RAJEEV YESHWANT PATIL ,VIRAR vs. ACIT CC-3 THANE , THANE

As both the appeals pertain to the same assessee and impugned order passed by the learned CIT(A) is also common, therefore, both the appeals were heard together as a matter of convenience and are being adjudicated by way of this consolidated order. ./2019 Assessee’s Appeal – A.Y. 2011–12

In this appeal, the assessee has raised following grounds:– “1. On the facts and in law, the Hon. CIT(A) erred in confirming the addition of Rs.25,00,000/- as unexplained cash loan given by the appellant to one, M/s. Maad Realtors & Infra Pvt. Ltd. (Maad) based on entries on seized page no.6 of bundle no.1/party A-2, found and seized from the premises of the said' Maad, not appreciating that the appellant had not given any such cash loan and the issue was explained by the said Maad to be an accounting error on their part and therefore the addition was not justified.

The only issue arising in assessee’s appeal is with regard to addition of Rs. 25,00,000 as unexplained cash loan given by the assessee to M/s Maad Realtors and Infra Private Limited.

The brief facts of the case pertaining to this issue as emanating from the record are: The assessee is an individual and engaged in business of construction activities in the name and style “M/s Y.K. & Sons”. The assessee is also a partner in various firms. A search and seizure action under section 132 of the Act was carried out on 31.07.2014 in AMEYA group of cases including at the residence of the assessee. Notice under section 153A of the Act was issued on 15.12.2014 for the assessment years 2009–10 to 2014–15. In response to notice under section 153A of the Act, assessee filed his return of income for the assessment years 2009– 10 to 2014–15 and regular return of income for the assessment year 2015–16. The assessee was provided with the copies of statement recorded during the search and survey vide letter dated 23.03.2015.

Separately, during the course of search proceedings in the office premises of M/s Maad Realtors and Infra Private Limited loose paper bundles were found and seized. The said documents contain details of loans received from various parties in the books of M/s Maad Realtors and Infra Private Limited. At page No. 6 of such document, Rs. 2,25,00,000 in Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 the loan column against “Rajiv Patil (Nana)” was shown. At page No. 15 of the said bundle, Rs. 2,00,00,000 paid in cheque and Rs. 25,00,000 paid in cash by Nana (Rajiv Patil) was mentioned. The assessee was asked to show cause. In response, assessee submitted that the same is investment made by Rashmi Ameya Developers Housing & Estate Realtors Pvt. Ltd. through the assessee. By mistake accountant has passed entry in Ledger account of assessee.

The Assessing Officer vide order dated 19.09.2016 passed under section 143(3) read with section 153A of the Act did not agree with the submission of the assessee and held that assessee failed to submit cogent supporting evidence in support of his claim. Accordingly, the Assessing Officer, inter-alia, treated Rs. 25,00,000 as unexplained cash loan made by the assessee and added the same to the total income of the assessee.

In appeal before learned CIT(A), the assessee submitted that it has no connection to the premises of the third-party from where the documents were found and seized. The assessee further submitted that M/s Maad Realtors and Infra Private Limited vide letter dated 08.09.2016 explained to the Assessing Officer that by mistake the said entry was credited to the account of the assessee by the accountant and subsequently the said error was rectified at seized paper No. 59, which only mentions loan of Rs. 2,00,00,000 in the name of assessee as liability in the books of M/s Maad Realtors and Infra Private Limited. Accordingly, the assessee submitted

The learned CIT(A) vide common impugned order dated 19.08.2019 held that perusal of document at page 15 indicates that it is a Ledger account for the period 01.04.2004 to 26.04.2011 and the receipt of cash of Rs. 25,00,000 against the name of Nana i.e. the assessee is appearing in voucher No. 55 at seized page 15 dated 16.12.2010. The learned CIT(A) further observed that at page No. 59 is the unsecured loan from other group summary for the period 01.04.2012 to 31.05.2013 indicating liability of Rs. 2,00,00,000 towards Rajiv Patil. Accordingly, the learned CIT(A) held that the 2 accounts do not relate to the same period and therefore the claim of the assessee on the basis of seized page 59 cannot be accepted. The learned CIT(A) further held that the assessee was given full information on the documents found during the course of search and which was sought to be used against the assessee. As a result, the learned CIT(A) dismissed the appeal filed by the assessee on this issue. Being aggrieved, the assessee is in appeal before us.

During the course of hearing, Shri Subodh Ratnaparkhi, learned Authorised Representative (“learned A.R.”) submitted that the assessee

The learned A.R. by referring to letter dated 08.09.2016 filed by accountant of M/s Maad Realtors and Infra Private Limited further submitted that the entries at seized page 15 were the investments made by Rashmi Ameya Developers Housing & Estate realtors Pvt. Ltd. through the assessee and by mistake accountant has passed entry in Ledger account of the assessee. The learned A.R. also submitted that the Assessing Officer failed to grant opportunity to cross examine directors/partners of M/s Maad Realtors and Infra Private Limited from where the documents were seized.

On the other hand, Shri Salil Mishra, learned Departmental Representative (“learned D.R.”) vehemently relied upon the orders passed by the lower authorities and submitted that the facts in special knowledge of a person need to be explained by that person only. The learned D.R. also placed reliance on section 292C of the Act. In rejoinder, learned A.R. submitted that section 292C of the Act is not applicable in the present case as the seized documents were not in the possession of the assessee.

We have considered the rival submissions and perused the material available on record. In the present case, the addition made by the Assessing Officer was based on the documents seized during the course of search at the office premises of M/s Maad Realtors and Infra Private Limited. As per the assessee, Rs. 2,00,00,000 was paid to M/s Maad

Further the assessee submitted that no amount in cash was paid by the assessee to M/s Maad Realtors and Infra Private Limited. Vide letter dated 08.09.2016, which is forming part of the paper book at page 28, the accountant of M/s Maad Realtors and Infra Private Limited clarified that Rs. 25,00,000 mentioned at seized page 15 is the investment by Rashmi Ameya Developers Housing & Estate Realtors Ltd. through the assessee. We, at page 40 of the paper book, scheduled to the balance sheet of the assessee, find that Rs. 25,00,000 is shown as unsecured loan to Rashmi Ameya Developers. Though, the letter dated 08.09.2016 filed before the Assessing Officer submitted that the entry of Rs. 25,00,000 in cash was by mistake of the accountant was passed in the Ledger account of the assessee and the same in fact was investment by Rashmi Ameya Developers Housing & Estate Realtors Ltd, the Assessing Officer neither called for any information / document from Rashmi Ameya Developers Housing & Estate Realtors Ltd. nor issued any notice under section 133(6) of the Act to ascertain the authenticity of such a statement. In the present case, it is evident that the Assessing Officer completely dis-regarded the aforesaid letter dated 08.09.2016 and merely on the basis of seized document page 15 made addition in the hands of the assessee as unexplained cash loan to M/s Maad

In this appeal, the Revenue has raised following grounds:– “1. Whether On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting addition of Rs.2,11,97,690 (for A.Y. 2014–15) on account of unexplained expenditure.

The only issue arising in revenue’s appeal is with regard to deletion of addition of Rs. 2,11,97,690 on account of unexplained expenditure.

The brief facts of the case pertaining to this issue as emanating from record are: During the course of survey proceedings in the office premises of the assessee on 31.07.2014, loose paper identified as No. 108 to 112 of bundled 2 were found and seized. These papers show interest calculation from March 2007 to March 2014 in respect of Gokhivare-Vasai and Central Park, Nallasopara. The principal amount shown at Rs. 1,32,30,000 as on March 2007 and interest at 2% per month. The cumulative amount is shown at Rs. 6,98,19,104.17 out of which Rs. 5,65,89,104 is interest component. Further principal amount of Rs. 47,00,000 on March 2007 and cumulative figure of Rs. 2,52,99,530 as on March 2014 which includes interest component of Rs. 2,05,99,530. The assessee vide letter dated 26.08.2016 submitted that these papers do not pertain to it. However, vide show cause notice dated 02.09.2016, the assessee was asked to show cause as to why interest of Rs. 5,65,89,104 and Rs. 2,05,99,530 been treated as undisclosed income on the basis of loose papers found in assessee’s premises during the course of survey. In reply, assessee submitted that he is actively involved in political and social affairs of his area and his guidance is sought by various personal in social, political as well as business affairs. In the course of such activity, the above papers must have been brought to his office and have remained there. The Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 assessee further submitted that the papers found and impounded from his office belong to various entities with which he has no direct connection and on the basis of such papers proceedings under section 153C of the Act have been initiated. The assessee further submitted that from the examination of the said papers it is apparent that the concern investments have been made in financial years which are prior to the assessment years under consideration.

The Assessing Officer vide order dated 19.09.2016 passed under section 143(3) read with section 153A of the Act did not agree with the submission of the assessee and held that the documents seized were found in the possession of the assessee and thus the onus is on the assessee of explaining the same. Accordingly, the Assessing Officer made an addition of Rs. 2,11,97,690 as unexplained payment made by the assessee.

In appeal before the learned CIT(A), the assessee submitted that he is not involved in any project named in the loose documents. The assessee also submitted that working of interest in these documents represents notional interest to determine the value as on 31.03.2014 and thus, entries in these documents do not indicate any income or expenditure arising in the hands of any person during the period covered by assessment years 2009–10 to 2015–16.

The learned CIT(A) vide impugned order dated 19.08.2019 held that from the documents it is seen that cumulative interest on month-to-month

During the course of hearing, learned D.R. submitted that date, amount and name of the project was clearly mentioned on the documents. Further, the assessee also did not discharge the onus casted on it to explain the ownership of the documents. Thus, there is no basis to held that the documents were dumb documents.

On the other hand, learned A.R. relied upon the order passed by learned CIT(A).

We have considered the rival submissions and perused the material available on record. From the contents of loose documents, as mentioned

In the result, appeal by the assessee for assessment year 2011–12 is allowed, while appeal by the Revenue for assessment year 2014–15 is dismissed. Order pronounced in the open court on 02/05/2022