SHAKUNTALA KAMBLE (LEGAL REPRESENTATIVE OF PREMCHAND KAMBLE),THANE vs. DCIT -CENT. CIR `, THANE

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Thane (West), Thane - 400607 [PAN: AFKPK6065J] Appearance For the Appellant/Assessee : Shri Pravin Tembhekar Ms. Prachi Nalawde For the Respondent/Department : Shri K.C. Selvamani Date Conclusion of hearing : 31.07.2023 Pronouncement of order : 30.08.2023

O R D E R Per Bench 1.1. This is a batch of 9 appeals pertaining to Assessment Year 2005-06 to 2008-09 consisting of 6 appeals preferred by the Assessee and 3 appeals preferred by the Revenue. The aforesaid 6 appeals were preferred by Mr. Premchand Kamble [hereinafter referred to as „the Assessee‟] in October 2021. The Assessee passed away on 13/02/2022. Therefore, Revised Form 36 was filed by Smt. Shakuntala Kamble, mother of the Assessee being duly constituted attorney of all the legal heirs.

1.2. The present set of appeal, though filed after the expiry of period of 60 days prescribed in Section 253(3) of the Act, are being treated as being filed within limitation as the appeal has been filed within the extended time allowed by the Hon‟ble Supreme Court vide order, dated 23/03/2020 and 27/04/2021 passed in the Suo Motu Writ Petition (Civil) No. 3 of 2020 read with order, dated 23/09/2021, passed in M.A. No. 665 of 2021 in Suo Motu Writ Petition (Civil) No. 3 of 2020.

1.3. For the Assessment Year 2005-06 to 2008-09, assessment was ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 framed on the Assessee under Section 144 read with Section 153A of the Act vide 4 separate assessment orders, each dated 06/08/2010, after special audit was conducted under Section 142(2A) of the Act. Subsequently reassessment proceedings were initiated for the Assessment Year 2007-08 and 2008-09 and 2 separate reassessment order were passed on 20/03/2013 under Section 143(3) read with Section 147 of the Act.

1.4. Being aggrieved by the above 4 assessment order for the Assessment Year 2005-06 to 2008-09 and 2 reassessment orders for Assessment Year 2007-08 and 2008-09, the Assessee preferred 6 appeals before the Commissioner of Income Tax (Appeals), Pune – 11 [Hereinafter referred to as „the CIT(A)‟]. The 6 appeals were disposed off by the CIT(A) vide a common order dated 20/12/2019 granting partial relief to the Assessee.

1.5. Being aggrieved by the fact that the CIT(A) did not grant complete relief as claimed by the Appellant, the Assessee preferred 6 appeal before the Tribunal against the common order, dated 20/12/2019, passed by the CIT(A). Since the Revenue was also aggrieved by the partial relief granted by the CIT(A), the Revenue preferred 3 cross- appeals pertaining to Assessment Year 2006-07 to 2008-09. Thus, the 6 appeals filed by the Assessee consist of 4 appeals pertaining to assessment orders passed under Section 144 read with Section 153A of the Act for the Assessment Years 2005-06 to 2008-09 and the 2 appeals pertaining to reassessment orders passed under Section 143(3) read with Section 147 of the Act for the Assessment Years 2007-08 and 2008-09. Whereas, the 3 appeals preferred by the Revenue are cross-appeals pertain to the assessment order passed under Section 144 read with Section 153A for the 3

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Assessment Year 2006-07, 2007-08 and 2008-09.

1.6. All the 9 appeals were heard together as the same involved identical issues arising from same factual matrix, and are, therefore, being disposed off by way of a common order.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 firm, were maintained on computer in tally package. Mr. Mukesh Gupta was merely a salaried employee with no other source of income. The duties of Mr. Mukesh Gupta included looking after cash and bank transactions of Unique Finance under instructions from the Assessee. Mr. Mukesh Gupta was shown the accounts appearing in the tally package and after examining the same he stated that these were regular books of accounts of M/s Unique Finance and the cash found at his residence was not reflected in the said books of accounts. The aforesaid search action resulted in seizure of data found in computers and seizure of cash of INR 4,65,00,000/- (b) Search action at the Office of Unique Finance at 306, Anant Lakshmi Chambers, Opp. Waman Hari Pethe, Thane (West) and cash of INR 45,15,615/- was found. The employees present at the office could not provide explanation about the cash. The aforesaid search action resulted in seizure of documents and loose papers found at the premise, back up of computers and cash of INR 43,00,000/-. Further, documents relating to Smt. Vrushali S. Shinde, Proprietor of M/s Trushna Services & Trushna Enterprises having office at E-47, Sant Mira Society, Kopri Colony, Thane (East) were found which showed that cash to the tune of INR 10.91 Crores was deposited in the bank account of these concerns. The case of Smt. Vrushali S. Shinde has been covered under Section 153C of the Act. (c) Survey action at the office of M/s Unique Motors, a proprietorship concern of the Assessee, at Shop No. 6 Pride Park, Opp. Lawkim Company, Manpada, Ghodbunder Road,

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Thane (West). A number of books of accounts and documents as well as 2 CDs containing the back up of data on computers were impounded. (d) Survey action at the office of M/s Unique Tour and Travels, a proprietorship concern of Mr. Ravi Ramchandra Suvarna – alleged to be a close associate of the Assessee, located at Shop No. 14, D Wing, Shri Balaji Darshan, Mira-Bhayander Road, Bhayander (East). During the course of the survey, books of accounts, documents and two CDs containing back up of the data on computers were impounded. (e) Survey action at the office of M/s Unique Travels, a proprietorship concern of Sanjay Narayan Chauhan, located near Ambrosia Hotel, Opp. Trimurti School, Ghodbunder Road, Thane (West). During the course of the survey, books of accounts, documents and two CDs containing back up of the data on computers were impounded. Further, statement of Shri Sanjay Chauhan was also recorded. Assessment Proceedings 2.3. Consequent on the above search actions under Section 132 of the Act and taking into account material seized, notice under Section 153A of the Act and Section 142(1) of the Act were issued to the Assessee for the Assessment Year 2002-03 to Assessment Year 2008-09. The Assessee did not comply with the aforesaid notices and failed to file the return of income. The notice dated 26/03/2008, 18/09/2008 and 21/10/2009, issued under Section 142(1) of the Act were also not complied with.

2.4. The Assessing Officer noted that during the search/survey actions it

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 was discovered that the Assessee did not maintain regular books of accounts. However, records were found in the form of Tally Data and MS Excel files maintained by the Mr. Mukesh Gupta. The bank accounts of the Assessee showed huge cash deposits and withdrawals. Even though the turnover of various proprietorship concerns ran into crores, no tax audit was undertaken by the Assessee. In view of the aforesaid, vide order, dated 18/12/2009 the case of the Assessee was record for Special Audit under Section 142(2A) of the Act. The order of Special Audit was served on the Assessee on 23/12/2009. The special auditor reported that the Assessee did not cooperate with the auditor and did not furnished information/documents sought for by the special auditor. Therefore, the audit was completed on the basis of the seized material impounded during the search action and a copy of the Special Audit Report was furnished to the Assessee on 14/06/2010.

2.5. Thereafter, on 24/06/2010 a letter was filed by the Authorised Representative on behalf of the Assessee asking for copies of the bank statements. On 09/07/2010, the copies of the bank statements were collected by the Ld. Authorised Representative for the Assessee. Since the assessment was required to be completed within a period of 60 days of the date of the Special Audit Report, a final notice under Section 142(1), dated 09/07/2010 along with detail show cause notice was issued fixing the hearing on 19/07/2010 was issued to the Assessee. The Assessee was asked to produce all the books and accounts and documents. Thereafter, an application, dated 16/07/2010, was filed by the Ld. Authorised Representative for the Assessee requesting for copies of seized materials and the CDs on the ground that the same got misplaced

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 during the shifting of office of Ld. Authorised Representative for the Assessee. The entire information contained in the CDs was furnished to the Ld. Authorised Representative for the Assessee. On 19/07/2010, the Ld. Authorised Representative for the Assessee filed a letter requesting time till 26/07/2010 to file income tax return as the Assessee had been recently released from jail after almost three years of incarceration. However, on 26/07/2010, none appeared for the Assessee but the return of income was filed under Section 153A of the Act declaring loss along with Profit & Loss Account, capital account and balance sheet. Notice under Section 143(2) of the Act was issued on 27/07/2010 case for hearing on 30/07/2010 and requiring the Assessee to attend the hearing and produced relevant documents/details. Further, the Assessee was also complied with notice dated 09/07/2009, issued under Section 142(1) of the Act. On 30/07/2010, the aforesaid notices were not complied with and none appeared for the Assessee. In the aforesaid facts and circumstances, the Assessing Officer proceeded to frame assessment on the Assessee under Section 144 read with Section 153A of the Act and passed the Assessment Order making certain additions/disallowances.

2.6. Subsequently, reassessment proceedings were initiated for the Assessment Year 2007-08 and 2008-09. The Assessing Officer noted that no addition/disallowance was made to the taxable income in respect of cash receipts of INR 1,31,30.265/- and INR 36,18,335/- pertaining to Aurangabad Office of the Assessee during the previous year relevant to the Assessment Year 2007-08 and 2008-09, respectively. Therefore, reassessment proceedings were initiated and addition/disallowance were made in respect of ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 receipts/payments related to the Aurangabad Office vide reassessment orders passed under Section 143(3) read with Section 147 of the Act for the Assessment Year 2007-08 and 2008- 09, both, dated 20/03/2013.

Appeal Before CIT(A) 2.7. Being aggrieved the Assessee preferred 4 appeals before the CIT(A) against the Assessment Orders passed under Section … of the Act for the Assessment Year 2005-06 to 2008-09 and 2 appeals against the reassessment order for the Assessment Year 2007-08 and 2008-09 passed under Section 143(3) read with Section 147 of the Act. The Appellant challenged the additions/disallowances on merit before the CIT(A). The CIT(A) vide common order dated 20/12/2019 decided all the 6 appeals granting partial relief to the Assessee.

Appeal before the Tribunal 2.8. Now, both the Assessee and the Revenue are in appeal before us against the order passed by the CIT(A) in all the 6 appeals. Whereas, the Revenue has filed 3 appeals against the order passed by the CIT(A) in relation to assessments order passed under Section 144 read with Section 153A of the Act for the Assessment Year 2006-07 to 2008-09.

3.1. The appeals arise from common factual matrix. Further, for each assessment year identical issues have been raised in appeal. Therefore, before dealing with the ground raised in each appeal, we 10

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 deem it appropriate summarize the overarching the factual and legal background.

3.2. The Assessee is an individual who had floated schemes and taken deposits from various persons promising high returns. The modus operandi of the Appellant was that the Appellant would take money from the customers in the name of its proprietorship concern „Unique Finance‟ on the pretext of buying car in the name of the customers which would be given on lease rental basis to another proprietary concern of the Appellant (such as Unique Motors) and this proprietary concern would in turn give these cars to call centers and offices on rent.

3.3. While discussing the schemes floated by the Appellant, the Assessing Officer has, in paragraph 2 to 2.3 of the Assessment Order, dated 06/08/2010, for the Assessment Year 2005-06 recorded as under: “2 Shri Premchand Ashok Kamble (proprietor of M/s. Unique Finance and other entities of Unique Group) had floated two deposit/investment schemes for periods of 3 years and 5 years. 2.1. In the three years scheme there are ten down payment options for the customer to choose from i.e. he has to make a down payment of Rs.41,364/- to Rs.1,61.617/- either in cash or by cheque. He is also made to sign a agreement stating that he is giving the vehicle on hire to sister concern of Unique Finance and in return for the same he would get monthly repayment of Rs.4,000/- to Rs. 16,000/- @ 10% per month of the investment value plus at the end of 3 years he would get 30% of the amount of down payment made. 2.2. Although the scheme appears to be for purchase of vehicle, no vehicle was ever purchased. In short, it is an investment scheme wherein on amounting a sum of Rs. 11

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 41,364/- (for e.g) one can get Rs.4,000/- p.m. for 36 months plus 30% of invested amount at the end of 36 months i.e. total Rs.1,56,409/-. 2.3. The five year scheme is similar to three year scheme but in this scheme, the deposit amount varies from Rs 85.267/- to Rs 2,23,223/-, the vehicles are actually purchased in the name of the customer, taken on hire by sister concern of 'Unique Finance from the customer and given on rent to multinationals and BPOs and the customer is assured of monthly repayment of Rs.5,000/- to Rs. 13000/- p.m for 5 years depending on the Car scheme opted for, with further option of repayment of 30% of the invested amount at the end of five years or getting the vehicle back. In short on depositing a sum of Rs 85,267/-, (for e.g.) one can get Rs.5,000/- p.m. for 60 month plus 30% of invested amount at the end of 60 months i.e total Rs 3,2,580/- of Income The investors in both the types of scheme are further offered commission in excess of 6% for soliciting new customers interested in investing in these types of schemes.”

3.4. On perusal of the above it can be seen that the First Scheme was for the 3 Year having following feature:

(a) Customers had 10 options to choose from – A customer could make a down payment of INR 41,364/- to INR 1,61,617/- either in cash or by cheque

(b) Customer would enter into agreement with a sister concern of Unique Finance for giving car on finance to such sister concern

(c) In return for giving car on hire, the customer would get INR 4,000/- to 16,000/- at the rate of 10% per month for 36 months, and at the end of 36 month the customer would get 30% of the down payment amount.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09

(d) Though the scheme was for purchase of cars, no cars were actually purchased as per the Assessing Officer (e) Majority of customers opted for this scheme 3.5. Similarly, the Appellant had floated 5 Year Scheme which was identical to the 3 Year Scheme with following differences:

(a) Customers were to pay comparatively higher down payment, and would get higher returns (b) The cars were actually purchased (c) At the end of the Scheme the customers had option to take 30% of the deposited amount or the car 3.6. We note that while the CIT(A) had recorded that no cars were actually purchased, the Assessee had contended that the cars were purchased and at the end of the Scheme some of the customers were given the cars.

3.7. On examining the terms of the 3 year scheme floated the Assessee it can be seen that a customer investing INR 41,364/- was to receive back around INR 1,56,409/- over a period of around 36 months and while a customer investing around INR 85,267/- in 5 year scheme would get around INR 3,15,580/- over the period of 60 months. Thus, the business model of the Assessee was premised on giving high returns to the customers. The fact that the Appellant was promising very high returns and was accepting down payments in cash or cheque attracted a number of customers. However, the Appellant was not able to provide the promised returns and therefore, criminal proceedings were initiated against the Appellant

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 by some of the customers. During police action at the residence of Mr. Mukesh Gupta, an employee of the Appellant, cash of INR 4,66,73,200/- was found by the Police and information regarding the same was sent to the Revenue. This lead to various search and survey actions by the Revenue in which the following businesses/premises were covered: (a) Search at Residence of Mr. Mukesh Gupta (b) Seach at Office of Unique Finance at 306, Anant Lakshmi Chambers, Opp. Waman Hari Pethe, Thane (West) (c) Survey at Office of M/s Unique Motors, a proprietorship concern of the Assessee, at Shop No. 6 Pride Park, Opp. Lawkim Company, Manpada, Ghodbunder Road, Thane (West). (d) Survey at Office of M/s Unique Tour and Travels, a proprietorship concern of Mr. Ravi Ramchandra Suvarna – alleged to be a close associate of the Assessee, located at Shop No. 14, D Wing, Shri Balaji Darshan, Mira-Bhayander Road, Bhayander (East). (e) Survey at Office of M/s Unique Travels, a proprietorship concern of Sanjay Narayan Chauhan, located near Ambrosia Hotel, Opp. Trimurti School, Ghodbunder Road, Thane (West). 3.8. During the aforesaid search/survey action the following had transpired:

(a) Cash of INR 4,66,73,200/- was found at Residence of Mr. Mukesh Gupta, out of which cash of INR 4,65,00,000/- was seized. Further, cash of INR 45,15,615/- was found at the Office of Unique Finance at 306, Anant Lakshmi Chambers, Opp. Waman Hari Pethe, Thane (West) out of which cash of INR 43,00,000/- was seized.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 (b) Tally data backup which were in the nature of regular books of accounts maintained by the Appellant was seized.

(c) Diary maintained by Mr. Mukesh Gupta which was in the nature of daily cash book was seized

(d) Paper bundles, and loose papers giving incriminating information about cash receipts and payments not recorded in tally data back-up were seized (e) computer back-up were also seized (f) Statement of Mr. Mukesh Gupta was recorded 3.9. Thereafter, notice under Section 153A of the Act was issued to the Appellant asking the Appellant to file return of income which was not complied with. The Assessing Officer was of the view that the there were voluminous records in the form of paper bundles, loose sheets, diary, computer back-up (excel sheets), and tally data. Further, the bank statements showed deposit of cash and cash payments. The data contained in the aforesaid needed to co-related with the business operation of the Assessee and his associate concerns. Keeping in view the aforesaid complexity, vide order dated 18/12/2009, Special Audit under Section 142(2A) of the Act was ordered. The Special Auditor noted that the Appellant did not cooperate in the special audit and therefore, the Special Auditor completed the audit and filed the Audit Report. Copy of Special Audit Report was provided to the Assessee. On receipt of the Special Report, return of income was filed by the Assessee on 26/07/2010. However, since no reply or submissions were filed by the Appellant, the Assessing Officer completed the Assessment under Section 144 read with Section 153A of the Act for the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Assessment Year 2005-06 to 2008-09.

3.10. On perusal of the Assessment Order we note that on different occasions the Assessing Officer has noted that the Appellant was confronted with the search material, served with a copy of the notices and provided the special audit report. Despite this the Appellant failed to file any reply/submission. In our view, the conduct of the Assessee is to be understood in the context of the facts prevailing at the relevant time. It was submitted by the Learned Authorised Representative for Assessee during the course of hearing that after the Police action and search/survey by the income tax department, the employees and associates of the Appellant, disassociated themselves with the Assessee and did not cooperate with the Assessee and his counsel. In this regard, we note that the CIT(A) has, in paragraph 9 of the order impugned, recorded as under: “9. One of the grounds of appeal for all the years is that proper opportunity of being heard was not given. During the appeal proceedings, several opportunities were given to the appellant to produce documents and submissions in support of the grounds of appeals for all the years. As the assessments were completed by the Assessing Officer without substantial submissions made by the appellant on merits, presumably because the appellant was in jail for a long period of time (the appellant is reportedly still in jail), references were made to the AO vide letters dtd 05/01/2016, 16/06/2016. 09/01/2017, 23/03/2018, 04/01/2019, 08/08/2019 & 20/11/2019, seeking reports of the AO on specific issues of addition and also allowing opportunities to the assessee. The AO has submitted various remand reports (without any replies from the Appellant despite repeated opportunities) dtd. 18/01/2013, 04/10/2016, 13/12/2017, 18/04/2018, 25/03/2019, 16/09/2019 & 04/12/2019. The remand reports were also confronted to the appellant and reply dtd 09/01/2017 was received. During the appeal proceedings, written submissions which are far and few were received on behalf of the appellant vide replies dtd.08/04/2013, 15/01/2016 and 13/12/2018, Despite these repeated opportunities, even in the appeal stage, extremely inadequate representations have been made in support of the grounds of appeal. At the remand 16

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 stage before the AO also, no useful submissions have been made on behalf of the appellant and the AO has repeatedly expressed its inability to comment on the merits of the appeal in absence of any justification or submissions etc, during the remand proceedings. Considering that these are very old appeals, and sufficient opportunities have been given to the appellant both by the appellate authority and the AO, it is considered appropriate to decide the appeals on the basis of the material available on record and the merits of the additions made. The ground of appeal of the appellant (AYs 2005- 06 to 2008-09) pleading for opportunity of being heard be given to the appellant, is therefore held to be sufficiently complied with, though the appellant failed to make sufficient compliance.”

3.11. We note that the Assessee was being prosecuted in various civil and criminal proceedings. The Assessee was in judicial custody from August 2007 till February 2010. During February 2010 till April 2013, when the Assessee was not in jail, the Assessee was being prosecuted for a number of civil and criminal cases. The Assessee was again arrested in February 2010 and he finally passed away on 13/02/2022 while he was still behind bars. Thus, the lack of assistance on the part of the Assessee or his representatives during the assessment and the appellate proceedings before the CIT(A) was partly on account of the fact that the Assessee was incarcerated for majority of the period.

3.12. We note that the CIT(A) has recorded that the despite sufficient opportunity being granted, the submission filed on behalf of the Appellant were few and far between. It is admitted position that the order of Special Audit and the initiation of reassessment proceeding under Section 147 of the Act for the Assessment Year 2007-08 and 2008-09 have not been challenged on behalf of the Assessee. The appeals before the Tribunal are being pursued by the mother of the Appellant being his legal heir and duly constituted attorney of other

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 legal heirs. Even during the course of appellate proceedings before us, despite taking time on several occasions, the Learned Authorised Representative for Appellant failed to place on record further documents/details to support the case of the Appellant.

3.13. On perusal of record we find that during the assessment proceedings special audit was ordered on 18/12/2009 while the Assessment Order was passed under Section 144 read with Section 153A of the Act on 06/08/2010. For the majority of this period the Appellant was imprisoned and therefore, non-compliance on the part of the Assessee to the various notices gets explained to some extent. On the other hand we find that the Assessing Officer who had proceeded to frame assessment without making any independent inquiry or verification. Though, the Assessing Officer was aware of the Schemes floated by the Appellant, no information/details were gathered from the customers or any third party during the assessment proceedings or at the time of giving remand report. The assessment was framed primarily on the basis of the findings of the Special Auditor appointed under Section 142(2A) of the Act. All the receipts of the Appellant have been treated as income in absence of explanation furnished by the Appellant. On payment side, the addition/disallowances were made giving common reasoning that the Appellant failed to produce books of accounts and supporting vouchers. The Assessing Officer also invoked provisions of Section 40(a)(ia), and Section 40A(3) of the Act on account non-deduction of tax at source and payments made in cash in excess of INR 20,000/-, respectively. Disallowances were also made of expenses on the ground that the expenditure were not for the purpose of the business or were capital in nature.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Further, additions Section 69 and 69C of the Act were made on the ground that Appellant failed to provide details of the nature & source of Investment/expenditure.

3.14. Since the assessment was framed under Section 144 of the Act, the Appellant had filed details, documents and submissions before the CIT(A) in relation to which remand report was sought by the CIT(A) from the Assessing Officer from time to time. In the remand report filed, the Assessing Officer simply reiterated the stand taken during the assessment proceedings without any inquiry/verification. The CIT(A) also concurred with the Assessing Officer and sustained majority of additions/disallowances while granting partial relief to the Appellant.

3.15. The Appellant is now before us challenging the additions/disallowances on merits.

3.16. First Common Issue that arises for consideration is whether the deposits received by the Appellant, whether by way of cash or through banking channel, can be treated as income of the Appellant.

3.17. The law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on the assessee. Where the nature and source of a receipt cannot be satisfactorily explained by the assessee, it is open to the Revenue to hold that it is the income of such assessee and no further burden lies on the Revenue to show that income is from any particular source [Roshan Di. Hatti Vs. CIT, 107 ITR 938 (SC)].

3.18. We note that it was contended on behalf of the Appellant that the 19

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 money in the form of deposits received by the Appellant in cash and through banking channel were from the customers subscribing the schemes. However, since the Appellant was not able to furnish the details of the customers who had subscribed for the scheme and the details of deposits received from the same, addition was made by the Assessing Officer. Before CIT(A) also the Assessee failed to provide the details/documents to correlate the receipts with the amounts received as deposits from customers under the schemes. Therefore, the CIT(A) confirmed the addition. Even in appellate proceedings before us, the Learned Authorised Representative for the Assessee has failed file any details or documents in support of the contentions that the all receipts are not in the nature of income. However, we note that before the CIT(A), on the strength of the report of the Economic Offence Wing, Pune and the orders passed by the Hon‟ble Consumer Forum, the Appellant had contended that to the extent stated in the aforesaid report/orders, the nature and source of the deposits stood explained and therefore, the benefit to this extent be granted to the Appellant. However, the CIT(A) declined to grant any relied observing that (a) the Appellant had failed to provide details/confirmations as pointed out by the Assessing Officer in the remand report, and (b) that the source of the deposits as well as year wise break-up was still not available. While the CIT(A) rejected the contention of the Assessee, we are not in agreement with the CIT(A). The Assessee has placed on record the Economic Offence Wing, Pune and the orders passed by the Hon‟ble Consumer Forum. Economic Offence Wing, Pune has submitted report after carrying out necessary verification and inquiry. Similarly, the claims have been allowed by the Hon‟ble Consumer Forum after examining the claims. Therefore, there is no ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 need to obtain any confirmation from the customers who actively pursuing the claim. Further, no inquiry/verification has been carried out by the Assessing Officer while submitting the remand report. There was nothing before the Assessing Officer to doubt the investigation report filed by the Economic Offence Wing, Pune or the findings returned by the consumer forum at the time of giving the remand report. No efforts have been made to carry out any inquiry/verification to address issue of mapping the year of claim before denying it. Therefore, we are inclined to accept the aforesaid approach adopted by the Assessing Officer/CIT(A). Thus, in absence anything to the contrary on record, the fact that claims of the customers have been verified by an independent investigating agency or accepted by the consumer forum, is sufficient to conclude that the nature and source of the such deposits were the customers perusing the claims, and the fact that the Appellant was not able to provide details of these customers or get a confirmation from such customers is of no consequence in the given facts and circumstances. Accordingly, we hold that the addition to the extent of INR 22,29,30,802/- [17,33,22,654/- plus INR 4,96,08,148/-] was incorrectly sustained by the CIT(A). As regards, non-availability of the year-wise details of the deposits are concerned, we direct the Assessing Officer to reduce the addition made on account of unexplained receipts on proportionate basis Accordingly, we direct the Assessing Officer to reduce the additions made on the account of unexplained receipt in proportion of the net receipts as stated in paragraph 16 of the order passed by the CIT(A) [at page 29 of 74].

