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Income Tax Appellate Tribunal, MUMBAI BENCH “H” MUMBAI
Before: SHRI OM PRAKASH KANT & MS KAVITHA RAJAGOPAL
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 14/10/2020 passed by the learned Commissioner of Income- tax(Appeals)-48, Mumbai [in short the Ld. CIT(A)] for assessment year 2011-12, raising following grounds:
Shri Hirachand Javerchand Jain “The ground or grounds of appeal are without prejudice to one another.
1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) failed to appreciate that:- a) the assessment completed u/s. 143(3) r.w.s. 153A is against the provisions of law and as such liable to be annulled: and b) The AO has not issued notice u/s. 143(2) after the date of furnishing the return of income and before commencing the assessment proceedings or in the course of assessment proceedings. 2.a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) failed to appreciate that the AO has erred in :- a) determining the turnover of cheque discounting activities at Rs.107.89 crores as against such turnover of Rs.22.95 crores as worked out by the Appellant; and b) estimating the commission/brokerage income@0.8% ( reduced to 0.6% by the CIT(A) of the turnover) as against 0.05% of the turnover as shown by the Appellant, and thereby the ld. CIT(A) further erred in confirming the addition to the extent of Rs. 64,73,400/- (@0.6% of the turnover) out of addition of Rs.85,16,406/- made by the AO to the income of the Appellant on account of commission/brokerage income on cheque discounting activities and in doing so the ld. CIT(A)
Shri Hirachand Javerchand Jain further erred in not allowing set off of profit of 1,14,794/- already shown in the books of account and the AO has allowed such relief. The addition made to the income of the Appellant by the AO and confirmed by the ld. CIT(A) is incorrect and invalid as the same is based on guess work and suspicion. b) The ld. CIT(A) failed to appreciate that: i) the turnover of cheque discounting activities and commission/brokerage earned thereon as shown by the Appellant is supported by the seized materials; ii) The Appellant was never the owner or the operator of the bank accounts used for cheque discounting purposes; iii) The Appellant was working only as cheque discounting broker; and iv) the details and materials suggesting transactions of cheque discounting activities to the tune of Rs.107.89 crores through the Appellant on which the ld. CIT(A) as well as AO has relied upon have not been provided to the Appellant for refutal inspite of specific request by the Appellant for the same. C) In reaching to the conclusion and confirming such addition, the ld. AO omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors.
Shri Hirachand Javerchand Jain 3.a) On the facts and circumstances of the case and in law, the ld.CIT(A) erred in confirming the addition of Rs. 41,00,000/- made by the AO to the income of the Appellant on account of unexplained cash found at the premises of the Appellant in the course of the search invoking the provisions of section 69A. b) The ld.CIT(A) failed to appreciate that the Appellant has explained the nature and source of acquisition of the cash found in the course of the search satisfactorily. c) In reaching to the conclusion and confirming such addition, the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors.
4. The ld. CIT(A) erred in holding that levy of interest u/s. 234A and 234B for the Income Tax Act, 1961 is mandatory. The Appellant denies its liability for such interest.
5. The ld. CIT(A) erred in holding that the ground raised
disputing initiation of penalty proceedings u/s. 271(1)(c) is premature. The Appellant denies its liability for such penalty.”
2. Briefly stated facts of the case are that a search and seizure action under section 132(1) of the Income-tax Act, 1961 ( in short the „Act‟) was carried out at the premises of the assessee on 10/01/2011 along with the premises of M/s „Lodha‟Real Estate Group. For the year under consideration, the assessee filed return of income on 05/11/2012 declaring total income of Shri Hirachand Javerchand Jain ₹ 2, 47, 790/-. Subsequently, statutory notices under the „Act‟ were issued and assessment under section 143(3) read with section 153A of the Act was completed on 18/02/2013, wherein addition of ₹ 85, 16, 406- from commission/brokerage on cheque discounting and addition for unexplained cash of ₹ 41, 00, 000/- was made to the returned income. On further appeal, the Ld. CIT(A) upheld the additions made by the Assessing Officer. Aggrieved, the assessee is before the Income-Tax Appellate Tribunal (ITAT), raising the grounds as reproduced above.
Before us, the learned counsel of the assessee filed a paperbook containing pages 1 to 78.
In ground No. one of the appeal , the assessee has challenged validity of the assessment on two grounds. (a) Firstly, that assessment completed under section 143(3) read with section 153Ais against the provisions of the law therefore liable to be annulled. (b) Secondly , that no notice under section 143(2) of the Act was issued by the Assessing Officer after filing return of income by the assessee. 4.1 The facts in brief qua the issue in dispute are that in the case of the assessee search u/s 132(1) of the Act was carried out on 10/01/2011 and therefore assessment years 2005-06 to 2010- 11 are covered under the search period i.e. six assessment years prior to the assessment year in which search was carried out and assessment year 2011-12 is the current year of the search. Under the provisions of the Act, in case of search year , the Shri Hirachand Javerchand Jain return of income was due for filing as on date of search , therefore assessment was abated and addition under the normal/regular provisions as well as in respect of incriminating material found in the course of the search could be made in AY 2011-12. Therefore, the ground 1 (a) that no addition could have been made in asst year, except based on incriminating material is rejected. The ground in accordingly dismissed. 4.2 The fact that no notice under section 153A of the Act was issued by the Assessing Officer in relation to the assessment year under consideration asking the assessee to file return of income has not been disputed by the parties. 4.3 The assessee filed return of income for the year under consideration on 05/11/2012 declaring total income at ₹ 2, 47, 790/-manually. In the performa of the return filed, the assessee ticked the checkbox against section 153A and also filed a letter wherein it was mentioned that said return was filed in response to notice under section 153A of the Act. 4.4 A notice under section 143(2) of the Act was issued by the Assessing Officer on 29/06/2012 (PB-25) prior to furnishing the return of income by the assessee on 05/11/2012 and thereafter no notice under section 143(2) of the Act has been issued by the Assessing Officer, prior to completion of the assessment. 4.5 In view of the above background of undisputed facts, we are, discussing the arguments of the parties in respect of the ground No. 1(b) .
Shri Hirachand Javerchand Jain 4.6 The learned counsel of the assessee submitted before us that the Assessing Officer had not issued any notice under section 143(2) the Act after the date of the furnishing of the return of income by the assessee and therefore the impugned assessment order dated 18/02/2003 is without jurisdictions and invalid. He further submitted that the defect of non-issuing of notice under section 143(2) of the Act subsequent to the filing of the return of income, cannot be cured even under section 292B of the Act. In support of the Contention, the learned counsel of assessee relied on the decision of the Hon‟ble Supreme Court in the case of CIT Vs Laxman Das Khandelwal (2019) 108 taxmann.com 183 (SC). 4.7 Per contra, the learned department representative (DR) submitted that return of income filed by the assessee was the non-est as same was filed under section 153A of the Act and not under section 139 or under section 142(1) of the Act as required under regular assessment procedure. He submitted that notice under section 143 (2) of the Act is required to be served on the assessee only in those cases where a return of income has been furnished under section 139 of the Act or in response to notice under subsection 1 of section 142 of the Act . He submitted that in the instant case neither return of income was filed under section 139 nor under section 142(1) of the Act ,therefore there was no legal requirement to serve a notice under section 143(2) of the Act and the notice dated 29/06/2012 shown to have been issued under section 143(2) of the Act was a completely
Shri Hirachand Javerchand Jain infructuous and redundant notice, which cannot be taken into consideration being not a valid notice. The learnedDRdistinguished the decision of the Hon‟ble Supreme Court relied upon by the learned counsel of the assessee in the case of CIT Vs Laxman Das Khandelwal (supra). He submitted that in said case there was no dispute that no return of income was filed under section 139 or section 142(1) of the Act, as against the issue of no return filed under section 139 or 142(1) of the Act in the instant case. 4.8 With reference to above arguments of the learned DR, in rejoinder ,the learned counsel of the assessee submitted that the return of income dated 05/11/2012 cannot be treated as non- est merely for the reason that said return of income was claimed to have been filed in response to notice under section 153A of the Act. The learned counsel submitted that if said return of income was to be held as non-est, then the Assessing Officer would have so mentioned in the assessment order, whereas he has made a positive statement that return of income was filed by the assessee on 05/11/2012 declaring total income of ₹ 2, 47, 790 /- and then immediately thereafter in para three of the order , he states that subsequently statutory notice under section 143(2) was issued and served upon the assessee. 4.9 The learned counsel of the assessee further contended that even if the assessee had erroneously tick marked the wrong box of section 153A, which was also followed by a letter , it was the Shri Hirachand Javerchand Jain duty of the Assessing Officer to bring to the notice of the assessee as prescribed under section 139(9) of the Act holding it as a defective return and having not done so by the Assessing Officer, it can be presumed that he had accepted the said return of income under section 139 of the Act inasmuch as he had taken all the steps to proceed to assess the total income under the Act. 4.10 He further submitted that assessee being a layman, a person from non-tax background, cannot be held accountable for merely ticking wrong section at the time of filing return of income to treat the said return as non-est, when the return of income for prior years had been filed pursuant to notice under section 153A of the Act. 4.11 The ld. counsel of the assessee submitted that the Assessing Officer had considered the said return of income and moved ahead and therefore now the learned department representative, at the appellate stage cannot improve the case of the Department by holding that said return of income was non-est. 4.12 According to him, the Assessing Officer had accepted the aforesaid return of income as valid, which should be treated as return filed under section 139(4) of the Act and he ought to have issued notice under section 143(2) of the Act after filing of return of income and having not done so, the entire assessment proceedings are bad in law.
Shri Hirachand Javerchand Jain 4.13 In respect of mentioning by the Assessing Officer of assessment completed under section 143(3) read with section 153A is concerned, the ld departmental representative submitted that assessment was actually completed under section 144 of Act and wrong mentioning of the section in the assessment order was a mistake curable under section 292B of the Act. He submitted that Assessing Officer duly issued notice under section 142(1) of the Act dated 09/07/2012 (PB-26) calling for details in respect of incriminating material found during the course of the search and after considering submission of the assessee, passed a best judgement assessment order under section 144 of Act, which inadvertently has been mentioned in heading of the order as passed under section 143(3) read with section 153A of the Act. The learned DR submitted that the assessee did not filed return of income under section 139 of the Act and therefore the Assessing Officer was empowered to make best judgement assessment under section 144 of Act, after giving an opportunity of being heard to the assessee. He further submitted that, since in this case, the notice under section 142(1) of Act was issued by the Assessing Officer prior to making of assessment, therefore the Assessing Officer was not legally required to serve a specific show cause notice for best judgement. Therefore the assessment order in the case has been passed by the Assessing Officer in accordance with the provisions of section 144 of the Act. 4.14 The learnedDR refers to section 292B of the Act and submitted that the assessment order is in substance and effect in Shri Hirachand Javerchand Jain conformity with the intent and purpose of the Act. He submitted that in number of judgements, it has been held that quoting of wrong section in the assessment order is covered and curable under section 292B of the Act. In support of the contention, the learned DR relied on the decision of the (coordinate bench of the Tribunal, Bangaluru in the case of DCIT Vs KM Nagraj (2017) 82 taxmann.com 170 (Bangluru -Trib) which has been further upheld by the Hon‟ble High Court of Karnataka as reported in KM Nagraj Vs DCIT (2020) 120 taxmann.com 425 ( Karnataka). 4.15 The learned counsel of the assessee vehemently opposed the argument of the learned departmental representative that Assessing Officer framed the assessment under section 144 of the Act and there was an inadvertent error of mentioning section 143(3) read with section 153A of Act. He submitted that explanation of the learned DR that said defect was curable, is grossly misconceived. He submited that arguments of the learned DR cannot be accepted for the reason that the Assessing Officer has neither given any reasons for framing such an order under section 144 of Act nor it is apparent from conduct as he has accepted the return of income as a valid return. He further submitted that all the relevant details had been filed with the Assessing Officer and he after taking cognizance of such details in conjunction with the return of income filed completed the assessment and there is no whisper of any intent in assessment order of passing a best judgement assessment. It was submitted that once the Assessing Officer had accepted the return of Shri Hirachand Javerchand Jain income filed, though ticking wrong section, and relevant details as required by the Assessing Officer were filed, the assessment order cannot be said to be framed under section 144 of the Act. As regard to the decision in the case of KM Nagraj (supra), the learned counsel submitted that same relates to different facts and therefore cannot be applied to the case of the assessee. 4.16 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The first issue, is whether there was requirement of issuance of notice under section 143(2) of the Act in the instant case, because once it is held that it was mandatory or prerequisite to issue notice under section 143(2) of the Act in the case, then non-compliance of the same, consequently lead to assessment being bad in law due to lack of jurisdictional requirement. As far as the issue of notice under section 143(2) of the Act is concerned, the provisions of the section during relevant assessment year are reproduced as under: “Where a return has been furnished under section 1329, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,_ (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date Shri Hirachand Javerchand Jain to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim: Provided that no notice under this clause shall be served on the assesssee on or after the 1st day of June, 2003; (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return: Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.” 4.17 From the plane reading of section 143(2) of the Act, it is evident that such a notice can be issued subsequent to the filing of the return of income either under section 139 or under section 142(1) of the Act. Therefore the next issue which arises before us is whether the return of income filed by the assessee on 05/11/2012 was filed in terms of section 139 or in response to notice under section 142(1) of the Act. A copy of notice under Shri Hirachand Javerchand Jain section 142(1) of the Act dated 09/07/2012 is placed on page 26 of the paperbook. On perusal of the said notice, it is evident that same was issued for filing accounts or documents or information specified therein and not for filing return of income. The only dispute left is whether the return of income which was filed manually ( not electronically ) by the assessee on 05/11/2012 , is filed in terms of section 139 of the Act or not. It is undisputed that in the return of income filed by the assessee on 05/11/2012, the assessee was required to tick box to show under which section the return was filed and the assessee ticked the box of section 153A. Further, the assessee filed a letter along with the return of income and in said letter also the assessee emphasized that the return of income filed was in response to the notice under section 153A of the Act, whereas actually no such notice under section 153A of the Act was issued by the Assessing Officer in respect of the assessment year under consideration. Once the assessee has categorically mentioned its intention by way of letter and ticking the relevant box , as under which section the return is filed by him, there is no scope for further interpretation for considering that return might have been filed under other provisions i.e. section 139 of the Act. Accordingly, we reject the contention of the learned counsel of the assessee that the return of income could be considered to be filed under section 139(4) of the Act. It is undisputed that no notice under section 153A of the Act was issued by the Assessing Officer for the year under consideration, then said Shri Hirachand Javerchand Jain return of income filed under section 153A of the Act becomes non-est return in the eyes of the law. This defect of filing a return of income in the wrong section is a fatal and fundamental defect, having legal implication for both the parties . Moreover, the assessee participated in the assessment proceeding and did not challenge the requirement of issuance of notice under section 143(2) of the Act. During the course of the assessment proceeding also the assessee did not bring it to the notice of the Assessing Officer that concerned return of income should be treated as having been filed under section 139 (4) of the Act and therefore at this stage this plea of the assessee for considering as having been filed the return of income under section 139 is rejected. 4.18 Another logical inference is that when no return of income has been filed under section 139 or in response to notice under section 142(1) of the Act and whatever return of income filed is non-est in the eyes of the law , the then natural corollary is that assessment has to be completed under section 144 of the Act. 4.19 As far as curability of mentioning wrong section i.e. Section 143(3) read with section 153A of the Act instead of section 144 , in heading or title of the assessment order is concerned, the Tribunal in the case of DCIT Vs KM Nagraj (supra) has held as under:
Shri Hirachand Javerchand Jain We heard rival submissions and perused the material on record. The only issue that arises in the persent appeals is whether the CIT(A) was justified in cancelling the impugned assessment order on the ground that wrong section was mentioned in the assessment orders. Notice for assuming jurisdiction for framing assessment order was issued under wrong section i.e. 153A instead of 153C. It is undisputed fact that tere was no search warrant in the name of the respondent-assessee. There is no dispute that incriminating material relevant to respondent- assessee was found as a result of search and seizure operation in the case of M/s. Corporate Leizure & Porperty Development (P) Ltd. It is clear that AO can assume jurisdiction only u/s. 153C as no search warrant was issued in the name of the respondent- assessee. But the AO had mentioned section 153A in the notice issued calling upon the respondent-assessee to file return of income as well as in the orders of assessment. Whether this fact alone shall invalidate the assessment order? This requires to be adjudicated in the light of the provisions of section 292B of the Act which provides that return of income or notice or summons shall not be invalidated on certain grounds. The provisions of section 292B are extracted below: “Return of income, etc., not to be invalid on certain grounds No return of income, assessment, notice, summons or other proceedings, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be Shri Hirachand Javerchand Jain deemed to be invalid merely by reason of any mistake, assessment, notice, summons or other proceedings if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act.” A perusal of above section makes very clear that notices or summons shall not be invalided by mere reason of any mistake merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of the Act. The Hon‟ble Jurisdictional High Court, in the case of Micro Labs Ltd.(supra), had dealt with the scope of the provisions of section 292B and the relevant observations are as follows: “The purport of section 292B is that in the even of any mistake, defect or omission in the notice or other proceedings, if the same is in conformity with or according to the intent and purpose of the Act, the notice cannot be termed as invalid. The notice should be in conformity with and in accordance with the intent and purpose of the Act. The intent and purport as provided under Section 158BC is to serve a notice on the assessee by providing a time not less than 15 days and not more than 45 days. This is the purport and intent of the section. No extra time can be granted subsequently. Time to be granted is a maximum Shri Hirachand Javerchand Jain of 15 and maximum of 45 days. The same has to be specified in the notice. Hence, grant of extra time is without authority in law. If cannot validate an invalid notice. Moreover, it is relevant to note that the notice issued is on printed form wherein the details are required to be filled up. At the bottom of the notice, is a printed matter, which reads that the time to be granted shall not be less than 15 days. In spite of this, the time granted to the asssesse is less than 15 days. Therefore, it is apparent that there has been a violation of law. Therefore, when the sum and substance of the notice issued to the assessee is not in conformity with the purpose of the Act, section 292B has no application. Hence, question No. 2 is answered in favour of the assessee and against the Revenue.” The Sine qua non for issuing notice u/s 153A of the Act is that there should be warrant of search in the name of the assessee to whom notice was issued. In the present case, undisputedly no search warrant was issued in the name of the respondent- assessee but the respondent-asssessee had responded to the notice issued u/s 153A by filing return of income, participated in the proceedings till the matter resulted in framing of the assessment order. During the course of assessment proceedings, the respondent-assessee was given due opportunity of meeting the case made against him and in the result there was no prejudice casued to the respondent-assessee. Furthermore, it is not the case of the respondent-assessee that his case even does not fall within the scope and ambit of the provisions of section Shri Hirachand Javerchand Jain 152C of the Act. The only mistake on the part of the AO is in mentioning section 153A instead of 153C. In the facts of the present case, the provisions of section 292B clearly come into play. Under the provisions of section 292B, certain acts are not to be treated as invalid by reasons of mistake or defect or omission either in the return of income, assessment, notice summons or other proceedings. In other words, notice cannot be invalidated by reason of any mistake such as one occurred in the present case i.e. mentioning section 153A instead of 153C. If this mistake is not allowed to be cured, the very purpose and object of enacting the provisions of section 292B is defeated. This notice, in substance and effect, is in conformity with or according to the intent and purpose of the Act. The purpose of issuing notice is all call upon the assessee to file return of income disclosing income found in the incriminating material found as a result of search and seizure in the case of M/s. Corporate Leisure & Property Development (P) Ltd. This being the intent and purpose of the provisions contained in section 153A and 153C, stands satisfied if the notice is responded and the assessee has participated in the assessment proceedings. The fact that wrong section was mentioned in the notice does not invalid the proceedings initiated pursuant thereto. In the present case, had the respondent-assessee not responded to notice and had raised such grounds of challenge, perhaps it would have been a different case altogether. But having respondent, participated in the proceedings, respondent-assessee cannot be allowed to turn around or raise objections for the first Shri Hirachand Javerchand Jain time before the CIT(A) seeking invalidation of the proceedings initiated by issuing notice u/s. 153A instead of 153C. Hon‟ble jurisdictional High Court in the case of CIT vs. Shri Durga Enterprises (44 tamann.com 442) dealing with a case where notice u/s. 148 was challenged on the ground that period within which specified, the Hon‟ble jurisdictional High Court quoting the provisions of section 292B of the Act held as under: “In the present case, as observed earlier, the assessee not only responded to the notice under Section 148 of the Act within one month, but on the basis of the return filed earlier, participated in the proceedings till the matter reached the FAA and was disposed of. A glance at Section 292B of the Act, shows that under this provision, certain Acts are not to be treated as invalid, may be by reason of any mistake, defect or omissions, either in return of income, assessment, notice, summons or other proceedings. In other words, a notice cannot be invalidated by reason of any mistake, such as the one occurred in the present case, namely, the period of filing return of income was not specified as contemplated by Section 148 of the Act. If such a defect is not allowed to be cured, or treated as invalid so as to declare the notice invalid, despite the fact that letter and spirit and participated in the proceedings, the very purpose/objective of the provisions contained in Section 292B of the Act would stand frustrated/defeated. The intent of the Legislature is clear from the language employed in this provision which states that a defective notice, such as the one in the present case, cannot Shri Hirachand Javerchand Jain be declared invalid by reason of any mistake, defect or omission , if the notice in „substance‟ and in „effect‟ is in conformity with or accordingly to the intent of purpose of this Act. The intent or purpose of issuing the notice is to call upon the assessee to filed return, if the Assessing Officer finds that income has escaped the assessment. This being the intent and purpose of the provisions contained in Section 148 of the Act, in our opinion, it stands satisfied if the notice is responded within reasonable time, which in the present case was 30 days, irrespective of the fact whether the period was specified or not in the notice for filling return of income. In the present case, if the assessee had not responded to this notice at all and had raised such ground of challenge, perhaps, he would not succeed (sic). But having responded and participated in the proceedings, he cannot be allowed to turn around and raise objection for the first time before the Tribunal seeking invalidation of the proceedings initiated by issuing notice under Section 148 of the Act. In the circumstance, we allow this appeal answering both substantial questions of law in favour of the Revenue and against the assessee. In view of the peculiar facts and circumstances of the case, there shall be not order as to costs.” The ratio laid down by the Hon‟ble jurisdictional High Court in the case cited supra is squarely applicable to the facts of the present case. We hold that the CIT(A) had passed the impugned orders blatantly ignoring the provisions of section 292B. Thus the order of the CIT(A) is per incuriam as it is passed in ignorance of plain Shri Hirachand Javerchand Jain provisions of the Act. The CIT(A), therefore, ought not to have allowed the appeals on the ground the assessments were not valid in law. However, we remand the matter to the file of the CIT(A) to adjudicate the matter on merits of the addition. 4.20 Respectfully, following the above, we are of the opinion that mistake of mentioning section 143(3) read with section 153A of the Act is curable under section 292B of the Act, therefore impugned assessment order has to be treated accordingly. In view of above discussion, we reject the contentions of assessee challenging validity of the assessment and accordingly dismiss the Ground No. 1(a) – (b) one of the appeal.
The ground No. 2 (two) of the appeal relates to addition of ₹ 85, 16, 406/-made by the Assessing Officer for brokerage on cheque discounting by the assessee, which has been restricted by the Ld. CIT(A)to the extent of ₹ 67, 73, 400/-. 5.1 The facts in brief qua the issue in dispute are that during the course of search proceeding at the office premises of the assessee located at „Kalbadevi Road‟, Mumbai, the assessee admitted that he was engaged as a broker by the „Lodha Group‟ for discounting of cheques for „Lodha Group‟ with various parties in the market . In the search proceeding , a file containing pages 1 to 175 was found by the investigation wing, which was inventorised as annexure A1. The page No. 1 to 80 of the Annexure A-1,except page 37 provided the information about the cheques collected by the assessee from „Lodha group‟ for Shri Hirachand Javerchand Jain discounting whereas page No. 81 onward including page No. 37 provided information about the cheques discounted by the assessee in the name of various account holders with various banks. The Assessing Officer computed amount of cheques received by the assessee as noted in seized documents to Rs. 26, 29, 61, 051/-. Similarly, he computed amount of cheques deposited as recorded in seized annexure at Rs. 13,60,99,800/-. As against the information in the seized records, the assessee in the return of income filed, declared brokerage from cheques discounting at₹ 1, 14, 794/-computing brokerage at the rate of 0.05% on cheques discounted of ₹ 22, 95, 67, 650/-. In view of no complete information provided by the assessee during the course of the assessment proceedingwith regard to datewise cheques discounted, datewise cheques encashed, cheques retained by him and cash handed over to the Lodha group, , the learned Assessing Officer rejected the income declared by the assessee in the return of income from cheques discounting . The Assessing officer made computation of brokerage from Cheque discounting from multiple databases. 5.2 The first computation of such income from brokerage was made by the Assessing Officer on the basis of the documents seized from the assessee. 5.3 The second computation of brokerage income has been made by the Assessing Officer from the information received from the investigation wing during search and post search investigation.
Shri Hirachand Javerchand Jain The investigation wing gathered the bank accounts of the concerns in whose name cheques were collected and on the basis of those bank statements , the Assessing Officer computed the amount of cheques discounted at₹ 91.90 crore. 5.4 The third computation of brokerage income has been made by the Assessing Officer on the basis of evidence found during search at the premises of Lodha group. During the course of search proceeding, the director of Lodha Group, sh Abhinandan Lodha admitted undisclosed income of ₹ 107.08 crore on sale of car parking. The modus operandi of sale of car parking and discounting of the cheques received from the prospective buyers by the „Lodha group has been summarised by the Assessing Officer as under: “The purchaser of car parking used to approach the developer of Lodha Group. If the terms of sale of car parking are accepted by the prospective buyer, the Lodha Group used to take a cheque from such buyer in the name of either of the following entities; 1. Navkar Enterprises 2. Nakoda Enterprises 3. Raj Vijay 4. Arihant Enterprises 5. Dev Industries 6. Hirani Enterprises 7. Shiv Shakti Enterprises Shri Hirachand Javerchand Jain 8. V Raj Enterprises 9. Weaves Impex 10. Vijaylaksmi and Co.
Arya Enterprises The cheques issued by the buyer were given to the seller i.e. Lodh Group. The Lodha Group used to pass on these cheques to the assessee for discount and the cash generated after discounting was collected by the assessee. The assessee used to hand over the cash so back to the employees of Lodha Group after reducing his commission. This aspect of modus operandi and disclosure on this account has been admitted by Shri Adhinandan Lodha. He is his statement has admitted while making the disclosure u/s. 132(4) interalia to a disclosure of Rs. 107.89 crores on account of undisclosed car parking charges received. The details of disclosure provided by Shri Abhinandan Lodha in his statement clearly mentions that the major chunk of disclosure made by his group is attributable to the undisclosed receipts on account of sale of car parking. The modus operandi evolved and involved in respect of sale of car parking hs already been dealt upon in the earlier paras. So to avoid repetition same is not dwelt again.” 5.5 The learned Assessing Officer requisitioned bank statement of the parties listed above and after cross verification of the same Shri Hirachand Javerchand Jain with the seized material found from the residence of the assessee, found that certain cheques received by the assessee for discounting were not appearing in the bank accounts of the above parties, therefore , the Assessing Officer was of the view that assessee had not provided complete detail of the bank account where cheques had been discounted and therefore he proposed to the assessee to consider total cheques of the car parking discounted by the Lodha group at Rs. 107.84 crores as cheques discounted by the assessee. The assessee reiterated that the amount of cheques discounted was at ₹22.95 crore only. The ld. Assessing Officer rejected the contention of the assessee observing as under: “Assessee‟s submission imprinted above has been carefully perused and considered. At the outset, it needs to be mentioned that during the course of search proceedings the seized documents were pertaining only for few days for the period October 2010 to December 2010. The assessee;s turnover of discounting cheques for these few days was Rs. 22.95 Crs. And since no documents were found for the other period does not mean that assessee was not engaged in these activities but he had time to ensure the papers are destroyed. It is clear that neither is the assessee submitting the details of the bank accounts through which the cheques were discounted, nor is the assessee giving details of the complete cheques discounted through him. Thus it has only to be inferred that the assessee is suppressing information. However, this office has on the basis Shri Hirachand Javerchand Jain of the declaration made by Abhinandan Lodha Group were 107.84 crore. In this regard, the finding given by the Delhi High Court in the case reported in [2012] 25 taxmann.com 227 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax-VII v. Chetan Lachman Das in ITT APPEAL NOS. 1788, 1789, 1791, 2021, 2022, 2023, 2024 & 2045 OF 2010 order dated AUGUST 7, 2012 has held that while holding that Seized material can be relied upon to also draw inference that there can be similar transactions throughout period of six years covered by section 153A has clearly brought out as under: …………………………………………………………… The case has great relevance in the case under consideration. Relying on the same and also relying on the other facts referred supra, it is clear that the submission made by the assessee cannot be taken by its face value taking into consideration the fact that the Lodha Group voluntarily made a disclosure of Rs. 107.80 Crs. On account of sale of car parkings to which all these cheque discounting activities pertain to. In the backdrop of these facts, it is needless to mention that assessee‟s submission does not hold any water and cannot be accepted. In the circumstances, the brokerage earned by the assessee during the under consideration is computed on an account of Rs. 107.80Crs.” 5.6 To support the theory of extrapolation of amount of cheques discounted by the assessee for the entire year on the basis of Shri Hirachand Javerchand Jain evidences of cheques discounted for a particular period, the ld. Assessing Officer relied on the decision of the Hon‟ble Delhi High Court in the case of CIT Vs Chetan Das Lachman Das (supra), wherein Hon‟ble High Court has relied on the decision of the Supreme Court in the case of HM Esufali Abdulali (supra). The learned Assessing Officer and Ld. CIT(A) both have reproduced the relevant paras of the decision of Hon‟ble Delhi High Court (supra) in the impugned orders. Relying on the above decision the Assessing Officer computed the amount of cheques discounted by the assessee at ₹ 107.80 crore. 5.7 Thereafter, the Assessing Officer ascertained the rate of brokerage earned by the assessee on the activity of cheques discounting. The Assessing Officer has noted that in the return of income assessee has admitted brokerage commission at the rate of 0.05% on cheques discounted of ₹ 22.95 crores and offered income of ₹ 1, 14, 794/-. The ld. Assessing Officer has further noted that during the course of search proceeding in the case of one of the employee of Lodha Group namely Sh somanathan Nair , certain documents were seized by the investigation wing where assessee has been shown to have paid brokerage at the rate of 0.8%. The assessee explained that brokerage shown by the assessee in the return of income was net brokerage income, which is after deducting expenses incurred by him for earnings of brokerage. After considering, submission of the assessee, the ld. Assessing Officer computed brokerage income of the assessee at ₹ 86, 31, 200/-and after Shri Hirachand Javerchand Jain deducting a sum of ₹ 1, 14, 794/-which was already declared by the assessee in the return of income, he made a net addition of ₹ 85, 16, 406/-observing as under: Accordingly, the brokerage income of the assessee is worked out on the basis of disclosure of Rs.107.89 Crs made on account of car parking sales by the Lodha Group as disclosed earlier. The brokerage Income on amount of Rs. 107.89 Crs. Is 0computed @0.8% for the reasons stated earlier works out to Rs. 86,31,200/- as mentioned that before making such variation, as stated earlier following the dictum of principle of natural justice the assessee was given an opportunity to make his submission in this regard. In response to same, assessee made a submission which is reproduced above wherein he has denied having transactions more than Rs. 22.95 crores. The mere act of disowning the transaction is no plausible explanation which can be accepted keeping in view the facts that :- i) Lodha Group has offered on account of car parking of Rs. 107.89 crores while no other agent other than Sh. Hira Lal Jain was engaged for bill discounting. ii) The cheque discounted list seized during the raid when compared with the bank statements of the parties by whom cheques are discounted, shows that the number of cheques are not appearing in the bank statement which Shri Hirachand Javerchand Jain proves that there may be other bank accounts used for the bill discounting. Hence the assessee‟s statement that he has discounted cheques not more than Rs. 22.95 crores only is not acceptable. Vide this office letter dtd 21-1-2013 the assessee was given an opportunity to explain why most of the cheque discounted through him as appearing in the seized papers of bill discounting are not appearing in the bank statements of persons engaged for these activities. In response to this notice the assessee vide his letter dated 28-1-2013 made a submission which has already been reproduced above wherein the mentions that he was supposed to discount the cheques which were handed over to him by Lodha Group and it was the prerogative of the Lodha Group which cheques to be given to him for discounting and what is to be done with the other cheques. This is just a lame excuse put forth by the assessee knowing fully well that it is a hollow excuse put forth by him as he was the only prominent major beneficiary of discounting brokerage. Moreover the onus is on him to produce his books of account of brokerage, to show the cheques discounted by him, the bank accounts used by him to get the same discounted and to provide the date wise details of the same. Not having discharged his own onus and colluding with the Lodha Group to hide the Shri Hirachand Javerchand Jain reald beneficiary of the cheques, the assessee cannot be turn back and allege that he be given benefit of the expenses when the same are neither correct nor proved. Therefore the statement of the assessee that he has only discounted cheques of Rs. 22.95 is not acceptable and brokerage is worked out at the total amount of Rs. 107.89 crores declared by the Lodha Group which comes to Rs. 86,31,200/-. Accordingly, a sum of Rs. 85,16,406/- (Rs. 86,31,200- Rs. 1,14,794) is added to the total income on this account. Penal proceedings u/s. 271(1)(c) and 271AAA are initiated. 5.8 Before the Ld. CIT(A), the assessee assailed the finding of the Assessing officer on various counts. Firstly, the commission on cheques discounting given by the Lodha Group was shared between assessee and the party who discounted the cheque or cash (i.e. list of 11 parties), thus the composite brokerage charged of 0.8% was divided into two parts i.e. firstly , the charges of the person who discounted the cheque , which was 0.75% and secondly charges of the broker (i.e the assessee,) which was 0.05%. The second argument made by the assessee was that in case one of the party who discounted the cheque i.e sh Deven Kamlesh prop of M/s Dev industries, assessment was reopened for receipt of commission against cheque discounting. The Ld. CIT(A) concurred with the Assessing Officer as far as amount of cheque discounted computed at ₹ 107.89 crore, however rate of brokerage Shri Hirachand Javerchand Jain /commission has been restricted by the ld CIT(A) to 0.60% and accordingly addition for brokerage has been restricted by the Ld. CIT(A) to Rs. 67, 73, 400/-. The relevant finding of the Ld. CIT(A) is reproduced as under: The next issue to be decided here is the rate of profit on account of such transactions. The assessee has claimed, his rate of profit is 0.05% however, Ld AO has adopted rate at 0.80% on the basis of statement of Shri Somnath Nair, one of the employee of Lodha Group. Certain papers were seized from the premises of Somnath Nair, which indicated profit/commission for cheque discounting was to the tune of 0.80%. Therefore, adoption of rate of 08.% also does not appear out of the way. However, assessee argued that, there are other persons and layers were involved in whole exercise with whom commission is shared. Assessee further mentioned that there are people in whose bank account cheques are credited and they also charge some commission. The assessee is this regard has relied upon the case of Deven Kavish Jain, in whose case the Department has made an assessment on the basis of identical transactions, recovered in case of present assessee and in connection with Lodha Group case. Therefore, I am of the view that the assessee may be given some benefit on account of various layers of agents involved in such task. Considering the facts in totality, it will be fair and reasonable to adopt the rate of commission in the hands of the assessee at Shri Hirachand Javerchand Jain 0.60% as against 0.80% adopted by AO. The amount of addition, accordingly, works out at Rs. 64,73,400/-. Thus assessee gets a relief of Rs. 20,43,006/-. Accordingly, the AO is directed to restrict the addition at Rs. 67,73,400/-. 5.9 Before us, the learned counsel of the assessee reiterated the submission which were made before the Ld. CIT(A). The ld. departmental representative on the other hand relied on the order of the lower authorities. 5.10 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. As regard to the quantum/turnover of the brokerage/commission income of cheque discounting is concerned, the contention of the assessee is that amount recorded in seized documents of ₹ 22, 95, 67, 650/-is the correct amount of turnover for considering the undisclosed brokerage/commission income of cheque discounting. The learned counsel of the assessee contended that there were several brokers doing brokering business of cheque discounting for the Lodha group and assessee was one out of those brokers. This contention of the assessee is not supported by documentary evidences. The assessee asserts that there were other brokers in cheque discounting for the sale amount of car parking of Lodha group, then onus was on the assessee to furnish before the Assessing Officer an affidavit from the director of the Lodha group along with the name and address of other brokers and Shri Hirachand Javerchand Jain amount of cheque discounted by them during assessment proceeding. Merely making a statement by the assessee, the documentary evidence found in the course of the search indicating involvement of the assessee solely in cheque discounting of sale of car parking of Lodha group cannot be brushed aside. The Lodha group has declared undisclosed income ₹ 107.89 crore from sale of car parking for the assessment year under consideration. Since we have held that it is the assessee only who had executed the job of cheque discounting for the Lodha group , the corresponding turnover for the purpose of brokerage /commission on such cheque discounting is also liable to be assessed in the hands of the assessee in the year under consideration . The learned counsel of the assessee further contended that the turnover of the bank account of the parties who discounted the cheque cannot be treated turnover of the assessee for the simple reason that said parties used to do business of cheque discounting for other persons also in the market. As far as this contention is concerned, we are of the view that said amount was reffered by the ld Assessing Officer as a second option for computing the quantum or turnover of cheque discounting, however finally Assessing Officer has computed the quantum of cheque discounted on the basis of the amount of sale of car parking by the Lodha group and therefore this contention of the Ld Counsel of assesee is not relevant now. Further the learned counsel of the assessee, with reference to books of Shri Hirachand Javerchand Jain accounts maintained, submitted that all the transactions of cheque discounting have been found in Annexure A1 ( 175 pages) and therefore it was not relevant that no separate books of account were maintained by the assessee and therefore same could not be produced before the Assessing Officer in respect of the business of broking cheque account. He submitted that the bank accounts used for cheque discounting belong to other parties and none of those bank accounts were operated by the assessee therefore to consider deposits and withdrawals in those accounts as belonging to the assessee was not justified. As regarding to this contention, we are of the opinion that the seized documents pertained only for a few days for the period from October 2010 to December 2010 only. The learned Assessing Officer and Ld. CIT(A) has relied on the decision of Hon‟ble Delhi High Court in the case of CIT Vs Chetan das Lchhman das (supra), wherein the Hon‟ble High Court has analysed the decision of Hon‟ble Supreme Court in the case of HM Esufali HM Abduali (supra). In said case the flying squad of sales tax department inspected the business premises of the assessee and found a bill book for the period of 19 days from September 1-19, 1960 showing sales of value of ₹ 31, 171/-which had not been entered in the account books maintained by the dealer. The sales tax officer initiated reassessment and on the basis of sales out of books of account for the period of 19 days , estimated the escaped turnover for the entire accounting period. The matter came before the Shri Hirachand Javerchand Jain Hon‟ble Supreme Court. The Hon‟ble Supreme Court held that the dealer did not establish any justified reason for not entering in his accounts the dealing noted in the notebook seized. The Hon‟ble Supreme Court declined to interfere with the best judgement of the sales tax officer, because the estimate made was a bonafide estimate and it was based on rational basis , without any bias. The finding of the Hon‟ble Supreme Court (supra) reproduced by the learned Assessing Officer in para 14 is extracted as under: “It is now proved as well as admitted that his dealings outside his accounts during a period of 19 days were of the value of Rs. 31,171.28. From this circumstances, it was open to the Sales tax Officer to infer that the assessee had large-scale dealings outside his accounts. The assessee has neither pleaded nor established any justifiable reason for not entering in his accounts the dealings noted in the bill book seized. It is obvious that he was maintaining false accounts to evade payment of sales tax. In such a situation, it was not possible for the Sales Tax Officer to find out precisely the turnover suppressed. He could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him is not arbitrary and has nexus with facts discovered, the same cannot be questioned. In the very nature of things the estimate made may be an over-estimate or an judgment”. It is true that the basis adopted by the officer should be relevant to the estimate made. The High Court was wrong in assuming that Shri Hirachand Javerchand Jain the assessing authority must have material before it to prove the exact turnover suppressed. If that is true, there is no question of “best judgment” assessment. The assessee cannot be permitted to take advantage of his own illegal acts. It was his duty to place all facts truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove conclusively what turnover he had suppressed. That fact must be within his personal knowledge. Hence, the burden of proving that fact is on him. No circumstances has been placed before the assessing authority to show that the assessee‟s dealings during September 1, 1960 to September 19, 1960, outside his accounts were due to some exceptional circumstance or that they were proportionately more than his dealings outside his accounts during the remaining periods. The assessing authority could not have been in possession of any correct measure to find out the escaped turnover during the periods November 1, 1959 to August 31, 1960 and September 20, 1960 to October 20, 1960. The task of the assessing authority in finding out the escaped turnover was by no means easy. In estimating any escaped turnover, it is inevitable that here is some guess-work. The assessing authority while making the “best judgment” assessment, no doubt, should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact Shri Hirachand Javerchand Jain that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his “best judgment: and not of anyone else. The High Court could not substitute its “best judgment” for that of the assessing authority. In the case of “best judgment” assessments, the courts will have to first see whether the accounts maintained by the assessee were rightly rejected as unreliable. If they come to the conclusion that they were rightly rejected, The next question that arises for consideration is whether they basis adopted in estimating the turnover has reasonable nexus with the estimate made. If the basis adopted is held to be are relevant basis even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed. In the present case, there is no dispute that the assessee‟s accounts were rightly discarded. We do not agree with the High Court that it is the duty of the assessing authority to adduce proof in support of its estimate. The basis adopted by the Sales Tax Officer was a relevant one whether it was the most appropriate or not. Hence the High Court was not justified in interfering with the same.” 5.11 In the instant case, if the turnover recorded in seized documents for the period of two months is extrapolated for the entire accounting period, the turnover may be more than the turnover which has been assessed on the basis of the undisclosed income declared by the Lodha group on sale of car Shri Hirachand Javerchand Jain parking, which was collected in cash by way of cheque discounting. The statement of sh Sanja Ambre , an office assistant at Lodha group, who was designated as director in various companies of the Lodha group was recorded during the course of search proceeding . He admitted that he was engaged in receiving the cash from parties, keeping the same in lockers and giving back to the party, as directed to him by Sh Somanathan Nair, ( person handling accounts of Lodha group) . In his statement recorded under section 132 (4) of the Act during the course of search proceeding on 10/01/2011 , he Stated the fact of cash received from the assessee against sale of car parking of the loader group. The relevant part of the statement available on paperbook page 48 is reproduced as under:
Shri Hirachand Javerchand Jain Shri Hirachand Javerchand Jain Shri Hirachand Javerchand Jain 5.12 Sh Somanathan Nair also endorsed collection of cash from parties in his statement recorded on 10/01/2011 under section 132(4) of the Act. The relevant part of the statement available on paperbook page 59 is reproduced as under: Q.3 Please give a brief about your job nature, your duties and responsibilities while performing your role in this organization. Ans. I do whatever job is entrusted to me by Mr. Abhinandan Lodha, Dy.Managing Director of the Lodha Group of companies. I perform the tasks of handling cash under the instruction of Mr.Abhinandan Lodha. Mr. Abhinandan Lodha instructs me as to where to collect the cash from, where to keep the cash and whom to give the cash. I account for the receipts and payments of cash. I write the details of the cash handled, by me, in small pieces of loose papers and small diaries. I give the details of cash receipts/ payments and daily balance to my boss, Mr. Abhinandan Loadh, on a daily basis in the office. Our office staff, Mr. Sanjay Amre and Ravindra Tawde, assist me in handling the physical cash. The cash are generally kept in several lockers kept with three safety vault operators. They are Amrut Lockers, Sardar Lockers and I don‟t remember the name of the concern that runs the third safety vault. However, the contact person in that safety vault is Mr.Ashok Jain whose number is 9769329523. 5.13 In view of the above, we do not find any error in the order of the Ld. CIT(A) in upholding the quantum or turnover of cheque Shri Hirachand Javerchand Jain discounting computed by the Assessing Officer at ₹ 107.89 Crores. 5.14 The next issue is regarding rate of commission or brokerage on cheque discounting. The assessee in the return of income has computed the brokerage/commission from cheque discounting at the rate of 0.05% on the amount of cheque discounted. The Assessing Officer, however adopted commission at the rate of 0.8% of the turnover on the basis of documents seized from the premises of Sri Somanathan Nayar as mentioned in show cause notice issued by the Assessing Officer to the assessee ( relevant part of which has been reproduced by the Assessing Officer on page 15 of the assessment order). Before Ld. CIT(A) the assessee claimed that entire 0.8% commission was not earned by the assessee and it was shared between the assessee and the party who finally discounted the cheque and the share of the assessee was only upto 0.05%. The Ld. CIT(A) considered the submission of the assessee that the Assessing Officer has recommended reopening of assessment of one of the party who discounted the cheque namely Deven Kavish Jain Prop of Dev Industries and given benefit of sharing of commission by the assessee and restricted the rate of commission to 0.60%. 5.15 As far as rate of commission on the cheque discounting is concerned, the statement of three Sanjay Ambre (supra) is one Shri Hirachand Javerchand Jain of the reference point. The relevant part of a statement available on page 52 of the paperbook is reproduced as under:
Shri Hirachand Javerchand Jain Shri Hirachand Javerchand Jain Shri Hirachand Javerchand Jain 5.16 Though the assessee has claimed that it had shared substantial amount of commission with the party who discounted the cheque, but assessee did not furnish any documentary evidence of the amount of brokerage commission shared with them ,therefore in absence of any such evidence, Ld. CIT(A) is justified in estimating the commission/brokerage at the rate of 0.6% of the amount of cheque discounted. Accordingly, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and we uphold the same. 5.17 In view of our discussion, the ground No. 2 of the appeal of the assessee is dismissed.
The ground No. 3 (three) of the appeal relates to addition of Rs. 41 lakh made by the Assessing Officer in respect of unexplained cash found from the premises of the assessee. 6.1 The facts in brief qua the issue in dispute are that during the course of search proceeding cash of ₹ 41 lakh was found from a premise of the assessee. The assessee submitted that said cash was realised as part of cheque discounted and was to be handed over to the employees of Lodha group. During the assessment proceeding also the assessee repeated same argument without providing any documentary evidence in support and therefore, the Assessing Officer assessed the amount as unexplained cash of the assessee in terms of section 69A of the Act .
Shri Hirachand Javerchand Jain 6.2 On further appeal Ld. CIT(A), also upheld the addition observing as under: The assessee argued that the cash of Rs.41 lacs is generated from the cheque discounting activities and belongs to Lodha Group and, therefore, nothing is liable to be added in his hands on his account. I have given my careful consideration to the rival submissions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. During the course of search and seizure action on 10.01.2011 at the premises of the assessee a cash of Rs. 41,00,000/- was found and seized. In his statement on oath, the assessee mentioned that, he is engaged in the business of cheque discounting activity and has been working for Lodha Group and the cash of Rs. 41 lacs belongs to Lodha Group and said cash was to be handed over to the employee of Lodha Group. Assessee also mentioned that one anjay Ambre of Lodha Group Ltd used to visit his office, used to handover cheques and that cash was received on account of discounting of such cheques. I considered the argument of the assessee. Firstly the cash is clearly of unexplained in nature. Secondly, the assessee has failed to explain the source of this cash in his own hands. Further, even the Lodha Group to whom the assessee alleged that the cash really belongs, has also not owned up this cash. The assessee has also not produced any confirmation from Lodha Group in this regard. Therefore, the cash has not been taxed in the hands of Lodha Group Entity either. Therefore, Shri Hirachand Javerchand Jain merely the assertion of the assessee that cash belongs to Lodha Group, will not absolve him onus in this regard unless they also own up it. Further, from the facts of the case which have been discussed by AO in para 20 to 22 of assessment order, it is clear that, the cash is not accounted anywhere in the books of accounts of either the assessee or of Lodha Group. Since this amount is seized from the possession of the assessee, therefore, in view of provisions of sec. 132(4A) of the Act, it may be assumed has failed to explain the sources of this cash and the cash is not accounted for anywhere in the books of accounts of the assessee. Therefore, the amount is to be treated as the undisclosed income of the assessee u/s. 69A. I therefore, uphold the decision of Ld.AO adding sum of Rs. 41,00,000/- in hands of the assessee. 6.3 We have heard rival submission the parties on the issue in dispute and perused the relevant material on record. Before us learned counsel of the assessee reiterated the arguments which were made before the Ld. CIT(A), We noted that no documentary evidences in support of the claim has been filed by the assessee either before the lower authorities or before us. The Ld. CIT(A) has observed that the Lodha Group has declined to own this money as belonging to them and therefore cash has not been taxed in the hands of the Lodha group. In such circumstances, in our opinion, the finding of the Ld. Shri Hirachand Javerchand Jain CIT(A) on the issue in dispute are well reasoned and accordingly, we uphold the same. The ground No. 3 (three) of the appeal of the assessee is accordingly dismissed. The ground No. four of the appeal is consequential whereas ground No. five of the appeal is premature and therefore both these grounds are dismissed as infructuous. In the result, the appeal of the assessee is dismissed.
Order pronounced under Rule 34(4) of the ITAT Rules, 1963 on 30/11/2022.