ROHAN MEHTA, (LEGAL HEIR OF LATE MR JITENDRA N MEHTA),MUMBAI vs. DCIT CEN CIR 47, MUMBAI

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

3 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 3. At the core of the dispute is the admission of undisclosed income made by the late Shri Jitendra Mehta in the course of search action. In the assessment orders passed by the Assessing Officer, additions have been made in the context of the loose papers found and seized during the course of search and on the basis of statement recorded u/s 132(4) dated 26/27th July 2011. The said additions which are stated to be on the basis of seized material and statement u/s 132(4) of the assessee have been confirmed by the Ld.CIT(A). Aggrieved by the additions made by the Assessing Officer and confirmed by the Ld. CIT(A), the assessee is in appeal before us.

1. On the facts and in the circumstances of the appellant’ s case and in law Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 10 35, 59,382/- on account of undisclosed income being negative peak.

2. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming the AO’s action of making an addition of Rs. 65,000/- on account of alleged unaccounted

4 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 3. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal.

4. The appellant prays before the Hon’ble Tribunal to delete the addition made by the AO to the extent confirmed by the Ld. CIT(A).

A.Y. 2008-09 “1. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 11,82,89,580/- on account of undisclosed income being negative peak.

2. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal.

3. The appellant prays before the Hon’ble Tribunal to delete the addition made by the AO to the extent confirmed by the Ld. CIT(A).

A.Y. 2011-12 1. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 1,94,877/- on account of undisclosed income being negative peak.

2. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 17,20,35,681/- on account of alleged cash interest.

3. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 45,99,142/on account of alleged cash interest (Shivalik).

5 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 4. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal.

5. The appellant prays before the Hon’ble Tribunal to delete the addition made by the AO to the extent confirmed by the Ld. CIT(A).”

A.Y. 2012-13 1. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 4,00,000/- on account of undisclosed income being negative peak.

2. On the facts and in the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO's action of making an addition of Rs. 60,000/- on account of alleged undisclosed interest income.

4. The appellant prays before the Hon’ble Tribunal to delete the addition made by the AO to the extent confirmed by the Ld. CIT(A).”

6 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} towards undisclosed income on behalf of the entire ‘Rohan Group’. Out of total disclosure of ₹.100 crores, disclosure of ₹.29,66,34,233/- pertains to added in the hands of Late Jitendra Mehta. Thereafter, the assessee has filed a letter dated 01.08.2011 stating that in the statement recorded on 26/27th May 2011 he had inadvertently admitted income of ₹.3.50 crores which is related to his brother, Harresh N Mehta. This clarification is available in Para 22.18 of CIT(A)’s order.

7 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} Property. Further on the basis of Page No. 11 of Annexure A6 the Assessing Officer has made an addition of ₹.4,00,000/- on account of alleged unaccounted payment towards purchase of property at Ladiwala Chawl. On the basis of seized document Page no. 15 of Annexure, A-1 the Assessing Officer has made addition of ₹.65,000/- on account of alleged cash household expenses. Also, a promissory note for ₹.50,00,000/- being document numbered Page No. 5 of Annexure A-5 was seized from the residence of appellant’s employee Shri Vijay Jasani. This promissory note was seen to contain the signature of Harresh Mehta on behalf of Rohan Developers Pvt. Ltd.

Income Offered During Search Income Offered Income Addition Made AY Particulars Negative Peak Undisclosed During Search as Offered (E=C-D) (A) Income (B) per cash flow During Return statement (C ) u/s 153A (D) 2007-08 12,72,672 10,50,00,000 10,62,72,672 27,13,290 10,35,59,382 Negative Peak 2008-09 2,29,29,097 9,80,43,198 1,20,29,72,295 26,82,715 11,82,89,580 and Undisclosed 2011-12 1,94,877 - 1,94,877 - 1,94,877 Income 2012-13 36,17,859 50,00,000 86,17,859 82,17,859 4,00,000 Page 15, Ann. A-1 seized 2007-08 - 65,000 65,000 - 65,000 from Residence Total 2,80,14,505 20,81,08,198 1,31,81,22,703 1,36,13,864 22,25,08,839

10 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} AY Particulars Amount Amount Negative Peak Cash 12,72,672 10,62,72,672 Unaccounted 2008-09 Income 9,80,43,198 Negative Peak Cash 2,29,29,097 12,09,72,295 2009-10 Negative Peak Cash 2,22,47,743 2,22,47,743 2010-11 Negative Peak Cash 9,84,095 9,84,095 2011-12 Negative Peak Cash 3,28,40,736 3,28,40,736 Unaccounted 2012-13 Income 50,00,000 59,72,000 1,09,72,000 Total 29,66,34,233 29,66,34,233 It may be noted that the alleged receipts of Rs. 20,78,51,498/- noted on the seized page no. 1 of Annexure A-1 are duly covered in my disclosure of Rs. 29,66,34,233/-. The noting relating to Bhoslewadi/ CFO are not related and relevant in view of the disclosure made by me. The above disclosure is made voluntarily by me and I request that no penalty be levied or any other penal action be initiated against me. It may be noted that the above disclosure covers disclosures made by me in the course of statement recording under section 132 (4) of the Income Tax Act 1961 earlier on account of payments recorded on the various seized papers…………..”

12 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 14. The Ld AR of the assessee submitted that the noting found on the impugned seized material namely Page nos 8,14,10,11 & 15 of Annexure A1, A5 & A6 are nothing but rough noting. Nothing incriminating emanates from these rough noting. The said documents are dumb documents, it does not specify as to who has entered into the transaction and with whom, whether, the said transaction is for purchase or sale of property. She contended that there is absolutely no material evidence with the revenue to link flow of alleged unrecorded transactions with the assessee. The Assessing Officer has not brought anything on record to prove that the transactions appearing in such dumb document has actually materialized. There is no corroborative material on record of Assessing Officer to link alleged transactions with assessee. The rough noting are not accompanied with any acceptable narration. The alleged transactions are not in any way linked to the financial statements, so much so that even transactions denoted as cheque payments are not reflected in books of assessee. There is no independent corroborative material on record of Assessing Officer to prove his hypothesis that said noting reveal either unaccounted income, or unaccounted investment or unaccounted expenditure of assessee. None of the properties as mentioned appear in 13 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} the financials of the assessee. Placing reliance on the order of the jurisdictional Tribunal in the case of ACIT Vs Layer Exports Ltd [2017] 184TTJ 469, which as clarified by the Ld AR, has drawn support from the judgement of the Hon’ble Supreme Court in the case of Mohd.Yusuf & Anr Vs D.& Anr AIR 1968 Bom 112, it is contended by Ld AR that when seized material contains jottings of certain figures but same does not describe or express the contents and the contents themselves are not capable of describing the transactions the way Assessing Officer has deciphered them without support of corroborative evidence of parties attributed to the alleged transaction, the additions are without basis and unsustainable. According to Ld AR it is an ascertainable fact that assessee has not carried out any construction / development business. It is the companies Rohan Developers Ltd and associated entities who have carried out such business and not the assessee. Further, she also contended that assessee has only made a general disclosure, never admitted to having carried out any such transaction and it was clearly stated by him before search party that disclosure is made only to purchase peace of mind, at the same time denying the purported transactions. Under said circumstances, during the post search proceedings, on realization that no such transaction has been 14 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} entered into by him, he retracted from his statement by not offering any income in respect of such transactions.

16 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 16. Considered the rival submissions and have given anxious thought to the questions raised before us. We have carefully considered the orders of the lower authorities, the submissions made before us by the Revenue and the relevant seized materials. It is to be noted that there are jottings in the seized material being certain figures date-wise as well as and abbreviations as deciphered by the Assessing Officer as cash/cheque towards alleged investments. Certain inferences were drawn by the Assessing Officer to the effect that certain jottings indicate receipt of cash by the assessee and certain jottings have been interpreted as payment of cash by the assessee towards either undisclosed investment in property or towards unaccounted payments. To illustrate, it is observed from the orders of lower authorities that page 1 of Annexure A-1 of seized material has been interpreted by Assessing Officer as noting relating to receipts from sale of Bhoslewadi property, page 10 of Annexure-1 as unaccounted payments made to broker ( the seized loose sheet indicating name of broker, total consideration, agreement value, cash component etc.) as towards cash payments to broker for purchase of Goregaon property, pages 8 & 14 of Annexure-1 as noting denoting unaccounted investment towards purchase of Pune Property. Such loose sheets have been seized

17 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} from the residence of the late assessee and during recording of statement u/s 132 (4) on being confronted with the loose sheets it was declared by late assessee Jitendra Mehta that if the receipts are treated as unaccounted income, said money should be presumed to be available for making payments as noted in the seized papers. What we note with bewilderment is that in the course of statement u/s 132(4) the late assessee though specifically asked to explain the jottings such as “Bhoslewadi & CFO” declined to explain stating that since a disclosure of ₹.100 crores has been made, any further clarification or explanation is not relevant. Apparently, the Revenue being satisfied with the admission as secured, has also not carried out any independent enquiry or investigation to ascertain the veracity of the transactions in movable /immovable properties as per seized material despite the assessee having renegaded from the disclosure made u/s 132(4) while filing the return of income. It is the assertion of the assessee now, as per return of income filed that such transactions never materialized and that the jottings are mere simply rough noting of certain events that did not materialize, that such admission was made by late assessee only to purchase peace and facts being otherwise, there is no undisclosed income to be offered to tax. Of 18 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} course the declarant u/s 132 (4) is no more. Moreover, from the statement recorded u/s 132 (4) it can be seen that there is no clinching admission on part of late Jitendra Mehta that such transactions as per the rough noting had taken place. It is apparent that it only in a manner of conditional declaration that such sums were admitted. Undoubtedly, the assessee has not explained the nature of transactions emanating from the seized material. It is indeed not clear as to which noting denotes purchase of property and which transaction constitutes sale of property. There is no mention as to whom the property is sold or from whom the property is purchased. There has been no attempt on part of Department to track down either seller/ buyer or even purported broker whose name has been mentioned in the seized material. In other words, the Assessing Officer, merely on the basis of statement made, has made the addition without ascertaining the nature of transaction, without ascertaining the parties involved in such transactions, what tax implication can be drawn and the additions sustained by the Ld.CIT(A) without facilitating any further enquiry or investigation. No attempt has been made by lower authorities to scratch the surface and probe in to the alleged transactions. We cannot bring ourselves to agree with the finding of the Ld CIT(A) that the 19 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} admission u/s 132 (4) is corroborated by seized material. We are unable to appreciate such a finding when there is nothing on record to explain the jottings; neither any explanation / clarification of the assessee nor any interpretation from Assessing Officer based on independent enquiries on his part. The Assessing Officer has miserably failed to bring on record who are the other parties to the purported transactions, there cannot be a sale without a buyer and there cannot be a payer without a payee. It is evident from a reading of the orders of the lower authorities that no further corroboration has been done, which could have indicated transactions of cash. We do not find any evidence on record which establishes a link between the amount mentioned in the seized documents and the assessee herein. It is our anxious observation that there is not even an iota of evidence to hold that any such transaction has been actually materialized. When the assessee had declined to explain/interpret the noting/ abbreviations, it was incumbent on the Assessing Officer to bring on record independent and corroborative material to prove that the rough noting reveal either unaccounted income or unaccounted expenditure or unaccounted investment of assessee. No addition is sustainable when there is nothing to establish that such payments have been actually

20 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} received or expended especially in the absence of any enquiry with purported payer/payee of such sums. The Assessing Officer has not collected any independent evidence that could provide an acceptable narration for jottings as seen made in the seized material. We cannot persuade ourselves to agree to the finding of the Ld CIT(A) that because of the presumption available to Revenue u/s 132 (4A) r.w.s. 292C of the Act, there is no necessity of any independent enquiry for corroborating the contents of a document. As per law, the power to presume is not conclusive in that presumption is a rebuttable presumption as laid down by Hon’ble Supreme Court in Pullangode Rubber Produce Co. Vs State of Kerala [1973] 91 ITR 18. It is to be kept in mind in the instant case that assessee who made the admission, albeit conditional admission, is no more. It is settled law that though admission could be an important piece of evidence, it is not conclusive as to truth of the matters stated therein. It is well settled that the provisions of Evidence Act are not strictly applicable to proceedings under the Income Tax Act; it is the broad principles of law of evidence that apply to proceedings under the Income Tax Act. Besides, in our considered view, in the peculiar facts of the instant case where the declarant is no more and the legal heir has 21 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} renegaded from the declaration of the dead person by stating that as per his study of the documents/ books maintained as well as the seized material for the purpose of filing the return in his capacity as legal heir, such transactions had never materialized, and that such admission had been made only to purchase peace as well as avoid litigation, it was incumbent on Assessing Officer to bring independent and corroborative material on record to justify his findings on the basis of which the additions were made . In support of our view that the additions made based solely on rough jottings in seized loose sheets, which jottings have not been explained by assessee, nor has Assessing Officer brought any independence evidence in support of his hypothesis of what they represent and on the basis of which disclosure has been obtained, are not sustainable in the absence of independent, tangible, evidence. we draw support from the following orders of various courts wherein it has been held as under:

22 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} a) In the case of ITO vs. Kranti Impex Pvt. Ltd. ITA No. 1229/Mum/2013 it was held that “Since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the Revenue wants to make use of it, the onus rests on the Revenue to collect cogent evidence to corroborate the noting therein. The Revenue has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the unaccounted on-money receipts of the assessee. ” b) As per the decision in the case of Nishan Constructions Vs. ACIT after considering the Hon’ble Apex Court’s landmark decision in Common Cause, Vs. Union of India (2017) 77 taxmann.com 245 (SC) as well as CBI Vs. V.C. Shukla (1998) 3 SCC 410 (SC) it has been held such loose sheets deserves to be treated as a dumb document when full details such as dates, name of the recipient etc. are lacking. c) The Delhi ITAT in the case of SK Gupta V/S DCIT 63 TTJ 532, has held that addition made on the basis of loose sheets cannot be sustained as same does not indicate that any transaction ever took place and when it does not contain any information in relation to nature of transaction and name of the party to the transaction in question.

23 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} d) In the case of SMC Brokers Limited v/s DCIT 109 TTJ 700, the Delhi ITAT has held when the diary seized does not contain any evidence regarding any receipts of money and also when the diary was not written by assessee or his employees, it cannot be substantiated assessee has earned any undisclosed income hence addition based on such dumb document. e) The ITAT, Mumbai in case of Amarjit Singh Bakshi (HUF) v. Asstt. CIT [2003] 86 ITD 13 (Delhi) (TM) held that any notings in loose sheet is no evidence by itself. An entry in the books of account maintained in the regular course of business is relevant for purposes of considering the nature and impact of a transaction, but notings on slips of paper or loose sheets of paper cannot fall in this category. Nothings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person, who admittedly is a party to the nothings. f) In the case of D.A. Patel v. Dy. CIT [2000] 72 ITD 340 (Mum.) it has been held that simply because a sheet of paper was found during the search at the premises of an assessee, he could not be saddled with a tax liability unless it could conceivably be related to the assessee in some reasonable manner. g) The Hon’ble Bombay High Court in case of PCIT V. Umesh Ishrani [2019] 108 taxmann.com 437 (Bombay) held that since the tribunal concluded that entries reflected in loose papers were not corroborated with any other evidence on record, therefore the Tribunal was justified in deleting impugned additions made by revenue. h) As per the order of Mumbai ITAT in case of S.P. Goyal v. Dy. CIT [2002] 82 ITD 85 (Mum.) (TM) :

24 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} “………… . The loose paper in itself has got no intrinsic value. …When it is a mere entry on a loose sheet of paper and if the assessee claims that it was only a planning, not supported by actual cash, then there has to be circumstantial evidences to support that this entry really represent cash of Rs. 60 lakhs. There is no such evidence found by the Revenue in the form of extra cash, jewellery or investment outside the books.”

A.Y: 2007-08 Ground No.1

Ground No. 2

A.Y: 2011-12 Ground No. 1

Ground No. 2

30 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} was paid during the F.Y. 2010-11 and he has worked out of the cash interest component allegedly paid by the M/s Rohan Group during this period. The details of such cash interest paid during the period 01/04/2011 to 26/05/2011 is worked to the tune of ₹.17,20,35,681/-.

“Q.38 During the course of search at your residence at Shiv-Tapi Apartment various loose papers and documents handwritten and computer print outs have been found and seized. Kindly explain the contents of the same and the manner in which these records are maintained with reference to your business. Ans. I have not been able to complete graduation; do not know how to use the computer. Therefore, initially I used to maintain, the record of such loans in hand written pages. However, considering the volume of work I could not properly maintain such records and lots of errors and discrepancies erupted in such records. I was not able to maintain proper / accurate / complete records and therefore mainly used to rely on the records maintain by respective parties. Further considering the volume I requested my daughters to help me in maintaining these noting in the computer Since I did not understand how computer works, there are numerous noting which are incomplete, in parts and without any reference. A lot of trial and error was carried by me with the help of my daughters to enable me to maintain proper record of the transactions. In the process lot of incomplete noted records have been generated which were subject to checking / verification which would not make any sense in oration Therefore many of the printouts found and seized from my residence you will note that no names are written, no reference are written and some rough numbers with some rough calculations are mentioned. Few such examples are Annexure A-1 pages, 62-66, 71, 149, 194, 234, 237, Annexure A-2 page nos. 11, 12, 85. Annexure A-5 page nos. 30, 61, etc. as you can see these are the 32 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} pages generated in the course of such trial-and-error exercise and there is no way I can correlate them with any of the actual transactions that may have been carried out.” Q.39 Kindly explain since when you have started collecting cash interest from the parties? Ans. The real estate sector was badly hit by slow down and it was facing numerous issues which are in the public knowledge, including severe liquidity crunch. As a result many small builders who were not having financial strengths for borrowing, started offering absurd interest rates. As a result Lenders who had lent money to my clients started demanding higher interests on the money lent by them. Therefore, there are numerous pages containing noting in respect of such higher demand of interest and calculation of differential interest over and above the interest paid to them. These workings prepared by me were tentative workings for discussions with my clients who were resisting such payment of additional interest. I may further add here that I was in the habit of writing names of persons who had referred the parties to me instead of the parties from whose bank accounts the cheques were actually received. Different parties were demanding much differential interest for various period of time. However, since all the clients had made the interest payments till 31-3-2010, all of them refused to pay such differential interest for any period prior to 31-3-2010 since the demands were made by the lenders subsequent to the year ending 31-3 2010. Further, the clients have even disputed the demand of such differential interest for the period subsequent to 1-4-2010. However, as a broker my duty is to put the lenders demand to the clients and arrive at mutually agreeable solutions. Therefore, to put a claim to the clients all these calculations were made which are found and seized from my residence. Most of these calculations were for the quarter beginning April 2010.”

33 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} generated during the course of trial-and-error exercise and it cannot be correlated with any of the actual transactions that may have been carried out. Further, in response to Q.39, he has admitted that various lenders were demanding higher rate of interest and as a broker, he prepared these proposed workings to present before his clients. Samir Shah has himself admitted that these are merely tentative workings. The AR of assessee has also pointed out that that Assessing Officer has completely ignored this part of the statement given by Samir Shah. Further, it is the submission of the AR that during the course of search, the assessee was also confronted with the statement of Samir Shah and assessee has also denied of any cash payment of interest made by him. The assessee in his statement has explained that Mr. Samir Shah was claiming additional interest citing several reasons including market conditions and there was a dispute between the two of them regarding the same. However, having said so, he admitted that he is making disclosure of Rs. 17.20 crores in order to avoid inconvenience to Samir Shah and to buy peace of mind and avoid litigation. Thus, the Ld AR contented that addition is made by the Assessing Officer merely on the basis of draft rough workings that never materialized and thus, such addition is not sustainable.

34 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 30. The Ld AR also drew our attention to the remand report dated 21.12.2017 given by the Assessing Officer of Shri Samir Shah during the course of assessment proceedings of Samir Shah. Para 5 of such remand report is reproduced as under: -

“Further Late Shri. Jitendra N Mehta vide his sworn in statement dated 22/07/2011 recorded u/s 132(4) of the IT Act 1961 has in his answer to Q. No.4 (wherein he was confronted to the statement of Shri. Samir Shah) has stated that he has denied the allegation made by the department and has stated that Shri. Samir Shah was claiming for additional Interest payable to him citing several reasons Including that of market conditions however he has categorically denied of having paid any cash Interest to Shri, Samir Shah in his statement recorded which proves the version of Shri. Samir Shah mentioned in above explanation to noting found on page no. 206 of annexure A-1 was correct that it was just a noting and rough working of the interest amount payable to his clients who had invested money through him.”

35 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} 32. We have carefully considered the matter. After hearing both the parties, in our view, the statement of the person who is creator of the document is crucial to understand the nature of transaction emanating from the said document. In the present case, Samir Shah has himself admitted that the amounts appearing in the said seized material are merely rough workings of interest prepared by him in order to present before his clients. Further, it has been brought to our notice that the Assessing Officer of Samir Shah, in his remand report, has also admitted the amounts mentioned in the seized page as rough workings. It is also observed that none of the lenders have admitted that any cash interest has been received by them. All these documents/statements support the contention of the assessee that the entries mentioned on the seized pages are merely tentative workings of additional interest and there is nothing on record to hold that such workings had materialized and cash payment of interest was actually made. Under the circumstances we are unable to sustain the addition as made. We accordingly direct that the addition of Rs. 17,20,35,681/- made by the Assessing Officer in respect of alleged cash payment of interest be deleted. Ground no. 2 raised by the assessee is allowed.

“It may be noted that in the various loose papers found from the residence of Mr. Samir Shah, one page contains certain rough noting in respect to our group company Shivalik Ventures Pvt. Ltd. It may further be noted that the other Directors/ Shareholders of the said Shivalik Ventures Pvt. Ltd. do not know Mr. Samir Shah and the loan was arranged by me for the said Shivalik Ventures Pvt. Ltd. Since, the commercial terms for the aforesaid loan taken by Shivalik Ventures Pvt. Ltd. were negotiated by me with my broker Mr. Samir Shah, they are not involved with such claims of additional interest. Further, Shivalik Ventures Put. Ltd. has not paid any such additional interest. However, to buy peace of mind and avoid litigation, the 37 3799, 3805 & 3802/MUM/2019 (A.Ys: 2007-08, 2008-09, 2011-12 & 2012-13) Rohan Mehta {Legal heir of Late Jitendra Mehta} alleged additional interest in respect of the loan taken by Shivalik Ventures Pvt. Ltd. of Rs. 45,99,142/·is also offered by me.”

A.Y: 2012-13