3.19. Second Common Issue that arises for consideration is whether the Assessing Officer was justified in making

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 additions/disallowances under Section 69 or 69C of the Act which is also connected with First Issue.

3.20. Section 69 and 69C of the Act contain deeming provisions. Thr provisions of Section 69 of the Act are triggered when an Assessee is not able to provide explanation about the nature and source of the investment or the explanation offered by the Assessee is not found to be satisfactory by the Assessing Officer. Similarly, Section 69C of the Act is attracted when an Assessee is not able to provide explanation about the source of the expenditure incurred or the explanation offered by the assessee is not found to be satisfactory by the Assessing Officer. We note that the Assessing Officer had treated the deposits received by the Appellant from the customers as income of the Appellant. To conclude that the Appellant had failed to provide explanation about the nature and source of investment or expenditure without taking into account the addition so made in the hands of the Assessee, as has been done by the Assessing Officer, would put the Assessee in double jeopardy in the facts and circumstances of the present case. In our view, in the facts and circumstances of the present case the availability of deposits/receipts treated as income as source of expenditure or investment should also be taken into consideration while determining applicability of the provisions of Section 69/69C of the Act.

3.21. Third Common Issue that arises for consideration pertains to the disallowances made by the Assessing Officer under Section 40(a)(ia) and 40A(3) of the Act which have been sustained by the CIT(A).

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 3.22. In this regard, we note that the Assessing Officer rejected the books of account of the Appellant as incomplete. The Assessing Officer framed assessment on the Appellant on the basis of the Profit & Loss Account and the Balance Sheet prepared by the Special Auditor appointed under Section 142(2A) of the Act. It is admitted position that the Appellant had not produced books of accounts or co-operated to furnish explanation. The Special Auditor had concluded the special audit on the basis of the ceased material only. Thus, the profit or loss determined by the Special Auditor was nothing more than an estimate drawn on the basis of ceased material. For the Assessment Year 2006-07 to 2008-09, the Assessing Officer adopted the profit/loss so computed by the Special Auditor as the starting point and made additions by treating deposits received by the Appellant as income of the Appellant to arrive at the estimated income of the Appellant. The Assessing Officer had disallowed certain expenses invoking provisions of Section 40(a)(ia) of the Act on the ground that the Appellant had made payments without deducting tax. Disallowances have also been made by the Assessing Officer under Section 40A(3) of the Act on the ground that the payments were made by the Appellant in cash exceeding specified limit.

3.23. Section 29 of the Act deals with the manner of computation of income under the head „Profits & Gains of Business or Profession‟. Section 29 states that the income from profits and gains of business shall be computed in accordance with the provisions contained in sections 30 to 43D. Section 40 provides for certain disallowances in certain cases notwithstanding that those amounts are allowed generally under other sections. The computation under ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 section 29 is to be made under section 145 on the basis of the books regularly maintained by the assessee. If those books are not correct or complete, the Income-tax Officer may reject those books and estimate the income to the best of his judgment. When such an estimate is made it is in substitution of the income that is to be computed under section 29. In other words, all the deductions which are referred to under section 29 are deemed to have been taken into account while making such an estimate. This will also mean that the embargo placed in section 30 to 43D is also taken into account. [Indwell Constructions Vs CIT: (1998) 232 ITR 776 (Andhra Pradesh)].

3.24. In the present case, the Assessing Officer has estimated income according to the best judgment under Section 144 of the Act, and thus, opted to substitute the income that is to be computed under Section 29 of the Act by such estimated income. Having opted to estimate income as aforesaid, the Assessing Officer can no longer resort to the provisions of Section 40 of the Act to make additions/disallowances in respect of expenses which are otherwise allowable. In the present case Assessing Officer has noted that the Assessee has incurred certain expenses and the fact that these expenses have been incurred for the purpose of business of the Assessee has not been doubted. Therefore, in our view, the Assessing Officer was not justified in making additions/disallowances by invoking the provisions of Section 40(a)(ia) and 40A(3) of the Act in respect of such expenses while computing income on estimate basis.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 ASSESSMENT YEAR 2005-06 (

4. That this appeal is preferred by the Appellant for the following reliefs which are erroneously denied by the Hon’ble CIT Appeals 11 as per order dated 20/12/2019 in appeal no. 928/A.Y. 2007-08 a) To accept the return of income filed by the Appellant on 26/07/2010 b) To allow hire charges (finance charges) amounting to Rs. 52,52,210 in toto c) To not disallow the refund of deposits amounting to Rs. 14,04,000/- d) To allow commission paid amounting to Rs. 3,38,600/-“ 5.3. The relevant facts in brief are that for the Assessment Year 2005- 06, the Assessing Officer rejected the income tax return filed by the Assessee in response to notice under Section 153A of the Act and took into consideration Profit & Loss Account and Balance Sheet, forming part of the seized material, certified to be the „true copy‟ by Chartered Accountant and bearing signature of the Assessee as the basis of computing income. The Assessing Officer, vide Assessment

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Order dated 06/08/2010 passed under Section 144 read with Section 153A of the Act, assessed the income of the Assessee at INR 93,92,968/- after making following additions/disallowances:

SNo. Particulars Amount (INR) A Payments - Additions/Disallowances A1 Expenses disallowed 16,13,709 A2 Hire charges paid 52,52,210 A3 Disallowance u/s 40a(ia) 3,38,600 A4 Capital Expenditure 38,091 A5 Disallowance u/s 40a((ia) 33,440 A6 Unexplained investment u/s 69 1,71,000 A7 Unexplained investment u/s 69B 57,090 A8 Diary seized from the premises of Mr. 14,04,000 Mukesh Gupta (unexplained payments) 5.4. Being aggrieved by the Assessment Order, the Assessee preferred appeal before CIT(A). The CIT(A), vide common order dated 20/12/2019, partly allowed the appeal preferred by the Assessee.

5.5. Not being satisfied with the relief granted by the CIT(A), the Assessee in appeal before us on the grounds reproduced in paragraph 5.2 above.

5.6. We have considered the rival contention and perused the material on record including the order passed by the Assessing Officer and the CIT(A).

Ground No. 4.a) 5.7. Ground No. 4.a) raised by the Assessee is disposed off as being general in nature and therefore, not requiring adjudication.

Ground No. 4.b) 5.8. Ground No. 4.b) raised by the Assessee is directed against disallowance of Car Hire Charges of INR 52,52,210/- made by the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Assessing Officer holding the same to be unexplained expenditure incurred by the Assessee and treating the same as deemed income by invoking the provisions of Section 69C of the Act. The Assessing Officer also held that the deduction for the aforesaid expenses was not allowable in terms of Section 40(a)(ia) of the Act since the Assessee has failed to deduct tax from such payments under Section 194C of the Act.

5.9. In appeal preferred by the Assessee, the CIT(A) held that provisions of Section 40(a)(ia) of the Act are not attracted in the facts and circumstances of the present case since the Assessee had not claimed deduction for Car Hire Charges of INR 52,52,210/- and had not debited the same to the Profit & Loss Account. However, as regards applicability of Section 69C of the Act, the CIT(A) agreed with the Assessing Officer and confirmed the addition.

5.10. Being aggrieved, the Assessee is now in appeal before us.

5.11. We have heard the rival submissions and perused the material on record. 5.12. We note that the CIT(A) while rejecting the contentions of the Assessee, the CIT(A) had recorded as under: “57. From the assessment made by the AO for A.Y. 2005-06, it is seen that the AO has computed the income, treating that the income computed by the auditor as per the P&L account constructed on the basis of tally data found and seized. The further additions have been made only on the basis of disallowance of expenses and unexplained payments. As the deposits and payments during the year has been indicated above, leaving a balance of Rs.34,52,478/- (as indicated above), the payment of hire charges of Rs.52,52,210/- does not get explained from the deposits received by the appellant during the year. Clearly, the appellant during the course of 27

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 the business in the year must have incurred several other expenses besides hire charges. Accordingly, on the basis of the available material on record, I am inclined to accept the conclusion of the AO that the above said hire charges are unexplained expenditure and assessable u/s 69C of the Act. The addition made by the AO is therefore upheld.” 5.13. On perusal of above, we find that the CIT(A) has concluded that the Assessee had excess of receipts/deposits over payments of INR 34,52,478/-. Since the same were less than the Car Hire Charges of INR 52,52,210/-, the CIT(A) concluded that the Assessee had failed to explain the nature and source of Car Hire Charges incurred by the Assessee. While arriving at the aforesaid conclusion the CIT(A) observed that the Assessee must have incurred several other expenses during the course of business. In our view, the CIT(A) failed to appreciate that the Assessing Officer has not computed income on the basis of Profit & Loss Account and Balance Sheet prepared by the Special Auditor. The Assessing Officer has accepted the net income as disclosed in the audited account for the Assessment Year 2005-06 seized during the search/survey proceedings. In this regards, while framing the assessment under Section 144 read with Section 153A of the Act the Assessing Officer has recorded as under: “3.18 In the seized material, Profit & Loss Account and Balance Sheet of M/s. Unique Enterprises and M/s. Unique Finance, for the AY 2005-06, which are proprietary concerns of Mr. Premchand Kamble were found. These Profit & Loss account and Balance Sheet are certified as 'True Copy' by one Mr. Vikas R Agarwal, Chartered Accountant and are also signed by the assessee. The same are shown as Annexure-J of the Audit Report. This is adopted as base for the completion of assessment proceedings for AY 2005-06.” 5.14. We note that the Assessing Officer has not made any additions in relation to deposits received during the Assessment Year 2005-06.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Therefore, to the extent of surplus deposit of INR 34,52,478/- the nature and source of deposits stands accepted. Therefore, granting benefit of the same, we restrict the addition under Section 69C of the Act to INR 17,99,732/-, being the difference between the payments of Car Hire Charges of INR 52,52,210/- and the aforesaid surplus of deposit of INR 34,52,478/-. In terms of the aforesaid, Ground No. 4.b) raised by the Assessee is partly allowed. Ground No. 4.c) 5.15. Ground No. 4.c) is directed against addition of INR 14,04,000/- made by the Assessing Officer under Section 69C of the Act in respect of payment of INR 3,04,000/-and INR 11,00,000/- made by the Assessee to „Sanjay Chavan‟ and „Abhay Sir‟s Wife‟ as recorded in the diary seized from the premises of Mr. Mukesh Gupta. 5.16. During the assessment proceedings, the Assessee was asked to provide the details of the above payments. Since there was no compliance on the part of the Assessee, the Assessing Officer made addition of INR 14,04,000/- under Section 69C of the Act. 5.17. Being aggrieved, the Assessee carried the issue in appeal before the CIT(A) and contended that the amount of INR 14,04,000/- represents refund/return of the deposit money received by the Assessee. However, the Assessee failed to file any supporting documents/details, and therefore, the CIT(A) confirmed the addition. 5.18. The Assessee is now in appeal before us. 5.19. Having considered the rival submissions and on perusal of record, we conclude that there nothing on record to support the contention

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 of the Assessee that the amount of INR 14,04,000/- represents refund/return of the deposit. We do not find any infirmity in the order passed by CIT(A) in this regard. Accordingly, Ground No. 4.c) raised by the Assessee is dismissed. Ground No. 4.d) 5.20. Ground No. 4.d) raised by the Assessee is directed against the disallowance of commission expenses of INR 3,38,600/-. 5.21. The Assessing Officer made addition of INR 3,38,600/- by holding the same as unexplained expenditure incurred by the Assessee and treating the same as deemed income by invoking the provisions of Section 69C of the Act. The Assessing Officer also held that the deduction for the aforesaid expenses was not allowable in terms of Section 40(a)(ia) of the Act since the Assessee has failed to deduct tax from such payments.

5.22. In appeal preferred by the Assessee, the CIT(A) held that provisions of Section 40(a)(ia) of the Act are not attracted in the facts and circumstances of the present case since the Assessee had not claimed deduction for commission paid amounting to INR 3,38,600/- and had not debited the same to the Profit & Loss Account. However, as regards applicability of Section 69C of the Act, the CIT(A) agreed with the Assessing Officer and confirmed the addition.

5.23. Being aggrieved, the Assessee is now in appeal before us.

5.24. We have heard the rival submissions and perused the material on record.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 5.25. Having considered the rival submissions and on perusal of record, we conclude that there nothing on record that explain the source of the expenditure incurred by the Assessee. While granting relief to the Assessee in relation to Ground No. 4.b) above, we have taken into account the surplus of deposits over payments for the relevant previous year. Therefore, the source of INR 3,38,600/- remains unexplained. Accordingly, we do not find any infirmity in the order passed by CIT(A) in this regard. Accordingly, Ground No. 4.d) raised by the Assessee is dismissed. ASSESSMENT YEAR 2006-07 6. We will now take up cross-appeals for the Assessment Year 2006- 07. 6.1. These cross-appeals arising from the common order, dated 20/12/2019, passed by the CIT(A) whereby the CIT(A) had partly allowed the appeal preferred by the Assessee against the Assessment Order, dated 06/08/2010, for the Assessment Year 2006-07 passed under Section 144 read with Section 153A of the Act. 6.2. The Assessee has raised the following grounds of appeal in ITA No. 1767/Mum/2021:

4. That this appeal is preferred by the Appellant for the following reliefs which are erroneously denied by the Hon’ble CIT Appeals 11 as per order dated 20/12/2019 in appeal no. 928/A.Y. 2007-08 a) To accept the return of income filed by the Appellant on 26/07/2010. b) To allow genuine revenue debited to P&L account amounting to Rs 10,82,993/- c) To delete the addition of Rs 17,98,404/- towards gadi bhada

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 d) To delete the cash transfer of Rs. 2,11,600/- e) To allow rent paid amounting to Rs 1,08,000/- f) To allow Rs 38,091/- the revenue expenses or in alternative to allow for depreciation if the same is treated depreciation. as capital expenses to allow g) To allow expenses of printing and stationary of Rs 2,00,600/- h) To delete the addition u/s 269SS and 269T 1) To delete the addition of Rs 21,3 6,065/- i) To delete the addition of Rs 2,34,37,822/.”

6.3. The Revenue has raised the following grounds of appeal in “(1) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 5,99,70,264/- on account of Hire Charges without considering the facts that the assessee had failed to submit any evidence in respect of hire charges during the course of assessment as well as remand proceedings. (2) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 3,24,898/- on account of expenses disallowed on basis of audit report which stated that none of the expenses claimed by the assessee in P&L account were supported by bills and vouchers. (3) The appellant craves leave to add, alter amend and modify any of the above grounds of appeal.” 6.4. For the Assessment Year 2006-07, the Assessing Officer rejected the income tax return filed by the Assessee in response to notice under Section 153A of the Act and took into consideration Profit & Loss Account and Balance Sheet, prepared by the Special Auditor as the basis of computing income. The income of the Assessee was assessed at INR 7,79,17,495/- by the Assessing Officer (as against loss of INR 1,23,12,900/- computed by the Special Auditor) after 32

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 making following additions/disallowances vide Assessment Order dated 06/08/2010 passed under Section 144 read with Section 153A of the Act:

SNo. Particulars Amount (INR)

B Receipts – Additions B1 Hire Charges - Lease Rental Income 17,98,404 B2 Income from unexplained sources – 21,36,065 Opening Balance difference B3 Unexplained Receipt Recorded in Diary 2,34,37,822 B4 Undisclosed Interest Income - 5,192 C Payments - Additions/Disallowances C1 Commission paid disallowed u/s 40(a)(ia) 89,99,870 C2 Commission paid u/s 69C 65,000 C3 Disallowance u/s 40A(3) 1,20,308 C4 Expenses not being business 2,11,600 expenditure C5 Expenses not revenue in nature 3,63,176 C6 Expenditure disallowed u/s 40(a)(ia) 6,65,903 C7 Rent paid not being business expenditure 1,08,000 C8 Printing and Stationary paid to Heer Arts 2,00,600 – Disallowance u/s 40(a)(ia) C9 Expenses not being business 77,135 expenditure C10 Hire Charges paid treated as 5,99,70,264 unexplained expenditure u/s 69C C11 Capital expenditure/non business 7,46,028 expenditure C12 Expenses disallowed (30% of total 3,24,898 expenses of INR 10,82,993/-) D [B+C] Total 9,02,30,395/- 6.5. Being aggrieved by the Assessment Order, the Assessee preferred appeal before CIT(A). The CIT(A), vide order dated 20/12/2019, partly allowed the appeal preferred by the Assessee.

6.6. Being aggrieved by the order passed by the CIT(A), both, the Assessee and the Revenue are in appeal before us on the Grounds reproduced in paragraph 6.2 and 6.3. above.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 6.7. We have considered the rival contention and perused the material on record including the order passed by the Assessing Officer and the CIT(A). Appeal by Assessee (ITA No. 1767/Mum/2021, AY 2006-07) 6.8. We would first take grounds raised by the Assessee in the appeal. Ground No. 4.a) 6.9. Ground No. 4.a) raised by the Assessee does not require adjudication and is disposed off as being general in nature.

Ground No. 4.b) 6.10. Ground No. 4.b) raised by the Assessee does not arise from the order impugned. We note that the CIT(A) had deleted the addition of INR 10,82,993/- made by the Assessing Officer by making ad- hoc disallowance of 30% of expenses debited to the profit and loss account. Therefore, Ground No. 4.b) raised by the Assessee is dismissed as being infructuous.

Ground No. 4.c) 6.11. Ground No. 4.c) raised by the Assessee is directed against the addition of INR 17,98,404/- made by the Assessing Officer in respect of Gadi Bhada or lease rental receipts.

6.12. The Assessing Officer made the addition of INR 17,98,404/- in the hands of the Assessee holding that the same to be lease rental receipts from Unique Travels not offered to tax by the Assessee. 6.13. Before the CIT(A) the Assessee denied receipt of INR 17,98,404/- and submitted that there was no mention of Gadi Bhada or lease

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 rental receipts from Unique Travels in the seized documents. However, the CIT(A) confirmed the addition relying upon the Assessment Order, wherein the Assessing Officer noted that the in the Special Audit Report the Special Auditor has stated that Gadi Bhada charges of INR 17,98,404/- were received by the Assessee from Unique Travels and the same have not been offered to tax by the Assessee. 6.14. Being aggrieved the Assessee is now in appeal before us. 6.15. We have heard the rival submissions and perused the material on record. 6.16. We note that the addition has been made by the Assessing Officer by placing reliance upon the Special Audit Report. The Assessee had challenged the addition before CIT(A) stating that no such Gadi Bhada or lease rental income was recorded in the material seized. However, the CIT(A) has confirmed the addition without making reference to any incriminating material. We note that the Assessment Order is also silent as regards any enquiry/verification carried out by the Assessing Officer in this regard. The status and/or constitution of Unique Travels has not been mentioned either in the Assessment Order or the order passed by the CIT(A). Further, we note that the CIT(A) has recorded that no bank account of in the name of Unique Travels was found by the Revenue. From the aforesaid we conclude that there was no basis for making addition of INR 17,98,404/- in the hands of the Assessee. The addition made by the Assessing Officer cannot be sustained and is, therefore, deleted. Accordingly, Ground No. 4.c) raised by the Assessee is allowed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Ground No. 4.d) 6.17. Ground No. 4.d) raised by the Assessee is directed against the disallowance of INR 2,11,600/-. 6.18. During the assessment proceedings the Assessing Officer adopted the Profit & Loss Account prepared by the Special Auditor on the basis of tally data and documents seized. The Assessing Officer noted that the Special Auditor has reported that an amount of INR 2,11,600/- has been incorrectly debited to the Profit & Loss Account. The aforesaid amount represented cash transfer to Pune Branch and no an expenditure incurred by the Assessee. Therefore, the Assessing Officer disallowed the same. 6.19. In appeal the CIT(A) declined to interfere with the above disallowance made by the Assessing Officer on the ground that the Assessee had failed to provide any evidence to the contrary. 6.20. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal. 6.21. We have considered the rival submissions and perused the material on record. 6.22. During the appellate proceedings before us, despite having been granted sufficient time and opportunity, nothing has been placed before us to explain the nature of expenditure represented by the amount of INR 2,11,600/- debited to the Profit & Loss Account, or to controvert the concurrent findings returned by the Assessing Officer and the CIT(A). Ground No. 4.d) raised by the Assessee is, therefore, dismissed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Ground No. 4.e) 6.23. Ground No. 4.e) raised by the Assessee is directed against the disallowance of INR 1,08,000/-. 6.24. During the assessment proceedings the Assessing Officer noted that the Special Auditor has reported that Rent of INR 1,08,000/- paid by the Assessee has been debited to the Profit & Loss Account. The Assessing Officer disallowed the aforesaid amount on the ground that no rent agreement was found in relation to the same. 6.25. In appeal the CIT(A) declined to interfere with the above disallowance made by the Assessing Officer observing that the Assessee had failed to provide any evidence to the contrary. 6.26. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal. 6.27. We have considered the rival submissions and perused the material on record. 6.28. The disallowance has been made by the Assessing Officer merely on account of the fact that rent agreement could not be found. The Assessing Officer has not challenged the payment of the rent amount. The Profit & Loss Account has been prepared by the Special Auditor on the basis of the entries found in the tally software. Since the Assessing Officer has accepted the veracity of receipts, the expenses recorded therein cannot be denied to the Assessee in absence of any material or information to cast doubts about the nature or quantum of such expenses. Since no such information/material has been relied upon by the Assessing Officer, the disallowance of INR 1,08,000/- made by the Assessing Officer is deleted.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09

Ground No. 4.f) 6.29. Ground No. 4.f) raised by the Assessee reads as under: “To allow Rs 38,091/- the revenue expenses or in alternative to allow for depreciation if the same is treated depreciation. as capital expenses to allow” 6.30. On behalf of the Assessee no arguments were advanced on this ground, and therefore, the same is dismissed as not pressed. Ground No. 4.g) 6.31. Ground No. 4.g) raised by the Assessee is directed against the disallowance of INR 2,00,600/-. 6.32. During the assessment proceedings the Assessing Officer noted that the Special Auditor has reported that Printing & Stationary Expenses of INR 2,00,600/- incurred by the Assessee have been debited to the Profit & Loss Account. The Assessing Officer disallowed the aforesaid amount by treating the same as a contractual payment. 6.33. In appeal the CIT(A) confirmed the disallowance holding that the Assessee had failed to deduct tax from the contractual payment of printing & stationary expenses and therefore, deduction for the same is not allowable in terms of Section 40(a)(ia) of the Act. 6.34. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal. 6.35. We note that the Assessing Officer made the disallowance printing & stationary expenses of INR 2,00,600/- by merely treating the same as a contractual payment and without assigning any reasons. On the other hand the CIT(A) upheld the disallowance on account 38

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 of violation of provisions of Section 40(a)(ia) of the Act. In view of paragraph 3.21 to 3.23 above, we hold that the provisions of Section 40(a)(ia) cannot be attracted in the facts and circumstances of the present case to sustain the disallowance of INR 2,00,600/- made by the Assessing Officer. Accordingly, disallowance of INR 2,00,600/- is deleted and Ground No. 4. g) raised by the Assessee is allowed. Ground No. 4.h) 6.36. By way of Ground No. 4.h) the Assessee had sought deletion of addition made under Section 269SS and 269T of the Act. Since this issue does not arise from the order passed by the CIT(A), Ground No. 4.h) raised by the Assessee is dismissed. Ground No. 4.i) 6.37. Ground No. 4.i) raised by the Assessee pertain to receipts of INR 21,36,064/- brought to tax in the hands of the Assessee. 6.38. During the assessment proceedings the Assessee was not able to provide any explanation regarding the difference INR 21,36,064/- in the opening balance of the Balance Sheet for the previous year relevant to the Assessment Year 2006-07. Therefore, addition of INR 21,36,064/- was made by the Assessing Officer. 6.39. Before CIT(A), it was contended by the Assessee that the Assessing Officer had compared the Assessing Officer had compared the Profit & Loss Account in balance sheet as reflected in the tally software. However, the same were incomplete and could not have been relied upon to make the addition of INR 21,36,064/-. However, the CIT(A) was not convinced and confirmed the addition observing that the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Assessee has failed to produce the books or provide any explanation before the Assessing Officer. 6.40. Being aggrieved, the Assessee is in appeal before us. 6.41. Having considered the rival submissions and on perusal of record, we are of the view that the addition of INR 21,36,064/- made by the Assessing Officer cannot be sustained. The Assessing Officer had rejected books of accounts maintained by the Assessee and had relied upon the Profit & Loss Account and Balance Sheet as prepared by the Special Auditor on the basis of material available. The Special Auditor had noted that the books of account maintained in tally software were incomplete. Therefore, we find merit in the contention advanced on behalf of the Assessee that the books of account maintained in tally software cannot form the sole basis of making addition on account of difference in the opening balance. The addition of INR 21,36,064/- made by the Assessing Officer is deleted and Ground No. 4.i) raised by the Assessee is allowed. Ground No. 4.j) 6.42. Ground No. 4.j) raised by the Assessee is directed against the addition of INR 2,34,37,822/- made by the Assessing Officer on the basis of unaccounted receipts recorded in the diary seized from the premises of Mr. Mukesh Gupta. 6.43. The Assessing Officer had made the above addition as the Assessee had failed to provide any explanation regarding the entries relating to cash receipts recorded in the diary seized.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 6.44. The CIT(A) also confirmed the addition observing that the Assessee has failed to explain the source of the receipts and to establish that the same were recorded in the tally software. 6.45. The Assessee is now in appeal before us. 6.46. We have considered the rival submissions and perused the material on record. 6.47. In view of paragraph 3.16 to 3.18 above, we hold that the Appellant was able to provide explanation of nature and source of receipts of INR 2,38,28,628/- [22,29,30,802/- x (7,01,37,412/65,61,76,656)]. Accordingly, addition of INR 2,34,37,822/- made by the Assessing Officer and sustained by the CIT(A) is deleted and Ground No. 4.j) raised by the Assessee is allowed. Appeal by Revenue (ITA No. 1394/Mum/2020, AY 2006-07)

6.48. We would now take up grounds raised by the Revenue in the cross appeal. Ground No. 1 6.49. Ground No. 1 raised by the Revenue is directed against the order of the CIT(A) deleting the addition of INR 5,99,70,264/- made by the Assessing Officer on account of Car Hire Charges. 6.50. During the Assessing Officer noted that as per the seized documents the Assessee had made payment of Car Hire Charges of INR 5,99,70,266/-. However, the same were not found to be recorded in seized tally data. Since no explanation was furnished by the Assessee during the assessment proceedings, the Assessing

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Officer made addition under Section 69C of the Act treating the same as deemed income by holding the same to be unexplained expenditure. 6.51. The Assessee had claimed before the CIT(A) that Car Hire Charges represented payments made to the customers who had subscribed for the scheme and made deposits. The CIT(A) noted that the substantial amount of payments were made by cheques. For the relevant previous year the Assessing Officer has recorded in the Assessment Order that the Assessee had receipts of INR 14,10,16,718/- and payments of INR 7,08,79,306/-. Thus, the Assessee had surplus receipts of INR 7,01,37,412/-. The CIT(A), therefore, concluded that the Assessee had sufficient funds to make payment of Car Hire Charges. The CIT(A) deleted the addition. 6.52. We concur with the CIT(A). In view of paragraph .. to … above, we hold the source of funds to the extent of surplus receipts of INR 7,01,37,412/- stood explained. The aforesaid surplus receipts were sufficient to meet payment of Car Hire Charges of INR 5,99,70,266/-. As regards, contention of the Revenue that the payments are not supported by vouchers, we hold that having accepted the veracity of the receipts recorded in the seized documents/tally data, the Revenue cannot challenge the veracity of expenses recorded in the same seized documents/data without any material/information to doubt the quantum or nature of such expenses. We note that the CIT(A) had noted the fact that substantial payments were made through banking channels. However, the Assessing Officer did not make any attempt to inquire into the matter. The Assessment Order is silent as to any queries being raised on the persons receiving the payments through

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 cheques. In view of the aforesaid, we do not find any merit in the contentions raised by the Revenue and the same are rejected. We hold that the CIT(A) was justified in deleted the addition of INR 5,99,70,266/- Ground No.1 raised by the Revenue is, therefore, dismissed. Ground No. 2 6.53. Ground No. 2 raised by the Revenue is directed against the order of CIT(A) deleting the ad-hoc disallowance of INR 3,24,898/- being 30% of the aggregate expenses debited to the Profit & Loss Account. 6.54. We note that the CIT(A) had deleted the disallowance observing as under: “79. As the P&L account has been prepared based on the entries in the seized tally account, and the AO has accepted the veracity of the receipts in the tally account, the expenses claimed in the said account cannot be denied to the assessee. Courts have held (Supra) that any reliance on a seized material has to be for the entire set of information and the AO cannot be selective in accepting only part of the entries and rejecting the other part from the same document. Accordingly, once the tally data has been accepted, both the income and expenditures as per the tally account has to be accepted by the AO. Therefore, the disallowance made @30% of the expenditure is not justified and is directed to be deleted.” 6.55. We concur with the reasoning given by the CIT(A). We have already concluded that having accepted the veracity of the receipts recorded in the seized documents/tally data, the Revenue cannot challenge the veracity of expenses recorded in the same seized documents/data without any material/information to doubt the quantum or nature of such expenses. In any case, the disallowance were made by the on ad-hoc basis and were, therefore, not ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 sustainable for that reason also. Thus, Ground No. 2 raised by the Revenue is dismissed. Ground No. 3 6.56. Ground No. 3 raised by the Revenue is general in nature and therefore, dismissed. ASSESSMENT YEAR 2007-08 7. We will now take up cross-appeals for the Assessment Year 2007-08.

7.1. These cross-appeals arise from the common order, dated 20/12/2019, passed by the CIT(A) whereby the CIT(A) had partly allowed the appeal preferred by the Assessee against the Assessment Order, dated 06/08/2010, for the Assessment Year 2007-08 passed under Section 144 read with Section 153A of the Act. 7.2. The Assessee has raised the following grounds of appeal in “4. That this appeal is preferred by the Appellant for the following reliefs which are erroneously denied by the Hon’ble CIT Appeals 11 as per order dated 20/12/2019 in appeal no. 928/A.Y. 2007-08 a) To accept the return of income filed by the Appellant on 30/07/2010 b) To allow Rs 16,67,400/- which is disallowed u/s 40A(3) of the Act. c) To allow Rs 1,44,87,580/- added u/s 69. C. d) To allow hire charges expenses of Rs. 40,96,294 e) To allow Rs 2,12,950/- the printing and stationary expenses in toto.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 f) To allow Rs 19,86,570/- the revenue expenses or in alternative to allow for depreciation if the same is treated as capital expenses to allow depreciation. g) To delete the addition of Rs 7,25,76,664/- and Rs 20,58,29,238/- as unaccounted income in toto. h) To delete the addition of Rs 7,99,58,132/-.”

7.3. The Revenue has raised the following grounds of appeal in “(1) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made u/s 69C of the I.T.Act without considering the facts that the assessee had failed to submit any supporting evidence in respect of various expenses claimed such as hire charges, rent paid etc during the course of assessment as well as remand proceedings. (2) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 7,99,58,132/- on account of negative cash balance in hand mentioned in the audit report without considering the facts that the assessee had failed to offer any explanation with supporting evidence indicating the reason for negative cash balance in hand. (3) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 3,58,210/- on account of expenses disallowed on basis of audit report which stated that none of the expenses claimed by the assessee in P&L account were supported by bills and vouchers.” 7.4. For the Assessment Year 2007-08, the Assessing Officer rejected the income tax return filed by the Assessee in response to notice under Section 153A of the Act and took into consideration Profit & Loss Account and Balance Sheet, prepared by the Special Auditor as the basis of computing income. The income of the Assessee was assessed at INR 66,32,83,709/- by the Assessing Officer (as against loss of INR 1,57,79,245/- computed by the Special Auditor) after making following additions/disallowances vide Assessment

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Order dated 06/08/2010 passed under Section 144 read with Section 153A of the Act:

SNo. Particulars Amount (INR) E Receipts – Additions E1 Undisclosed income 13,69,538 E2 Undisclosed Income on account of 7,25,76,664 unexplained cash receipts E3 Negative Cash Balance as undisclosed 7,99,58,132 income E4 Cash receipt in Diary seized from 20,58,29,238 premises of Mukesh Gupta E5 Interest on SB Account 4,864

F Payments - Additions/Disallowances F1 Commission paid disallowed u/s 31,38,860 40(a)(ia) F2 Commission paid u/s 69C 35,000 F3 Disallowance u/s 40A(3) 5,00,220 F4 Disallowance u/s 69C 44,87,580 F5 Payment towards car insurance 36,267 disallowed u/s 69C F6 30% of Expenses Disallowed 3,58,210 F7 Car hire charges paid (Car EMI client) 40,96,294 disallowance u/s 40(a)(ia) F8 Rent payment disallowance u/s 69C 2,13,290 F9 Excess Receipt (interest income) 51,000 F10 Courier Charges disallowance u/s 2,79,152 F11 Printing and stationary paid to Heer Arts- 2,12,950 Disallowance u/s 40(a)(ia) F12 Capital Expenditure 41,023 F13 Hire charges paid unexplained 30,08,84,127 expenditure u/s 69C F14 Capital/personal expenditure 19,86,570 F15 Rent not debited disallowed u/s 69C 9,17,290 F16 Disallowance u/s 69C 7,21,290 F17 Disallowance u/s 69C 6,13,120 G [E+F] Total 66,32,83,709/- 7.5. Being aggrieved by the Assessment Order, the Assessee preferred appeal before CIT(A). The CIT(A), vide order dated 20/12/2019, partly allowed the appeal preferred by the Assessee.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 7.6. Being aggrieved by the order passed by the CIT(A), both, the Assessee and the Revenue are in appeal before us on the Grounds reproduced in paragraph 7.2 and 7.3. above. 7.7. We have considered the rival contention and perused the material on record including the order passed by the Assessing Officer and the CIT(A). Appeal by Assessee (ITA No. 1766/Mum/2021, AY 2007-08) 7.8. We would first take grounds raised by the Assessee in the appeal. Ground No. 4.a) 7.9. Ground No. 4.a) raised by the Assessee does not require adjudication and is disposed off as being general in nature.

Ground No. 4.b) 7.10. Ground No. 4.b) raised by the Assessee is directed at the disallowance made by the Assessing Officer by invoking provisions of Section 40A(3) of the Act.

7.11. During the assessment proceedings, the Assessing Officer noted that the payments aggregating to INR 16,67,400/- were made in violation of provision of Section 40A(3) of the Act as the said payments were in excess of INR 20,000/- and were made otherwise than by way of crossed cheques or demand drafts. Therefore, the Assessing Officer made a disallowance of INR 5,00,220/- being 30% of aggregate payment of INR 16,67,400/-.

7.12. In appeal CIT(A) confirmed the disallowance.

7.13. Being aggrieved, the Assessee carried the issue in appeal before us.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 7.14. We have heard the rival submissions and perused the material on record.

7.15. Adopting the reasoning given in paragraph 3.21 to 3.24 above, we hold that the disallowance of INR 5,00,220/- made under Section 40A(3) of the Act cannot be sustained in the facts and circumstances of the present case. Therefore, we direct the Assessing Officer to delete the disallowance of INR 5,00,220/- (incorrectly stated by the Assessee as 16,67,400/-) made under Section 40A(3) of the Act. In terms of the aforesaid, Ground No. 4. b) raised by the Assessee is partly allowed.

Ground No. 4.c) 7.16. Ground No. 4.c) raised by the Assessee is directed at the disallowance of INR 44,87,580/- (incorrectly stated as INR 1,44,87,580/- in the grounds of appeal) made by the Assessing Officer by invoking provisions of Section 69C of the Act.

7.17. During the assessment proceedings the Assessee failed to provide any explanation in respect of payments of INR 44,87,580/- made during the relevant previous year and therefore, the Assessing Officer invoked the provisions of 69C of the Act treating the same as deemed income of the Assessee by holding the same to be unexplained income of the Assessee. In appeal, the CIT(A) deleted the addition holding that the Assessee had sufficient surplus deposits of around INR 14,33,29,389/- to make payment of INR 44,87,580/-. Therefore, in our view, Ground No. 4.c) has been raised by the Assessee on account of incorrect understanding of facts and the same is disposed off as being infructuous.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09

Ground No. 4.d) 7.18. Ground No. 4.d) raised by the Assessee is directed at the disallowance of Car Hire Charges of INR 40,96,294/- made by the Assessing Officer by invoking provisions of Section 40(a)(ia) of the Act which were confirmed by the CIT(A) in appeal.

7.19. Adopting the reasoning given in paragraph 3.21 to 3.24 above, we hold that the disallowance of INR 40,96,294/- made under Section 40(a)(ia) of the Act cannot be sustained in the facts and circumstances of the present case. Therefore, we direct the Assessing Officer to delete the disallowance of INR 40,96,294/- made under Section 40(a)(ia) of the Act. Accordingly, Ground No. 4. d) raised by the Assessee is allowed.

Ground No. 4.e) 7.20. Ground No. 4.e) raised by the Assessee is directed against the disallowance of INR 2,12,950/-.

7.21. During the assessment proceedings the Assessing Officer noted that the Special Auditor has reported that Printing & Stationary Expenses of INR 2,12,950/- incurred by the Assessee. Since tax was not deducted at source from the same, the Assessing Officer made disallowance of INR 2,12,950/- under Section 40(a)(ia) of the Act.

7.22. In appeal the CIT(A) confirmed the disallowance holding that the Assessee had failed to deduct tax from the contractual payment of printing & stationary expenses and therefore, deduction for the same is not allowable in terms of Section 40(a)(ia) of the Act.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 7.23. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal.

7.24. We note that the Assessing Officer and the CIT(A) have made the disallowance printing & stationary expenses of INR 2,12,950/- under Section 40(a)(ia) of the Act. In view of paragraph 3.21 to 3.24 above, we hold that the provisions of Section 40(a)(ia) cannot be attracted in the facts and circumstances of the present case and therefore, disallowance of INR 2,12,950/- is deleted. Ground No. 4. e) raised by the Assessee is allowed.

Ground No. 4.f)

7.25. Ground No. 4.f) raised by the Assessee is directed against the disallowance of INR 19,86,570/- made by the Assessing Officer during the assessment proceedings.

7.26. The Assessing Officer made a disallowance of INR 19,86,570/- on the ground that the aforesaid expenses was capital in nature as the Assessee had failed to provide any explanation during the assessment proceedings.

7.27. We note that even during the appellate proceedings before the CIT(A), no explanation or supporting documents were furnished by the Assessee in order to meet the specific query raised by the Assessing Officer during the assessment proceedings regarding the nature and purpose of the expenses. Therefore, the CIT(A) confirmed the disallowance holding the expenses to be capital in nature. However, the CIT(A) directed the Assessing Officer to grant depreciation on the same. 50

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 7.28. Being aggrieved, the Assessee has carried the issue in appeal before us contending that the expenses were revenue in nature.

7.29. On perusal of appeal filed before the CIT(A) in Form 35, we note that it was specifically pleaded by the Assessee that the expenses under consideration were incurred for the purpose of business and depreciation be allowed on the same. The aforesaid plea was accepted by the CIT(A). Before us the Assessee has claimed deduction for entire expenses on the ground that the same are revenue in nature. However, nothing has been placed before on record to enable us to take a view contrary to the view taken by the CIT(A). Therefore, Ground No. 4.f) raised by the Assessee is dismissed.

Ground No. 4.g) 7.30. By way of Ground No. 4.g), the Assessee has sought deletion of the addition of INR 7,25,76,664/- and INR 20,58,29,238/- made by the Assessing Officer and confirmed by the CIT(A).

7.31. During the assessment proceedings, the Assessing Officer made an addition of INR 7,25,76,664/- on the basis of seized material in the form of paper bundles found during the course of search on the ground that the same were not recorded in the books of accounts and the Assessee had failed to provide any explanation for the same during the assessment proceedings. Further, addition of INR 20,58,29,238/- was made by the Assessing Officer on the basis of the two diaries seized from the premises of Mr. Mukesh Gupta. According to the Assessing Officer, the aforesaid cash was received 51

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 from Hiral, Ms. Rohini, Ms. Swapnali, Ms. Radnya and the Assessee. Since the Assessee had failed to provide any explanation, addition of INR 20,58,29,238/- was made by the Assessing Officer.

7.32. In appeal, the CIT(A) upheld both the aforesaid additions.

7.33. Being aggrieved, the Assessee carried both the issues in appeal before the Tribunal.

7.34. We have considered the rival submissions and perused the material on record 7.35. On behalf of the Assessee, it was contended that the additions made by the Assessing Officer on the basis of entries found in the seized material without taking into consideration the contra entries where cash has been withdrawn from the bank account or cash has been sent from one proprietorship concern to another proprietorship concern belonging to the Assessee. However, there is nothing on record to establish and/or to quantify the existence and the impact of such contra entries. Therefore, in absence of any supporting material and evidence on record to identify/quantify the contra entries, the aforesaid contention raised by the Assessee cannot be accepted.

7.36. In view of paragraph 3.16 to 3.18 above, we hold that the Appellant was able to provide explanation of nature and source of receipts of INR 4,86,95,020/- [22,29,30,802/- x (14,33,29,389/65,61,76,656)]. Accordingly, addition to the extent of INR 4,86,95,020/- made by the Assessing Officer and sustained by the CIT(A) is deleted while the balance addition is confirmed. In ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 terms of the aforesaid, Ground No. 4.g) raised by the Assessee is partly allowed. Ground No. 4.h) 7.37. Ground No. 4.h) raised by the Assessee is directed against the delete the addition of INR 7,99,58,132/-.

7.38. The Assessing Officer had made an addition of INR 7,99,58,132/- on account of negative cash balance for the Assessment Year 2007- 08. In appeal preferred by the Assessee, the CIT(A) deleted the addition taking into account the additions made by the Assessing Officer on account of cash receipts. Therefore, in our view, Ground No. 4.h) has been raised by the Assessee on account of incorrect understanding of facts and the same is disposed off as being infructuous.

Appeal by Revenue (ITA No. 1395/Mum/2020, AY 2007-08)

7.39. We would now take up grounds raised by the Revenue in the cross appeal. Ground No. 1 7.40. Ground No. 1 raised by the Revenue is directed against the order of the CIT(A) deleting the addition made by the Assessing Officer under Section 69C of the Act. 7.41. During the assessment proceedings the Assessing Officer made following additions under Section 69C of the Act as the Assessee has failed to provide any explanation:

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09

H Payments - Additions/Disallowances H1 Commission paid u/s 69C 35,000 H2 Disallowance u/s 69C 44,87,580 H3 Payment towards car insurance 36,267 disallowed u/s 69C H4 Rent payment disallowance u/s 69C 2,13,290 H5 Hire charges paid unexplained 30,08,84,127 expenditure u/s 69C H6 Capital/personal expenditure 19,86,570 H7 Rent not debited disallowed u/s 69C 9,17,290 H8 Disallowance u/s 69C 7,21,290 H9 Disallowance u/s 69C 6,13,120 7.42. The CIT(A) deleted the above additions on the ground that the Assessee had surplus cash deposits of INR 14,33,29,389/-. Further, additions on account of undisclosed income aggregating to INR 27,97,75,440/- were also made in the hands of the Assessee. Therefore, the Assessee had sufficient funds to discharge the payments.

7.43. Being aggrieved, the Revenue is now in appeal before us.

7.44. We have considered the rival submissions and perused the material on record. Taking into account the surplus cash deposits of INR 14,33,29,389/- available with the Assessee during the relevant previous year and the additions on account of undisclosed receipts/income confirmed by us, we are also of the view that the Assessee had sufficient funds to discharge the payments. Accordingly, keeping in view the facts and circumstances of the case as well as the reasoning given by us in paragraph 3.19 to 3.20 above, we do not find any infirmity in the order passed by the CIT(A). Accordingly, Ground No. 1 raised by the Revenue is dismissed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Ground No. 2 7.45. Ground No. 2 raised by the Revenue is directed against the order of the CIT(A) deleting the addition of INR 7,99,58,132/- made by the Assessing Officer on account of negative cash balance. 7.46. The Assessing Officer had made an addition of INR 7,99,58,132/- on account of negative cash balance for the Assessment Year 2007- 08. In appeal preferred by the Assessee, the CIT(A) deleted the addition taking into account the additions made by the Assessing Officer on account of cash receipts. 7.47. Being aggrieved, the Revenue is now in appeal before us.

7.48. We have heard the rival submissions and perused the material on record. We concur with the CIT(A) that in case the cash receipts added in the hands of the Assessee are taken into account there would be no negative balance for the Assessment Year 2007-08. While concluding as aforesaid we have taken into account the relief granted to the Assessee in the appellate proceedings by the CIT(A) and by us. Accordingly, we do not find any merit in the ground raised by the Revenue and therefore, the same is dismissed.

Ground No. 3 7.49. Ground No. 3 raised by the Revenue is directed against the order of CIT(A) deleting the ad-hoc disallowance of INR 3,58,210/- being 30% of the aggregate expenses debited to the Profit & Loss Account. 7.50. We note that the CIT(A) had deleted the disallowance observing as under:

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 “98. The AO has also made an addition of Rs.3,58,210/- representing 30% of the total expenses of Rs 11,94,034/- claimed by the appellant in the P & account maintained in tally software, as the expenses were not supported by vouchers. These observations have also been made by the auditor at para-9 of page no.7 of the audit report that none of the expenditure was supported by vouchers. In view of the fact that the expenses are not supported by vouchers and that the onus was entirely on the appellant to justify the claim of expenses, However, as the assessment is being made on the basis of the seized documents and diaries as there was no regular books of accounts maintained by the appellant and the fact that the receipt sides of the P&L account as per the tally data has been accepted by the AO in toto, it would be unreasonable on part of the AO to ignore the expenses side as per the entries in the tally accounts As such, the assessment has been based on the entries in tally data and once the P & L account has been taken as a basis, the expenses cannot be disallowed on the pretext that they are not supported by bills and vouchers. The case of the appellant as such that the complete books of account are not available and therefore, the assessments are to be completed on the basis of the material found and seized during the course of search and survey is justified. Accordingly, I am of the view that it may not be fair for the AO to disallow the expenses claimed in the tally data on an adhoc basis: The disallowance of 30% of expenses amounting to Rs.3,58,210/- is directed to be deleted.” 7.51. We concur with the reasoning given by the CIT(A). Having accepted the veracity of the receipts recorded in the seized documents/tally data, the Revenue cannot challenge the veracity of expenses recorded in the same seized documents/data without any material/information to doubt the quantum or nature of such expenses. In any case, the disallowance was made by the on ad- hoc basis and was, therefore, not sustainable for that reason also. Thus, Ground No. 3 raised by the Revenue is dismissed. ASSESSMENT YEAR 2008-09 8. We will now take up cross-appeals for the Assessment Year 2008- 09.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 8.1. These cross-appeals arise from the common order, dated 20/12/2019, passed by the CIT(A) whereby the CIT(A) had partly allowed the appeal preferred by the Assessee against the Assessment Order, dated 06/08/2010, for the Assessment Year 2007-08 passed under Section 144 read with Section 153A of the Act. 8.2. The Assessee has raised the following grounds of appeal in ITA No. 1765/Mum/2021: “4. That this appeal is preferred by the Appellant for the following reliefs which are erroneously denied by the Hon’ble CIT Appeals 11 as per order dated 20/12/2019 in appeal no. 928/A.Y. 2007-08 a) To accept the return of income filed by the Appellant on 30/07/2010. b) To delete the addition of Rs 45,15,615/- which is treated as unexplained cash credit in toto. c) To delete the addition of Rs 4,65,00,000/- u/s 68 in toto d) To delete Rs 19,00,190 /- u/s 40. A(3) in toto e) To allow hire charges of Rs 41,57,096/- in toto. f) To delete Rs 10,92,50,000/- wrongly added as unexplained cash deposits in toto g) To allow Rs 22,40,855/- revenue expenses or in alternatively to allow for depreciation if the same is treated as capital expenditure h) To allow printing and stationery expenses of Rs 3,17,900/- in toto i) To delete Rs 4,00,000/- transfer entry treated as expenses. j) To delete Rs 90,00,000/- treated as unexplained investments k) To delete Rs. 1,85,78,752/- treated as unexplained cash 57

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 credit.”

8.3. The Revenue has raised the following grounds of appeal in “(1) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 16,60,788/-without considering the facts that the assessee had failed to submit any supporting evidence in respect of payments made to various persons thereby failing to prove the nature of expenditure incurred. (2) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 27,16,65,680/- on account of Hire charges without considering the facts that the assessee had failed to submit any in respect of hire charges during the course of assessment as well as remand proceedings. (3) Whether on facts and circumstances of case the Hon'ble CIT(A) is justified in deleting the addition made of Rs. 6,66,664/- on account of expenses disallowed on basis of audit report which stated that none of the expenses claimed by the assessee in P&L account were supported by bills and vouchers. (4) The appellant craves to leave, add, alter or amend and modify any of the above grounds of appeal.” 8.4. For the Assessment Year 2008-09, the Assessing Officer rejected the income tax return filed by the Assessee in response to notice under Section 153A of the Act and took into consideration Profit & Loss Account and Balance Sheet, prepared by the Special Auditor as the basis of computing income. The income of the Assessee was assessed at INR 98,93,70,958/- by the Assessing Officer (as against loss of INR 1,27,81,914/- computed by the Special Auditor) after making following additions/disallowances vide Assessment Order dated 06/08/2010 passed under Section 144 read with Section 153A of the Act:

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 SNo. Particulars Amount (INR) I Receipts – Additions I1 Unexplained cash credit 45,15,615 I2 Unexplained cash found 4,66,73,200 I3 Unexplained cash deposits in Bank 10,91,50,000 I4 Unexplained cash credit/cheques 1,85,78,572 I5 Unaccounted cash deposits in Diary 52,48,35,753 I6 Undisclosed Interest Income 42,34,976 J Payments - Additions/Disallowances J1 Disallowance 40(a)(ia) 13,274 J2 Disallowance 40A(3) 19,00,190 J3 Expenses not revenue in nature 16,60,788 J4 Expenses not being business 26,932 expenditure (payment towards Car Insurance) J5 Disallowance of Hire Charges Paid (Car 41,57,096 EMI Client) u/s 40(a)(ia) J6 Disallowance of Rent paid u/s 40(a)(ia) 13,68,000 J7 Disallowed as unexplained expenditure 1,25,000 u/s 69C J8 Disallowance u/s 69C 1,25,000 J9 Expenses not being business 20,000 expenditure J10 Disallowance of Courier charges u/s 1,49,666 40(a)(ia) J11 Personal/capital expenses disallowed 22,40,855 J12 Printing and Stationary paid to Heer Arts 3,17,900/- Disallowance u/s 40(a)(ia) J13 Unexplained expenditure u/s 69C(hire 27,16,65,680 charge paid) J14 Expenses not being business 4,00,000 expenditure J15 Unexplained Investment 90,00,00,000 J16 Unexplained investment u/s 69B 2,75,000 J17 Disallowance of 30% of expenses of INR 6,66,664 22,22,214/- J18 Advertisement Expenses disallowed u/s 52,711 40(a)(ia) K [I+J] Total 98,93,70,958/- 8.5. Being aggrieved by the Assessment Order, the Assessee preferred appeal before CIT(A). The CIT(A), vide order dated 20/12/2019, partly allowed the appeal preferred by the Assessee.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 8.6. Being aggrieved by the order passed by the CIT(A), both, the Assessee and the Revenue are in appeal before us on the Grounds reproduced in paragraph 8.2 and 8.3. above. 8.7. We have considered the rival contention and perused the material on record including the order passed by the Assessing Officer and the CIT(A). Appeal by Assessee (ITA No. 1766/Mum/2021, AY 2007-08) 8.8. We would first take grounds raised by the Assessee in the appeal. Ground No. 4.a) 8.9. Ground No. 4.a) raised by the Assessee does not require adjudication and is disposed off as being general in nature.

Ground No. 4.b) & 4.c) 8.10. Ground No. 4.b) raised by the Assessee is directed against the addition of INR 4,65,00,000/- while Ground No. 4.c) is directed against the addition of INR 45,15,615/-.

8.11. During the assessment proceedings, the Assessing Officer noted that cash amounting to INR 45,15,615/- and INR 4,66,73,200/- was found during search at 306, Anant Laxmi Chambers, Thane and at the premises of Mr. Mukesh Gupta, respectively. Since no explanation was furnished during the assessment proceedings the Assessing Officer made addition of INR 45,15,615/- and INR 4,66,73,200/- in the hands of the Assessee.

8.12. In appeal before CIT(A) it was contended on behalf of the Assessee that the aforesaid cash amount have been taken into account while return of income for the Assessment Year 2008-09. The CIT(A) 60

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 observed that books of accounts were not produced before the Assessing Officer or the CIT(A) and therefore, the CIT(A) rejected the aforesaid contention of the Assessee.

8.13. Being aggrieved, the Assessee carried the issue in appeal before us.

8.14. We have considered the rival submissions and perused the material on record.

8.15. On behalf of the Assessee it was also contended that the entire amount of addition be deleted in view of the fact that addition of INR 52,48,35,753/- had already been made on account of entries in the diary found at the premises of Mr. Mukesh Gupta. We find some merit in the contention advanced on behalf of the Assessee. In our view, addition made on the basis of cash receipts recorded in the diary maintained by Mr. Mukesh Gupta should be taken as inclusive of the actual cash found during the course of search since search took place on 22/08/2007. Accordingly, granting the benefit to the Assessee we delete the addition of INR 45,15,615/- and INR 4,66,73,200/- made on account of cash found during the course of search. Further, granting the benefit of the aforesaid amount to the Assessee we delete the addition of INR 45,15,615/- and INR 4,66,73,200/-.

8.16. In view of paragraph 3.16 to 3.18 above, we hold that the Appellant was able to provide explanation of nature and source of receipts of INR 14,92,34,202/- [22,29,30,802/- x (43,92,57,377/65,61,76,656)]. Accordingly, we further direct the Assessing Officer to reduce the addition of INR 52,48,35,753/- by the aforesaid amount of INR 14,92,34,202/-. In view of the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 aforesaid, Ground No. 4.b) & 4.c) raised by the Assessee are allowed.

Ground No. 4.d) 8.17. Ground No. 4.d) raised by the Assessee is directed at the disallowance of INR 19,00,190/- made by the Assessing Officer by invoking provisions of Section 40A(3) of the Act.

8.18. During the assessment proceedings, the Assessing Officer noted that the payments were made by the Assessee in violation of provision of Section 40A(3) of the Act as the said payments were in excess of INR 20,000/- and were made otherwise than by way of crossed cheques or demand drafts. Therefore, the Assessing Officer made a disallowance of INR 19,00,190/-.

8.19. In appeal CIT(A) confirmed the disallowance. 8.20. Being aggrieved, the Assessee carried the issue in appeal before us. 8.21. We have heard the rival submissions and perused the material on record.

8.22. Adopting the reasoning given in paragraph 3.21 to 3.24 above, we hold that the disallowance of INR 19,00,190/- made under Section 40A(3) of the Act cannot be sustained in the facts and circumstances of the present case. Therefore, we direct the Assessing Officer to delete the disallowance of INR 19,00,190/- made under Section 40A(3) of the Act. In terms of the aforesaid, Ground No. 4. b) raised by the Assessee is partly allowed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Ground No. 4.e)

8.23. Ground No. 4.e) raised by the Assessee is directed at the disallowance of Car Hire Charges of INR 41,57,096/- made by the Assessing Officer by invoking provisions of Section 40(a)(ia) of the Act which were confirmed by the CIT(A) in appeal.

8.24. Adopting the reasoning given in paragraph 3.21 to 3.24 above, we hold that the disallowance of INR 41,57,096/- made under Section 40(a)(ia) of the Act cannot be sustained in the facts and circumstances of the present case. Therefore, we direct the Assessing Officer to delete the disallowance of INR 41,57,096/- made under Section 40(a)(ia) of the Act. Accordingly, Ground No. 4. e) raised by the Assessee is allowed.

Ground No. 4.f) 8.25. Ground No. 4.f) raised by the Assessee is directed against the addition of INR 10,91,50,000/- (incorrectly stated as INR 10,92,50,000/-) made by the Assessing Officer holding the same to be unexplained cash deposits.

8.26. During the assessment proceedings, the Assessing Officer noted that unexplained cash deposits of INR 5.32 Crores and INR 5.59 Crores were made in the bank account of M/s Trushna Enterprises and Trushna Services, respectively. The seized material found during the course of search at the office of Unique Finance, which was a proprietorship firm of the Assessee, certain documents were found pertaining to Trushna Enterprises and Trushna Services indicating deposit of cash to the tune of 10.91 Crores in the bank account. Based upon the statement given by Ms. Virushali S

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Shinde, proprietor of Trushna Enterprises and Trushna Services to the effect that the two bank accounts in which cash deposits were made were controlled belong to the Assessee, the Assessing Officer made the addition of INR 10,91,50,000/- in the hands of the Assessee.

8.27. Being aggrieved, the Assessee carried the issue in appeal before the CIT(A) who called for remand report. The Assessing Officer furnished the remand reported, dated 09/12/2019 wherein it was claimed that Ms. Virushali S Sinde as well as her husband Mr. Sanjay Shinde had given a statement under oath that the bank accounts related to the Assessee. Placing reliance on the aforesaid remand report, the CIT(A) rejected the contention of the Assessee that Ms. Virushali Shinde had not stated that the transactions in the bank accounts under consideration related to the Assessee. The documents indicating deposit in the bank account were found at the premises of the Assessee when considered along with the statements given by Ms. Virushali Shinde, provided reasonable basis to confirm the addition made by the Assessing Officer. Thus, the CIT(A) confirmed the addition of INR 10,91,50,000/- in the hands of the Assessee. Being aggrieved, the Assessee is now in appeal before us.

8.28. We have heard the rival submissions and perused the material on record. Paragraph 41 of the order impugned, wherein the CIT(A) has reproduced the extract of the statement of Ms. Virushali Shinde, read as under:

“41. In view of the claim made by the appellant, that there was no proof of any statement given by Smt. Virushali Shinde that the two accounts in the bank mentioned above were the deposits of the 64

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 appellant, the AO was asked to verify from the records and ascertain if Smt Virushali Shinde was confronted with the bank account either during search/survey or at any later stage and also indicate the statement given by Smt. Virushali Shinde with respect to the bank account and deposits in the said bank accounts. In response, the AO has sent a report dtd 09/12/2019, forwarded by JCIT. Central Range, Thane vide his letter dtd. 11/12/2019. The relevant extract of which is reproduced as under: "It is observed from the statement given by Smt. Vrushali Shinde u/s 131 IT Act wherein reply to Q No 7 she had stated as under- I am showing you bank statement in respect of M/s Trushna Enterprises and M/s Trushna Services having account no103010030099 and 10030100 Please give details of amount deposited and withdrawal from these. accounts Ans Yes i gone through these bank statements ie M/s Trustina Services having A/c 10030100 UBI and confirm that this bank statement pertains to my business ie M/s Trushna Services The deposits and withdrawal upto 30/3/2007 are related with my business. The transactions after 12/4/2007 are related with Ms Unique Finance I have given one blank cheque book duly signed by me, to my husband Shri Sanjay Shinde. My husband had utilized the said blank cheque book singed by me for making transactions with M/s Unique Finance I cannot give any explanation about the amount deposited in bank account after 12/4/2007. However, I came to know from my husband that the said account was utilized for cash deposil and cash transfer transaction with M/s Unique Finance All these transactions were carried out by Shri Mukesh Gupta. I cannot explain details of any transaction after 12/4/2007 The transactions in the account no.10030099 UBI Thane (W), was carried out after 12/4/2007 were not related to my business. My husband said to me that the said transactions are related to M/s Unique Finance 3. Further, the husband of Smt. Vrushali Shindo, Shri Sanjay Shinde also in his statement have confirmed in reply to Q No 9 & 10 that all the transaction carried out in the bank account of M/s Trishna Services were at the instruction of Shri Promchand

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Kamble Also he had stated that all the signed cheques book bearing his wife signature wore in the custody of Shri Pemchand Kamble. The copy of the statement given by Shn Sanjay Shinde is also enclosed herewith for your kind reference" 8.29. On perusal of the above, we note that Ms. Virushali Shinde has stated that the bank account(s) pertained to her business and that deposits and withdrawal up to 30/03/2007 in those bank account(s) also pertained to her business. However, she was not able to explain the transaction after 12/04/2007. Further, she has given a statement that she was informed by her husband that the transaction after 12/04/2007 related to M/s Unique Finance. Therefore, her statement is merely hearsay statement which cannot be relied upon. Further, it was stated by her that she had given signed a cheque books to her husband Mr. Sanjay Shinde who has, inturn, stated that the aforesaid cheques were given to the Assessee. We note that both, Ms. Virushali Shinde and Mr. Sanjay Shinde, have disassociated themselves from the transaction. Apart from the statements given by Ms. Virushali Shinde and Mr. Sanjay Shinde, there is nothing on record to show that the Assessee was in controlled of the bank accounts under consideration. On perusal of Assessment Order and the order passed by CIT(A), we find that there is no reference to any enquiry/verification carried out by the Assessing Officer in relation to the transactions routed through the accounts. Accordingly, in our view, given the aforesaid facts and circumstances, the addition of INR 10,91,50,000/- made by the Assessing Officer cannot be sustained. The order passed by the CIT(A) is overturned and addition of INR 10,91,50,000/- is deleted. Accordingly, Ground No. 4.f) raised by the Assessee is allowed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Ground No. 4.g)

8.30. Ground No. 4.g) raised by the Assessee is directed against the disallowance of INR 22,40,855/- made by the Assessing Officer during the assessment proceedings and sustained by the CIT(A).

8.31. The Assessing Officer made a disallowance of INR 22,40,855/- on the ground that the aforesaid expenses was capital in nature as the Assessee had failed to provide any explanation during the assessment proceedings.

8.32. We note that even during the appellate proceedings before the CIT(A), no explanation or supporting documents were furnished by the Assessee in order to meet the specific query raised by the Assessing Officer during the assessment proceedings regarding the nature and purpose of the expenses. Therefore, the CIT(A) confirmed the disallowance holding the expenses to be capital in nature. However, the CIT(A) directed the Assessing Officer to grant depreciation on the same.

8.33. Being aggrieved, the Assessee has carried the issue in appeal before us contending that the expenses were revenue in nature.

8.34. On perusal of appeal filed before the CIT(A) in Form 35, we note that it was specifically pleaded by the Assessee that the expenses under consideration were incurred for the purpose of business and depreciation be allowed on the same. The aforesaid plea was accepted by the CIT(A). Before us the Assessee has claimed deduction for entire expenses on the ground that the same are revenue in nature. However, nothing has been placed before on ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 record to enable us to take a view contrary to the view taken by the CIT(A). Therefore, Ground No. 4.f) raised by the Assessee is dismissed.

Ground No. 4.h)

8.35. Ground No. 4.h) raised by the Assessee is directed against the disallowance of INR 3,17,900/-.

8.36. During the assessment proceedings the Assessing Officer noted that the Special Auditor has reported that Printing & Stationary Expenses of INR 3,17,900/- incurred by the Assessee. Since tax was not deducted at source from the same, the Assessing Officer made disallowance of INR 3,17,900/- under Section 40(a)(ia) of the Act.

8.37. In appeal the CIT(A) confirmed the disallowance holding that the Assessee had failed to deduct tax from the contractual payment of printing & stationary expenses and therefore, deduction for the same is not allowable in terms of Section 40(a)(ia) of the Act.

8.38. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal.

8.39. We note that the Assessing Officer and the CIT(A) have made the disallowance printing & stationary expenses of INR 3,17,900/- under Section 40(a)(ia) of the Act. In view of paragraph 3.21 to 3.24 above, we hold that the provisions of Section 40(a)(ia) cannot be attracted in the facts and circumstances of the present case and therefore, disallowance of INR 3,17,900/- is deleted. Ground No. 4.h) raised by the Assessee is allowed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09

Ground No. 4.i)

8.40. Ground No. 4.i) raised by the Assessee is directed against the disallowance of INR 4,00,000/- made by the Assessing Officer on the ground that the aforesaid amount debited in the Profit & Loss Account represented a transfer entry to a group concern of the Assessee in the name of Unique Moto Deals.

8.41. In appeal the CIT(A) declined to interfere with the above disallowance made by the Assessing Officer on the ground that the Assessee had failed to provide any evidence to the contrary. 8.42. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal. 8.43. During the appellate proceedings before us, despite having been granted sufficient time and opportunity, nothing has been placed before us to explain the nature of expenditure represented by the amount of INR 4,00,000/-, or to controvert the concurrent findings returned by the Assessing Officer and the CIT(A). Ground No. 4.i) raised by the Assessee is, therefore, dismissed

Ground No. 4.j)

8.44. Ground No. 4.j) raised by the Assessee is directed against the addition of INR 90,00,000/- made by the Assessing Officer under Section 69B of the Act in relation to fixed deposits of INR 90,00,000/- held with DCB, Bank in the name of a sister concern of the Assessee operating under the name Unique Moto Deals since the Assessee had failed to provide any explanation during the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 course of assessment proceedings.

8.45. In appeal, the CIT(A) agreed with the Assessing Officer and confirmed the addition holding that the Assessee had failed to provide details of source and nature of investment.

8.46. Being aggrieved, the Assessee has carried the issue in appeal before us.

8.47. We note that for during the previous year relevant to the Assessment Year 2008-09, it is the case of the Revenue that the Assessee had surplus deposits of around INR 43,92,57,377/-. In our view, the aforesaid were sufficient to make investment of INR 90,00,000/-. Thus, the source of the investment made by the Assessee stands established. It is admitted position that the investment is in the form of fixed deposits. Thus, both, the source and nature of the investment stand established. Therefore, in view of the aforesaid and adopting the reasoning in paragraph 3.16 to 3.18 above, we delete the addition of INR 90,00,000/- made by the Assessing Officer under Section 69B of the Act.

Ground No. 4.k)

8.48. Ground No. 4.k) raised by the Assessee is directed against the addition of INR 1,85,78,752/- made by the Assessing Officer holding the same to be unexplained cash credit/cheques. 8.49. During the assessment proceedings, the Assessing Officer observed the Assessee has deposited cheques and obtained demand draft. Since the Assessee failed to provide any explanation, addition of INR 1,85,78,572/- , being aggregate amount of cheques and ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 demand draft, was made by the Assessing Officer.

8.50. In appeal preferred by the Assessee, the CIT(A) observed that the Assessee had deposited (a) 2 cheques of INR 50,00,000/-, and (b) 1 cheque of INR 85,78,572/- in his bank account. Therefore, the CIT(A) confirmed the addition of INR 1,85,78,572/-.

8.51. Being aggrieved, the Assessee has carried the issue in appeal before the Tribunal.

8.52. We have heard the rival submissions and perused the material on record. We find that nothing has been placed on record to persuade us to take a view different from the view taken by the Assessing Officer and CIT(A). The nature and source of the receipts in the bank account of the Assessee remains unexplained and unsubstantiated. Addition of INR 1,85,78,572/- is, therefore, sustained. Ground No. 4.k) raised by the Assessee is dismissed.

Appeal by Revenue (ITA No. 1396/Mum/2020, AY 2008-09)

8.53. We would now take up grounds raised by the Revenue in the cross appeal. Ground No. 1 8.54. Ground No. 1 raised by the Revenue is directed against the order of the CIT(A) deleting the addition of INR 16,60,788/- made by the Assessing Officer. 8.55. The Assessing Officer had made disallowance of INR 16,60,788/- consisting of payment of INR 2,99,488/- made by the Assessee to ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Jai Mata Dee Services and payment of INR 13,61,300/- made by the Assessee to Pyramid Marketing since the Assessee had failed to provide any explanation. 8.56. Before CIT(A), the Assessee submitted that the above payments were in the nature of marketing expenses incurred by the Assessee for the purpose of business. Accepting the aforesaid explanation given by the Assessee and taking note of the fact that the aforesaid expenses were recorded in the tally data, the CIT(A) deleted the disallowance of INR 16,60,788/- 8.57. Being aggrieved, the Revenue is now in appeal before us. 8.58. We have considered the rival submissions and perused the material on record. 8.59. We concur with the reasoning given by the CIT(A). The Assessee had explained that the expenses were in the nature of marketing expenses incurred for the purpose of business. It is not the case of the Revenue that the aforesaid expenses were not recorded in tally data. Having accepted the veracity of the receipts recorded in the seized documents/tally data, the Revenue cannot challenge the veracity of expenses recorded in the same seized documents/data without any material/information to doubt the quantum or nature of such expenses. Therefore, Ground No. 1 raised by the Revenue is dismissed. Ground No. 2 8.60. Ground No. 2 raised by the Revenue is directed against the order of the CIT(A) deleting the addition of INR 27,16,65,680/- made by the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 Assessing Officer under Section 69C of the Act in relation to Car Hire Charges. 8.61. The Assessing Officer had made an addition of INR 27,16,65,680 under Section 69C of the Act in relation to Car Hire Charges recorded in the material seized holding the same to be unexplained expenditure since the Assessee had failed to provide any explanation during the course of assessment proceedings.

8.62. In appeal, the CIT(A) deleted the above addition made by the Assessing Officer, inter alia, on the ground that the Assessee had surplus deposits of INR 43,92,57,377/- which was sufficient for making payment of Car Hire Charges of INR 27,16,65,680/- during the relevant previous year agreed with the Assessing Officer and confirmed the addition holding that the Assessee had failed to provide details of source and nature of investment.

8.63. Being aggrieved, the Revenue has carried the issue in appeal before us.

8.64. We note that for during the previous year relevant to the Assessment Year 2008-09, it is the case of the Revenue that the Assessee had surplus deposits of around INR 43,92,57,377/-. We concur with the CIT(A) that the aforesaid surplus deposits were sufficient to make investment of INR 27,16,65,680/-. Having accepted the veracity of the receipts recorded in the seized documents, the Revenue cannot challenge the veracity of expenses recorded in the same seized documents without any material/information to doubt the quantum or nature of such expenses. Therefore, in view of the aforesaid and adopting the ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 reasoning in paragraph 3.16 to 3.18 above, we dismiss Ground No. 2 raised by the Revenue.

Ground No. 3 8.65. Ground No. 3 raised by the Revenue is directed against the order of CIT(A) deleting the ad-hoc disallowance of INR 6,66,664/- being 30% of the aggregate expenses debited to the Profit & Loss Account. 8.66. We note that the CIT(A) had deleted the disallowance observing as under: “124. The special audit report in its notes to accounts (para-9 of page-7) has indicated that none of the expenditure debited to the P & L account as per tally data are supported by vouchers. In absence of any documentary evidence produced before the AO, the AO disallowed 30% of the expenses which worked out to Rs 6.66.664/- and added to the income of the assessee. As the P&L account has been prepared based on the entries in the seized tally account, and the AO has accepted the veracity of the receipts in the tally account, the expenses claimed in the said account cannot be denied to the assessee Courts have held (Supra) that any reliance on a seized material has to be for the entire set of information and the AO cannot be selective in accepting only part of the entries and rejecting the other part from the same document. Accordingly, once the tally data has been accepted both the income and expenditures as per the tally account has to be accepted by the AO Therefore, the disallowance made @30% of the expenditure is not justified and is directed to be deleted.” 8.67. We concur with the reasoning given by the CIT(A). Having accepted the veracity of the receipts recorded in the seized documents/tally data, the Revenue cannot challenge the veracity of expenses recorded in the same seized documents/data without any material/information to doubt the quantum or nature of such expenses. In any case, the disallowance was made by the on ad-

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 hoc basis and was, therefore, not sustainable for that reason also. Thus, Ground No. 3 raised by the Revenue is dismissed. ASSESSMENT YEAR 2007-08 Appeal By Assessee (ITA No.1911/Mum/2021) 9. We will now take up appeal preferred by the Assessee for the Assessment Year 2007-08 against the common order dated 20/12/2019, passed by the CIT(A) whereby the CIT(A) had partly allowed the appeal preferred by the Assessee against the Assessment Order, dated 20/03/2013, passed under Section 143(3) read with Section 147 of the Act. 9.1. The Assessee has raised the following grounds of appeal

3. That this Appeal is preferred by the Appellant for the following reliefs which are erroneously denied by the Hon'ble CIT Appeals 11 as per order dated 20.12 2019 in Appeal No. 929/A.Y.2007-08 :- a) To accept the return of income filed by the Appellant on 26/07/2010. b) To delete the addition of Rs 1,30,31,265/” Ground No. 3.a) 9.2. Ground No. 3.a) raised by the Assessee does not require adjudication and is disposed off as being general in nature.

Ground No. 3.b) 9.3. For the Assessment Year 2007-08 the original assessment was framed under Section 144 read with Section 153A of the Act vide order, dated 06/08/2010 at income of INR 66,32,83,709/-. Subsequently, reassessment proceedings were initiated and vide

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 order dated 20/03/2013, passed under Section 143(3) read with Section 147 of the Act reassessment proceedings were concluded. The income of the Assessee was reassessed at INR 67,63,14,970/- after making an addition of INR 1,30,31,265/- being unaccounted/unexplained cash deposit pertaining to Aurangabad office of the Assessee. 9.4. Being aggrieved, the Assessee preferred appeal before CIT(A) challenging the addition of INR 1,30,31,265/- on merits. The CIT(A), vide common order dated 20/12/2019, confirmed the aforesaid addition and dismissed the ground raised by the Assessee in this regard. 9.5. Being aggrieved by the order passed by the CIT(A), the Assessee is now in appeal before us on the Grounds reproduced in paragraph 9.1. 9.6. We have considered the rival contention and perused the material on record including the order passed by the Assessing Officer and the CIT(A). In view of paragraph 3.16 and 3.17 we confirm the addition of INR 1,30,31,265/- since the Assessee has failed to place on record any material to substantiate that the aforesaid receipts do not constitute income of the Assessee. Ground No. 3.b) raised by the Assessee is therefore, dismissed. ASSESSMENT YEAR 2007-08 Appeal By Assessee (ITA No.1912/Mum/2021)

10. We will now take up appeal preferred by the Assessee for the Assessment Year 2008-09 against the common order dated 20/12/2019, passed by the CIT(A) whereby the CIT(A) had partly

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 allowed the appeal preferred by the Assessee against the Assessment Order, dated 20/03/2013, passed under Section 143(3) read with Section 147 of the Act. 10.1. The Assessee has raised the following grounds of appeal:

4. That this Appeal is preferred by the Appellant for the following reliefs which are erroneously denied by the Hon'ble CIT Appeals 11 as per order dated 20.12.2019 in Appeal No. 930/A.Y.2008-09 :- a) To accept the return of income filed by the Appellant on 26/07/2010. b) To delete the addition of Rs 38,18,335/-”

Ground No. 4.a) 10.2. Ground No. 4.a) raised by the Assessee does not require adjudication and is disposed off as being general in nature.

Ground No. 4.b) 10.3. For the Assessment Year 2008-09 the original assessment was framed under Section 144 read with Section 153A of the Act vide order, dated 06/08/2010 at income of INR 98,93,70,958/-. Subsequently, reassessment proceedings were initiated and vide order dated 20/03/2013, passed under Section 143(3) read with Section 147 of the Act, reassessment proceedings were concluded. The income of the Assessee was reassessed at INR 99,63,18,030/- after making an addition of INR 36,18,335/- being unaccounted/unexplained cash deposit pertaining to Aurangabad office of the Assessee, and INR 33,28,740/- being unaccounted expenditure on account of rent paid in advance.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 10.4. Being aggrieved, the Assessee preferred appeal before CIT(A) challenging the above additions on merits. The CIT(A), vide common order dated 20/12/2019, confirmed the aforesaid addition of INR 36,18,335/- on account unexplained cash deposits while deleting the addition of INR 33,28,740/- pertaining to payment of rent. 10.5. Being aggrieved by the order passed by the CIT(A) sustaining the addition of INR 36,18,335/-, the Assessee is now in appeal before us on the Grounds reproduced in paragraph 10.1 above. 10.6. We have considered the rival contention and perused the material on record including the order passed by the Assessing Officer and the CIT(A). In view of paragraph 3.16 and 3.17 we confirm the addition of INR 36,18,335/- since the Assessee has failed to place on record any material to substantiate that the aforesaid receipts do not constitute income of the Assessee. Ground No. 3.b) raised by the Assessee is therefore, dismissed. Thus, in result: (a) the appeals preferred by the Assessee for the Assessment Year 2005-06 (1764/Mum/2021), 2006-07 (1767/Mum/2021), 2007-08 (1766/Mum/2021) and 2008-09 (1765/Mum/2021) arising from original Assessment Order passed under Section 144 read with Section 153A of the Act are partly allowed. The cross appeals preferred by the Revenue for the Assessment Year 2006-07 (1394/Mum/2020), 2007-08 (1395/Mum/2020) and 2008-09 (1396/Mum/2020) are dismissed.

ITA Nos. 1764-1767 & 1911-1912/Mum/2021 & AY 2005-06-2008-09, AY 2006-07- to 2008-09 (b) the appeals preferred by the Assessee Assessment Years 2007-08 (ITA No. 1911/Mum/2021) to 2008-09 (ITA No. 1912/Mum/2021) arising from the reassessment order passed under Section 143(3) read with Section 147 of the Act are dismissed.

Order pronounced on 30.08.2023.