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Income Tax Appellate Tribunal, JAIPUR BENCHES “A”, JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 533/JP/2019
ORDER PER: SANDEEP GOSAIN, J.M. This is the appeal filed by the assessee against the order of the ld. CIT(A)-I, Jaipur dated 07/03/2019 for the A.Y. 2010-11. The grounds taken by the assessee are as under: “1(a) On the facts and in the circumstances of the case, the Authorities Below have erred in holding the view that the statutory notice u/s 147/148 of the Act issued in 'incorrect' name is a valid notice. The statutory notice issued in incorrect name is patently an invalid notice as per provisions of Law and the same deserves to be quashed. 1(b) On the facts and in the circumstances of the case the Authorities Below have factually and legally erred in turning down the various objections of the appellant regarding initiation of the re-assessment proceedings u/s 147/148 of the Act without appreciating the facts of the case in right perspective and also without addressing the points at issue. Thus the findings of the Authorities Below in this regard are not well reasoned, the same deserve to be quashed summarily.
2 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO 2(a) On the facts and in the circumstances of the case the Authorities Below have factually and legally erred in making and confirming the addition of Rs.8,00,000/- on account of the alleged funds received by the appellant, without appreciating the facts of the case in right perspective. Thus the addition so made and confirmed by the Authorities Below deserves to be deleted summarily. 2(b) On the facts and in the circumstances of the case, the Authorities Below have factually and legally erred in observing that due opportunity was allowed to the appellant to cross examine the witness but the appellant did not avail such opportunity. In fact, the ld. AO had allowed only one `hour' for the purpose as explained vide letter dated 9.10.2017. Thus for practical reasons, the opportunity could not be availed.
On the facts and in the circumstances of the case , the both grounds Author ities Below have factually and legally erred in holding the impugned funds of Rs.8,00,000/- as un- explained' income of the appellant and simultaneously penalty proceedings u/s 271D of the Act were also initiated and upheld by the Authorities for accepting the deposit in violation of the provisions of section 269SS of the Act. Both views are self-contradictory. This shows double state of mind of the Authorities Below. Obviously addition made on the basis of such vague findings is bad in Law and deserves to be deleted summarily.
The appellant craves to add, amend or withdraw any of the ground of appeal
either before or at the time of hearing of appeal.”
2. The hearing of the appeal and C.O. were concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.
3. The brief facts of the case are that as per information available with the department, the assessee received a sum of Rs. 8,00,000/- in cash from Shri K.K. Khilnani, the guarantor for unaccounted financial transactions between Shri Asharam Bapu/his group/Ashram during the year under consideration. Statement of Shri K.K. Khilnani was recorded U/s 132(4) of the Income Tax Act, 1961 (in short, the Act) and he had accepted the loan given to assessee in cash, on which, proceedings U/s 3 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO 147 of the Act was initiated by issuance of notice U/s 148 of the Act. The assessee filed reply before the A.O. on 24.04.2017 and stated that he has already filed his return of income on 31.07.2010. Accordingly, he demanded for reasons for initiation of proceedings. Consequent upon change of incumbent, Notice under section 142(1) of the Act dated 12.06.2017 was issued and served upon the assessee. In response to the above notice the assessee himself appeared and stated that his actual name is Dholan Das Khatwani' and confirmed the other credentials mentioned in the above Notice dated 12.06.2017. During the assessment proceedings, the assessee filed a copy of ITR for the A.Y. 2010-11 which was filed on 31.07.2010. A Copy of Profit & Loss Account and Balance Sheet for the year under consideration was also filed. During the assessment proceedings the assessee requested to treat the above return of income filed on 31.07.2010 as filed in response to the Notice under sec. 148 dated 29.03.2017. Accordingly, considering his request, reasons for initiating proceedings under sec. 148 were provided to him. The also stated that on the next date, i.e. dated 18.07.2017 the assessee appeared and filed written submission wherein he stated that the transactions mentioned in the reason for initiating proceedings under sec. 148 belongs to Dholumal whereas his name is ‘Dholan Das Khatwani'. On being pointed out that during the course of assessment proceedings on 07.07.2017 he 4 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO had confirmed the other credentials available on records (as his residential address; Shop address of his family member i.e. M/s Laxmi Mobile, Opp. Rayrnonds, M.I.Road, Jaipur etc.) the assessee agreed and confirmed that both the names are of same person. Finally, the A.O. completed the assessment U/s 148/143(3) of the Act on 06/11/2017 determining total income of assessee at Rs. 9,39,680/- by making addition of Rs. 8.00 lacs as unexplained income.
4. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of both the parties as material placed on record, upheld the action of the A.O.. Against the said order of the ld. CIT(A), the assessee has preferred the present appeal before the ITAT on the grounds mentioned above.
Grounds No. 1 and 2 of the appeal raised by the assessee relates to challenging the order of the ld. CIT(A) in confirming the reassessment proceedings U/s 147 of the Act. In this regard, the Ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and submitted that the notice u/s 147/148 of the Act was issued in 'incorrect' name. Such notice was not served upon the assessee properly and timely. The reasons of belief were based on 'Borrowed Satisfaction'. As per reasons recorded, no case of 'Escapement of Income' within the meaning of section 147/148 could be 5 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO made out. It was a case of violation of the provisions of section 269SS of the Act.
The ld. AR has further submitted that the first ground of the appeal regarding initiation of the reassessment proceedings u/s 147/148 of the Act was also dismissed by the ld. CIT (A) on the basis of 'distorted' and 'incorrect' facts that the assessee did not avail the 'opportunity of cross examination' of the witness Shri K.K. Khilnani on 9.10.2017. In the process, the ld. CIT (A) did not decide the main point at issue i.e. as to whether accepting of the alleged loan in 'cash' is an 'Escapement of Income' or not? Thus the main point at issue was not decided by the ld. CIT (A). The provisions u/s 269SS of the Act are very clear and un-ambiguous. Accepting the alleged loan in cash in violation of section 269SS of the Act would attract penalty provisions u/s 271D of the Act only. By no stretch of imagination, such violation u/s 269SS could be taken as 'Escaped Income' within the meaning of section 147 of the Act as opined by the AO while recording his 'satisfaction' to initiate such re- assessment proceedings. The ld. CIT (A) did not consider this fact while dismissing the appeal. In the back-ground of above discussions, the findings of the ld. CIT (A) are assailed ground-wise as under:
6 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO (A)Ground No.1 regarding initiation of the re-assessment proceedings u/s 147/148 of the Act:
(a) As noted from the above findings, it is seen that the ld. CIT (A) had dismissed this ground mainly on the plea that the appellant did not avail the opportunity on 9.10.2017 to cross examine the witness Shri K.K. Khilnani. On careful study of the assessment proceedings, it is noted that such findings of the ld. CIT (A) are 'factually incorrect'. In fact, from day one of the re-assessment proceedings commenced on 21.9.2017, the appellant had been urging for cross-examination of the witness. The ld. AO had however advised the appellant to contact the concerned AO of the witness for this purpose (copy of the order-sheet proceedings is submitted in PB at page No. 10). The regular hearing in the case was fixed on 9.10.2017. Till 9.10.2017, no opportunity was allowed by the concern AO of the witness. This fact was duly communicated to the Ld. AO vide our letter dated 9.10.2017 submitted in regular hearing on 9.10.2017 at about 11.30 AM (PB No.11 to 16). Vide order-sheet entry dated 9.10.2017 of the regular hearing on the same date, the ld. AO had required the AR to advise the appellant to be present at 12.30 PM in his office for the purpose. The AR of the appellant, who was attending such regular hearing on 9.10.2017 had expressed his inability to produce the appellant by 12.30 PM i.e. within one hour on the plea that the appellant did not accompany him in regular hearing and it was not practically possible to locate the appellant at such short notice and to request him to attend the office of the AO instantly on the same day. Accordingly, the AO was requested to allow reasonable opportunity vide A.R.'s hand written letter of the even date. Copy of the letter is submitted herewith for your kind perusal and record at PB No.17. The AO had however turned down such request and had proceeded to finalize the proceedings without allowing proper and adequate opportunity for the purpose. From these sequences, it is evident that the appellant was prevented by bona-fide and 7 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO reasonable cause from availing the opportunity on 9.10.2017. The ld. CIT (A) had however failed to appreciate such bona-fide and evident facts and dismissed this ground mainly on the plea that the appellant was not willing to avail such opportunity. Obviously, such findings are factually incorrect and are devoid of merits to be quashed summarily.
