DCIT Rg. - 3(1), MUMBAI V. Sri. SUBHASH S. MOTWANI, MUMBAI

ITSSA 63/MUM/2006

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8550 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 22-10-2012
• Assessment Year: misc
• Appeal Filed On: 22-02-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Keywords: Unexplained cash credit; Business income; Document seized; Additional evidence; Reasonable cause; Block assessment; Documents seized
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITSS NO. 04/MUM/2006 BLOCK PERIOD 1.4.1996 TO 29.01.2003 SHRI SUBHASH S. MOTWANI, M/S. DYNAMIC COURIER & CAREER CENTRE PVT. LTD., 3/35, KAMAL MANSION, A.B. ROAD, COLABA, MUMBAI -400 005 PAN: AAACD 2179 G VS DY. COMMISSIONER OF INCOME-TAX, RANGE- 3(1), MUMBAI (APPELLANT) (RESPONDENT) ITSS NO. 63/MUM/2006 BLOCK PERIOD 1.4.1996 TO 29.01.2003 DY. COMMISSIONER OF INCOME- TAX, RANGE- 3(1), MUMBAI VS SHRI SUBHASH S. MOTWANI MUMBAI -400 005 (APPELLANT) (RESPONDENT) APPELLANT-ASSESSEE BY : SHRI SUBHAS S. SHETTY RESPONDENT-REVENUE BY : SHRI S.D. SRIVASTAVA DATE OF HEARING: 22.10.2012 DATE OF PRONOUNCEMENT: 21.11.2012 O R D E R PER VIVEK VARMA, JM: THE CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND T HE DEPARTMENT RESPECTIVELY AGAINST THE ORDER OF CIT(A)-XXV III, MUMBAI DATED 28.02.2005. AS THE APPEALS HAVE BEEN FILED AGAINST THE SAME ORDERS WE, FOR THE SAKE OF CONVENIENCE & BREVITY ARE PAS SING A COMMON ORDER. SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 2 ITSS 4/MUM/2006 : APPEAL BY THE ASSESSEE 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) COMMITTED A GROSS ERROR OF LAW AND FACT IN SUSTAINI NG THE UNDISCLOSED INCOME AS THE ADDITIONS OF RS 55.75 LAK HS MADE BY THE ASSESSING OFFICER BEING THE CASH LOAN T AKEN BY THE APPELLANT. 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) E RRED IN NOT APPRECIATING THE FACT THAT MAJORITY OF THE C ASH LOANS WERE TAKEN PRIOR TO THE BLOCK PERIOD WHICH IS DOUBLED IN THE BLOCK AND HENCE CAN BE SUSTAINED AS UNEXPLAINED INCOME OF THE BLOCK PERIOD. 3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) COMMITTED A GROSS ERROR IN CONFIRMING REPETITIVE CA SH LOAN OF RS 13,50,000/- 4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) COMMITTED A GROSS ERROR IN FAILING TO APPRECIATE TH AT ACTUAL CASH LOANS OF RS 13 LAKHS TAKEN DURING THE B LOCK PERIOD WAS ALREADY DECLARED BY THE APPELLATE HIMSEL F IN HIS BLOCK RETURN AND THEREFORE NO FURTHER ADDITION IN CALLED FOR ON THAT ACCOUNT. 3. THE AR POINTED OUT THAT GROUNDS NO. 1 & 2 ARE COMM ON AND CONNECTED AND GROUNDS NO. 3 & 4 ARE COMPONENTS OF GROUND NO. 1. 4. THE FACTS OF THE CASE ARE THAT THERE WAS A SEARCH U/S 132 AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 29.01.2003 THE ASSESSEE IS A DIRECTOR IN THE COMPANY M/S DYNAM IC COURSES & CAREER CENTRE PVT. LTD. WHICH IS ENGAGED IN CONDUCTING VARIOUS PROFESSIONAL/VOCATIONAL COURSES WHICH INCLUDE DIPLOMA COURSES IN : (I) HOTEL & CATERING MANAGEMENT (II) TRAVEL & TOURISM (III) AIRLINE MANAGEMENT (IV) HOTEL, AIRLINE & TOURISM (V) EXPORT & CARGO IND. MANAGEMENT (VI) BEAUTICIAN COURSES (VII) ELECTRONICS / TELEVISION SERVICING IN ADDITION TO THIS, THE ASSESSEE IS PROPRIETOR OF M/S INNOVATIVE INVESTMENTS WHICH IS IN THE BUSINESS OF TAKING LOAN S AND DEPOSITS. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING DOCUMENTS, SUCH AS LOOSE-PAPERS/BOOKS OF ACCOUNTS/TRIAL BALANC ES, ETC. WERE SEIZED. DOCUMENTS RELATING TO SALE OF VARIOUS LOAN TRANSACTIONS WERE ALSO SEIZED. SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 3 5. THE AO, ADDED RS 62,75,000 ON ACCOUNT OF UNEXPLAINED L OANS FROM THE FOLLOWING PEOPLE: SR.\ NO. NAME OF THE CREDITOR AMT. OF CASH LOAN (RS) 1 UTTAMCHANDANI 100,000 2 ZAHEER ABBAS 50,000 3 C.P. PURSWANI 500,000 4 ROMILA S.M. 800,000 5 ROMILA S.MOTWANI 500,000 6 M. KAPOOR 100,000 7 BODAL 200,000 8 BODAL 110,000 + 90,000 9 AJIT U 100,000 10 RAZIA KHAN 175,000 11 RADHA K.M. 100,000 12 S.P. MAKHIJA 100,000 13 S.P. MAKHIJA 200,000 14 RATAN U 200,000 15 K.S. MOTWANI 450,000 16 PURSWANI 500,000 17 KATARA 1,100,000 18 SADHANA KATARA 100,000 19 VASUDEV KATARIA 800,000 TOTAL 6,275,000 6. THE AO, THEREFORE, ADDED THE SUM OF RS. 62,75,000 ON ACC OUNT TO THE INCOME OF THE ASSESSEE UNDER CHAPTER XIVB OF TH E INCOME TAX ACT. 7. AGGRIEVED, THE ASSESSEE, PREFERRED AN APPEAL BEFORE THE CIT(A), WHO GAVE RELIEF AND DELETED THE ADDITION ON ACCOUNT OF LOAN FROM PURSWANI AT RS. 5,00,000 AND FROM RATTAN U AT RS. 2,00,00 0, AGGREGATING TO RS. 7,00,000. THE CIT(A), THUS SUSTAINED THE ADDITION OF RS. 55,75,000. 8. AGGRIEVED, THE ASSESSEE IS BEFORE THE ITAT. 9. BEFORE US, THE AR BRIEFED US WITH THE FACTUAL ASPECT, WHEREIN, IT WAS POINTED OUT THAT THE ASSESSEE WAS IN THE BUSINESS OF SOLICITING LOANS FROM PEOPLE AND RETURN THEM AFTER A PERIOD OF FOUR YEARS, SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 4 WHEREIN THE REDEMPTION AMOUNT WOULD BE DOUBLE THE PRINCIP LE AMOUNT. THE AR POINTED OUT, THE CONTENTS OF THE SEIZED S LIP HAD BEEN REPRODUCED BY THE CIT(A) IN THE IMPUGNED ORDER, WHEREIN T HE SEIZED SLIP PERTAINED TO MR. SURESH P MAKHIJA (HUF). ACCORDING T O THE AR, THE SLIP WAS GENERATED ON 5 TH AUGUST, 1993 AT RS. 25,000 WHICH GOT DOUBLED ON 05.08.1997, WHEN THE AMOUNT BECAME RS. 50,000 AND WAS FURTHER ROLLED OVER ON 05.08.1997 FOR ANOTHER FOUR YEARS A ND THE REDEMPTION DATE WAS 05.08.2001. THE AR, THEREFORE, POINTED OUT THAT ALL THE SEIZED SLIPS WERE OF SIMILAR NATURE AND SINCE THE INV ESTMENT CAME TO BE MADE WITH THE ASSESSEE IN CASH, PRIOR TO TH E BLOCK PERIOD, THAT AMOUNT CANNOT BE ADDED TO THE BLOCK PERIOD. THE A R SUBMITTED THAT THE INVESTMENTS/CREDITS ACCEPTED BY THE ASSESSEE WAS UTILIZED BY THE ASSESSEE IN OTHER GROUP COMPANIES/BUSINESS. 10. THE AR, THEREFORE, PLEADED THAT SINCE THE SEIZED PAP ERS THEMSELVES SHOW THAT ACTUAL INVESTMENT CAME TO THE ASS ESSEE PRIOR TO THE BLOCK PERIOD, THEREFORE AS PER THE PROVISIONS OF CHAPT ER XIVB NO ADDITION CAN BE MADE. 11. THE DR RELIED ON THE ORDER OF THE REVENUE AUTHORITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND WE FIND THAT THE ASSESSEE HAD SHOWN THE UTILIZATION OF THE DOUBLED AMOUNT AND HAVE SHOWN THE UTILIZATION ONLY WITH THE ASSESSEE GROUP CONCE RNS, THEREFORE, IN THESE CIRCUMSTANCES, SINCE THE UTILIZATION IS BEING SHOWN ON THE DOUBLED AMOUNT, THEN THE DECISIONS OF THE REVENUE AUTHOR ITIES HAVE TO BE ACCEPTED. THIS IS BECAUSE, IT IS NOT THE CASE OF THE AS SESSEE THAT THE FUNDS REMAINED WITH THE ASSESSEE OR WERE INVESTED IN OTH ER INTEREST YIELDING SECURITIES WHICH, WHEN ACCUMULATED, WOULD HELP THE A SSESSEE TO DOUBLE THE INVESTMENT MADE WITH HIM. BUT IN THIS CASE, S INCE IT IS THE DOUBLED AMOUNT, WHICH HAS BEEN SUBMITTED BY THE AR TO BE UTILIZED BY HIM, ONE DO NOT FIND ANY REASON TO DISTURB THE REASONING SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 5 GIVEN BY THE REVENUE AUTHORITIES FOR MAKING THE ADDITION O F RS. 62.75 LACS. 13. THE GROUNDS NO. 1 & 2 ARE THUS REJECTED. 14. THE GROUNDS NO. 3 & 4 : AS MENTIONED EARLIER IN THE O RDER ARE COMPONENTS OF GROUNDS 1 & 2. ON THE QUERY BY THE BENC H, THE AR SUBMITTED THAT ALL THE AMOUNTS MENTIONED THEREIN, FIGURE I N THE TOTAL ADDITION OF RS. 55.75 LACS AS SUSTAINED BY THE CIT(A). 15. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 16. WE HAVE HEARD THE ARGUMENTS FROM EITHER SIDE. WE FIND THAT THE ADDITION BEING AGITATED BY THE ASSESSEE ARE IN FACT COMPO NENTS OF THE ADDITION MADE BY THE AO AT RS. 62.75 LACS AND SUSTAINED B Y THE CIT(A) AT RS. 55.75 LACS. SINCE THE ADDITION HAS BEEN SUSTAINED A T RS. 55.75 LACS, THESE ADDITIONS, IN SUCH A CASE, DO NOT HAVE ANY LEGS TO STAND ON, AS THAT WOULD AMOUNT TO DOUBLE ADDITION. HENCE, ADDITIONS ARE DELETED . 17. GROUND NO. 3 & 4 ARE ALLOWED. 18. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITSS 63/MUM/2006: BY THE DEPARTMENT 19. THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN ALLOWING RELIEF OF RS 7 LAKHS UNDER THE HEAD UNEXPLAINED CASH CREDIT OUT OF THE TOTAL ADDITION OF RS 62.75 LACS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 13.40 LAKHS ON ACCOUNT OF UNEXPLAINED CHEQUE LOANS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 6 ADDITION OF RS 30,47,748/- ON ACCOUNT OF INTEREST ON CASH CREDITS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 9,95,000/- ON ACCOUNT OF INTEREST ON CHEQUE LOANS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 11,00,000/- BEING ASSESSEES SHARE IN THE FLAT AT SOHINI BUILDING. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 11.8 LAKHS WITH RESPECT TO PURCHASE OF GARAGE IN SOHINI BUILDING. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS 10 LAKHS WITH RESPECT TO FIXED DEPOSITS. 8. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 20. GROUND NO. 1, THE CIT(A) HAS GIVEN RELIEF TO THE ASSESS EE ON TWO AMOUNTS, I.E. RS. 5,00,000 FROM MR. PURSWANI AND RS. 2,00,000 FRO M MR. RATTAN U. THE ASSESSEE IN THE SUBMISSIONS BEFORE THE CIT(A) CONTENDED THAT THE CASH CREDIT HAS BEEN REPEATED, WHIC H WAS ALREADY TAKEN INTO CONSIDERATION. AS IS SEEN FROM THE REPRODUCTION OF SEIZED ANNEXURES IN THE ASSESSMENT ORDER WE FIND THAT THE CRE DIT FROM MR. PURSWANI HAVE BEEN MENTIONED IN SEIZED ANNEXURES A3/1 A ND A8/121, SINCE THIS WAS REPETITIVE, THE CIT(A) HAS DEDUCTED THE ADDITION. 21. ON THE ISSUE OF DELETION OF RS. 2,00,000 OF CREDIT IN THE NAME OF MR. RATAN U, IT WAS STATED THAT THIS WAS ACTUALLY CHEQUE RECEIPT AS ADVANCE, BUT HAS BEEN MENTIONED AS CASH RECEIPT. THIS WA S FACTUALLY FOUND TO BE CORRECT BY THE CIT(A), WHO, THEN DELETED THE ADDITION. 22. THE DR RELIED ON THE ORDER OF AO. 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GONE T HROUGH THE CONTENTS OF THE REPRODUCED SEIZED MATERIAL. WE FIND THAT T HE NAME OF PURSWANI WAS MENTIONED IN TWO ANNEXURES, BECAUSE OF WHICH THE SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 7 ADDITION WAS MADE. ON THE OTHER HAND ADDITION OF RS 2.00 LACS WAS UNDER THE MISCONCEPTION OF BEING A CASH LOAN, WHICH INSTEAD WAS AN ADVANCE RECEIVED BY THE ASSESSEE THROUGH REGULAR BANK ING CHANNELS. THESE FACTS, WE FIND, HAD BEEN CONSIDERED BY THE CIT(A), AFT ER REFERRING THE CASE TO THE AO FOR HIS COMMENTS, AFTER THE ASSESSEE HAD PLACED CERTAIN ADDITIONAL EVIDENCE UNDER RULE 46A. SINCE THESE ISS UES HAD BEEN EXAMINED BY THE AO AND AFTER CONSIDERING THE AOS COMMENTS, THE CIT(A) CAME TO FACTUAL FINDINGS, IIN THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO DISTURB THE FINDINGS OF THE CIT(A) DELETING THE ADDITION OF RS. 7,00,000. 24. GROUND NO. 1 IS REJECTED. 25. GROUND NO. 2 : THE CIT(A) HAS EXTRACTED THE RELEVANT PORTION OF THE ORDER OF THE AO, WHICH READS, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A O NOTICED FROM VARIOUS SEIZED PAPER ANNEXURE A-3 AND A-8 THAT THE APPELLANT HAS RECEIVED A TOTAL LOAN OF RS 13.40 LAK HS FROM VARIOUS PARTIES. THE AO ASKED THE APPELLANT TO FUR NISH CONFIRMATIONS IN RESPECT OF VARIOUS SUCH LOANS. HO WEVER, THE APPELLANT COULD NOT FURNISH ANY CONFIRMATIONS WITH RESPECT TO LOANS RECEIVED FROM THE FOLLOWING PARTIES: I) CLETUS PERREIRA RS 2,00,000 II) N.G. JAGHANI RS 50,000 III) AJIT UTTAMCHANDANI RS 2,00,000 + RS 1,00,000 IV) RATAN UTTAMCHANDANI RS 2,00,000 + RS 50,000 V) ZAHEER ABBAS RS 2,00,000 THE APPELLANT HOWEVER FURNISHED CONFIRMATIONS FROM THE REST OF THE PARTIES NAMELY, MOHAMED ZAHEER, RAZIA AND AMJAD KHAN. HOWEVER, THE AO WAS NOT SATISFIED ABOUT THE CONFIRM ATIONS OF THESE PARTIES SINCE THERE WERE NO PERMANENT ACCOUNT NUMBERS AND DETAILS OF ASSESSMENTS MENTIONED ON SUCH LETTER S. THE AO WAS THEREFORE NOT SATISFIED ABOUT THE GENUINENESS A ND CREDITWORTHINESS OF THESE PARTIES. THE AO ALSO REA SONED THAT THE APPELLANT HAD NOT FILED BALANCE SHEET WITH REGU LAR RETURN OF INCOME ALTHOUGH HE WAS HAVING BUSINESS INCOME AND H ENCE, VARIOUS LOANS BY CHEQUES COULD NOT BE TREATED AS AC COUNTED. THE AO HAS THEREFORE TREATED THE ENTIRE CHEQUE LOAN S AS UNEXPLAINED INCOME OF THE APPELLANT. 26. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A), BEFORE WHOM, IT WAS SUBMITTED: SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 8 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LE ARNED AR OF THE APPELLANT HAS FILED DETAILED SUBMISSION DATED 2 0.06.2005 WHEREBY LOAN CONFIRMATIONS ALONGWITH INCOME TAX NOS OF VARIOUS SUCH PARTIES WHO HAVE GIVEN LOANS THROUGH C HEQUES HAVE BEEN FILED. IT WAS SUBMITTED BY THE LEARNED A R THAT THE LOAN CONFIRMATIONS OF VARIOUS PARTIES MENTIONED BY THE AO COULD NOT BE SUBMITTED AT THE TIME OF ASSESSMENT PROCEEDI NGS BECAUSE THE FIRST PARTY WAS OUT OF INDIA AND THE OTHER CRED ITORS WERE NOT AVAILABLE AT THAT TIME AND HENCE, THEIR LOAN CONFIR MATIONS COULD NOT BE OBTAINED. IT WAS THEREFORE SUBMITTED THAT T HE APPELLANT HAS REASONABLE CAUSE BECAUSE OF WHICH VARIOUS DETAI LS PERTAINING TO THE GENUINENESS OF THESE LOANS COULD NOT BE FILED AT THE TIME OF ASSESSMENT PROCEEDINGS AND HENCE, THIS FRESH EVIDENCE MAY BE TAKEN ON RECORD AT THE TIME OF APPE LLATE PROCEEDINGS. SINCE VARIOUS CONFIRMATIONS ALONGWITH THE PANS FILED BY THE APPELLANT CONSTITUTED FRESH EVIDENCE, AN OPPORTUNITY WAS GIVEN TO THE AO VIDE THIS OFFICE LETTER DATED 0 7.11.2005 TO EXAMINE THE FRESH MATERIAL ON RECORD AND SEND HIS R EMAND REPORT IN ACCORDANCE WITH THE PROVISIONS OF RULE 46 A OF I.T. RULES, 1962. THE AO WAS SPECIFICALLY ASKED TO GIVE HIS COMMENTS ON THE SAID FRESH EVIDENCES FILED BY THE A R SINCE THE SAID EVIDENCES COULD NOT BE FILED BY THE ASSESSEE D URING THE COURSE OF ASSESSMENT PROCEEDINGS BECAUSE OF VARIOUS REASONS AND ALSO SINCE THOSE FRESH CONFIRMATIONS FROM CREDI TORS WAS BEING CONSIDERED BY THIS OFFICE BEFORE THE FINALIZA TION OF THE PRESENT APPEAL. HOWEVER, THE AO HAS SUBMITTED A LE TTER DATED 21.11.2005 WHEREBY IT HAS BEEN CONTENDED THAT THE F RESH EVIDENCE IN THE FORM OF CONFIRMATIONS HAS BEEN FILE D BY THE ASSESSEE IN CONTRAVENTION TO RULE 46A AND HENCE, TH E SAME SHOULD BE REJECTED BY THE CIT (A). IT HAS BEEN MEN TIONED BY THE AO THAT THE APPELLANT WAS GIVEN SUFFICIENT OPPORTUN ITY AT THE TIME OF ASSESSMENT PROCEEDINGS BUT HE FAILED TO FUR NISH THE CONFIRMATION OF CHEQUE LOANS AND HENCE, THE UNEXPLA INED INCOME OF RS 13.40 LAKHS HAS RIGHTLY BEEN ADDED IN THE HAN DS OF THE APPELLANT. 27. IT WAS FURTHER SUBMITTED: IT WAS SUBMITTED THAT SOME OF THE CONFIRMATIONS D ULY FILED BY THEM DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN D THE AO HAS DULY MENTIONED THIS FACT IN THE ASSESSMENT ORDE R ALSO. IT WAS FURTHER POINTED OUT THAT THE APPELLANT HAD NOT BEEN ABLE TO FILE THE SAID CONFIRMATIONS BEFORE THE AO AND THE R EASONS FOR SUCH NON-COMPLIANCE WERE DULY SUBMITTED TO THE AO V IDE THEIR LETTER DATED 28.01.2005 FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF. IN THE SAID LETTER, APPELLANT HAD EXPLAINED THE REASONS FOR NOT FILING CONFIRMATION OF FOUR PAR TIES SINCE THOSE PARTIES WERE OUT OF STATION AT THAT MATERIAL TIME. A COPY OF THE SAID LETTER HAS BEEN FILED DURING THE COURSE OF APP ELLATE PROCEEDINGS ALSO. IN VIEW OF THESE FACTS, IT WAS SU BMITTED BY THE AR THAT AO WAS NOT JUSTIFIED IN RAISING OBJECTIONS AGAINST THE ADMISSION OF THE SAID ADDITIONAL EVIDENCE AS WELL A S IN NOT CONSIDERING THE SAID FRESH EVIDENCES ON MERITS ALSO . SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 9 28. THE CIT(A), AFTER TAKING INTO CONSIDERATION, THE ENTIRE S EQUENCE OF EVENTS, OBSERVED, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT WAS PREVENTED BY SUFFICIENT LOANS FORM FILING THE CONFIRMATIONS A ND PANS OF A FEW PARTIES WHO HAD ADVANCED LOANS TO THE APPELLANT BY CHEQUES. THEREFORE, THE ADDITIONAL EVIDENCE IN THE FORM OF CONFIRMATIONS FILED BY THE APPELLANT DURING THE COU RSE OF APPELLATE PROCEEDINGS HAS BEEN PLACED ON RECORD. I AM FURTHER OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE ADDITIONAL EVIDENCE FILED BY THE APPELLANT WITHOUT ASSIGNING A NY COGENT REASONS. THE AO WAS REQUIRED TO GIVE COMMENTS ON TH E MERITS OF THE CASE ALSO. THIS IS PARTICULARLY SO BECAUSE IN M Y LETTER DATED 07.11.2005, IN PARA 3, I HAD SPECIFICALLY MENTIONED THAT THE ADDITIONAL EVIDENCE FILED BY THE APPELLANT IS BEING CONSIDERED IN THE APPELLATE PROCEEDINGS. WITHOUT PREJUDICE TO THI S, I AM FURTHER OF THE VIEW THAT ONCE THE CONFIRMATIONS HAVE BEEN F ILED BY THE AO, THE ONUS SHIFTS ON THE DEPARTMENT TO PROVE THAT EITHER THESE CONFIRMATIONS ARE FALSE OR BOGUS, OR THE GENUINENES S OF THE LOAN TRANSACTION IS DOUBTFUL. THE AO HAS NOT GIVEN ANY C OMMENTS ON THESE ASPECTS OF THE CASH CREDIT UNDER CONSIDERATIO N. THE APPELLANT HAS DISCHARGED THE PRIMARY ONUS BY FILING THE DETAILS OF SUCH PARTIES, FILING THEIR CONFIRMATION LETTERS AND GIVING DETAILS OF THE TRANSACTIONS ENTERED WITH THEM THROUGHOUT TH E BLOCK PERIOD INCLUDING THE INTEREST PAID TO THEM BY CHEQU E FROM TIME TO TIME. IT IS AN ESTABLISHED LAW THAT AN ASSESSEE CAN FILE ANY LEGAL EVIDENCE PERTAINING TO THE ISSUE INVOLVED IN A PROC EEDING AT ANY APPELLATE STAGE PROVIDED HE HAD BEEN PREVENTED TO F ILE SUCH EVIDENCES EARLIER DUE TO REASONABLE CAUSE. IN THE PRESENT CASE, I AM OF THE VIEW THAT THE APPELLANT HAD FILED PARTIAL DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. EVEN THOSE D ETAILS HAVE BEEN REJECTED BY THE AO WITHOUT BRINING ON RECORD F URTHER EVIDENCES TO PROVE THAT THE SAID PARTIES ARE EITHER BOGUS OR THEY WERE NOT HAVING THE REQUISITE CREDITWORTHINESS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE ENTIRE ADDITION OF RS 13.40 LAKHS MADE BY THE AO ON ACCOUNT OF CHEQUE LOANS IS HEREBY DELETED. 29. AGGRIEVED, BY THE ABOVE FINDINGS OF THE CIT(A), THE D EPARTMENT IS IN APPEAL BEFORE THE ITAT. 30. BEFORE US, THE DR RELIED ON THE ORDER OF THE AO, AND O N THE OTHER HAND, THE AR, RELIED ON THE ORDER OF THE CIT(A). 31. WE HAVE GONE THROUGH THE ORDER OF THE REVENUE AU THORITIES. WE FIND THAT THE ASSESSEE HAD PLACED CONFIRMATIONS, WHICH WERE REJECTED BY THE AO. THE AO, ON THE SIMILAR BASIS REJECTED THE OTH ER CREDITS AS WELL. BEFORE THE CIT(A), THE ASSESSEE PLACED ADDITIONAL EVIDEN CE, WHICH SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 10 WAS SENT TO THE AO IN REMAND AND WHICH WAS CONSIDERED BY THE AO ONCE AGAIN. ON THE BASIS OF THE SUBMISSIONS OF THE ASSESSE E AND REMAND REPORT BY THE AO, THE CIT(A) CONCLUDED THAT ADDIT ION OF RS. 13.40 LACS COULD NOT BE SUSTAINED. ON CONSIDERATION OF THE OBSERVATION OF THE CIT(A) ON THE IMPUGNED ISSUE, WE ARE OF THE CONSIDER ED OPINION THAT THE CIT(A) WAS CORRECT IN DELETING THE ADDITION, WE, T HEREFORE, SUSTAIN THE ORDER OF CIT(A). 32. GROUND NO. 2 IS THEREFORE REJECTED. 33. GROUND NO. 3 IS AGAINST THE DELETION OF RS. 30,47,748, A DDED AS INTEREST ON CASH CREDITS. 34. THE ISSUE IS BASED ON THE FACT THAT THE ASSESSEE U SED TO DOUBLE THE INVESTMENT MADE BY HIS CONSTITUENTS IN THE FOUR YEAR CYCLE. 35. THE CIT(A) HAS CATEGORICALLY OBSERVED THAT, ON PERUSAL OF THE SEIZED DOCUMENTS AND THE RECEIPTS FOR DOUBLING THE CASH DEPOSITS, IT IS VERY CLEAR THAT THE APPELLANT HAD BEEN ADDING THE CAS H INTEREST ELEMENT IN THE PRINCIPLE AMOUNT OF LOAN AT THE TIME OF ISSUING THE FRESH RECEIPTS FOR CASH DEPOSITS FROM VARIOUS PARTIES. THUS, THE APPE LLANT HAD BEEN ROTATING HIS UNEXPLAINED CASH CREDITS IN THE FORM OF ENTRIES FOR THE PAYMENT OF INTEREST IN CASH ALSO. ONCE THE APPELLANT I S HAVING SUFFICIENT CASH AT THE TIME WHEN THE CASH INTEREST IS ACTUALLY G IVEN AS IS STATED TO BE CREDITED IN THE FORM OF THE DOUBLING OF THE AMOUNT, IT CAN BE PRESUMED THAT THE CASH CREDITS HAVE BEEN UTILIZED FOR THE PAY MENT OF CASH INTEREST DURING THE BLOCK PERIOD . THE CIT(A), THUS HELD, I AM OF THE CONSIDERED VIEW THAT SEPARATE ADDITION ON ACCOUNT OF CASH INTE REST PAYMENT CANNOT BE MADE SINCE THIS ADDITION GETS COVERED BY THE ADDIT ION ON ACCOUNT OF CASH CREDITS. 36. THE DEPARTMENT IS IN APPEAL AGAINST THIS FINDING. SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 11 37. THE DR, RELIED ON THE FINDINGS OF THE AO, WHEREAS, THE AR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 38. WE HAVE HEARD THE RIVAL CONTENTIONS AND WE FIND THAT THE CIT(A) HAS ADOPTED A VERY REASONABLE APPROACH TO THE ISSUE. T HE ENTIRE CASE OF THE ASSESSEE IS THAT HE DOUBLES THE INVESTMENTS RECE IVED FROM HIS CONSTITUENTS IN A FOUR YEAR CYCLE. THE AO, WHILE ASSESSING H IM, TOOK INTO CONSIDERATION THE GROSSED UP FIGURE OR WHAT WE FIND T HE DOUBLED FIGURE, AS PER THE ILLUSTRATED SEIZED PAPER. THE REVENUE AUTHORITIES HAVE ADOPTED THIS GROSSED FIGURE, WHICH, VERY STRICTLY OBSERVING IS AS PER THE UNCONTROVERTED INVESTMENT FROM THE CONSTITUENTS . IF THE AO HAS ACCEPTED THE GROSSED FIGURE, IT WOULD AUTOMATICALLY INFER TO INCLUDE THE INTEREST PORTION. WE MAY MENTION THAT, ADDITION COULD HAVE BEEN TENABLE, HAD THERE BEEN NO ADDITION ON THE GROSSED FIGURE OF CONSTITUENTS INVESTMENTS. 39. WE, ARE THEREFORE, IN FULL AGREEMENT OF THE REASONING GIV EN BY THE CIT(A) IN DELETING THE ADDITION OF INTEREST. 40. THEREFORE, GROUND NO. 3 IS REJECTED. 41. GROUND NO. 4 IS AGAINST THE ADDITION OF RS. 9,95,000 BEIN G INTEREST ON ACCOUNT OF LOANS RECEIVED BY THE ASSESSEE T HROUGH REGULAR BANKING CHANNELS. 42. THE ONLY REASON GIVEN BY THE AO WAS THAT THE ASS ESSEE COLD NOT PRODUCE ALL THE CONFIRMATIONS, PAN AND OTHER DETAILS WITH RE GARD TO LOANS RECEIVED BY THE ASSESSEE TO THE EXTENT OF RS. 13,40,000. 43. THE CIT(A) DELETED THE ADDITION BECAUSE, HE HAD DELETE D THE ADDITION ON THE PRINCIPAL SUM. THE DEPARTMENT IS IN APPEAL. SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 12 44. THE DR RELIED ON THE ORDER OF THE AO, WHEREAS, THE A R RELIED ON THE ORDER OF CIT(A). 45. WE HAVE PERUSED THE ORDERS AND WE AGREE WITH THE OBSERVATIONS OF THE CIT(A) THAT THE INTEREST PAYMENTS MADE THROUGH C HEQUES TO THE PERSONS FROM WHOM GENUINE LOAN WERE TAKEN/ACCEPTED, CAN NOT BE DISALLOWED. 46. THEREFORE, WE SUSTAIN THE ORDER OF THE CIT(A), WHEREIN , HE HAD DELETED THE ADDITION OF RS. 9,95,000. 47. ACCORDINGLY, WE REJECT GROUND NO. 4. 48. GROUND NO. 5 AND 6 PERTAIN TO THE ADDITION MADE BY THE AO AT RS 11,00,000 AND RS 11,80,000 WITH RESPECT TO ASSESSEE S HARE IN SOHINI BUILDING AND PURCHASE OF GARAGE IN SOHINI BUILDING. 49. THE AR POINTED OUT THAT THE FACTS IN THE IMPUGNED IS SUES ARE IDENTICAL TO THE FACTS AS DECIDED BY THE COORDINATE BENCH IN THE CASES OF ASSESSEES BROTHERS, SHYAM S. MOTWANI AND KRISHNA S M OTWANI IN ITSS NO 16/M/2006 AND 17/M/2006 RESPECTIVELY, WHEREIN, THE COORDINATE BENCH HELD, THE THIRD GROUND OF REVENUES APPEAL IS IN RESPECT OF ADDITION OF RS 11,00,000/- MADE ON ACCOUNT OF UNEXPLAINED INVES TMENT ON PURCHASE OF FLAT OF SOHINI BUILDING. THE ASSESSEE E XPLAINED THE REASONS IN SUPPORT OF THE PURCHASE PRICE OF PROPERT Y. AS NOTED WHILE DECIDING GROUND NOS. 1 & 2 OF THIS APPEAL THA T BLOCK ASSESSMENT IS SUBJECT TO UNDISCLOSED INCOME BY NOT THE INCOME SUBJECT TO REGULAR ASSESSMENT. WE FIND THAT THE CIT (A) HAS RIGHTLY OBSERVED THAT THIS ADDITION MADE BY THE AO IS MERELY ON PRESUMPTION. THE ADDITION CANNOT BE MADE IN BLOCK A SSESSMENT MERELY ON THE BASIS OF PRESUMPTION. IN THE LIGHT OF DETAILED DISCUSSION AND THE REASONS GIVEN BY THE CIT(A) WHIL E DELETING ADDITION, WE INCLINE TO UPHOLD THE ORDER OF CIT(A). AND SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 13 2 ND GROUND OF REVENUE IS IN RESPECT OF ADDITION OF RS 22.00 LAKH ON ACCOUNT OF SALE OF FLAT NO. 1, SOHINI BUILDING, VILE PARLE (WEST), MUMBAI. GROUND NO. 3 RD IS IN RESPECT OF ADDITION OF RS 11.80 LAKHS ON THE SALE OF GARAGE AT SOHINI BUILDING. THE AO DID NOT ACCEPT THE ASSESSEES SUBMISSIONS AND MADE THE ADDI TION OF DIFFERENCE OF RS 22 LAKHS ON ACCOUNT OF SALE OF FLA T AND RS 11.8 LAKH ON ACCOUNT OF SALE OF GARAGE. THE CIT(A) DELET ED THE SAID ADDITION RELYING UPON THE DISCUSSION MADE BY HIM IN THE CASE OF SHRI SHYAM MOTWANI. THE CIT(A) OBSERVED THAT THE PR OPERTY WAS SOLD UNDER THE PECULIAR CIRCUMSTANCES AS THE PROPER TY WAS UNDER THE OCCUPATION OF THE PURCHASERS, THE MERE ES TIMATED CURRENT MARKET VALUE OF THE SAID PROPERTY CANNOT BE ADOPTED FOR DETERMINING THE TOTAL CONSIDERATION FOR THE TRANSFE R OF THE SAID PROPERTY. THE CIT(A) FURTHER OBSERVED THAT THE AO D ID NOT BRING ON RECORD ANY EVIDENCE TO PROVE THAT THE ASSESSEE H AD RECEIVED ANY CASH OVER AND ABOVE THE DOCUMENTED CONSIDERATIO N OF RS 2 LAKHS ON THE SALE OF THIS PROPERTY. ACCORDINGLY, TH E CIT(A) DELETED THE ADDITION OF RS 22 LAKHS. ON SIMILAR GRO UNDS, THE CIT(A) DELETED THE ADDITION OF RS 11.8 LAKHS ON ACC OUNT OF GARAGE. 50. SINCE THE SIMILAR ADDITIONS MADE IN THE INSTANT CASE HA VE BEEN DELETED BY THE COORDINATE BENCH, WE, RESPECTFULLY FOLLOWING T HE ITAT DECISIONS IN THE CASES OF SHYAM S. MOTWANI AND KISHAN S MO TWANI, SUSTAIN THE ORDER OF THE CIT(A), WHEREIN, HE HAS DELETED TH E ADDITION OF RS. 11,00,000 AND RS. 11,80,000. 51. GROUNDS NO. 5 & 6 ARE, THEREFORE, REJECTED. 52. GROUND NO. 7 IS AGAINST THE DELETION OF RS. 10,00,000 ON ACCOUNT OF ADDITION MADE BY THE AO ON FIXED DEPOSITS. 53. THE AR SUBMITTED THE INSTANT ISSUE IS IDENTICAL TO TH E ISSUE IN ITSS 16/M/2006, WHEREIN THE COORDINATE BENCH HAS HELD, GROUND NO. 1 AND 2 ARE IN RESPECT OF DELETION OF A DDITION OF RS 20.00 LAKHS ON ACCOUNT OF FIXED DEPOSITS AND INTERE ST THEREON. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PA RTIES AND RECORD PERUSED. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT THE ASSESSEE HAS DISCHARGED HIS ONUS REGARDING SECTION 68 OF THE ACT, IN RESPECT OF FIXED DEPOSIT OF RS. 20 L AKHS. THE CIT(A) RECORDED THE FACT THAT REQUISITE TDS HAS ALSO BEEN DEDUCTED BY THE BANK AT THE TIME OF THE CREDIT OF THE INTEREST ON FD IN THE NAME OF ASSESSEE. THE ASSESSEE HAS SHOWN THAT INTER EST INCOME IN THE RETURN OF INCOME. WHEREAS THE AO SAID THAT T HE ASSESSEE DID NOT OFFER THE INTEREST INCOME. THE CONTRADICTOR Y FACTS ARE FOUND TO BE NOTED BY THE CIT(A) & AO. IN ORDER TO V ERIFY THE CORRECT FACTS, THE LEARNED DR PRODUCED ORIGINAL ASS ESSMENT RECORDS. ON PERUSAL OF THE SAID ORIGINAL RECORD WE FIND THAT THE ASSESSEE HAS OFFERED THE INTEREST INCOME AND TDS WA S ALSO SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 14 MADE BY THE BANK. THE TDS CERTIFICATE IN FORM NO. 1 6A FILED ALONG WITH REGULAR RETURN. A PHOTO COPY OF THE TDS CERTIFICATE HAS BEEN PLACED ON RECORD AT PAGE 82 OF THE PAPER BOOK. THUS, WE FIND THAT THE FACTS RECORDED BY THE CIT(A) ARE THE CORRECT FACTS IN RESPECT OF THIS ISSUE. SINCE IT IS BLOCK ASSESSMENT AND ONLY UNDISCLOSED INCOME IS SUBJECT TO TAX IN BLOCK ASSES SMENT, THEREFORE, ADDITION WHICH IS TO BE MADE IN REGULAR ASSESSMENT CANNOT BE MADE IN BLOCK ASSESSMENTS. APART FROM ABO VE, THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE AFTER RECORDING THE CORRECT FACTS, THEREFORE, WE UPHOLD T HE ORDER OF CIT(A) ON THIS ISSUE. 54. SINCE THE SIMILAR ADDITION MADE HAS BEEN DELETED IN THE CONNECTED CASE, WE, RESPECTFULLY FOLLOWING THE ITAT DECISIO N IN ITSS 16/M/06, SUSTAIN THE ORDER OF THE CIT(A), WHEREIN, HE HAS D ELETED THE ADDITION OF RS. 10,00,000. 55. GROUND NO. 7 IS, THEREFORE, REJECTED. 56. GROUND NO. 8 & 9 ARE GENERAL. 57. THE APPEAL FILED BY THE DEPARTMENT IS, THUS DISMISSED. IN THE RESULT: ITSS 04/MUM/2006 FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITSS 65/MUM/2006 FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- (R. S. SYAL) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-XXVIII, MUMBAI. SHRI SUBHASH S. MOTWANI ITSS 04 & 63/MUM/2006 15 4) THE CIT -3, MUMBAI, 5) THE D.R. J BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN