ACIT, CENTRAL CIRCLE-04, NEW DELHI vs. VISHNU KUMAR GARG, FARIDABAD

PER R.K. PANDA, A.M.

ITA.No.9147/Del./2019 to ITA.No.9152/Del./

2019 filed by the assessee are directed against the common

order dated 30.09.2019 of the Ld. CIT(A)-23, New Delhi

relating to A.Ys. 2011-12 to 2016-17 respectively. The

Revenue has filed ITA.No.9448/Del./2019 for the A.Y. 2013-

14 and ITA.No.9449/Del./2019 for the A.Y. 2014-15 against

the relief granted by the Ld. CIT(A)-23, New Delhi in the

order dated 30.9.2019. Since, common issues are involved

in all these appeals, therefore, these were heard together

and are being disposed of by this common order.

ITA.No.9147/Del./2019 – A.Y. 2011-12 [Assessee] :

an individual and derived income from salary, house

property, income from business and income from other

sources. He filed his return of income on 15.09.2011

declaring total income of Rs.61,93,010/-. A search under

section 132 of the I.T. Act was conducted on 28.02.2017 at

3 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the residential premises of the assessee at House No. 128,

Sector-16, Faridabad, Haryana from where certain

papers/documents belonging to the assessee were found

and seized. The jurisdiction of the assessee was transferred

from Pr.ClT-5, Delhi to PCIT, Central Circle-4, Delhi vide

order under section 127(1) dated 30.11.2017. In response to

notice under section 153A of the I.T. Act, the assessee filed

return of income declaring total income of Rs.61,93,010/-.

The A.O. issued notice under section 143(2) and

subsequently notice under section 142(1) along with

questionnaire. In response to the same, the assessee

appeared before the A.O. and filed the requisite details from

time to time. The A.O. thereafter completed the assessment

under section 153A of the I.T. Act determining the total

income of the assessee at Rs.1,64,54,330/-.

assessee. Aggrieved with such order of the Ld. CIT(A), the

assessee is in appeal before the Tribunal by raising the

following grounds of appeal :

4 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

and conclusion of assessment proceedings u/s 153A at

an amount of Rs.1,64,54,331/- is being challenged on

facts and law.

and law for making additions in assessment

proceedings u/s 153A when there is no incriminating

material/ document found during the course of search

u/ s 132 of the Act for the impugned year.

and law for making an addition of Rs.10,00,000/- by

invoking the provisions u/s. 69A, while the transaction

is duly explained and accounted, recorded, disclosed

and declared in books of account.

and law for making an addition of Rs.11,00,000/- by

invoking the provisions u/s. 69A, however per assessee

the same are rough notings.

and law for making an addition of Rs.14,00,000/- by

5 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

invoking the provisions u/s. 69A, which is considering

the explanation of assessee yet without assigning the

reason to the basis of rejection of the explanation hence

mechanically passing the assessment order.

and] law for making addition of Rs.11,25,000/- (@

1.5%) given to Mishra ji which is unwarranted action by

assuming the interest accrued of 1.5% which is a

hypothetical income and against the principle of law

(Godhara Electricity Co. Ltd., vs., CIT (1997) 225 ITR

746 (SC) further per assessee said loan of

Rs.75,00,000/- is given to Abhay Salwan & not to

Mishraji.

and law for making addition of Rs.11,25,000/-,

wherein the evidence and the fact of the payee Abhay

Salwan being a proclaimed offender and absconding is

matter of Judicial Review before the Hon’ble Allahabad

High Court, yet wrongly invoking the jurisdiction of

presumption u/s. 132(4A). The prayer is to allow the

6 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

claim/relief in accordance with the provision of section

58(2) r.w.s. 70, 71 of Income Tax Act, 1961.

and law for making an addition of Rs.40,00,000/- as

unexplained money while treating the witness

(assessee) u/s. 118 of Indian Evidence Act, 1872, as

the assessee involved in the transaction resultingly an

unreasonable finding without even calling and

summoning the person involved namely RA Financial

Services and Om Shanti Educational Society.

and law for making an addition of Rs.3,207/- by

invoking the provisions u/s 69C by making presumption

on presumption while law is settled that the

presumption is supplied by Statute namely Income Tax

Act, 1961, Schedule VII List 1 Entry 82 it is presumption

of income and not presumption on presumption.

the action for not allowing telescoping of addition on

account of u/s. 69A, u/s. 69C & commission expenses

7 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

against addition on account of bogus purchases of

group concerns is challenged on facts and law as both

additions cannot be made simultaneously.

arising out of this appeal and for any addition, deletion,

amendment and modification in the grounds of appeal

before the disposal of the same in the interest of

substantial justice to the assessee.”

3.1. The assessee has also raised the following

additional ground:

i) Because the action is being challenged on facts &

law for making additions in assessment

proceedings u/s 153A wherein the seized

documents Pg. 125 – 126 of Annexure A-5

relating to assessee were found from the

premises of third parties i.e., LV Rustore

Applications Pvt. Ltd., R R Carwell Pvt. Ltd.,

Blossom Landeal Pvt Ltd., & Elvi Bardahl India

Pvt. Ltd., 17/6, Hanspal Industrial Complex,

8 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Mathura Road, Faridabad, therefore the

additions on the basis of the said documents can

only be made u/s 153C of the Act & not u/s

153A of the Act.

the time of hearing did not press the additional ground, for

which, the Ld. D.R. has no objection. Accordingly, the

additional ground raised by the assessee is dismissed as not

pressed.

general in nature are dismissed.

grounds of appeal numbers.2 and 9, for which, the Ld. D.R.

has no objection. Accordingly, the same are also dismissed

as not pressed.

order of the Ld. CIT(A) in confirming the addition of Rs.10

lakhs under section 69A of the I.T. Act, 1961.

9 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

course of assessment proceedings, the A.O. noted that

during the course of search operation at the residential

premises of the assessee at House No. 128, Sector-16,

Faridabad, Haryana, Page-14 of Annexure-A1 was seized

wherein number of transactions were written. The A.O.

asked the assessee to explain every transaction recorded on

Page-14 of Annexure-A1 duly furnishing source of it and

tallying with its regular books of account. The A.O. observed

that there was an entry dated 07.07.10 against narration of

‘Mamaji ko 10,00,000/- diye, 1,00,000 ka Mataji ka hisab

clear. One entry dated 07.08.2010, against narration of

Mamaji ko diye Tagdi and Hath phool Gold ke layi Mamji ke

of Rs.2,00,000/-.

8.1. It was explained by the assessee that Mamaji and

Mataji were living with the assessee and assessee used to

handover business cash to them for safe custody, whenever

he used to go out of station for either business purpose or

some personal purpose. So, Rs.10,00,000/- were given to

Mamaji. Similarly an amount of Rs.1,00,000/- (i.e., 2

10 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

entries of Rs.50,000/- each were kept with Mamaji and

Mataji) and the other entry relate to an amount of

Rs.1,00,000/- received back by the assessee from Mataji.

Therefore, the amount of Rs.1,00,000/- which assessee has

given to them was received back. Alternatively, it was

argued that if any addition on this account is to be made

then assessee is entitled to telescoping against addition

made on account of Bogus purchases which is treated as

undisclosed income of assessee. It was further submitted

that if telescoping of income is not allowed, it will amount to

double addition.

8.2. However, the A.O. was not satisfied with the

arguments advanced by the assessee and made addition of

Rs.12 lakhs to the total income of the assessee.

8.3. In appeal, the Ld. CIT(A) deleted the addition of

Rs.2 lakhs and sustained the addition of Rs.10 lakhs by

observing as under :

“4.6. As far as amount of Rs.2,00,000/- given to ‘Mamaji’ on 07.08.2010 is concerned, it is clearly mentioned

11 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

in the seized paper itself that it was given for purchasing

gold jewellery. The AO has certainly not disputed cash in

hand of Shri Vishnu Kumar Garg (Rs.1,75,446/-) and Smt.

Lata Garg (Rs.1,63,557/-) as on 07.07.2010. It is noted that

Shri Vishnu Kumar Garg has declared income of

Rs.61,93,010/- for AY 2011-12 and Smt. Lata Garg has

declared income of Rs.23,75,500/-. This shows that the

appellant belong to a status family. Therefore, availability of

cash of Rs.2,00,000/- in form of house hold cash,, in case of

an Indian family of such status cannot be taken as

abnormal. I am of a considered opinion that source of the

cash of Rs.2,00,000/- given to ‘Mamaji’ on 07.08.2010 are

explained. As far as ground of telescoping is concerned, I

have noted that the AO, in the assessment orders for AYs

2013-14 and 2014-15, calculated cash availability on

particular dates, by considering transactions which were

outside books but were generating/consuming cash. Such

availability of cash was considered and additions which

were otherwise made out, were not made up to such extent.

This action of the AO is based upon sound logic and is

acceptable. The AR's argument that the cash generated due

to out of books transactions of bogus purchases is to be

12 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

treated at par with other out of books cash

generating/consuming transactions, is in line of the same

logic and hence, cannot be brushed aside. Also, the

argument of the AR that such case generation even in other

cases [Smt. Lata Garg (wife of the appellant), and M/s. RR

Carwell Pvt. Ltd. / M/s. L. V. Rustore Applications Pvt. Ltd.

where the appellant is director] would be available in hands

of the appellant because he is the person controlling affairs

of these entities, cannot be brushed aside as he is the main

decision maker of the group. However, one has to keep in

mind the aspect that if any addition is made under any

section which requires separate treatment, including special

rates, provisions of such section would have over-riding

effect. Secondly, requirement of consumption of cash in

particular case, as per telescoping requirements in that case

would get preference. Therefore, this ground (No.2) of appeal

is partly allowed and as a consequence, the addition to the

extent of Rs.2,00,000/- is deleted and balance addition to

the extent of Rs.10,00,000/- is confirmed, subject to the

above mentioned remarks.”

8.4. Aggrieved with such order of the Ld. CIT(A), the

assessee is in appeal before the Tribunal.

13 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

8.5. The Learned Counsel for the Assessee reiterated

the same arguments as made before the AO and Ld. CIT(A).

He submitted that Mamaji and Mataji were living with the

assessee and assessee used to handover business cash to

them for safe custody, whenever he used to go out of station

for either business purpose or some personal purpose.

Referring to Page-267 of the PB, Learned Counsel for the

Assessee drew the attention of the Bench to the details of

cash in hand as on 07.07.2010 in various proprietorship

firms and companies which are as under :

Sr. Particulars Amount PB No. Pg 1. Blossom Landeal Pvt. Ltd., 8,001.00 268 2. LV Rustore Applications Pvt. 4,51,455.07 269 Ltd., FBD 3. LV Rustore Applications Pvt. 17,392.25 270 Ltd., - DL 4. Vishnu Kumar Garg – 86,520.00 271 Proprietorship Firm 5. Lata Garg – Proprietorship Firm 3,77,827.00 272 6. Vishnu Kumar Garg 1,75,446.59 273 7. Lata Garg 1,63,557.00 274 Total Cash Balance as on 07 Jul 2010 12,80,198.91

8.6. He accordingly submitted that since the amount

of cash available as on 07.07.2010 is Rs.12,80,198/- which

14 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

is more than the amount of Rs.10 lakhs kept with Mamaji

and Mataji, the same should be deleted. In his alternative

contention, he submitted that if any addition on this

account has been made, then the assessee should be

entitled to telescoping against the addition made on account

of Bogus purchases in the hands of the assessee, Smt. Lata

Garg, L V Rustore Applications Pvt. Ltd., and R R Carwell

Pvt. Ltd., as undisclosed income of assessee. He submitted

that unless telescoping is given, it will amount to double

addition. Learned Counsel for the Assessee also relied on

the decision of Hon’ble Delhi High Court in the case of CIT

vs., Sonal Construction [2013] 359 ITR 532 (Del.) and the

decision of Hon’ble Supreme Court in the case of

Anantharan Veerasinghaiah & Co. vs., CIT [1980] 123 ITR

457 (SC).

order of the Ld. CIT(A) and submitted that assessee could

not substantiate with evidence to the satisfaction of the A.O.

or the Ld. CIT(A) regarding the amount paid to Mamaji and

Mataji to the tune of Rs.12 lakhs. She submitted that the

15 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Ld. CIT(A) while deciding the issue has given elaborate

reasoning while sustaining the addition. She accordingly

submitted that the same should be upheld.

the sides, perused the orders of the A.O. and the Ld. CIT(A)

and the paper book filed on behalf of the assessee. We have

also considered the various decisions cited before us. We

find the A.O. in the instant case made an addition of Rs.12

lakhs to the total income of the assessee under section 69A

of the I.T. Act, 1961 on the basis of entries dated

07.07.2010 and 07.08.2010 found as per Page-14 of

Annexure-A1. We find the Ld. CIT(A) deleted the addition of

Rs.2 lakhs and sustained the addition of Rs.10 lakhs the

reasoning of which has already been reproduced in the

preceding paragraph. It is the submission of the Learned

Counsel for the Assessee that since the cash available with

the assessee in various proprietorship concerns and

companies in which he is a Director is Rs.12,80,198/-

which is more than the figure of Rs.12 lakhs, therefore, no

addition should be made. Alternatively, it is the contention

16 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

of the Learned Counsel for the Assessee that addition on

account of bogus purchases, if any, made in the hands of

the assessee and other related concerns should be set-off

against this amount.

10.1. We find some force in the arguments of the

assessee. We find the assessee before the AO had

categorically stated that Mamaji & Mataji were staying with

the assessee and he used to handover business cash to

them for safe custody whenever he used to go out of station

for either business purposes or personal work. The

assessee has also given the availability of cash on

07.07.2010 (the date of entry in the seized document) in the

books of accounts of various proprietorship concerns and

companies in which the assessee is a director at

Rs.12,80,198.91/- which is more than the amount of

Rs.10.00 lakhs. Therefore, merely stating that the

explanation is not acceptable is not justified. Since, the

availabilities of cash of Rs.12.80 lakhs on 07.07.2010 in the

books of accounts of various concerns of the assessee is not

doubted, therefore, we are of the considered opinion that the

17 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Ld. CIT(A) is not justified in sustaining the addition of

Rs.10,00,000/-. The order of the Ld. CIT(A) on this issue is,

therefore, set-aside and the AO is directed to delete the

addition. The ground raised by the assessee is accordingly

allowed.

the Ld. CIT(A) in confirming the addition of Rs.11 lakhs.

during the course of assessment proceedings asked the

assessee to explain the following entries dated 26.04.2010

as mentioned in page-14 of Annexure-A1 found and seized

from the premises of the assessee during the course of

search.

- 16,30,000 cash - 75,000 Registree - 6,05,000 bhaiyaa ne -11,00,000/- Vishnu

12.1. The assessee vide his reply dated 26.12.2018

submitted as under :

18 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

“As regard entries to dt. 26.4.2010 amounting to

Rs.17,05,000/- in pg. 14, it is submitted that the said

entries are estimations and rough calculation for

purchase of property which did not materialised. Papers

pertaining to any such property were not found at the

time of search, the same is verifiable from the statement

of affairs and cash flow statement provided to your

goodself. As regard Rs.14,00,000/- and 6,55,000/- are

also rough notings/estimations, evident from the

calculation mistakes might have done for the above

proposed property. ”

12.2. However, the A.O. was not satisfied with the

arguments advanced by the assessee. He noted that the

amount of Rs.11 lakhs is clearly mentioned against the

name of the assessee. The entry pertains to one 650 Gaz

property for which 16,30,000/- was paid in cash and

Rs.75,000/- in cash was also spent on registries. Out of

total amount of Rs.17,05,000/-, Rs.6,05,000/- is given by

bhaiya whereas remaining Rs.11,00,000/- is given by

Vishnu i.e. the assessee. He therefore was of the opinion

19 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

that the assessee is the owner of such amount of

Rs.11,00,000/-. Since, the assessee could not explain the

source of amount of Rs.11,00,000/- to his satisfaction nor

could he show that these entries are recorded in his books

of account, the A.O. made addition of Rs.11,00,000/- to the

total income of the assessee u/s 69A of the I.T. Act, 1961.

12.3. In appeal, the Ld. CIT(A) upheld the action of the

A.O. on the ground that there is a clear entry in the seized

material to the effect that Shri Vishnu Kumar Garg paid

Rs.11 lakhs. He, however, accepted the arguments of the

Learned Counsel for the Assessee regarding the benefit of

telescoping. The relevant observation of the Ld. CIT(A) at

para 4.7 of his order reads as under:-

“4.7. The third addition is Rs.11,00,000/-. This

addition has been made because there were following

entries on page no.14 of Annexure-A1 seized from

premise no.128, Sec. 16, Faridabad :-

- 16,30,000 cash

20 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

- 75,000 Registree - 6,05,000 bhaiyaa ne -11,00,000/- Vishnu 4.8 Before the AO, the appellant stated that the entries are rough workings s pertained to property relating Shri Mukut Bhaiya, elder brother of the appellant. The / did not accept this reply. The AO noted that Rs. 11,00,000/- were paid by the appella {Shri Vishnu Kumar Garg} and therefore, added this amount. This addition was dispute vide ground No. 3.

4.9 ' During the appellate proceedings, the appellant re-iterated the same stand as was taken before the AO. The appellant also raised alternative contention that the cash was available out of bogus purchases in the hands of Shri Vishnu Kumar Garg, Smt. Lata Garg, M/s. RR Carwell Pvt. Ltd. and M/s. L. V. Rustore Applications Pvt. Ltd. and this addition should be telescoped against the same.

4.10 In my considered opinion, there is a clear entry in the seized material to the effect that Shri Vishnu Kumar Garg paid Rs. 11,00,000/-. Therefore, there is no infirmity in the action of the AO in terms of making addition of Rs. 11,00,000/-. As far as alternative plea of telescoping is concerned, it has been dealt with in para 4.6(supra). The observations/remarks made

21 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

therein are applicable to this addition, mutus mutandi.

4.11 In view of the above discussion, this ground (No. 3) of appeal is dismissed, subject to the above mentioned remarks/observations.

12.4. Aggrieved with such order of the Ld. CIT(A), the

assessee is in appeal before the Tribunal.

12.5. The learned Counsel for the Assessee submitted

that the entries found in the seized document are

estimations and rough calculations for purchase of property

which did not materialize. He submitted that papers

pertaining to any such property were not found at the time

of search. Referring to various decisions, he submitted that

documents found during the course of search must be a

speaking one and no addition can be made on the basis of

dumb documents. Further in the absence of any

corroborative evidence so as to support his inference, no

addition can be made by the A.O. For the above proposition,

Learned Counsel for the Assessee relied on the decision of

the Co-ordinate Bench of the Tribunal in the case of CIT vs.

22 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Praveen Juneja vide ITA.No.57/Del./2011 order dated

14.07.2017 and the decision of Hon’ble Supreme Court in

the case of CBI vs., V.C. Shukla reported in 1998 3 SCC

[Kol.-Tribu.],

352 (Jab.-Tribu.].

(Mum.Tribu).

ITAT)

12.6. He submitted that a perusal of the above

decisions would show that even when entries in the books of

account were held to be authentic and correct, then,

independent evidence was required to prove that entries

were in fact correct. He submitted that in the assessee’s

case the impugned note were merely rough notings in some

loose sheets and absolutely incomplete. Therefore, in the

23 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

absence of any documentary evidence found during the

course of search that assessee has in fact purchased the

property, no addition should be made.

the order of the Ld. CIT(A) and submitted that Ld. CIT(A)

has given justifiable reasons while sustaining the addition.

Therefore, the same should be upheld.

both the sides, perused the orders of the A.O. and the Ld.

CIT(A) and the paper book filed on behalf of the assessee.

We have also considered the various decisions cited before

us by both the sides. We find the A.O. on the basis of seized

document Page-14 of Annexure-A1 made addition of Rs.11

lakhs since the amount of Rs.11 lakhs was appearing

against the name of the assessee. We find the Ld. CIT(A)

sustained the addition on the ground that there is a clear

entry in the seized material to the effect that Shri Vishnu

Kumar Garg paid Rs.11 lakhs. It is the submission of the

Learned Counsel for the Assessee that the entries found in

24 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

documents seized are rough calculations for purchase of

same property which did not materialize and no such

property was found to have been purchased by the assessee

and, therefore, these are dumb documents and, therefore, in

the absence of any corroborative evidence no addition

should be made. It is the alternate contention of the

assessee that benefit of telescoping should be given on

account of additions made for bogus purchases etc.

14.1. We find the assessee had stated categorically

before the AO that these are rough calculation for purchase

of property which did not materialize. It is an admitted fact

that no such document or papers pertaining to purchase of

any property was found either during the course of search

or post search enquiries. Apart from the noting in the

seized papers, the revenue has no other evidence of

purchase of any property by the assessee. No post search

enquiry or investigation was conducted by the AO to find

out if at all any property has been purchased.

25 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

14.2. The Hon’ble Supreme Court in the case of CBI vs

V.C. Shukla (supra) has held that entries in the books of

accounts shall not alone be sufficient evidence to charge

any person with liability. Entries, even if relevant are

corroborative evidence. Independent evidence as to the

trustworthiness of those entries are necessary to fasten the

liability.

14.3. The Kokata Bench of the Tribunal in the case of

ACIT vs Ashok Kumar Poddar (2008) 16 DTR 055(Kol Trib.)

has observed as under:-

"The AO has made the addition only on the presumption

made u/s 132(4A) that the loose sheets belong to the

assessee without verifying the handwriting and without

making any enquiry or bringing any material on record

to substantiate that the assessee had actually earned

the income recorded in those loose sheets. It is a fact

that there was no substantial seizure in the form of any

investment in any movable or immovable property as

reflected in the annexures to the Panchnamas. If the

26 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

assessee had so much of undisclosed income, such

income should have been reflected in some investment

in one form or the other. But, no such investment or

asset was found during the course of search and

therefore the action of the AO in making the addition of the loose sheets without any matching assets found on

search cannot be held to be justified. The action of the

CIT(A) in deleting the addition was wholly justified. ”

14.4. The Jabalpur Bench of the Tribunal in the case of

ACIT vs Satyapal Wasaan (2007) 295 ITR (AT) (Jab Trib.)

has held that a document found during the course of a

search must be a speaking one and without any

second interpretation, must reflect all the details

about the transaction of the assessee in the relevant

assessment year. Any gap in various components as

mentioned in section 4 of the I.T. Act must be filled

up by the AO through investigation and correlation

with other material found either during the course of

the search or on investigation. Unless the document

27 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

is clear and unambiguous, it is only a dumb

document and no charge can be levied on the basis

of a dumb document. We find the Tribunal at para

11 of the order has observed as under:-

“11. For the sake of argument if we accept the submission of the Ld. D.R. that the Ld. CIT (A) erred in accepting fresh evidence then what is left after ignoring those affidavits is the bare document No. 7 with the bare details as referred to above. The moot question now arises is whether any addition can be made on the basis of that document. We have already pointed out above that this document is bereft of necessary details about year of transaction, ownership of transaction, nature of transaction, necessary code for deciphering the figures. It may be possible that a document may not be complete in all respects as the businessman or tax evaders may chose to record minimum details on a document and keep the rest in their memory. It is the duty of the AO to carry out necessary investigations by correlating the impugned document with other documents seized, with regular books of accounts, with record kept by outside agencies, such as banks or financial institution or debtors/ creditors and finally by recording the statements of concerned parties so as to fill up the gaps in confirming the inference arising from the documents for a proper charge of tax. Such correlation is necessary unless the

28 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

document is capable of speaking giving frill details so as to enable any intelligent person to find out the nature of transaction, the year of transaction , the ownership of the transaction and quantum thereof. Even in that situation, it is necessary to give opportunity to the assesses to offer his explanation and investigation be carried out to strengthen the direct inference arising from this document.”

14.5. The Mumbai Bench of the Tribunal in the case of

S.P. Goyal vs DCIT (2002) 82 ITD 0085 (TM) (Mum.) while

deleting the addition of Rs.60 lakhs on the basis of loose

sheets of diary seized during the course of search has held

that loose sheet of paper torn out of a diary could not be

construed as books for the purpose of section 68,addition

could not be made simply on the basis of certain notings on

loose sheets of a diary without any corroborative evidence in

the form of extra cash, jewellery or investment outside the

books.

14.6. Since, in the instant case, no document/paper

relating to the so called property was either found during

the course of search or post search enquiry and no

independent evidence was either found during the course of

search or collected subsequent to the search, therefore, in

29 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the light of the above decisions, the assessee in our opinion

cannot be fastened with the liability. We, therefore, set-aside

the order of the ld. CIT(A) on this issue and direct the AO to

delete the addition. Ground of appeal No.4 is accordingly

allowed.

the Ld. CIT(A) in confirming the addition of Rs.14 lakhs

made by the A.O. under section 69A of the I.T. Act, 1961.

15.1. Facts of the case, in brief, are that during the

course of assessment proceedings, the A.O. asked the

assessee to explain the entries dated 26.04.2010 mentioned

in Page-14 of Annexure-A1 seized from the premises of the

assessee which are as under :

- 14,00,000 - 6,55,000 - 8,45,000 – Balance - 5,00,000 – cash recd – 14/9/10 - 26/4/10 – 7,00,000/- mukut bhaiya (lan) - 3,45,000 balance. 15.2. The assessee explained that the entry relating to

dated 26.04.2010 pertains to property relating to Mukut

Bhaiya who is the elder brother of the assessee. However,

the A.O. was not satisfied with the arguments of the

30 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

assessee and held that the assessee could not explain the

source of Rs.14 lakhs. In absence of any satisfactory

explanation given by the assessee, the A.O. made addition of

the same to the total income of the assessee.

15.3. In appeal, the Ld. CIT(A) sustained the addition

made by the A.O. He, however, accepted the alternate plea

of the assessee for telescoping subject to his observation at

para-4.6 of the order reproduced at para 8.3 of his order.

The relevant observations of the Ld. CIT(A) at para 4.15 of

his order reads as under :

“4.15. In my considered opinion, there is a

clear entry in the seized material to the effect that on

14.09.2010, Rs.5,00,000/- cash was received. Also, the

entry “650000” shows either an amount of Rs.

6,50,000/- were received or adjusted so that balance

became Rs.8,45,000/- (instead of earlier balance of Rs.

14,00,000/-). Therefore, there is no infirmity in the

action of the AO in terms of making addition of

Rs.14,00,000/-. As far as alternative plea of telescoping

31 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

is concerned, As far as alternative plea of telescoping is

concerned, it has been dealt with in para 4.6 (supra).

The observations/remarks made therein are applicable

to this addition, mutus mutandi.

4.16. In view of the above discussion, this ground

(No.4) of appeal is dismissed, subject to the above

mentioned remarks/observations.”

the said entries pertain to property mentioned in Ground

number.3 as the same is on the same date i.e., 26.04.2010

and relate to Mukut Bhaiya, elder brother of the assessee.

Further the entries are estimations and rough calculations

for purchase of the property which did not materialize. He

relied on the decisions already mentioned while arguing

ground of appeal number.4.

the order of the Ld. CIT(A). She submitted that the amount

of Rs.14 lakhs is clearly mentioned against the name of the

assessee in the seized documents. The Ld. CIT(A) has given

32 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

justifiable reasons while sustaining the addition. She

accordingly submitted that the addition made by the A.O.

and sustained by the Ld. CIT(A) should be upheld and the

grounds raised by the assessee should be dismissed.

both the sides, perused the orders of the A.O. and the Ld.

CIT(A) and the paper book filed on behalf of the assessee.

We have also considered the various decisions cited before

us. We find the A.O. in the instant case made addition of

Rs.14 lakhs on the basis of entries found in the seized

documents at page-14 of Annexure-A1 wherein an amount

of Rs.14 lakhs was mentioned. We find the Ld. CIT(A)

sustained the addition on the ground that assessee could

not explain the source of Rs.14 lakhs nor proved that the

entries are recorded in the books of account. It is the

submission of the Learned Counsel for the Assessee that

these are rough calculations and estimations for purchase

of property which did not materialize and, therefore, no

addition should be made in the absence of any corroborative

33 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

evidence. It is his alternative contention that telescoping

benefit should be granted to the assessee.

18.1. We do not find any merit in the arguments of the

Learned Counsel for the Assessee that no property has been

purchased and the entries are mere calculations and

estimations. A perusal of the entries in the seized document,

which has been reproduced at Para 15.1 of this order clearly

mentions Rs.5,00,000/- cash received 14.09.2010. This, in

our opinion, cannot be termed as rough calculation or

estimation. However, a perusal of all the entries shows that

out of Rs.14,00,000/- there is still a balance of

Rs.3,45,000/- left. Therefore, addition, if any, has to be

restricted to Rs.10,55,000/- only (i.e., Rs.14,00,000 -

Rs.3,45,000). We, therefore, modify the order of the Ld.

CIT(A) and direct the A.O. to restrict the addition to

Rs.10,55,000/-.

18.2. So far as argument of Learned Counsel for the

Assessee that telescoping benefit should be given is

concerned, the same is acceptable in view of the decision of

34 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the Hon’ble Delhi High Court in the case of CIT vs. Sonal

Construction reported in [2013] 359 ITR 532 (Del.) where

the Hon’ble High court has accepted the theory of benefit of

telescoping. We, therefore, direct the A.O. to allow the

benefit of telescoping and deduct the addition of

Rs.10,55,000/- from profits from bogus purchases etc.

added in the hands of the assessee and his proprietorship

concerns and in the case of the 02 companies namely LV

Rustore Applications (P) Ltd., and RR Carwell Private Ltd.,

where he is a Director and is the controlling person. The

A.O. shall do the necessary calculation and the ground

raised by the assessee on this issue is accordingly partly

allowed in terms indicated above.

assessee has challenged the order of the Ld. CIT(A) in

confirming the addition of Rs.11,25,000/- made by the A.O.

course of search proceedings at premises 17/6, Hanspal

Industrial Complex, Mathura Road, Faridabad, Pages 125

35 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

and 126 of Annexure-A6 were seized. It was found that

assessee has given loan of Rs.50 lakhs in January, 2009

and Rs.25 lakhs in June, 2009 @ 1.5% interest. The A.O,

therefore, asked the assessee to explain the source of the

transaction and to explain as to why interest earned during

the year on the above said loan should not be added back to

the total income of the assessee.

20.1. The assessee filed reply which has been

reproduced by the A.O. and which reads as under :

“Actually, assessee had given Rs.50 Lakh in cash in

Jan 2009 & Rs.25 Lakh in June 2009 @ 1.5% p.m. to

Abhay Salwan & group when the money was given as it

was desired by Abhay Salwan as an interest bearing

loan. The page 125 & 126 of the seized Annexure A-5

(Pg. 1-2) contain details of Loan. When Abhay Salwan

did not make any payment of interest to assessee for

period w.e.f 01.01.2009 to 11.10.2010, then assessee

demanded from Abhay Salwan to recover the principal

amount & interest amount. After that Abhay Salwan

36 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

made repayment of Rs.25 Lakh on 11.10.2010 which

has been adjusted against principal of Rs.75 Lakh. The

same is mentioned on page 126 of the seized Annexure

A-5. However, the interest for the above said period &

balance Rs.50 Lakh (Principal) was still recoverable

from Abhay Salwan, the same is mentioned on page

125 of the seized Annexure A-5. Similarly, Interest

amounting Rs.6 Lakh on principal loan Rs.25 Lakh was

still recoverable as mentioned on page 125 of the seized

Annexure A-5.”

20.2. However, the A.O. was not satisfied with the

explanation given by the assessee and held that the

documents at Page Nos.125 and 126 of Annexure-A10

clearly mentions that assessee had received interest @ 1.5%

during the year under consideration. The Assessee failed to

prove that it had not received any interest during the year

on the loan given in January 2009 of Rs.50 lakhs and June

2009 of Rs.25 lakhs @ 1.5% per month. The A.O, therefore,

calculated the interest on Rs.75 lakhs at Rs.11,25,000/-

37 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

and added the same to the total income of the assessee

treating the same as income from other sources.

20.3. In appeal, the Ld. CIT(A) upheld the action of the

A.O. on the ground that the plea of the assessee that

interest was not received cannot be accepted in the absence

of any supporting evidence.

20.4. Aggrieved with such order of the Ld. CIT(A), the

assessee is in appeal before the Tribunal.

Pages 95 and 96 of the paper book submitted that the

seized documents Pages 125 & 126 of Annexure A-5

contain details of Loan. He submitted that the A.O.

presumed that the said documents contain details of loan

amounting Rs.75 Lakh given to Shri Rattan Prakash Mishra

in the year 2009 instead of Shri Abhay Salwan merely on

the basis that the said document contains signature of Shri

Rattan Prakash Mishra. He submitted that the A.O.

overlooked that the seized document Page 125 contains

signature of 4 persons (PB Page 95) namely the assessee,

38 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Abhay Salwan, Rattan Parkash Mishra and Dinesh Gupta

wherein Rattan Parkash Mishra and Dinesh Gupta had

signed as witnesses & assessee had signed as payer and

Abhay Salwan had signed as payee. The hand writing expert

report is at PB Pages 239-259 who confirmed that signature

of Abhay Salwan on various documents and initial signature

of Abhay Salwan on Page 126 of Annexure A5 are similar.

Further, during assessment proceedings under section

153A, statement of Sh. Rattan Prakash Mishra was

recorded on dt. 16.11.2018 (PB Pages 275-276) wherein no

question regarding loan taken by him from assessee has

been asked. This shows that AO with preconceived mind

has considered that the said loan was given to Rattan

Prakash Mishra. So, the presumption of loan to Rattan

Prakash Mishra is wrong. He submitted that rule of

presumption is that, once there is a doubtful fact, then, that

may be inferred from certain other proven facts. While

inferring the existence of a fact from another set of proved

facts, the Court exercises the process of reasoning and

reaches to a logical conclusion so as to arrive at the most

39 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

probable position pursuant to Section 114 of the Indian

Evidence Act, 1872. He submitted that in the present case

the Department is settling the whole case on presumption

on presumption and that too on circumstances which are a

very weak recourse of one of the form of secondary evidence.

21.1. The Learned Counsel for the Assessee further

submitted that the presumption of A.O. regarding interest

received on loan amounting Rs.11,25,000/- is wrong

because he overlooked the written pleadings of assessee dt.

30.11.2018 (PB Pages 68-78) and dt. 19.12.2018 (PB Pages

84-94) that assessee had given loan Rs. 50 Lakh in cash in

Jan 2009 and Rs. 25 Lakh in June 2009 @ 1.5% p.m. to

Abhay Salwan and group. When the money was given, it

was desired by Abhay Salwan as an interest bearing loan.

When Abhay Salwan did not make any payment of interest

to assessee for period w.e.f 01.01.2009 to 11.10.2010, then

the assessee demanded the money from Abhay Salwan to

recover the principal amount & interest amount. After that

Abhay Salwan made repayment of Rs.25 Lakh on dt.

11.10.2010 which has been adjusted against principal of

40 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Rs. 75 Lakh. The same is mentioned on pg.126 of the seized

Annexure A-5 (supra). However, the interest for the above

said period and balance Rs.50 Lakh (Principal) was still

recoverable from Abhay Salwan and the same is mentioned

on Page-125 of the seized Annexure A-5. Similarly, Interest

amounting Rs.6 Lakh on principal loan Rs.25 Lakh was still

recoverable as mentioned on Page-125 of the seized

Annexure A-5. Thus, it is a proven fact that assessee has

not received any interest on loan from Abhay Salwan during

that year. AO overlooked the documents Pages 125 & 126

(supra) and submissions of assessee and merely on

presumption added interest amount Rs.11,25,000/- during

the year.

21.2. Learned Counsel for the Assessee submitted that

Shri Rattan Prakash Mishra, in his proceedings under

section 153C has denied to have any transaction with the

assessee. He referred to the copy of assessment orders

passed under section 153A/153C for the A.Ys. 2011-12 and

2012-13, copies of which, are placed at Pages 16-24 of

41 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

second synopsis dated 03.08.2021 and drew the attention of

the Bench to the submission before the A.O. He submitted

that when both assessee and Shri Rattan Prakash Mishra

are denying of any transaction and there is no other

corroborative evidence or material before the A.O, the

addition on account of interest received is not justified.

21.3. Referring to the decision of Hon’ble Delhi High

Court in the case of CIT vs., Ved Prakash Choudhary

reported in 305 ITR 245 he submitted that when both the

parties are denying to have entered into the transaction,

then no addition could be made, in absence of corroborative

evidence as the presumption under section 132(4A) of the

I.T. Act, 1961 is a rebuttal one.

21.4. The Learned Counsel for the Assessee submitted

that the search party has not found any unrecorded assets

or cash which can be said to have been received in the form

of interest. So, interest on loan is not taxable so as to arrive

at a real income and accrual basis cannot be a justifying

factor and the commercial and business realties of the

assessee, should be considered.

42 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

21.5. Learned Counsel for the Assessee submitted that

the interest income has to be recognized in the books of

accounts only to the extent of actual collection. Referring to

the Accounting Standard 9 of ICAI, he submitted that

according to these guidelines when uncertainties exist

regarding the determination of the amount or its

collectability, the revenue shall not be treated as accrued,

hence shall not be recognized until collection is made. The

recognition of revenue on accrual basis presupposes the

satisfaction of two conditions – i.e., (i) The revenue is

measurable and (ii) The revenue is collectable with

certainty. In support of the above proposition, the Learned

Counsel for the Assessee relied upon the following

decisions:

Shahjahan Properties Pvt. Ltd., vide

ITA.No.742/Del./2020 dated 20.08.2020 for the

A.Y. 2016-17. 2. CIT vs., Goyal M.G. Gases (P) Ltd., 303 ITR 159

(Del.HC).

43 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad. 3. CIT vs., Godhra Electricity Co. 225 ITR 746 (SC). 4. Andhra Bank vs., CIT 225 ITR 447 (SC). 5. CIT vs., Excel Industries Ltd., & Others 358 ITR 295

(SC).

21.6. The Learned Counsel for the Assessee

further submitted that Shri Abhay Salwan to whom loan

was given on interest is a proclaimed offender and

absconding and the matter is subjudice before Hon'ble

Allahabad High Court in pursuant to order dt.20.07.2015

[PB Page-117 & Civil Misc. Writ Petition filed before Hon'ble

Allahabad High Court is at PB Pages 198-238]. Resultantly,

the ambit of re-convertibility of statutory levies are like a

general lien of the state on all the belongings (moveable and

immoveable assets) of the litigant whereby the assessee

Vishnu Garg is an unsecured creditor. However an

unsecured creditor with a unilaterally signed document

bereft of bilateral and consensus-ad-idem is not an

enforceable document in Law perse. Simultaneously and

collaterally the state (statutory bodies for statutory levy)

don't have any document of whatsoever kind to recover the

44 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

amounts from said Shri Abhay Salwan and in spite of that

they are a secure creditor in accordance with the principle

of law laid down in the case of Vijay Bank vs., CIT (2010)

323 ITR 166 (SC).

21.7. He further submitted that in the Court of Saurab

Gusain, Civil Judge (Sr. Div), Faridabad in the case of Vijay

Sachdeva (Plaintiff) vs., Abhay Salwan (Defendant), vide

order dt. 22.09.2015 (PB Pages 112-197) in suit for specific

performance of contract where the issue is that the

defendant Abhay Salwan agreed to sell the property to the

plaintiff for a total sale consideration of Rs.50 Lakhs vide

sale agreement dt.31.12.2012. On same day defendant

received a sum of Rs.45 Lakh as part payment and also

handed over the original sale deed dt.05.11.2009 to the

plaintiff. The last date for execution and registration of sale

deed was fixed on or before 30.06.2013. A separate receipt

was also executed by defendant in presence of witnesses. It

has been further claimed that since defendant was in need

of money, he requested the plaintiff to make balance sale

consideration of Rs.5 Lakh, which was also paid by Plaintiff

45 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

vide separate receipt. It was claimed that thereafter

although plaintiff always remained ready and willing to

perform the part of the contract, but, the defendant evaded

on performing his part of contract and did not execute the

sale deed in his favour. Hence this suit.

21.8. The defendant did not present before court and

ex-parte order was passed on 22.09.2015. Thus, Abhay

Salwan has not only defaulted to the assessee, but, was

also a regular defaulter since past as mentioned in above

case where he has received Rs.50 Lakh in December 2012.

Even the plaintiff Vijay Sachdeva got decree in his favour

from Civil Judge (Senior Division), Faridabad, still the said

plaintiff could not recover his money and the same is open

for verification. Further Judicial Magistrate, Faridabad in

various cases held that Abhay Salwan is not traceable and

is a proclaimed person [PB Pages 318-409 and at Page-327]

wherein it is held as under :-

"Intimation to this regard be sent to SHO concerned &

PO Staff. File after doing the needful be consigned to the

46 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

record room with a red ink note on the index of the file

that the accused Brij Bhushan Tyagi & Abhay Salzoan

have been declared proclaimed persons in this case and

proceeding against above named accused will be

initiated as and when accused will be arrested and

appeared before the court and till then file be not

destroyed."

21.9. He accordingly submitted that Shri Abhay

Salwan is not traceable, is absconding, is a proclaimed

person and has not repaid any of his debts/liabilities. The

said fact is verifiable from Police stations, Banks and

Various Courts of Faridabad that the said person is

defaulter of many persons & not traceable since year 2014.

He accordingly submitted that when Shri Abhay Salwan is a

defaulter and not traceable to even Police, how it can be

said that assessee has received interest from such person.

So, it is only AO's presumption that assessee has recovered

such huge interest amount from Shri Abhay Salwan even

though no document was found during search relating to

recovery of interest and even overlooking the order of

47 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Hon'ble Allahabad High Court, Civil Court and Judicial

Magistrate wherein Shri Abhay Salwan has been declared

as a proclaimed person.

21.10. Alternatively and without prejudice to

above, the Learned Counsel for the Assessee submitted that

if any addition on this account is made, then, the assessee

should be entitled to telescoping against addition made of

Bogus purchases in the hand of assessee and two

companies namely LV Rustore Applications Pvt. Ltd. and R

R Carwell Pvt. Ltd. where he is the director and the

controlling person as undisclosed income of assessee. He

submitted that if telescoping of income is not given than

there will be double addition in as much as both the

undisclosed income and the investment made out of such

income are both brought to tax which was contrary to the

basic principles of assessment. Therefore, undisclosed

income and the undisclosed investment are to be set off

against each other, thus giving benefit of telescoping to the

assessee. For the above proposition, the Learned Counsel

for the Assessee relied upon the following Judgments :-

48 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

(i) CIT vs., Sonal Construction [2013] 359 ITR 532

(Del.) (ii) Anantharan Veerasinghaiah & Co. vs., CIT [1980]

123 ITR 457 (SC)

the orders of the A.O. and the Ld. CIT(A). She submitted

that when the seized documents clearly mention the

interest @ 1.5% per month, therefore, in the absence of any

evidence on record to show that assessee has not received

the interest, the order of the Ld. CIT(A) be upheld.

both the sides, perused the orders of the A.O. and the Ld.

CIT(A) and the paper book filed on behalf of the assessee.

We have also considered the various decisions cited before

us. We find the A.O. in the instant case made addition of

Rs.11,25,000/- being interest @ 1.5% on the loan of Rs.50

lakhs in January, 2009 and Rs.25 lakhs in June, 2009

given to Shri Abhay Salwan. The submission of the assessee

that he has not received any interest on loan and only an

49 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

amount of Rs.25 lakhs was received towards the principal

amount was not accepted by the A.O. in the absence of any

credible evidence to his satisfaction that assessee has not

received any interest. According to the A.O. as per the

provisions of Section 132 (4A) of the I.T. act, 1961 it is

presumed that any content or document found during the

course of search operation are true. It is also the

observation of the A.O. that documents at Page Nos.125 and

126 of Annexure-A10 clearly mention that assessee had

received interest @ 1.5% during the year under

consideration and the assessee failed to prove that he had

not received any interest during the year. It is the

submission of the Learned Counsel for the Assessee that

A.O. overlooked the seized documents at Page number.125

which contains signature of 04 persons namely the

assessee, Abhay Salwan, Rattan Prakash Mishra and

Dinesh Gupta, where Mr. Dinesh Gupta and Mr. Rattan

Prakash Mishra have signed as witnesses, the assessee has

signed as Payer and Abhay Salwan has signed as Payee. It

is also his contention that a perusal of the seized

50 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

documents at page no.125 of Annexure-A5 clearly shows

that interest for the above said period and balance of Rs.50

lakhs was still recoverable from Abhay Salwan. Therefore,

once the assessee has proved that he has not received any

interest from Abhay Salwan during the year, no addition on

account of such interest should be made.

23.1. We find some force in the above arguments of the

Learned Counsel for the Assessee. A perusal of the seized

document at Page Number-125 of Annexure-A5 clearly

mentions the following :

“Principal Amount Rs.75,00,000

Paid 11.10.2010 Rs.25,00,000/-

Balance up to 31.12.2010 Rs.50,00,000/-

[Interest @ 1.5% p.m.]”

23.2. From the above it cannot be deciphered that

assessee has received any interest on the amount of Rs.75

lakhs given to Shri Abhay Salwan. We find merit in the

arguments of the Learned Counsel for the Assessee that the

lower authorities have overlooked the submissions and

51 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

added the interest merely on the basis of presumption and

surmises. We find the Learned Counsel for the Assessee

through various documents/Court order has established

that Shri Abhay Salwan is absconding, is a proclaimed

person and is a defaulter. Therefore, in absence of any

evidence available with the Revenue, it cannot be said that

the assessee has received the interest of Rs.11.25 lakhs

from Shri Abhay Salwan during the year especially when

the seized document does not categorically mention that the

assessee has in fact received the interest.

23.3. We find the Coordinate Bench in the case of Red

Fort Shahjahan Properties Pvt. Ltd., (supra) vide

ITA.No.742/Del./2020 dated 20.08.2020 has held as under:

“16. In our considered opinion where the

principle amount of loan/advance is doubtful of

recovery interest thereon cannot be accrued and

added to income even under the mercantile system of

accounting. Our view is fortified from the decision of

the Hon'ble Madras High Court in the case of CIT v.

Motor Credit Co. P. Ltd.: 127 ITR 572.

52 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the judicial decision discussed hereinabove, we are of

the considered view that on given set of facts there is no

accrual of interest even though the assessee's following

the mercantile system of accounting and the charge of

notional interest by the AO/ CIT (A) is bad on facts and

deserves to be deleted. We direct accordingly.”

23.4. We find the Hon’ble Delhi High Court in the case

of CIT vs Goyal M G Gases P Ltd. 303 ITR 159 has held that

when the realization of even the principal amount of loan

was in jeopardy, there could not be any accrual of income

by way of interest, even as per the mercantile system of

accounting.

23.5. We find the Hon’ble Supreme Court in the case of

CIT vs. Godhra Electricity Co. (1997) 225 ITR 746 (SC) has

held that if income does not result at all, there cannot be

53 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

any tax and that if an income has not materialized, then

merely an entry made about a hypothetical income by

following book keeping methods, the liability to tax cannot

be attracted.

23.6. We find the Hon’ble Supreme Court in the case of

Andhra Bank vs., CIT (1997) 225 ITR 447 (SC) has held that

there cannot be a tax if no income resulted, despite the

entry in the book keeping. The case deals with s. 148.

Assessee changed method of accounting from A.Y. 1960

onwards. But during A.Y. 1963-64, the A.O. objected the

change and reopened assessments for A.Y. 1960 onwards.

The Hon’ble Apex court held that this amounts to change of

opinion and re-assessment is not valid.

23.7. We find the Hon’ble Supreme Court in the case of

CIT vs. Excel Industries Ltd. & Ors. (2013) 358 ITR 295 (SC)

has held that going by the Accounting Standard though the

revenue is collectible by certainty, the assessee in the

present case, in fact, had not received any interest and

hence, interest in question remained only notional interest.

54 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

23.8. In view of the above discussion, we set aside the

order of the Ld. CIT(A) on this issue and direct the AO to

delete the addition. The grounds raised by the assessee are

allowed.

challenged the order of the Ld. CIT(A) in confirming the

addition of Rs.40 lakhs made by the A.O. as unexplained

money.

course of search proceedings at premises 17/6, Hanspal

Industrial Complex, Mathura Road, Faridabad, Page Nos.67

to 71 of Annexure-A5 Hanspal Industrial Complex were

seized. These pages are letters issued by R.A. Financial

Services to Mr. Rattan Prakash Mishra, President Om

Shanti Educational Society. As per this letter, Sh. Vishnu

Garg has received Rs.40,00,000/- (Rs.18,00,000/- received

on 19.10.2010 and Rs.22,00,000/- received on 30.10.2010)

from R. A. Educational Trust. The A.O, therefore, asked the

assessee to explain the said amount and his interest in

55 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Omshanti Educational Society and the reasons as to why

the said amount was paid to assessee.

25.1. The reply of the assessee vide letter dated

30.11.2018 has been reproduced by the A.O. which reads

as under :

“As regard Pg. No. 67 & 71 of Annexure 5(Pg. 155-159)

seized from 17/6, Hanspal Industrial Complex, Mathura

Road, Faridabad, letters issued by R A Financial

Services to Rattan Prakash Mishra, President Om

Shanti Educational Society. As per these letters,

assessee received cash of Rs.40,00,000/- on behalf of

Om Shanti Educational Society from R.A. Financial

Services. In this regard, it is submitted that assessee

has received cash on behalf of Om Shanti Educational

Society (as authorised person) which is specifically

mentioned in Letter at Pg. 155. Moreover, the impugned

agreement mentioned in this letter was between RA

financial services and Om Shanti Education Society &

assessee was not related to either with Om Shanti

56 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Education Society or R.A. Financial services. His role

was only that of a witness to the transactions and he

had not received any amount from any of the involved

parties. It is further stated that he has neither any

interest in Om Shanti Education Society nor do have

any shareholding or investment in the said society.”

25.2. However, the A.O. was not satisfied with the

arguments advanced by the assessee and made addition of

Rs.40 lakhs on the ground that assessee did not furnish

any evidence in respect of its claim that this money was

actually further given to Omshanti Educational Society.

According to him, merely submitting that the amount was

received on behalf of the Society without furnishing any

evidence of giving it further to the Society cannot be

accepted. He accordingly made addition of Rs.40 lakhs to

the total income of the assessee under section 69A of the

I.T. Act, 1961.

25.3. In appeal, the Ld. CIT(A) upheld the action of the

A.O. by observing as under :

57 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

“5.4. It is not in dispute that the cash was received

by the appellant. It is onus of the appellant to prove that

the cash was received as an agent of someone else

(M/s. Omshanti Educational Society). The appellant

failed to discharge this onus before the A.O. as well as

before the undersigned. I find no infirmity in action of

the A.O. in making this addition. Therefore, this ground

(No.6) is dismissed.”

25.4. Aggrieved with such order of the Ld. CIT(A) the

assessee is in appeal before the Tribunal.

challenged the order of the Ld. CIT(A) in confirming the

addition of Rs.40 lakhs made by the A.O. He submitted that

the documents Page Nos. 67 to 71 of Annexure 5 (PB-1

Pages 79-83) seized from 17/6, Hanspal Industrial

Complex, Mathura Road, Faridabad, are letters issued by

RA Financial Services to Rattan Prakash Mishra, President

Om Shanti Educational Society. As per these letters

58 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

assessee received cash of Rs.40,00,000/- (40 Lakh) on

behalf of Om Shanti Educational Society from R.A.

Financial Services as Authorized Person which is

specifically mentioned in Letter at PB Pages 81-82.

Moreover, the impugned agreement mentioned in this letter

was between RA financial services and Om Shanti

Educational Society and assessee was not related to either

with Om Shanti Educational Society or R. A. Financial

Services. He submitted that assessee's role was only that of

a witness to the transactions and he had not received any

amount from any of the involved parties. During

assessment proceedings under section 153A, statement of

Sh. Rattan Prakash Mishra was recorded on dt. 16.11.2018

(PB Pg. 275-276) wherein specific question (Q-13) was

asked relating to above said letter and money received by

assessee amounting Rs.40 Lakh from R A Educational Trust

on behalf of Om Shanti Education Trust and in reply after

looking the letter (supra), he has recalled about Ms. Ashima

Salwan he had stated as under :-

"Presently I can't recall about such information and I am

59 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

unable to access books of accounts of Om Shanti

Education Society now. After looking these pages I

recall that Ms. AshimaSalwan is the wife of Sh.

AbhaySalwan who is the controlling authority ofRA

Financial services & RA Education Trust."

26.1. Thus from above submissions, letter and

statement of Rattan Prakash Mishra, it is clear that the said

sum of Rs.40 Lakh belongs to Om Shanti Educational

Society. The A.O. without making any further enquiry from

Om Shanti Educational Society or Sh. Rattan Prakash

Mishra merely on surmises and conjectures made the

addition of Rs.40 lakh in the hands of the assessee.

26.2. The Learned Counsel for the Assessee in his

alternate contention submitted that if any addition on this

account is to be made, then assessee is entitled to

telescoping against addition made on account of bogus

purchases in the hands of assessee, L V Rustore

Applications Pvt. Ltd. & R R Carwell Pvt. Ltd. as undisclosed

income of assessee. He submitted that if telescoping of

60 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

income is not given, then there will be double addition in as

much as both the undisclosed income and the investment

made out of such income are both brought to tax which is

contrary to the basic principles of assessment. Therefore,

undisclosed income and the undisclosed investment are to

be set-off against each other, thus, giving benefit of

telescoping to the assessee. In support of this contention,

the Learned Counsel for the Assessee relied upon the

following decisions :

(1) CIT vs Sonal Construction (2013) 359 ITR 0532

(Del) (supra).

(2) AnantharanVeerasinghaiah & Co. Vs CIT (1980)

123 ITR 0457 (SC) (supra).

the order of the A.O. She submitted that assessee could not

substantiate with evidence that it had received money on

behalf of Omshanti Educational Society from R.A. Financial

Services and handed over the same to Omshanti

Educational Society. She submitted that it is highly

61 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

improbable that R.A. Financial Services instead of giving the

money directly to Omshanti Educational Society has given

the money to the assessee to handover the same to

Omshanti Educational Society. She accordingly submitted

that the order of the Ld. CIT(A) should be upheld and the

ground raised by the assessee on this issue should be

dismissed.

both the sides, perused the orders of the A.O. and the Ld.

CIT(A) and the paper book filed on behalf of the assessee.

We have also considered the various decisions cited before

us. We find the A.O. in the instant case made addition of

Rs.40 lakhs on the basis of the seized documents Page

Nos.67 to 71 of Annexure-A5 on the ground that as per the

letter issued by R.A. Financial Services to Mr. Rattan

Prakash Mishra, President Omshanti Educational Society,

Mr. Vishnu Garg has received Rs.40 lakhs from R.A.

Educational Trust on various dates i.e., Rs.18 lakhs on

19.10.2010 and Rs.22 lakhs on 30.10.2010. The

submission of the assessee that he has received the cash of

62 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Rs.40 lakhs on behalf of Omshanti Educational Society

from R.A. Financial Services and were subsequently passed-

on to Omshanti Educational Society was rejected by the

A.O. on the ground that the assessee failed to furnish any

evidence that this money was actually further given to

Omshanti Educational Society. It is the submission of the

Learned Counsel for the Assessee that there is an

agreement between R.A. Financial Services and Omshanti

Educational Society and assessee was not related to either

of them and his role was that of a witness to the

transaction. It is also his submission that during the course

of assessment proceedings under sections 153A/153C of

the I.T. Act, 1961, the statement of Shri Rattan Prakash

Mishra was recorded on 16.11.2018 wherein specific query

was asked to him. The A.O. without any further enquiry

from Omshanti Educational Society or Shri Rattan Prakash

Mishra made the addition which is nothing but surmises

and conjectures.

28.1. We find some force in the above arguments of the

Learned Counsel for the Assessee. A perusal of the seized

63 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

documents clearly and categorically show that the amount

of Rs.40 lakhs was paid by R.A. Financial Services to Shri

Rattan Prakash Mishra, President of Omshanti Educational

Society through Shri Vishnu Garg. We find from PDF Page-

81 (PB Pages 172 and 173) that R.A. Financial Services vide

letter dated 17.08.2011 addressed to Shri Rattan Prakash

Mishra, President Omshanti Educational Society has

written as under :

“R.A. FINANCIAL SERVICES

SOLUTION TO FINANCIAL MATTERS

F-13, 2nd Floor, Sector-10, Faridabad Ph.9971797798

Email : abhaysalwan@gmail.com

17th August, 2011 To Mr. Rattan Prakash Mishra, President, Om Shanti Educational Society, H.No.1365, Sector-17, Faridabad.

Sub: Re-Reply to your Letter Dated 09.08.2011 in context

with my Letter Dated 5.08.2011.

64 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Dear Mr. Mishra,

2011 regarding the re reminders and reminder

letters for the MOU agreement dated 6th Sep 2010

between RPS Education Foundation, Om Shanti

Educational Society and R.A. Financial Services. At

the outset, it is stated that each and every

allegation of breach and or non performance of-any

of the terms and conditions of MOU dated

06.09.2010 are wrong, false and have been totally

concocted.

dated 06.09.2010, R.A. Financial Services was

liable to pay 1,73,32,674/- (Rupees; One Crore

Seventy Three Lacs Thirty Two Thousand Six

Hundred and Seventy Four only) to party of the

first and second part which stands already paid,

The details of which are as under :

65 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

“A sum of Rs.1,35,00,000 (Rs.One Crore Thirty

Five Lacs only) has been paid till 16.10.2010 as

admitted by you in your letter under reply. The

balance amount of Rs.40,00,000 (Rs.Fourty Lacs

only) has been paid by R.A. Financial Services

through its authorized signatory Mr. Abhay

Salwan to Mr. Vishnu Garg, s/o. Sh. B.D. Garg,

member Omshanti Educational Society as per your

instructions and to your knowledge because you

have to pay the aforesaid amount to Mr. Vishnu

Garg. The details of payment are given below :

19.10.2010 – A sum of Rs.18,00,000 (Rs.Eighteen Lacs only) was paid.

30.10.2010 – A sum of Rs.22,00,000 (Rs.Twenty Two Lacs only) was paid.

payment terms of the said agreement, the

balance payment having already been paid to

you on 30.10.2010 by R.A. Financial Services

66 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the land of RPS Education. Foundation has

been transferred to Omshanti Educational

Society vide Sale Deed No.149 dated

06.04.2011. It is further stated that after

having received the amount of Rs.1,35,00,000

(Rs. One Crore Thirty. Five lacs only) the

undersigned and five of his associates were

inducted as members of the Governing body of

Omshanti Educational Society which fact is to

your knowledge. The undersigned and five of

his associates were inducted as members with

all powers to deal with, the properties and

management of Omshanti Educational Society.

It is further to bring to your notice that the

undersigned was .appointed as the Treasurer

of the society and Ms. Aashima Salwan as the

Vice President of the society. The aforesaid

members were inducted on 12.10.2010. The

67 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

intimation of the induction of the said members

was duly communicated to the District

Registrar, Firms and Societies, Faridabad vide

letter dated 18.10.2010 addressed to him by

your goodself.

resolution was passed on in the name of

Shyam College of Education which was run by

Omshanti Educational Society inter alia

authorising the undersigned to operate the

account of Shyam College of Education run by

Omshanti Educational Society in Syndicate

Bank, Chawla Colony, Ballabgarh.

that any amount is outstanding towards the

undersigned or R.A. Financial Services. You

have no right to allege or say that the MOU

68 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

dated 06.09.2010 has in any way been

violated by the undersigned thereby giving

you any scope to treat the MOU as cancelled

or rescinded. In these premises each and

every allegation and statement of facts

contained in the letter under reply is totally

false and the symbol of falsity stated therein

is to your knowledge.

factum of receipt of the amount of Rs.40,00,000 (Rs.

Forty Lacs only) which has, been paid by the

undersigned on behalf of R.A. Financial Services to

your authorised arid nominated person.

withdraw your letter dated and refrain from shuttle

cocking such type of obnoxious communications in

future. Needless to add that you have no right to

either resile from the terms and conditions of the

69 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

MOU dated 06.09.2010 or treat it as cancelled on your fabricated grounds.

For R.A. Financial Services Sd/- Authorised Signatory

cc. Mr. Vishnu Garg, H.No.128, Sector-16, Faridabd. Mr. Dinesh Gupta, H.No.326, Sector-10, Faridabad.”

28.2. Similarly, R.A. Financial Services vide

letter dated 29.08.2011 addressed to Shri Rattan

Prakash Mishra, President Omshanti Educational

Society has written as under [PB Pages 170-171

and PDF Pages 79-80] :

“R.A. FINANCIAL SERVICES SOLUTION TO FINANCIAL MATTERS F-13, 2nd Floor, Sector-10, Faridabad Ph.9971797798 Email : abhaysalwan@gmail.com

29th August, 2011 To Mr. Rattan Prakash Mishra, President, Om Shanti Educational Society,

70 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

H.No.1365, Sector-17, Faridabad.

Dear Mr. Mishra,

Please refer to your communication dated 23,08.2011.

After going through the contents and without adverting to

para-wise and point-wise reply, I wish to Inform you as

under :

At the outset, it is highly surprising and painful to say

that despite having received- the entire amount in terms of

the MOU dated 06.09.2010, you still have the audacity to

deny the receipt of payment, although it is in your active and

full knowledge. To steer clear the misgivings, it is once again

brought to-your notice in order to straighten the records that

admittedly a sum of Rs.1,35,00,000 has been received by

you. The remaining amount of Rs.40,00,000 stands paid to

you by the, undersigned and the payment has been received

by you through Mr. Vishnu Garg, your authorised person..

The details of payment have been given in the last letter

dated 17.08.2011. You can cross check and co ordinate with

your own representative..

71 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Your bid to cancel the MOU is obviously mischievous

and malafide attempt. It is beyond anybody's comprehension

as to how and under what circumstances you can wriggle out

of the aforementioned MOU when its terms and conditions

have been, adhered to by the undersigned in its entirety.

Regarding your assertion that attempts are being made

to allegedly occupy or possess the land and building at

Panhera Khurd, Ballabgarh by the undersigned and about

the alleged trespass, it is yet another cock and bull story on

your part. You are unnecessary trying to put curtain on your

admitted stand. It is again emphasized that the land and

building at the said site is in possession of R.A. Educational

Trust which is in in lawful possession under a valid

arrangement. Any attempt, to dislodge the working of R.A.

Educational Tryst would on the other hand be an act of

trespass and or interference in the legal and peaceful

possession of the said R.A. Educational Trust. Rest of the

contentions in your reply are nothing but old rhymes

enchanted earlier in your communication under reply which

have since been appropriately dealt with and replied.

72 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

It is needless to emphasize that R.A. Educational Trust

is running Savitri Polytechnic For Women in the premises

which is too well known to you and such activity is going on

since January 2011, Coincidently the said institution was

inaugurated by your goodself and the members of your

family. It is therefore too late in the day for you to resile from

the factual matrix.

For R.A. Financial Services Sd/- Authorised Signatory

cc. Mr. Vishnu Garg, H.No.128, Sector-16, Faridabd. Mr. Dinesh Gupta, H.No.326, Sector-10, Faridabad.”

28.3. Since these letters were found and seized during

the course of search and the letters clearly and categorically

mention that an amount of Rs.40 lakhs was given by R.A.

Financial Services to Shri Rattan Prakash Mishra, President

Omshanti Educational Society and the assessee was only

an intermediary, therefore, adding the same to the income

of the assessee, in our opinion, is not justified. Accordingly,

the order of the Ld. CIT(A) on this issue is set aside and the

73 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

ground of appeal number 8 raised by the assessee is

allowed.

telescoping which has already been adjudicated while

deciding the ground No.5 at para 18.2 of this order and,

therefore, no separate adjudication is required.

Assessee is partly allowed.

ITA.No.9148/Del./2019 – A.Y. 2012-13 :

conclusion of assessment proceedings u/s 153A at

an amount of Rs.79,47,790/- is being challenged on

facts and law.

law for making additions in assessment proceedings

u/s 153A when there is no incriminating material/

74 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

document found during the course of search u/ s 132

of the Act for the impugned year.

law for making an addition of Rs.4,50,000/- (@ 1.5%

of Rs.50,00,000/- given to Mishra ji) which is

unwarranted action by assuming the interest accrued

of 1.5% which is a hypothetical income and against

the principle of law (Godhara Electricity Co. Ltd., vs.,

CIT (1997) 225 ITR 746 (SC) whereas per assessee

said loan of Rs.50,00,000/- is given to Abhay

Salwan & not to Mishraji.

law for making an addition of Rs.4,50,000/- (@ 3% of

Rs.50,00,000/- given to Abhay Salwan) which is

unwarranted action by assuming the interest accrued

@ 3% which is a hypothetical income and against the

principle of law (Godhara Electricity Co. Ltd., vs., CIT

(1997) 225 ITR 746 (SC).

law for making an addition of Rs.9,00,000/-, wherein

75 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the evidence and the fact of the payee Abhay Salwan

being a proclaimed offender and absconding is

matter of Judicial Review before the Hon’ble

Allahabad High Court, yet wrongly invoking the

jurisdiction of presumption u/s. 132(4A).

Alternatively and without prejudice to above, the

prayer is to allow the claim/relief in accordance with

the provision of section 58(2) r.w.s. 70, 71 of Income

Tax Act, 1961.

arising out of this appeal and for any addition,

deletion, amendment and modification in the grounds

of appeal before the disposal of the same in the

interest of substantial justice to the assessee.”

31.1. The assessee has also raised the following

additional ground :

ii) Because the action is being challenged on facts

& law for making additions in assessment

proceedings u/s 153A wherein the seized

76 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

documents Pg. 125 – 126 of Annexure A-5 relating

to assessee were found from the premises of third

parties i.e., LV Rustore Appliations Pvt. Ltd., R.R

Carwell Pvt. Ltd., Blossom Landeal Pvt Ltd., & Elvi

Bardahl India Pvt. Ltd., 17/6, Hanspal Industrial

Complex, Mathura Road, Faridabad, therefore the

additions on the basis of the said documents can

only be made u/s 153C of the Act & not u/s 153A

of the Act.

31.2. However, the Learned Counsel for the Assessee

did not press the additional ground, for which, the Ld. D.R.

has no objection. Accordingly, the additional ground is

dismissed as not pressed.

in nature, are dismissed.

grounds of appeal number.2, for which, the Ld. D.R. has no

objection. Accordingly, grounds of appeal number.2 is

dismissed as not pressed.

77 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

of Rs.9,00,000/- [Rs.4,50,000/- + Rs.4,50,000/-] from Shri

Abhay Salwan and Shri Rattan Prakash Mishra.

grounds are identical to the grounds of appeal numbers.6

and 7 in ITA.No.9147/Del./2019. We have already decided

the issue and the grounds raised by the assessee have been

allowed wherein the addition of interest made by the AO

and upheld by the Ld. CIT(A) has been deleted. Following

similar reasoning the above grounds by the assessee are

allowed.

ITA No.9149/Del./2019(Assessee’s appeal) A.Y. 2013-14

conclusion of assessment proceedings u/s 153A at an

amount of Rs.3,70,94,992/- is being challenged on

facts and law.

law for making additions in assessment proceedings

78 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

u/s 153A when there is no incriminating

material/document found during the course of search

u/ s 132 of the Act for the impugned year.

for invoking the jurisdiction u/s. 69A r.w.s. 115BBE as

unexplained money for Rs.2,39,25,000/- while

assuming the presumption for addition bereft of

material facts containing material particulars in the

case proceedings.

not giving benefit of Rs.50,00,000/- (receipts dt.

01.01.2012 seized during search) received back from

Abhay Salwan & R. A. Financial Services in peak cash

balance. Similarly, A.O. has not given benefit of

Rs.50,00,000/- (receipts dt.15.12.2011 seized during

search relating to L V Rustore Applications P. Ltd.,

wherein assessee is Share Holder & Director) received

back from Abhay Salwan & R A Financial Services

along with interest in peak cash balance.

79 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

charging interest of Rs.41,86,000/- (Period 12.11.2012

to 31.03.2013) as income from other sources which is

disputed since hypothetical income cannot be put to

charge and alternatively without prejudice, the prayer

is to allow the claim/relief in accordance with the

provision of section 58(2) r.w.s. 70,71 of Income Tax

Act 1961.

for making the addition of Rs.13,50,000/- on the

invoking of provision u/s 132(4A) (presumption) which

is being disputed since treated as income from other

sources since hypothetical income cannot be put to

charge and alternatively without prejudice, the prayer

is to allow the claim/relief in accordance with the

provision of section 58(2) r.w.s. 70,71 of Income Tax

Act 1961.

for making disallowance of interest for Rs.3,04,832/-

80 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

which is a deduction allowable while computing

chargeable income u/s 22 to 24.

out of this appeal and for any addition, deletion,

amendment and modification in the grounds of appeal

before the disposal of the same in the interest of

substantial justice to the assessee.”

additional ground :

“(i) Because the action is being challenged on

facts & law for making additions in assessment

proceedings u/s 153A wherein the seized

documents Pg. 38 – 39 of Annexure A-10 & Pg.36-

37 of Annexure A-10 relating to assessee were

found from the premises of third parties i.e., LV

Rustore Applications Pvt. Ltd., RR Carwell Pvt.

Ltd., Blossom Landeal Pvt Ltd., & Elvi Bardahl

India Pvt. Ltd., 17/6, Hanspal Industrial Complex,

Mathura Road, Faridabad, therefore the additions

on the basis of the said documents can only be

81 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

made u/s 153C of the Act & not u/s 153A of the

Act.”

additional ground, for which, the Ld. D.R. has no objection.

Accordingly, the additional ground by the assessee is

dismissed.

general in nature, are dismissed.

ground of appeal number.2, for which, the Ld. D.R. has no

objection. Accordingly, the same is dismissed as not

pressed.

has challenged the addition of Rs.2,39,25,000/- made by

the A.O. and sustained by the Ld. CIT(A).

search operation at premises 17/6, Hanspal Industrial

Complex, Mathura Road, Faridabad, Page numbers.35 and

36 of Annexure A-10 was seized. It is an MOU entered into

82 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

by the Assessee and Gyaneshwar Education Trust on

12.11.2012. According to this MOU assessee had given a

cash loan of Rs.3.5 crores to Gyaneshwar Education Trust

@ 2.6% interest per month for one year till 11.11.2013. This

MOU is duly signed by Shri Abhay Salwan on behalf of the

Trust and was found in the custody of the assessee. The

A.O, therefore, asked the assessee to explain the source of

Rs.3.5 crores and explain as to why the same should not be

added as unexplained income.

“As regard Pg. No. 36 & 37 of the Annexure A-10

(Pg. 98-100 of submission for AY 2011-12) seized

from premises 17/6, Hanspal Industrial Complex,

Mathura Road, Faridabad, it is submitted that in

MOU, Abhay Salwan has not signed at First Party

place but made initial only as proposal of signing

MOU(supra) & sent the same to the assessee for

execution however assessee rejected said MOU &

declined to sign the said MOU and however the

document was kept as a matter of abundant

83 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

caution to determine the acceptance of

acknowledged debt by Mr Abhay Salwan.

Moreover, the same is not having any seal of

Gyaneshwar Education Trust nor the document is

notarized hence the same is not enforceable in

accordance with the procedure of law...”

explanation given by the assessee on the reasoning that

during assessment proceedings in case of the assessee for

AY 2012-13, it was concluded that the basic premise of the

assessee that Rs.75,00,000/- was given to Shri Abhay

Salwan in Year 2009 was false because such amount of

Rs.75,00,000/- was found to have been given to Shri Rattan

Prakash Mishra in Year 2009. The AO also reasoned that

the version of the assessee that the assessee, in order to

protect the principal amount of Rs.50,00,000/- (out of

Rs.75,00,000/-, Rs.25,00,000/- was returned to the

assessee in September 2011) and interest thereon, decided

to create the MOU with Shri Abhay Salwan for Rs.3.5 Cr on

12.11.2012, did not appeal to human logic on several

84 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

accounts. The AO reasoned that even if it is considered that

Rs.50,00,000/- and interest @ 1.5% per month thereon was

pending to be received from September 2010, the said

amount would not be more than Rs.71,47,514/- in

September 2012. Then why a person i.e. Shri Abhay Salwan

on behalf of M/s. Gyaneshwar Educational Trust would

sign an agreement which clearly mentioned that M/s.

Gyaneshwar Educational Trust had received a cash loan of

Rs.3.5 Cr which carried interest @ 2.6% per month for one

year (i.e. till 11.11.2013). The AO calculated available cash

balance as per the table mentioned in para 5.8 of the

assessment order to the tune of Rs.1,10,75,000/- as on

12.11.2012. Since, the MOU acknowledged receipt of cash

loan of Rs. 3.5 Cr, therefore, the AO treated

Rs.2,39,25,000/- being the difference between Rs.3.5 Cr

and Rs.1,10,75,000/-, as unexplained and made addition of

equivalent amount u/s 69A.

the A.O. by observing as under :

85 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

22.6. During the present appellate proceedings,

that AR repeated the stand taken before the AO.

Additionally, the AR argued that calculation of

availability of cash as on 12.11.2012 was not correct

because benefit of Rs.1,00,00,000/- which was

extended by way of four receipts of Rs.25,00,000/-

each {first evidencing payment of cash loan

Rs.25,00,000/- by Shri Vishnu Kumar Garg to Shri

Abhay Salwan, second evidencing payment of cash loan

of Rs.25,00,000/- by M/s. L.V. Rustore Applications Pvt.

Ltd. to Shri Abhay Salwan, third evidencing payment of

cash loan of Rs.25.00,000/- by Shri Vishnu Kumar Garg

to M/s. RA Financial Services (signed by Shri Abhay

Salwan) and fourth evidencing payment of cash loan of

Rs.25,00,000/- by M/s. L V. Rustore Applications Pvt.

Ltd. to M/s. RA Financial Services (signed by Shri

Abhay Salwan) } and cash generated out of bogus

purchases in case of appellant, Smt. Lata Garg (W/o the

appellant), M/s. L.V. Rustore Applications Pvt. Ltd. and

M/s. R R Carwell Pvt. Ltd. has not been allowed.

86 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

22.7. As far as plea that this agreement was not

enforceable by the law is concerned, the same cannot

be accepted. The provisions u/s 132(4A)/292C are very

clear. The presumption is that content of any seized

material are to be taken as true. The MOU clearly stated

that the appellant had given a total amount of

Rs.3,50,00,000/- as a loan in cash for a period of one

year i.e. from 12th November, 2012 to 11th November,

2013. It is an evidence. Of course, it is a rebuttable

evidence. However, the appellant produced no evidence

to rebut the same. Therefore, this plea is rejected. The

AO has rejected the theory of earlier loan of

Rs.75,00,000/- ( Rs.50,00,000/- in Jan, 2009 and

Rs.25,00,000/- in June, 2009 and re-payment of

Rs.25,00,000/- on 11.10.2010) to Shri Abhay Salwan

because the seized papers clearly showed that it was

given to Shri Rattan Prakash Mishra. During the present

appellate proceedings, the AR could not show that any

material was submitted before the AO to rebut this

finding. Therefore, this theory is also rejected.

87 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

22.8. As far as benefit of Rs.1,00,00,000/- which

was extended by way of four receipts of Rs.25,00,000/-

each is concerned, the two receipts out of captioned four

receipts have stated that the amounts mentioned therein

were advanced on 15.12.2011 for a period of one year.

Rest of the two receipts stated that the amount

mentioned therein were advanced on 01.01.2012 for a

period of one year. Although, the AR claimed that it was

the same amount along with the due interest (because

the interest was never paid) which was shown as

received under the MOU under consideration, however,

the appellant produced no material evidence in support

of this claim. As such, these (four) receipts evidence that

the loan was extended for one year with effect from

01.01.2012. Therefore, in absence of any evidence

showing contrary, it will be presumed that these loans

would be returned on 15.12.2012/01.01.2013.

Therefore, it is difficult to accept this plea. As far as the

other plea (telescoping against the generation of cash

out of bogus purchases) is concerned, it has been dealt

88 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

with in para 4.6 (supra). The observations/remarks

made therein are applicable to this addition, mutus

mutandi.

22.9. In view of the above discussion, this ground

(No. 3) of appeal is dismissed, subject to the above

mentioned remarks/observations.”

the assessee is in appeal before the Tribunal.

challenged the order of the Ld. CIT(A) in sustaining the

addition of Rs.2,39,25,000/- made by the AO on the basis

of seized documents at page no.36 & 37 of the Annexure A-

only the signature of Abhay Salwan, which was neither

stamped nor notarized. Therefore, it has no evidentiary

value. Further Shri Abhay Salwan is a fraud has already

been brought on record by producing court orders while

arguing for AY 2011-12. There is no corroborative evidence

that the amount of Rs.3.5 crores is given by the assessee to

89 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Abhay Salwan. He submitted that a perusal of the MOU and

other details given by the assessee to the AO at the time of

assessment proceedings conclusively prove the amount of

Rs.3.50 Crores consists of the principal, interest and

interest on interest be recovered from Abhay Salwan. He

accordingly submitted that the addition made by the AO

and sustained by the Ld. CIT(A) should be deleted.

47.1. He submitted that in the MOU, Abhay Salwan

has not signed at First Party place but made initial only as

proposal of signing MOU and sent the same to the assessee

for execution. However, the assessee rejected the said MOU

and declined to sign the said MOU. However the document

was kept as a matter of abundant caution to determine the

acceptance of debt acknowledged by Mr Abhay Salwan. He

submitted that the MOU is not having any seal of

Gyaneshwar Education Trust nor the document is notarized

hence the same is not enforceable in accordance with the

procedure of law.

47.2. He submitted that the two MOUs dated

12.11.2012 and 28.09.2013 are not supported by any book

90 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

entries which could reveal that actual cash has been paid.

He submitted that the above MOUs are only made up

documents to protect the assessee’s interest on account of

assuring the amount to be received from Mr. Abhay Salwan.

The ld. Counsel for the assessee submitted that the

assessee does not have any source to pay such huge

amount of Rs.5 Crores to Mr. Abhay Salwan as per the

second MOU. Referring to various pages of the paper book,

he submitted that in fact the principal loan given to Mr.

Abhay Salwan in 2009-10, the interest on it and interest on

interest all together comes to Rs.5 Crores which can be

verified from the details given before the AO and the AO has

not found the same to be incorrect or untrue. Referring to

various decisions, he submitted that when assessee is

denying the making of any payment, then the burden is on

the Revenue to bring cogent evidence to establish the same.

47.3. Ld. Counsel for the assessee referring to the

contents of the MOUs, submitted that as per the MOU,

money was received by Mr. Abhay Salwan for construction

of his ongoing project. However, no effort has been made by

91 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the AO to find out as to whether any construction activity

has taken place so as to verify the authenticity of the cash

payment and charge the assessee. He submitted that since

the main person Mr. Abhay Salwan is absconding, the AO

should have examined the witnesses to such MOUs and the

notary who are available to find out the truth.

47.4. Ld. Counsel for the assessee referring to

various court orders submitted that Mr. Abhay Salwan, his

wife Ashima Salwan, his partner Brij Bhusan Tyagi, Mr.

Himanshu Tyagi and Suman Tyagi wife of Mr. Brij Bhushan

Tyagi, who are parties to the second MOUs are declared as

proclaimed offenders. However, the AO has not examined

Mr. Sanjay Gupta, one of the witness of the MOU or the

notary in whose register, such documents/MOUs were

entered to find out the truth.

47.5. Ld. counsel for the assessee submitted that

during the course of search, receipts in the name of O.P.

Gulati and his wife Renu Gulati were also found, which is

related to these MOUs. Although the AO has summoned

O.P. Gulati and recorded his statement, however, no

92 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

question was asked to him on these MOUs which shows

that no proper examination was done by the AO. He

submitted that since the AO has failed in his duty, the

addition made by him and sustained by the Ld. CIT(A)

should be deleted.

47.6. The ld. counsel for the assessee further

submitted that addition has been made by the AO under

section 69A of the I.T. Act. Referring to the provisions of

section 69A, he submitted that these MOUs do not come

under the category of money, bullion, jewellery or other

valuable articles. Further, the date of payment is also not

mentioned in the MOUs and therefore to which financial

year it relates is not ascertainable which is mandatory

requirement of provisions of section 69A of the I.T. Act,

1961. He submitted that addition, if any, could have been

made only u/s 69 of the Act.

47.7. Ld. counsel for the assessee submitted that

the first MOU dated 12.11.2012 does not have the signature

of the assessee or any witness and not even notarized. The

Second MOU dated 28.09.2013 has not been acted upon.

93 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

The so-called property to be mortgaged by Mr. Abhay

Salwan as mentioned in the MOU was already mortgaged to

the bank and property documents were never handed over

to the assessee, then it is against human probability that

the assessee would have given such huge money especially

when he is denying the same from the beginning.

47.8. Alternatively & without prejudice to the above, he

submitted that the AO has not given the benefit in

calculation of peak cash credit relating to loan given by L V

Rustore Applications P Ltd. to Abhay Salwan amounting Rs.

50 Lakh in AY 2012-13 received back from him during the

year and interest on loan given to Abhay Salwan for which

separate addition of Rs. 5,25,000/- in AY 2012-13 & Rs.

11,25,000/- in AY 2013-14 has been made. The peak cash

credit after giving benefit of amount of L V Rustore

Applications Pvt. Ltd. & interest amount be reduced by Rs.

66,50,000/-.

47.9. He accordingly submitted that the addition

sustained by the ld. CIT(A) should be deleted.

94 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the orders of the AO and the Ld. CIT(A). She submitted that

the addition was made by the AO on the basis of seized

documents page no.36 & 37 of the Annexure A-10. The

assessee could nothing explain with satisfactory explanation

as to how and why the MOUs were found from the place of

the assessee. Whatever argument the ld. Counsel for the

assessee has made are nothing but concocted story and

does not have any evidentiary value. She submitted that

the argument of the assessee nowhere matches with the

figures mentioned in the MOU. Therefore, the order of the

Ld. CIT(A) being in accordance with law should be upheld.

both the sides, perused the orders of the Assessing Officer

and the Ld. CIT(A) and the paper book filed on behalf of the

assessee. We have also considered the various decisions

cited before us. We find the AO in the instant case made

addition of Rs.2,39,25,000/-on the basis of documents at

page 36 and 37 of the Annexure A-10 seized from the

premise at 17/6, Hanspal Industrial Complex, Mathura

95 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Road, Faridabad. According to the AO, the seized

document is an MOU entered into between the assessee and

Gyaneshwar Education Trust on 12.11.2012, according to

which the assessee had given cash loan of Rs.3.50 Crores

to Gyaneshwar Educational Trust @ 2.6% interest per

month for one year till 11.11.2013. This MOU is duly signed

by Shri Abhay Salwan on behalf of the Trust and was found

in the custody of the assessee. We find the reply of the

assessee that Mr. Abhay Salwan has not signed at First

Party place but made initial only as proposal of MOU was

rejected by the AO and for which the AO has given his

reasoning at pra 5.4 to 5.10 onwards in his order. However,

the AO while making the addition of Rs.2,39,25,000/-, has

given benefit of peak credit of Rs.1,10,75,000/- and made

the addition of balance Rs.2,39,25,000/-. We find the ld.

CIT(A) upheld the same, the reasoning of which have

already been reproduced in the preceding paragraph. It is

the submission of the ld. Counsel for the assessee that since

Mr. Abhay Salwan defaulted in making the payment, he

came with a new proposal in the month of November, 2012

96 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

to secure the assessee’s loan and voluntarily furnished an

undertaking in the form of MOU with Gyaneshwar

Education Trust for consolidated amount of Rs.3.5 Crores

which was outstanding with interest upto 12.11.2012. It is

the submission of the ld. Counsel for the assessee that in

the MOU dated 12.11.2012, there is only one initial of Mr.

Abhay Salwan, which is not stamped or notarized. Further,

it does not contain the signature of the assessee or any

witness. It is his submission that Mr. Abhay Salwan is fraud

and was only buying time to pay the principle as well as

interest. It is the submission of the ld. Counsel for the

assessee that there is no corroborative evidence regarding

the amount of Rs.3.5 Crores given by the assessee to Mr.

Abhay Salwan and that the AO has not examined the

available persons to the MOU such as the witness Mr.

Sanjay Gupta or the notary since the other persons in the

MOU are declared as proclaimed persons. It is also his

submission that although the AO summoned and recorded

statement of Mr. O.P. Gulati, he has not asked any question

to Mr. Gulati on the issue of the MOU although receipts in

97 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

the name of Mr. Gulati were found and related to the same

MOU.

49.1. We find some force in the argument the ld.

counsel for the assessee that proper justice has not been

done while making such huge addition without examining

the various persons to the MOU to find out the truth. We

find a somewhat identical issue had come up before the

Hon’ble Delhi High Court in the case of CIT Mr. Ved Prakash

Choudhary, reported in 305 ITR 245 (Del.) and relied by the

Ld. counsel for the assessee, where the Hon’ble High Court

dismissed the appeal filed by the Revenue by observing as

under:-

98 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

99 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

High Court in Commissioner of Income Tax vs. P.R. Metrani (HUF), [2001] 251 ITR 244, it was held that the presumption was rebuttable. It was further held that the Assessee had been able to successfully rebut the presumption. 7. Learned counsel for the Revenue reiterated the view expressed by the Assessing Officer. Unfortunately, we are not in agreement with that view. 8. The facts of the case make it very clear that there were two MOUs entered into by the Assessee with Ravi Talwar and Madhu Talwar in respect of the purchase of agricultural land. The two MOUs did record that “the purchase consideration shall be Rs.123.30 lacs. The purchaser having paid to the vendor the sum of Rs.25,00,000 part of the said purchase consideration as a deposit and shall pay the residual of said purchase consideration to the vendor on or before 30th April, 1999 when the purchase will be completed.” 9. Notwithstanding this, the Assessee as well as Ravi Talwar and Madhu Talwar denied the money transaction. In addition thereto, the case set up was that the agricultural land had, in fact, been sold to M/s. Delhi Tent and Decorators Pvt. Ltd. by Ravi Talwar and Madhu Talwar. This was confirmed by Shri N.K. Mittal, one of the Directors of M/s. Delhi Tent and Decorators Pvt. Ltd. Quite clearly, the MOUs did not fructify. 10. Section 132(4A) of the Act uses the expression “it may be presumed”. It is not obligatory on the assessing authority to make a presumption. Even if a presumption is required to be made, then, as held in Commissioner of Income Tax v. S.M.S. Investment Corporation P. Ltd., [1994] 207 ITR 364, the presumption is a

100 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

rebuttable one and relates to a question of fact. While coming to this conclusion, the Rajasthan High Court relied upon an earlier decision rendered by it in Commissioner of Income Tax v. S.M.S. Investment Corporation, [1988] 173 ITR 393. 11. Even in Income Tax Officer, B-Ward, Ernakulam v. T. Abdul Majeed, [1988] 169 ITR 440, it has been held as follows: - “It is true that section 132(4A) of the Act enables the court to presume the truth of the contents of such books. However, it is a presumption which can be rebutted. Moreover, the presumption envisaged therein is only a factual presumption. It is in the discretion of the court, depending upon other factors, to decide whether the presumption must be drawn. The expression used in the sub-section is “may be presumed” as is used in section 114 of the Evidence Act, 1872. It is not a mandate that whenever the books of account are seized, the court shall necessarily draw the presumption, irrespective of any other factors which may dissuade the court from doing so.” 12. In so far as the present case is concerned, the Assessee had stated that in fact there was no transfer of money between him and Ravi Talwar and Madhu Talwar. On the other hand, Ravi Talwar and Madhu Talwar had denied receipt of any money from the Assessee. In the fact of these denials, there ought to have been corroborative evidence to show that there was in fact such a transfer of money. Both the Commissioner as well as the Tribunal have come to the conclusion that there was no such material on record.

101 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

49.2. We find the SLP filed by the Revenue was

dismissed by Hon’ble Supreme Court vide order dated

09.01.2009 as reported in (2010) 3 taxmann.com 785 (SC)

case where the assessee is denying to have made any

payment as per the MOU and the second party in the MOU

is absconding and is a proclaimed person. However, it is

also a fact that the MOUs were found from the premises of

the assessee and therefore the onus is on the assessee to

prove that the assessee has not paid the amount as

mentioned in the first and second MOU and that these

102 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

MOUs are only for securing the payments made earlier with

interest and interest on interest.

50.1. In our opinion, the matter requires a revisit to the

file of the AO to examine certain things to find out the truth

before making any addition. i. The AO shall summon and record the statement of Mr. Sanjay Gupta who is a witness to the MOU and the notary in whose register the same has been entered to find out the facts and veracity of the MOU.

ii. The AO shall also summon and record the statement of Mr. O.P. Gulati in whose name receipts were found and which are related the MOU.

iii. In case the above persons do not respond to the summons issued by the AO, the onus shall be on the assessee to produce them before the AO. If the assessee fails to produce them and they do not respond to the summons then the AO may take adverse view.

50.2 The AO shall decide the issue in the light of our

above observation and in accordance with law after giving

due opportunity of being heard to the assessee. He shall

also keep in mind the decision of the Hon’ble Delhi High

Court (cited supra), while deciding the issue. We hold and

103 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

direct accordingly. The ground of appeal no.3 by the

assessee is accordingly allowed for statistical purposes.

of credit of Rs.50 lakhs received from Mr. Abhay Salwan and

R.A. Financial Services while computing the peak cash

balance.

51.1. After hearing both the sides, we find it is the

contention of the ld. Counsel for the assessee that benefit of

Rs.50 lakhs as per receipt dated 01.01.2012 seized during

the search and received back from Mr. Abhay Salwan and

R.A. Financial Services should be given for computing the

peak cash balance, Similarly, it is also his submission that

the Assessing Officer has not given the benefit of Rs.50

lakhs as per seized documents dated 15.12.2011 seized

during the course of search relating to L.V. Rustor

Application Pvt. Ltd. where the assessee is shareholder and

director and amount being received back from Mr. Abhay

Salwan and R.A. Financial Services along with interest

should be considered for computing the peak cash balance.

Considering the totality of the facts of the case and in the

104 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

interest of justice, we deem it proper to restore this issue to

the file of the AO with a direction to decide the issue afresh

after giving due opportunity of being heard to the assessee.

We hold and direct accordingly. Ground of appeal No.4 by

the assessee is accordingly allowed for statistical purposes.

Rs.41,86,000/- made by the Assessing Officer and

sustained by the Ld. CIT(A).

Assessing Officer made the addition of Rs.41,86,000/- being

interest @ 2.6% of cash loan of Rs.3.5 Crores given by

Gyaneshwar Education Trust for the period 12.11.2012 to

11.11.2013 on the basis of MOU seized at the time of

search. We find the Ld. CIT(A) sustained the addition by

observing as under:-

22.9 Vide ground No. 4, the appellant has contested the addition of Rs. 41,86,000/-. This addition has been made because the AO has calculated the interest on the above stated cash loan of Rs. 3,50,00,000/- to M/s. Gyaneshwar Educational Trust.

105 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

22.10 Before the AO, as well as during the present appellate proceedings, the appellant contested that no interest was ever received. Other contentions extended are same as raised in support of ground No. 3, adjudicated above.

22.11 The provisions u/s 132(4A)/292C are very clear. The presumption is that content of any seized material are to be taken as true. The MOU clearly stated that the appellant had given a total amount of Rs. 3,50,00,000/- as a loan in cash for a period of one year i.e. from 12th November, 2012 to 11th November, 2013 and bears an interest @2.6 % per months. It is an evidence. Of course, it is a rebuttable evidence. However, the appellant produced no evidence to rebut the same. Therefore, this plea is rejected.

22.12 In view of the above discussion, this ground (No. 4) of appeal is dismissed.”

53.1. Since, the issue relating to the addition on

the basis of the MOU as per ground of appeal No.3 has been

restored to the file of the AO for fresh adjudication,

therefore, this ground is also restored to the file of the for

fresh adjudication by the AO. Needless to say, the AO shall

give due opportunity of being heard to the assessee and

decide the issue as per fact and law. We hold and direct

106 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

accordingly. This ground of the assessee is accordingly

allowed for statistical purposes.

Rs.13,50,000/- made by the AO and sustained by the Ld.

CIT(A) again on account of interest received from Mr. Abhay

Salwan on the loan granted of Rs.25 lakhs and Rs.25 lakhs

each.

ground is identical to the ground of appeal no.6 and 7 in

ITA No.9147/Del/2019 for AY 2011-12. We have already

decided the issue and ground raised by the assessee has

been allowed. Following similar reasonings, this ground

raised by the assessee is allowed.

of the Ld. CIT(A) in confirming the addition of Rs.3,04,832/-

made by the AO being interest paid on housing loan.

on the perusal of the computation of income found that the

assessee has shown interest payment on housing loan

107 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

amounting to Rs.12,05,686/- . On being questioned by the

AO, it was submitted by the assessee that he has obtained

housing loan of Rs.2,00,75,720/- on which interest has

been paid. However, the AO noted that the assessee has

utilized only Rs.1,50,00,000/- out of the above amount of

Rs.2,00,75,720/- for the purchase of the house property

and the remaining funds were diverted for other purpose.

In absence of any satisfactory explanation given by the

assessee, the AO made addition of Rs.3,04,832/-, which has

been upheld by the Ld. CIT(A). We do not find any infirmity

in the order of the Ld. CIT(A) on this issue in absence of any

satisfactory explanation even before us. Accordingly, the

order of the ld. CIT(A) on this issue is upheld and the

ground raised by the assessee is dismissed.

dismissed.

ITA No.9448/Del/2019 (Revenue’s Appeal) for AY 2013-14.

appeal :

108 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Ld. CIT (A) has erred in allowing telescoping effect of

Rs.2,39,25,000/- on account of bogus purchases made

in the hand of other entity of Group to the assessee's

case.

Ld. CIT (A) has erred in allowing the benefit of cash

generated due to the additions of bogus purchases in

the hands of other entity of Group to the assessee’s

case.

Ld. CIT (A) has erred in allowing the cash generated

due to out of books transactions of bogus purchases is

to be treated at par with other out of books cash

generating transactions in assessee’s case.

facts that additions on account of bogus purchases

made in the cases of other entity whereas, the addition

on account of un-explained money u/s. 69A of the Act,

109 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

made in the assessee's hand.

the ground of appeal before or during the course of

hearing of the appeal.”

challenged the order of the Ld. CIT(A) in allowing the

telescoping benefit out of the income from bogus purchases

and the profit from other entities.

infirmity in the order of the Ld. CIT(A) on this issue. So far

as the benefit of telescoping is concerned, we have already

allowed the benefit of telescoping by relying on the decision

of the Hon’ble Delhi High Court in the case of CIT vs., Sonal

Construction [2013] 359 ITR 532 (Del.). Therefore, the

grounds raised by the Revenue on this issue are dismissed.

telescoping benefit from additions made in various other

companies are concerned, the same in our opinion is

justified. Admittedly, the assessee Mr. Vishnu Kumar Garg

110 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

is the director and controlling person of the two other

companies namely R.R.Carwell (P) Ltd. and L.V. Rustore

Applications Pvt. Ltd. . Therefore, there is no infirmity in the

order of the Ld. CIT(A) on this issue since the profit was

generated on account of bogus purchases, etc in the hands

of the two companies are appropriated by Mr. Vishnu

Kumar Garg only. Therefore, the grounds raised by the

Revenue on this issue being devoid of any merit are

dismissed.

ITA No.9150/Del/2019 (Assessee’s Appeal) for AY 2014-15.

law for arriving at the chargeable income of

Rs.6,03,53,210/- which is dehors material facts

containing material particular to the case controversy

during the course of case proceeding and contrary to

the judgement S. Sankappa vs. ITO ((1968) 2SCR

674).

111 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

law for making additions in assessment proceedings

u/s 153A when there is no incriminating material/

document found during the course of search u/s 132

of the Act for the impugned year.

law for invoking the jurisdiction u/s 69A r.w.s.

115BBE as unexplained money for Rs 3,59,64,000/-

while assuming the presumption for addition bereft

of material facts containing material particulars in

the case proceedings.

action for not giving benefit of Rs.3,50,00,000/- (as

per MOU dt. 12.11.2012 seized during search)

received back from Gyaneshwar trust in peak cash

balance.

for charging interest of Rs.91,50,000/- (Period

28.09.2013 to 31.03.2014) as income from other

sources which is disputed since hypothetical income

112 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

cannot be put to charge and alternatively without

prejudice, the prayer is to allow the claim/relief in

accordance with the provision of section 58(2) r.w.s.

70,71 of Income Tax Act 1961.

law for making the addition of Rs.67,03,666/- on the

invoking of provision u/s 132(4A) (presumption)

which is being disputed since treated as income from

other sources since hypothetical income cannot be

put to charge and alternatively without prejudice, the

prayer is to allow the claim/relief in accordance with

the provision of section 58(2) r.w.s. 70, 71 of Income

Tax Act 1961.

law for making disallowance of interest for

Rs.5,47,261/- which is a deduction allowable while

computing chargeable income u/s 22 to 24.

arising out of this appeal and for any addition,

deletion, amendment and modification in the grounds

113 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

of appeal before the disposal of the same in the

interest of substantial justice to the assessee.”

additional ground :

(i) Because the action is being challenged on facts

& law for making additions in assessment

proceedings u/s 153A wherein the seized

documents Pg. 36-37 of Annexure A-10 & Pg.13-

14 of Annexure A-10 relating to assessee were

found from the premises of third parties i.e., LV

Rustore Applications Pvt. Ltd., RR Carwell Pvt.

Ltd., Blossom Landeal Pvt Ltd., & Elvi Bardahl

India Pvt. Ltd., 17/6, Hanspal Industrial

Complex, Mathura Road, Faridabad, therefore

the additions on the basis of the said

documents can only be made u/s 153C of the

Act & not u/s 153A of the Act.

press the additional ground of appeal for which the Ld. DR

114 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

has no objection. Accordingly, the additional ground filed by

the assessee is dismissed as not pressed.

counsel for the assessee for which the Ld. DR has no

objection. Accordingly, the grounds of appeal no. 1 and 2

are dismissed as not pressed.

67 Grounds of appeal no.3 and 4 relate to the order

of the Ld. CIT(A) in confirming the addition of

Rs.3,59,64,000/-.

that during the search operation at premise 17/6, Hanspal

Industrial Complex, Mathura Road, Faridabad , page No.

13 & 14 Of Annexure- A10 was seized. It is an MOU entered

into by the assessee and Gyaneshwar Educational Trust on

28.09.2013. According to this MOU, the assessee had given

a cash loan of Rs 5 Cr in cash to Gyaneshwar Educational

Trust on 28.09.2013 @ 3% interest per month for three

years from 28.09.2013 to 28.09.2016. This MOU is duly

signed by the assessee and Sh Abhay Salwan on behalf of

Gyaneshwar Educational Trust and was found in the

115 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

custody of the assessee. During assessment proceedings,

the assessee was asked to explain the source of Rs 5 Cr and

to show cause as to why the amount Rs 5 Cr not to be

treated as unaccounted money and be added back to total

income of the assessee during the year under consideration.

submitted that Pg. No. 13 & 14 of the Annexure A-10 were

seized from premises 17/6, Hanspal Industrial Complex,

Mathura Road. Faridabad. It is an MOU dt. 28.09.2013

executed between Gyaneshwar Educational Trust &

assessee. It was submitted that during the year Abhay

Salwan has not made any payment of whatsoever kind

relatable to principal, interest & interest on interest.

However it is most relevant to state that Abhay Salwan

again offered to furnish an undertaking in the form of

another MOU with Gayneshwar Education Trust for Rs. 5

Crs acknowledged outstanding debt upto 15.09.2013

towards earlier given loan and interest amount & interest

on interest for the period w.e.f 15.12.2011/01.01.2012 to

116 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

15.09.2013. However, Abhay Salwan was unable to either

repay the principal or the interest amount. The said MOU

was duly signed & notarized but assessee had not received

any amount as interest till date.

arguments advanced by the assessee. He noted that during

assessment proceedings of the assessee for AY 2012-13, it

was concluded that the basic premise of the assessee that

Rs 75,00,000/- was given to Abhay Salwan in Year 2009 is

false because such amount of Rs 75,00,000/- was found to

be given to Sh Ratan Prakash Mishra in Year 2009.

Submission of the assessee that he, in order to protect the

principle amount of Rs.50,00,000/- (Out of Rs 75,00,000/-,

Rs 25,00,000/- was returned to the assessee in Sep 2011)

and interest thereon , entered into the MOU with Abhay

Salwan for Rs. 5Cr. on 28.09.2013 defies human wisdom on

several accounts. According to the AO, even if it is

considered that Rs.50.00,000/- and interest @1.5% per

month thereon is pending to be received from Sep 2010, the

117 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

said amount would not be more than Rs.85,45,697/- in

September 2013. Then why a person i.e. Abhay Salwan on

behalf of Gyaneshwar educational trust would sign on an

agreement which clearly mentioned that Gyaneshwar

educational trust is receiving Rs 5 Cr in cash on

28.09.2013@ 3% interest for three year till 28.09.2016.

was entered into by the assessee and Gyaneshawar

Educational Trust on 28.09.2013 whereas MOU of Rs 3.5

Cr was entered into by the assessee and Gyaneshawar

Educational Trust on 12.11.2012 for one year. Therefore,

the MOU of Rs 5 Cr was entered before completion of the

MOU of Rs 3.5 Cr. Therefore, Both MOUs are independent

and not related to each other. The AO therefore concluded

that the assessee had given a cash loan of Rs 5 Cr to

Gyaneshwar Educational trust @ 3% interest per month on

28.09.2013 for three year till 28.09.2016.

118 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

course of search, the AO noted that the following

transactions pertain to the assessee and were occurred in

cash. In order to find peak cash balance on a given date,

the AO recorded these transactions in chronological order

with narration as shown below:

AY 2011- 12

Date Amount Amount Narration Received Paid Interest received on unsecured cash loan of Rs 25 lakh given to Mishraji in Year 2009 for period from 30.09.2010 2,25,000 01.04.2010 to 30.09.2010 interest income for prior period on loan of Rs 25 lakh given to Mishraji in Year 2009 for period from 30.09.2010 3,75,000 01.04.2010 to 30.09.2010 Received on behalf of Om Shanti education society 19.10.2010 18,00,000 from RA financial services 30.10.2010 22,00,000 Received on behalf of Om Shanti education society from RA financial services Received back principle amount of Rs 25,00,000 11.11.2010 25,00,000 given to Mishra in 2009 Interest income on cash loan of Rs 50 lakh given to Mishraji in 2009 for period from 01.04.2010 to 31.03.2011 9,00,000 31.03.2011 31.03.2011 11,25,000 Prior period interest on Rs 50 lakh cash loan given to Mishra in 2009 91,25,000 Cash in hand on 31.03.2012 AY 2012- 13 30.09.2011 50,00,000 Received back principle amount of Rs 50,00,000 given to Mishra in 2009 Interest on 50 lakh given to mishra in 2009 for 30.09.2011 4,50,000 period from 01.04.2011 to 30.09.2011 1,45,75,000 Total cash in hand at 01.01.2012 01.01.2012 Cash loan given to Abhay Salwan & RA Financial 50,00,000 Services

119 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

95,75,000 Remained cash in hand as on 02.01.2012 Interest income from cash loan of Rs25,00,000/- given to Abhay Salwan & cash loan of Rs25,00,000/-.given to RA Financial Services for 31.3.2012 4,50,000 period from 01.01.2012 to 31.03.2012 1,00,25,000 Total cash in hand on 31.03.2013 AY 2013- 14 Interest income from cash loan of Rs25,00,000/- given to Abhay Salwan & cash loan of Rs25,00,000/- given to RA Financial Services for 11.11.2012 10,50,000 period from 01.04.2010 to 31.10.2012 1,10,75,000 Total cash in hand on 12.11.2012 12.11.2012 3,50,00,000 Cash loan given to Gyaneshwar Trust Interest income from cash loan of Rs25,00,000/- given to Abhay Salwan & cash loan of Rs25,00,000/- given to RA Financial Services for 31.12.2012 3,00,000 period from 1.1 1.2012 to 31.12.2012

Received back principle amount of Rs25,00,000/- given to Abhay Salwan and Rs.25,00,000/- 01.01.2013 50,00,000 given to RA Financial Services

Interest income from cash loan of 3.5 Cr given to Gyaneshwar Trust on 12.11.2012 31.3.2013 41,86,000 for period from 12.11.2012 to 31.03.2013 94,86,000 Cash in hand as on 31.03.2014 AY 2014-15 Interest income from cash loan of 3.5 Cr given to Gyaneshwar Trust on 12.11.2012 31.8.2013 45,50,000 for period from 01.04.2013 to 31.08.2013 1,40,36,000 Total cash in hand as on 28.09.2013

had a peak cash balance of Rs. 1,40,36,000/-. The assessee

had given a cash loan of Rs 5 Cr to Gyaneshwar

Educational Trust on 28.09.2013. Out of total cash of Rs 5

Cr given to the Gyaneshwar Educational Trust, Rs.

1,40,36,000/- is adjusted against total cash in hand on

120 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

28.09.2013. For the remaining amount of Rs.3,59,64,000/-

out of Rs 5 Cr, the source remained unexplained. The

assessee has not recorded these transactions in his books

of account/statement of affairs. The assessee is found to be

owner of Rs.3,59,64,000/- but he did not furnish any

explanation regarding the source of the money. Therefore,

he treated the amount of Rs.3,59,64,000/- as unexplained

money of the assessee u/s 69A of IT Act.

made by the AO by observing as under:-

29.7. During the present appellate proceedings, that AR repeated the stand taken before the AO. Additionally, the AR argued that calculation of availability of cash as on 28.09.2013 is not correct because benefit of Rs. 3.5 Cr received as per earlier (draft) MOU have already been added. The AR also said that the benefit of cash generated due to additions of bogus purchases in the hands of appellant, his wife (Smt. Lata Garg) and his companies namely, M/s. RR Carwell Pvt. Ltd. and M/s. L. V. Rustore Applications Pvt. Ltd. should be allowed, while calculating cash availability.

29.8. It was argument of the AR that MOU

121 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

dated 28.09.2013 was made after rescinding the MOU dated 12.11.2012 or in other words only additional amount of Rs.1.5 Cr was given which was in form of accrued interest. The AR submitted calculation by using a calculation of interest @ 3% per month, compounded every month which was nearing (but not exactly tally) the figure of Rs. 5 Cr. The AR also argued that the property mentioned in both the MOUs is same and he also produced a copy of auction notice published on 18 May, 2018 in 'Jan Satta' newspaper (got published by Central bank of India) in respect of a part the same property showing its reserved price Rs. 1.43 Cr for 5.063 acre. The AR pointed out that the total area of this property was 3.883 hectares. The AR argued that by this rate the total value of the property is less than 2.5 Cr and no prudent was likely to give an additional loan of Rs. 5 Cr during the pendency of earlier loan of Rs. 3.5 Cr.

29.9 Although, the AR claimed that the amount of Rs. 3.5 Cr became the amount of Rs. 5 Cr by including the due interest (because the interest was never paid). However, the appellant used rate of interest @ 3% per month and used compounding every month. However, the rate of interest as per seized MOU dated 12.11.20121 was only 2.6 % per month and the agreement was supposed to be in force upto 11.11.2013. The appellant produced no material evidence in support of this claim that the (earlier) MOU dated 12.11.2012 was rescinded.

122 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Therefore, in absence of any evidence showing contrary, it will be presumed that the loan of Rs. 3.5 Cr would be returned' on 11.11.2013. Therefore, it is difficult to accept this plea. As far as the other plea (generation of cash out of bogus purchases) is concerned, it has been dealt with in para 4.6(supra). The observations/remarks made therein are applicable to this addition, mutus mutandi.”

assessee is in appeal before the Tribunal.

identical to ground of appeal no.3 in ITA No.9149/Del/2019

for AY 2013-14. We have already decided the issue and

restored the issue to the file of the AO for fresh

adjudication. This issue was also discussed in the said

ground. Following similar reasonings, we restore this issue

to the file of the AO for fresh adjudication. The AO shall

decide the issue as per fact and law after giving due

opportunity of being heard to the assessee in the light of

our direction given therein. We hold and direct accordingly.

This ground by the assessee is accordingly allowed for

statistical purposes.

123 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

contention regarding giving benefit of Rs.3.56 lakhs which

was received back from M/s Gyaneshwar Educational Trust

as per MOU dated 12.11.2012.

77.1. Since, we have already restored ground of appeal

no.3, this ground is also restored to the file of the AO for

fresh adjudication. The ground raised by the assessee is

accordingly allowed for statistical purposes.

order of the Ld. CIT(A) in confirming the addition of interest

of Rs.91,50,000/- made by the AO.

the basis of MOU that the assessee has received interest @

3% per month on the cash loan of Rs.5 Crores given to

Gynaeshwar Educational Trust on 28.09.2013 made

addition of Rs.91,50,000/- being interest. We find the Ld.

CIT(A) upheld the action of the AO. It is the submission of

the ld. Counsel for the assessee that Mr. Abhay Salwan is

not traceable, is absconding, is a proclaimed person and

offender. Therefore, no interest can be taxed on notional

124 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

basis. For the above proposition, he relied on the argument

while arguing for the interest on loan from Mr. Abhay

Salwan for AY 2012-13.

the order of the AO and the Ld. CIT(A).

MOU has been restored to the file of the AO for fresh

adjudication. We therefore, restore this issue to the file of

the AO for adjudication of this issue in accordance with law

and after giving due opportunity of being heard to the

assessee. While doing so, the AO shall also keep in mind

our findings in ground of appeal No.6 and 7 in ITA

No.9147/Del/2019 for AY 2011-12. The ground raised by

the assessee on this issue is accordingly allowed for

statistical purpose.

order of the ld. CIT(A) in sustaining the addition of

Rs.67,03,666/- again on interest income.

the basis of MOU entered into by the assessee with M/s

125 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Gyaneshwar Educational Trust on 12.11.2012, according

to which the assessee had given a sum of Rs.3.5 Crores to

Gyaneshwar Education Trust on 12.11.2012 as loan on

interest @ 2.6% per month for one year made addition of

Rs.6,70,3666/- on account of interest received, which has

been upheld by the Ld. CIT(A).

of appeal No.5 decided in the preceding paragraph.

Following the similar reasoning, we restore this issue to the

file of the AO for fresh adjudication in the light of our

directions given therein. The ground raised by the assessee

is accordingly allowed for statistical purposes.

challenged the order of the Ld. CIT(A) in sustaining the

addition of Rs.5,47,261/- on account of disallowance of

housing loan interest.

is identical to ground of appeal no.7 in ITA

No.9149/Del/2019 for AY 2013-14. We have already

126 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

decided this issue and dismissed the ground. Following the

similar reasoning, the ground raised by the assessee is

dismissed.

ITA No.9449/Del/2019 (Revenue’s Appeal) for AY 2014-15 87. The ground raised the Revenue are as under:-

Ld. CIT (A) has erred in allowing telescoping effect of

Rs.1,8186,816/- on account of bogus purchases made

in the hand of other entity of Group to the assessee's

case.

Ld. CIT (A) has erred in allowing the benefit of cash

generated due to the additions of bogus purchases in

the hands of other entity of Group to the assessee’s

case.

Ld. CIT (A) has erred in allowing the cash generated

due to out of books transactions of bogus purchases is

to be treated at par with other out of books cash

127 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

generating transactions in assessee’s case.

facts that additions on account of bogus purchases

made in the cases of other entity whereas, the addition

on account of un-explained money u/s. 69A of the Act,

made in the assessee's hand.

the ground of appeal before or during the course of

hearing of the appeal.”

grounds are identical to the ground raised by the Revenue

in ITA No.9448/Del/2019 for AY 2013-14. We have already

decided this issue and the grounds raised by the Revenue

have been dismissed. Following, the similar reasoning, the

ground raised by the Revenue are dismissed.

ITA.No.9151/Del./2019 – A.Y. 2015-16 :

law for arriving at the chargeable income of Rs

128 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

1,95,05,533/- which is dehors material facts

containing material particular to the case controversy

during the course of case proceeding and contrary to

the Judgment S. Sankappa vs. ITO ((1968) 2 SCR

674).

law for making additions in assessment proceedings

u/s 153A when there is no incriminating

material/document found during the course of search

u/s 132 of the Act for the impugned year.

for charging interest of Rs.90,00,000/- (Period

01.04.2014 to 30.09.2014) as income from other

sources which is disputed since hypothetical income

cannot be put to charge and against the principle of

law (Godhara Electricity Co. Ltd v CIT (1997) 225 ITR

746(SC)).

law for making an addition of Rs.90,00,000/-,

wherein the evidence and the fact is that the payee

129 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Abhay Salwan being a proclaimed offender and

absconding is matter of Judicial Review before the

Hon'ble Allahabad High Court, yet wrongly invoking

the jurisdiction of presumption u/s 132(4A) and

alternatively without prejudice, the prayer is to allow

the claim/relief in accordance with the provision of

section 58(2) r.w.s. 70, 71 of Income Tax Act 1961.

law for making disallowance of interest for

Rs.5,06,563/- which is a deduction allowable while

computing chargeable income u/s 22 to 24.

Rs.30,00,000/- is being challenged on facts and law

as assessee failed to prove identity, genuineness and

credit worthiness of unsecured loan whereas per

assessee the said amount received is repayment of

loan given to Abhay Salwan by assessee

substantiated through document seized in search. 7. For any consequential relief and/or legal claim

arising out of this appeal and for any addition,

130 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

deletion, amendment and modification in the grounds

of appeal before the disposal of the same in the

interest of substantial justice to the assessee.”

additional ground :

Because the action is being challenged on facts i)

& law for making additions in assessment

proceedings u/s 153A wherein the seized

documents Pg. 13-14 of Annexure A-10 & Pg.46 of

Annexure A-10 relating to assessee were found

from the premises of third parties i.e., LV Rustore

Appliations Pvt. Ltd., RR Carwell Pvt. Ltd.,

Blossom Landeal Pvt Ltd., & Elvi Bardahl India

Pvt. Ltd., 17/6, Hanspal Industrial Complex,

Mathura Road, Faridabad, therefore the additions

on the basis of the said documents can only be

made u/s 153C of the Act & not u/s 153A of the

Act.

131 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

press the additional ground for which the ld. DR has no

objection. The additional ground raised by the assessee is

accordingly dismissed.

grounds no.1 and 2 for which the ld. DR has not objection,

accordingly, the grounds no.1 and 2 are dismissed.

challenged the order of the Ld. CIT(A) in confirming the

addition of Rs.90 lakhs being interest @ 3% on the amount

of cash loan to Mr. Gyaneshwar Educational Trust.

grounds are identical to grounds of appeal No. 5 to 6 in ITA

No.9150/Del/2019. We have already decided the issue and

the grounds raised by the assessee have been restored to

the file of the AO for fresh adjudication. Following similar

reasoning, these grounds by the assessee are allowed for

statistical purpose.

132 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

order of the Ld. CIT(A) in confirming the addition of

Rs.5,06,563/- being interest on borrowed capital.

ground is identical to ground of appeal no. 7 in ITA

No.9149/Del/2019. We have already decided this issue and

the ground raised by the assessee has been dismissed.

Following similar reasoning, this ground by the assessee is

dismissed.

order of Ld. CIT(A) in confirming the addition of

Rs.30,00,00/- made by the AO being unsecured loan from

M/s Giantmaker Developers Pvt. Ltd. and M/s NBS

Engineers India Pvt. Ltd.

during the course of assessment proceedings observed from

the details of unsecured loan that the assessee has shown

unsecured loan of Rs 10,00,000/- received on 09.04.2014

and Rs.l5,00,000/- on 11.04.2014 from M/s Giantmaker

Developers P Ltd and Rs5,00,000/- received on 05.05.2014

133 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

from NBS Engineers India P Ltd during the year under

consideration. The assessee was asked to provide ITR,

Bank statement of the party and Confirmation of the party

who provided unsecured loan during the year in order to

prove identity, credit worthiness and genuineness of the

transaction. But the assessee failed to provide any of the

above mentioned documents. Further, page no 46 of

Annexure A-10 seized from the premise of the asessee

contains above mentioned loan amount from Giant maker

developers P Ltd and NBS Engineers P Ltd. Vide

questionnaire dated 15.10.2018, the assessee was asked to

explain these entries. Thereafter, the assessee was asked to

show cause as to why the amount Rs.25,00,000/- received

from M/s Giant maker Developers Pvt. Ltd and

Rs.5,00,000/- received from M/s NBS Engineers P Ltd not

to be considered bogus/unaccounted and added back to

total income of the assessee. The assessee did not file any

satisfactory reply. The AO noted that the assessee could not

provide any document in support of his claim of unsecured

loan received during the year. Secondly, the assessee is

134 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

contradicting himself when he is mentioning that Rs

25,00,000/- received from Giantmaker Developers Pvt Ltd

and Rs 5,00,000/- received from M/s NBS Engineers India

Pvt Ltd is actually a payment made by Abhay Salwan

against the loan given by the assessee in earlier years. He

noted that as per submission made by the assessee, this

payment of Rs 30,00,000/- should have been shown as bad

debt recovered or loan recovered in the hand of the assessee

and not as unsecured loan in hand of the assessee.

Moreover, the assessee has shown this received payment as

a liability in his statement of affairs. That liability still exists

in the statement of affairs as on 31.03.2017. That clearly

shows that the assessee was trying to hide the actual nature

of receipt and colouring it with character of liability in his

statement of affairs. In view of the above the AO held that

the assessee failed to prove identity, genuineness and credit

worthiness of the unsecured loan but also tried to hide the

actual nature of the payment by showing it as a liability.

Therefore, he considered the said amount of Rs.25,00,000/-

received from M/s Giantmaker Developers Pvt. Ltd. and

135 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Rs.5,00,000/- received from M/s NBS Engineers P Ltd as

unexplained money of the assessee. He accordingly made

addition of Rs 30,00,000/- to the total income of the

assessee.

the AO by observing as under:-

“39.3. Before AO, the appellant failed to discharge initial onus of providing identity and creditworthiness of the lender and genuineness of the transaction. The appellant stated that these are re- payments of the loan taken by Shri Abhay Salwan. The appellant that these are companies of Shri Abhay Salwan and the addition has already been made in the hands of appellant when this amount was extended as a loan, in cash. In other words, It was claim of the appellant that the cash of Rs. 50,00,000/- { Rs. 25,00,000/- each paid to Shri Abhay Salwan/ M/s. R A Financial } has already been taxed(added) and the same money has come back. The AO did not accept this plea and added the amount.

39.4. Before undersigned, the AR argued that the fact of this money being received from Shri Abhay Salwan was evident from the entries reflecting re-payments under consideration which are written in juxtaposition of an entry reflecting receipt of Rs. 10 Lakhs on 07.05.2014 from Shri Abhay Salwan. The AR informed that this re-payment of Rs. TO Lakhs received from Shri Abhay Salwan was received in group company M/s. Blossom Landeal Pvt. Ltd. and has been taxed in AY 2015-16.

136 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

39.5 It is noted that these additions have been made u/s 68. It is not the case of appellant that he was able to discharge initial onus of proving identity and creditworthiness of the lender and genuineness of the transaction. It is also noted that the amount of Rs. 50 Lakhs was not added in the AY 2012-13 (because due to telescoping, the source of two cash loans of Rs. 25 each were extended on 01 January, 2012 to Shri Abhay Salwan and M/s. RA Financial Services, were treated as explained, as discussed in para 15.2, above ). Moreover, the AO has already given credit for receipt of this amount after one year i.e. on 01.01.2013 as per the chart of cash availability in para 5.8 of the AY 2014-15. 39.6. Therefore, this ground (No. 5) of appeal is dismissed.”

assessee is in appeal before the Tribunal.

the seized document at page no.46 Annexure A-10 from the

premises at 17/6, Hanspal Industrial Complex, Mathura

Road, Faridabad, shows certain hand written entries of

receipt of amount from Mr. Abhay Salwan in his group

companies. The ld. Counsel for the assessee drew the

attention of the Bench to the following details:-

137 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

S. No. Date Amount Mode of Name of Party (Rs.) Payment from whom Books of Acoounts Received in which received 1. 09.04.2014 10,00,000 RTGS Giantmaker Developers P. Ltd. Vishnu Kumar Garg (ROC Form 32 & Annual returns showing that Abhay Salwan is director & shareholder in said company (Submitted at submission dt. 23.07.2019 of Vishnu Kumar Garg AY 2011-12 Pg. 451 - 468) 2. 11.04.2014 15,00,000 RTGS Vishnu Kumar Garg

Giantmaker Developers Pvt Ltd. 3. 05.05.2014 5,00,000 RTGS NBS Engineers Vishnu Kumar Garg India Pvt Ltd. (ROC Form 32 for appointment on dt. 13.04.2013 & resignation on dt. 01.07.2014 from directorship in said company (Submitted at submission dt. 23.07.2019 of Vishnu Kumar Garg AY 2011-12 Pg. 469 -478)

138 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Rs. 75 Lakh from Abhay Salwan, Rs. 25 Lakh in A.Y. 2013-

14 & Rs. 50 Lakh in A.Y. 2015-16. When assessee received

back the principal amount Rs. 50 Lakh & Rs. 25 Lakh as

interest, then assessee decided not to file any FIR against

Abhay Salwan to buy peace of mind. Most importantly, if

assessee had given such huge amount of Rs 8.5 Cr. as loan

to Abhay Salwan, then assessee must have filed the FIR as

filed by other persons and (or) initiated court proceedings

under the Specific Relief Act,1963. However, till date no

such proceeding has been initiated, thus, the onus to

139 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

explain & put the details of transaction to the knowledge of

the deptt. stands discharged by the assessee & even further

to state that rule of presumption is that once there is a

doubtful fact then that may be inferred from certain other

proved facts. While inferring the existence of a fact from

another set of proved facts , the Court exercises the process

of reasoning and reaches to a logical conclusion so as to the

most probable position pursuant to Section 114 of the

Indian Evidence Act, 1872. He submitted that in the

present case the Deptt. is settling the whole case on

presumption which is not correct. He accordingly

submitted that the order of the Ld. CIT(A) be set-aside and

the ground raised by the assessee be allowed.

the order of the Ld. CIT(A).

the sides, perused the orders of the A.O. and the Ld. CIT(A)

and the paper book filed on behalf of the assessee. We have

also considered the various decisions cited before us. We

find the AO in the instant case made addition of

140 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Rs.30,00,000/- to the total income of the assessee being

unsecured loans of Rs.25 lakhs from M/s Giant Maker

Developers Pvt. Ltd. aned Rs.5 lakhs from NBS Engineers

India Pvt. Ltd. obtained by the assessee on the ground that

the assessee has failed to prove the identity, genuineness

and creditworthiness of the loan creditors and also tried to

hide actual nature of the payment by showing its liability.

AO, the reasons of which have already been reproduced in

the preceding paragraph. It is the submission of the Ld.

counsel for the assessee that the amount of Rs.30,00,000/-

received by the assessee are in fact the recovery of principal

amount earlier given to Mr. Abhay Salwan and the addition

made by the AO and sustained by Ld. CIT(A) are on

presumption basis. It is the settled position of law that for

allowing any cash credit as genuine, the onus is always on

the assessee to substantiate with evidence to the

satisfaction of the AO regarding the identity and

creditworthiness of the loan creditor and genuineness of the

141 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

transactions. However, the assessee in the instant case has

not discharged the onus. The submission of the ld. counsel

for the assessee that these are in fact recovery of principal

amount also needs to be established by the assessee.

Considering the totality of facts of the case and in the

interest of justice, we deem it proper to restore this issue to

the file of the AO with a direction to give one more

opportunity to the assessee to substantiate his case and

decide the issue as per fact and law. We hold and direct

accordingly. The ground raised by the assessee is

accordingly allowed for statistical purposes.

dismissed.

ITA.No.9152/Del./2019 – A.Y. 2016-17 :

law for making disallowance of interest for

Rs.2,39,785/- which is a deduction allowable while

computing chargeable income u/s 22 to 24.

142 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

law for making addition of Rs.10,000 based on

seized paper whereas per assessee the said entry is

rough noting given to driver for business purposes.

arising out of this appeal and for any addition,

deletion, amendment and modification in the grounds

of appeal before the disposal of the same in the

interest of substantial justice to the assessee.

as under:-

Because the action is being challenged on facts i)

& law for making additions in assessment

proceedings u/s 153A wherein the seized

documents Pg. 13-14 of Annexure A-10 & Pg.46 of

Annexure A-10 relating to assessee were found

from the premises of third parties i.e., LV Rustore

Appliations Pvt. Ltd., RR Carwell Pvt. Ltd.,

Blossom Landeal Pvt Ltd., & Elvi Bardahl India

143 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Pvt. Ltd., 17/6, Hanspal Industrial Complex,

Mathura Road, Faridabad, therefore the additions

on the basis of the said documents can only be

made u/s 153C of the Act & not u/s 153A of the

Act.

press the additional ground for which the ld. DR has no

objection. Accordingly, the additional ground raised by the

assessee is dismissed.

order of the Ld. CIT(A) in confirming the addition of

Rs.2,39,785/- made by the AO being interest on borrowed

capital for house property.

ground is identical to the ground of appeal no. 7 in ITA

No.9149/Del/2019. We have already decided this issue and

the ground raised by the assessee on this issue has been

dismissed. Following similar reasoning, this ground of the

assessee is dismissed.

144 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

addition of Rs.1 lakhs made by the AO as unexplained

money.

during the course of assessment proceedings noted that

during the course of search at premises H. No.128, Sec 16,

Faridabad, page 11 of Annexure A-1 was seized. It contains

entry dated 14.04.2015 of Rs.1,00,000/- against narration

of Yadav bhai le gaye, 65000 unke, 35000/- mere. In

absence of any satisfactory explanation given by the

assessee, the AO made addition of Rs.1 lakhs u/s 69A of

the Act.

holding that it is clear entry of handing over cash of Rs.1

lakh to Yadav Bhai and no specific explanation was given by

the assessee either before the AO or before him. Since, the

ld. Counsel for the assessee could not explain before us also

regarding the nature and source of the entry of Rs.1 lakh,

145 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

therefore, we uphold the addition made by the AO and

sustained by Ld. CIT(A). However, the alternate contention

of the ld. Counsel for the assessee that the benefit of

telescoping be given is accepted. The AO is directed to give

the benefit of telescoping as held by us in the preceding

years. The ground raised by the assessee is accordingly

partly allowed for statistical purposes.

dismissed.

Revenue are dismissed and all the appeals filed by the

assessee are partly allowed for statistical purposes.

Order pronounced in the open Court on11.02.2022.

Sd/- Sd/- (Ms. SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi, Dated 11th February, 2022 f{x~{tÜ 9 VBP/-

146 ITA.Nos.9147 to 9152 & 9448 & 9449/Del./2019 Shri Vishnu Kumar Garg, Faridabad.

Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘F’ Bench, Delhi 6. Guard File.

// By Order //

Assistant Registrar : ITAT Delhi Benches : Delhi.