(b) Further, the Ld. CIT (A) had opined that the report received from the Investigation Wing of the Deptt. is a valid reason to initiate the reassessment proceedings u/s 147/148 of the Act. In support of his findings, he had referred to number of judicial citations as discussed in the appeal order. Ongoing through such judicial citations, it is noted that all these judgments have no bearing on the facts of the present case. In all these judgments, it has been brought home by the Judicial Authorities that the information as received from the Investigation Wing could be basis to form a 'Reasonable Belief' after due verification and examination of the information so received. But in the present case, the AO did not examine and verify the information so received by him and had blindly issued notice u/s 147/148 of the Act in 'incorrect name' of `Dholumal' instead of 'Dolan Das' without ascertaining even the correct name and identity of the appellant. As opined by the Ld. CIT (A), though it is a case of mistaken identity, yet the fact still remains that the AO did not examine or verify the correct name & identity of the appellant before issuing such statutory notice u/s 147/148 of the Act. Issuing of a statutory notice in incorrect name is a strong evidence to show that the AO had acted blindly on the information received from the Investigation Wing; so much so that he did not care to verify the examine the identity of the appellant before initiating such re-assessment proceedings. It is now for kind consideration of the honorable Member to decide as to whether 8 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO issuance of a statutory notice u/s 147/148 of the Act in the name of a mistaken identity is a valid notice or not; particularly when the AO was legally required to examine and verify the correctness of the report of Investigation Wing religiously and meticulously before forming his 'belief' and 'satisfaction' to issue notice u/s 147/148 of the Act? The ld. CIT (A) had however skipped to address this point while dismissing this ground.
(c) Again, the ld. CIT (A) had skipped to give findings as to whether accepting of the alleged 'loan' in 'cash' tantamount to 'Escapement of Income' within the meaning of section 147 of the Act? The ld. CIT (A) had failed to address this point and did not give any finding on the point. Obviously as per provisions of Law, accepting the alleged loan in cash in violation to section 269SS of the Act attracts only penalty u/s 271D of the Act and warranting no addition either u/s 68 or 69 of the Act. The ld. CIT (A) did not dwell upon this fact and gave no finding on this fact. The ld. CIT (A) had felt satisfied to deal with the point regarding 'sufficiency of the reasons' only; which were never in question. In fact, the appellant had questioned the 'Correctness' of the reasons and not the 'Sufficiency' of the reasons as dealt with by the Authorities Below. Thus the Authorities Below had failed to deal with the point regarding 'correctness' of the reasons recorded as objected by the Appellant in the re-assessment proceedings. Thus the Authorities Below had turned down this objection, without addressing question the same. Thus the Authorities Below were not justified in rejecting such claim of the appellant without examining the correctness of the reasons recorded.
In view of the above discussions, the ld. CIT (A) had incorrectly dismissed this ground on the basis of distorted facts and also without addressing the main point at issue. Accordingly, this 9 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO ground of appeal deserves to be allowed in view of the facts as discussed above.
7. On the other hand, the ld. DR has vehemently supported the orders of the authorities below and submitted that the ld. CIT(A) has passed a well-reasoned order.
We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we observed that the assessee raised the contention that the reopening was done on mistaken identity. The name of the assessee is Shri Dholan Das and not Shri Dholu Mal. This issue has been discussed by the A.O. in detail in para No.3 of his assessment order and held that the assessee agreed and confirmed that both the names are of same person. The assessee also raised objection that the reopening was done on borrowed satisfaction and Shri K.K. Khilnani, on whose statement, they relied upon, never mentioned the name of the assessee. We further observe that the AO recorded the reasons for reopening and also provided the copy of the same to the assessee. The objections raised by the assesse were dealt by the A.O. in the assessment order. The assessee demanded the copy of the statement 10 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO of Shri K.K. Khilnani which was also provided by the A.O. to him. The A.O. had also provided opportunity to the assessee to cross examine Shri K.K. Khilnani, but the assessee did not avail the opportunity of cross examination. In view of the above facts and circumstances, we are of the considered view that ld. CIT(A) has passed a well-reasoned speaking order discussing all the material facts. The ld. AR has not brought out any new material to controvert the findings recorded by the ld. CIT(A) qua violation reopening the assessment, therefore, we find no reason to interfere with or deviate from the findings so recorded by the ld. CIT(A) qua this issue. Accordingly, we uphold the same. Hence, grounds No. 1 and 2 of the appeal are dismissed.
Ground No. 3 of the appeal raised by the assessee relates to challenging the order of the ld. CIT(A) in confirming the addition of Rs. 8.00 lacs as unexplained income of the assessee. In this regard, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied upon the written submissions filed before the Bench and the contents of the same are reproduced below: Regarding addition of Rs.8,00,000/- The Ld. CIT (A) had dismissed this ground of appeal vide para (x) of the Appeal Order. On going through the findings of the Ld. CIT (A), it is noted that the Ld. CIT (A) had dismissed this ground in 'summary manner' & 'solely' on the plea that the appellant was not willing to cross 11 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO examine the witness on the given date of 9.10.2017 so his various contentions on the point were not sustainable. Obviously such findings are lopsided, devoid of merits and contrary to the principles of 'Equity' & "Natural Justice', to be assailed vehemently for following reasons: (a) At the out-set, it may be pointed out that the Ld. CIT (A) had `incorrectly' opined that the appellant was not willing to cross examine the witness Shri K.K. Khilani on the given date of 9.10.2017. As discussed at length in the fore-gone paras and also as evident from the communications exchanged in the re-assessment proceedings, the appellant was very much willing to cross examine the witness right from 'day one'. However, due to short notice of 'one hour', coupled with other un-avoidable circumstances as explained hereinabove, the appellant was prevented by bona-fide reasons from cross examining the witness. In the circumstances, the above findings of Ld. CIT (A) are not well founded and the same deserve to be quashed summarily. (b) The Ld. AO had 'incorrectly' mentioned in the assessment order that Shri Khilnani had informed in his statement recorded u/s 132(4) of the Act on 9.9.2015 that he (Khilnani) had given Rs.8 lac to Shri Dholumal. In fact, through an over-sight the Ld. AO had considered the appraisal report of the Investigation Wing of Ahmedabad as part of the statement of the witness and had reproduced the same in the body of the assessment order also under such misplaced impression. On going through the statement of Shri Khilnani (Copy placed in the PB at page No. 32 to 40) it is noted that Shri Khilnani had never said that he had given Rs.8 lac to the appellant. On the contrary, he had informed that he was unable to recollect any of such details. Relevant extract from his statement was also re-produced in the explanation given before the Ld. AO from time to time and also in the written submissions made before the Ld. CIT (A). However, both the Authorities did not deal with this fact on the plea that the appellant had not availed the opportunity to cross examine the witness.
12 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO Obviously, the contents of the statement recorded u/s 132(4) of the Act (which were very general and non-specific in nature) could not be ascertained and verified on the plea that the appellant did not avail the opportunity to cross examine the witness. Thus the authenticity and relevance of the statement recorded u/s 132(4) of the Act could not be verified in absence of the cross examination of the witness. As per relevant extracts reproduced in the appeal order, the witness had categorically and specifically informed that he did not recall the details of such transactions and he was unable to narrate any detail of the transactions undertaken through him. More-over no name what-so-ever of any of the `recipient' of the alleged funds could be mentioned by the witness in his statement recorded u/s 132(4) of the Act. In the circumstances, no adverse inference was called for on account of such `general' and `vague' statement recorded u/s 132(4A) of the Act, and valid addition could be made. Thus the Ld. AO had incorrectly taken an adverse view on account of such general and non-committal statement u/s 132(4A) of the Act.
(b-1) Moreover, the presumption u/s 132(4A) is available only against the person from whose possession the document is found and not against the third person. Kindly refer to the judgment of honorable ITAT, Pune Bench (B) Pune in the case of Vinit Ranawat (ITA Nos. 1105 and 1105/PN/2013 dated 12.6.2016 (copy placed in the PB at as held by number of judicial authorities in number of cases. In the circumstances, no adverse view was called for in the case of the appellant on the basis of the statement of Shri Khilnani u/s 132(4A) of the Act.
(c) It is an also an `undisputed' fact that the material which had been sought to be relied upon by the Deptt., was found and seized from the custody of `Third Party' in search operations. As per 13 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO 'Evidence Act' and as propounded and interpreted by the Judicial Authorities from time to time, including by the honorable Supreme Court in its land mark judgments in the cases of Common Cause vs UOI (Sahara Diaries) in IA No.3 & 4 of 2017 in W.P (Civil) No. 505 of 2015 dated 11.1.2017) it is held that section 34 of the Evidence Act, entries in loose papers/ sheets are irrelevant and inadmissible as evidence. Such loose papers are not books of account and the entries therein are not sufficient to charge a person with liability. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is incumbent upon the person relying upon those entries to prove that they are in accordance with facts. It has further been laid down in V.C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary to trustworthiness of those entries which is a requirement to fasten the liability. Such view of the honorable Supreme Court had been followed consistently by number of Judicial Courts including honorable Jaipur Bench, Jaipur in the case of M/s Lodha Builders vs DCIT, ITAT-A-Bench (JP) (2008) ITR (JP-IT) 303 and number of other cases as discussed in the written submissions made before the Authorities Below. Thus no valid addition can be made on the basis of any of such material found and seized from the custody of third parties.
(d) Again the 'Prints Out' as obtained by the Investigation Wing, Ahmedabad and as relied upon by the Department to make such addition are 'Deaf and Dumb' papers; having no 14 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO 'conclusive' and 'definite' information of the transaction under consideration, so much so, the dates of payment/re-payment, mode and nature of payments, acknowledgement of the receipt of funds in the form of 'Money Receipt' and final destination of the funds etc. are not forthcoming. In absence of such vital and relevant details, the papers and material under consideration are 'Deaf and Dumb' papers only and carry no evidentiary value as for all purposes and carry. The Authorities Below had however turned down this contention on the plea that 'Tabulated Sheets' cannot be considered as 'Deaf and Dumb' documents as these contained complete details and 'dates' of the payments under consideration. Such findings of the Authorities Below are factually incorrect. On perusal of the printouts of the sheets, it is noted that there is no mention of any date, receipt and other supporting details in respect of such transactions. Thus the judgment as relied upon by the Authorities Below has no bearing on the facts of the present case. The Authorities were not justified in rejecting such contention of the appellant on the basis of this judgment. As on date, it is a settled law that no addition could be made on dumb document/note book/loose slips found during the search and the basis of the entry of noting on loose sheet or figures etc. and on the basis of the same it could not be concluded that those represents the undisclosed income of the assessee. The entries in the loose papers are required to be corroborated. For the said proposition, reliance is placed on the following judgments:
(i) CIT, Central-1 vs. Vatake Landbase (P) Ltd. (2016) 383 ITR 320 (Delhi)
(ii) CIT, Central-II vs. S.M. Aggarwal (2007) 162 Taxman 3 (Delhi)
15 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO (iii) Smt. K.V. Lakshmi Savitri Devi vs. ACIT (2013) 30 taxmann, cin, 117 (Hyderabad-Trib)] (iv) S. Narayan Reddy v. DCIT (2014) 42 taxmann. Corn 127 (Hyderabad-Trib)] (v) DCIT, CC-1 VS. C. Krishna Yadav (2011) 12 taxmann .com 4(Hyd)
(vi) ACIT vs Sharad Chaudhary (2015) 55 taxmann.com 324 (Delhi Trib). (vii) Dimsy Food & Chemicals (P) Ltd. vs. DCIT (2008) 24 SOT 65 (Delhi)(Uro). (viii) CIT Delhi-IV vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi)
(e) Further, it was alleged that the cash funds of Rs. 8 lac had passed hands from the agents of Shri Asha Ram to the appellant, who is again a 'Broker' only, doing no business on his own as evident from his ITRs. This fact has not been disputed by the Revenue. Once this fact is acknowledged and acted upon by the Deptt, then the nature of the funds allegedly passed hand from a 'broker to broker' could never be 'loan' as presumed by the Revenue to make such addition. More- over, the nature and sources of the alleged 'loan' stood automatically explained as the fact regarding existence of the funds and passing of these funds from Agents to the appellant had already been admitted by the Deptt., warranting no adverse view to make the addition. Again the provisions of section 68/69 of the Act would not come into play to tax the alleged loan. In the circumstances, it is understandable that the Ld. AO consciously did not invoke these provisions to make this addition. It appeared that the Ld. AO himself was not sure to make any addition on account of the alleged transfer of these funds. In the reasons also, he did not record definite finding of the escapement of income on account of the alleged transfer of funds. The Ld. AO had simply expressed his hunch that such funds are liable to be taxed 16 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO being un-accounted, but in whose case? No definite finding was recorded. In absence of categorical and specific finding and also in absence of invoking any charging section of the Act, no valid addition could be made. The Authorities Below had however kept mum on the point and did not give any finding on the point. Thus the addition so made and confirmed the same in absence of any specific findings. Thus the addition so made and confirmed deserves to be deleted summarily.
(f) As the alleged funds under consideration had already been considered and assessed in the case of Shri Asharam so no further addition was made on account of the same funds in the case of Shri Khilnani., being a finance broker. Like-wise, the appellant is also a `Commission Agent' and the alleged transfer of the funds from a broker to broker should be treated alike on the same footings and analogy. As the funds were transferred further by Shri Khilnani to the appellant who is again a broker, so the funds transferred from one broker to another is not inevitably a loan as taken by the Revenue. On the basis of same analogy, no further addition is called for in the case of the appellant also. The Authorities Below had however erred to ignore this vital fact and had made and confirmed the addition without appreciating this fact that this would tantamount to double addition. Thus the addition so made is bad in law and same deserves to be deleted.
In view of above discussions, the addition of Rs.8,00,000/- as made and confirmed by the Authorities Below are factually and legally incorrect and same deserves to be deleted.
17 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO 10. On the other hand, the ld DR has relied on the orders of the authorities below. She has also relied on the following judicial pronouncements: (i) Hindusthan Tobacco company Vs CIT, West Bengal-IV (2012) 27 taxmann.com 155 (Cal.) (ii) Rajat Bansal Vs CIT (2011) 11 taxmann.com 357 (P&H) (iii) Arunkumar J. Muchhala Vs CIT (2017) 85 taxmann.com 306 (Bom) (iv) CIT Vs Uttam Chand Nahar (2007) 295 ITR 403 (Raj) (v) ACIT Vs Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 161 Taxman 316 (SC) (vi) Raymond Woolen Mills Ltd. Vs ITO (1999) 236 ITR 34 (SC) 11. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that the assessee is a small-time finance broker having petty commission income from brokerage as is evident from the computation of income. As mentioned in the Investigation Report, Shri K.K. Khilnani had also been doing the same profession of brokerage on the same lines as that of the assessee. However, the Revenue had treated Shri Khilnani a 18 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO financial broker only and no addition was made in his case in respect of such transactions. The assessee is also a financial broker.
We observed that the 'sources' of the alleged funds of Rs.8 lac under consideration are 'self-explained' as evident from the seized material. Thus the nature and sources of the funds under consideration are not disputed by the Revenue. The only point of dispute is regarding violation of the provisions of section 269SS of the Act warranting penalty proceedings. Thus it is not a case of escapement of income within the meaning of Section 68 or 69 of the Act, warranting addition. While making such addition of Rs.8,00,000/- as un-explained income vide para 10 of the assessment order the AO did not mention any charging Section of 68 or 69 of the Act. Even otherwise also, both the provisions of Act i.e. Section 68 & 69 are not applicable in the present case. As Section 68 of the Act comes into operation only when `no satisfactory explanation’ is coming forth in respect of the cash credit found recorded in the books. In the present case, however, no such credit entry is recorded as evident from the books. Thus this section is not applicable in this case. Again, Section 69 of the Act is not applicable in the present case as the assessee was never found in 'possession' of such sum at any stage 19 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO in any manner. Thus both the provisions of law are not operative in the present case.
We further observe that again on the date, it is a settled law that no valid addition can be made on the basis of the material found from the custody of 'Third Party' as held by the Hon’ble Supreme Court in the land mark judgment in the case of Common Cause vs UOI (Sahara Diaries) in IA No.3 & 4 of 2017 in W.P (Civil) No. 505 of 2015 dated 11.1.2017, wherein, the Hon’ble Apex Court has held that “section 34 of the Evidence Act, entries in loose papers/ sheets are irrelevant and inadmissible as evidence. Such loose papers are not books of account and the entries therein are not sufficient to charge a person with liability. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is incumbent upon the person relying upon those entries to prove that they are in accordance with facts. It has further been laid down in V.C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent 20 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO evidence is necessary to trustworthiness of those entries which is a requirement to fasten the liability. Such view of the honorable Supreme Court had been followed consistently by number of Judicial Courts including honorable Jaipur Bench, Jaipur in the case of M/s Lodha Builders vs DCIT, ITAT-A-Bench (JP) (2008) ITR (JP- IT) 303 and number of other cases as discussed in the written submissions made before the Authorities Below. Thus no valid addition can be made on the basis of any of such material found and seized from the custody of third parties.”
We further observe that the copies of the alleged 'Prints Outs' received from the Investigation Wing, Ahmedabad and forwarded to the assessee subsequently in the assessment proceedings were 'deaf and dumb document' for all the purposes and had carried no evidentiary value in absence of the 'corroborative evidences'. Number of vital details like 'Dates of Payments' & 'Re-payments' of the funds under consideration, the 'Money Receipts' acknowledging the receipt and re-payment of these funds, 'Final Destination' of these funds and the "Nature' of the transactions reflected in the printed sheets i.e. whether such transaction was a 'loan' or 'payment' in lieu of any other transaction etc. were missing. In absence of such vital details, no 'logical' conclusion could be arrived at. Lastly, the assessee was 21 ITA 533/JP/2019 _ Shri Dholuram alias Dholan Khatwani Vs ITO never confronted about all these missing details in the assessment proceedings. Therefore, the case laws relied upon by the ld DR has not been found to be applicable as per the facts in the case of the assessee, therefore, considering the totality of the facts and circumstances of the case, we are of the view that the assessee has discussed his case in detail and we find merit in his contention, therefore, we direct to delete the addition made qua this issue. We direct accordingly.
In the result, this appeal of the assessee is allowed partly. Order pronounced in the open court on 30th June, 2021. Sd/- Sd/- ¼foØe flag ;kno½ ¼lanhi x®lkÃa½ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30/06/2021 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Dholumal Alias Dholan Das Khatwani, 1. Jaipur. izR;FkhZ@ The Respondent- I.T.O., Ward-3(2),Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 533/JP/2019) 6. vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत