Income Tax Appellate Tribunal - Panji
Aruna Sankhla, Jaipur vs Dcit, Jaipur on 1 December, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES , JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM
vk;dj vihy la-@ITA No. 484/JP/2016
fu/kZkj.k o"kZ@Assessment Year: 2009-10
Smt. Aruna Sankhla cuke The DCIT
A-3, Moti Lal Atal Road, Jaipur Vs. Central Circle - 1, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGBPS 3591 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by: Shri Rajeev Sogani, CA
jktLo dh vksj ls@ Revenue by:Shri Varinder Mehta, CIT - DR
lquokbZ dh rkjh[k@ Date of Hearing : 07/09/2017
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 1 /12/2017
vkns'k@ ORDER
PER BHAGCHAND, AM
The assessee has filed an appeal against the order of the ld.
CIT(A)-4, Jaipur dated 30-03-2016 for the Assessment Year 2005-06 raising following grounds.
''1. In the facts and circumstances of the case and in law the search proceedings conducted u/s 132 is patently illegal and consequently the assessment made u/s 153A is illegal, without any basis and beyond scope. Relief may please be granted by holding the search proceedings illegal and consequently quashing the assessment proceeding u/s 153A being void and ab inito.
ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur
2. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the addition of Rs. 13,00,000/- u/s 69B of the I.T. Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the case of the assessee. Relief may please be granted by deleting the said addition of Rs. 6,12,500/-
3. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming undisclosed income from other sources amounting to Rs. 34,500/-
4. The ld. CIT(A) has erred in upholding the addition of Rs. 1,38,00,000/-u/s 68 of the I.T. Act, 1961.'' 2.1 During the course of hearing, the ld.AR of the assessee has not pressed the Ground No. 1.Hence, the same is dismissed being not pressed.
3.1 Apropos Ground No. 2 and 3 of the assessee, the facts as emerges from the order of the ld. CIT(A) is as under:-
''3.3.2 I have duly considered the assessee's submission and also carefully gone through the assessment order.I have taken a note of the factual matrix of the case as well as case laws relied upon. In this case AO has made the addition on account of undisclosed investment amounting to Rs. 13 lacs made through the finance broker Sh Manish Tambi and interest thereof of Rs. 34,500/-. AO has made a detailed discussion in this regard in para 43 to 53 pg 13 to 15 of the assessment order and also relied on decision of Hon'ble Court in case of Sumati Dayal & Durga Prasad More (Supra). Sh Manish Tambi was also covered in search operation conducted against the Sh Mahaveer Singh Sankhla Group and incriminating documents(namely Annexure A-1 & A-4) seized from Sh Tambi's premise contain names of Sh Vishnu Maharwal, Smt Aruna Sankhla & M/s. Kamakshi International. Sh Manish Tambi being a finance broker, arranges finance both in cheque and cash. Late Sh Bimal Kr Jain was also covered under search action conducted against this group and during the search operation on the basis of entries made in seized documents found from the premises of Sh Manish Tambi had made a disclosure of undisclosed investment of Rs. 68 lacs in cash arranged through Sh Manish Tambi and also earned interest on the said undisclosed investment. In view of these facts and circumstances evidences, AO has observed that Smt. Aruna Sankhla whose name appearing in seized material Annexure A-1 to A-4, seized from the residential cum business premises of Sh Manish Tambi 2 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur has made an undisclosed investment of Rs. 13 lacs through Sh Manish Tambi and earned interest of Rs. 34,500/- for the intervening period.
It is also fact that before forming this opinion, AO has also examined Sh Vishnu Maharwal u/s 131 of the Act, where, Sh Vishnu Maharwal in the sworn statement recorded on oath u/s 131 of the Act on 20.12.2011 has denied having any transactions made with or arranged through to Sh Manish Tambi. The relevant extract of his sworn statement is reproduced here as under:
^^---------iz0 6 eS vkidks Jh euh"k rkEch dh iqLrdksa ds vk/kkj ij rS;kj vkids [kkrs dh udy tks fd fnukad 01-01-2009ls 30-06-2009 ls lEcfU/kr gS] fn[kk jgk gwWA bl [kkrs esa vkidk ,oa EkS0 dkek{kh bUVjus'kuy }kjk fd;sa x, udn ysu nsu dk C;kSjk gSA d`i;k bl Øe esa vkidk D;k dguk gS \ mRrj esjk bl izdkj dk dksbZ udn ysu nsUk ugha gqvk gS vkSj esjh tkudkjh esa Hkh ugha gSA-------
Further, Sh O. P. Vyas AR of the assessee has also drawn my attention towards Hon'ble ITAT Jaipur decision in ITA No. 736, & 737/2007-08, 2009-10 & 2010-11 in case of Sh Manish Tambi where Hon'ble ITAT has directed the AO to tax only commission income in the hands of Sh Manish Tambi, relevant extract of which is reproduced as under:
"...................................................................................................... .............
736/JP/2013-AY 2007-08
4.1 This appeal of the assessee is directed against the order of the Ld. CIT(A) dated 14-08-2012 for the AY 2009-10 wherein following grounds have been raised.
1. That under the facts and circumstances the Ld. AO has erred in completing the assessment on the basis of deaf, dumb and rough noting which nothing more than rough papers are.
2. The order passed by the Ld. AO u/s 153A/143(3) is void ab-initio deserves to be quashed.
3. Under the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the addition of Rs. 3,21,31,893/- as income on the basis of peak creditors calculated by them ignoring the submissions of the assessee and without considering the contention of the assessee against declared peak of Rs. 52,40,137/- which was calculated on more scientific basis.
4. Under the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the addition of Rs. 32,42,597/- as own unexplained cash/capital 3 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur employed in debtors after addition of Rs. 3,21,31,893/- which amount to double addition and without considering the surrender of Rs. 52,40,137/- by the assessee.
5. Under the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming the addition of Rs. 1,24,77,126/- on account of interest income which is not the real income of the assessee and was calculated.
6. The assessee prays your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing.
5.1 During the course of hearing, the Ld. AR has not pressed the Ground No. 1 and 2. Hence, the same are dismissed being not pressed.
6.1 The Ground No. 6 of the assessee is general in nature which does not require any adjudication.
7.1 The ground Nos. 3 and 4 are in connection with one issue only. The facts apropos to this issue are that during search certain loose papers were found and seized from the assessee. These papers contain debit and credit entries for which the assessee has got no explanation. As per the assessee, only peak credit theory is applicable in such cases. According to the assessee, the entries should be so arranged in serial order that a credit following a debit entry should be treated as referable to the latter to the extent possible and that not the aggregate but only the 'peak' of the credit should be treated as unexplained. The AO has calculated the peak amount and has made the impugned addition. The defence of the assessee is that the peak computed by the AO is not correct. The seized papers marked as Annexure A-1 to A-4 is mentioned in para 5 by the AO in his assessment order, containing transaction of cash relating to finance business. The entries did not contain the addresses of the creditors or the debtors. The assessee was not in a position to explain and furnish the source and evidence of entries or address thereof. The assessee offered all the credit and debit entries pertaining to him individually and agreed to pay tax on the peak amount of these transaction. As per the AO, the peak figure comes to Rs. 3,21,31,593/- whereas as per the assessee the peak amount of capital employed comes to Rs. 52,40,137/- and it is only this amount which is required to be considered as peak amount. However, both the authorities below rejected the assessee's appeal.
7.2.................................................................................................................................... ...............................
4 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 7.3.................................................................................................................................... ...............................
7.4 After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot 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 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.
5 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 8.1 The next ground No. 5 which pertains to confirmation of addition of Rs. 1,24,77,126/- made on account of interest income which is not the real income of the assessee.
8.2.................................................................................................................................... ..............
8.3 After considering the rival submissions and on perusal of the materials available on record, we have found that the AO has failed to cause enquiry in respect of these parties,. In our considered opinion, the AO has wrongly considered the entire credits and interest entries in the hands of the assessee. Accordingly, we are in agreement with the submission of the Ld. AR and order to delete the addition of Rs. 1,24,77,126/- added on account of notional interest. Thus the Ground No. 5 of the assessee is allowed.
In the result, the appeal of the assessee is partly allowed. ................................................................................................................................. .................."
On careful perusal of the aforementioned judgment, it is seen that Hon'ble ITAT Bench Jaipur has not treated the seized document as a "dumb document " and asked the AO to tax only commission income in the hands of Sh Manish Tambi but no where Hon'ble ITAT has mentioned that transactions in the hands of persons whose names are appearing in the seized documents cannot be taxed. In fact in pg 16 para 7.4 Hon'ble ITAT Bench Jaipur has also mentioned that when once peak amount is added then no separate addition is required because AO had added over and above peak credit. Accordingly, the case of Manish Tambi will be actually in favour of the assessee.
It is also a fact that assessee has not controverted AO's findings given in the assessment order. In view of facts and circumstances of the case and duly considering the Principle of Human Probability as explained by Hon'ble Apex Court in case of Sumati Dayal & Durga Prasad More(Supra), and also duly considering circumstantial evidences of the case, both the additions made on a/c of undisclosed investment of Rs 13,00,000/= and interest earned thereof of Rs. 34,500/= for the intervening period are hereby confirmed.
Assessee's appeal in Grs no 3 & 5 fail.'' 6 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 3.2 During the course of hearing, the ld.AR of the assessee prayed for deletion of addition confirmed by the ld. CIT(A) for which following written submission has been filed.
''3. SUBMISSIONS 3.1 The entire addition by the ld. AO and its confirmation by the ld. CIT(A) is based on a presumption that whatever was written the name of Smt. Aruna Sankhla in the documents seized from Shri Manish Tambi, was of the present appellant Smt. Aruna Sankhla. However, following have been ignored by the lower authorities and therefore this conclusion is not tenable in law:-
3.1.1 Whatever transactions, Smt. Aruna Sankhla or that matter M/s Kamakshi International (sister concern), had with the finance broker Shri Manish Tambi were through banking channel.
3.1.2 M/s Kamakshi International had also borrowed funds through Shri Manish Tambi by way of banking channel. It is strange that one group concern is borrowing while the family member of same group is allegedly advancing.
3.1.3 Premises of Smt. Aruna Sankhla was also searched and no documents of her advancing the money through Shri Manish Tambi were found or seized from her premises. It is a normal practice that if money is lent, the accepted hundi of borrower, duly signed by the borrower, is kept by the lender. Such document was neither found from the premises of Shri Manish Tambi nor from the premises of Smt. Aruna Sankhla. Without such document the money cannot be recovered and, therefore, its existence is a pre condition for making any addition.
3.1.4 Shri Manish Tambi had not admitted that this transaction belong to Smt. Aruna Sankhla (Para 53 pg 15 AO order). It is quite possible that Shri Manish Tambi circulated his own black money in the name of Smt. Aruna Sankhla. Such is a normal practice with finance brokers. Ld. Assessing officer also had this possibility in his mind and, therefore, he added the said sum protectively in the hands of Shri Manish Tambi.
3.1.5 Neither the seized documents were made available nor cross examination of Shri Manish Tambi was allowed.
3.1.6 Ld. CIT(A), at page 31 & 32 of his order, has reproduced the relevant portion of the statements of Shri Vishnu Meharwal recorded u/s 131 on 20-12-11 where in the said Shri Vishnu Meharwal had denied any cash transactions of himself or M/s Kamakshi International with Shri Manish Tambi.7 ITA No. 484/JP/2016
Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 3.2 Ld. CIT(A) has misplaced his reliance on the decision of Hon'ble ITAT Jaipur Bench in the case of Shri Manish Tambi (although at page 34 of his order ld. CIT(A) has mentioned that the order of Shri Manish Tambi is actually in favor of the assessee). Ld. CIT(A) has wrongly held that Hon'ble ITAT Bench, Jaipur has not treated the seized document as a "dumb document". It is submitted that, Ground No. 1 of the assessee's appeal appearing at the Page 6 of the order of Hon'ble ITAT, was not pressed as appearing at para 5.1 at page 7 of the order of Hon'ble ITAT. Thus, the issue of document being deaf & dumb was not adjudicated and ld. CIT(A) is wrong in drawing any inference in this regard. Moreover, Hon'ble ITAT deleted the additions in the hands of Shri Manish Tambi for the technical reasons (page 16 of the order of Hon'ble ITAT) that loose papers cannot be termed as Books, therefore, no addition with reference to loose papers can be made u/s 68 of the Income Tax Act, 1961.
3.3 Ld. AO at para 47 pg 14 of his order has mentioned that some persons whose names were appearing in the documents have owned the said money. However, ld. AO has not mentioned the names of the persons appearing in the documents but who did not own up the money. Merely owning by some persons cannot make the entire contents of the diary to be correct. Reliance is placed on the judicial pronouncement of the Hon'ble Supreme Court in the case of C.B.I v. V.C. Shukla 1998 (3) SCC 410, wherein it has been held that meaning of accounts book would not be diary. The extract has been set out for the sake of your convenience.
"In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words:
" An account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to."
From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second park speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed.
8 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 'Book' ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed:-
" In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book............................... ................................I think the term "book" in S. 34aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S. 34."
We must observe that the aforesaid approach is in accord with good reasoning and we are in full agreement with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91).
........ Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under Section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'.
........ In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate an 9 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts."
3.4 Hon'ble Supreme Court in the recent case of Common Cause (A Registered Society) vs. Union of India [2017] 77 taxmann.com 245 (SC), has also relied on the ratio laid down in the case of V.C. Shukla (supra) and has held as under:-
"16. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla's case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also. This Court has considered the entries in Jain Hawala diaries, note books and file containing loose sheets of papers not in the form of "Books of Accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible.
17. It has further been laid down in V.C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability.
...... The materials in question are not only irrelevant but are also legally inadmissible under Section 34 of the Evidence Act, more so with respect to third parties and considering the explanation which have been made by the Birla Group and Sahara Group, we are of the opinion that it would not be legally justified, safe, just and proper to direct investigation, keeping in view principles laid down in the cases of Bhajan Lal and V.C. Shukla (supra)."
3.5 Presumption, however strong, cannot partake the character of evidence. 3.6 In respect of additions u/s 69, there is heavy burden on the revenue to establish that the money belonged assessee, which burden is not discharged by the department while making this addition.
In view of the above submissions, additions of Rs. 13,00,000 made by ld. AO and confirmed by ld. CIT(A), as unexplained investments and interest thereon of Rs. 34,500, may please be deleted.'' 10 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 3.3 On the other hand, the ld. DR supported the order of the ld. CIT(A) on the issue in question.
3.4 We have heard the rival contentions and perused the materials available on record. It is pertinent to mention that similar issue in the case of M/s. Kamakshi International vs DCIT (ITA No.327/JP/2017) has been decided against the assessee by observing as under:-
''2.4 We have heard the rival contentions and perused the materials available on record. Brief facts of the case are that a Search u/s 132 of the Act was conducted at business cum residential premises, C-33, Sikar House, Outside Chandpole Gate, Jaipur of Shri Manish Tambi and his family members on 23-7-2009. Shri Manish Tambi and his family members are engaged in the field of finance as broker. During the course of search proceedings, books of accounts of Shri Manish Tambi were found and seized wherein cash transactions were reflecting. In this case, it is noted that the AO made the addition of Rs. 5,79,335/- u/s 69C of the Act in the hands of the assessee firm on the basis of a ledger, seized from the possession of Shri Manish Tambi. In first appeal, the ld. CIT(A) has confirmed the action of the AO. It is further noted that the issue in question is covered by the decision dated 07-03-2014 of ITAT Coordinate, Jaipur Bench in ITA No.737/JP/013 for the Assessment Year 2010-11. The relevant observation of the Hon'ble Bench is as under:-
7.4 After considering the rival submissions and the materials available on record, we are of the considered opinion that the seized papers cannot 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 11 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 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 A.O. 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 A.O. is not correct, otherwise also, when once peak amount has been added then no separate addition is required. It seems that the A.O. 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 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.'' In view of the above facts, circumstances of the case and also the order of the Hon'ble ITAT Jaipur Bench (supra), we find no reason to interfere with the order of the ld. CIT(A) on the issue in question. Thus the solitary ground of the assessee is dismissed.'' Taking into consideration the decision in the case of M/s. Kamakshi International vs DCIT (supra), we find no reason to interfere with the order of the ld. CIT(A). Thus Ground No. 2 and 3 of the assessee are dismissed.
4.1 The Ground No. Ground No. 4 of the assessee is regarding upholding the addition of Rs. 1.38 crores u/s 68 of the Act by the ld.
12 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur CIT(A). The facts as emerges from the order of the ld. CIT(A) are as under:-
''3.2.2 I have duly considered the assessee's submission and also carefully gone through the assessment order. I have taken a note of factual matrix of the case as well as applicable case laws relied upon. Assessee has shown advance cash receipts amounting to Rs. 1.38 Crores on account of advance against sale of Khatwara Agricultural land Jaipur. The cash payments of Rs. 65 Lakhs purported to have been made to the assessee by M/s. Ravik Finance & Investment Pvt Ltd , Mumbai and Rs. 73 Lakhs by M/s Murti Real Estate Pvt Ltd Navi Mumbai during the year consideration. AO treated it as bogus transactions and gave his detail reasoning in para 18 to 33 pg 7 to 11 of the assessment order. The relevant findings of the AO are summarized as under:
a) The transactions were made in cash. The reason for making such a huge transactions was not very convincing.
b) A survey operation was conducted on 23.07.2009 to verify the genuineness of the concerns at the given address and in the survey operation, M/s. Ravik Finance & Investment Pvt Ltd, Mumbai and M/s Murti Real Estate Pvt Ltd Navi Mumbaiwere found to be non -existent on the given addresses.
c) ACB, Govt. Of Rajasthan, Jaipur has also conducted similar enquiries against those concerns and found them non-existent which further proves the finding of the AO.
d) Assessee said to have entered to the agreement with the new director Suresh Navsare, who was not a director of M/s. Ravik Finance & Investment Pvt Ltd, Mumbai on 02.01.2009 and sh Ashish Verma was also not a director of M/s Murti Real Estate Pvt Ltd Navi Mumbai, meaning therebyi.e., the date of said agreement of sale /on the date of transaction. Meaning thereby on the date, he was not in a capacity to enter into such an agreement of sale.
e) On the date of agreement Sh Nayan Arvind Shah was Director of M/s. Murti Real Estate Pvt.
Ltd. who has confirmed that no such transactions were performed by the assessee. Similarly, Sh Ravi Kewlani who was director of M/s Ravik Finance & Investment Pvt Ltd has also denied to have entered such agreement with the assessee
f) On the date of agreement both the concerns namely, M/s Murti Real Estate Pvt Ltd Navi Mumbai and M/s. Ravik Finance & Investment Pvt Ltd, Mumbai were not having sufficient cash balance so as to advance Rs. 73 lakhs& 65 Lakhs respectively to the assessee.
g) On perusal of agreement dt 02.01.2009, AO has noticed that while notifying the document, the notary has simply put a stamp "ATTESTED" and "NOTARY, JAIPUR(RAJASTHAN)" and no registered no. of the notary is appearing on the agreement which raises serious doubt about genuineness and authenticity of this legal document.
13 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur Assessee during the appellate proceeding has not controverted AO's aforementioned findings. In view of these facts and circumstances of the case as discussed above, addition made by the AO of Rs. 1,38,00,000 on account of unexplained cash is hereby sustained. Assessee's appeal in Gr No. 2 fails.'' 4.2 During the course of hearing, the ld.AR of the assessee prayed for deletion of addition sustained by the ld. CIT(A) amounting to Rs. 1.38 crores u/s 68 of the Act for which the ld.AR of the assessee filed the following written submission.
''3. SUBMISSIONS 3.1 Our submissions before ld. CIT(A), reproduced by him at pages 18 to 27 of his order, may please be considered in correct perspective.
3.2 The findings of ld. CIT(A) are contrary to law and facts as submitted below:-
(a) "The transactions were made in cash. The reason for making such a huge transactions was not very convincing."
There is no prohibition under the law to receive cash as advance towards agreement to sell. The said cash was duly recorded in the cash book of the appellant [PB 18-23]. The transaction was duly supported by valid agreement between the parties which was found and seized during the course of search. Merely, because the transaction was in cash, the same cannot be doubted.
(b) "A survey operation was conducted on 23.07.2009 to verify the genuineness of the concerns at the given address and in the survey operation, M/s. Ravik Finance & Investment Pvt. Ltd, Mumbai and M/s Murti Real Estate Pvt. Ltd. Navi Mumbai were found to be non-existent on the given address."
The buyer companies were incorporated under the provisions of Companies Act, 1956. This fact is not doubted. No evidence was brought on record by the department in support of its allegation that the companies were not existent on the given addresses. Without prejudice to this, it is submitted that the Companies Act, 1956 allows companies to change their registered office. However, on any given point of time, exact address of any company can be ascertained from the office of Registrar of Companies. No such efforts have been made except making unsubstantiated allegations.
(c) "ACB, Govt. Of Rajasthan, Jaipur has also conducted similar enquiries against those concerns and found them non-existent which further proves the finding of AO." Lower authorities have referred and relied on the enquiries conducted by ACB, Government of Rajasthan. However, no such report of ACB was made available to the assessee at any stage so as to give her opportunity to rebut the same.
(d) "Assessee said to have entered to the agreement with the new director Suresh Navsare, who was not a director of M/s. Ravik Finance & Investment Pvt. Ltd, Mumbai on 02.01.2009 and Shri Ashish Verma was also not a director of M/s Murti Real Estate Pvt. Ltd Navi Mumbai, meaning thereby i.e., the date of said agreement of sale/on the date of transaction. Meaning thereby on the date, he was not in a capacity to enter into such an agreement of sale."
The agreements entered into by the persons are alleged by the lower authorities to be not directors on the dates of entering into the agreements. However, companies have not refuted the agreement. No evidence has 14 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur been brought on record in support of the allegation that these persons were not directors of these respective companies on the dates of agreement. However, these persons were, otherwise, directors of these companies have not been disputed or doubted by the lower authorities.
(e) "On the date of agreement Sh. Nayan Arvind Shah was Director of M/s. Murti Real Estate Pvt. Ltd. Who has confirmed that no such transactions were performed by the assessee. Similarly, Sh. Ravi Kewlani who was the director of M/s Ravik Finance & Investment Pvt. Ltd. Has also denied to have such agreement with the assesee."
The allegation of denial is not substantiated by the department by bringing appropriate material on record. Neither copies of statements recorded were provided nor opportunities for cross examinations were given.
(f) "On the date of agreement both the concerns namely, M/s Murti Real Estate Pvt Ltd Navi Mumbai and M/s Ravik Finance & Investment Pvt. Ltd, Mumbai were not having sufficient cash balance so as to advance Rs. 73 lakhs & 65 lakhs respectively to the assessee."
The allegation again is unsubstantiated. Once the agreement is signed & cash having given is confirmed, non-availability of cash (unsubstantiated allegation) has no relevance for the assessment of the appellant.
(g) "On perusal of agreement dt 02.01.2009, AO has noticed while notifying the document, the notary has simply put a stamp "ATTESTED" and "NOTARY, JAIPUR (RAJASTHAN)" and no registered no. of the notary is appearing on the agreement which raises serious doubt about genuineness and authenticity of this legal document."
This agreement is notarized which fact is not disputed. So-called lapse on the part of functioning of Notary, if any, has no relevance for the appellant. Moreover, there is no dispute that agreement is signed by both the parties and both are owning and admitting the same. Any frivolous matter cannot negate the validity of the agreement.
3.3 It is also submitted that no incriminating documents, suggesting this transaction to be bogus, was found during the search operation. Had it been a managed transaction, some traces of the same would have been found. But nothing was found suggesting that a contrary transaction had taken place than what was recorded in the books.
3.4 The contents of the agreement are presumed to be true in view of the provisions of section 132(4A). It is binding on the department.
3.5 Reliance is placed on the decision of the Hon'ble jurisdictional High Court in the case of Pr. CIT vs Shubh Mines Pvt Ltd (D.B. Income Tax Appeal No. 96/15), where even addition is held to be unjustified unless it is proved that money belonged to the assessee. Relevant portion of the decision is extracted below:
"In the considered opinion of this court, in absence of any cogent evidence on record establishing that the money shown to have received as share application money, was as a matter of fact, unaccounted money belonging to the assessee company, the finding arrived at by the AO, which is based on suspicion, has rightly been held not sustainable in the eyes of law".
In view of above submissions, addition of Rs. 1,38,00,000 made by ld. AO and confirmed by CIT(A), may please be deleted.
4.3 On the other hand, the ld. DR supported the order of the ld.
CIT(A).
15 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 4.4 We have heard the rival contentions and perused the materials available on record. It is noted that the AO made the addition of Rs. 1.38 crores u/s 68 of the Act treating the amount as unexplained cash and added the same to the total income of the assessee with the observation that the assessee could not prove the source of advances received. In first appeal, the ld. CIT(A) has sustained the addition made by the AO. It is noted from the available records that during the search operation incriminating documents showing cash receipts amounting to Rs. 1.38 crores lacs on account of advance for sale of Khatwara Agriculture Land.
The above cash payment had been made by M/s. Ravik Finance & Investment Pvt. Ltd, C-33/1-2 Nivara Co-operative Housing Society, Sector-3, Sanpada, Navi Mumbai of Rs. 65.00 lacs and from Miss. Murti Real Estate Pvt. Ltd L-33/1-2, Nivara Co-operative Housing Society, Sector-3, Sanpada, Navi Mumbai of Rs. 73.00 lacs totallling to Rs. 1.38 crores during the year under consideration. . In order to verify the genuineness of the above concern, a survey operation was conducted on 28-07-2009 at the addresses of the above mentioned concern alongwith three other concerns from whom other family members were said to have received cash payment against sale of certain properties. The Revenue's 16 ITA No. 484/JP/2016 Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur claim is that during the course of survey these concerns were found to be non-existent. However, the assessee claims that the above concerns were having PAN and the new address could have been ascertained from Registrar of Companies. It is also noted that the ACB, Govt. of Rajasthan, Jaipur has conducted the similar enquiries against the concerns at Mumbai and found the concerns were not existing on the given registered office addresses. The ld.AR of the assessee submitted that lower authorities have referred and relied on the enquiries conducted by the ACB, Govt. of Rajasthan, however, no such report of ACB was made available to the assessee at any stage. Assessee was not provided opportunity to controvert the report if any. There is violation of natural justice. Law does not allow such act. Taking into consideration all the above facts, circumstances of the case and also into consideration the written submissions of the assessee, it will be in the interest of equity and justice to restore the issue to the file of the AO to decide it afresh by providing reasonable opportunity of being heard to the assessee. It is also pertinent to mention here that the assessee be provided the Report of ACB on this issue to contest its case appropriately. Thus the Ground No. 4 of the assessee is allowed for Statistical purposes.
17 ITA No. 484/JP/2016Smt. Aruna Sankhla vs DCIT, Central Circle-1, Jaipur 5.0 In the result, the appeal filed by the assessee is partly allowed for Statistical purposes.
Order pronounced in the open Court on 1-12-2017.
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2. izR;FkhZ@ The Respondent- The DCIT, Central Circle-1 , Jaipur
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6. xkMZ QkbZy@ Guard File (ITA No. 484/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar 18