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PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM These two appeals by assessee are directed against two appeals by assessee are directed against two appeals by assessee are directed against two separate orders dated 21/08/2018 and 13/08/2018 respectively separate orders dated 21/08/2018 and 13/08/2018 separate orders dated 21/08/2018 and 13/08/2018 passed by the Ld. . Commissioner of Income-tax tax (Appeals)-50, Mumbai [in short ‘the Ld. CIT(A) the Ld. CIT(A)’] for assessment year 2010 ] for assessment year 2010-11. The first appeal is in respect of quantum in respect of quantum assessment assessment proceedings, whereas second appeal whereas second appeal is in respect of penalty levied for violation of in respect of penalty levied for violation of loans accepted otherwise then by loans accepted otherwise then by account payee account payee cheque. Both appeals being connected with the same assessee, were heard appeals being connected with the same assessee, were heard appeals being connected with the same assessee, were heard together and dispose together and disposed off by way of this consolidated order for by way of this consolidated order for convenience.
The grounds s s raised raised raised by by by the the the assessee assessee assessee in in in ITA No. 6123/Mum/2018 are reproduced as under: 6123/Mum/2018 are reproduced as under:
(a) On facts and circumstances of the case, the Ld. CIT(A) 1. (a) On facts and circumstances of the case, the Ld. CIT(A) 1. (a) On facts and circumstances of the case, the Ld. CIT(A)- 50, Mumbai erred in not holding that the order passed u/s. 50, Mumbai erred in not holding that the order passed u/s. 50, Mumbai erred in not holding that the order passed u/s. 143(3) r.w.s. 153A by the DCIT, CC 143(3) r.w.s. 153A by the DCIT, CC-8(3), Mumbai ("Assessing 8(3), Mumbai ("Assessing Officer) is without jurisdiction, invalid and bad in law. Officer) is without jurisdiction, invalid and bad in law. Officer) is without jurisdiction, invalid and bad in law.
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(b) The Ld. CIT(A) has grossly erred in facts and law in not (b) The Ld. CIT(A) has grossly erred in facts and law in not (b) The Ld. CIT(A) has grossly erred in facts and law in not appreciating the explanations and material placed on record appreciating the explanations and material placed on record appreciating the explanations and material placed on record as well as true content of the seized material and taking the as well as true content of the seized material and taking the as well as true content of the seized material and taking the wholistic view wholistic view of the matter by telescoping the real income of of the matter by telescoping the real income of the assessee. the assessee.
(a) The Ld. CIT(A) erred in facts and law in upholding the 2. (a) The Ld. CIT(A) erred in facts and law in upholding the 2. (a) The Ld. CIT(A) erred in facts and law in upholding the addition of Rs. 6,25,01,000/ addition of Rs. 6,25,01,000/- by treating it as unaccounted by treating it as unaccounted cash u/s. 68 of the Act, instead of sale proceeds received in cash u/s. 68 of the Act, instead of sale proceeds received in cash u/s. 68 of the Act, instead of sale proceeds received in cash on his own suspicion. s own suspicion.
[b) The Ld. CIT(A) erred in facts and law in upholding the [b) The Ld. CIT(A) erred in facts and law in upholding the [b) The Ld. CIT(A) erred in facts and law in upholding the application of provisions of section 40A(3) of the Act and application of provisions of section 40A(3) of the Act and application of provisions of section 40A(3) of the Act and thereby confirming the addition of entire sales as income of thereby confirming the addition of entire sales as income of thereby confirming the addition of entire sales as income of the assessee. the assessee.
The Ld. CIT(A) erred in facts and law in up 3. The Ld. CIT(A) erred in facts and law in up 3. The Ld. CIT(A) erred in facts and law in upholding the addition of unaccounted interest payment of Rs. 3,02,567/ addition of unaccounted interest payment of Rs. 3,02,567/ addition of unaccounted interest payment of Rs. 3,02,567/- as unexplained expenditure u/s. 69C of the Act on the alleged unexplained expenditure u/s. 69C of the Act on the alleged unexplained expenditure u/s. 69C of the Act on the alleged cash loan taken of Rs. 1,10,00,000/ cash loan taken of Rs. 1,10,00,000/- without appreciating the without appreciating the explanations provided by the assessee. explanations provided by the assessee.
The ld. CIT(A) erre 4. The ld. CIT(A) erred in facts and law in upholding the d in facts and law in upholding the addition of loan aggregating to Rs. 1,09,000/ addition of loan aggregating to Rs. 1,09,000/- as unexplained as unexplained cash credit u/s cash credit u/s 68 of the Act without appreciating 68 of the Act without appreciating that no incriminating material incriminating material was found in the course of search once was found in the course of search once the assessment had already attained f the assessment had already attained finality prior to the date inality prior to the date of search.
The Ld. CIT(A) erred in facts and law in not admitting and 5. The Ld. CIT(A) erred in facts and law in not admitting and 5. The Ld. CIT(A) erred in facts and law in not admitting and adjudicating the additional ground raised, relating to addition adjudicating the additional ground raised, relating to addition adjudicating the additional ground raised, relating to addition
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of loan aggregating to Rs. 2,10.568/ of loan aggregating to Rs. 2,10.568/- as unexplained cash as unexplained cash credit U/S.68 of the Act. credit U/S.68 of the Act.
The Ld. CIT(A) erred in facts and law in not admitting and . CIT(A) erred in facts and law in not admitting and . CIT(A) erred in facts and law in not admitting and adjudicating the additional ground raised, relating to addition adjudicating the additional ground raised, relating to addition adjudicating the additional ground raised, relating to addition of Rs. 65,000/ of Rs. 65,000/- as capital introduced.
All the above grounds are independent and without 7. All the above grounds are independent and without 7. All the above grounds are independent and without prejudice to each other. prejudice to each other.
Briefly stated fact stated facts of the case that that the assessee, s of the case that that the assessee, an individual, filed his return of income for the year under filed his return of income for the year under filed his return of income for the year under consideration on 19/09/2010 declaring total income of ₹1,59,300/- consideration on 19/09/2010 declaring total income of consideration on 19/09/2010 declaring total income of . Subsequently, a search and seizure action under section 13 Subsequently, a search and seizure action under section 13 Subsequently, a search and seizure action under section 132 of the Income-tax Act, 1961 ( tax Act, 1961 (in short ‘the Act’) was carried out at the ) was carried out at the premises of the assessee on 11/06/2013 along with the search premises of the assessee on 11/06/2013 along with the search premises of the assessee on 11/06/2013 along with the search action at the premises of action at the premises of ‘RSBL’ Group. Consequent to Group. Consequent to search, a notice under section 153 notice under section 153A of the Act was issued on 07/10/2014 ct was issued on 07/10/2014 and in compliance, , the assessee filed return of income on return of income on 21/08/2015 admitting the total income which was declared in the 21/08/2015 admitting the total income which was declared in the 21/08/2015 admitting the total income which was declared in the regular return of income filed on 19/09/2010. Thereafter, statutory regular return of income filed on 19/09/2010. Thereafter regular return of income filed on 19/09/2010. Thereafter notices under that notices under that Act were issued and complied with. A d complied with. After considering submission of the as considering submission of the assessee, the assessment assessment u/s 153A
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was was completed completed on on 31/03/2016 31/03/2016 wherein wherein certain additions/disallowances additions/disallowances were made to the returned income were made to the returned income. Against the said assessment order, the assessee filed appeal before the Ld. assessment order, the assessee filed appeal before the Ld. assessment order, the assessee filed appeal before the Ld. CIT(A), who allowed part relief to the assesse CIT(A), who allowed part relief to the assessee. Aggrieved with the e. Aggrieved with the order of the Ld. CIT(A) order of the Ld. CIT(A), the assessee is in appeal before the ITAT (In appeal before the ITAT (In short ‘the Tribunal’) by way of raising grounds ) by way of raising grounds as reproduced above. reproduced above.
The ground No. 1(a) of the appeal, in general in nature and No. 1(a) of the appeal, in general in nature and No. 1(a) of the appeal, in general in nature and therefore same is dismissed as therefore same is dismissed as infructuous.
4.1 In ground No.1(b) of the appeal ground No.1(b) of the appeal, the assessee the assessee is seeking telescoping of the undisclosed income against the undisclosed telescoping of the undisclosed income against the undisclosed telescoping of the undisclosed income against the undisclosed expenditure. The Ld. counsel Ld. counsel of assessee submitted that during the of assessee submitted that during the course of the assessment proceeding course of the assessment proceeding, the assessee had submitted a assessee had submitted a cash flow statement of undisclosed receipt to explain the source of cash flow statement of undisclosed receipt to explain the source of cash flow statement of undisclosed receipt to explain the source of undisclosed investment and therefore addition could have been undisclosed investment and therefore addition could have been undisclosed investment and therefore addition could have been made only for one side i.e. either the undisclosed receipt or made only for one side i.e. either the undisclosed receipt or made only for one side i.e. either the undisclosed receipt or undisclosed investment following the r undisclosed investment following the real income theory. The eal income theory. The Ld. counsel of assessee particularly stated that assessee has already of assessee particularly stated that assessee has already of assessee particularly stated that assessee has already accepted unsecured loans of accepted unsecured loans of ₹1.10 crores appearing in seized pages appearing in seized pages
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No. 3 and 4 of Annexure Annexure A-1, impounded from business premises of 1, impounded from business premises of the assessee at 96/106, Abh the assessee at 96/106, Abhusan House, Sheikh Memon Street House, Sheikh Memon Street, Zaveri Bazar, Mumbai. The Ld. CIT(A) while adjudicating the appeal Zaveri Bazar, Mumbai. The Ld. CIT(A) while adjudicating the appeal Zaveri Bazar, Mumbai. The Ld. CIT(A) while adjudicating the appeal of the assessee against levy of penalty u/s 271D i.e. for accepting of the assessee against levy of penalty u/s 271D i.e. for accepting of the assessee against levy of penalty u/s 271D i.e. for accepting cash loan otherwise then account pay cheque for assessment year cash loan otherwise then account pay cheque for assessment year cash loan otherwise then account pay cheque for assessment year 2010-11, has reproduced the has reproduced the details of such cash loan and interest details of such cash loan and interest payable thereon as noted in the seized document. The relevant payable thereon as noted in the seized document. The relevant payable thereon as noted in the seized document. The relevant observation of the Ld. CIT(A) are reproduced as under: observation of the Ld. CIT(A) are reproduced as under: observation of the Ld. CIT(A) are reproduced as under:
“7.2 During the course of survey at the business premises of During the course of survey at the business premises of During the course of survey at the business premises of the appellant at 96/106, Aabhushan Hou the appellant at 96/106, Aabhushan House, Sheikh Memon se, Sheikh Memon Street, Zaveri Bazar, Mumbai, Annexure A Street, Zaveri Bazar, Mumbai, Annexure A-1 was impounded. 1 was impounded. In the seized page No. 3 and 4 of Annexure A In the seized page No. 3 and 4 of Annexure A-1, there is a 1, there is a working of interest on loans received by the Appellant. In the working of interest on loans received by the Appellant. In the working of interest on loans received by the Appellant. In the seized seized seized pages, pages, pages, the the the principal principal principal amount amount amount is is is depicted depicted depicted as as as Rs.1,10,00,000/ 0,000/- and interest amount is worked out at Rs. and interest amount is worked out at Rs. 29,88,262/-. The said noting on the seized page is . The said noting on the seized page is . The said noting on the seized page is reproduced, as under: reproduced, as under:- 9800=00 15/12/09 15/12/09 1200=00 1012110 Days 700=00 14/2/12 14/2/12 792 184=800 800=00 21/212 21/212 799 212=066 1000=00 12/3/12 12/3/12 819 272=999 1500=00 20/03/12 20/03/12 827 413=500 1000=00 30/3/12 30/3/12 837 278=999 2500=00 10/4/12 10/4/12 848 706=666 1000=00 11/4/12 11/4/12 792 263=999 8500=00 2334=029
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1300=00 To be paid on 30.04.2012 To be paid on 30.04.2012 811 351=433 1200=00 To be paid on 30.04.2012 To be paid on 30.04.2012 757 302=800 2988=262 Interest 5. We have heard rival submiss We have heard rival submission of the parties on the issue ion of the parties on the issue-in- dispute and perused the relevant material on record. As far as the dispute and perused the relevant material on record. As far as the dispute and perused the relevant material on record. As far as the principal of real theory is concerned, we concur principal of real theory is concerned, we concur in principle in principle with the Ld. counsel of the assessee that wherever unaccounted of the assessee that wherever unaccounted of the assessee that wherever unaccounted investment/expenditure expenditure is explained by way of undisclosed receipt, is explained by way of undisclosed receipt, then no separate addition for such unexplained investment or then no separate addition for such unexplained investment then no separate addition for such unexplained investment expenditure should be made. Since the lo be made. Since the lower authorit er authoritieshave not given any finding on the Cash flow statement, which was submitted given any finding on the Cash flow statement, which was submitt given any finding on the Cash flow statement, which was submitt by the assessee during the course of the assessment proceeding, by the assessee during the course of the assessment proceeding, by the assessee during the course of the assessment proceeding, the entries in the Cash flow statement need verification. Therefore, the entries in the Cash flow statement need verification. Therefore, the entries in the Cash flow statement need verification. Therefore, we restore this issue this issue of telescoping of undisclosed receipts or of telescoping of undisclosed receipts or income against undisclosed investment / expenditure to the file of income against undisclosed investment / expenditure income against undisclosed investment / expenditure the Ld. Assessing Officer for deciding after considering the Assessing Officer for deciding after considering the Assessing Officer for deciding after considering the submission and explanation of the assessee regarding each entry of submission and explanation of the assessee regarding each entry of submission and explanation of the assessee regarding each entry of the cash flow statement. the cash flow statement.
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The ground No. 1(b) No. 1(b) of the appeal is accordingly allowed for of the appeal is accordingly allowed for statistical purposes.
The ground No. 2 The ground No. 2(a) of the appeal relates to addition of the appeal relates to addition of ₹6,21,01,000/-which according to the Ld. CIT(A) is unaccounted which according to the Ld. CIT(A) is unaccounted which according to the Ld. CIT(A) is unaccounted cash in terms of section 68 of the cash in terms of section 68 of the Act,whereas according to the whereas according to the assessee the amount represents sale proceeds received in cash. assessee the amount represents sale proceeds received in cash. assessee the amount represents sale proceeds received in cash.
7.1 During the course of ring the course of search action at the residence of the search action at the residence of the assessee certain incriminating papers have been s assessee certain incriminating papers have been seized which have eized which have been inventoried as pages 3, as pages 3, 4 and 5 of Annexure A 4 and 5 of Annexure A-2.The Assessing Officer asked the assessee regarding Assessing Officer asked the assessee regarding those documents those documents and after considering the submission of the assessee, the Assessing sidering the submission of the assessee, the Assessing sidering the submission of the assessee, the Assessing Officer made addition of Officer made addition of ₹6,25,01,000/-for the year under for the year under consideration as cash sales, appearing in consideration as cash sales, appearing in seized documents. The documents. The finding of the ld. Assessing Officer is reproduced as under: Assessing Officer is reproduced as under: Assessing Officer is reproduced as under:
“6. As per page No. 4 and 5 of annexure A As per page No. 4 and 5 of annexure A-2 seized from 2 seized from the residence of the assessee, cash sales of ₹17,24,00,000/ the residence of the assessee, cash sales of 17,24,00,000/- was made by the assessee and ₹17,27,43,800/ was made by the assessee and 17,27,43,800/- towards metal totaling ₹17,27,43,800/-. Date wise bifurcation of this metal totaling . Date wise bifurcation of this cash sale is as under: cash sale is as under:
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FY 2009-10 Date Amount (₹) 19.12.2009 19.12.2009 3904900 3904900 19.12.2009 19.12.2009 1095100 1095100 19.12.2009 19.12.2009 51000 51000 21.12.2009 21.12.2009 5000000 5000000 23.12.2009 23.12.2009 3000000 3000000 24.12.2009 24.12.2009 5000000 5000000 29.12.2009 29.12.2009 1500000 1500000 29.12.2009 29.12.2009 2500000 2500000 30.12.2009 30.12.2009 1500000 1500000 04.01.2010 04.01.2010 1500000 1500000 06.01.2010 06.01.2010 1500000 1500000 08.01.2010 08.01.2010 1000000 1000000 18.01.2010 18.01.2010 10000000 10000000 02.03.2010 02.03.2010 5000000 5000000 03.03.2010 03.03.2010 7450000 7450000 17.03.2010 17.03.2010 7500000 7500000 23.03.2010 23.03.2010 2000000 2000000 24.03.2010 24.03.2010 2500000 2500000 24.03.2010 24.03.2010 500000 500000 Total 62501000 62501000
FY 2010-11 Date Amount (₹) 14.04.2010 14.04.2010 5000000 5000000 14.04.2010 14.04.2010 9900000 9900000 17.04.2010 17.04.2010 5000000 5000000 5000000 20.04.2010 20.04.2010 5000000 5000000 22.04.2010 22.04.2010 5000000 18.05.2010 18.05.2010 8000000 8000000 19.05.2010 19.05.2010 5000000 5000000 19.05.2010 19.05.2010 12000000 12000000 20.05.2010 20.05.2010 5000000 5000000 25.05.2010 25.05.2010 5000000 5000000 2 PC Metal 2 PC Metal 343800 343800 20.06.2010 20.06.2010 15000000 15000000 30.06.2010 30.06.2010 10000000 10000000 12.07.2010 12.07.2010 10000000 10000000 22.07.2010 22.07.2010 10000000 10000000 Total 110243800 110243800
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Out of this, cash sales of Rs. 6,25,01,000/ Out of this, cash sales of Rs. 6,25,01,000/- pertain to the FY pertain to the FY 2009-10 and balanc 10 and balance amount of Rs. 11,02,43,800/ ,800/- pertains to FY 2010 to FY 2010-11. then confronted, the assessee vide hen confronted, the assessee vide submission filed on 28.03.2016, submitted that I : was submission filed on 28.03.2016, submitted that I : was submission filed on 28.03.2016, submitted that I : was carrying on out of carrying on out of book sales of bullion and was carrying carrying net profit of 0.5% if the sales as prof profit of 0.5% if the sales as profit margin in bullion sales is in bullion sales is very low Hence, as far as quant very low Hence, as far as quantum of cash sales um of cash sales isconcerned, the assessee has admitted that isconcerned, the assessee has admitted that he he had road cash sales of Rs 17.2.43,800/ und there cash sales of Rs 17.2.43,800/ und there to no dispute on o dispute on this. An regards axability of the cash sales. as the sales is of this. An regards axability of the cash sales. as the sales is of this. An regards axability of the cash sales. as the sales is of bullion which is made out of bullion which is made out of goods, the corresponding , the corresponding purchases are also m purchases are also made in cash and the same arc not de in cash and the same arc not allowable as per the provisions of section 40A(3) of the as per the provisions of section 40A(3) of the as per the provisions of section 40A(3) of the Income Tax Art Income Tax Art, 1961
The Provisions of section 40A(3) of the Income Tax Act, 19 I The Provisions of section 40A(3) of the Income Tax Act, 19 I The Provisions of section 40A(3) of the Income Tax Act, 19 I provides that cash expenses exceeding ₹20,000/ provides that cash expense 20,000/- is not allowable as a allowable as a deduction in. In CIT vs Hynoop Food and Oil in. In CIT vs Hynoop Food and Oil Industries Ltd Ltd.[290 IT'R 272 (Guj)]. it is held that that provisions of See 40A13) of the Income Tax Act, 1961 will apply to 13) of the Income Tax Act, 1961 will apply to 13) of the Income Tax Act, 1961 will apply to transaction outside the books of accounts also. In fact, the transaction outside the books of accounts also. In fact, the transaction outside the books of accounts also. In fact, the provision of section 10A(3) of the Inco ion of section 10A(3) of the Income Tax Act, 1961 is me Tax Act, 1961 is brought on the statute to ensure that payments exceeding the brought on the statute to ensure that payments exceeding the brought on the statute to ensure that payments exceeding the sum specified arc made by a c m specified arc made by a crossed cheque drawn on a rossed cheque drawn on a bank or by a crossed bank bank or by a crossed bank draft so that it will be casier to raft so that it will be casier to ascertain when deduction is claimed, whether the pay ent when deduction is claimed, whether the pay ent when deduction is claimed, whether the pay ent was genuine and whether it was made out of income from was genuine and whether it was made out of income from was genuine and whether it was made out of income from disclosed sources. Th disclosed sources. The validity of sec 40A(3) of the Incom validity of sec 40A(3) of the Income Tax Act, 1961 has also been upheld by the Apt: Court in the Tax Act, 1961 has also been upheld by the Apt: Court in the Tax Act, 1961 has also been upheld by the Apt: Court in the
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case of Altar Singh Gurmukh Singh Vs. Income case of Altar Singh Gurmukh Singh Vs. Income- -tax Officer. Ludhiana [1991 1991] 191 ITR 667 (S.C.) Moreover, if the payment 191 ITR 667 (S.C.) Moreover, if the payment is made through is made through cash and not trough account payee cash and not trough account payee chegue/draft, then draft, then it would be quite difficult for the departme it would be quite difficult for the departme 1 to ascertain whether the payment so made by payee tax 1 to ascertain whether the payment so made by payee tax 1 to ascertain whether the payment so made by payee tax payer is accounted for by I e recipient (other) tax payer. The payer is accounted for by I e recipient (other) tax payer. The payer is accounted for by I e recipient (other) tax payer. The provision of section 40A(3) of the Incom n of section 40A(3) of the Income Tax Act e Tax Act,1961 is intended to serve the objective o intended to serve the objective of checking tax evasion f checking tax evasion.”
Thus, the ld AO has not only held the purchases Thus, the ld AO has not only held the purchases Thus, the ld AO has not only held the purchases corresponding to the unrecorded sales and profit thereon as corresponding to the unrecorded sales and profit thereon as corresponding to the unrecorded sales and profit thereon as unexplained but also held the purchases made in cash exceeding unexplained but also held the purchases made in cash exceeding unexplained but also held the purchases made in cash exceeding Rs. 20,000/- in cash disallowable u/s 40A(3) of the Act. in cash disallowable u/s 40A(3) of the Act. The Ld. in cash disallowable u/s 40A(3) of the Act. CIT(A) however was of the view that these seized paper does not CIT(A) however was of the view that these seized paper does not CIT(A) however was of the view that these seized paper does not manifest cash sales but these are unaccounted cash financial manifest cash sales but these are unaccounted cash financial manifest cash sales but these are unaccounted cash financial transactions. For arriving at th transactions. For arriving at this conclusion, the Ld. CIT(A) has , the Ld. CIT(A) has given his reasoning. The detailed finding of Ld. CIT(A) is reproduced given his reasoning. The detailed finding of Ld. CIT(A) i given his reasoning. The detailed finding of Ld. CIT(A) i as under:
“13.6 I have gone through the said seized pages and noted 13.6 I have gone through the said seized pages and noted 13.6 I have gone through the said seized pages and noted that at the top of the Seized Page No. 5, the phrase "Cash that at the top of the Seized Page No. 5, the phrase "Cash that at the top of the Seized Page No. 5, the phrase "Cash A/c" has been written. There is no reference to the A/c" has been written. There is no reference to the A/c" has been written. There is no reference to the unaccounted sales on these seized pages, as claimed by the unaccounted sales on these seized pages, as claimed by the unaccounted sales on these seized pages, as claimed by the Appellant. Further, it is pertinent to note that all the figures lant. Further, it is pertinent to note that all the figures lant. Further, it is pertinent to note that all the figures noted in the seized page are in hundreds, thousands, lakhs noted in the seized page are in hundreds, thousands, lakhs noted in the seized page are in hundreds, thousands, lakhs
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and crores. The very fact that all the unaccounted cash and crores. The very fact that all the unaccounted cash and crores. The very fact that all the unaccounted cash entries noted on the seized page are rounded off, clearly entries noted on the seized page are rounded off, clearly entries noted on the seized page are rounded off, clearly reveals that these entr reveals that these entries doesn't represent the amount of ies doesn't represent the amount of sales, as has been alleged by the appellant. sales, as has been alleged by the appellant.
13.7 It also needs to be emphasized here that no quantitative 13.7 It also needs to be emphasized here that no quantitative 13.7 It also needs to be emphasized here that no quantitative details of bullion is mentioned on the said seized page. If the details of bullion is mentioned on the said seized page. If the details of bullion is mentioned on the said seized page. If the figures mentioned on the seized page were to repr figures mentioned on the seized page were to repr figures mentioned on the seized page were to represent bullion purchase, the rate of which varies on a daily basis, bullion purchase, the rate of which varies on a daily basis, bullion purchase, the rate of which varies on a daily basis, the amounts would certainly not be rounded of in lakhs and the amounts would certainly not be rounded of in lakhs and the amounts would certainly not be rounded of in lakhs and crores. There is only one entry of Rs. 3,43,800/ crores. There is only one entry of Rs. 3,43,800/- - mentioned on the seized document, which represents some metal, as on the seized document, which represents some metal, as on the seized document, which represents some metal, as the narration the narration against the same is "2 PC Metal". This against the same is "2 PC Metal". This numerical figure, which is rounded of in hundreds, itself numerical figure, which is rounded of in hundreds, itself numerical figure, which is rounded of in hundreds, itself reveals that at best this is the only figure, which may reveals that at best this is the only figure, which may reveals that at best this is the only figure, which may represent some bullion sale. It has also been noted that represent some bullion sale. It has also been noted that represent some bullion sale. It has also been noted that regarding this entry, the appellant has stated regarding this entry, the appellant has stated that the 2 pc. that the 2 pc. metal worth Rs. 3,43,800/ metal worth Rs. 3,43,800/- was given by one of his customer was given by one of his customer in lieu of cash. Thus, this entry is basically a purchase of the in lieu of cash. Thus, this entry is basically a purchase of the in lieu of cash. Thus, this entry is basically a purchase of the bullion and not a sale transaction. However, the appellant bullion and not a sale transaction. However, the appellant bullion and not a sale transaction. However, the appellant was unable to corroborate even this entry, during the co was unable to corroborate even this entry, during the co was unable to corroborate even this entry, during the course of the assessment / appellate proceedings. of the assessment / appellate proceedings.
13.8 Further, the claim of the appellant that the amounts 13.8 Further, the claim of the appellant that the amounts 13.8 Further, the claim of the appellant that the amounts mentioned on the seized pages, represented cash sales is not mentioned on the seized pages, represented cash sales is not mentioned on the seized pages, represented cash sales is not supported by any evidence. The details of not even a single supported by any evidence. The details of not even a single supported by any evidence. The details of not even a single party relating to the alleged party relating to the alleged cash sales have been divulged cash sales have been divulged by the appellant. It the appellant has made unaccounted by the appellant. It the appellant has made unaccounted by the appellant. It the appellant has made unaccounted cash sales to the tune of more than Rs. 17 Crore, then cash sales to the tune of more than Rs. 17 Crore, then cash sales to the tune of more than Rs. 17 Crore, then certainly some evidence for unaccounted cash purchases certainly some evidence for unaccounted cash purchases certainly some evidence for unaccounted cash purchases
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should have been found, during the course of search should have been found, during the course of search should have been found, during the course of search operation. However, no such details of cash purchase of on. However, no such details of cash purchase of on. However, no such details of cash purchase of bullion have been found. It needs to be emphasized here that bullion have been found. It needs to be emphasized here that bullion have been found. It needs to be emphasized here that to corroborate the alleged claim of cash sales, no details of to corroborate the alleged claim of cash sales, no details of to corroborate the alleged claim of cash sales, no details of any party relating to cash purchases have been furnished by any party relating to cash purchases have been furnished by any party relating to cash purchases have been furnished by the appellant,eitherthe the appellant,eitherthe assessment stage or the appellate assessment stage or the appellate stage.
13.9 Needless to emphasize here that if the appellant was 13.9 Needless to emphasize here that if the appellant was 13.9 Needless to emphasize here that if the appellant was engaged in unaccounted cash purchase and sale of bullion at engaged in unaccounted cash purchase and sale of bullion at engaged in unaccounted cash purchase and sale of bullion at such a large scale, then there would have been some such a large scale, then there would have been some such a large scale, then there would have been some corroborating evidence, which should have bee corroborating evidence, which should have bee corroborating evidence, which should have been found during the course of the search and survey operation. Even during the course of the search and survey operation. Even during the course of the search and survey operation. Even the basic details like the name, address etc. of the so called the basic details like the name, address etc. of the so called the basic details like the name, address etc. of the so called cash sale parties is not available on record. Thus, the mere cash sale parties is not available on record. Thus, the mere cash sale parties is not available on record. Thus, the mere plea of the appellant that the cash receipts should be plea of the appellant that the cash receipts should be plea of the appellant that the cash receipts should be considered unaccounted sales, unaccounted sales, without adducing any without adducing any documentary evidence in support, needs to be out rightly documentary evidence in support, needs to be out rightly documentary evidence in support, needs to be out rightly rejected. It is also worthwhile to note that no unaccounted rejected. It is also worthwhile to note that no unaccounted rejected. It is also worthwhile to note that no unaccounted stock of bullion of such huge amount has been found during stock of bullion of such huge amount has been found during stock of bullion of such huge amount has been found during the course of the search operation to c the course of the search operation to corroborate the orroborate the contention of the Appellant that the entries on the seized contention of the Appellant that the entries on the seized contention of the Appellant that the entries on the seized record depicted unaccounted cash sales. record depicted unaccounted cash sales.
13.10 I have also gone through the statement of the 13.10 I have also gone through the statement of the 13.10 I have also gone through the statement of the Appellant, recorded during the course of the search Appellant, recorded during the course of the search Appellant, recorded during the course of the search operation, by the Investigation Wing o operation, by the Investigation Wing of the Department. f the Department. During the course of search operation, the explanation on During the course of search operation, the explanation on During the course of search operation, the explanation on these incriminating seized pages was sought these incriminating seized pages was sought these incriminating seized pages was sought from the appellant in the statement recorded u/s 132(4) of the Act on in the statement recorded u/s 132(4) of the Act on in the statement recorded u/s 132(4) of the Act on
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11/06/2013 at B/72, Kalpataru Residency, Sion 11/06/2013 at B/72, Kalpataru Residency, Sion 11/06/2013 at B/72, Kalpataru Residency, Sion-Koliwada Road, Sion, Mumbai Mumbai-22. The relevant portion of the statement 22. The relevant portion of the statement is reproduced hereunder, for ready reference: is reproduced hereunder, for ready reference:
"Q28. I am showing you a small blue coloured-cover "Q28. I am showing you a small blue coloured "Q28. I am showing you a small blue coloured diary titled" diary titled" Jagruti PONIA EX. BOOK PAGES 80" Jagruti PONIA EX. BOOK PAGES 80" having handwritten pages No.1 to 7 (total seven having handwritten pages No.1 to 7 (total seven having handwritten pages No.1 to 7 (total seven pages), seized pages), seized under Annexure-A-2 of Panchnama, 2 of Panchnama, found from your own cupboard in your bedroom today. from your own cupboard in your bedroom today. Kindly tell in whose handwriting this diary is written Kindly tell in whose handwriting this diary is written Kindly tell in whose handwriting this diary is written & explain the contents in detail. & explain the contents in detail.
Ans. This diary is not written in my handwriting. I also Ans. This diary is not written in my handwriting. I also Ans. This diary is not written in my handwriting. I also do not know whose handwr do not know whose handwriting this is. I am also not iting this is. I am also not aware of the contents of this diary. aware of the contents of this diary.
Q.29. In the reply to preceding Q28, you have stated .29. In the reply to preceding Q28, you have stated .29. In the reply to preceding Q28, you have stated that you are neither aware in whose handwriting the that you are neither aware in whose handwriting the that you are neither aware in whose handwriting the blue coloured blue coloured-cover diary mentioned therein is written cover diary mentioned therein is written in nor you are aware of the co in nor you are aware of the contents of these pages. In ntents of these pages. In such case, how this diary has been found in your such case, how this diary has been found in your such case, how this diary has been found in your personal cupboard in your own bedroom? personal cupboard in your own bedroom?
Ans. I do not know how this diary has landed up in Ans. I do not know how this diary has landed up in Ans. I do not know how this diary has landed up in my personal cupboard in my bedroom." my personal cupboard in my bedroom."
13.11 The above statement of the appellant clearly sho 13.11 The above statement of the appellant clearly sho 13.11 The above statement of the appellant clearly shows that during the course of the search, he has completely that during the course of the search, he has completely that during the course of the search, he has completely disowned the said diary found from his possession. Further, disowned the said diary found from his possession. Further, disowned the said diary found from his possession. Further, he has feigned ignorance about the contents of the said he has feigned ignorance about the contents of the said he has feigned ignorance about the contents of the said diary. At the time of the search operation, it has never been diary. At the time of the search operation, it has never been diary. At the time of the search operation, it has never been
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claimed that the ca claimed that the cash entries recorded in the seized page sh entries recorded in the seized page represents his unaccounted cash sales. Thus, the claim of represents his unaccounted cash sales. Thus, the claim of represents his unaccounted cash sales. Thus, the claim of the the the appellant during appellant during appellant during the course of the course of the course of the the the assessment assessment assessment proceedings after the lapse of a considerable period of time proceedings after the lapse of a considerable period of time proceedings after the lapse of a considerable period of time that the entries depicted cash sales is just an that the entries depicted cash sales is just an afterthought, afterthought, which has been stated only for the purpose of reducing the which has been stated only for the purpose of reducing the which has been stated only for the purpose of reducing the tax liability. This leads to the irresistible conclusion that the tax liability. This leads to the irresistible conclusion that the tax liability. This leads to the irresistible conclusion that the appellant has given false explanation about the cash entries appellant has given false explanation about the cash entries appellant has given false explanation about the cash entries recorded in the seized documents. recorded in the seized documents.
13.12 It needs to be e 13.12 It needs to be emphasized here that no incriminating mphasized here that no incriminating documents relating to cash purchase and sale were found documents relating to cash purchase and sale were found documents relating to cash purchase and sale were found during the course of search / survey operation, but on the during the course of search / survey operation, but on the during the course of search / survey operation, but on the other hand substantial documents relating to unaccounted other hand substantial documents relating to unaccounted other hand substantial documents relating to unaccounted cash financing transactions have been founds Fo cash financing transactions have been founds Fo cash financing transactions have been founds For the sake of brevity, the same are not discussed here but such of brevity, the same are not discussed here but such of brevity, the same are not discussed here but such incriminating documents relating to financing transaction of incriminating documents relating to financing transaction of incriminating documents relating to financing transaction of taking and giving unaccounted cash loans / advances have taking and giving unaccounted cash loans / advances have taking and giving unaccounted cash loans / advances have been discussed in the present appellate order, at appropriate been discussed in the present appellate order, at appropriate been discussed in the present appellate order, at appropriate places. Thus places. Thus on the basis of the seized material, it is on the basis of the seized material, it is concluded that the appellant has taken unaccounted cash concluded that the appellant has taken unaccounted cash concluded that the appellant has taken unaccounted cash from various parties, which is not recorded in the regular from various parties, which is not recorded in the regular from various parties, which is not recorded in the regular books of account and needs to be taxed u/s 68 of the Act. books of account and needs to be taxed u/s 68 of the Act. books of account and needs to be taxed u/s 68 of the Act. For taxing such amounts u/s 68 of the A For taxing such amounts u/s 68 of the Act, the burden ct, the burden doesn't lie on the Revenue, it squarely lies on the assessee, on the Revenue, it squarely lies on the assessee, on the Revenue, it squarely lies on the assessee, who has to prove the nature and source of such entries.” who has to prove the nature and source of such entries.” who has to prove the nature and source of such entries.”
8.1 The Ld. CIT(A) also relied on the The Ld. CIT(A) also relied on the following decisions in support following decisions in support of his claim:
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i. SumatiDayal v. CIT [1995] 80 Taxman/89/ SumatiDayal v. CIT [1995] 80 Taxman/89/214 ITR 801 (SC) 214 ITR 801 (SC) ii. Roshan Di Hatti v. CIT [1997] 107 ITR 983 (SC) Roshan Di Hatti v. CIT [1997] 107 ITR 983 (SC) Roshan Di Hatti v. CIT [1997] 107 ITR 983 (SC) iii. Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) iv. Sreelekha Banerjee v. CIT (1963) 49 ITR 112 (SC) Sreelekha Banerjee v. CIT (1963) 49 ITR 112 (SC) Sreelekha Banerjee v. CIT (1963) 49 ITR 112 (SC) v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) vi. Vijay Kumar Talwar v. CIT [2011] 196 Vijay Kumar Talwar v. CIT [2011] 196 Taxman 136/[2010] 8 Taxman 136/[2010] 8 taxmann.com taxmann.com vii. CIT v. Om Prakash Mittal [2005] 273 ITR 326/143 Taxman 373 CIT v. Om Prakash Mittal [2005] 273 ITR 326/143 Taxman 373 CIT v. Om Prakash Mittal [2005] 273 ITR 326/143 Taxman 373 (SC) viii. CIT &Ors. V. Saravana Construction (P) Ltd. reported in (2012) CIT &Ors. V. Saravana Construction (P) Ltd. reported in (2012) CIT &Ors. V. Saravana Construction (P) Ltd. reported in (2012) 82 CCH 249 (Kar) HC : (2012) DTR (Kar) 258 82 CCH 249 (Kar) HC : (2012) DTR (Kar) 258 ix. Commissioner Commissioner of of Income-tax Income tax (Central) (Central) v. v. Settlement Settlement Commission (IT & WT) [2017] 77 taxmann.com 167 (Kerala) Commission (IT & WT) [2017] 77 taxmann.com 167 (Kerala) Commission (IT & WT) [2017] 77 taxmann.com 167 (Kerala) x. H. Nabhiraja v. Deputy Commissioner of Income-tax, Circle H. Nabhiraja v. Deputy Commissioner of Income H. Nabhiraja v. Deputy Commissioner of Income 7(1), [2007] 163 Taxman 501 (Kar) 7(1), [2007] 163 Taxman 501 (Kar) xi. Nandlalkhanchand Khatri v. Commissioner of Income-tax Nandlalkhanchand Khatri v. Commissioner of Income Nandlalkhanchand Khatri v. Commissioner of Income [2004] 139 Taxman 51 (MP) [2004] 139 Taxman 51 (MP) xii. Shri Kamlesh G. Mehta and S Shri Kamlesh G. Mehta and Smt. Neeta R. Lad, the Hon’ble mt. Neeta R. Lad, the Hon’ble ITSC Bench- -1, Mumbai, vide order dated 22.09.2017 1, Mumbai, vide order dated 22.09.2017 xiii. Haji Nazir Hussain v. Income Haji Nazir Hussain v. Income-tax Officer [2004] 91 ITD 42 tax Officer [2004] 91 ITD 42 (Delhi) (TM)
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8.2 Relying on the on the above decisions, the Ld. CIT(A) held the sum , the Ld. CIT(A) held the sum recorded in seized papers seized papers/documents found during the course of during the course of the search operation the search operation as unexplained cash credit under section 68 of unexplained cash credit under section 68 of the Act as against holding the same as cash sales by the ld. AO. as against holding the same as cash sales by the ld. AO. as against holding the same as cash sales by the ld. AO.
Before us the Before us the Ld. counsel of the assessee filed of the assessee filed a common paperbook for AY 2010 for AY 2010-11 to 2014-15, and assailed observations of nd assailed observations of the Ld. CIT(A). The the Ld. CIT(A). The Ld. Counsel of the assessee submitted that l of the assessee submitted that during the course of assessment proceeding during the course of assessment proceedings a detailed cash flow of a detailed cash flow of his unaccounted funds and unaccounted income and expenditure his unaccounted funds and unaccounted income and expenditure his unaccounted funds and unaccounted income and expenditure was filed, which is available on pag was filed, which is available on page 32 and 33 of the common e 32 and 33 of the common paperbook for assessment year 2010 paperbook for assessment year 2010-11 to assessment year 2014 11 to assessment year 2014- 15. The Ld. Counse sel submitted that the assessee had initially l submitted that the assessee had initially obtained unsecured loans to the tune of obtained unsecured loans to the tune of ₹1.10 crores crores, which was accepted accepted accepted as as as undisclosed undisclosed undisclosed income income income during during during the the the assessment proceedings. (But no addition for which has been made by the ut no addition for which has been made by the ut no addition for which has been made by the Assessing Officer in the assessment order Assessing Officer in the assessment order) . The Ld. Counsel further submitted that purchase and consequent sales of bullion up to July submitted that purchase and consequent sales of bullion up to July submitted that purchase and consequent sales of bullion up to July 2010 (as appearing in the seized pages no. 3 as appearing in the seized pages no. 3 -5 of Annexure A of Annexure A-2),
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were made out of said unsecured loans. It was contended by the Ld. were made out of said unsecured loans. It was contended by the were made out of said unsecured loans. It was contended by the counsel that considering the above facts only the real income i.e. that considering the above facts only the real income i.e. that considering the above facts only the real income i.e. the unaccounted net profit should only be taxed applying the the unaccounted net profit should only be taxed applying the the unaccounted net profit should only be taxed applying the normal profit margin of 0.5% on bullion sal normal profit margin of 0.5% on bullion sales. The es. The Ld. counsel further submitted that the Assessing Officer further submitted that the Assessing Officer has duly accepted as duly accepted those entries as cash sales. The cash sales. The Ld. Counsel further assailed each l further assailed each contention of the Ld. CIT(A). contention of the Ld. CIT(A).
The Ld. DR on the other hand relied on the finding of the Ld. DR on the other hand relied on the finding of the Ld. DR on the other hand relied on the finding of the Ld. CIT(A) and submitted that seized papers nowhere indicate purchase d submitted that seized papers nowhere indicate purchase d submitted that seized papers nowhere indicate purchase or sales of the bullion i.e. bullion trade carried out by the assessee or sales of the bullion i.e. bullion trade carried out by the assessee or sales of the bullion i.e. bullion trade carried out by the assessee and, therefore Ld. CIT(A) is justified in treating the entries therefore Ld. CIT(A) is justified in treating the entries therefore Ld. CIT(A) is justified in treating the entries appearing in the relevant seized papers as unexplained cash credit appearing in the relevant seized papers as unexplained cash credi appearing in the relevant seized papers as unexplained cash credi of the assessee.
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on re dispute and perused the relevant material on record. The Ld. CIT(A) cord. The Ld. CIT(A) has summarized the details of the papers as under: ed the details of the papers as under:
13.2 On the top of page 5 "CASH A/C" has been written. The 13.2 On the top of page 5 "CASH A/C" has been written. The 13.2 On the top of page 5 "CASH A/C" has been written. The total of the cash account on page 3 and 4 is Rs.12,77,44,800/ total of the cash account on page 3 and 4 is Rs.12,77,44,800/ total of the cash account on page 3 and 4 is Rs.12,77,44,800/-.
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Further, the seized Page No. 3 is in continuity of page 4 and 5. Further, the seized Page No. 3 is in continuity of page 4 and 5. Further, the seized Page No. 3 is in continuity of page 4 and 5. Page 3 and 4 is cash account till 25.05.2010 and Page 3 starts Page 3 and 4 is cash account till 25.05.2010 and Page 3 starts Page 3 and 4 is cash account till 25.05.2010 and Page 3 starts with the date 02.06.2010. On 02.06.2010, there is a noting the date 02.06.2010. On 02.06.2010, there is a noting the date 02.06.2010. On 02.06.2010, there is a noting 'HisabMilaya', which means the account has been tallied. The 'HisabMilaya', which means the account has been tallied. The 'HisabMilaya', which means the account has been tallied. The total amount after tallying the account works out to total amount after tallying the account works out to total amount after tallying the account works out to Rs.14,24,00,000/ Rs.14,24,00,000/-. After tallying the account, there are three . After tallying the account, there are three entries of Rs. 1 crore ea entries of Rs. 1 crore each written on the seized page on ch written on the seized page on different dates.Thus, the total of cash account, as worked out different dates.Thus, the total of cash account, as worked out different dates.Thus, the total of cash account, as worked out on the seized page amounts to Rs. 17,24,00,000/ on the seized page amounts to Rs. 17,24,00,000/ on the seized page amounts to Rs. 17,24,00,000/- after reconciliation/tallying. reconciliation/tallying.
13.3 The financial year 13.3 The financial year-wise breakup of the "Cash Account" is wise breakup of the "Cash Account" is tabulated, as tabulated, as FY 2009-10 Date Amount (₹) 19.12.2009 19.12.2009 3904900 3904900 19.12.2009 19.12.2009 1095100 1095100 19.12.2009 19.12.2009 51000 51000 21.12.2009 21.12.2009 5000000 5000000 23.12.2009 23.12.2009 3000000 3000000 24.12.2009 24.12.2009 5000000 5000000 29.12.2009 29.12.2009 1500000 1500000 29.12.2009 29.12.2009 2500000 2500000 30.12.2009 30.12.2009 1500000 1500000 04.01.2010 04.01.2010 1500000 1500000 06.01.2010 06.01.2010 1500000 1500000 08.01.2010 08.01.2010 1000000 1000000 18.01.2010 18.01.2010 10000000 10000000 02.03.2010 02.03.2010 5000000 5000000 03.03.2010 03.03.2010 7450000 7450000 17.03.2010 17.03.2010 7500000 7500000 23.03.2010 23.03.2010 2000000 2000000 24.03.2010 24.03.2010 2500000 2500000 24.03.2010 24.03.2010 500000 500000 Total 62501000 62501000
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FY 2010-11 Date Amount (₹) 14.04.2010 14.04.2010 5000000 5000000 14.04.2010 14.04.2010 9900000 9900000 17.04.2010 17.04.2010 5000000 5000000 20.04.2010 20.04.2010 5000000 5000000 22.04.2010 22.04.2010 5000000 5000000 18.05.2010 18.05.2010 8000000 8000000 19.05.2010 19.05.2010 5000000 5000000 19.05.2010 19.05.2010 12000000 12000000 20.05.2010 20.05.2010 5000000 5000000 25.05.2010 25.05.2010 5000000 5000000 2 PC Metal 2 PC Metal 343800 343800 20.06.2010 20.06.2010 15000000 15000000 30.06.2010 30.06.2010 10000000 10000000 10000000 12.07.2010 12.07.2010 10000000 10000000 22.07.2010 22.07.2010 10000000 Total 110243800 110243800 13.4 13.4 13.4 Thus, Thus, Thus, the the the unaccounted unaccounted unaccounted cash cash cash amounting amounting amounting to to to Rs.6,25,01,000/ Rs.6,25,01,000/- pertain to the F.Y. 2009-10 and balance 10 and balance amount of Rs. 11,02,43,800/ amount of Rs. 11,02,43,800/- pertains to F.Y.2010 pertains to F.Y.2010-11.
11.1 The contention of the assessee The contention of the assessee that those entries are of bullion that those entries are of bullion trade sales made in trade sales made in cash but not accounted in the books of not accounted in the books of accounts. According to the accounts. According to the Ld. counsel, the initial purchase , the initial purchase corresponding to the sales have been made out of the unsecured the sales have been made out of the unsecured the sales have been made out of the unsecured loans of ₹1.10 crores (unexplained) es (unexplained), which were accepted by the , which were accepted by the
assessee during the course of the assessment proceeding based on assessee during the course of the assessment proceeding based on assessee during the course of the assessment proceeding based on the cash flow of unaccounted income and expenditure filed, but no the cash flow of unaccounted income and expenditure filed, but no the cash flow of unaccounted income and expenditure filed, but no addition has been made by the Assessing Officer for said addition has been made by the Assessing Officer for said addition has been made by the Assessing Officer for said unexplained unsecured loans of unexplained unsecured loans of ₹1.10 crores. The Ld. counsel Ld. counsel is of
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the view that since the unexplained purchase of bullion the view that since the unexplained purchase of bullion the view that since the unexplained purchase of bullion corresponding to the sales recorded in relevant seized paper stands corresponding to the sales recorded in relevant seized paper stands corresponding to the sales recorded in relevant seized paper stands explained by way of unsecured loans of explained by way of unsecured loans of ₹1.10 cro 1.10 crores available, therefore no addition should be made for therefore no addition should be made for unexplained purchase of unexplained purchase of the bullion and only addition which could be made is of the profit the bullion and only addition which could be made is of the profit the bullion and only addition which could be made is of the profit earned on the bullion sales, which according to the assessee should earned on the bullion sales, which according to the assessee should earned on the bullion sales, which according to the assessee should be determined at the rate of the 0.5% of the sales. The Ld. CIT(A) be determined at the rate of the 0.5% of the sales. The Ld. CIT(A) be determined at the rate of the 0.5% of the sales. The Ld. CIT(A) has rejected those con se contentions which were raised before him. which were raised before him.
11.2 Firstly, according to the Ld. CIT(A) there is no reference of Firstly, according to the Ld. CIT(A) there is no reference of Firstly, according to the Ld. CIT(A) there is no reference of unaccounted sales in those seized papers which are titled as ‘cash unaccounted sales in those seized papers which are titled as unaccounted sales in those seized papers which are titled as account’. According to him all the figures are in hundreds or . According to him all the figures are in hundreds or . According to him all the figures are in hundreds or thousands i.e. in round figu thousands i.e. in round figures and therefore, does not represent does not represent sales. Before us the Ld. Ld. Counsel of the assessee has contended that l of the assessee has contended that these allegations of the Ld. CIT(A) are based on surmises and these allegations of the Ld. CIT(A) are based on surmises and these allegations of the Ld. CIT(A) are based on surmises and without any evidence. According to him any evidence. According to him, there are only three pages only three pages in the diary represen representing sales, which were maintained simply for sales, which were maintained simply for the remembrance by the by the assessee. The Ld. CIT(A) has rejected this . The Ld. CIT(A) has rejected this explanation of the assessee explanation of the assessee as only an afterthought, because thought, because at the
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time of search operations h operations, the assessee had never claimed th the assessee had never claimed those cash entries as unaccounted cash sales. The s unaccounted cash sales. The Ld. counsel Ld. counsel on the other hand before us submitted that during other hand before us submitted that during search proceeding search proceeding, the assessee had denied the knowledge of the cash noting recorded in assessee had denied the knowledge of the cash noting recorded in assessee had denied the knowledge of the cash noting recorded in diary and did not exp diary and did not explain, but he cannot be deprived to explain the , but he cannot be deprived to explain the same during the assessment proceeding. during the assessment proceeding. In our opinion, it is In our opinion, it is normal that during search proceedings being normal that during search proceedings being in in an unfamiliar atmosphere, the assessee might not atmosphere, the assessee might not have readily respond readily responded to the questions raised and he can explain those papers in assessment questions raised and he can explain those papers in assessment questions raised and he can explain those papers in assessment proceedings before the AO, which before the AO, which the Ld. AO can’t brush aside can’t brush aside simply on the ground that no explanation was given in respect of simply on the ground that no explanation was given in respect of simply on the ground that no explanation was given in respect of those papers during the course of search. those papers during the course of search.
11.4 Secondly, the Ld. CIT(A) observed that no incriminating Secondly, the Ld. CIT(A) observed that no incriminating Secondly, the Ld. CIT(A) observed that no incriminating documents relating to cash purchase documents relating to cash purchase and cash sales of bullion has ales of bullion has been found during the the course of search, but on the other hand search, but on the other hand substantial documents relating to unaccounted cash financial substantial documents relating to unaccounted cash financial substantial documents relating to unaccounted cash financial transactions have been found. Before us the transactions have been found. Before us the Ld. counsel Ld. counsel of the assessee submitted that assessee carrie assessee submitted that assessee carried out such bullion trade in d out such bullion trade in
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cash upto 2010 whereas search was conducted in 2013, thus it was whereas search was conducted in 2013, thus it was whereas search was conducted in 2013, thus it was not practical to retrieve any such documents of purchase and sales. not practical to retrieve any such documents of purchase and sales. not practical to retrieve any such documents of purchase and sales. He further submitted that Ld. CIT(A) has not pointed out any He further submitted that Ld. CIT(A) has not pointed out any He further submitted that Ld. CIT(A) has not pointed out any evidence of unaccounted cash finan evidence of unaccounted cash financing transactions. The cing transactions. The Ld. counsel further submi further submitted that in one narration as “ tted that in one narration as “2 Pc Metal” against Rs. 3,43,800/ against Rs. 3,43,800/- the assessee treated the same as sale but ated the same as sale but the Ld. CIT(A) held the same as bullion purchase because it was the Ld. CIT(A) held the same as bullion purchase the Ld. CIT(A) held the same as bullion purchase received in lieu of the cash. According to the received in lieu of the cash. According to the Ld. counsel Ld. counselif said entry can be considered as sale can be considered as sale or purchase, why the other entries cannot why the other entries cannot be accepted as sales or purchases. In our opinion, there is at least In our opinion, there is at least mention of metal trade in the mention of metal trade in the relevant seized papers, whereas zed papers, whereas, there is no mention of taking loan or financial transaction in seized is no mention of taking loan or financial transaction in seized is no mention of taking loan or financial transaction in seized papers under reference. nce.
11.5 Regarding the contention of the Ld. CIT(A) that no Regarding the contention of the Ld. CIT(A) that no Regarding the contention of the Ld. CIT(A) that no quantitative details of bullion is mentioned in the seized paper, the quantitative details of bullion is mentioned in the seized paper, the quantitative details of bullion is mentioned in the seized paper, the Ld. counsel submitted that it was not necessary to mention such submitted that it was not necessary to mention such submitted that it was not necessary to mention such details and the noting were recorded for own purpose. details and the noting were recorded for own purpose. details and the noting were recorded for own purpose.
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11.6 Further, regarding regarding the contention of the Ld. CIT(A) that the contention of the Ld. CIT(A) that no unaccounted stock stock of the bullion of such huge amount of the bullion of such huge amount had been found in the course of found in the course of the search to corroborate the claim of bullion the search to corroborate the claim of bullion trade by the assessee, the trade by the assessee, the Ld. counsel submitted that impugned submitted that impugned transactions belong to financial year 2009 transactions belong to financial year 2009-10, where 10, whereas the search action had taken place had taken place in 2013, therefore it was not possible or in 2013, therefore it was not possible or practical to retrieve or maintain details of the stock more so when etrieve or maintain details of the stock more so when etrieve or maintain details of the stock more so when the assessee already stopped said bullion trading cash after the assessee already stopped said bullion trading cash after the assessee already stopped said bullion trading cash after conversion of his proprietary concern into private limited company. conversion of his proprietary concern into private limited company. conversion of his proprietary concern into private limited company.
11.7 In view of the above arguments, the issue before us is In view of the above arguments, the issue before us is In view of the above arguments, the issue before us is whether the noting noting in seized records reflects carrying of in seized records reflects carrying of ‘unaccounted bullion trade bullion trade’ by the assessee or by the assessee or ‘cash financing transactions’ by the assessee. ’ by the assessee.
11.8 In our opinion, the finding of the Ld. CIT(A) are based on In our opinion, the finding of the Ld. CIT( In our opinion, the finding of the Ld. CIT( presumptions only. The Ld. CIT(A) has made his conclusion on the presumptions only. The Ld. CIT(A) has made his conclusion on the presumptions only. The Ld. CIT(A) has made his conclusion on the presumption that amounts are in round figure so same cannot be presumption that amounts are in round figure so same cannot be presumption that amounts are in round figure so same cannot be the sales. He further presumed that since no quantitative details the sales. He further presumed that since no quantitative details the sales. He further presumed that since no quantitative details are mentioned in seized paper, so it cannot be are mentioned in seized paper, so it cannot be cash sales of bullion. cash sales of bullion.
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He further presumed that since no amount of any bullion stock has He further presumed that since no amount of any bullion stock has He further presumed that since no amount of any bullion stock has been found from the premises of the assessee so, therefore he been found from the premises of the assessee so been found from the premises of the assessee so cannot be said to have engaged in the bullion trade. Whereas cannot be said to have engaged in the bullion trade. Whereas cannot be said to have engaged in the bullion trade. Whereas contention of the assessee, that he was car contention of the assessee, that he was carrying business of bullion rying business of bullion trade in his books of accounts and proprietary concern before trade in his books of accounts and proprietary concern before trade in his books of accounts and proprietary concern before conversion of the same into private limited company. As per the conversion of the same into private limited company. As per the conversion of the same into private limited company. As per the submission, the assessee was running his proprietorship business , the assessee was running his proprietorship business , the assessee was running his proprietorship business namely M/s Abhushan till 2008 and there namely M/s Abhushan till 2008 and thereafter from 01/04/2009 it after from 01/04/2009 it got converted into private limited company namely M/s Abhusan got converted into private limited company namely M/s Abhusan got converted into private limited company namely M/s Abhusan ornaments ornaments ornaments private private private limited limited limited and and and he he he was was was earning earning earning director director director remuneration only. Thus only. Thus, assessee was engaged in bullion trading , assessee was engaged in bullion trading in regular course, then probability of carrying su in regular course, then probability of carrying such trade out of ch trade out of books is more as compared to carrying of financing activity i.e. books is more as compared to carrying of financing activity i.e. books is more as compared to carrying of financing activity i.e. other activity by the assessee other activity by the assessee, which has been presumed by the Ld which has been presumed by the Ld. CIT(A) for which no incriminating documents have been referred by CIT(A) for which no incriminating documents have been referred by CIT(A) for which no incriminating documents have been referred by the Ld. CIT(A). As far as evidence the Ld. CIT(A). As far as evidences of bullion trading in cash, the Ld. lion trading in cash, the Ld. CIT(A) himself has accepted one such transactions in para 13.7 of CIT(A) himself has accepted one such transactions CIT(A) himself has accepted one such transactions the impugned order, where he the impugned order, where he held that the transactio the transactions of “2 Pc Metal” as purchase of the bullion. This transaction is part of the ” as purchase of the bullion. This transaction is part of the ” as purchase of the bullion. This transaction is part of the
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transactions recorded in the transactions recorded in the relevant seized paper, which also leads relevant seized paper, which also leads to the probability that transactions recorded in the relevant seized to the probability that transactions recorded in the relevant seized to the probability that transactions recorded in the relevant seized paper are of the bullion trade. It is evident that in the seized paper paper are of the bullion trade. It is evident that in the seized paper paper are of the bullion trade. It is evident that in the seized paper it is not clearly mentioned whether these are the cash transactions it is not clearly mentioned whether these are the cash transactions it is not clearly mentioned whether these are the cash transactions or cash sales and therefore sales and therefore, one has to infer on the basis of the on the basis of the probability and surrounding evidence, which leads to carrying of probability and surrounding evidence, which leads to carrying of probability and surrounding evidence, which leads to carrying of bullion trade in cash by the assessee. The assessee has accepted bullion trade in cash by the assessee. The assessee bullion trade in cash by the assessee. The assessee profit at the rate of 0.5% based on the comparable cases the rate of 0.5% based on the comparable cases the rate of 0.5% based on the comparable cases. As far as unexplained purchase of bullion corresponding to the cash sales is unexplained purchase of bullion corresponding to the cash unexplained purchase of bullion corresponding to the cash concerned, the assessee has attempted to explain the same by way concerned, the assessee has attempted to explain the same by way concerned, the assessee has attempted to explain the same by way of unsecured loan of R of unsecured loan of Rs.1.10 crores, which has been , which has been accepted by the Assessing Officer as undisclosed income g Officer as undisclosed income, but , but we find that Assessing Officer has not made any addition in respect of the such Assessing Officer has not made any addition in respect of the such Assessing Officer has not made any addition in respect of the such undisclosed income, undisclosed income, because he made addition for unexplained dition for unexplained purchase, therefore we feel it appropriate to restore this issue of therefore we feel it appropriate to restore this issue of therefore we feel it appropriate to restore this issue of considering amount of unexplained purchase considering amount of unexplained purchase and and profit thereon corresponding to the sales corresponding to the sales, to the file of the Ld. Assessing Officer Assessing Officer. The ground of the appeal of the assessee The ground of the appeal of the assessee is accordingly allowed for accordingly allowed for statistical purposes.
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As far as ground No.3 of the appeal is concerned, the As far as ground No.3 of the appeal is concerned, the As far as ground No.3 of the appeal is concerned, the Ld. Counsel of the assessee though did not press the addition, however l of the assessee though did not press the addition, however l of the assessee though did not press the addition, however submitted that same might be considered for the purpose of submitted that same might be considered for the purpose of submitted that same might be considered for the purpose of telescoping. Since the telescoping. Since the Ld. Assessing Officer has not considered the s not considered the cash flow of unaccounted income and expenditure for the purpose cash flow of unaccounted income and expenditure for the purpose cash flow of unaccounted income and expenditure for the purpose of the addition, therefore this issue of consi he addition, therefore this issue of considering the unsecured dering the unsecured loan of ₹1,10,00,000/ 000/- as unexplained and for availability of as unexplained and for availability of undisclosed fund, is also restored to the file of the Ld. Assessing undisclosed fund, is also restored to the file of the undisclosed fund, is also restored to the file of the Officer for considering undisclosed income in the hand of the Officer for considering undisclosed income in the hand of the Officer for considering undisclosed income in the hand of the assessee. This ground of the appeal is also allowed for statistical assessee. This ground of the appeal is also allowed for statistical assessee. This ground of the appeal is also allowed for statistical purposes.
The ground No. The ground No. 4 to 6 of the appeal relates to unexplained of the appeal relates to unexplained cash credit under section 68 of the section 68 of the Act.
13.1 The relevant part of the order of the The relevant part of the order of the Ld. Assessing Officer Assessing Officer related to ground no. 4 related to ground no. 4 is reproduced as under:
“12. The assessee has claimed following loans taken during they under The assessee has claimed following loans taken during they under The assessee has claimed following loans taken during they under consideration other than those from family members or close relatives : consideration other than those from family members or close relatives : consideration other than those from family members or close relatives :
Amount (₹) Sr. No. Sr. No. Name of the Party
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Rajesh Jain 109000/- 12.1 The assessee has not even furnished confirmation of the party and The assessee has not even furnished confirmation of the party and The assessee has not even furnished confirmation of the party and no supporting documents as regards genuineness of loans are furnished. no supporting documents as regards genuineness of loans are furnished. no supporting documents as regards genuineness of loans are furnished. As discussed above, the details were furnished on As discussed above, the details were furnished on 29.03.2016 and it was 29.03.2016 and it was not possible to make any verification. The amount is appearing as liability not possible to make any verification. The amount is appearing as liability not possible to make any verification. The amount is appearing as liability in the balance sheet of the assessee and the onus is on the assessee to in the balance sheet of the assessee and the onus is on the assessee to in the balance sheet of the assessee and the onus is on the assessee to explain cash credit appearing in his books of accounts as per the explain cash credit appearing in his books of accounts as per the explain cash credit appearing in his books of accounts as per the provisions of section 68 of the Income on 68 of the Income-tax Act that is to establish identity of tax Act that is to establish identity of the party, genuineness of transaction any creditworthiness of the party. the party, genuineness of transaction any creditworthiness of the party. the party, genuineness of transaction any creditworthiness of the party. The assessee failed to offer any explanation at all in this liability as The assessee failed to offer any explanation at all in this liability as The assessee failed to offer any explanation at all in this liability as appearing in his balance sheet. Mere filing of co appearing in his balance sheet. Mere filing of confirmation is no sufficient nfirmation is no sufficient in view of decision of Hon’ble Supreme Court in the case of Durgaprasad in view of decision of Hon’ble Supreme Court in the case of Durgaprasad in view of decision of Hon’ble Supreme Court in the case of Durgaprasad More 82 ITR 510. The Hon’ble Kerala High Court in the case of M/s Diza More 82 ITR 510. The Hon’ble Kerala High Court in the case of M/s Diza More 82 ITR 510. The Hon’ble Kerala High Court in the case of M/s Diza Holdings Pvt. Ltd. 120 Taxmann 539 has held as under: Holdings Pvt. Ltd. 120 Taxmann 539 has held as under: Holdings Pvt. Ltd. 120 Taxmann 539 has held as under:
On the terms of section 68, On the terms of section 68, the burden is on the assessee to offer a burden is on the assessee to offer a satisfactory explanation about the nature and source of the amount, satisfactory explanation about the nature and source of the amount, satisfactory explanation about the nature and source of the amount, found credited in the books of the assessee. It is also clear that the found credited in the books of the assessee. It is also clear that the found credited in the books of the assessee. It is also clear that the mere furnishing of particulars is not enough. The mere fact, that mere furnishing of particulars is not enough. The mere fact, that mere furnishing of particulars is not enough. The mere fact, that payment was b payment was by way of account payee cheque is also not y way of account payee cheque is also not conclusive. Therefore, the assessing officer was entitled to consider conclusive. Therefore, the assessing officer was entitled to consider conclusive. Therefore, the assessing officer was entitled to consider whether notwithstanding the fact that the payments were made by whether notwithstanding the fact that the payments were made by whether notwithstanding the fact that the payments were made by
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cheques, whether the assessee has satisfactorily explained the cheques, whether the assessee has satisfactorily explained the cheques, whether the assessee has satisfactorily explained the nature and source nature and source of the amounts found credited in the books of the of the amounts found credited in the books of the assessee. It is clear that the assessing officer was satisfied that the assessee. It is clear that the assessing officer was satisfied that the assessee. It is clear that the assessing officer was satisfied that the so-called depositors did riot have the resources to make such called depositors did riot have the resources to make such called depositors did riot have the resources to make such deposits.
12.2 Hence, the onus lies on the assessee to establish the cash credit Hence, the onus lies on the assessee to establish the cash credit Hence, the onus lies on the assessee to establish the cash credit appearing in his books of accounts which the assessee failed to explain. appearing in his books of accounts which the assessee failed to explain. appearing in his books of accounts which the assessee failed to explain. Hence, addition of ₹1,09,000/- is made to the total income of the assessee Hence, addition of is made to the total income of the assessee u/s 68 of the Income u/s 68 of the Income-tax Act. Penalty proceedings is initiated u/s 271(1)(c) tax Act. Penalty proceedings is initiated u/s 271(1)(c) of the Income-tax Act for furnishing inaccurate particulars of income.” tax Act for furnishing inaccurate particulars of income.” tax Act for furnishing inaccurate particulars of income.”
13.2 The para no. 11 of the assessment order no. 11 of the assessment order, which , which relates to Ground No. 5, is reproduced as under: , is reproduced as under:
The assessee has shown sundry loans of ₹2,10,568/ “11. The assessee has shown sundry loans of 2,10,568/- for which no explanation is offered by the assessee as regard their source. The onus is explanation is offered by the assessee as regard their source. The onus is explanation is offered by the assessee as regard their source. The onus is on the assessee explain any credit appearing in his books of accounts on the assessee explain any credit appearing in his books of a on the assessee explain any credit appearing in his books of a which the assessee failed to explain. Hence, amount of ₹2,10,568/- which the assessee failed to explain. Hence, amount of which the assessee failed to explain. Hence, amount of assessee. Penalty proceeding u/s 271(1)(c) of the Income-tax Act, 1961 is assessee. Penalty proceeding u/s 271(1)(c) of the Income assessee. Penalty proceeding u/s 271(1)(c) of the Income initiated for furnishing inaccurate particulars of income. initiated for furnishing inaccurate particulars of income.” ”
13.3. The para No. 8 of the assessment order, 13.3. The para No. 8 of the assessment order, which relat which relates to Ground No. 6, is reproduced as under: , is reproduced as under:
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“8. During the course of survey at the business premises of During the course of survey at the business premises of During the course of survey at the business premises of the appellant at 96/106, Aabhushan House, Sheikh Memon the appellant at 96/106, Aabhushan House, Sheikh Memon the appellant at 96/106, Aabhushan House, Sheikh Memon Street, Zaveri Bazar, Mumbai, Annexure A Street, Zaveri Bazar, Mumbai, Annexure A-1 was impounded. 1 was impounded. In the seized page No. 3 an In the seized page No. 3 and 4 of Annexure A-1, there is a 1, there is a working of interest on loans received by the Appellant. In the working of interest on loans received by the Appellant. In the working of interest on loans received by the Appellant. In the seized seized seized pages, pages, pages, the the the principal principal principal amount amount amount is is is depicted depicted depicted as as as Rs.1,10,00,000/ Rs.1,10,00,000/- and interest amount is worked out at Rs. and interest amount is worked out at Rs. 29,88,262/-. The said noting on the seized page is . The said noting on the seized page is . The said noting on the seized page is reproduced, as under: produced, as under:- 9800=00 15/12/09 15/12/09 1200=00 1012110 Days 700=00 14/2/12 14/2/12 792 184=800 800=00 21/212 21/212 799 212=066 1000=00 12/3/12 12/3/12 819 272=999 1500=00 20/03/12 20/03/12 827 413=500 1000=00 30/3/12 30/3/12 837 278=999 2500=00 10/4/12 10/4/12 848 706=666 1000=00 11/4/12 11/4/12 792 263=999 8500=00 2334=029 1300=00 To be paid on 30.04.2012 To be paid on 30.04.2012 811 351=433 1200=00 To be paid on 30.04.2012 To be paid on 30.04.2012 757 302=800 2988=262 Interest” 13.4 The Ld. Counsel Counsel of the assessee submitted that of the assessee submitted that additions are not based on the incriminating material found during the course of not based on the incriminating material found during the course of not based on the incriminating material found during the course of the search, and assessment in the year under consideration being the search, and assessment in the year under consideration being the search, and assessment in the year under consideration being unabated assessment, Assessing Officer was not permitted to make unabated assessment, Assessing Officer was not permitted to make unabated assessment, Assessing Officer was not permitted to make addition based without any incriminating material relying on the addition based without any incriminating material relyi addition based without any incriminating material relyi decision of CIT v. Continental Warehousing in ITA No. 523 of CIT v. Continental Warehousing in ITA No. 523 of CIT v. Continental Warehousing in ITA No. 523 of
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2013 2013 (Bombay (Bombay High High Court) Court). In the the case case of Continental of Warehousing (supra), the Hon’ble Bom (supra), the Hon’ble Bombay High Court held y High Court held as under:
Similar is the case with the Division Bench judgment of the High Court 36. Similar is the case with the Division Bench judgment of the 36. Similar is the case with the Division Bench judgment of the of Karnataka at Bangalore. There as well a real estate firm was the of Karnataka at Bangalore. There as well a real estate firm was the of Karnataka at Bangalore. There as well a real estate firm was the assessee. A return of income was filed and when an order under section assessee. A return of income was filed and when an order under assessee. A return of income was filed and when an order under 143(3) of the Act came to be passed on 31 st SRP 38/61 of the Act came to be passed on 31 st SRP 38/61 ITXA523.13.doc of the Act came to be passed on 31 st SRP 38/61 December, 2010, for assessment year 2008 December, 2010, for assessment year 2008-09 that a search took place in 09 that a search took place in the premises of the assessee on 12th April, 2011. In the course of search, the premises of the assessee on 12th April, 2011. In the course of search, the premises of the assessee on 12th April, 2011. In the course of search, incriminating material leading to undisclosed income was seized. incriminating material leading to undisclosed income was seized. incriminating material leading to undisclosed income was seized. Therefore, the proceedings un Therefore, the proceedings under section 153A of the Act calling upon the of the Act calling upon the assessee to file return of income under assessee to file return of income under section 153A(1)(a) section 153A(1)(a) came to be initiated by a notice dated 13 th Janua initiated by a notice dated 13 th January, 2012.
Return of income was filed pursuant to receipt of such notice and for six Return of income was filed pursuant to receipt of such notice and for six Return of income was filed pursuant to receipt of such notice and for six years as required by the provision. When this return was under years as required by the provision. When this return was under years as required by the provision. When this return was under consideration on 14th March, 2013, the Commissioner of Income Tax consideration on 14th March, 2013, the Commissioner of Income Tax consideration on 14th March, 2013, the Commissioner of Income Tax initiated proceedings under initiated proceedings under section 263 of the Act on the ground that the of the Act on the ground that the order dated 31st December, 2010 in relation to the return of income for order dated 31st December, 2010 in relation to the return of income for order dated 31st December, 2010 in relation to the return of income for assessment year 2008 assessment year 2008-09 and holding that the same is erroneous and 09 and holding that the same is erroneous and prejudicial to the interest of the prejudicial to the interest of the Revenue came to be passed. The assessee Revenue came to be passed. The assessee filed his filed his objection but filed his objection but objection but the Commissioner the Commissioner the Commissioner maintained his action maintained maintained his action his action under section 263. That is how the aggrieved assessee carried the matter . That is how the aggrieved assessee carried the matter . That is how the aggrieved assessee carried the matter in appeal to the Tribunal a in appeal to the Tribunal and before the Tribunal it was contended that nd before the Tribunal it was contended that once section 263 of the Act has been invoked during the pendency of of the Act has been invoked during the pendency of of the Act has been invoked during the pendency of proceedings under proceedings under section 153A of the Act, then, that was impermissible. of the Act, then, that was impermissible. That was impermissible for the assessments SRP 39/61 ITXA523.13.doc That was impermissible for the assessments SRP 39/61 That was impermissible for the assessments SRP 39/61
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including for the assessment year 2008 including for the assessment year 2008-09 stand reopened. Once they are 09 stand reopened. Once they are reopened, then, there is no order of assessment in force and in regard to reopened, then, there is no order of assessment in force and in regard to reopened, then, there is no order of assessment in force and in regard to which any action under which any action under section 263 of the IT Act can be initiated. It is in of the IT Act can be initiated. It is in dealing with this argument and which was negatived by the Tribunal that dealing with this argument and which was negatived by the Tribunal that dealing with this argument and which was negatived by the Tribunal that all the observations of the High Court of Karnataka have been made. In all the observations of the High Court of Karnataka hav all the observations of the High Court of Karnataka hav paragraphs 5 and 6, the arguments have been noted and thereafter the paragraphs 5 and 6, the arguments have been noted and thereafter the paragraphs 5 and 6, the arguments have been noted and thereafter the provision has been reproduced. In paragraph 9, extensive reference has provision has been reproduced. In paragraph 9, extensive reference has provision has been reproduced. In paragraph 9, extensive reference has been made to the judgment in Anil Kumar Bhatia of the High Court of Delhi been made to the judgment in Anil Kumar Bhatia of the High Court of Delhi been made to the judgment in Anil Kumar Bhatia of the High Court of Delhi (supra) and then the follo (supra) and then the following observations in paragraphs 10 and 11 are wing observations in paragraphs 10 and 11 are made :
"10. Section 153A of the Acts start with a non obstante clause. The fetters "10. Section 153A of the Acts start with a non obstante clause. The fetters "10. Section 153A of the Acts start with a non obstante clause. The fetters imposed upon the Assessing Officer by the strict procedure to assume imposed upon the Assessing Officer by the strict procedure to assume imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under jurisdiction to reopen the assessment under Sections 147 Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) been removed by the non obstante clause with which sub section (1) been removed by the non obstante clause with which sub section (1) of Section 153A opens opens. The time-limit within which the notice under limit within which the notice under Section 148 can be issued, as provided in can be issued, as provided in Section 149 has also been made has also been made inapplicable by the non obstante inapplicable by the non obstante clause. Section 151 Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to sanction to be obtained by the Assessing Officer by issue of notice to sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under reopen the assessment under Section 148 has also been excluded in a so been excluded in a case covered by Section 153A Section 153A. The time-limit prescribed for completion of limit prescribed for completion of an assessment or reassessment by an assessment or reassessment by Section 153 has also been has also been done away with in a case covered by with in a case covered by Section 153A.
With all the stops having been pulled out, the Assessing Officer With all the stops having been pulled out, the Assessing Officer With all the stops having been pulled out, the Assessing Officer under Section 153A Section 153A has been entrusted with the duty of bringing to tax the with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by total income of an assessee whose case is covered by total income of an assessee whose case is covered by even making SRP 40/61 even making SRP 40/61 ITXA523.13.doc reassessments without any ITXA523.13.doc reassessments without any fetters, if need be. Therefore, it fetters, if need be. Therefore, it is clear even if an assessment order is is clear even if an assessment order is passed under Section 143(1) Section 143(1) or 143(3) of the Act, the Assessing Officer is or 143(3) of the Act, the Assessing Officer is
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empowered to reopen those proceedings and reassess the total income empowered to reopen those proceedings and reassess the total income empowered to reopen those proceedings and reassess the total income taking note of the und taking note of the undisclosed income, if any, unearthed during the search. isclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is After such reopening of the assessment, the Assessing Officer is After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. empowered to assess or reassess the total income of the aforesaid years. empowered to assess or reassess the total income of the aforesaid years. The condition precedent for application of The condition precedent for application of Section 153A Section 153A is there should be a search under Section 132 Section 132. Initiation of proceedings under . Initiation of proceedings under Section 153A is not dependent o is not dependent on any undisclosed income being unearthed during n any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the such search. The proviso to the aforesaid section makes it clear the such search. The proviso to the aforesaid section makes it clear the assessing officer shall assess or reassess the total income in respect of assessing officer shall assess or reassess the total income in respect of assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any each assessment year falling within such six assessment years. If each assessment year falling within such six assessment years. If assessment proceedings are pending within the period of six assessment assessment proceedings are pending within the period of six assessment assessment proceedings are pending within the period of six assessment years referred to in the aforesaid sub years referred to in the aforesaid sub-section on the date of initiation of the section on the date of initiation of the search under Section 132 Section 132, the said proceeding shall abate. If such all abate. If such proceedings are already concluded by the assessing officer by initiation of proceedings are already concluded by the assessing officer by initiation of proceedings are already concluded by the assessing officer by initiation of proceedings under proceedings under Section 153A, the legal effect is the assessment gets , the legal effect is the assessment gets reopened. The block assessment roped i reopened. The block assessment roped in only the undisclosed income and n only the undisclosed income and the regular assessment proceedings were preserved, resulting in multiple the regular assessment proceedings were preserved, resulting in multiple the regular assessment proceedings were preserved, resulting in multiple assessments. Under assessments. Under Section 153A, however, the Assessing Officer has , however, the Assessing Officer has been given the power to assess been given the power to assess or reassess the "total income" of the six or reassess the "total income" of the six assessment years in question in separate assessment orders. The assessment years in question in separate assessment orders. The assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess Assessing Officer is empowered to reopen those proceedings and reassess Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed the total income, taking note of the undisclosed income, if any, unearthed the total income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax ring the search. He has been entrusted with the duty of bringing to tax ring the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by the total income of an assessee whose case is covered by the total income of an assessee whose case is covered by even making reassessments without any fetters. This means that there even making reassessments without any fetters. This means t even making reassessments without any fetters. This means t can be only one assessment order in respect of each of the six assessment can be only one assessment order in respect of each of the six assessment can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be years, in which both the disclosed and the undisclosed income would be years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section brought to tax. When once the proceedings are initiated under Section brought to tax. When once the proceedings are initiated under Section 153A of the SRP 41/61 153A of the SRP 41/61 ITXA523.13.doc Act, the legal effect is even in case 3.doc Act, the legal effect is even in case
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where the assessment order is passed it stands reopened. In the eye of where the assessment order is passed it stands reopened. In the eye of where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re law there is no order of assessment. Re-opened means to deal with or opened means to deal with or begin with again. It means the Assessing Officer shall assess or reassess begin with again. It means the Assessing Officer shall assess or reasses begin with again. It means the Assessing Officer shall assess or reasses the total income of six assessment years. Once the assessment is the total income of six assessment years. Once the assessment is the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in reopened, the assessing authority can take note of the income disclosed in reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also the earlier return, any undisclosed income found during search or and also the earlier return, any undisclosed income found during search or and also any other income which is not disclosed any other income which is not disclosed in the earlier return or which is in the earlier return or which is not unearthed during the search, in order to find out what is the "total not unearthed during the search, in order to find out what is the "total not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order. Therefore, the income" of each year and then pass the assessment order. Therefore, the income" of each year and then pass the assessment order. Therefore, the Commissioner by virtue of the power conferred under Commissioner by virtue of the power conferred under Section 263 of the Act gets no jurisdiction to initiate proceedings under the said provision Act gets no jurisdiction to initiate proceedings under the said provision Act gets no jurisdiction to initiate proceedings under the said provision because the condition precedent for initiating proceedings under Section because the condition precedent for initiating proceedings under because the condition precedent for initiating proceedings under 263 is any order passed under the Act by the Assessing Officer is order passed under the Act by the Assessing Officer is order passed under the Act by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of the revenue. Once the erroneous insofar as it is prejudicial to the interest of the revenue. Once the erroneous insofar as it is prejudicial to the interest of the revenue. Once the order passed by the Assessing Officer gets reopened, there is no order order passed by the Assessing Officer gets reopened, there is no order order passed by the Assessing Officer gets reopened, there is no order which can be said to be erroneous insofar as it i which can be said to be erroneous insofar as it is prejudicial to the interest s prejudicial to the interest of the revenue which confers jurisdiction on the Commissioner to exercise of the revenue which confers jurisdiction on the Commissioner to exercise of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction. the power of the jurisdiction.
In view of above, respectfully following the finding of the 14. In view of above, respectfully following the finding of the In view of above, respectfully following the finding of the Hon’ble Bombay High Court High Court (supra), we are of the opinion , we are of the opinion that no addition can be made addition can be made in the case of the assessee as no in the case of the assessee as no incriminating material has been found qua the addition in dispute. incriminating material has been found qua the addition in dispute incriminating material has been found qua the addition in dispute Ground Nos. 4 to 6 of the appeal of the assessee are accordingly . 4 to 6 of the appeal of the assessee are accordingly . 4 to 6 of the appeal of the assessee are accordingly allowed.
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Now we take up the appeal of the assessee against confirming Now we take up the appeal of the assessee against confirming Now we take up the appeal of the assessee against confirming of penalty u/s 271D of the Act levied by the Joint/Additional of penalty u/s 271D of the Act levied by the Joint/Additional of penalty u/s 271D of the Act levied by the Joint/Additional Commissioner of Income Commissioner of Income-tax.
The brief facts reproduced by the Ld. CIT(A) are extracted as 16. The brief facts reproduced by the Ld. CIT(A) are extracted as The brief facts reproduced by the Ld. CIT(A) are extracted as under :
“7.0 I have considered the obs 7.0 I have considered the observations of the A.O. in the ervations of the A.O. in the assessment order, submissions of the appellant and also assessment order, submissions of the appellant and also assessment order, submissions of the appellant and also perused the materials available on record, on this issue. perused the materials available on record, on this issue. perused the materials available on record, on this issue. Since, the Ground No. 1 to 4 are interrelated and Since, the Ground No. 1 to 4 are interrelated and Since, the Ground No. 1 to 4 are interrelated and interconnected to each other, they are taken up together for interconnected to each other, they are taken up together for interconnected to each other, they are taken up together for adjudication. judication.
7.1 The brief facts of the case are that the original return of 7.1 The brief facts of the case are that the original return of 7.1 The brief facts of the case are that the original return of income was e income was e-filed by the appellant on 19.09.2010 declaring a filed by the appellant on 19.09.2010 declaring a total income of Rs. 1,59,300/ total income of Rs. 1,59,300/-. A search & seizure action u/s. . A search & seizure action u/s. 132 of the Act was conducted in RSBL Group of cases on 132 of the Act was conducted in RSBL Group of cases on 132 of the Act was conducted in RSBL Group of cases on 11.06.2013 and the appellant was also covered in the search 11.06.2013 and the appellant was also covered in the search 11.06.2013 and the appellant was also covered in the search operation. In view of the search operation on the Appellant, an operation. In view of the search operation on the Appellant, an operation. In view of the search operation on the Appellant, an order u/s. 143(3) r.w.s. 153A dated 31.03.2016 was passed order u/s. 143(3) r.w.s. 153A dated 31.03.2016 was passed order u/s. 143(3) r.w.s. 153A dated 31.03.2016 was passed by the AO determining the total income of the appellant at Rs. by the AO determining the total income of the appellant at Rs. by the AO determining the total income of the appellant at Rs. 6,34,26,950/ /-, after making various additions.
7.2 During the course of survey at the business premises of During the course of survey at the business premises of During the course of survey at the business premises of the appellant at 96/106, Aabhushan House, Sheikh Memon the appellant at 96/106, Aabhushan House, Sheikh Memon the appellant at 96/106, Aabhushan House, Sheikh Memon Street, Zaveri Bazar, Mumbai, Annexure A Street, Zaveri Bazar, Mumbai, Annexure A-1 was impounded. 1 was impounded. In the seized page No. 3 and 4 of Annexure A In the seized page No. 3 and 4 of Annexure A-1, 1, there is a
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working of interest on loans received by the Appellant. In the working of interest on loans received by the Appellant. In the working of interest on loans received by the Appellant. In the seized seized seized pages, pages, pages, the the the principal principal principal amount amount amount is is is depicted depicted depicted as as as Rs.1,10,00,000/ Rs.1,10,00,000/- and interest amount is worked out at Rs. and interest amount is worked out at Rs. 29,88,262/-. The said noting on the seized page is . The said noting on the seized page is . The said noting on the seized page is reproduced, as under: reproduced, as under:- 9800=00 15/12/09 15/12/09 1200=00 1012110 Days 700=00 14/2/12 14/2/12 792 184=800 800=00 21/212 21/212 799 212=066 1000=00 12/3/12 12/3/12 819 272=999 1500=00 20/03/12 20/03/12 827 413=500 1000=00 30/3/12 30/3/12 837 278=999 2500=00 10/4/12 10/4/12 848 706=666 1000=00 11/4/12 11/4/12 792 263=999 8500=00 2334=029 1300=00 To be paid on 30.04.2012 To be paid on 30.04.2012 811 351=433 1200=00 To be paid on 30.04.2012 To be paid on 30.04.2012 757 302=800 2988=262 Interest 7.3 During the course of the assessment proceedings, the 7.3 During the course of the assessment proceedings, the 7.3 During the course of the assessment proceedings, the Appellant had admitted that he has received cash loan Appellant had admitted that he has received cash loan Appellant had admitted that he has received cash loan amounting to Rs. amounting to Rs. 1,10,00,000/-. However, no addition was . However, no addition was made of the principal amount by the A.O.. Since, the cash made of the principal amount by the A.O.. Since, the cash made of the principal amount by the A.O.. Since, the cash loans were in contravention of provisions of section 26955 of loans were in contravention of provisions of section 26955 of loans were in contravention of provisions of section 26955 of the Act, a proposal was sent to the Addl. Commissioner of the Act, a proposal was sent to the Addl. Commissioner of the Act, a proposal was sent to the Addl. Commissioner of Income Tax, Central Range Income Tax, Central Range-8, Mumbai for initiating penalty or initiating penalty w/s. 271D of the Income Tax Act. w/s. 271D of the Income Tax Act.”
16.1 The Ld. CIT(A) after considering the submission of the The Ld. CIT(A) after considering the submission of the The Ld. CIT(A) after considering the submission of the
assessee upheld the penalty observing as under: assessee upheld the penalty observing as under:
“7.4 I have noted that the appellant has vide submissions 7.4 I have noted that the appellant has vide submissions 7.4 I have noted that the appellant has vide submissions filed on 28.03.2016 categorically filed on 28.03.2016 categorically submitted during the course submitted during the course
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of the penalty proceedings that he had accepted cash loans of of the penalty proceedings that he had accepted cash loans of of the penalty proceedings that he had accepted cash loans of Rs. 85 lacs in December 2009, Rs. 13 lacs on 10.02.2010 and Rs. 85 lacs in December 2009, Rs. 13 lacs on 10.02.2010 and Rs. 85 lacs in December 2009, Rs. 13 lacs on 10.02.2010 and Rs. 12 lacs on 05.04.2010 totaling to Rs. Rs. 12 lacs on 05.04.2010 totaling to Rs.1,10,00,000/ 1,10,00,000/-. Thus, relevant to the AY. 2010 relevant to the AY. 2010-11, the appellant has accepted cash has accepted cash loan worth Rs. 98 lac and an amount of Rs. 12 lacs has been loan worth Rs. 98 lac and an amount of Rs. 12 lacs has been loan worth Rs. 98 lac and an amount of Rs. 12 lacs has been accepted to be taken in the A.Y. 2011 accepted to be taken in the A.Y. 2011-12. Both the said 12. Both the said amounts have been admittedly taken in cash, which is in amounts have been admittedly taken in cash, which is in amounts have been admittedly taken in cash, which is in violation of the provisions of Section 269SS of the Act. The AO violation of the provisions of Section 269SS of the Act. The AO violation of the provisions of Section 269SS of the Act. The AO has duly sent a proposal to the JCIT, Range for levying of s duly sent a proposal to the JCIT, Range for levying of s duly sent a proposal to the JCIT, Range for levying of penalty penalty penalty us us us 271D 271D 271D of of of the the the Act, Act, Act, vide vide vide letter letter letter on on on DCIT/CC8(3)/Proposal DCIT/CC8(3)/Proposal for for Pen.271D/2016 Pen.271D/2016- -17 dated 25.05.2016.
7.5During the penalty proceedings and the present appellate 7.5During the penalty proceedings and the present appellate 7.5During the penalty proceedings and the present appellate proceedings the appellant has stated proceedings the appellant has stated that there was an acute that there was an acute shortage of funds and theassessee had huge loan liability of shortage of funds and theassessee had huge loan liability of shortage of funds and theassessee had huge loan liability of Rs. 4,52,13,051/. Further, it was stated that there was a Rs. 4,52,13,051/. Further, it was stated that there was a Rs. 4,52,13,051/. Further, it was stated that there was a family dispute regarding the title of the family property at family dispute regarding the title of the family property at family dispute regarding the title of the family property at assessee's native place and hence he could not arra assessee's native place and hence he could not arra assessee's native place and hence he could not arrange loans through banking channels and was forced to take cash loans through banking channels and was forced to take cash loans through banking channels and was forced to take cash loans from the market. from the market. Further, the appellant's claim was that he Further, the appellant's claim was that he was not aware of the provisions of Section 269SS of the Act. was not aware of the provisions of Section 269SS of the Act. was not aware of the provisions of Section 269SS of the Act.
7.6 I am of the considered opinion that shortage of funds and 7.6 I am of the considered opinion that shortage of funds and 7.6 I am of the considered opinion that shortage of funds and a family dispute on property cannot be termed as a pressing mily dispute on property cannot be termed as a pressing mily dispute on property cannot be termed as a pressing cause for taking unaccounted cash loans. It is pertinent to cause for taking unaccounted cash loans. It is pertinent to cause for taking unaccounted cash loans. It is pertinent to note that there is a plethora of seized material found during note that there is a plethora of seized material found during note that there is a plethora of seized material found during the course of the search action on the appellant, which clearly the course of the search action on the appellant, which clearly the course of the search action on the appellant, which clearly indicates indicates that that the the appellant appellant has has carried carried out out severalunaccounted cash transactions in a systematic and severalunaccounted cash transactions in a systematic and severalunaccounted cash transactions in a systematic and
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organized manner. Thus, the present cash loans is not an organized manner. Thus, the present cash loans is not an organized manner. Thus, the present cash loans is not an isolated aberration in the case of the appellant. isolated aberration in the case of the appellant.
7.7 The shortage of funds is a very general financial 7.7 The shortage of funds is a very general financial 7.7 The shortage of funds is a very general financial constraint faced by each and every business venture and int faced by each and every business venture and int faced by each and every business venture and such an excuse can't be used to raise unaccounted cash such an excuse can't be used to raise unaccounted cash such an excuse can't be used to raise unaccounted cash loans. In the absence of any documentary evidence in support loans. In the absence of any documentary evidence in support loans. In the absence of any documentary evidence in support of the so called family dispute, no credence can be given to of the so called family dispute, no credence can be given to of the so called family dispute, no credence can be given to such general unsubstantiated a such general unsubstantiated averments of the Appellant.In verments of the Appellant.In the absence of any clear property available for mortgage, the the absence of any clear property available for mortgage, the the absence of any clear property available for mortgage, the appellant could have gone for unsecured loans. Further, appellant could have gone for unsecured loans. Further, appellant could have gone for unsecured loans. Further, ignorance of law cannot be termed as a valid reasonable ignorance of law cannot be termed as a valid reasonable ignorance of law cannot be termed as a valid reasonable cause, under the provisions of Section 273B of the Ac cause, under the provisions of Section 273B of the Ac cause, under the provisions of Section 273B of the Act.
7.8 I am of the considered opinion that on the facts of the 7.8 I am of the considered opinion that on the facts of the 7.8 I am of the considered opinion that on the facts of the present case, there was no real exigency that has compelled present case, there was no real exigency that has compelled present case, there was no real exigency that has compelled the appellant to accept the loans in cash and that also from the appellant to accept the loans in cash and that also from the appellant to accept the loans in cash and that also from unaccounted sources. The appellant could have easily met his unaccounted sources. The appellant could have easily met his unaccounted sources. The appellant could have easily met his financial constraints by opting for unsecured loan,duly onstraints by opting for unsecured loan,duly onstraints by opting for unsecured loan,duly recoded in the books of account at both ends viz. in the books recoded in the books of account at both ends viz. in the books recoded in the books of account at both ends viz. in the books of the lender and the borrower. Thus, the appellant has not of the lender and the borrower. Thus, the appellant has not of the lender and the borrower. Thus, the appellant has not been able to place on record sany reasonable cause for been able to place on record sany reasonable cause for been able to place on record sany reasonable cause for violating the provisions of the S violating the provisions of the Section 26955 of the ection 26955 of the
7.9 During the course of the appellate proceedings, the 7.9 During the course of the appellate proceedings, the 7.9 During the course of the appellate proceedings, the appellant has stated that it does not want to press the Ground appellant has stated that it does not want to press the Ground appellant has stated that it does not want to press the Ground No. 3 relating to reasonable case us 273B of the Act. I am of No. 3 relating to reasonable case us 273B of the Act. I am of No. 3 relating to reasonable case us 273B of the Act. I am of the considered opinion that only the provisions of Sec the considered opinion that only the provisions of Sec the considered opinion that only the provisions of Sec 273B of the Act can come to the rescue of the appellant in the facts of the Act can come to the rescue of the appellant in the facts of the Act can come to the rescue of the appellant in the facts of
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the present case, which I think has been erroneously not the present case, which I think has been erroneously not the present case, which I think has been erroneously not pressed by the appellant. pressed by the appellant.
7.10 It is also pertinent to note that the said cash loans were 7.10 It is also pertinent to note that the said cash loans were 7.10 It is also pertinent to note that the said cash loans were not routed through the books of accou not routed through the books of accounts of the appellant and nts of the appellant and hence hence hence does does does not not not deal deal deal with with with accounted accounted accounted money. money. money. These These These unaccounted cash loans were detected during the course of unaccounted cash loans were detected during the course of unaccounted cash loans were detected during the course of search operation conducted on the appellant. It is also search operation conducted on the appellant. It is also search operation conducted on the appellant. It is also pertinent to note that the said unaccounted cash loan pertinent to note that the said unaccounted cash loan pertinent to note that the said unaccounted cash loan amounting to Rs amounting to Rs. 1 Crore 10 lacs has not been added in the . 1 Crore 10 lacs has not been added in the assessment order passed by the A.O. u/s 143(3) r.w.s. 153A assessment order passed by the A.O. u/s 143(3) r.w.s. 153A assessment order passed by the A.O. u/s 143(3) r.w.s. 153A of the Act. Since, these unaccounted cash luans have not been of the Act. Since, these unaccounted cash luans have not been of the Act. Since, these unaccounted cash luans have not been taxed u/s 68 of the Act, there is all the more reasons that the taxed u/s 68 of the Act, there is all the more reasons that the taxed u/s 68 of the Act, there is all the more reasons that the penalty u/S271D of the Act penalty u/S271D of the Act should be levied on the Appellant. should be levied on the Appellant.
7.11 As far as, the plea of the appellant is concerned that no 7.11 As far as, the plea of the appellant is concerned that no 7.11 As far as, the plea of the appellant is concerned that no statuary notice us 274 of the Act has been issued for invoking statuary notice us 274 of the Act has been issued for invoking statuary notice us 274 of the Act has been issued for invoking provisions of the Section 271D of the Act, it is stated that provisions of the Section 271D of the Act, it is stated that provisions of the Section 271D of the Act, it is stated that under the provisions of Section 27 under the provisions of Section 274 of the Act, there is no 4 of the Act, there is no prescribed form or format in which the show prescribed form or format in which the show-cause is to be cause is to be issued. As far as the provisions of section 274(1) are issued. As far as the provisions of section 274(1) are issued. As far as the provisions of section 274(1) are concerned, it only states that no order of penalty shall be concerned, it only states that no order of penalty shall be concerned, it only states that no order of penalty shall be imposed, unless the assessee has been heard or has been imposed, unless the assessee has been heard or has been imposed, unless the assessee has been heard or has been given a reasonable opportunity of being heard. I have noted given a reasonable opportunity of being heard. I have noted given a reasonable opportunity of being heard. I have noted that the JCIT, Central Range that the JCIT, Central Range-8 has vide letter dated 8 has vide letter dated 08.07.2016 issued a detailed show cause notice, whereby 08.07.2016 issued a detailed show cause notice, whereby 08.07.2016 issued a detailed show cause notice, whereby proper opportunity was given to the appellant to explain his proper opportunity was given to the appellant to explain his proper opportunity was given to the appellant to explain his stand on the penalty initi stand on the penalty initiated u/s 271D of the Act. Thus, there ated u/s 271D of the Act. Thus, there is no violation of principles of natural justice in the is no violation of principles of natural justice in the is no violation of principles of natural justice in the
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proceedings conducted u/s 271D of the Act by the JCIT, proceedings conducted u/s 271D of the Act by the JCIT, proceedings conducted u/s 271D of the Act by the JCIT, Central Range Central Range-8, Mumbai.
7.12 The appellant has also claimed that burden lies on the 7.12 The appellant has also claimed that burden lies on the 7.12 The appellant has also claimed that burden lies on the Revenue to prove that Revenue to prove that the loans were taken at one stroke or the loans were taken at one stroke or amounted to Rs. 20,000/ amounted to Rs. 20,000/- or more from a single party. In this or more from a single party. In this regard, a reference may be made to theentries noted on the regard, a reference may be made to theentries noted on the regard, a reference may be made to theentries noted on the seized page, which clearly reveals that all the entries of seized page, which clearly reveals that all the entries of seized page, which clearly reveals that all the entries of unaccounted cash loans are above Rs. 2 unaccounted cash loans are above Rs. 20,000/-. Thus, clearly . Thus, clearly provisions of Section 2695S of the Act are attracted in the case provisions of Section 2695S of the Act are attracted in the case provisions of Section 2695S of the Act are attracted in the case at hand. As far as, the identification of the lenders and their at hand. As far as, the identification of the lenders and their at hand. As far as, the identification of the lenders and their name and address is concerned, it is stated that the onus was name and address is concerned, it is stated that the onus was name and address is concerned, it is stated that the onus was on the appellant to provide the same, as t on the appellant to provide the same, as the unaccounted he unaccounted transactions transactions transactions were in the complete knowledge of the were in the complete knowledge of the were in the complete knowledge of the appellant.However, the appellant has failed to discharge the appellant.However, the appellant has failed to discharge the appellant.However, the appellant has failed to discharge the burden of proof, which lies on him. Needless, to mention here burden of proof, which lies on him. Needless, to mention here burden of proof, which lies on him. Needless, to mention here that the appellant himself has during the assessment and that the appellant himself has during the assessment and that the appellant himself has during the assessment and penalty proceedings unequivocally accepted that an amount of oceedings unequivocally accepted that an amount of oceedings unequivocally accepted that an amount of Rs. 1 crore 10 lacs have been received by him in cash. Rs. 1 crore 10 lacs have been received by him in cash. Rs. 1 crore 10 lacs have been received by him in cash.”
16.2 He He He further further further relied relied relied upon upon upon the the the following following following judicial judicial judicial pronouncements :
i. AnantharamVeerasinghaiah& Co. v. CIT reported in (1980) 123 AnantharamVeerasinghaiah& Co. v. CIT reported in (1980) 123 AnantharamVeerasinghaiah& Co. v. CIT reported in (1980) 123 ITR 457 (SC) ITR 457 (SC) ii. Dhanji R Zalte (265 ITR 204) Dhanji R Zalte (265 ITR 204) iii. Kum A B Shanthi (122 Taxman 574) (SC) Kum A B Shanthi (122 Taxman 574) (SC) iv. Mysore Sales International Ltd. v. Dy. CIT [2004] 134 Taxman Mysore Sales International Ltd. v. Dy. CIT [2004] 134 Taxman Mysore Sales International Ltd. v. Dy. CIT [2004] 134 Taxman 193 (Kar.) and 193 (Kar.) and
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v. State of Bihar v. CIT [1993] 202 ITR 535 (Pat.) State of Bihar v. CIT [1993] 202 ITR 535 (Pat.) State of Bihar v. CIT [1993] 202 ITR 535 (Pat.) vi. Attar Singh Gurmukh Singh (199 ITR 667) Attar Singh Gurmukh Singh (199 ITR 667) vii. Finance Bill, 1984 (146 Finance Bill, 1984 (146 (ST) 162) viii. Circular No. 387 dated 06.07.1984 Circular No. 387 dated 06.07.1984 ix. ThenamalChhajjer (96 ITD 210) ThenamalChhajjer (96 ITD 210) x. P. Bhaskar (340 ITR 560) P. Bhaskar (340 ITR 560) xi. Kasi Consultant Corporation (311 ITR 419) Kasi Consultant Corporation (311 ITR 419)
Before us, the Before us, the Ld. Counsel of the assessee submitted that Ld. Counsel of the assessee submitted that there was no material before the Ld. Addl./Commissioner of there was no material before the Ld. Addl./Commissioner of there was no material before the Ld. Addl./Commissioner of Income-tax to substantiate that cash loan in reference were tax to substantiate that cash loan in reference were tax to substantiate that cash loan in reference were exceeding ₹20,00,000/ 20,00,000/- and therefore those authorities have levied and therefore those authorities have levied the penalty mainly on the p the penalty mainly on the presumption that cash loans are resumption that cash loans are exceeding ₹20,00,000/ 20,00,000/-. According to the Ld. Counsel, it was the . According to the Ld. Counsel, it was the onus on the authority who has levied the penalty to establish that onus on the authority who has levied the penalty to establish that onus on the authority who has levied the penalty to establish that loans in question were exceeding ₹20,00,000/- and therefore, the loans in question were exceeding and therefore, the penalty levied is liable to levied is liable to be deleted. However, we do not agree with be deleted. However, we do not agree with the above contention of the Ld. Counsel of the assessee. The details the above contention of the Ld. Counsel of the assessee. The details the above contention of the Ld. Counsel of the assessee. The details of the loan entries found during the course of the search have been of the loan entries found during the course of the search have been of the loan entries found during the course of the search have been referred by the Ld. CIT(A) in para 7.1 of the impugned order where referred by the Ld. CIT(A) in para 7.1 of the impugned order where referred by the Ld. CIT(A) in para 7.1 of the impugned order where is exceeding ₹20,00,000/-. If the assessee was having each entry is exceeding . If the assessee was having any evidence that those entries are combined loan having each any evidence that those entries are combined loan having each any evidence that those entries are combined loan having each
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entry below ₹20,00,000/ 20,00,000/- then it was the responsibility of the then it was the responsibility of the assessee to forward the assessee to forward the name and address of the parties along with name and address of the parties along with relevant evidences evidences evidences justifying justifying justifying identity, identity, identity, creditworthiness creditworthiness creditworthiness and and and genuineness of transaction. genuineness of transaction. If the assessee did not provide any f the assessee did not provide any details of the entry of loan of ₹98,00,000/- -, ₹7,00,000/-, details of the entry of loan of ₹8,00,000/-, ₹10,00,000/ 10,00,000/- etc., then the logical inference is that the the logical inference is that the amount is unexplained cash credit, which should have been is unexplained cash credit, which should have been is unexplained cash credit, which should have been assessed u/s 68 of the Act by the Assessing Officer and in that assessed u/s 68 of the Act by the Assessing Officer and in that assessed u/s 68 of the Act by the Assessing Officer and in that case, it is not being explained unsecured loan, having no name and case, it is not being explained unsecured loan, having case, it is not being explained unsecured loan, having address of the of parties, no penalty for violation of 269SS/T can be address of the of parties, no penalty for violation of 269SS/T can be address of the of parties, no penalty for violation of 269SS/T can be initiated. What is beyond the seized record is known to the assessee What is beyond the seized record is known to the assessee What is beyond the seized record is known to the assessee and therefore, the onus and therefore, the onus in on the assessee to substantiat substantiate the same. In view of the above discussion, we same. In view of the above discussion, we are of the view that the are of the view that the penalty levied u/s 271D of the Act is not justified. penalty levied u/s 271D of the Act is not justified. Since th Since the issue of addition of section 68 of the Act in respect of amount of unsecured addition of section 68 of the Act in respect of amount of unsecured addition of section 68 of the Act in respect of amount of unsecured loan claimed by the assessee has already been restored back to the loan claimed by the assessee has already been restored back to the loan claimed by the assessee has already been restored back to the file of the Assessing Officer in ITA No. 6123/Mum/2018, while file of the Assessing Officer in ITA No. 6123/Mum/2018, while file of the Assessing Officer in ITA No. 6123/Mum/2018, while deciding the issue of addition of ₹6,25,01,000/- on the basis of deciding the issue of addition of on the basis of pages of seized diary, pages of seized diary, we feel appropriate to restore this issue of levy e feel appropriate to restore this issue of levy
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of penalty u/s 271D of the Act to the file of the Ld. Joint/Addl. of penalty u/s 271D of the Act to the file of the Ld. Joint/Addl. of penalty u/s 271D of the Act to the file of the Ld. Joint/Addl. Commissioner for deciding afresh after adjudication by the Commissioner for deciding afresh after adjudication by the Commissioner for deciding afresh after adjudication by the Assessing Officer whether the amount of u Assessing Officer whether the amount of unsecured loan in nsecured loan in consideration is unexplained cash credit or explained unsecured consideration is unexplained cash credit or explained unsecured consideration is unexplained cash credit or explained unsecured loan. The grounds of the appeal of the assessee are accordingly loan. The grounds of the appeal of the assessee are accordingly loan. The grounds of the appeal of the assessee are accordingly allowed for statistical purpose. allowed for statistical purpose.
In the result, the appeal of the In the result, the appeal of the assessee is having ITA No. is having ITA No. 6123/M/2018 and ITA No. 6124/M/2018 are allowed for statistical ITA No. 6124/M/2018 are allowed for statistical ITA No. 6124/M/2018 are allowed for statistical purposes.
Order pronounced Order pronounced under Rule 34(4) of the ITAT Rules, of the ITAT Rules, 1963 on 31/10/2022 /10/2022. Sd/- Sd/ Sd/- (SANDEEP SINGH KARHAIL SANDEEP SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 31/10/2022 Rahul Sharma, Sr. P.S.
Shri Sanjay Shantilal Jain Shri Sanjay Shantilal Jain 44 ITA No. 6123 & 6124/M/2018
Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai