SH. GOPAL SINGH SUNDA ,SIKAR vs. DCIT, CENTRAL CIRCLE-2, JAIPUR, JAIPUR

These seven appeals are filed by the assessee, which was arised out of the order of the learned Commissioner of Income Tax (Appeals)-4, Jaipur all dated 31.10.2023 [Here in after referred as “ld. CIT(A)” ] for the assessment years 2012-13 to 2018-19 respectively, which in turn arise from the orders dated 20.12.2019 passed under section 143(3) r.w.s. 153Cof the Income Tax Act [Here in after referred as “Act” ], by the DCIT, Central Circle-2, Jaipur.

ITA No. 791 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT . Since the facts of these cases are identical and of the same assessee, we have heard these cases together with the consent of the parties and passing the order together. For the present discussion the bench feels that as facts are similar and grounds are similar therefore, for the present discussion the facts and grounds are taken from the folder of Shri Gopal Singh Sunda in and this case is taken as lead case for deciding the issue raised in these appeals.

3. In the lead case (ITA no. 791/JP/2023) the assessee has raised following grounds: - “1. The Ld. CIT(A) has erred on facts and in law in not allowing the credit of opening balance of loan taken as on 31.03.2011 of Rs. 35,11,940/- worked out from the diary seized at Annexure A-15 and advance received/repayment of loan given earlier of Rs. 11,50,000/- which is the source for advance given during the year on the ground that the opening balance remained unverified, unaccounted & untaxed and thereby confirming the addition of Rs. 3,20,000/- on account of unexplained advances.

3. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 96,000/- u/s 69C on account of interest payment ignoring that source of such interest payment is out of the alleged interest income and out of opening funds available with the assessee.

4. The appellant craves to alter, amend & modify any ground of appeal

5. Necessary cost be awarded to the assessee.”

4.1 Thus, being satisfied that the books of accounts or documents found and seized during the search belonged to a person other than the person in the case of whom the search u/s 132 of the Act was carried out, notice(s) under section(s) 153C of the Act dated 06-09-2019 was issued and served upon the Assessee, requiring him to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules, 1962 within 15 days of the service of the said notice.

4.2 In response to the said notice(s), a return declaring an income of Rs. 3,89,950/- was filed by the Assessee on 27-09-2019. In the return of income originally filed by the Assessee u/s 139(1) of the Act on 26-09- 2012 an income of Rs. 3,89,950/- was declared. However, in the return of income filed in response to notice u/s 153C of the Act no undisclosed income pertaining to the relevant year has been declared by the assessee.The assessee primarily derives his income from Salary, Business and Other Sources of income. To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT 4.3 The proceedings of assessment of income were commenced by issue of notice u/s 143(2) of the Act on 21-10-2019. Later notice u/s 142(1) dated 21-10-2019 was also issued to the assessee and information and details pertaining to the case relevant to assessment of his income were called by means of a questionnaire. Later queries were raised vide notices under section 142(1) and/or Order Sheet Entries wherever deemed fit. The information furnished by the Assessee's Counsel was examined and placed on record.

4.4 Pursuant to search and seizure action u/s 132 of the I.T. Act carried at residential premises of Shri Jogendra Sunda, Piyush Sunda, Smt. Urmila at Opp. Prince School, Palwas Road, Sikar (Rajasthan), wherein a diary containing details of cash loan transaction was found and seized as Exhibit-15. During the search proceedings, the statements of Shri Jogendra Singh were recorded u/s 132(4) of the IT.Act, 1961 wherein Shri Joginder Singh in reply to question No. 15 admitted that the diarypertains to his father Shri Gopal Singh Sunda and all the transaction noted in the diary pertain to him only.

4.5 Thus, from these details it was noticed that the assessee Shri Gopal Singh Sunda has borrowed total amount of ₹18,70,000 in different financial years and total amount of ₹57,17,000 were given by him to various persons in the different financial year's spread from assessment To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT year 2012-13 to assessment year 2018-19. It was also found that the assessee has earned total interest of ₹13,85,000 in the different financial years. Accordingly, a detailed show cause notice was issued to the assessee on 07/11/2019 mentioning the noted transaction in the diary found in a tabulated format. In response to the said notice the assessee submitted that the diary contains the memoranda noting from the year 2003 to 2017 and most of the transaction noted in the diary are outside the purview of the assessment proceedings. The assessee also furnished a working containing details of loan given, loan taken, interest along with running balance claiming that he is not aware of the name and whereabouts of the person and the amount noted in annexure A in different name or fictitious persons he further claimed that the opening balance as on 01.04.2011 is ₹36,11,940 and the same was distributed during the period assessment year 2012-13 to A. Y. 2018-19.

4.6 The ld. AO noted that the reply of the assessee was considered but the same was not found tenable on account of the following discrepancies;

(i) Page number one of the seized Annexure-A a an entry dated 20/08/2003 in the name of Shri Parmeshwar of ₹10,00,000 was noted however the same was not found recorded in the working sheet provided by the assessee.

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT (ii) On page number 44 of seized Annexure A an entry dated 01.08.2015 in the name of Shri Mukesh S/o Dwarka Prasad of Rs. 10,00,000 was noted however, in the working sheet provided by the assessee the same was recorded on 08.01.2015.

(iii) On page no. 48 of Seized Annexure A, an entry dated 9/1/2015 in the name of Shri Bhawan Ram Sunda of ₹1,30,000 was noted however, in the working sheet provided by the assessee the same was recorded on 1/9/2015.

(iv) On page no. 48 of Seized Annexure A, an entry dated 06/03/2017 in the name of Shir Om Prakash of Rs. 1,00,000/- was noted however, in the working sheet provided by the assessee the same was recorded on 03/06/2017.

(v) Apart from other various other instant were also found wherein either the dates were manipulated or the entries were not found recorded at all.

Based on these observations the ld. AO noted that the assessee was with the sole purpose of increasing the funds during the pre-search period placed on record the working sheet was prepared. In view of the above, the working sheet prepared by the assessee is incorrect and thus, cannot be acceptedas per the reasons as discussed herein above by him.He also noted that the assessee neither furnished any 6 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT confirmation nor did he furnished any details of or where about of such persons as noted in the diary. In view of these discussion the ld. AO noted that the sum noted on the page of the diary is treated as unexplained cash loan advance and held as undisclosed income of the assessee u/s. 68 of the Act in the respective year as worked out by and is tabulated here in below;

Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Total Cash Loan 3,20,000 13,67,000 1,20,000 5,80,000 11,70,000 6,60,000 12,00,000 54,17,000 Interest earned 48,000 80,700 1,41,600 1,93,200 2,76,800 3,43,200 3,00,000 13,83,500 thereon Total 3,68,000 14,47,700 2,61,600 7,73,200 14,46,800 10,03,200 15,00,000 68,00,500 As it is evident from the above table that the assessee has advanced a cash loan and earned interest thereon totalling to Rs. 3,68,000/- for the year under consideration which has not been recorded in the regular books of account. Accordingly, the amount of Rs. 3,68,000/- added back to the total income of the assessee u/s. 68 of the Act.

5. Aggrieved from the above order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised by the assessee before the ld. CIT(A),the relevant finding of the ld. CIT(A) is reiterated here in below:-

“ 4.4 I have considered the facts of the case and submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The AD observed that in search a diary containing details of cash loan transactions was found and seined as Exhibit 15. The To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT diary contains details of loans and borrowings. The transaction noted in the diary is summarised by AO at Pg 03-06 the assessment order. The AO on the basis of diary found during search, noted that assessee has taken an of Rs. 18,70,000/- and has given loan of Rs. 57,17,000/- to various persons on different dates and the total interest received is Rs. 13,85,000/- during AY 12- 13 to AY 18-19. 4.5 In assessment the assesse filed the detailed working of the loan given, Joan taken, interest paid and internet received and explained that the opening balance of Then taken as on 01.04.2011 is Rs. 36,11,940/- and the same is utilised in giving loans during AY 12-13 to AY 18-19. The AO did not accepted the same. 4.5 The AO, thereafter computed the total loan given during the AY 2012-13 to 2018-19 of Rs. 54,17,000/- and interest income at Rs. 13.85,000/- as tabulated at page 08-111 of the assessment order and treated the same as undisclosed income of the assessee and did not allow the claim of set off of the opening balance, loan received during the your merest expenses. 47 On perusal of the overall facts I find that there is no dispute as to the fact that details of the unaccounted cash loans revived and given are found recorded in the diary. The AR has also not disputed the fact of giving of loans to various parties. 4.8 During the proceedings the appellant had claimed opening balance of rupees 36,11,940/- and during the appeal proceedings the appellant has claimed opening balance of 35,11,940/-. So far as claim of credit of the opening balance of loans is concerned, I find that this amount is never assessed to tax though the same is claimed by the appellant to be worked out as per the seized diary. Therefore the opening balance remained unverified and at the same time unaccounted and untaxed. The appellant entered into transactions which were kept concealed and hidden and discovered only during the search and seizure. 4.9 The claimed opening cash balance is claimed to be coming and building up from several years in the past and the yearly amount claimed is also not substantially very huge meaning thereby that the amounts are relatively smaller and could have been spent by the appellant for various purposes like personal expenses, family functions, purchase of gold and jewellery, household expenses, education expenses, etc. Taking additional loan when the earlier loan was already available also raises doubt considering the human probabilities. Without the due verification through scrutiny assessment during those years along with detailed verification of the entries, the actual figure of opening cash balance and whether there was any cash balance or not cannot be ascertained and verified. Also, the source of receipts is unverified in terms of identity, genuineness and creditworthiness as noted in To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT the assessment order on page six for A.Y. 2012-13 the appellant did not produce the names of the parties and the whereabouts of the parties. Further, the Ld. AO has also pointed out mismatches in the working provided by the appellant as noted on page 07 to 09 in assessment order for Α.Υ. 2012-13. 4.10 Further, in this regard guidance and reliance is placed on the judgement of Hon'ble ITAT in the case of judgement dated 21.06. 2013 in Chetan Gupta vs ACIT in 1892 & 1893/Del/2012 Asstt. Yrs. 2001-02, 2002-03 & 2003-04 ITA No. 2757/Del/2012 Asstt. Yr 2002-03. The paras relevant to the issue at hand are extracted below:- "6.26. In the wake of these observation we proceed to desde the quantum of undisclosed income of the assessee as under: (i) The reassessment for AY 2001-02 is quashed (ii) For AY 2002-03 the credit for opening balance is not given as we have quashed the reassessment for AY 2001-02, therefore, the opening figure flowing from the quashed reassessment cannot be verified, Subject to these observations the peak credit as worked out by the assessee at Rs. 36,89,310/- is held as undisclosed income for this year. ............................... 4.11 In the above case the assessment took place for the assessment year 2001-02 and onwards however the assessment for the assessment year 2001-02 was quashed in the order of the Hon'ble Tribunal and on this ground it was held there that the cash transactions which took place in the assessment year for which the assessment has not taken place or has been quashed the benefit of cash available in those assessment year cannot be allowed in subsequent assessment year on the ground that the same cannot be verified. 4.12 The above judgement has been followed in judgement of Hon'ble ITAT 'B' Bench Delhi in the case of the same assessee for AY 2004-05 in order dated 31.01.2014. 4.13 Accordingly credit of this claimed amount can't be given against the further investment made and the claim of credit of opening balance of Rs. 35,11,940/- is hereby rejected. The appellant fails in these ground of appeal and the same are hereby dismissed.”

5. Ground of Appeal No. 2 Ground No. 2: The Ld. AQ has erred on facts and in law in making addition of R 3,20,000/- an account of cash loan given as per the said seized diary and faxing the same u/s 115BBE of the Act ignoring that the source of the same is out of the advance received.

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT

5.1 I have considered the facts of the case and submissions of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. The issue of credit of the claimed opening balance has already been discussed in the paragraphs above and the claim of the appellant in this regard has been rejected. As far as the entries of advances received during the years A.Y. 2012-13 to 2018-19 are concerned the issue is not discussed in the assessment order and the learned assessing officer has disallowed the credit of the same in the working whereby only entries of loan given have been considered in the table given on page 10 of the assessment order for A.Y. 2012-13. It is general principle that the receipt of advances/receipt of repayment of advances given earlier, becomes the source af subsequent investment. Judgement of Hon'ble ITAT in Chetan Gupta vs ACIT in 1892 6 1893/Del/2012 Asstt. Yrs. 2001-02, 2002-03 & 2003-04 and ITA No. 2757/Del/2012 Asstt. Yr 2002-03 has inter- alia been relied upon to reject the claim of the appellant for allowing the credit of the claimed opening balance of the cash. Following the same judgement, with respect to receipt of advances/loan-repayments during A.Y. 2012-13 to A.Y. 2018-19, the benefit of receipt of advances/loan- repayments during A.Y. 2012-13 to A.Y. 2018-19 is to be allowed to the appellant while working out the peak during the respective years. It is held accordingly. 5.2 In the assessment order the addition has been taxed under section 68 of the Act and the appellant has challenged the same on legal grounds that diary cannot be considered a books of accounts. In case the diary in not treated as the books of accounts, the undisclosed/unaccounted income in terms of peak balance in the form of unexplained loans advanced is held to be taxable under section 69 of the Act. 5.3 The appellant has also made submissions on the corrections in the quantification of amounts. The appellant has claimed that an amount of rupees 3 lakhs was repaid to one Mr. Mukesh whereas the same is added by the learner assessing officer as the receipt. The appellant has drawn attention to papers of the sessed diary in this regard. I have used the cease diary copy as provided in the submission along with the submission of the chart of receipt and repayments as provided by the appellant. is seen from page 37 of the diary that for 2 transactions of rupees 1,00,000 13- 04-2014) and 2,00,000 (dated 31-07-2014) pertaining to Mr. Mukesh there is a reference of having money taken and thus it cannot be loan and advance given and accordingly this amount is treated as money received by the appellant and accordingly relief is allowed to the appellant in this regard. 54 The appellant has also claimed that there are errors in the calculation of interest by the learned AO. Relevant extract of the submissions is as under:- AO in its working has considered amount of Rs. 3,00,000/-as advance given to Mukesh and calculated interest thereon at Rs. 80,000/-. This is incorrect as 10 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT the amount of Rs. 3,00,000/- is actually repayment of advance given on 05.01.2013 as evident from the Diary. In the diary there is no mention of any interest. Hence notional calculation of interest of Rs. 80,000/- is incorrect.(PB- 37). 8.5 The above submission is also perused, On the issued by the appellant pertaining to rupees 3,00,000/- relief has been allowed to the appeal end in the paragraph above that the same is not a receipt but the repayment and accordingly the learned Assessing Officer is directed to recalculate the interest on this transaction. 5.6 Accordingly, the appellant succeeds in this ground of appeal to the extent discussed above and the ground is hereby partly allowed.

6. Ground of appeal No. 2.1 2.1: The Ld AO has erred on facts and in law in making addition of Rs. 48,000/- on account of interest received on advance given and taxing the same u/s 115BBE of the Act without allowing deduction for interest paid on advance taken. 6.1 I have considered the facts of the case and submissions of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. The challenge of the appellant is that the learned AO did not allow the deduction of interest expense while taxing the interest income. The appellant has made contention that the AO made addition for gross interest received whereas the assessee has also taken loan from various parties on which interest is paid. The amount taken on loan is utilized for giving the advance. Therefore it is claimed that there is direct nexus between the interest received on advance and interest paid on advances. Accordingly deduction for interest paid needs to be allowed against the interest income received. 6.2 As per the work sheet submitted by the appellant it is found that there were no nexus between advance received and loan given as there is huge difference between the amounts of loans taken/available cash vis-à-vis the amount of loan given. When there is already cash claimed to be in hand which is sufficient to cover the loan to be given in very text few days then if further loan is taken in that case the further loan cannot be treated or considered having direct nexus with the loan given. 6.3 For example during the period of 12.06.2010 to 01.08.2011, appellant has shown advance received of Rs. 24,08,390/- and during the same period he has given loan only Rs. 3.90,000/-. 6.4. The purpose for which the surplus cash was taken and deployed in the intervening period is unknown. Further it is noticed that there is long period of To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT differences between dates of advance taken and advance given as per work sheet submitted the appellant. For example a) He has taken loan on 23.07.2011 Rs. 1,50,000, 01.08.2011 6,00,000, 01.08.2011 Rs. 3,00,000 and given loan on 21.09.2011 Rs. 1,25,000 04.11.2011 Rs 45,000, 07.01.2012 Rs. 15,000/- b) He has taken loan on 05.04.2014 Rs. 36,000/, 06.04.2014 R 1,00,000/-, 22.04.2014 Rs. 24,000/-, 31.07.2014 Rs. 3,00,000/- 05.10.2014 Rs. 2,70,000/- & 04.11.2014 Rs. 1,00,000/- and given loan on 08.01.2015 Rs. 10,00,000/-. 6.5 As per work sheet submitted by the appellant it is clear that he was not required to take advance for loan given. It is for the claimant appellant to prove with the evidences that there is a direct nexus between the loan taken and the loan given meaning thereby what amount has been taken on loan the same has been further given on loan. As per the facts of the case there is no direct nexus in this regard. 6.6 The appellant has also claimed that there are errors in the calculation of interest by the learned AO. Relevant extract of the submissions is as under:- Amount of Interest is not mentioned against the entry of advance in the diary. The AO has calculated the same only on notional basis. Hence the calculation of interest to the extent of Rs/ 2,49,400/- is incorrect and not borne out of seized paper (PB48,50,52,53). .............. This paper is related to Pg 29. As per this paper Rs. 2,00,000/- was advanced to Bhanwar Lal/ Vinod Kumar on 16.03.2011. On this amount interest for 2 years till 16.03.2013 is received at Rs. 97,500/-. Thereafter on pg 57 interest is calculated on the amount of Rs. 2,00,000/- till 15.06.2015 at Rs/ 1,25,000/- ( 48,000+59,500+18,000). Thus the total amount including the interest is worked out at Rs. 3,25,500/-. However party only gave the principal of Rs. 2,00,000/- and the interest remained outstanding. Hence the amount of Rs. 48,000/- and Rs. 59,500/- considered as interest receipt by AO is incorrect (PB 29,57). 6.7 The above submission is also perused. On the first issue the appellant hasclaimed that the interest is notional and not specifically mentioned in the seized papers and that in the second issue the appellant has claimed that the receipt of interestremains outstanding and hence the same should not be taxed. It is not in dispute thatthe money was given on loan by the appellant and such loan was interest bearing andin that case whether the receipt of To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT interest amount in specifically mentioned in theseized paper or not and also when the interest is received actually in cash is immaterial In view of the fact that the income of interest can be taxed on accrual basis in the above transaction. 6.8 In view of the above, the appellant falls in this ground of appeal and the same is hereby dismissed.

7. Ground of Appeal No.

3. Ground No. 3: The ld. AO has erred on facts and in law in making addition of Rs. 96,000/- on account of interest paid by treating the same as unexplained expenditure u/s 69C of the Act and taxing the same u/s 115BBE of the Act by ignoring that source of such payment is advance and interest earned on advance given. 7.1 I have considered the facts of the case and submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration, In this regard the learned AO has computed the interest expenditure upto the date of repayment of loan and same are summarized in pars 7.5 of the order. He has concluded that the assessee has made payment of interest loan received during various years to the extent to Rs. 96,000/- which has not been recorded in the regular books of assesse and the amount of Rs. 96,000/- is added back to the total income of the assessee u/s 69C of the I T. Act. The appellant has not made specific transaction in support of this ground of appeal. Considering the averments made its the ground of appeal it can be stated that the source of such latest payment can be considered to have been made out of explained sources when the same is made out of taxed peak credit balance as per the discussion in this order However if that interest payment has not been considered as payment on respective dates in the station of peak balance in that case such payment cannot be considered having made out of explained sources. The appellant has not been able to show that the payment has been made out of the explained/taxed funds available in the hands of the appellant. In view of the discussion, this ground of appeal is dismissed.”

6. Feeling dissatisfied from the finding recorded in the order of the ld. CIT(A), the assessee has preferred the present appeal on the grounds as stated herein above. In support of the various grounds so raised by To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT the assessee the ld. AR has filed a detailed written submission which is reproduced here in below :-

“The Ld. CIT(A) has erred on facts and in law in not allowing the credit of opening balance of worked out from the diary seized at Annexure A-15 and advance received/ repayment of loan given earlier as under which is the source for advance given during the year on the ground that the opening balance remained unverified, unaccounted & untaxed and thereby confirming the addition as under on account of unexplained advances. AY Amount of opening Advance Addition confirmed balance as on 31st received/repayment (Amount in Rs.) March (Amount in of loan (Amount in Rs.) Rs.) 2012-13 35,11,940/- 11,50,000/- 3,20,000/- 2013-14 40,83,940/- - 13,67,000/- 2014-15 30,74,450/- - 1,20,000/- 2015-16 29,82,040/- - 2,80,000/- 2016-17 33,40,440/- - 11,70,000/- 2017-18 25,79,040/- - 6,60,000/- 2018-19 22,48,040/- - 12,00,000/- Ground No.2 (AY 2012-13 to 2018-19) The Ld. CIT(A) has erred on facts and in law in confirming the addition as under on account of alleged interest income ignoring that no such interest receipt is recorded in the seized diary/ without allowing deduction of interest paid on advances taken. AY Actual interest Interest paid Addition received (Amount (Amount in made(Amount in Rs.) Rs.) in Rs.) 2012-13 - 96,000/- 48,000/- 2013-14 80,700/- 3,71,400/- 80,700/- 2014-15 27,600/- 64,800/- 1,41,600/- 2015-16 47,400/- 10,800/- 1,93,200/- 2016-17 600/- - 2,76,800/- 2017-18 3,29,000/- - 3,43,200/- 2018-19 18,000/- - 3,00,000/- Ground No.3 (AY 2012-13 to 2015-16) The Ld. CIT(A) has erred on facts and in law in confirming the addition as above u/s 69C on account of interest payment ignoring that source of such interest payment is out of the alleged interest income and out of opening funds available with the assessee. Ground No.3 (AY 2017-18)

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT

The Ld. CIT(A) has erred on facts and in law in taxing the above addition u/s 115BBE @ 60% instead of taxing the same @ 30% by ignoring that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 15.12.2016 and made applicable from 01.04.2017 is not applicable to AY 2017-18. Facts:-

1. 1. The assessee aged 60 years during AY 2012-13 derives income from salary, business and other sources. He is filing his return regularly.

2. A search and seizure action u/s 132 was carried out on Prince Group, Sikar on 10.03.2018 of which assessee is one of the member. In search at the residential premises of his son Joginder Singh Sunda, a diary containing details of cash loan transactions was found and seized as Exhibit-15(PB 70- 75). The diary contains details of advance given and amount borrowed. The transaction noted in the diary is summarised by AO at Pg3-6 of the assessment order.

3. The AO on the basis of this diary noted that assessee has taken loan of Rs.18,70,000/- and has given loan of Rs.57,17,000/- to various persons on different dates and the total interest received is Rs.13,85,000/- during AY 2012-13 to AY 2018-19. Accordingly he issued show cause notice for making addition for the same. Assessee filed detailed working of the loan given, loan taken, interest paid and interest received vide letter dt. 29.11.2019 (PB 76- 83). He explained that the opening balance of loan taken as on 01.04.2011 is Rs.35,11,940/-(PB 81) and the same is utilised in giving loan during AY 2012- 13 to AY 2018-19.

4. The AO rejected the working of the assessee by pointing out the following mistake in the statement of loans filed by the assessee:- (i) On Pg 1 of the seized annexure (PB 20), an entry dt. 20.08.2003 was noted in the name of Shri Parmeshwar of Rs.10,00,000/- (correct amount is Rs.1,00,000/-) but the same was not noted in the working sheet prepared by the assessee. (ii) On Pg 44 of the seized annexure(PB 61), an entry dt.01.08.2015 was noted in the name of Shri Mukeshs/o Dwarka Prasad of Rs.10,00,000/- but the same was not noted in the working sheet prepared by the assessee. (iii) On Pg48 of the seized annexure(PB 65), an entry dt.09.01.2015 was noted in the name of Shri Bhagwan Ram Sunda of Rs.1,30,000/- but the in the working sheet prepared by the assessee the same was recorded on 01.09.2015. (iv) On Pg 48 of the seized annexure(PB 65), an entry dt.06.03.2017 was noted in the name of Shri Om Prakash of Rs.1,00,000/- but in the working sheet prepared by the assessee the same was recorded on 03.06.2017.

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT

(v) Various entries were found wherein the dates were manipulated or they were not recorded in the working sheet which shows that the sole purpose of the assessee is to increase the funds during pre-search period. 5. The AO thereafter computed the total loan given during the AY 2012-13 to 2018-19 at Rs.54,17,000/- and interest income at Rs.13,85,000/- as tabulated at Pg10-11 of the assessment order and treated the same as undisclosed income of the assessee u/s 68 of the Act as under:-

Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Total Cash Loan 3,20,000 13,67,000 1,20,000 5,80,000 11,70,000 6,60,000 12,00,000 54,17,000 Interest earned 48,000 80,700 1,41,600 1,93,200 2,76,800 3,43,200 3,00,000 13,83,500 thereon Total 3,68,000 14,47,700 2,61,600 7,73,200 14,46,800 10,03,200 15,00,000 68,00,500

6. The AO further made addition of Rs.5,43,000/- in AY 2012-13 to 2015-16 by treating the interest paid on loan received as unexplained expenditure u/s 69C of the Act and tax the same u/s 115BBE of the Act.

8. The Ld.CIT(A) after considering the submission of assessee at Para 4.8 to 4.13, Pg 20-23 of its order observed that opening balance of loan taken as worked out from the seized diary remained unverified, unaccounted and untaxed. The opening cash balance is coming and building up from several years in the past and the yearly amount claimed is not substantial, therefore, in human probabilities it could have been spent by the assessee for personal use. Without the due verification through scrutiny assessment during those years, the actual figure of opening cash balance cannot be ascertained and verified. Also as the assessee did not produce the name & address of the parties, the identity, genuineness & creditworthiness remains unverified. AO has also pointed out mismatches in the working of assessee. The Ld. CIT(A) relied on the decision of ITAT, Delhi Bench in case of Chetan Gupta Vs. ACIT where since the reassessment for AY 2001-02 was quashed, credit for opening balance for AY 2002-03 was not allowed and the peak credit as worked out by the assessee was held as undisclosed income of that year.Accordingly the credit of opening balance claimed by the assessee is rejected.

1. 1. There is no dispute as to the fact that the diary found during the search belongs to the assessee and the noting in the diary is regarding loan taken on interest and loan given on interest to various persons.

2. It can be noted that AO on the basis of the diary has made addition of Rs.68,00,500/- (54,17,000+13,83,000) in AY 2012-13 to 2018-19 on account of loan given and interest received whereas Ld. CIT(A) has restricted the addition to Rs.65,00,500/- (51,17,000+13,83,000) by not appreciating that the source of loan given is out of the loan taken as is evident from the diary itself. This is more evident from the following:- (i) As per the diary opening net funds available with the assessee is Rs.35,11,940/- (PB 81)as submitted to the AO vide letter dt. 29.11.2019 (PB76-77). The AO has not disputed the same. The source of advance given is out of the advance taken. The Ld. CIT(A) has not allowed the credit of advance taken as recorded in the seized diary only on assumptions & presumptions. There is no recording in the seized diary that the advance taken has been used for personal purpose. The time gap between the dates of advance taken and advance given as worked out from the seized diary or the fact that the opening balance of advance taken could not be taxed since it is beyond the period for which income can be assessed cannot be a ground for not allowing the credit of opening balance of advance received which is source of advance given as evident from the seized diary. This fund is utilized for giving loan to various persons during the years under consideration. Hence the source of loan given to this extent is verifiable from the diary itself. In fact after considering the opening balance of advance taken, the source of advance given gets fully verified as under:- AY Opening Advance Interest Interest Advance Closing balance given/repaym paid received received/repayme balance ent of loan nt of advance given 2012-13 35,11,940/- 3,20,000/- 2,94,000/- - 11,50,000/- 40,47,940/- 2013-14 40,47,940/- 11,67,000/- 60,000/- 2,17,000/- - 30,37,940/- 2014-15 30,37,940/- 1,20,000/- - 27,600/- - 29,45,540/- 2015-16 29,45,540/- 2,80,000/- 1,29,000/- 47,400/- 5,70,000/- 31,53,940/- 2016-17 31,53,940/- 11,70,000/- - 2,72,600/- - 22,56,540/- 2017-18 22,56,540/- 6,60,000/- - 3,29,000/- - 19,25,540/- 2018-19 19,25,540/- 12,00,000/- - - - 7,25,540/- Thus the source of advance given is out of the advance taken. The lower authorities wrongly took the amount of advance given for AY 2013-14 at Rs.13,67,000/- whereas correct amount is Rs.11,67,000/- in as much as the amount of Rs.2 lacs taken by AO in the name of Bhanwar Lal Vinod Kumar on 16.03.2013 at Pg 10 of the assessment order on the basis of Pg 57 of Annexure 15(PB 74) is in fact given on 16.03.2011 as evident from Pg 29 (PB 45) of this Annexure. Hence the addition to the extent of Rs.2 lacs made in AY 2013-14 is otherwise correct. The decision of ITAT, Delhi Bench relied by Ld. CIT(A) is in a different context which is not applicable. To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT (ii) As per the diary AO has worked out advance received at Rs.18,70,000/- between AY 2012-13 to 2018-19. The correct amount of advance received as per the diary is Rs.17,20,000/-. The difference is due to the fact that AO has considered entry dt. 11.04.2014 of Rs.1 lacs and entry dt. 21.07.2014 of Rs.2 lacs in the name of Mukesh as advance given whereas the same is advance received by the assessee. This is accepted by Ld. CIT(A). Further the AO has included four entries namely (i) RatanLal Sunda Rs.50,000/- (old) (PB 27) (ii) Bhopal Rs.2,50,000/- (03.09.2009) (PB 37) (iii) Sharwan S/o Mahadu Bhai Rs.1,00,000/- (22.07.2010) (PB 38) (iv) Ganesh Rs.50,000/- (01.01.2011) (PB 44) which relates to the period prior to 01.04.2011 and not to the period under consideration. Thus the correct position of advance received works out at Rs.17,20,000/- (18,70,000+3,00,000-4,50,000). This is also a source of advance given but the lower authorities without any discussion did not allowed the credit of loan taken against the loan given. Hence the source of loan given to this extent is verifiable from the diary itself. (iii) The AO at Pg 11 of the assessment order has noted that assessee has earned interest of Rs.13,85,000/- from the advances given and at Pg 12 of the assessment order has noted that he incurred interest expenses of Rs.5,43,000/- during the period from AY 2012-13 to AY 2015-16. Thus interest receipt after reducing the interest expenses works out to Rs.8,42,000/- which is also a source of giving advances. Hence the source of loan given to this extent is verifiable from the diary itself. (iv) If all the above sources of funds as per the diary are considered, the total availability of the funds works out to Rs.62,23,940/- (3511940 + 1870000 + 842000). This is much more than the advance given of Rs.54,17,000/-. In view of above, addition confirmed by Ld. CIT(A) on account of advance given is unjustified and the same be deleted.

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT (iii) AO observed that on Pg48 of the seized annexure an entry dt.09.01.2015 was noted in the name of Shri Bhagwan Ram Sunda of Rs.1,30,000/- but in the working sheet prepared by the assessee the same was recorded on 01.09.2015. This is now corrected in the amended sheet (PB 84-85). (iv) AO observed that various entries were found wherein the dates were manipulated or they were not recorded in the working sheet which shows that the sole purpose of the assessee is to increase the funds during pre- search period. The said observation is incorrect as the dates were not manipulated. Only by mistake in some entries dates and months are swapped. Even after correcting the same there does not remain any difference. Further few entries were left out to be recorded by mistake but the same is shown in the amended sheet.

4. It is submitted that the total interest received by the assessee for the years under consideration as per the amended sheet works out at Rs.9,48,100/- as against Rs.13,83,500/- worked out by the AO. The explanation for the difference of Rs.4,35,400/- (13,83,500- 9,48,100) is as under:- Exhibit Name of Remarks Date Amount PgNo Party The AO at Pg 4 of the order has considered amount of Rs.3,00,000/- 37 11/04/2014 Mukesh 24,000 (1,00,000+2,00,000) at S. No.25 & 26 as advance given to Mukesh and calculated interest thereon at 37 11/04/2014 Mukesh 8,000 Rs.80,000/-. This is incorrect as the 37 31/07/2014 Mukesh 32,000 amount of Rs.3,00,000/- is actually repayment of advance given on 05.01.2013 as evident from the diary. 37 31/07/2014 Mukesh 16,000 In the diary there is no mention of any interest. Hence notional calculation of interest of Rs.80,000/- is incorrect. Bhagwan Amount of interest is not mentioned 48 09/01/2015 31,200 Ram Sunda against the entry of advance in the diary. The AO has calculated the Bhagwan 48 09/01/2015 31,200 Ram Sunda same only on notional basis. Hence the calculation of interest to the extent 50 06/11/2016 Munni Devi 3,000 of Rs.2,49,400/- is incorrect and not Nirmala 52 22/09/2017 18,000 borne out of seized paper (PB 65, 67, Sunda 69, 70). 52 15/10/2017 Omprakash 6,000 53 01/08/2017 Mukesh 1,60,000 Bhanwar Lal/ This paper is at PB 74. It is related to 57 16/03/2013 48,000 Vinod Kumar Pg 29(PB 45). As per this paper Rs.2,00,000/-was advanced to BhanwarLal/ Vinod Kumar on 16.03.2011. On this amount interest for 2 years till 16.03.2013 is received Bhanwar Lal/ 57 16/03/2013 59,500 at Rs.97,500/-. Thereafter on Pg 57 Vinod Kumar interest is calculated on the amount of Rs.2,00,000/- till 15.06.2015 at Rs.1,25,500/- (48,000+59,500+18,000). Thus the 19 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT total amount including the interest is worked out at Rs.3,25,500/-. However party only gave the principal of Rs.2,00,000/- and the interest remained outstanding. Hence the amount of Rs.48,000/- and Rs.59,500/- considered as interest receipt by AO is incorrect. Total 4,35,400/- The Ld. CIT(A) has not given any finding on the above mistakes pointed out to him but has only observed that once interest is due it is to be taxed on accrual basis whether it is actually received in cash or not. It is submitted that interest of Rs.80,000/- calculated in respect of Mukesh Kumar is factually incorrect as this entry is not of advance given but of advance taken. Further Hon’ble Gauhati High Court in case of N.R. SirkarVs. CIT 111 ITR 281has held that where the regular books are not maintained, income has to be assessed on cash basis. Hence addition to the extent of Rs.4,35,400/- in respect of interest income be deleted.

