SYED AHMED ABBAS NAQVI,MUMBAI vs. DCIT CEN CIR 2, MUMBAI

Ground No. 1 relates to an addition in the sum of Rs.3,44,061/-, made with reference to pgs. 52 and 53 of Annexure A1 to the Panchanama dated 06.01.2007, corresponding to pgs. 112 and 113 of the assessee’s paper-book (APB). The issue is a continuing one, and stands discussed at length by the Tribunal vide its order for the 2 6104/M/10 & 7259/M/10, 6129/M/10 (A.Ys. 2006-07 & 2007-08) Syed Ahmed Abbas Naqvi two immediately preceding years (refer paras 2 to 5.4 of the order by the tribunal dated 09.10.2015 (in ITA Nos. 2807 & 2808/Mum/2010)). The facts and circumstances of the case; the material on record, on the basis of which the addition stands made and sustained, as well as the respective cases of the parties, are the same. We, accordingly, for the same reasons as inform the said decision, decide likewise, for which reference may be made to the afore-referred paras of the tribunal’s order dated 09.10.2015 (supra) in the assessee’s own case. There is further no reason to add the total of the accumulated figure of profit separately.

Vide Ground # 2, the assessee impugns the addition for Rs.2,44,000/-, made with reference to pg. 54 of Annexure A1, corresponding to APB pg. 115. The same has already been found to relate to an addition for Rs.3.60 lacs, which is the subject matter of Ground # 3 of the assessee’s appeal for A.Y. 2005-06 (in ITA No. 2808/Mum/2010). That is, the two documents (APB pgs. 115 and 135) have been found by us as being in relation to the same set of payments and receipts (refer paras 9-11 of the captioned order). As such, in principle, the same amount would stand to be sustained, i.e., at Rs.1,15,000/- in aggregate. With regard to the year of assessment, we have already prescribed a manner of allocating the net amount of addition sustained, Rs.1.15 lacs, over the two assessment years, being A.Ys. 2005-06 & 2006- 07, during the relevant previous years of which the transactions have been found to have taken place. Further, without prejudice to the foregoing, if for any reason, the addition for the preceding year is cancelled or reduced, the same, to the extent so, would stand to be sustained for the current year. We state so as the net amount of Rs.1.15 lacs is clearly stated as recoverable on 02.6.2005 by the assessee from his client on account of payments made by him to the contractors, source of which remains unexplained. We decide accordingly, partly allowing the appeal.

Before us, the ld. Authorized Representative (AR) would rely on the books of account, claiming that all the payments are duly reflected in the accounts and, further, that the difference in the dates is only marginal and, further, in most cases due to the difference between the date of cheque/s and that of its encashment. The ld. Departmental Representative (DR), on the other hand, would submit that no books of account were found during search, so that their subsequent production is only an afterthought; the same being compiled only for the purpose of justifying the payments made. There was no reference to the said books at the time of search. The same, could, therefore, not be taken into account.

We have heard the parties, and perused the material on record.

Ground No. 5 of the Appeal relates to an addition for Rs.24.60 lacs referable to pg. 17 of Annexure A-3 (to Panchanama dated 06.01.2007), corresponding to APB pgs. 144. The same reads as under (also refer para 9/pgs. 5-6 of the assessment order): ‘Bharat’s A/c Rs.5 lacs from Aapa Rs.3.8 lacs from Munna Bhai Rs.3.0 lacs from Munna Rs.1.70 lacs from Nirmal D (nadim) Rs.2 lacs from Munna Rs.0.80 from Munna Rs.0.35 from Munna Received Rs.15 lacs on 25.03.2006 Rs.15,000 – (Nari bhai)’ The assessee explained the document, a page of a diary, as pertaining to payments by RDC World Wide (RDC) to one, Mr. Bharat, working as a contractor for it, citing the diary being in the name of RDC in support. The same did not find favour with the Revenue for the same reasons as for other similar additions, viz. Grounds 3 and 4 of this appeal. There was nothing to link the transactions stated therein with 7 6104/M/10 & 7259/M/10, 6129/M/10 (A.Ys. 2006-07 & 2007-08) Syed Ahmed Abbas Naqvi RDC, even as the presumption in law would be of the same belonging to the assessee (s.292C). In fact, the assessee had himself admitted to transactions, noted similarly, under the account head ‘Dimple’ (pg. 54/Annexure A-1; pg. 8/Annexure A-3, at PB pgs. 115 and 135 and pgs. 13 - 15 of Annexure A-3/PB pgs. 140-142), all the pages of Annexure A-3 being the different pages of the same diary. The additions being made and sustained thus, the assessee is in second appeal before us.

Before us, the case of the assessee as well as the Revenue continued to be the same, i.e., as before the authorities below.

We have heard the parties, and perused the material on record. If ‘Munna’ and ‘Munna Bhai’ represent the assessee’s name, as indeed is the admitted position between the assessee and the Revenue, which is also in agreement with the various entries made in the documents found and seized during search, i.e., is borne out of record, then, clearly, the account under reference represents an account as appearing in the books of a third person, and not the assessee. It could perhaps be RDC, for whom the assessee states to be working as a interior designer, on whose behalf the account may be maintained in his diary. The A.O. has in fact not added the entire sum listed therein, but only the sums noted (on the leaf bearing the date 22.01.2005) as from Munna or Munna Bhai, i.e., Rs.9.60 lacs, besides another Rs.15 lacs noted as received on 25.03.2006. The narration ‘from Munna/Munna Bhai’ and ‘received on 25.03.2006’, are inconsistent when both are considered as received from the assessee and added together, as by the Revenue. The entry of Rs. 15 lacs, which, by the manner of its writing, represents a separate category, can only be interpreted as an amount received by RDC (or any other person on whose behalf the account is being maintained) from Bharat, i.e., the person whose account stands maintained. It is worthwhile to note, being oft-stated (by the assessee), that Bharat is a contractor for RDC, and that therefore Bharat may not be a client, as are other persons whose

In the result, the assessee’s appeal for A.Y. 2006-07 (ITA No. 6129/M/2010) is partly allowed. A.Y. 2007-08 (ITA No. 7668/M/10 – Assessee’s appeal & appeal) Assessee’s Appeal

Ground # 1 of the appeal is general, warranting no separate adjudication.

Ground # 2 concerns an addition for Rs.2,41,170/- by the Assessing Officer (A.O.) on account of alleged undisclosed jewellery, confirmed by the ld. CIT(A) at Rs.1,37,500/-. The brief and undisputed facts of the case are that the gold and diamond jewellery, detailed as under, was found from the residence of the assessee during search (refer para 9/pgs. 2-3 of the assessment order):

We have heard the parties, and perused the material on record. The total gold jewellery with the assessee and his wife, i.e., as disclosed to the Revenue, which would include that received by them at the time of marriage or from friends and relatives from time to time, when adjusted for the inflation in the rate of gold over time, works to 205.200 grams (approx.), as against at 196.600 grams found during search (refer pg. 5 of the impugned order). The entire gold jewellery is thus explained. Adjusting the amount surrendered (Rs.3.25 lacs) against the diamond jewellery found (at Rs.4.625 lacs) leaves the balance of Rs.1,37,500/-. There is no dispute with regard to the valuation. The same is, accordingly, confirmed for addition. The Board Instruction No. 1914 is, we may clarify, in respect of seizure and not assessment, which is to be in terms of section 69/69A and, two, is in respect of gold jewellery only. We decide accordingly.

Ground # 3 concerns an addition for Rs.52 lacs, relatable to pages 3 and 3A of Annexure A1 (to Panchanama dated 06.01.2007). The same are reproduced as below for ready and better comprehension of the contents thereof as well as of the nature of the transactions: Page No. 3A of Annexure A1 (APB pg. 61)

We have heard the parties, and perused the material on record. The case of both the parties before us continued to be the same. The language of the document and the manner of its writing is abundantly clear, so that there is no question of the recorded amounts being proposed to be received and paid by the assessee, as stated by him. In fact, the very fact that the payments came to be netted and the net amount worked out, would validate this. Further, the equivalence in Indian rupees (INR); the amount having been received - as clearly stated therein, in foreign exchange, worked out by applying a particular rate, which would only be with reference to a particular date, establishes this. The same, thus, clearly is an account of the sums received and paid over a period of time. At the same time, it is also apparent that what stands received by the assessee from KT, was not on his own account, but for being transmitted to HAK. This is also clear from the balance Rs.1 lac stated to be receivable (from KT) in-as-much as HAK was paid Rs.41 lacs, on a particular account and on/over a particular date/period, as against Rs.40 lacs received on that account/period from KT. No dates have been mentioned, so that the only inference is of both the payments and receipts relating to the same account and period. Further, in the absence of the mention of dates, the amount paid has to be regarded as from that received. This may well may not be true, so that the amount came to be paid by the assessee in the first instance, only to be later

Ground # 5 pertains to an addition for Rs.2,72,635/-, referable to page 37 of Annexure A-1 (APB pg. 97), which reads as under: ‘Dullup Annya Const. 1,42,170/- (1) 47,600/- (2) Paid 1,35,000 Bal. 54,770/- Atria Bal 13,415/- (3) Wadala 56,450/- 13,000/- 69,450/- (4) Paid 50,000/- Bal 19,450/-’ PS: Notations (1) to (4) are by us, to mark the amounts added as the assessee’s income. The same was explained during assessment as being notings of payments to be made to different persons involved in interior work of offices in Dunlop, Atria and Wadala (refer para 13/pgs.8-9 of the assessment order). The assessee was, by own admission, it was noted by the A.O., working on the Dunlop project. The assessee’s explanation was, thus, considered as without basis, and in any case unsupported by evidence. The entire amount of work charged, i.e., as per the noting, aggregating to the impugned sum of Rs.2.73 lacs, was accordingly added. Before the ld. CIT(A), the assessee stated of the amounts being duly reflected in his books of account, producing the same. The ld. CIT(A), however, was of the view that the same were not acceptable in-as-much as no books were produced before the A.O. The accounts were, in any case, unaudited and also did not match with the seized material. The addition being thus confirmed, the assessee is in second appeal.

Vide Ground # 6 the assessee impugns the addition in the sum of Rs.26,47,375/-, made with reference to pg. 50 of Annexure A1 (to Panchanama dated 06.01.2007) placed at APB pg. 110, reproduced as under: “AN ISO 9001-2000 Certified Company (*) 10,15,000 400 2,75,000 100 x 3 4,89,000 18,000 18,61,300 54,000 Wall (outside) 6,00,000 Glass 1,56,000 Mahaver 4,000 Painting 5,000 Slap” (*) already printed, while the other noting is by hand.

We have heard the parties, and perused the material on record. Like submissions were made before us as well. We are unable to see as to why the assessee producing his accounts before the Revenue, it does not examine the same, verifying his claims. The non-audit of accounts, which is certainly an enabling and assisting factor, cannot by itself be a reason for not admitting the assessee’s claim; the satisfaction with regard to the assessee’s explanation, toward which he produces his books, is only of the Revenue, so that it is it’s, and not that of any other (as the Auditor), that would obtain. Further on, when the seized material (APB pg. 110) is only an estimation of the work to be done, as it appears from the cost of various jobs involved being listed in round figures, on a slip pad bearing the logo of, presumably three through different companies, viz. VAS ANZ, Liberty and another, or even as inferable from the mention of it being an ISO Certified Co., one company, where is the question of any error being pointed out with reference thereto. No specific error has, in fact, been stated by the ld. CIT(A), who has, we are afraid to say, not applied his mind to the matter. We are conscious that the assessee may have compiled the books produced only subsequently in-as-much as the same were not found during search, and neither is there any reference thereto thereat, even as observed by us while adjudicating his appeal for A.Y. 2005-06 (also refer para 6 of this order). So, however, when he produces the same before the first appellate authority, who has coterminous powers, with the amounts having been already received through the banking channel, the same would require being examined on merits in-as-much as the burden of proof, so as to satisfactorily explain the transaction/s, is only on the assessee. The books of account, even if maintained in the regular course of business,

Ground # 7 relates to an addition for Rs.1,91,326/-, referable to page 55 of Annexure A1 of the seized material (APB pg. 117). The assessee explained the same as being the detail of the expenditure incurred for the plastering work for different tenants of the Jagdesh Kunj building, incurred by various persons (sub-contractors). The work being supervised by him, the detail of the said payments, which were paid by the tenants to the contractor directly, were retained by him. The notings were not in his hand, and that he had not paid anything to the sub-contractors (refer para 15/pg.9 of the assessment order). The same did not find favour with the A.O. in view of the non-substantiation, as well as section 292C being attracted. Before the ld. CIT(A), the assessee having accepted to having undertaken the civil construction work for the said property, so that there was change in stand again, the same merited rejection at the outset. Aggrieved, the assessee is in second appeal.

We have heard the parties, and perused the material on record. The case of both the parties before us remains the same. We observe no inconsistency in the assessee’s explanation, which though remains to be proved. We have rather observed the assessee to be working through sub-contractors. As long as it is admitted that the project work under reference is in respect of Jagdish Kunj property, work in respect of which was supervised by him, the impugned document is of concern to the assessee, and thus relevant, which is further established by the fact of it being found in his possession. Whether the paper written is in the assessee’s own hand or not, is not material, and may well be written by somebody on his behalf, as by an employee. The 19 6104/M/10 & 7259/M/10, 6129/M/10 (A.Ys. 2006-07 & 2007-08) Syed Ahmed Abbas Naqvi crux of the assessee’s statement is that the payment to different sub-contractors stood made directly by the tenants. If that be so, why does the assessee need to maintain the account? Rather, as is common experience, left to the tenants, some – or perhaps most of them, may not be inclined to, or otherwise reluctant to agree for the work being undertaken or, in any case, pay for it. Even the sub-contractors would not risk such an arrangement as the tenant, with whom they have no privity of contract, may not pay them. It is also quizzical that a number of sub-contractors, and for paltry sums, are involved. It is only the assessee’s accounts, which remain to be verified, which perhaps could provide answer to the various issues arising. The assessee is supervising the project, which includes the work under reference, so that his remuneration or interest, both in its value as well as progress, is only understandable. The matter is clearly factually indeterminate. We, accordingly, restore it back to the file of the ld. CIT(A) for adjudication afresh. The onus, we may clarify, to explain the documents with reference to his books or even otherwise is on the assessee, failing which the Revenue is authorized to draw any inference as admissible on the consideration of and consistent with the overall facts and circumstances of the case. We decide accordingly.

Ground # 8 is in respect of an addition in the sum of Rs.48,41,188/-, referable to pages 1 to 11 of Annexure A-2 (to Panchanama dated 06.01.2007). The same were explained to be notings by one, Suresh Mistry regarding measurement of work to be done and the estimated cost of the work to be done by it, for the Dunlop work. Page 9 thereof, reading as under, is the summary of the various estimations made in the preceding pages, i.e., pgs. 1 to 8, aggregating to the impugned sum: “16,31,000-W.P. & P. Wall 10,50,000-Ext. plaster 2,50,000- comp. Wall 1,50,000 1,60,000 – plumbring

We have heard the parties, and perused the material on record. The arguments before us were a reiteration of their respective cases at the assessment and the first appellate stage. The documents under reference are pages of a note book (Prakash Note Book), placed at pages 120-127 of the APB. The same bear, in great detail, the measurement for different works, viz. terrace water proofing, parapet plastering, entrance double coat, RCC breaking tile, etc. Page 11 (APB pg. 127), similarly, contains the total (Rs.30.43 lacs, though the correct sum is Rs.30.53 lacs), being a summary of different works, each separately valued, which though does not match with that detail in the preceding pages, which stand summarized at page 9 (supra), further bearing the heading ‘As On 26.04.2006’. These pages are at least in 3 to 4 different hands. It is apparent that the same belong to the same set of works carried out by different persons, viz. Suresh, Chand, Mahavir, etc. There is no question of the papers being retained if the work had not been carried out, and did not proceed beyond the quotation stage. The hearing ‘As on 26.04.2006’ further clarifies of the same being the status of the work as on a particular date, i.e., is qua the work undertaken. The assessee, in fact, admits at the appellate stage to the work having been carried out for the Worli office of Dunlop. The case of the assessee and the Revenue being the same as for Grounds # 6 & 7 of this appeal, we only consider it

Ground # 9 is in respect of an addition in the sum of Rs.15,75,000/- made with reference to pages 13-15 of Annexure A-3 of the seized material (corresponding to pages 140-142 of APB). The same relate to the account of Manikji’s (Maniklal M. Shah), the owner of Jagdish Kunj property, for which the assessee had undertaken the construction work. The same forms the subject matter of addition for A.Y. 2006-07 (challenged vide Grounds 3 & 4), which stands in fact adjudicated by us vide para 6 of this Order. Our decision qua the said ground would necessarily be the same, the facts and circumstances as well as the case of the opposite sides being the same, besides being on the same set of materials. We decide accordingly.

Vide his Ground # 10, the assessee impugns an addition in the sum of Rs.19.35 lacs, being in respect of notings found on pg. 16 of Annexure A-3 of the seized material (corresponding to APB pg. 143), reproduced at para 17 (ii)/pg. 12 of the assessment order. The same lists the payments stated due to be received by the assessee from different persons, as under: ‘TO RECEIVE BY ME (ABBAS) Amounts to come 15,00,000 lacs from Bharat Mehta 1,00,000 lacs from Ramesh Kisani 1,00,000 lacs from Venu 1,00,000 lacs from Venu 1,00,000 lacs from Pappu (Jaggu’s brother) 1,25,000 lacs from Jaggu 1,00,000 lacs from Amir Hyderabad 9,50,000 lacs from Manikji (scored out and ticked as received) 6,50,000 lacs from Guruji 2,00,000 lacs from Bharat Mehta (scored out and ticked as received) 1,15,000 lacs from dimple Kisani’ (words italicized are written by us, and not part of the document)

We have heard the parties, and perused the material on record. Our first observation in the matter is that the assessee despite having been allowed adequate opportunity to explain the same, has been unable to furnish any satisfactory explanation with regard to the said amounts, attributing the same, clearly stated as due to him in the seized document, as belonging to RDC on the specious plea that the diary belongs to it, the folder bearing it’s name. The name appearing on the cover of the diary does not indicate that of its’ owner, but of its’ sponsorer in-as-much as the diaries - which is an item of everyday use, are generally printed and distributed to different stakeholders by a business house as advertisement material. The amounts from some of the parties as Bharat Mehta and Manikji, as stated by the A.O., are clearly the assessee’s clients, even as the noting is in the hand of the assessee. We, further, observe that each of the amounts is in round figures. It may well be that these amounts are recoverable by the assessee on account of loan, etc. As he was contemplating investing huge sums in a joint venture with Mr. Nirmal Daftary, having found to have already invested Rs.30 lacs, with further Rs.20 lacs to be invested by 15.01.2005 (refer paras 6 to 8 of the tribunal’s order in dated 09.10.2015), it could well be that he made a statement of the amounts which had 23 6104/M/10 & 7259/M/10, 6129/M/10 (A.Ys. 2006-07 & 2007-08) Syed Ahmed Abbas Naqvi been given by him to, and thus due to him from, different persons. The amounts are noted on the leaf of the diary bearing the date 21.01.2005. The same may not necessarily imply of being with reference to that date; the assessee having been found to have noted dates on the diary pages much subsequent to the page/date on/at which these are noted, viz. APB 140-142, 151, 152, 153, 154 (150-154). The absence of any mention of any date, or otherwise inconsistent therewith, would only imply of the document being current, i.e., as valid as on the date of the search. In the instant case, therefore, the sums stated as due to the assessee would be so on 05.01.2007. We have vide the said order already confirmed the said addition for Rs.30 lacs invested in the joint venture with Mr. Nirmal Daftary. In fact, against some of the amounts, viz. Rs. 2 lacs from Bharat Mehta and Rs.9.50 from Manikji, there appears a tick (✓) above the amount stating the amount to have been received (since). If so, that may well explain the source of the stated investments and, in any case, corroborate the same.

At this stage, we may proceed to discuss Ground 11 of the appeal, which we find as para materia in-as-much as the same also enlist amounts, in this case, to be given by the assessee, i.e., Syed Ahmed Abbas Naqvi. The said ground impugns the addition for Rs.66.50 lacs made with reference to page 18 of the Annexure A-1 of the seized material (APB pg. 145) (also refer para 17(iii)/pg. 13 of the assessment order), reproduced as under: ‘Amount that I have to give (Abbas)

We have heard the parties, and perused the material on record. The stand of both the assessee and the Revenue remains the same. There is, firstly, nothing to link the said document with RDC. Further, while the assessee explains the document as bearing the details of the amounts received by him, it does not anywhere states so, but only that the same are to be disbursed to another set of people, and not to RDC, as the assessee explains. Again the assessee does not state as on what account the different payments are either due to him or are to be paid. Also, where to be received or paid on behalf of the RDC, what is the basis for the said claim and on what account? Needless to add, there is no substantiation or corroboration of its case with reference to RDC, an organization which the assessee admits having left in November/December, 2005. If the amounts had not collected by then, certainly the same would need to be transferred to another, who would then take charge. What, further, are the full names and addresses of the persons stated in the document? The document raises several questions, which rather than being answered, get multiplied by the explanation advanced. Continuing further, we have in Ground # 10 of the instant appeal, encountered sums receivable by the assessee per a document (at APB pg. 143/paras 25-26 of this order), enlisting the same. The same, similarly found, clearly exhibits sums

In the result, the assessee’s appeal for A.Y. 2007-08 ( ) is partly allowed for statistical purposes.

The Revenue’s appeals impugn additions for Rs.84 lacs and Rs.19 lacs for the two consecutive years respectively. Pgs. 1 and 2 of Annexure-1 (of the seized documents) found from the assessee’s residence during search, reflect trading in diamonds, i.e., the purchase of diamonds/diamond jewellery by Kashinath Tapuriah (KT) from Soir Jewellers (SJ), and toward which in fact Chandrika Tapuriah (CT), his wife, had issued a cheque for Rs.1,25,00,000/-, which though was not honored on presentation (stated to be due to paucity of funds). The notings on the said papers, as well as pgs. 3 and 3A of the said Annexure, apparently maintained by the assessee, were also a subject matter of consideration in the case of KT, in whose hands substantive assessments were made for these years (refer APB-14, pgs. 2119-2128, in his case). Clearly, the assessee had received and disbursed funds for and on behalf of Tapuriaji (KT). Though, therefore, substantially assessed in his hands, protective assessments were also made by the Revenue, i.e., to protect its’ interest, in the hands of the assessee in-as-much as the assessments in the case of KT were liable to be contested in appeal. The ld. CIT(A), in appeal, deleted the additions for both the years on the ground of his having confirmed the additions, on substantive basis, in the hands of KT. Aggrieved, the Revenue is in further appeal.

We have heard the parties, and perused the material on record. The addition in the hands of KT stands made on the basis of these very papers, and being found in the course of search, the statutory presumption of section 292C would apply thereto. Our first observation in the matter is that the said addition/s, in the hands of KT, since upheld by us (in to 3821/Mum/2010), are at Rs.53 lacs and Rs.54 lacs for A.Ys. 2006-07 and 2007-08, respectively, i.e., the additions made relying on the said set of papers do not match. We, however, observe no dispute with regard to the quantum. In our view, the assessee’s case, rather than being impugned, is saved by the 27 6104/M/10 & 7259/M/10, 6129/M/10 (A.Ys. 2006-07 & 2007-08) Syed Ahmed Abbas Naqvi provisions of sections 132(4) and 292C of the Act. In fact, corroborating documents were also found from the residence of KT. The Tribunal, on examining the facts found the documents found in search from the respective residences; the statements by the assessee, as well as the copy of account (of KT) in the books of SJ, to clearly exhibit the facts, i.e., of the amount/s being paid by KT toward the purchase of diamonds, and which could not be considered as merely a proposal, as stated by KT. The assessee is clearly an intermediary. He may have charged some amount for his services, or may be even helping a friend or a close friend. That though is the case of neither party. The fact of the matter, however, remains that the amounts, as listed in the seized documents, were paid and received by the assessee not on his own account, as duly reflected in the seized documents, but for and on behalf of the Tapuriaji (KT). The right of the Revenue to frame a protective assessment/s is not in doubt, and is well established, even as clarified by the Apex Court as far as back in Lalji Haridas vs. ITO [1961] 43 ITR 387 (SC). The same, however, would only be where there is some genuine doubt, considering the facts and/or the law in the matter, as to the right person in whose hands the income under reference is to be assessed, so that the Revenue, pursuing the person who may not be found subsequently to the right person, may not loose its rightful share of taxes. As clarified above, we find no such doubt in the instant case. We accordingly find no basis for the impugned assessment and, accordingly, no basis for impugning the same. We accordingly decline interference, dismissing the Revenue’s appeals.