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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI N.K. BILLAIYA & SHRI SANJAY GARG
आदेश / O R D E R
PER N.K. BILLAIYA, AM:
These captioned appeals were heard together as they relate to the same set of facts in issues and are therefore decided by this common order for the sake of convenience and brevity.
We will first take up which is an appeal by the Revenue against the order of the Ld. CIT(A)-39 dated 9.9.2010 pertaining to A.Y. 2005-06.
The impugned assessee is a partnership firm. A search was conducted on 8.5.2007 at the residential/business premises of one Mr. Rohira who happens to be a partner in the assessee firm. During
3 8552/M/10 ITA No. 4022/M/14 & 507/M/2011 the course of search at the premises of Mr. Laxmichand Rohira, some loose papers were found. On analysis of these loose papers, the Assessing Officer was of the opinion that the cash payment of Rs. 3,44,02,000/- was made for acquisition of shops by the partnership firm. The AO was also of the opinion that the entire cash payments have been made out of books. On the basis of the entries found in the loose papers, the AO formed a belief that 36% has been paid by Shri Ghanshyam Bodani, 24% share by Umesh Israni and 40% share by Shri Laxmichand Rohira. To safeguard the interest of the Revenue, the AO proceeded by making a protective addition of Rs. 3,44,02,000/-. The protective assessment was made u/s. 143(3) of the Act r.w. Section 153A vide order dated 23.12.2009.
Aggrieved, the assessee carried the matter before the Ld. CIT(A). It was vehemently argued before the Ld. CIT(A) that the loose papers have no connection with the assessee. The loose papers referred to purchase of 4 shops for the firm by the partners. The Ld. CIT(A) was convinced that there is clear evidence to show that the unaccounted funds came from the partners and not from the firm. The Ld. CIT(A) therefore directed the AO to delete the protective addition made in the hands of the partnership firm.
Aggrieved by this, Revenue is before us.
Having heard the rival contentions and after perusal of the orders of the authorities below as mentioned elsewhere, the addition have been made on protective basis to safeguard the interest of the Revenue. The Ld. CIT(A) found that the additions cannot be made in the hands of the partnership firm and therefore the additions were 4 8552/M/10 ITA No. 4022/M/14 & 507/M/2011 deleted. We do not find any reason to interfere with the findings of the Ld. CIT(A). The appeal filed by the Revenue is accordingly dismissed.
are the appeals by the assessee against two separate orders of the Ld. CIT(A)-39 Mumbai dated 9.9.2010 pertaining to two different assessees viz., Mr. Ghanshyam L. Bodani & Shri Umesh I. Ishrani for A.Y. 2005-06. As mentioned in the order in the case of the partnership in the Ld. CIT(A) has deleted the protective addition from the hands of the partnership firm. Therefore, the additions made in the hands of the partner became substantive addition.
Mr. Ghanshyam L. Bodani & Shri Umesh I. Ishrani happened to be partners in the firm M/s. Satnam Sakhi Associates. Hence, the impugned additions deleted from the hands of the partnership firm became substantive additions in the hands of these partners. As per the facts mentioned in a search was conducted on 8.5.2007 at the residential /business premises of Shri Laxmichand Rohira who also happens to be a partner alongwith these two partners in the firm M/s. Satnam Sakhi Associates.
Before going into the factual matrix of the cases in hand, it would be pertinent to understand the provisions of Sec. 132(4A) and 292(C) of the Act. The provisions read as under:
Sec. 132 (4A) “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,it may be presumed--
5 8552/M/10 ITA No. 4022/M/14 & 507/M/2011 (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.”
Sec. 292(C)
(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, 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 6 8552/M/10 ITA No. 4022/M/14 & 507/M/2011 control of that person in the course of a search under section 132.”
A perusal of the aforesaid section clearly show that these provisions are applicable in respect of anything found in the possession or control of any person in the course of a search. The undisputed fact is that the search was conducted at the premises of Shri Laxmichand Rohira and not at the premises of Mr. Ghanshyam L. Bodani & Shri Umesh I. Ishrani. The scanned copy of the relevant loose paper used against the assessees by the AO is attached as Annexure-I
The entire addition has been made on the analysis of the loose paper as exhibited at page-34 of the Paper Book is attached as Annexure-II
On the analysis of the aforementioned papers, the AO came to the conclusion that cash payment amounting to Rs. 3,44,02,000/- have been made out of which 24% share is of Shri Umesh I. Ishrani and his family, 36% is of Mr. Ghanshyam L. Bodani and his family and the balance of 40% is of Shri Laxmichand Rohira and his family. Accordingly, the AO made addition of Rs. 82,56,480/- being 24% of Rs. 3,44,02,000/- in the hands of Shri Umesh I. Ishrani and Rs. 1,23,84,720/- in the hands of Mr. Ghanshyam L. Bodani being 36% of Rs. 3,44,02,000/-.
12.1. When these loose papers were confronted to the assessee during the course of the assessment proceedings, the assessee completely denied of having any knowledge in respect of these loose papers. It was strongly contended that since these papers were not
We have given a thoughtful consideration to the impugned seized materials relied upon by the AO. The relevant documents have been exhibited elsewhere. A perusal of these documents shows that the entries made in these papers nowhere mentioned that they are payments made by some person, it can be vice versa also. Meaning thereby these entries may reflect the receipt of money.
The Hon’ble Jurisdictional High Court in the case of Miss Lata Mangeshkar 97 ITR 696 has held that some entries in the accounts regarding payments was not sufficient as there was no guarantee that the entries were genuine. The entire addition have been made on the basis of the entries found in loose sheets being alleged payment on account of shop purchased from one M/s. Everest Developer. Surprisingly and for the reasons best known to the Revenue authorities, no enquiries have been made from M/s. Everest Developer. There is not even a whisper of any reference to any enquiry/verification from the seller of the shops and that is M/s. Everest Developer. Thus, it can be safely concluded that the entries found in the loose sheet have not been corroborated by the Revenue by any cogent material evidence on record. On identical set of facts, it would not be out of place to refer to the decision of the Tribunal, Delhi Bench in the case of Amarjit Singh Baskhi HUF Vs ACIT 263 8ITR 75 (Del.)(Trib.)™ wherein the majority view held as under :
“ Held, per R.M. Mehta (Vice President) and R.K. Gupta (Judicial Member) (Sikander Khan (Accountant Member) (dissenting) that the provisions of the Indian Evidence Act are not strictly applicable to the proceedings under the Income-tax Act, 8 8552/M/10 ITA No. 4022/M/14 & 507/M/2011 but the broad principles of the law of evidence apply to such proceedings. Further an entry in the books of account maintained in the regular course of business is relevant for purposes of considering the nature and impact of a transaction, but notings on slips of paper or loose sheets of paper cannot fall in this category. Notings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person, who admittedly is a party to the notings. A further distinction had to be drawn between slips of paper or loose sheets found from the possession of the assessee and similar documents found from a third person. In case the statement of the third person is recorded with reference to the notings, then such a statement undoubtedly has to be confronted to the assessee and he is to be allowed an opportunity of cross-examination. In the present reference the document in question had not been found from the assessee’s possession, but from the possession of A and undoubtedly no opportunity of cross examination had been allowed to the assessee and it had clearly emerged from the record that the testimony of A was not credible at all since in three separate statements he had indicated different figures, his secretary, G, had given yet another figure and in proceedings before the two different courts at Delhi and Dhanbad, he had given a different picture altogether and, lastly, in his income-tax assessment he had retracted from all his earlier statements and had categorically stated that the document which had been signed both by him and by the assessee contained only projections and purported figures in respect of the property in question. In other words, the entire addition in the hands of the assessee was based on the document found, but there was no evidence to support the Revenue’s case that a huge figure whatever be its quantum over and above the figure booked in the records and accounts changed hands between the parties. No addition could therefore be made to the income of the assessee.”
Considering the peculiar facts of the case that the impugned loose papers were found from the premises of a third party, in our considered opinion, the additions made in the hands of the assessees without bringing any corroborative evidence on record and without there being any enquiry from the seller M/s. Everest Developers, the additions made cannot be sustained as the Revenue has grossly failed in discharging the onus cast upon it for the simple reason that the presumption raised vide provisions of Sec. 132(4A) and 292(C) of the Act do not apply in the case of the assessee . We, therefore, do not find any force in the additions made by the AO and confirmed by the 9 8552/M/10 ITA No. 4022/M/14 & 507/M/2011 Ld. CIT(A) in the light of the decision of the Hon’ble Jurisdictional High Court in the case of Miss Lata Mangeshkar (supra). We, therefore, set aside the findings of the Ld. CIT(A) and direct the AO to delete the impugned additions from the hands of the assessee.
In the result, both the appeals are allowed.
The appeal relates to the levy of penalty by the AO u/s. 271(1)(c) of the Act which was confirmed by the Ld. CIT(A). The penalty has been levied for the additions made in the quantum proceedings in respect of the share in the alleged purchase of shops.
Vide order of even date in (supra), we have deleted the quantum addition. As the foundation have been removed, super structure will fall. We, accordingly set aside the order of the Ld. CIT(A) and direct the AO to delete the penalty. The appeal filed by the assessee is allowed.
In the result, the appeals filed by the assessee are allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 14th October, 2015