ACIT - 17(1), MUMBAI vs. SHRI ANAND JAIKUMAR JAIN, MUMBAI

O R D E R PER S. RIFAUR RAHMAN (AM)

2 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain 2. Since the issues raised in all the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in ITA.No. 3823/MUM/2019 for Assessment Year 2008-09 as lead case.

3 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain should not be made in respect of such cash transactions. In response, the assessee flatly denied having entered into any cash transactions with Dalmia Group. The Assessing Officer rejected the explanation of the assessee and proceeded to determine the undisclosed income arising out of the cash transactions recorded in the seized documents. The Assessing Officer thereafter made a detailed discussion about the contents of the seized documents. The Assessing Officer has also referred to the statements of Shri Punit Dalmia and Shri Yadu Hari Dalmia recorded during the course of the search. The Assessing Officer has also reproduced the statement of the assessee recorded by the ADIT (Inv.), New Delhi wherein the assessee has denied having entered in to any transactions in cash with Dalmia group. After elaborate discussions, the Assessing Officer concluded in paras 13.1 to 13.13 as under: - "13.1 In view of the above, the assessee was required to explain the documents seized and the evidences discovered, as above, independently, as also with reference to returns filed for the relevant period and the accounts maintained/audited. The explanation was to be supported with relevant details/documents. As already mentioned, the assessee did not furnish any explanation and denied all the transactions. Therefore, a show cause notice was issued to the assessee on 25.02.2015, proposing additions for the assessment years under consideration. Once again, the assessee denied all the transactions. 13.2 In fact, the stand now taken by the assessee is in line with the earlier stand taken by the assessee when his statement was recorded under section 131(1), on 11.05.2012, by the ADIT(Inv.), U-VI(1), New Delhi. In this statement, the assessee denied any transactions between him, in the individual capacity, with Dalmias

4 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain and their business entities. The assessee distanced himself from the documents, containing evidences, with implications unaccounted income, in the hands of the implications. 13.3 The documents seized from the residence of Shri Yadu Hari Dalmia and Shri Puneet Dalmia, 18, Golf Links, New Delhi; contains MOU. This is a memorandum of understanding, the contents of which are clear, detailed and specific However, seized documents Le. page nos. 27 and 29, reflect the draft MOU as between "I & D". Pages 28 and 24, of the seized documents contain calculation of money payable and paid to "AJ". "J" and "AJ" have been identified as Shri Anand Jain by Shri Yadu Hari Dalmia and Shri Puneet Dalmia. At this juncture, it may be noted that Shri Anand Jain is husband of Smt Sushma Jain, who is Shri Puneet Dalmia's mother's niece. 13.4 The search and seizure operations and investigations conducted in the cases of Shri Joydeep Basu, Manger (Treasury) in M/s. Dalmia Bharat Enterprises Ltd, Shri Neel Kamal Berry, Senior Manager (Finance) of Dalmia Bharat Enterprises Ltd and Shri Sanjay Mitra, acting as the head of the team for handling cash transactions, revealed that the instructions start from the Dalmias and flow through Shri Sanjay Mitra, Shri Neel Kamal Berry and Shri Joydeep Basu, in that order, for executing discreet unaccounted cash transactions/receipts and payments. Relevant evidences have been supplied to the assessee. 13.5 It is to be noted that Shri Joydeep Basu, regularly and systematically, maintained the details of unaccounted cash transactions on a pen drive. Some of the details, as contained in the pen drive, match with the contents of the documents, seized from the residence of the Dalmias. In the pen drive, one folder named "SJ Files" is stored The folder "Si Files" contain three folders namely "Meeting on 9.78.2011", "reciprocal" and strd files". 13.6 The details in "structured Accounts" and "reciprocal", stored on the pend drive of Shri Joydeep Basu, have been discussed at length in the questionnaire issued. The transactions of shares appearing in "strd filed" of "SJ Files" reflect cash paid on the given dates to Shri Anand Jain. The details of shares, share holding, capital, interest rate, profit earned and dividend received are all appearing in the seized data. A comparison of the data seized from the possession of Shri Joydeep Basu and the MOU seized from the 5 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain residence of Dalmias show that MOU between Dalmias and Shfi Anand Jain is in the context of "Structured Account". 13.7 Shri Puneet Dalmia in the statement recorded under section 132(4), on 20.01.2012, admitted that the seized documents contain details of cross holding of shares. However, Shri Puneet Dalmia did not come up with full facts in respect of the seized documents. Therefore, a statement was recorded from Shri Vadu Hari Dalmia under section 131(1), on 16.04.2012. Shri Yadu Han Dalmia identified 'AP in the seized documents as Shri Anand Jain, who is husband of his wife's niece. He further stated that as per his understanding these matters pertain to some investments in shares etc. or some loan/advance transactions. 13.8 On the same day, i.e. 16.04.2012, Shri Puneet Dalmia's statement was recorded. The statement was continued on 28.06.2012. Shri Puneet Dalmia confirmed that the details maintained on the pen drive in "strd files" are the same as figures out in MOU. He clarified that document saved in the pend drive seized from the residence of Shri Joydeep Basu (Path 1.1 Confidential file\Strd Files Structured Acct July .9, 2011 Summary) are containing the record of the same transactions as mentioned in MOU seized from his residence. However, he could not explain the source of these payments. 13.9 From the statements of Shri Puneet Dalmia dated 16.04.2012 and 28.06.2012, it is revealed that in the MOU T refers to Shri Anand Jain and 'D' refers to Dalmia family. 'SJ Files' contain details of transactions carried out with Shri Anand lain. Shri Anand Jain is husband of Smt. Sushma Jain who is his mother's niece. Anand Jain had taken a market position in some shares related to Dalmia group companies. At some point in time in 2011 he wanted to sell these shares and approached Dalmias because of the personal relationship. Dalmias did not want these shares to go to their competitors, hence they reached an understanding where Dalmias had an option to either buy these shares themselves or enable selling to a person/investor of their comfort. They did not know when these shares would be sold therefore, informally documented it. The condition for giving them this option to buy or to enable selling to a person of their comfort was that Dalmias will ensure that there is no loss on these shares including reimbursement of an interest of 12% per annum. Therefore, they provided an lCD of Rs. 40 crores, Rs. 10

6 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain crores as debenture application money and Rs. 34 crores as cash to ShriAnand lain. 13.10 In paras 11.15 to 11.17, of the questionnaire issued, the details of transactions and issues relating to funds provided, debenture application money and payments made, are discussed. The details of interest accrued and reimbursement of capital are discussed in paras 11.20 and 11.21 of the questionnaire. 13.11 The issues relating to transactions in shares appearing in the file 'reciprocal' of "SI files" are discussed at length in para 12 of the questionnaire. 13.12 The seized documents and data contain unaccounted cash transactions, which are not part of the books maintained by the Dalmias and their related business entities. Some of the seized documents are in the handwriting of Shri Yadu Hari Dalmia. Some of the details in the seized documents match with the details stored on the pen drive by Shri Joydeep Basu, who is an employee of the assessee group. The unaccounted cash transactions are handled discreetly by a close group functioning under the control of Shri Puneet Dalmia. 13.13 Statements recorded under section 132(4) constitute evidence. Oher statements recorded under section 131 have evidentiary value. The nature of incriminating material is such that it can only be within the private knowledge of two parties. In the present case, it is the mutual understanding between the assessee and the Dalmias. The calculations of cash paid, accrual of interest, interest rate, related periods, cross holding of shares, investments, advances etc, as contained in the seized material, are systematic, meticulous, logical and exhaustive. Copies of the seized documents, enclosed to the questionnaire issued to the assessee, are also enclosed to this order, in the same order"

7 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain group. In order to corroborate the transaction, he issued notices u/s.133(6) of the Act to Revas Port Limited and Urban Infrastructure Holding Pvt. Ltd., which are the group companies of the assessee. He has reproduced the replies received from these companies and concluded that the cheque transactions of lCD and debenture application money recorded in the seized paper are duly reflected in the regular books of account of these companies.

8 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain Path: H./SJ Files/Reciprocal/SJ reciprocal MIS July 5 2011/Sheet 3). Cash of Rs. 29.66 crores is received by Shri Jain in the FY 2009-10. Accordingly, the amounts of Rs. 47 crores in the A Y 2008-09, Rs. 75 crores in the A V 2009-10 and Rs. 29.66 crores in the A Y.2010-11, in the hands of Shri Anand jain, become relevant. The assessee was required to furnish explanation."

10 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain 9. Aggrieved, the revenue is in appeal before us and it raised following grounds of appeals. Grounds for the A.Y. 2008-09 are: - “1. “Whether on the facts and circumstances of the case and in law, the Ld. C.I.T.(A) has erred in deleting the addition in respect to the addition made by the A.O. for Rs.47.00 Crores holding that documents seized from the premises of Dalmias of Delhi is not conclusive evidence.”

2. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of AO be restored.” 3. “The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

11 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain 11. It was argued that the assessee is holding certain shares of the listed companies of Dalmia Group. However, in reality, such investment is on behalf of Dalmia Group and the assessee is being compensated in cash for such investment and interest thereon. It is stated that the details of such shareholding and the calculation of the cash transactions are noted in the seized documents.

12 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain documents and, hence, the addition was correctly made by the Assessing Officer. The Ld. DR has given a detailed chronology of events, explained the seized material and various notings made therein and argued that the seized documents have the evidentiary value based on which it could be concluded that the assessee has entered into the cash transactions. The Ld DR has also argued that the assessee may be holding the shares recorded in the seized documents in a physical form. In any case, it is for the assessee to prove the holding of the shares. The Ld. DR has also pointed out that two transactions recorded in the seized documents in respect of lCD and debenture application money are duly recorded in the books of the group entities of the assessee, which is sufficient corroboration of the seized material. The Ld. DR has also relied upon several decisions in support of his arguments, they are: - a. CIT v. S.V. Sreenivasan [2018] 404 ITR 433 (Madras) b. Smt Dayawanti v. CIT [2017] 390 ITR 496 (Del.) c. Smt. Vasantibai N. Shah v. CIT [1995] 213 ITR 805 (Bombay). d. Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) e. S. P. Jaiswal v. CIT [1973] 224 ITR 619 (SC)

13 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain for making the addition in the hands of the assessee. Thus, the principal argument of the assessee is that the addition on the basis of seized material found during the course of search from third party cannot be sustained. This is more particularly so when the assessee has consistently and categorically denied any cash transactions. Further, not only there is no corroboration of the seized documents but the details of the shareholding, allegedly held by the assessee, has not been shown to be existing at all. Thus, the seized documents are uncorroborated. He submitted that this proposition is supported by the series of judicial pronouncements, which he has submitted as under:- i) CIT v. Sant Lal [317 CTR 483 (Del)]- Pg. nos. 19-22 of P.B In this case, the department relied upon the notings of hundi in the diary seized from the premises of third party. The said notings allegedly contained entries of hundi transactions on behalf of parties including assessee whose names were written in abbreviated/code words. The Hon'ble Delhi High Court relying on its earlier decision in the case of CIT v. Mahabir Prasad Gupta (hA No. 814 of 2015 dated 20.10.2015) held that since diary was neither found from premises of assessee nor was it in hand writing of assessee, no addition could be made in hands of assessee. ii) Naren Premchand Nagda v ITO (ITA No. 3265/Mum/2015) - Pg. nos. 23-32 of P.B. In this case, search was conducted at the premises of builder. The statement of key person of the group was recorded who stated that the assessee had paid cash to the group. When the statement of the key person was put to the assessee, he denied of making any payment in cash. However, the department made addition by relying

14 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain on the statement of key person of the group. The Hon'ble Tribunal relying on series of judicial pronouncements held that in absence of any evidence found against the assessee, no addition can be made on the basis of documents found from the premises of third party and the statements recorded during the course of search conducted in third party premises. It may be noted that in this case the transaction of purchase of property by the assessee from the builder has not been denied by the assessee. Further, the cheque payment was also reflected in the seized notings. Inspite of this, the addition made on the basis of notings in respect of cash transaction was not confirmed. iii) Jawaharbhai Atmaram Hathiwala v. ITO [128 TTJ 36 (Ahd)(UO)] - Pg. nos. 33-37 of P.B. In this case, addition was made by relying on seized material and statement of third party without bringing any other evidence on record. The Hon'ble Tribunal deleted the addition. The relevant portion of the order of Hon'ble Tribunal is as under (Head Note) "Held that no evidence could be brought on record by the Revenue to show that in fact the assessee had paid 'on money' to the developers. No document containing signature of the assessee or handwriting of the assessee to corroborate the above making of payment by the assessee was found during the course of the search. Merely recording made by a third party or statement of a third party could not be treated as so sacrosanct so as to read as a positive material against the assessee. Therefore, addition in the hands of the assessee on account of 'on-money' was notjustified" iv) ACIT v. Prabhat Oil Mills [52 TTJ 533 (Ahd)] - Pg. nos. 38-43 In this case, the department relied upon certain notings in the seized diary found from the premises of third party and contended that the assessee had made sales outside the books of accounts. However, the assessee denied of having made any sales outside the books of accounts. The Hon'ble Tribunal held that once the assessee denies the transaction, the onus was on the Assessing Officer to prove with corroborative evidence that the entries in the seized diary

15 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain represented sales outside books of accounts. The Hon'ble Tribunal further held that mere entries in the accounts of third party was not sufficient to prove that assessee had indulged in transaction outside books of accounts. Further, in para 9 of the order, the Hon'ble Tribunal also rejected the argument of the department that the matter should be set aside to the file of the Assessing Officer. v) CIT v. M/s Daga Fibres Pvt. Ltd (Bombay High Court)- Pg nos 44-45 of P.B. The Hon'ble Bombay High Court upheld the order of the Hon'ble Tribunal wherein the addition made by the Assessing Officer on the basis of loose paper found from the premises of third party was deleted since the assessee as well as third party had denied to have entered into any transaction. Further, no corroborative evidence was brought on record by the department to suggest that the transaction took place. In view of the same, the Hon'ble Bombay High Court, upholding the order of Hon'ble Tribunal, held that no addition can be made in the hands of assessee on the basis of loose papers found during the course of search at the premises of the third party

16 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain companies), dividend income etc. (which admittedly could not be in cash). The Assessing Officer should have corroborated the said transactions with the books of accounts of the assessee. But no such evidences were collected by the Assessing Officer to corroborate the seized material before completing the assessment of the assessee. He also relied other decision while making submissions: - a) Decision of Hon’ble Delhi High Court in case of CIT v. Sant Lal dated 11.03.2020 reported in 317 CTR 483 b) Decision of Mumbai ITAT in case of Naren Premchand Nagda v. ITO dated 08.07.2016 ITA No. 3265/Mum/2015 c) Decision of Ahmedabad ITAT in case of Jawaharbhai Atmaram Hathiwala v. ITO dated 09.10.2009 [128 TTJ 36] d) Decision of Ahmedabad ITAT in case of ACIT v. Prabhat Oil Mills dated 03.04.1995 [52 TTJ 533] e) Decision of Bombay High Court in case of CIT V/s M/s Daga Fibres Pvt Ltd.

19 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain 5. It is submitted by. ........... Shri Gautam Dalmia, the modus operandi and background of the cases, the nature of income offered, etc have been discussed in the SOF and other submissions, which are briefly summarized as hereunder: As stated supra, a Pen Drive was also allegedly found from the residence of an employee. No copy of the said Pen Drive has been made available to the applicants by the department ........ ”

20 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain considered view, the same is not binding on the assessee. The similar view was expressed in the decision of Jaipur Bench of the Tribunal in the case of Moti Developers v. ACIT in ITA No. 101/Jp/2017 dated 07.07.2017. Further, it is brought to our notice that the seized MOUs relied upon by the Department are undated, unsigned (by either party) and titled as 'draft'. It is the duty of the AO to bring on record that the same was acted upon, at the same time, the Dalmia Group has gone to ITSC to settle the issue, this itself does not prove that unsigned MOUs were actually acted upon and how it is linked to the assessee.

21 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain 21. Further on veracity of the statements recorded by the Department, we observe that Shri Yadu Hari Dalmia has stated that he is not looking after the business affairs (question no. 16 on pg. no. 7 and question no 3 on pg. no. 8 of assessment order). In respect of 'SJ account' appearing on seized page nos 20 and 21 (Pg. nos. 13, 14 of P.B.) he has stated that he does not know what is SJ account. Further we observe that the issue of abbreviations (like ‘SJ’ etc) used in the seized documents were already held as inconsistent by Ld CIT(A) in his order. Further, the Dalmias have not accepted that they have entered into any transactions with the assessee outside the books of accounts. The same is evident from the statements of Shri Puneet Dalmia recorded during the course of search on 20.01.2012, 28.01.2012 and 16.04.2012 which have been reproduced by the Assessing Officer on Pg. nos. 6, 7 and 9 to 11 of his order. It is needless to record that the statements are recorded over a period of time and it is not a case where the third party has given a firm and categorical statement on the first day itself.

25 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain 26. The identical issue has been involved in A.Y. 2009-10, 2010-11 and 2011-12 findings given in the para no 26 is applicable mutatis mutandis, accordingly the appeal filed by the revenue is AY 2009-10, 2010-11 and 2011-12 are also dismissed.

is reproduced as under: -

2. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) is right in holding that the rateable value of the properties as determined by the Municipal Authorities is the yardstick Ignoring that section 23(1)(a) mandates annual value to be deemed as the sum for which the property might reasonably to expected to let from year to year?"

28. The brief facts relating to the above ground are, the Assessing Officer has observed that the assessee is the owner of certain flats in the building known as Central Garden Complex. The said flats were vacant and, accordingly, the assessee offered annual letting value of the flat as per the municipal ratable value. The AO disagreed with the amount of annual ratable value offered by the assessee and proceeded to determine the market value of rental income. The Assessing Officer has discussed certain case laws and determined the annual ratable value based on the report of the inspector, who made a spot inquiry. The Assessing Officer

29. The matter was carried further before the Ld.CIT(A) who has observed that the ITAT has decided identical issue in A.Y. 2010-11 in favour of the assessee. He has further observed that this is a recurring issue and in A.Y. 2013-14 also the issue has been decided in favour of the assessee. The Ld.CIT(A) finally directed the AO to determine the annual ratable value as per the method prescribed by the ITAT in A.Y. 2013-14.

At the time of hearing, the Ld AR submitted that this is a repetitive issue and has been decided in favour of the assessee consistently. He submitted the relevant decisions before us and it is reproduced below:

1. 1. Decision of Hon'ble Mumbai ITAT in assessee's own case for A.Y. 2009-10 dated 17.04.2015.

2. Decision of Hon'ble Mumbai ITAT in assessee's own case for A.Y. 2010-11 dated 02.08.2016.

3. Decision of Hon'ble Mumbai ITAT in assessee's own case for A.Y. 2012-13 dated 07.12.2018.

4. Decision of Hon'ble Mumbai ITAT in assessee's own case for A.Y. 2013-14 and A.Y. 2014-15 dated 27.02.2019.

5. Decision of Hon'ble Bombay High Court in the case of Laxmi Jain for A.Y. 2009-10 dated 16.04.2018.

6. Decision of Hon'ble Bombay High Court in the case of Harsh Jain for A.Y. 2009-10 dated 05.02.2019.

Order pronounced in the open court on 22.04.2022.