THE ADDITIONS CANNOT BE UPHELD AND ALL THE ADDITIONS WERE DELETED. 3. IN THE CASE OF M/S MITTAL CONSUL & CO., THE TRIBUNAL VIDE ITS ORDER DATED 30.05.2005 HAD HELD THAT THE CONDITION PRECEDENT FOR PROCEEDINGS AGAINST THE PERSON, I.E., THE ASSESSEE AGAINST WHOM PROCEEDINGS U/S 158BD OF THE ACT HAD BEEN INITIATED, IS UNSUSTAINABLE ON FACTS AND IN LAW. IT WAS FURTHER HELD THAT, IN THE PRESENT CASE, NOTHING OTHER THAN CASH OF RS. 2,41,000/- WAS FOUND AT THE TIME OF SEARCH (HAD REQUISITIONED BY THE DEPARTMENT U/S 132A OF THE ACT MADE) IN THE CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. IT WAS THUS HELD ASSESSMENT MADE BY THE AO U/S 158BC READ WITH SECTION 158BD OF THE ACT WAS VOID-AB- INITIO AND AS SUCH TRIBUNAL HAD QUASHED THE ASSESSMENT MADE. 4. IN THE CASE OF SHRI R. K. MITTAL, THE TRIBUNAL VIDE ITS ORDER DATED 31.10.2007, SIMILARLY HAD QUASHED THE ASSESSMENT. IT HAD BEEN HELD THAT THE FACTS ARE IDENTICAL TO M/S MITTAL CONSUL & CO. 5. AGGRIEVED BY THE AFORESAID THREE ORDERS, REVENUE HAD PREFERRED APPEALS U/S 260A OF THE ACT. THE HONBLE HIGH COURT BY ITS JUDGMENT DATED 25.03.2011, HELD THAT THE PROCEEDINGS INITIATED U/S 158BD AND U/S 158BC OF THE ACT AGAINST THE RESPONDENT-ASSESSEES WERE LEGALLY VALID. IN PARA 30 OF ITS JUDGEMENT, THE HONBLE HIGH COURT OBSERVED AND HELD AS UNDER: 4 THE TRIBUNAL DID NOT GO INTO THE MERITS OF THE CASE OF THE ASSESSEE/MCC. IT WAS BASED ON THIS FINDING OF THE TRIBUNAL WITH REGARD TO THE INVALIDITY OF THE PROCEEDINGS IN THE CASE OF MCC, THE TRIBUNAL IN THE CASES OF TUSHAR AND MITTAL AS WELL VIDE SEPARATE IMPUGNED ORDERS QUASHED THE ASSESSMENTS AND CONSEQUENTLY DELETED THE ADDITIONS MADE ON PROTECTIVE BASIS IN THEIR CASES. THE TRIBUNAL DID NOT GO INTO THE MERITS OF THE CASE OF THE ASSESSEE/TUSHAR NOR ANY REQUISITION WAS MADE UNDER SECTION 132A, AND, THEREFORE, THE ADDITIONS OF RS. 10.80 LAKHS, RS. 13.10 LAKHS AND RS. 78,335/- COULD NOT BE TREATED AS UNDISCLOSED INCOME. SINCE THE TRIBUNAL HAS NOT GONE INTO THE MERITS OF THE CASES BASED ON HIS FINDING THAT THE PROCEEDINGS UNDER SECTIONS 158BC AND 158BD WERE BAD IN LAW, THE CASES ARE BEING REMITTED BACK TO THE TRIBUNAL IN VIEW OF OUR FINDINGS WITH REGARD TO THE VALIDITY OF THE PROCEEDINGS UNDER THOSE PROVISIONS OF LAW. 6. IN VIEW OF THE AFORESAID DIRECTIONS, ALL THESE APPEALS WERE TAKEN UP FOR HEARING ON MERITS OF THE ADDITIONS SUSTAINED BY CIT(APPEALS). 7. BRIEFLY STATED THE FACTS ARE THAT ON 12.12.1995, A SEARCH HAD BEEN CONDUCTED BY ENFORCEMENT DIRECTORATE AT 17, PUSA ROAD, NEW DELHI AT THE PREMISES OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. AS PER ANNEXURE A OF PANCHNAMA PREPARED, REFLECTED DETAILS OF 30 BANK ACCOUNT HOLDERS DETAILING THE NAME AND BRANCH OF THE BANKS AND ALSO THE NUMBER OF CHEQUES AND SERIAL NUMBERS THEREOF. THE AFORESAID DETAILS HAD BEEN PREPARED ON THE BASIS OF CHEQUE BOOKS FOUND FROM THE AFORESAID PREMISES. AT THE TIME OF SEARCH A SUM OF RS. 2,41,000/- IN CASH WAS ALSO FOUND WHICH WAS SEIZED. THEREAFTER, IT APPEARS A STATEMENT OF SHRI RANJIT KUMAR MITTAL, S/O SHRI LAXMI CHAND MITTAL WAS ALSO RECORDED ON 12.12.1995 BY THE AUTHORISED OFFICER U/S 40 OF 5 FOREIGN EXCHANGE REGULATION ACT, 1973. THAT SHRI RANJIT KUMAR MITTAL WAS ONE OF THE DIRECTORS OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. AND ALSO ONE OF THE PARTNERS OF THE FIRM M/S MITTAL CONSUL & CO, A FIRM OF CHARTERED ACCOUNTANTS. IN THE STATEMENT, HE WAS REQUIRED TO GIVE THE NAME, ADDRESS, ACCOUNT NOS. OF THE PERSONS/FIRMS TO WHOM THE CHEQUE BOOK BELONGS AND SAME WAS PROVIDED BY HIM. HE WAS ALSO ASKED WHY THE CHEQUE BOOKS WERE FOUND WITH HIM, AND IN REPLY, IT WAS STATED BY HIM THAT SOME OF THE CHEQUE BOOKS BELONGS TO HIM AND HIS PROFESSIONAL FIRMS WHOSE NAMES WERE PROVIDED IN THE STATEMENT AND IN RESPECT OF THE REST OF THE CHEQUE BOOKS, IT WAS STATED BY HIM THAT SUCH CHEQUE BOOKS PERTAIN TO THE PROFESSIONAL CLIENTS FOR THE PREPARATION OF THEIR INCOME TAX RETURNS. A REQUISITION THEREAFTER WAS MADE U/S 132A OF THE ACT BY THE AO WHO INITIATED THE PROCEEDINGS U/S 158BC OF THE ACT IN THE CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. IN PURSUANCE THEREOF, A NOTICE DATED 8/21.04.1997 WAS ISSUED TO THE AFORESAID ASSESSEE AND THE JOINT CIT, SPECIAL RANGE -10, NEW DELHI, THE AO OF THE ASSESSEE M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. BY AN ORDER DATED 29.01.1999, FRAMED AN ASSESSMENT AND DETERMINED ITS UNDISCLOSED INCOME AT RS. 1,10,75,740/- INTER-ALIA MAKING FOLLOWING ADDITIONS: - I. UNEXPLAINED DEPOSITS IN BANK ACCOUNTS OF: 20 INDIVIDUALS (ON PROTECT IVE BASIS) (PARA 4.10) RS. 86,07,403/- II ON ACCOUNT OF PERSONAL USER OF RS. 78,335/- 6 TELEPHONES AND CARS (PARA 6.1) III ON ACCOUNT OF PAGE 16 OF EXHIBIT I SEIZED FROM THE RESIDENCE OF SH. A.S. ANEJA, DIRECTOR OF THE ASSESSEE COMPANY (PARA 5.3) RS. 13,10,000/- IV ON ACCOUNT OF SHARE CAPITAL/SHARE APPLICATION MONEY AS DISCUSSED ABOVE (PARA 6.5) RS. 10,80,000/- TOTAL UNDISCLOSED INCOME RS. 1,10,75,738/- ROUNDED OFF RS. 1,10,75,740/- 8. IT IS PERTINENT TO NOTE THAT OUT OF THE AFORESAID ADDITIONS, THE ADDITION OF RS. 86,07,403/- WAS MADE ON PROTECTIVE BASIS IN RESPECT OF THE CHEQUE BOOKS FOUND AND SEIZED BY THE FERA AUTHORITIES. IN RESPECT OF THE LIST OF THE CHEQUE BOOKS, IT WAS FOUND BY THE AO THAT OUT OF THE 30 ACCOUNTS, THE NAMES OF THREE PERSONS HAD BEEN REPEATED AND OUT OF THE REMAINING 27 ACCOUNTS, 7 ACCOUNTS ARE GENUINE; AND IN RESPECT OF THE 20 BANK ACCOUNTS, HE MADE THE ADDITION OF RS. 86,07,403/- ON PROTECTIVE BASIS IN THE HANDS OF THE M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD, SINCE SHRI. R.K. MITTAL AS ONE OF THE DIRECTORS OF THE COMPANY, WHO HAS CLAIMED THAT THE CHEQUE BOOKS BELONG TO THE CLIENTS OF M/S MITTAL CONSUL & CO., WHEREIN HE IS A PARTNER. 9. IN VIEW OF THE AFORESAID CLAIM OF SHRI. R.K. MITTAL, A SATISFACTION NOTE DATED 11/17.02.1999 WAS FORWARDED BY THE AO OF THE M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. BY ENCLOSING A LIST OF 20 ACCOUNTS CONTAINING TOTAL DEPOSITS OF RS. 86,07,403/- 7 AND HENCE, AO ISSUED NOTICES U/S 158BD OF THE ACT TO THE REMAINING TWO ASSESSEES, NAMELY M/S MITTAL CONSUL & CO. AND SHRI R. K. MITTAL, WHICH NOTICES WERE RECEIVED BY THEM ON 22.10.1999. IN PURSUANCE TO THE AFORESAID NOTICE, THE ACIT, CIRCLE 37(1), NEW DELHI, THE AO OF M/S MITTAL CONSUL & CO. FRAMED AN ASSESSMENT COMPUTING UNDISCLOSED INCOME OF THE ASSESSEE AT RS. 1,46,23,044/-. IN MAKING THE AFORESAID ADDITION, THE AO INSTEAD OF EXAMINING 20 BANK ACCOUNTS AS HAS BEEN FORWARDED ALONGWITH NOTE OF SATISFACTION, AGAIN EXAMINED 30 BANK ACCOUNTS WHEN IT WAS FOUND THAT OUT OF 30, THREE NAMES WERE REPEATED, AND IN RESPECT OF THE REMAINING 27 ACCOUNTS, HE MADE ADDITION OF RS. 1,46,23,044/- ON SUBSTANTIVE BASIS AS AGAINST THE ADDITION MADE OF RS. 86,07,403/- BY THE AO OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. THE AFORESAID ADDITION WAS MADE ON THE GROUND THAT THE ASSESSEE FIRM WAS INVOLVED IN BOGUS CAPITAL FORMATION AND IT HAS TRIED TO LAUNDER LARGE SUMS OF ITS UNACCOUNTED MONEY BY OPENING BANK ACCOUNTS IN FICTITIOUS NAMES AND FILING BOGUS INCOME TAX RETURNS IN THE NAMES OF NON- EXISTING INDIVIDUALS. IN THE CASE OF SHRI R. K. MITTAL THE SAME VERY AMOUNT OF RS. 1,46,23,044/- ON ESTIMATE BASIS, HAD BEEN BROUGHT TO TAX AS UNDISCLOSED INCOME BUT ON PROTECTIVE BASIS BY THE AO. 10. AGGRIEVED AGAINST THE RESPECTIVE ORDERS OF ASSESSMENT, THE AFORESAID THREE ASSESSEES FILED APPEALS BEFORE THE CIT(A), WHO VIDE HIS CONSOLIDATED ORDER DATED 03.12.2004 HAD DISPOSED OFF THE APPEALS OF THE THREE ASSESSEES. IN RESPECT OF THE CHEQUE BOOKS FOUND, THE CIT(A) HELD THAT JCIT, SPECIAL RANGE-10, HAD RECOMMENDED ONLY 20 BANK ACCOUNTS, AND THEREFORE, OTHER 7 8 BANK WERE NOT DOUBTED AS SUCH; HENCE IT WAS NOT APPROPRIATE ON THE PART OF THE AO TO INCLUDE THOSE ACCOUNTS. HE FURTHER HELD THAT AO HAD ESTIMATED THE DEPOSITS IN THE BANK ACCOUNT WHICH IS INCORRECT. HE THEREFORE, RESTRICTED THE ADDITION IN RESPECT OF THE DEPOSITS MADE IN 20 BANK ACCOUNTS. HE FURTHER HELD THAT IN RESPECT OF 20 BANK ACCOUNTS, AO OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD HAS COMPUTED THE TOTAL DEPOSITS TO RS. 86,07,403/- WHICH INCLUDE THE ESTIMATED DEPOSITS OF RS. 20,00,000/- IN 2 BANK ACCOUNTS, HOWEVER AO OF M/S MITTAL CONSUL & CO. AND SHRI. R.K. MITTAL HAS FOUND THE TOTAL DEPOSITS IN THE 20 BANK ACCOUNTS ON THE BASIS OF THE INFORMATION GATHERED AT RS. 1,06,23,044/-. AS SUCH, IN THE CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD HE HAS ENHANCED THE ADDITION FROM RS. 86,07,403/- TO RS. 1,06,23,044/- ON PROTECTIVE BASIS, WHEREAS IN THE CASE OF M/S MITTAL CONSUL & CO. ADDITION WAS UPHELD TO THE EXTENT OF RS. 1,06,23,044/- ON SUBSTANTIVE BASIS AND SAME AMOUNT WAS BROUGHT TO TAX ON PROTECTIVE BASIS IN THE HANDS OF SHRI. R.K. MITTAL ON PROTECTIVE BASIS. 11. FURTHER IN THE CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. THE AO HAD MADE THREE OTHER ADDITIONS TOTALLING RS. 24,68,335/-. ONE ADDITION WAS MADE IN RESPECT OF THE ADDITION MADE OF RS. 13,10,000/- ON ACCOUNT OF ENTRIES MADE IN THE DIARY OF SHRI. A.S. ANEJA WHICH WAS SEIZED FROM HIS RESIDENTIAL PREMISES, AND THE CIT(A) UPHELD THE ADDITION ON THE GROUND SHRI. A. S. ANEJA IS THE DIRECTOR OF THE APPELLANT COMPANY AND DIARY WAS SEIZED FROM HIS RESIDENTIAL PREMISES. IN RESPECT OF THE SECOND ADDITION BEING THE ADHOC DISALLOWANCE OF RS. 78,335/-, IT WAS HELD BY THE CIT(A) ELEMENT OF PERSONAL USE CANNOT BE RULED OUT 9 AND AO HAS MADE DISALLOWANCE OF ONLY 1/10 TH THE EXPENSES AS SUCH SAME WAS UPHELD. 12. THE LAST ADDITION WAS MADE OF RS. 10,80,000/- BEING THE SHARE APPLICATION MONEY RECEIVED AND SUCH ADDITION WAS SUSTAINED ON THE GROUND THAT IDENTITIES OF THE PERSONS WERE NOT FULLY DISCLOSED AND THEY WERE NOT PRODUCED FOR THE CROSS EXAMINATION. 13. AS SUCH, SUBSEQUENT TO THE ORDER OF THE CIT(A), THE POSITION OF THE ADDITION MADE IN THE CASE OF THE EACH OF THE THREE APPELLANTS ARE AS UNDER: SL. NO . NAME OF THE ASSESSEE UNDISCLOSED INCOME DETERMINED BY THE AO. UNDISCLOSED INCOME DETERMINED BY THE CIT(A) 1. M/S TUSHAR STOCK & BROKERS PVT. LTD. IT(SS) NO.: 435/DEL/2 004 UNEXPLAINED DEPOSITS IN BANK A/C RS. 86,07,403/- UNEXPLAINED DEPOSITS IN BANK A/C RS. 1,06,23,044/- PERSONAL USE OF CAR & TELEPHONE EXPENSES RS. 78,335/- PERSONAL USE OF CAR & TELEPHONE EXPENSES RS. 78,335/- SEIZED DAIRY RS. 13,10,000/- SEIZED DAIRY RS. 13,10,000/- SHARE APPLICATION/S HARE CAPITAL RS. 10,80,000/- SHARE APPLICATION/ SHARE CAPITAL RS. 10,80,000/- TOTAL RS. 1,10,75,738/- TOTAL RS. 1,30,91,379/- 2. M/S MITTAL CONSUL & CO. RS. 1,46,23,044/- RS. 1,06,23,044/- 10 IT (SS) NO. 434/DEL/2 004 3. SHRI R.K. MITTAL IT(SS) NO. 433/DEL/2 004 RS. 1,46,23,044/- RS. 1,06,23,044/- 14. THE LEARNED COUNSEL FOR THE APPELLANTS, SHRI. SALIL AGGRWAL SUBMITTED THAT IN THIS CASE, A SEARCH WAS CONDUCTED BY THE ENFORCEMENT DIRECTORATE U/S 37 OF THE FERA AT THE PREMISES OF M/S TUSHAR STOCK & BROKERS PVT. LTD., FROM WHERE 30 CHEQUE BOOKS AS WELL AS CASH OF RS. 2,41,000/- WAS FOUND AND 30 CHEQUE BOOKS WERE SEIZED BY THE DIRECTORATE UNDER FOREIGN EXCHANGE REGULATION ACT. HE SUBMITTED THAT AT THE TIME OF SEARCH, STATEMENT OF SHRI R.K. MITTAL, WHO WAS ONE OF THE DIRECTOR OF M/S TUSHAR STOCK & BROKERS PVT. LTD WAS ALSO RECORDED AND IN HIS STATEMENT HE WAS ASKED WHY THE CHEQUE BOOKS WERE FOUND WITH HIM, AND IN REPLY, IT WAS STATED BY HIM THAT SOME OF THE CHEQUE BOOKS BELONGS TO HIM AND HIS PROFESSIONAL FIRMS WHOSE NAMES WERE PROVIDED IN THE STATEMENT AND IN RESPECT OF THE REST OF THE CHEQUE BOOKS, IT WAS STATED BY HIM THAT SUCH CHEQUE BOOKS PERTAIN TO THE PROFESSIONAL CLIENTS FOR THE PREPARATION OF THEIR INCOME TAX RETURNS. IT WAS SUBMITTED THAT CHEQUE BOOKS WERE NOT IN THE NAME OF THE ASSESSEE BUT WERE OF THE CLIENTS OF M/S MITTAL CONSUL & CO, WHICH IS A FIRM OF CHARTERED ACCOUNTANTS WHEREIN SHRI. R.K. MITTAL WAS ONE OF A PARTNER. IT WAS SUBMITTED THAT SUCH ACCOUNTS WERE MAINTAINED BY SUCH ACCOUNT HOLDERS 11 AND ASSESSEE HAD NO ROLE TO PLAY IN ANY OF THE DEPOSITS MADE IN SUCH ACCOUNTS. IT WAS SUBMITTED THAT SUCH CHEQUE BOOKS WERE ALSO NOT IN THE HAND WRITING OF THE APPELLANT ASSESSEE. IT WAS SUBMITTED THAT TO SUBSTANTIATE THE AFORESAID ASSERTION, DURING THE COURSE OF THE ASSESSMENT, APPELLANT HAS ALSO FILED THE CLIENT REGISTER MAINTAINED BY M/S MITTAL CONSUL & CO WHEREIN THE PERSONS WHOSE CHEQUE BOOKS WERE FOUND, WERE RECORDED AS PROFESSIONAL CLIENT OF M/S MITTAL CONSUL & CO. IT WAS SUBMITTED THAT THE ALLEGATION OF THE REVENUE THAT M/S MITTAL CONSUL & CO WAS CARRYING ON THE ACTIVITY OF ENTRY OPERATOR IS WITHOUT ANY MATERIAL AND IS PURELY ON ASSUMPTION, PRESUMPTION, SURMISES AND CONJECTURES. IT WAS SUBMITTED THAT ACCOUNT HOLDERS WERE ASSESSED TO TAX, AND THE APPELLANT VIDE ITS SUBMISSIONS DATED 16.10.2001 AND 18.02.2002 HAD REQUESTED THE REVENUE TO ISSUE SUMMONS TO SUCH ACCOUNT HOLDERS, HOWEVER, REVENUE HAS FAILED TO CARRY ANY INVESTIGATION IN RESPECT THEREOF. IT WAS SUBMITTED BY SHRI AGGARWAL, THAT ASSESSMENTS WERE MADE UNDER CHAPTER XIV-B OF THE ACT, AS SUCH, UNLESS INCRIMINATING MATERIAL IS FOUND AS A RESULT OF SEARCH, ADDITION MADE IS UNSUSTAINABLE IN LAW. IT WAS FURTHER SUBMITTED THAT APPELLANT HAD LAID EVIDENCES TO SUBSTANTIATE THAT THE CHEQUE BOOKS FOUND WERE OF THE CLIENTS OF M/S MITTAL CONSUL & CO AND HAS ALSO REQUESTED TO EXAMINE FROM SUCH PERSONS, HOWEVER REVENUE HAS FAILED TO CARRY OUT ANY SUCH INVESTIGATION. IN SUCH CIRCUMSTANCES, IT WAS SUBMITTED THAT ADDITION MADE IN RESPECT OF DEPOSITS MADE IN THE BANK ACCOUNT OF THE PERSONS WHOSE CHEQUE BOOKS WERE FOUND WERE OUTSIDE THE SCOPE OF XIV-B OF THE ACT. 12 15. IN RESPECT OF THE ALLEGATION THAT MOST OF THE ACCOUNT OF THE INDIVIDUALS WERE INTRODUCED BY MC & CO, IT WAS SUBMITTED THAT MC & CO AND MITTAL CONSUL & CO. ARE NOT SAME. TO DEMONSTRATE THE SAME, IT WAS SUBMITTED THAT ON BEHALF OF MC & CO, SIGNATURE WAS MADE BY SHRI VED PRAKASH SHARMA WHO IS THE PROPRIETOR OF M/S MC & CO. IN SUPPORT OF THE SAME, HE REFERRED TO THE COMPUTATION OF INCOME ALONGWITH BALANCE SHEET AND PROFIT & LOSS A/C FOR THE AY 1991-92 FILED BY SHRI. VED PRAKASH SHARMA AND ALSO THE ORDER OF THE ASSESSMENT FOR THE SAME ASSESSMENT YEAR. 16. IN THE ALTERNATIVE, IT WAS FURTHER SUBMITTED THAT IN RESPECT OF 20 ACCOUNTS, THE CIT(A) HAS ADOPTED A FIGURE OF RS, 1,06,23,044/- AND OUT OF THE AFORESAID ACCOUNTS, AN ACCOUNT OF M/S KHANNA STENCILS PVT. LTD. WAS ALSO INCLUDED WHICH HAS BEEN FOUND GENUINE BY THE AO OF M/S TUSHAR STOCK & BROKERS PVT. LTD, AS SUCH, SAME WAS NOT REFERRED BY HIM IN THE SATISFACTION NOTE. IT WAS SUBMITTED THAT IF THE ACCOUNT OF M/S KHANNA STENCILS INDIA PVT. LTD. IS EXCLUDED, THEN THE TOTAL UNDISCLOSED INCOME DETERMINED BY THE LEARNED CIT(A) WOULD BE AT RS. 57,68,426/- (AFTER EXCLUDING THE DEPOSITS OF RS. 48,54,618/- IN THE BANK ACCOUNT OF M/S KHANNA STENCILS INDIA PVT. LTD.). 17. LASTLY, IT WAS SUBMITTED THAT EVEN IF IT IS HELD THAT ALL THE ACCOUNTS WERE THE ACCOUNT OF THE ASSESSEE, IT IS OBVIOUS THAT ONLY PEAK OF THE INVESTMENT MADE OF SUCH AN ACTIVITY CAN BE ADDED AS INCOME TO BE STATED AS UNDISCLOSED INCOME, WHICH DID NOT EXCEED RS. 2,50,625/- AND THUS, IF ANY ADDITION IS WARRANTED AND EVEN ON THE ALLEGATION, THE INCOME AS STATED TO BE UNDISCLOSED INCOME CANNOT IN ANY MANNER EXCEED THE SAID SUM. IN SUPPORT OF THE 13 WORKING OF THE PEAK, HE REFERRED TO THE SUBMISSION OF THE ASSESSEE DATED 12.08.2004. 18. IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF RECEIPT OF SHARE CAPITAL IN THE CASE OF M/S TUSHAR STOCK & BROKERS PVT. LTD, IT WAS FIRSTLY SUBMITTED THAT SAME WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH, AS SUCH, SAME IS OUTSIDE THE SCOPE OF CHAPTER XIV-B OF THE ACT. FURTHER TO THE AFORESAID, HE ALSO REFERRED THE RELEVANT PAGES OF THE WRITTEN SYNOPSIS TO SUBMIT THAT APPELLANT HAS FURNISHED COMPLETE DOCUMENTARY EVIDENCES AND HENCE ADDITION MADE WITHOUT BRINGING ANY ADVERSE MATERIAL IS UNSUSTAINABLE IN LAW. SIMILARLY, IN RESPECT OF THE ADDITION MADE OF RS. 13,10,000/- ON ACCOUNT OF PAGE-16 OF THE DIARY FOUND FROM THE RESIDENCE OF SHRI. A.S. ANEJA, LD. COUNSEL SUBMITTED WITH RESPECT TO THE SAID DIARY THAT IT WAS NOT FOUND FROM THE PREMISES OF THE ASSESSEE AND HENCE THE STATUTORY PRESUMPTION U/S 132(4A) CANNOT BE RAISED AGAINST ASSESSEE. HE SUBMITTED THAT, IF THE DIARY WAS NOT FOUND FROM THE POSSESSION OF ASSESSEE AS SUCH, THEN SUCH DIARY CANNOT BE USED AGAINST THE ASSESSEE UNLESS THE EVIDENCE BEING USED IS SUPPORTED BY OTHER CONCRETE EVIDENCE. 19. SIMILARLY, IN RESPECT OF DISALLOWANCE OF 1/10 TH OF THE EXPENSES I.E. OF RS. 78,335/- ON ACCOUNT OF PERSONAL USER OF TELEPHONE & CARS, IT WAS SUBMITTED THAT SAME IS OUTSIDE THE SCOPE OF CHAPTER XIV-B OF THE ACT AND IN ANY CASE ASSESSEE IS A CORPORATE ENTITY AND IN RESPECT OF THE CORPORATE ENTITY THERE IS ELEMENT OF PERSONAL USE. 14 20. ON THE OTHER HAND, LEARNED CIT DR RELIED UPON THE ORDER OF AO AND CIT(A). IN THE WRITTEN SUBMISSIONS, IT WAS SUBMITTED BY HIM THAT SHRI. R.K. MITTAL IN HIS STATEMENT HAS SUBMITTED THAT CHEQUE BOOKS WERE OF HIS CLIENTS WHO HAD LEFT FOR PREPARATION OF THE IT RETURNS, WHEREAS THE SAME STATEMENT, IT WAS SUBMITTED THAT THESE PERSONS WERE NO LONGER HIS CLIENTS AND IT WAS NOT POSSIBLE FOR HIM TO PRODUCE SUCH ACCOUNT HOLDERS FOR VERIFICATION. IT WAS SUBMITTED THAT ASSESSEE HAS FILED THE IT RETURNS OF THE ACCOUNT HOLDERS WHICH REFLECT VERY MEAGRE INCOME. IT WAS SUBMITTED THAT SINCE THE CHEQUE BOOKS WERE FOUND FROM THE ASSESSEE AS SUCH, ONUS WAS ON THE ASSESSEE TO PROVE THAT DEPOSITS MADE IN SUCH ACCOUNTS DID NOT BELONG TO THE ASSESSEE. IN RESPECT OF THE EXPLANATION OF THE ASSESSEE THAT MC & CO WAS NOT THE ASSESSEE, AND SHRI. VED PRAKASH SHARMA WAS THE PROPRIETOR OF MC & CO, IT WAS SUBMITTED BY THE LEARNED CIT DR THAT ASSESSEE COULD NOT EXPLAIN AS TO WHAT WAS THE RELATION BETWEEN MR SHARMA AND THOSE PERSONS WHOSE CHEQUE BOOKS WERE FOUND. HE SUBMITTED THAT SURROUNDING CIRCUMSTANCES LEAD TO THE CONCLUSION THAT THE SAID BANK ACCOUNTS WERE OPERATED BY THE ASSESSEE IN THE NAME OF THOSE PERSONS FOR HIS MONEY LAUNDERING ACTIVITY. 21. IN REJOINDER, SHRI AGGARWAL SUBMITTED THAT STATEMENT REFERRED BY THE LEARNED CIT DR DATED 25.10.2001 WAS RECORDED ALMOST AFTER SIX YEARS OF SEARCH WHICH WAS CONDUCTED ON 12.12.1995, AS SUCH, MERELY BECAUSE AFTER SIX YEARS, MOST OF THE PERSONS WERE NOT THE CLIENTS OF THE ASSESSEE, THAT DOES NOT REQUIRE ANY ADVERSE INFERENCE. FURTHER, THE ACCOUNT HOLDERS WERE FILING THE RETURN OF INCOME, ITSELF SHOWS THEIR IDENTITY AND IT WAS 15 FOR THE REVENUE TO MAKE ENQUIRY WHICH HAS NOT BEEN DONE IN THIS CASE. IN RESPECT OF THE CONTENTION OF THE LEARNED CIT DR THAT ASSESSEE COULD NOT EXPLAIN AS TO WHAT WAS THE RELATION BETWEEN MR SHARMA AND THE ACCOUNT HOLDERS, HE SUBMITTED THAT IT WAS NOT FOR THE ASSESSEE TO EXPLAIN SUCH A RELATIONSHIP AS ASSESSEE HAS CATEGORICALLY STATED THAT IT HAS NOT DEALT WITH MC & CO AND IT WAS FOR THE REVENUE TO REBUT THE MATERIAL FILED BY THE ASSESSEE. 22. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THESE THREE APPEALS, THE ASSESSMENTS WERE MADE UNDER CHAPTER XIV-B OF THE ACT. UNDER THE AFORESAID CHAPTER, A BLOCK ASSESSMENT IS TO BE CARRIED OUT ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND NOT AS A RESULT OF OTHER DOCUMENTS OR MATERIAL, WHICH COME TO THE POSSESSION OF THE AO SUBSEQUENT TO THE CONCLUSION OF THE SEARCH OPERATION UNLESS AND UNTIL SUCH MATERIAL HAS A RELATIONSHIP OR CONNECTION WITH CERTAIN MATERIAL OR EVIDENCE FOUND DURING THE COURSE OF SEARCH. IT WAS HIGHLIGHTED IN CIT V. RAVI KANT JAIN [2001] 250 ITR 141(DELHI) HOW THE PROCEDURE OF CHAPTER - XIV-B IS INTENDED TO PROVIDE A MODE OF ASSESSMENT OF UNDISCLOSED INCOME, WHICH HAS BEEN DETECTED AS A RESULT OF SEARCH. THE SCOPE AND AMBIT OF A BLOCK ASSESSMENT IS LIMITED TO MATERIALS UNEARTHED DURING SEARCH AND THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE AO. IN THE AFORESAID JUDGMENT, THE HONBLE HIGH COURT HAS HELD AS UNDER: 16 THE SPECIAL PROCEDURE OF CHAPTER XIV-B IS INTENDED TO PROVIDE A MODE OF ASSESSMENT OF UNDISCLOSED INCOME, WHICH HAS BEEN DETECTED AS A RESULT OF SEARCH. AS THE STATUTORY PROVISIONS GO TO SHOW, IT IS NOT INTENDED TO BE A SUBSTITUTE FOR REGULAR ASSESSMENT. ITS SCOPE AND AMBIT IS LIMITED IN THAT SENSE TO MATERIALS UNEARTHED DURING SEARCH. IT IS IN ADDITION TO THE REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE. THE ASSESSMENT FOR THE BLOCK PERIOD CAN ONLY BE DONE ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER. EVIDENCE FOUND AS A RESULT OF SEARCH IS CLEARLY RELATABLE TO SECTIONS 132 AND 132A. 23. IN THE INSTANT CASE, IT IS SEEN THAT NO SEARCH WAS CONDUCTED U/S 132(1) OF THE ACT BUT A REQUISITION WAS MADE U/S 132A OF THE ACT IN RESPECT OF THE CHEQUE BOOKS SEIZED BY THE ENFORCEMENT DIRECTORATE IN A SEARCH AND SEIZURE OPERATION UNDER SECTION 37 OF THE FOREIGN EXCHANGE REGULATION ACT. ON THE DATE OF SEARCH, STATEMENT OF SHRI RANJIT KUMAR MITTAL WAS RECORDED, WHO WAS ONE OF THE DIRECTORS OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. AND ALSO ONE OF THE PARTNER OF THE FIRM M/S MITTAL CONSUL & CO, A FIRM OF CHARTERED ACCOUNTANTS. IN THE STATEMENT, HE HAS PROVIDED THE NAME, ADDRESS, ACCOUNT NOS. OF THE PERSONS/FIRMS TO WHOM THE CHEQUE BOOK BELONGS. HE ALSO SPECIFICALLY STATED THAT SUCH CHEQUE BOOKS PERTAIN TO THE PROFESSIONAL CLIENTS FOR THE PREPARATION OF THEIR INCOME TAX RETURNS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE ALSO FURNISHED THE CLIENTS REGISTER MAINTAINED BY IT TO SUBSTANTIATE THAT AFORESAID CHEQUE BOOK WERE OF ITS CLIENTS. THE ASSESSEE ALSO FILED PAN AND ITR OF SUCH ACCOUNT HOLDERS WHICH CONTAIN THE COMPLETE DETAILS OF THE ACCOUNT HOLDERS. SHRI. R.K. 17 MITTAL, WHO WAS ONE OF THE DIRECTORS OF M/S TUSHAR STOCK & BROKERS PVT. LTD AND ALSO A PARTNER IN M/S MITTAL CONSUL & CO. HAS SPECIFICALLY SUBMITTED AT THE TIME OF SEARCH ON 12.12.1995 THAT SUCH ACCOUNTS WERE MAINTAINED BY RESPECTIVE ACCOUNT HOLDERS AND CHEQUE BOOKS WERE FOUND AT THE TIME OF SEARCH IN ITS PROFESSIONAL CAPACITY, AS IT WAS TO PREPARE THEIR TAX RETURN. DURING THE COURSE OF THE ASSESSMENT, ON 25.10.2001 STATEMENT OF SHRI. R.K. MITTAL WAS AGAIN RECORDED WHEREIN HE AGAIN SUBMITTED THAT SUCH ACCOUNT BELONGS TO THEIR PROFESSIONAL CLIENTS, HOWEVER AT THAT TIME, SUCH PERSONS WERE NO MORE HIS CLIENTS. THE APPELLANT THEREFORE VIDE ITS REPLIES DATED 16.10.2001 AND 18.02.2002 HAD REQUESTED THE REVENUE TO ISSUE SUMMONS TO SUCH ACCOUNT HOLDERS. THAT DESPITE THE REQUEST OF THE APPELLANT, NO ENQUIRY WAS MADE BY THE REVENUE FROM SUCH ACCOUNT HOLDERS TO ESTABLISH THAT DEPOSITS MADE IN SUCH ACCOUNTS BELONG TO THE APPELLANT. IN SUCH CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT WHERE AN ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE CLAIM THAT THE ACCOUNTS DO NOT BELONG TO THE ASSESSEE AND THE ASSESSEE MAKES A REQUEST TO EXAMINE SUCH ACCOUNT HOLDERS, THE MINIMUM REQUIREMENT FROM THE REVENUE IS TO EXAMINE SUCH MATERIAL AND SUMMON ANY OF THE ACCOUNTHOLDERS TO REBUT THE SUBMISSIONS OF THE APPELLANT OR WHETHER ASSESSEES EXPLANATION IS CORRECT OR NOT. AO CANNOT BRUSH ASIDE THE EVIDENCES MERELY ON THE BASIS OF THE ASSUMPTIONS AND HAS TO BRING SOME MATERIAL TO DRAW ADVERSE INFERENCE AND MAKE ADDITION WE THEREFORE, ARE OF THE OPINION THAT EXPLANATION OF THE APPELLANT THAT THERE IS NO MATERIAL OR BASIS TO HOLD THAT THE DEPOSITS IN BANK ACCOUNT WERE MADE BY THE ASSESSEE AND ALSO THERE IS NO EVIDENCE THAT SUCH 18 DEPOSITS EITHER BELONG TO ANY OF THE ASSESSEE OR THAT ACCOUNTS WERE CONTROLLED OR MANAGED BY M/S MITTAL CONSUL & CO DESERVES TO BE ACCEPTED. M/S MITTAL CONSUL & CO. IS A FIRM OF CHARTERED ACCOUNTANTS AND WAS DECLARING INCOME FROM RENDERING PROFESSIONAL SERVICES FOR PREPARING THEIR RETURN OF INCOME. APPELLANT HAS FILED THE PARTICULARS OF THE ACCOUNT HOLDERS AND ALSO THE PAN/ITR OF SUCH ACCOUNT HOLDERS WHICH SHOWS THAT ALL THE ACCOUNTHOLDERS ARE EXISTING ASSESSEES ARE IDENTIFIABLE. IT IS ALSO RELEVANT TO BE NOTED THAT NONE OF THE ACCOUNTHOLDERS HAVE DENIED THE ACCOUNTS AS NOT BELONGING TO THEM. THAT UNDER THE STATUTORY PROVISIONS, IF THE DOCUMENT IS FOUND, THEN THE PRESUMPTION IS THAT THE CONTENTS OF THE SUCH DOCUMENTS ARE TRUE. IN THIS CASE, CHEQUE BOOKS FOUND HOWEVER WERE NOT IN THE NAME OF THE APPELLANT ASSESSEE, WHICH CHEQUE BOOKS HAD BEEN IDENTIFIED TO BELONG TO ACCOUNT HOLDERS, WHO WERE THE CLIENTS OF THE FIRM M/S MITTAL CONSUL & CO. FURTHER, THE APPELLANT HAD LAID EVIDENCES TO REBUT SUCH PRESUMPTION AND HENCE THE BURDEN SHIFTS UPON THE REVENUE TO ESTABLISH THAT ACCOUNTS BELONGS TO THE ASSESSEE WHICH BURDEN HAS NOT BEEN DISCHARGED BY THE REVENUE. IT IS SETTLED LAW THAT THE APPARENT IS REAL UNLESS PROVED TO THE CONTRARY. THE ASSUMPTION THAT M/S MITTAL CONSUL & CO IS INTRODUCING THEIR UNACCOUNTED MONEY AND WERE ENGAGED IN LAUNDERING UNACCOUNTED MONEY IS UNSUBSTANTIATED BY ANY MATERIAL FACT FOUND OR BROUGHT ON RECORD. IN FACT, ALL THE CHEQUE BOOKS PERTAIN TO THE DIFFERENT PERSONS AND SUCH PERSONS WERE INCOME TAX ASSESSEES AND THERE IS NO PRESUMPTION IN LAW THAT ALL THE ACCOUNTHOLDERS HAD OPENED THEIR ACCOUNTS TO ACCOMMODATE 19 THE ASSESSEE AS SUCH A PROPOSITION IS AGAINST THE PRINCIPLES OF COMMON SENSE AND HUMAN PROBABILITIES. 24. IN SUCH CIRCUMSTANCES, AFTER LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, DOCUMENTS AND MATERIAL PLACED BEFORE US, WE ARE OF THE OPINION THAT THERE IS NO MATERIAL WHICH SUGGEST THAT THE CHEQUE BOOKS BELONG TO THE M/S MITTAL CONSUL & CO, AS APPELLANT HAS ESTABLISHED THAT SUCH CHEQUE BOOKS BELONG TO THE CLIENTS OF M/S MITTAL CONSUL & CO. IN SUCH CIRCUMSTANCES, ACTION OF THE REVENUE TO BRING TO TAX THE DEPOSITS MADE IN SUCH ACCOUNTS IN THE HANDS OF THE APPELLANT IS DEVOID OF ANY MERIT. HENCE, ADDITION MADE IN RESPECT OF THE DEPOSITS IN SUCH BANK ACCOUNTS AND SUSTAINED BY THE CIT(A) ARE DELETED. IN FACT, THE REVENUE HAD NOT FILED ANY APPEAL AGAINST THE ORDER OF CIT(A) DELETING THE ADDITIONS. THE DETAILS OF SUCH ADDITIONS HAVE ALREADY BEEN TABULATED IN FOREGOING PARA 13 ABOVE. IN THE RESULT, WE HOLD THAT THE ADDITIONS SUSTAINED BY CIT(A) OF RS. 1,06,23,044/- IN THE CASE OF M/S MITTAL CONSUL & CO. ON SUBSTANTIVE BASIS IS DELETED. 25. WE FURTHER HOLD THAT THE ADDITIONS SUSTAINED ON PROTECTIVE BASIS IN THE ASSESSMENTS MADE IN THE CASES OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. AND THAT OF SHRI R. K. MITTAL ARE ALSO UNSUSTAINABLE, HENCE ARE DELETED. 26. THE OTHER ISSUES INVOLVED ARE IN THE CASE OF M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. AND ARE DEALT AS BELOW: I) ONE OF THE ADDITIONS MADE IS OF RS. 13,10,000/-. THE SAID ADDITION WAS MADE ON THE BASIS OF A PAGE 16 OF THE DIARY FOUND FROM THE PREMISES OF SHRI. A.S. ANEJA. SUCH DIARY WAS 20 NOT FOUND FROM THE PREMISES OF THE ASSESSEE, AS SUCH, THEREFORE, PRESUMPTION U/S 132(4A) OF THE ACT IS NOT APPLICABLE. IN SUCH CIRCUMSTANCES, BURDEN WAS ON THE REVENUE TO BRING MATERIAL SUCH AN AMOUNT IS UNDISCLOSED INCOME OF M/S TUSHAR STOCK & BROKERS PVT. LTD. THE APEX COURT IN THE CASE OF CBI VS. V.C. SHUKLA AND OTHERS DATED 2.3.1998, CIVIL A NOS. 247-256 (ARISING OUT OF SLP CRL. NOS. 1716 OF 1997); HAS HELD THAT EVIDENCE TO BE USED AGAINST ACCUSED SHOULD BE EVIDENCE ACCEPTABLE TO PROCESS OF LAW. AN EVIDENCE, WHICH IS NOT FOUND IN POSSESSION OF A PERSON, CANNOT BE USED AGAINST HIM UNLESS THE EVIDENCE BEING USED IS SUPPORTED BY OTHER CONCRETE EVIDENCE. RECENTLY IN THE CASE OF COMMON CAUSE (A REGISTERED SOCIETY) VS. UOI REPORTED IN [2017] 394 ITR 220 (SC), IT WAS HELD THAT ENTRIES IN LOOSE PAPERS/ SHEETS ARE IRRELEVANT AND INADMISSIBLE AS EVIDENCE. SUCH LOOSE PAPERS ARE NOT BOOKS OF ACCOUNT AND THE ENTRIES THEREIN ARE NOT SUFFICIENT TO CHARGE A PERSON WITH LIABILITY. EVEN IF BOOKS OF ACCOUNT ARE REGULARLY KEPT IN THE ORDINARY COURSE OF BUSINESS, THE ENTRIES THEREIN SHALL NOT ALONE BE SUFFICIENT EVIDENCE TO CHARGE ANY PERSON WITH LIABILITY. IT IS INCUMBENT UPON THE PERSON RELYING UPON THOSE ENTRIES TO PROVE THAT THEY ARE IN ACCORDANCE WITH FACTS. IN SUCH CIRCUMSTANCES, ADDITION MADE SOLELY ON THE BASIS OF THE DIARY FOUND FROM THE PREMISES OF SHRI. A. S. ANEJA WITHOUT ANY CORROBORATIVE MATERIAL IS UNSUSTAINABLE IN LAW AND HENCE IS DELETED. 21 II) SIMILARLY, OTHER TWO ADDITIONS, I.E., ONE OF RS. 10,80,000/-, ON ACCOUNT OF AN AMOUNT REFLECTED IN THE BALANCE SHEET AS SHARE CAPITAL/APPLICATION MONEY AND ANOTHER OF ADHOC DISALLOWANCES OF RS. 78,335/- BEING 1/10 TH THE EXPENDITURE DEBITED BY THE ASSESSEE M/S TUSHAR STOCK & SHARE BROKERS PVT. LTD. IN ITS PROFIT AND LOSS ACCOUNT, ON THE GROUND THAT PERSONAL ELEMENT IN SUCH EXPENSES, IS BASED ON NO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND WERE DULY FOUND RECORDED IN THE BOOKS OF ACCOUNTS. IT IS WELL SETTLED LAW THAT SCOPE OF ADDITIONS IN CHAPTER XIV-B IS NOT MEANT FOR MAKING AN ASSESSMENT OR REASSESSMENT OF THE INCOME OF THE ASSESSEE, SINCE THE PROVISIONS OF CHAPTER XIV- B OF THE ACT CAN BE INVOKED ONLY FOR DETERMINING AN UNDISCLOSED INCOME OF THE ASSESSEE FOUND DURING THE COURSE. IN THE CASE OF N.R. PAPER AND BOARD LTD. &ORS. VS. CIT REPORTED IN 234 ITR 733, THE HONBLE HIGH COURT OF GUJARAT HAS HELD THAT: - THE BLOCK ASSESSMENT TARGETS THE AREA OF UNDISCLOSED INCOME THAT WAS NOT DISCLOSED AND WOULD NOT BE DISCLOSED, WHILE THE REGULAR ASSESSMENT IS TO ASSESS THE TOTAL INCOME OR LOSS OF THE PREVIOUS YEAR WHERE A RETURN IS FILED UNDER SECTION 139 AND THE ASSESSING OFFICER CONSIDERS IT NECESSARY OR EXPEDIENT UNDER SECTION 143(2) TO ENSURE THAT THE ASSESSEE HAD NOT UNDERSTATED THE INCOME OR HAS NOT COMPUTED EXCESSIVE LOSS OR HAS NOT UNDERPAID TAX IN ANY MANNER. BOTH THESE AREAS ARE DIFFERENT AND THERE IS NO WARRANT TO PREVENT THE STATUTORY POWER OF REGULAR ASSESSMENT FROM BEING EXERCISED WHERE THE BLOCK ASSESSMENT IS UNDERTAKEN OR COMPLETED FOR ASSESSING THE UNDISCLOSED INCOME. 22 27. EVEN ON THE MERITS OF THE ADDITIONS, IT IS SEEN THAT IN THE INSTANT CASE, ASSESSEE HAD RECEIVED SHARE CAPITAL OF RS. 1,02,11,000/- IN AY 1995-96 AND A SUM OF RS. 62,91,000/- IN AY 1996-97. THE AO DISPUTED THE SHARE CAPITAL OF RS. 4,91,000/- IN AY 1995-96 AND OF RS. 5,89,000/- IN AY 1996-97. THE REASON FOR NOT ACCEPTING THE AFORESAID SHARE CAPITAL BY THE AO WAS AS UNDER: A) IN THE CONFIRMATION FILED JURISDICTION OF THE AO HAS NOT BEEN STATED PROPERLY OR HAS NOT BEEN STATED: AY: 1995-1996 I. NEWATIA CONSULTANTS P. LTD. 1,80,000/- II. BUSY TRADERS & FINANCE LTD. 1,00,000/- 2,80,000/- AY: 1996-1997 I. M.S. ANEJA& SONS 3,00,000/- II. PARAMJEET KUMAR 18,000/- 3,18,000/- TOTAL OF AY 1995-96 & 1996-97 : 5,98,000/- B) NO CONFIRMATION WAS FILED FROM SIX SHAREHOLDERS AGGREGATING TO . I. AY 1995-96 2,11,000/- II. AY 1996-97 2,71,000/- 4,82,000/- TOTAL ADDITION ON ACCOUNT OF SHARE CAPITAL:10,80,000/- C) IN THE APPELLATE PROCEEDINGS, APPELLANT VIDE ITS SUBMISSION DATED 18.02.2002 NOT ONLY FILED THE JURISDICTION OF THE ASSESSING OFFICER IN RESPECT OF SUCH SHAREHOLDERS BUT ALSO 23 THE CONFIRMATION OF THE REMAINING SHAREHOLDERS. DESPITE THE AFORESAID, THE CIT(A) IGNORING SUCH EVIDENCES, HAD UPHELD THE ADDITIONS. 28. WE ARE THUS OF THE OPINION THAT, ONCE THE ASSESSEE HAS FURNISHED THE ADEQUATE EVIDENCE/MATERIAL, THE BURDEN OF THE ASSESSEE IS DISCHARGED IN PROVING IDENTITY OF SHAREHOLDERS, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF SHAREHOLDER, AND HENCE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(A) WITHOUT REBUTTING SUCH MATERIAL OR WITHOUT BRINGING ANY ADVERSE MATERIAL IS UNSUSTAINABLE IN LAW. IT IS NOT A CASE, WHEREIN THE SHAREHOLDERS HAVE DENIED THE INVESTMENT MADE IN THE ASSESSEE COMPANY NOR ANY ENQUIRY HAS BEEN MADE FROM SUCH SHAREHOLDERS TO PROVE THAT SHARE CAPITAL RECEIVED BY THE ASSESSEE IS NOT GENUINE. THEREFORE, ADDITION MADE IN RESPECT OF THE RECEIPT OF THE SHARE CAPITAL IS DELETED. IN OUR OPINION FURTHER AS STATED ABOVE, SUCH AN ADDITION WAS OTHERWISE UNSUSTAINABLE AS IT DID NOT REPRESENT ANY UNDISCLOSED INCOME WITHIN THE MEANING OF SECTION 158B(B) OF THE ACT. 29. IN RESPECT OF DISALLOWANCE OF 1/10 TH OF THE EXPENSES I.E. OF RS. 78,335/- ON ACCOUNT OF THE PURPORTED PERSONAL USER OF TELEPHONE & CARS, IT IS SEEN THAT AO HAS DISALLOWED THE EXPENDITURE ON THE GROUND THAT THERE COULD SOME ELEMENT OF PERSONAL USE AND SUCH DISALLOWANCE HAS BEEN SUSTAINED. APPELLANT HAS SUBMITTED THAT IT IS A CORPORATE ENTITY AND IN RESPECT OF THE CORPORATE ENTITY THERE IS ELEMENT OF PERSONAL USE. THE AFORESAID ISSUE IS COVERED BY THE JUDGMENT OF THE HIGH COURT OF THE GUJARAT IN THE CASE OF SAYALI IRON & ENGINEERING CO. VS. 24 CIT ., REPORTED IN 253 ITR 749, WHEREIN IT HAS BEEN HELD THAT IN THE CASE OF A COMPANY, WHICH IS A CORPORATE ENTITY THERE CANNOT BE ANY PERSONAL ELEMENT INVOLVED NO DISALLOWANCE OF ANY EXPENDITURE CAN BE MADE FOR POSSIBLE PERSONAL USE. FURTHER AS HAS BEEN OBSERVED BY US AS AFORESAID, OTHERWISE TOO THE AFORESAID DISALLOWANCE MADE WAS OUTSIDE THE PALE OF CHAPTER XIVB OF THE ACT. IN SUCH CIRCUMSTANCES, AFORESAID DISALLOWANCE MADE OF RS. 78,335/- IS DELETED. 30. IN VIEW OF OUR FINDINGS, ALL THREE APPEALS OF THE APPELLANT ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY, 2019. SD/- SD/- (L.P. SAHU) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17/05/2019 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI