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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI AMARJIT SINGH, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
O R D E R PER S. RIFAUR RAHMAN (AM)
These appeals are filed by the revenue against common order of the Learned Commissioner of Income Tax (Appeals)-54, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 25.03.2019 for the A.Y. 2008-09, 2009-10 and 2010-11. ITA.No. 3820/Mum/2019 arises out of another independent order passed by the Ld.CIT(A) of even date.
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.
Brief facts of the case are, the return of income was filed by the assessee for A.Y. 2008-09 on 31.07.2008 declaring total income of ₹.64,68,820/-. The assessment was completed u/s. 143(3) r.w.s. 153A of Income-tax Act, 1961 (in short “Act”) on 29.12.2010. Subsequently, there was a search at the premises of Dalmia Group on 20.01.2012. During the course of the search, certain incriminating documents were found. It is the case of the Department that the incriminating document found from the premises of Dalmia Group reveals unaccounted cash transactions between Dalmia Group and Jain Group of which assessee is a main person. The necessary information was passed on from the DDIT (Inv), New Delhi to the Assessing Officer at Mumbai. Consequently, a notice u/s.148 of the Act was issued by the Assessing Officer on 22.11.2013. During the course of the assessment proceedings, it was pointed out to the assessee that various documents found from the premises of the Dalmia Group reveal the cash transactions between Dalmia Group and the assessee. The assessee was asked to show cause as to why the addition
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"
The Assessing Officer further observed that the seized documents also refer to certain cheque transactions of lCD and debenture application money between Dalmia Group and companies belonging to the assessee
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.
The Assessing Officer finally determined the total cash transactions for the year under consideration at ₹.47 crores and made the addition thereof. The quantification of the addition of ₹.47 crores for the year under consideration has been made in para No. 12.9 and the same has been reproduced hereunder: - "12.9 Shri Anand Jain is the person involved with Shri Puneet Dalmia in these transactions. However, in his statement, he denied having any business dealings with Shri Dalmia. Record shows that Dalmias and Shri Anand Jain were having understanding regarding holding of shares. This understanding is in the form of busying shares of the companies which in understanding belonged to the other party. The profits earned by one party actually belonged to the other party. Therefore, the party earning more profits on such shares transferred such profit to the other party in the form of cash or profits. In his settlement, total amount Rs. 84.16 crores has been received by Shri Anand Jain. Out of this Rs. 84.16 crores, Rs. 54.50 crores have been paid in the form of profits and Rs. 29.66 crores have been paid in the form of cash. Out of the profits of Rs. 54.50, Rs. 47 crores (Rs.27 crores + Rs. 20 crores) are received in the A" 2007-08 and Rs.75 crores appear to be received by Shri Jain in FY 2008-09. (Refer
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."
The above referred cash payment has been alleged to be made by Dalmia Group to the assessee during the year under consideration. The case of the A.O., based on his interpretation of the seized material, is that the assessee is holding certain shares of the listed companies of the Dalmia Group and earning dividend and capital gain on it. However, these investment is on behalf of Dalmia Group, who is compensating the assessee in cash for such investment made by assessee.
The assessee preferred an appeal before the Ld.CIT(A) and pleaded that the assessee has not made any cash transactions with Dalmia group. The assessee also challenged the reopening u/s. 148 of the Act. The Ld.CIT(A) dismissed the ground of appeal regarding the reopening of assessment and no further appeal has been preferred by the assessee there against. So far as the merits of the case are concerned, the Ld.CIT(A) has held that the seized documents are not sufficient to establish the cash transactions. The Ld.CIT(A) has held that the term 'SJ' noted in the seized material cannot be taken as Sushma Jain (wife of the 9 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain assessee). The Ld.CIT(A) has taken example of another seized page wherein the same noting i.e. 'SJ' was made but admittedly it was not referring to the assessee or any of his family members. The Ld.CIT(A) has observed that various notings in the seized paper refers to investments made in shares. According to the Ld.CIT(A), however, there is no corroboration to this fact because the assessee has not made any such investment in shares as recorded in the seized pages.
The assessee filed an affidavit before the Ld.CIT(A) stating that he was not holding the shares as recorded in the seized papers. This, being an additional evidence, was referred to the Assessing Officer who has sent his remand report. According to the Ld.CIT(A), in absence of any shares being held by the assessee, the addition cannot be made. As regards the transactions of lCD and debenture application money, the CIT (A) held that the amounts paid to these two companies cannot be treated as paid to assessee. The Ld.CIT(A) also observed that as per the seized page notings, the profit earned in the books of Dalmia is to be transferred to the assessee. If the profit is earned in the books, there is no question of any addition. Moreover, the assessing officer has not made out a case of profit earned in the books. Based on the above, the Ld.CIT(A) deleted the entire addition.
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.”
At the time of hearing, Ld. DR submitted that the seized documents are meticulously maintained and the transactions with the assessee have been clearly reflected in the said seized documents. The attention was invited to various seized pages which are at page No. 1 to 16 of the assessee's paper book. The Ld. DR has drawn attention to various seized documents and pointed out that the amount of ₹.47 crores have been mentioned on seized page No. 21 (PBP 14) wherein it has been clearly mentioned that the profit of ₹.20 crores have been paid up to 31.12.2007 and ₹.27 crores has been paid during January to March 31, 2008. It was also pointed out that the heading of the seized page details of 'SJ' clearly reveals that the said payment has been made to the assessee. It was pointed out that SJ stands for Sushma Jain, who is wife of the assessee.
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.
The Ld.DR also pointed out that Dalmia Group has approached the Income-tax Settlement Commission wherein the cash transactions arising out of the seized documents have been admitted by them. Further, the Settlement Commission has accepted the application of Dalmia Group and passed an order u/s. 245D(4) of the Income-tax Act. The applications filed by Dalmia Group, the report of the Commissioner of Income-tax under Rule 9 of Income-tax Settlement Commission (Procedure) Rules 1997 and the order passed by the Income-tax Settlement Commission have been placed on record in the Department's paper book at page No. 1 to 82.
It was submitted that once Dalmia Group has accepted that they have entered into cash transactions and the Settlement Commission has passed an order u/s. 245D(4) of the Act, it has to be held that the assessee has in fact received the cash as recorded in the seized
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)
On the other hand, Ld. AR submitted that the real issue to be decided in the present case is not as to whether the seized documents are meticulous or complete. The real issue to be decided is as to whether the documents found from the premises of third party can be relied upon
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
It is submitted that the facts of the present case are similar to the facts before the Hon'ble Bombay High Court. In the present case also, the Assessing Officer has made the addition by merely relying on the documents found during the course of search conducted in third party premises i.e. Dalmia Group. The assessee has denied any transactions with Dalmia Group. The department has not brought any other corroborate evidence on record to suggest that the assessee has entered into any cash transactions. It is important to note that the Seized documents contained details of investment in shares (of listed
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.
Considered the rival submissions and material placed on record. We observe from the record submitted before us that there was a search at the premises of Dalmia Group and certain incriminating documents were found, it revealed alleged unaccounted cash transactions between Dalmia Group and Jain Group. The revenue considered the fact that the assessee is the main person in Jain Group, the DDIT (Inv), New Delhi referred the issues to the assessing officer, accordingly reassessment proceedings were initiated in the case of the assessee. When the above findings were 17 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain confronted with the assessee during the assessment proceedings, we observe from the record that the assessee has consistently denied having any transactions with the Dalmias. From the record submitted before us, such stand of the assessee was communicated to the Assessing Officer vide letter dated 04.03.2014 (Para no. 3.1 of assessment order). Further communication to this effect was made vide letter dated 20.03.2014 addressed to the Assessing Officer (Para no. 3.2 of assessment order). Further, we observe that the Assessee's statement was recorded u/s.131(1) of the Act on 11.05.2012 by ADIT (Inv), New Delhi, who had carried out a search in the case of Dalmia group, which has been reproduced by the Assessing Officer on Para 11.8 of his order. In the said statement also, the assessee has denied having any transactions or business dealings with the Dalmias.
We also observe that the assessee also filed an affidavit before the CIT(A) (Para 7.7 of the CIT(A) order) wherein the assessee has reiterated that he does not have any business dealings or transactions with the Dalmias. It is also a fact on record that the said affidavit has not been disproved by the Assessing Officer in his remand report dated 05.04.2018. Thus, the case of the assessee stands on a different footing from a case
Coming to the nature of seized material found during search, we observe that the seized data was maintained by Shri Joydeep Basu but he is stated to be only recording the entries. He is stated to be doing as per the inputs provided by Shri Neel Kamal Berry. Shri Neel Kamal Berry is stated to be receiving instructions from Sanjay Mitra and Puneet Dalmia. (Para 4.3, 4.4 of the assessment order). It is evident from the above that, even as per Department, the person carrying out the transactions, person recording the transactions and person giving instructions are different. This is to be seen in the light of the fact that Dalmia Group have disown the seized data while filing the application before Settlement Commission. The relevant portion of the order of Income Tax Settlement Commission, containing the averments of Dalmias, is reproduced as under: - “ …….. 4.1 During the course of search, a Pen drive as seized ......... In this connection, the applicants have made the following narration in the SOF which is reproduced hereunder: A Pen Drive was alleged to have been seized from the residence............The department claims that print out of 125 pages was taken from the cloned copy of pen drive.......... ………
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 ........ ”
Further we observe that in reply to Rule 9 report reproduced on Page no 18 of the order, Dalmias have stated that 'the employees who were recording/executing the transactions were not actually aware of the whole/correct import of the transaction. They have further observed at page 21 of the order that none of the Dalmia family member was present at the time when the pen drive was seized or cloned. It is their claim that 'hence, the ownership and authenticity of the contents of the pen drive per se is not clear'. We observe that the amount of addition admitted before the Settlement Commission by the Dalmias is way too small than the addition made in the case of the assessee. Although the Department has strongly objected this before the Settlement Commission (Pg no 13 of ITSC order), the application has been accepted and nothing has been brought on record to show that the order of the Settlement Commission has been reversed or even challenged. In any case, even if the person from whom the documents have been found out have accepted the Correctness of transaction before the Settlement Commission, in our
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.
Further, the seized material relied upon by the Assessing Officer for making addition in the hands of assessee does not have any reference to the name of assessee. The addition of Rs. 47 crores in the year under consideration has been made on the basis of seized documents page no. 21 (page no. 14 of paper book). We observe that no statement has been recorded in respect of this page and Seized material has not been corroborated by bringing on record any of the transactions of assessee in respect of purchase of shares, sale of shares, receipt of dividend etc. The statement and affidavit of the assessee, on the contrary, disproves the seized documents. In our view, such statement and affidavit have not been disproved.
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.
In our view, the AO has not conducted any independent enquiry or made any efforts to corroborate the seized pages or link it to assessee. The entire assessment has been made without bringing on record any
Further, as regards the argument of the Ld. DR that the cheque transactions with two companies are corroboration of seized material it is observed that the cheque transactions are not of the assessee. Transactions other than cheque transactions do not get established automatically. Ld DR argued by relying on the Hon’ble Jurisdictional High Court decision in the case of Smt. Vasantibai N Shah (supra) that there was nothing improper on the part of the AO in relying on circumstantial evidence in such a case for the purpose of arriving at the above finding in as much as no direct evidence in a transaction like the one in question was even possible. Circumstantial evidence in such cases was not impermissible because in such cases it was only the circumstantial evidence which would be available and no direct evidence could be expected. In the case under consideration, however, we observe that there is no mention of the assessee name anywhere in the seized documents and none of the searched parties agreed that they have undertaken any cash transaction with the assessee. We observe that the AO has not brought any corroborative evidence to support his findings and he only presumes that the assessee made investments on behalf of 23 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain Dalmia Group and he was compensated @12%, any dividend received or capital gain realized are adjusted against the above compensations. Overall, the assessee was promised net 12% return from the investment made by him on behalf of Dalmia Group, without there being any corroborative evidence substantiating the above presumptions. The department has found materials in the premises of Dalmia Group and based on circumstantial evidence, the AO can proceed to make addition in the hands of Dalmia Group but not in the hands of third party who is not mentioned anywhere in the seized documents, in case circumstantial evidence are critical and pointing towards the inevitable circumstances. This is main point/issue which distinguishes the facts in the Vasantibhai N Shah case (supra) relied by Ld DR. It is the duty of the AO to make enquiry and bring on record corroborative evidence particularly when he is making addition in the hands of the third party by relying on the statement of the searched (third) parties.
Further, it is brought to our notice by the Ld AR that the Hon'ble Supreme Court in the case of Arjun Panditrao Khotkar v. Kailash Khushanrao Gorantyal And Ors (Civil Appeal Nos 20825-20826 of 2017) dated 14.07.2020 has analyzed the provisions of 65B of The Indian Evidence Act, 1872 with regard to admissibility of electronic evidence. The 24 3821, 3822 & 3233/MUM/2019 Shri Anand Jaikumar Jain Hon'ble Supreme Court held that certificate under Section 65B (4) of The Indian Evidence Act, 1872 is a condition precedent to the admissibility of evidence by way of electronic record as S. 65B (4) of The Indian Evidence Act, 1872 is a mandatory. In view of the same, it was submitted that the pen drive (an electronic record), being relied upon by the department, is not admissible as evidence as certificate u/s 65B (4) has not been produced. It was submitted, the data retrieved from the pen-drive have been relied upon without any such certificate. This action of the AO is completely improper, more particularly so when Dalmia Group have disputed the contents of the pen-drive. Further reliance is placed upon the decision of Mumbai Bench of the Tribunal in the case of Simtools P. Ltd. v. DOT in ITA No. 1574/Mum/2020 dated 09.02.2022 wherein following the above referred decision of the Supreme Court, it was held that the electronic data cannot be relied upon in the absence of requisite certificate.
After considering the above discussion, in our considered view, the findings of Ld CIT(A) is proper and he has addressed the issue in right perspective. We do not see any reason to interfere with the findings of the Ld CIT(A). Accordingly, the grounds raised by the revenue is dismissed.
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.
Additionally, in A.Y. 2011-12 the Department has raised a ground in respect of annual letting value of certain flats owned by the assessee. The said ground of appeal
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.
Considered the rival submissions and material placed on record. We observe from the record that this issue under consideration is very much in favor of the assessee and it is more or less settled by the coordinate bench decisions in the earlier assessment years. Therefore, we are inclined to dismiss the ground raised by the revenue.
In the net result, all the appeals filed by the revenue are dismissed.
Order pronounced in the open court on 22.04.2022.