6. Without prejudice to above it is submitted that the AO has made the addition u/s 68. This is challenged before the Ld. CIT(A). However, Ld.CIT(A) has not given any finding on the same.For ready reference the relevant part of section 68 of the Act is reproduced as under:-

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT

Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income- tax as the income of the assessee of that previous year. From the plain reading of this section it can be noted that this section applies when any sum is found credited in books of accounts. Therefore, if the credit is not in the books of accounts, section 68 cannot be invoked. The definition of the books of accounts is given u/s 2(12A) of the Act as under:- “books or books of account" includes ledgers, day-books, cash books, account- books and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device” The definition of books of accounts is an inclusive definition. However, notepad, loose papers and diaries which can be easily detached and replaced cannot be termed as books. The AO in the present case has made addition on the basis of the personal diary of the assessee. Addition u/s 68 cannot be made on the basis of the noting on diary as the same is not books of the account of the assessee. In this connection reliance is placed on the following decisions:- ArunaSankhlaVs. DCIT dt.01.12.2017 (Jaipur) (Trib.) In this case Hon’ble ITAT at Para 7.4 of its order held as under:- “After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot be treated as books of account. Furthermore, only the commission income can be assessed in the hands of the assessee @ 0.10% on a total of the credits of Rs. 91,67,81,272/-. The addition u/s 68 of the Act can be made only if any sum is found credited in the books of the assessee. A book means a collection of sheets of papers bound together with the intention that such binding shall be permanent and papers used are kept collectively in one volume. A book which contains successive entries of items maybe a good memorandum book but until those entries are totaled or balanced or both as the case may be, there is no reckoning and no accounts. A book which merely contains entries of items of which no account is made at any time, is not a “book of account” in a commercial sense. Thus the addition made u/s 68 is not justified. It is noticed that over and above the peak credit, the AO has further made an addition of Rs. 52,40,137/- on account of debtors exceeding the creditors. We have found that the peak determined by the AO is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the AO has not properly prepared the list of debtors and creditors based on any logic. The Ld. CIT(A) has confirmed the addition of Rs. 52,40,137/- under the Provisions of Section 69B of the Act. This section relates to investment made by the assessee in the acquisition of bullion/jewellery or other valuable articles but it does not speak about any investment in debtors. Moreover, Section 69B also stipulates the position where the investment exceeds the amount shown in the books of account. Since the assessee does not maintain any books of account wherein To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT the debtors and creditors are reflected, therefore, this addition has also been wrongly made and upheld u/s 69B of the Act. Hence, in our considered opinion, only commission income has to be determined in this case and nothing more. Accordingly, we reverse the findings of the Ld. CIT(A) and order to delete the entire addition so made. Thus Ground Nos. 3 and 4 of the assessee are allowed. DCIT Vs GSNR Rice Industries Pvt Limited (2021) 90 ITR (Trib.) 114 Chennai The relevant Para 21 of this decision reads as under:- “21. The Income Tax Act, 1961 has defined books and books of accounts u/s.2(12A) of the Act, as per which books and books of accounts includes, ledgers, day-books, cash books, account books and other books, whether kept in the written form or as print- outs of data stored in a floppy, disk, tape or any other form of electro-magnetic data storage device. Therefore when books of accounts are clearly defined under the Act, then diary, notebook and retrieved data of computer CPU can be considered as books of accounts or not is a question that needs to be considered. From the definition of ‘books’ or ‘books of accounts’, it is abundantly clear that books of accounts means regular books of accounts maintained by the assessee for any previous year to record day to day transactions of its business including ledgers, day-books, cash books, account books and other books. The term other books does not mean to include some dumb documents like diary, notebook or deleted entries of computer CPU. The term other books refers to any other books which are relevant and in consonance with ledgers, day-books, cash books, account books, etc. Therefore, in order to include any other books of accounts maintained by the assessee within the ambit of term ‘other books’, those books must be relevant in the business of the assessee to keep track of transactions. Hence, other books refers to in the ordinary course of any business of the assessee are stock books maintained in the ordinary course of business to record movement of stocks, books of accounts maintained for recording salary and wages as required under the Wages Act and other statutory books prescribed under any other law. But, it does not include diary, notebook and some other dumb documents maintained by any person for any reason. Therefore, in our considered view books refer to under section 68 means, regular books of accounts maintained by an assessee in the ordinary course of business to record its business affairs and also to prepare financial statements for the relevant year. Any other documents, including, loose sheets, dairy, note book and other unconnected documents cannot be considered as books, unless the same is part of books of accounts maintained by the assessee. DCIT Vs. Smt. Manishaben N. MashruITA No.958/RJT/2010 dt.04.01.2018 (Rajkot) (Trib.) The relevant Para 89 & 90 of this decision reads as under:- “89. In the third ground, the Revenue challenges deletion of addition of Rs. 27.00 lakhs by the ld.CIT(A) on account of disallowance of fictitious liability.

was having credit balance of Rs. 8,05,000/-with M/s. Divya Travels, and in the books of the assessee the assessee has shown liability of Rs. 18,95,000/-. The AO held the same to be fictitious liability and taxed accordingly. Assessee challenged this addition before the ld.CIT(A) who deleted the addition on the ground that rough papers found from the premises of wife of the assessee were mere notebooks and diaries and not books of accounts of the assessee. Besides, he observed that wife of the assessee has owned up the noting in the rough diary and taxed accordingly. The ld.CIT(A) has also observed that there is no documents or material evidence with the Revenue to link flow of unrecorded transactions with the assessee. Since there is no contrary material brought before us by the Revenue to convince us to take a different view, we do not find any merit in this ground of appeal

. It is dismissed.” S.P. Goyal Vs. DCIT (2002) 82 ITD 85 (Mum.)(Trib.) In this case the Hon'ble Tribunal held that loose sheet of paper torn out of a diary could not be construed as books for the purpose of section 68 and further held that addition could not be made simply on the basis of certain notings on loose sheets of a diary without any corroborative evidence in the form of extra cash, jewellery or investment outside the books. Thus, addition made u/s 68 is legallynot tenable.

7. It is further submitted section 115BBE is applicable where the total income of an assessee includes any income referred to u/s 68 of the Act. Section 68 is applicable when any sum is found credited in the books of an assessee and the assessee offers no explanation of the source of the same. Thus the pre- condition of applicability of section 68 is that any sum of money must be credited in the books of the assessee. In the present case, AO has made addition of the advance given u/s 68 of the Act which is not applicable and consequently section 11BBE is also not applicable. Further interest received is not of the nature referred to in section 68, 69, 69A, 69B, 69C or 69D. Hence on interest income section 115BBE is not applicable. Therefore, AO be directed to tax the income as per the normal rates applicable to an individual and not u/s 115BBE of the Act.

8. The AO taxed the addition of Rs.10,03,200/- for AY 2017-18 u/s 115BBE @ 60%. It is submitted that substituted section 115BBE by Taxation Laws (Second Amendment Act), 2016 received the assent of President on 15.12.2016.The section is made applicable w.e.f. 01.04.2017. Hon’ble ITAT, Jabalpur Bench in case of ACIT Vs. Sandesh Kumar Jain ITA 41/JAB/2020 order dt. 31.10.2022 at Para 4.2 of the order while interpreting the amendment made in section 115BBE which received the assent of President on 15.12.2016 held as under:- 4.2 As regards the assessee‟s second, without prejudice, argument, i.e., qua nonretrospectivity, we find considerable force therein. Section 1(2) of the Amending Act provides that save as otherwise provided therein, it shall come into force „at once‟. The same only conveys the intent for, except where a later date is specified, the legislation to take immediate effect, i.e., as soon the assent of the Hon'ble President of India is received, by signing the same. The words „at once‟ convey an urgency, so that the same represents the earliest point of time at which the same is to take effect, i.e., 15/12/2016 itself, and which also To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT explains the same being enacted during the course of the fiscal year, tax rates for which stand already clarified at the beginning of the year per the relevant Finance Act (FA, 2016). The said words „at once‟ would loose significance if the provisions of the Act are to, as stated by the ld. CIT(A), be read as effective 01/04/2017, implying AY 2018-19. The same, for substantive amendments, as in the instant case, represents the first day of the assessment year, i.e., AY 2017- 18, which explains the assessee’s grievance of it being thus effective for fy 2016- 17 or, w.e.f. 01/4/2016. Enacting it mid-year and, further, making it applicable „at once‟, becomes meaningless if the same is to take effect retrospectively, or is made effective from a later date (01/4/2017), which could in that case be by Finance Act, 2017. True, the amendment, where so read, does gives rise to a peculiar situation inasmuch as two tax rates would obtain for the current year, i.e., one from 01/04/2016 to 14/12/2016, and another from 15/12/2016 to 31/03/2017, but, then, that is no reason to read retrospectivity where the applicable date is clear and, further, there is nothing to suggest retrospectivity. Further, extraordinary and supervening circumstance of the Demonetization Scheme, 2016, brought out by the Government of India in November, 2016, explains the urgency in bringing an amendment mid-year. Further, the tax rate being in respect of incomes which are imputed with reference to a transaction/s, it is possible to administer the same, another aspect of the matter that stands considered by us. That is, a tax rate for transactions made up to 14/12/2016, and another for those thereafter. Subsequent mention of the applicability of the amended provisions of ss. 271AAB and 271AAC with reference to the date on which the Presidential assent to the Act is received, further corroborates this view, which is based on the clear language of the Amending Act, as well as the principle that a substantive amendment is to be generally prospective. We draw support from the decision in Vatika Township Pvt. Ltd. (supra), reiterating the settled law of the rule against retrospectivity. The tax rate applicable to the impugned income would, therefore, be at 30%, i.e., the rate specified in sec. 115BBE as on 30/11/2016, the date of the surrender of income per statement u/s133A (PB-1, pgs.35-44). This, it may be noted, is also consistent with our view that the income is liable to be assessed u/s. 69B (see para 4.1). In the present case also, out of the addition of Rs.10,03,200/- made by the AO, Rs.6,60,000/- is in respect of loan advanced and Rs.3,43,200/- is on account of interest earned thereon. Out of the loan advanced of Rs.6,60,000/-, an amount of Rs.4,10,000/- was advanced prior to 15.12.2016 and therefore even if it is held that amount is taxable u/s 68 of the Act, tax rate applicable u/s 115BBE would be 30% and not 60%. Further on the interest income section 115BBE is not applicable and the same be directed to taxed under the normal provisions of the Act.”

6.1 To support the various grounds so raised by the ld. AR of the assessee and has relied upon the following evidences in support of the contentions so raised:- To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT S. No. Particulars Pg No. Filed before AO/CIT(A) 1. Copy of submission filed before ld. CIT(A) 1-15 CIT(A) 2. Copy of Index of paper book filed before 16 CIT(A) Ld. CIT(A) 3. Copy of seized diary found from the 17-75 Both residence of joginder Singh Sunda Marked as Exhibit 15 4. Copy of reply dt. 29.11.2019 filed during 76-83 Both the course of assessment proceedings along with summary of Exhibit 15 5. Copy of amended sheet of summary of 84-85 Both Exhibit 15 6.2 The ld. AR of the assessee in addition to the written submission vehemently argued that the assessee has explained all the entries, prepared a working sheet mentioning the date wise chart. Simply certain factual error does not represent that the whole working prepared is incorrect. In the second appellate proceeding the assessee corrected the inadvertent error on the part of the assessee and filed the revised working sheet. On this aspect of the matter the ld. CIT(A) observed that opening balance of loan taken as worked out from the seized diary remain unverified unaccounted and untaxed. The opening cash balance is coming and building up from several years in the past and the yearly amount claimed is not substantial therefore, in human probabilities it could have been spent by the assessee for personal use. Without the due verification through scrutiny assessment during those years the actual figure of opening cash balance cannot be ascertained and To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT verified. Also, as the assessee did not produce the name and address of the parties the identity genuineness and credit worthiness remains unverified the learned assessing officer has also pointed out mismatch in the working of the assessee. Thus, the ld. AR of the assessee submitted that neither the ld. CIT(A) or the ld. DR dispute the working sheet merely the opening balance is remained untaxed the seized document cannot be read in part and it should be considered as whole and the contentions of the revenue and taking the part of the diary is not correct as there is no dispute as to the fact that the diary found in the search belong to the assessee and the noting in the diary is regarding loan given and taken on interest to various parties. Thus, when the assessee has based on that diary has already placed on record that the source of advance given is out of the advance taken. The lower authorities wrongly took the amount of advance given for A. Y. 2013-14 at Rs. 13,67,000 whereas the same should be 11,67,000/-. The decision relied upon by the revenue in the case of Chetan Gupta is on different facts and the same is not applicable to the present facts of the case. Thus, considering the all the aspect of the same diary is considered the total availability of the funds works out to Rs. 62,23,940/- which is more then the advance given for an amount of Rs. 54,17,000/-. Based on these aspect of the matter the addition made is required to be deleted. To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT 7. Per contra, ld. DR submitted that there is no dispute as to the fact that the details of the unaccounted cash loan received and given are found recorded in the seized diary. The claimed opening balance never assessed to tax through the same is claimed by the assessee. These transactions are out of books and had the search could not be conducted this income remained concealed and hidden. The amount of loan claimed to have been available could have been spent by the assessee for various personal expenses, family functions, educations etc. and therefore, the contentions has no merits and thus he supported the finding recorded in the orders of the lower authority. To support the contention that the untaxed credit of opening balance cannot be given he supported the decision cited by the ld. CIT(A) in the case of Chetan Gupta vs. ACIT in ITA 1891 to 1893/Del/2012 dated 21.06.2013

Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Total Cash Loan 3,20,000 13,67,000 1,20,000 5,80,000 11,70,000 6,60,000 12,00,000 54,17,000 Interest earned 48,000 80,700 1,41,600 1,93,200 2,76,800 3,43,200 3,00,000 13,83,500 thereon Total 3,68,000 14,47,700 2,61,600 7,73,200 14,46,800 10,03,200 15,00,000 68,00,500

9. From the said seized diary the ld. AO further made addition of Rs.5,43,000/- in AY 2012-13 to 2015-16 by treating the interest paid on loan received asunexplained expenditure u/s 69C of the Act. In the first appeal the assessee submitted the amended summary sheet of Exhibit 15 (APB 84-85) where the mistakes / observations observed by the ld. AO was corrected. The ld. CIT(A) after considering the submission of To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT assessee at Para 4.8 to 4.13, at page 20-23 of its noted that opening balance of loan taken as worked out from the seized diary remained unverified, unaccounted, and untaxed. He further noted that the opening cash balance is coming and building up from several years in the past and the yearly amount claimed is not substantial, therefore, in human probabilities it could have been spent by the assessee for personal use. Without the due verification through scrutiny assessment during those years, the actual figure of opening cash balance cannot be ascertained and verified. Also, as the assessee did not produce the name & address of the parties, the identity, genuineness & creditworthiness remains unverified. The ld. AO pointed out mismatches in the working of assessee. Based on these observations the ld. CIT(A) relying on the decision of ITAT, Delhi Bench in case of Chetan Gupta Vs. ACIT where since the reassessment for AY 2001-02 was quashed, credit for opening balance for AY 2002-03 was not allowed and the peak credit as worked out by the assessee was held as undisclosed income of that year.Accordingly, the credit of opening balance claimed by the assessee rejected resultantly addition was confirmed for the year under consideration for an amount of Rs. 3,20,000/-. The assessee in ground no. 1 has challenged the denial of credit of opening balance and thereby making an addition of Rs. 3,20,000/-. To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT 10. Apropos to the ground no. 1 the bench noted that there is no dispute as to the fact that the diary found during the search belongs to the assessee and the noting in the diary is regarding the loan taken on interest and loan given on interest to various persons. The ld. AO worked out the addition of Rs. 68,00,500/- in A. Y. 2012-13 to 2018-19 which the ld. CIT(A) has confirmed to the extent of Rs. 65,00,500/-. The related facts as emerges from the order of the lower authorities that the assessee claimed opening balance as on 01.04.2011 for an amount of Rs. 36,11,940/- which the ld. AO based on the observations on the mistake in the working sheet did not believeon the that provided in the assessment proceeding including the claim of the assessee for the opening balance. The transaction recorded in the diary starts from the year 2003 and since that transaction are out of the period for which the notice be served to the assessee, the assessee has jotted all the transaction since beginning and demonstrated that as on 01.04.2011 there exist a balance which is to be considered as opening balance available with the assessee for making the loan for which the addition was made by the ld. AO. For the contention of the opening balance the ld. AO noted that the sole purpose of expressing this balance was to increase the funds during pre-search period and therefore, the same was not accepted by him. As regards the error / mistake pointed out by the ld. AO, the assessee filed the revised working sheet correcting the 31 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT mistake / observations of the ld. AO before the ld. CIT(A). This observations / mistake not affect the claim of the assessee about the opening balance claimed and worked out by the assessee from the said seized material. The bench further noted that as per the working sheet of diary which starts from 05.12.2003 (APB-78) for an amount of Rs. 60,000/- the same was accumulated for an amount of Rs. 35,11,940/- as on 01.04.2011 (APB-81). The bench also noted though the ld. AO noted the mistake of the transaction for the A. Y. 2012-13 to 2018-19 but there is only observation of the ld. AO that the working sheet made by the assessee was with the sole purpose of increasing the funds during pre- search period though the working sheet was prepared based on the same diary and there is no observation in the assessment order about the working which started f from year 2003. The mistake or error observed by the ld. AO has been corrected by the assessee and submitted before the ld. CIT(A) who also not commented on the opening balance but stated that the opening amount is never assessed to tax though the same is claimed by the assessee to be worked out as per the seized diary. Therefore, the opening balance remained unverified and at the same time unaccounted and untaxed. The assessee entered transactions which were kept concealed and hidden and discovered only during the search and seizure. The ld. CIT(A) further noted the claim of the opening cash balance is claimed to be coming and building up from 32 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT several years in the past and the yearly amount claimed could have been spent by the assessee for personal expenses. Merely based these observations the claim of the assessee was rejected by the lower authority. The seized document in the form of diary which is to be interpreted as it is the true recording of facts in the seized records. To this effect the provision of section 292C come to rescue of the assessee. The provision of section 292C reads as under;

Presumption as to assets, books of account, etc. 292C. (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed— (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132.

“5. On the merit of the additions made in the income of the assessee, there is a clear finding and about which there is no dispute that the amount added in the income of the assessee as unexplained investment or cash credit in the assessment year 1993-94 was the same amount which was credited in the books of account of the assessee for the previous year end- ing on March 31, 1992. The Tribunal has categorically come to a finding and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in the business and this amount was shown as a closing capital as on March 31, 1992, and on April 1, 1992, it was an opening balance. Considering this aspect, the Tribunal has come to the conclusion that what was already credited in the books of account ending on March 31, 1992, for the financial year 1991-92 relevant to the assessment year 1992-93 cannot be an unexplained cash credit or investment in the books of account maintained for the financial year 1992-93, the accounting period of which ends on March 31, 1993, so as to warrant its consideration as unexplained investment or cash credit for its relevant assessment year 1993-94.

To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT Respectfully following the judgment of the jurisdictional high court on the same issue and considering the discussion so recorded herein above we direct the ld. AO to consider the opening balance available with the assessee as on 01.04.2011 and give the consequential relief to the assessee in the year under consideration and subsequent year. Based on these observations ground no. 1 raised by the assessee is allowed and the ld. AO is directed to give the credit of the opening balance to the assessee and then reframe the addition if any to be made after considering the opening balance available with the assessee.

“The appellant has not been able to show that the payment has been made out of the explained/taxed funds available in the hands of the appellant. In view of the discussion, this ground of appeal is dismissed.” Against this observation the ld. AR of the submitted a chart prepared wherein he has prepared the year wise opening balance available, along To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT with the advance given/ received interest received and paid and year- end balance. This working clearly shows that the assessee has available balance for making the payment of Rs. 96,000/- and therefore, the addition made is directed to be deleted.

14. Before parting we would like to make it clear that the assessee be allowed to give credit of the opening balance as flowing from the said set of diary and whatever principal amount remained unexplained be checked after that and be sustained and as regards the interest income after giving set off of interest expenditure the net income or any unexplained expenditure remained unexplained from the source of the same diary and the ld. AO is directed to verify the working of net interest to be charged in the respective year.

Based on these observations the appeal of the assessee in stands allowed.

ITA No. 791 To 797/JPR/2023 Sh. Gopal Singh Sunda vs. DCIT is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in for the Assessment Year 2012-13shall apply mutatis mutandis in the case of Shri Gopal Singh Sunda in ITA 792 to 797/JP/2023 for the Assessment Year 2013-14 to 2018-19.

In the result, the seven appeals of the assessee are allowed.

Order pronounced in the open court on 30/05/2024.

Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 30/05/2024 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Sh. Gopal Singh Sunda, Sikar. 1. 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-2, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File to 797/JPR/2023) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत