Income Tax Appellate Tribunal - Mumbai
Shri Sanjay Shantilal Jain, Mumbai vs Dcit, Central Range-8 (3), Mumbai on 31 October, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "G" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER)
ITA No. 6123/MUM/2018
Assessment Year: 2010-11
Shri Sanjay Shantilal Jain, DCIT-CC 8(3),
72-7, Kalpataru Residency Tower 6th floor, Aayakar Bhavan,
B, Sion Koliwada Road, Sion, Vs. M.K. Road,
Mumbai-400022. Mumbai-400020.
PAN No. AABPJ 3761 A
Appellant Respondent
ITA No. 6124/MUM/2018
Assessment Year: 2010-11
Shri Sanjay Shantilal Jain, JCIT, Central Range-8,
72-7, Kalpataru Residency Tower 6th floor, Aayakar Bhavan,
B, Sion Koliwada Road, Sion, Vs. M.K. Road,
Mumbai-400022. Mumbai-400020.
PAN No. AABPJ 3761 A
Appellant Respondent
Assessee by : Mr. Rushabh Mehta, AR
Revenue by : Mr. Manoj Kumar, CIT- DR
Date of Hearing : 15/09/2022
Date of pronounce ment : 31/10/2022
Shri Sanjay Shantilal Jain 2
ITA No. 6123 & 6124/M/2018
ORDER
PER OM PRAKASH KANT, AM
These two appeals by assessee are directed against two separate orders dated 21/08/2018 and 13/08/2018 respectively passed by the Ld.. Commissioner of Income-tax tax (Appeals)-50, Mumbai [in short 'the CIT(A) ] for assessment year 2010-11.
the Ld. CIT(A)'] 2010 The first appeal is in respect of quantum assessment proceedings, whereas second appeal is in respect of penalty levied for violation of loans accepted otherwise then by account payee cheque. Both appeals being connected with the same assessee, were heard together and disposed dispose off by way of this consolidated order for convenience.
2. The grounds s raised by the assessee in ITA No. 6123/Mum/2018 are reproduced as under:
1. (a) On facts and circumstances of the case, the Ld. CIT(A) CIT(A)-
50, Mumbai erred in not holding that the order passed u/s.
CC 8(3), Mumbai ("Assessing 143(3) r.w.s. 153A by the DCIT, CC-8(3), Officer) is without jurisdiction, invalid and bad in law.
Shri Sanjay Shantilal Jain 3 ITA No. 6123 & 6124/M/2018
(b) The Ld. CIT(A) has grossly erred in facts and law in not appreciating the explanations and material placed on record as well as true content of the seized material and taking the wholistic view of the matter by telescoping the real income of the assessee.
2. (a) The Ld. CIT(A) erred in facts and law in upholding the 6,25,01,000/ by treating it as unaccounted addition of Rs. 6,25,01,000/-
cash u/s. 68 of the Act, instead of sale proceeds received in cash on his s own suspicion.
[b) The Ld. CIT(A) erred in facts and law in upholding the application of provisions of section 40A(3) of the Act and thereby confirming the addition of entire sales as income of the assessee.
3. The Ld. CIT(A) erred in facts and law in upholding up the addition of unaccounted interest payment of Rs. 3,02,567/-
3,02,567/ as unexplained expenditure u/s. 69C of the Act on the alleged 1,10,00,000/ without appreciating the cash loan taken of Rs. 1,10,00,000/- explanations provided by the assessee.
erred in facts and law in upholding the
4. The ld. CIT(A) erred 1,09,000/ as unexplained addition of loan aggregating to Rs. 1,09,000/- cash credit u/s 68 of the Act without appreciating that no incriminating material was found in the course of search once finality prior to the date the assessment had already attained finality of search.
5. The Ld. CIT(A) erred in facts and law in not admitting and adjudicating the additional ground raised, relating to addition Shri Sanjay Shantilal Jain 4 ITA No. 6123 & 6124/M/2018 of loan aggregating to Rs. 2,10.568/-
2,10.568/ as unexplained cash credit U/S.68 of the Act.
6. The Ld.. CIT(A) erred in facts and law in not admitting and adjudicating the additional ground raised, relating to addition of Rs. 65,000/-
65,000/ as capital introduced.
7. All the above grounds are independent and without prejudice to each other.
3. facts of the case that that the assessee, an Briefly stated facts individual, filed his return of income for the year under consideration on 19/09/2010 declaring total income of ₹1,59,300/-
. Subsequently, a search and seizure action under section 132 13 of the Income-tax ( short 'the Act')) was carried out at the tax Act, 1961 (in premises of the assessee on 11/06/2013 along with the search action at the premises of 'RSBL' Group. Consequent to search, a notice under section 153A ct was issued on 07/10/2014 153 of the Act and in compliance,, the assessee filed return of income on 21/08/2015 admitting the total income which was declared in the regular return of income filed on 19/09/2010. Thereafter Thereafter, statutory d complied with. After notices under that Act were issued and A considering submission of the assessee, as the assessment u/s 153A Shri Sanjay Shantilal Jain 5 ITA No. 6123 & 6124/M/2018 was completed on 31/03/2016 wherein certain additions/disallowances were made to the returned income.
income Against the said assessment order, the assessee filed appeal before the Ld. CIT(A), who allowed part relief to the assessee.
assessee. Aggrieved with the CIT(A), the assessee is in appeal before the ITAT (In order of the Ld. CIT(A) short 'the Tribunal')) by way of raising grounds as reproduced above.
4. The ground No. 1(a) of the appeal, in general in nature and therefore same is dismissed as infructuous.
4.1 appeal, the assessee is seeking In ground No.1(b) of the appeal telescoping of the undisclosed income against the undisclosed expenditure. The Ld. counsel of assessee submitted that during the proceeding the assessee had submitted a course of the assessment proceeding, cash flow statement of undisclosed receipt to explain the source of undisclosed investment and therefore addition could have been made only for one side i.e. either the undisclosed receipt or real income theory. The Ld. undisclosed investment following the real counsel of assessee particularly stated that assessee has already accepted unsecured loans of ₹1.10 crores appearing in seized pages Shri Sanjay Shantilal Jain 6 ITA No. 6123 & 6124/M/2018 No. 3 and 4 of Annexure A-1, 1, impounded from business premises of the assessee at 96/106, Abhusan Abh House, Sheikh Memon Street, Street Zaveri Bazar, Mumbai. The Ld. CIT(A) while adjudicating the appeal of the assessee against levy of penalty u/s 271D i.e. for accepting cash loan otherwise then account pay cheque for assessment year 2010-11, has reproduced the details of such cash loan and interest payable thereon as noted in the seized document. The relevant observation of the Ld. CIT(A) are reproduced as under:
"7.2 During the course of survey at the business premises of House, Sheikh Memon the appellant at 96/106, Aabhushan House, A 1 was impounded.
Street, Zaveri Bazar, Mumbai, Annexure A-1 In the seized page No. 3 and 4 of Annexure A 1, there is a A-1, working of interest on loans received by the Appellant. In the seized pages, the principal amount is depicted as 0,000/- and interest amount is worked out at Rs. Rs.1,10,00,000/ 29,88,262/-.. The said noting on the seized page is reproduced, as under:-
under:
9800=00 15/12/09 1200=00 1012110
Days
700=00 14/2/12 792 184=800
800=00 21/212 799 212=066
1000=00 12/3/12 819 272=999
1500=00 20/03/12 827 413=500
1000=00 30/3/12 837 278=999
2500=00 10/4/12 848 706=666
1000=00 11/4/12 792 263=999
8500=00 2334=029
Shri Sanjay Shantilal Jain 7
ITA No. 6123 & 6124/M/2018
1300=00 To be paid on 30.04.2012 811 351=433
1200=00 To be paid on 30.04.2012 757 302=800
2988=262 Interest
5. We have heard rival submission
submission of the parties on the issue-in-
issue dispute and perused the relevant material on record. As far as the principal of real theory is concerned, we concur in principle with the Ld. counsel of the assessee that wherever unaccounted investment/expenditure expenditure is explained by way of undisclosed receipt, then no separate addition for such unexplained investment or expenditure should be made. Since the lower lo er authoritieshave authorit not submitt given any finding on the Cash flow statement, which was submitted by the assessee during the course of the assessment proceeding, the entries in the Cash flow statement need verification. Therefore, we restore this issue of telescoping of undisclosed receipts or income against undisclosed investment / expenditure to the file of the Ld. Assessing Officer for deciding after considering the submission and explanation of the assessee regarding each entry of the cash flow statement.
Shri Sanjay Shantilal Jain 8 ITA No. 6123 & 6124/M/2018
6. The ground No. 1(b) of the appeal is accordingly allowed for statistical purposes.
7. The ground No. 2(a) 2 of the appeal relates to addition of which according to the Ld. CIT(A) is unaccounted ₹6,21,01,000/-which cash in terms of section 68 of the Act,whereas whereas according to the assessee the amount represents sale proceeds received in cash.
7.1 ring the course of search action at the residence of the During assessee certain incriminating papers have been seized which have seized been inventoried as pages 3, 4 and 5 of Annexure A-2.The A Assessing Officer asked the assessee regarding those documents sidering the submission of the assessee, the Assessing and after considering Officer made addition of for ₹6,25,01,000/-for the year under consideration as cash sales, appearing in seized documents. The finding of the ld. Assessing Officer is reproduced as under:
"6. A 2 seized from As per page No. 4 and 5 of annexure A-2 the residence of the assessee, cash sales of ₹17,24,00,000/ 17,24,00,000/-
was made by the assessee and ₹17,27,43,800/ 17,27,43,800/- towards metal totaling ₹17,27,43,800/-.. Date wise bifurcation of this cash sale is as under:
Shri Sanjay Shantilal Jain 9
ITA No. 6123 & 6124/M/2018
FY 2009-10
Date Amount (₹)
19.12.2009 3904900
19.12.2009 1095100
19.12.2009 51000
21.12.2009 5000000
23.12.2009 3000000
24.12.2009 5000000
29.12.2009 1500000
29.12.2009 2500000
30.12.2009 1500000
04.01.2010 1500000
06.01.2010 1500000
08.01.2010 1000000
18.01.2010 10000000
02.03.2010 5000000
03.03.2010 7450000
17.03.2010 7500000
23.03.2010 2000000
24.03.2010 2500000
24.03.2010 500000
Total 62501000
FY 2010-11
Date Amount (₹)
14.04.2010 5000000
14.04.2010 9900000
17.04.2010 5000000
20.04.2010 5000000
22.04.2010 5000000
18.05.2010 8000000
19.05.2010 5000000
19.05.2010 12000000
20.05.2010 5000000
25.05.2010 5000000
2 PC Metal 343800
20.06.2010 15000000
30.06.2010 10000000
12.07.2010 10000000
22.07.2010 10000000
Total 110243800
Shri Sanjay Shantilal Jain 10
ITA No. 6123 & 6124/M/2018
Out of this, cash sales of Rs. 6,25,01,000/ 6,25,01,000/- pertain to the FY 2009-10 10 and balance balanc amount of Rs. 11,02,43,800/ ,800/- pertains to FY 2010-11.
2010 then
hen confronted, the assessee vide
submission filed on 28.03.2016, submitted that I : was carrying on out of book sales of bullion and was carrying net profit margin in bullion sales is profit of 0.5% if the sales as prof very low Hence, as far as quantum of quantum cash sales isconcerned, the assessee has admitted that he had road o dispute on cash sales of Rs 17.2.43,800/ und there to no this. An regards axability of the cash sales. as the sales is of bullion which is made out of goods,, the corresponding m de in cash and the same arc not purchases are also made allowable as per the provisions of section 40A(3) of the Income Tax Art, Art 1961 The Provisions of section 40A(3) of the Income Tax Act, 19 I expense exceeding ₹20,000/ provides that cash expenses 20,000/- is not allowable as a deduction in. In CIT vs Hynoop Food and Oil Industries Ltd.[290 Ltd IT'R 272 (Guj)]. it is held that provisions
13) of the Income Tax Act, 1961 will apply to of See 40A13) transaction outside the books of accounts also. In fact, the provision ion of section 10A(3) of the Income Tax Act, 1961 is Income brought on the statute to ensure that payments exceeding the sum rossed cheque drawn on a m specified arc made by a ccrossed raft so that it will be casier to bank or by a crossed bank draft ascertain when deduction is claimed, whether the pay ent was genuine and whether it was made out of income from The validity of sec 40A(3) of the Incom disclosed sources. Th Income Tax Act, 1961 has also been upheld by the Apt: Court in the Shri Sanjay Shantilal Jain 11 ITA No. 6123 & 6124/M/2018 case of Altar Singh Gurmukh Singh Vs. Income Income--tax Officer.
Ludhiana [1991 1991] 191 ITR 667 (S.C.) Moreover, if the payment is made through cash and not trough account payee draft, then it would be quite difficult for the departme chegue/draft, 1 to ascertain whether the payment so made by payee tax payer is accounted for by I e recipient (other) tax payer. The provision n of section 40A(3) of the Income Tax Act,1961 Income Act is of checking tax evasion intended to serve the objective of evasion."
8. Thus, the ld AO has not only held the purchases corresponding to the unrecorded sales and profit thereon as unexplained but also held the purchases made in cash exceeding Rs. 20,000/- in cash disallowable u/s 40A(3) of the Act. The Ld. CIT(A) however was of the view that these seized paper does not manifest cash sales but these are unaccounted cash financial this conclusion,, the Ld. CIT(A) has transactions. For arriving at th i reproduced given his reasoning. The detailed finding of Ld. CIT(A) is as under:
13.6 I have gone through the said seized pages and noted "13.6 that at the top of the Seized Page No. 5, the phrase "Cash A/c" has been written. There is no reference to the unaccounted sales on these seized pages, as claimed by the lant. Further, it is pertinent to note that all the figures Appellant.
noted in the seized page are in hundreds, thousands, lakhs Shri Sanjay Shantilal Jain 12 ITA No. 6123 & 6124/M/2018 and crores. The very fact that all the unaccounted cash entries noted on the seized page are rounded off, clearly reveals that these entries entries doesn't represent the amount of sales, as has been alleged by the appellant.
13.7 It also needs to be emphasized here that no quantitative details of bullion is mentioned on the said seized page. If the figures mentioned on the seized page were to repr represent bullion purchase, the rate of which varies on a daily basis, the amounts would certainly not be rounded of in lakhs and crores. There is only one entry of Rs. 3,43,800/-
3,43,800/- mentioned on the seized document, which represents some metal, as the narration against the same is "2 PC Metal". This numerical figure, which is rounded of in hundreds, itself reveals that at best this is the only figure, which may represent some bullion sale. It has also been noted that regarding this entry, the appellant has stated that the 2 pc.
3,43,800/ was given by one of his customer metal worth Rs. 3,43,800/-
in lieu of cash. Thus, this entry is basically a purchase of the bullion and not a sale transaction. However, the appellant was unable to corroborate even this entry, during the course co of the assessment / appellate proceedings.
13.8 Further, the claim of the appellant that the amounts mentioned on the seized pages, represented cash sales is not supported by any evidence. The details of not even a single party relating to the alleged cash sales have been divulged by the appellant. It the appellant has made unaccounted cash sales to the tune of more than Rs. 17 Crore, then certainly some evidence for unaccounted cash purchases Shri Sanjay Shantilal Jain 13 ITA No. 6123 & 6124/M/2018 should have been found, during the course of search operation.
on. However, no such details of cash purchase of bullion have been found. It needs to be emphasized here that to corroborate the alleged claim of cash sales, no details of any party relating to cash purchases have been furnished by the appellant,eitherthe assessment stage or the appellate stage.
13.9 Needless to emphasize here that if the appellant was engaged in unaccounted cash purchase and sale of bullion at such a large scale, then there would have been some corroborating evidence, which should have been bee found during the course of the search and survey operation. Even the basic details like the name, address etc. of the so called cash sale parties is not available on record. Thus, the mere plea of the appellant that the cash receipts should be considered unaccounted sales, without adducing any documentary evidence in support, needs to be out rightly rejected. It is also worthwhile to note that no unaccounted stock of bullion of such huge amount has been found during corroborate the the course of the search operation to corroborate contention of the Appellant that the entries on the seized record depicted unaccounted cash sales.
13.10 I have also gone through the statement of the Appellant, recorded during the course of the search of the Department.
operation, by the Investigation Wing of During the course of search operation, the explanation on these incriminating seized pages was sought from the appellant in the statement recorded u/s 132(4) of the Act on Shri Sanjay Shantilal Jain 14 ITA No. 6123 & 6124/M/2018 11/06/2013 at B/72, Kalpataru Residency, Sion-Koliwada Sion Road, Sion, Mumbai-22.
Mumbai 22. The relevant portion of the statement is reproduced hereunder, for ready reference:
"Q28. I am showing you a small blue coloured-cover coloured diary titled" Jagruti PONIA EX. BOOK PAGES 80"
having handwritten pages No.1 to 7 (total seven 2 of Panchnama, pages), seized under Annexure-A-2 found from your own cupboard in your bedroom today. Kindly tell in whose handwriting this diary is written & explain the contents in detail.
Ans. This diary is not written in my handwriting. I also handwriting this is. I am also not do not know whose handwriting aware of the contents of this diary.
.29. In the reply to preceding Q28, you have stated Q.29.
that you are neither aware in whose handwriting the coloured cover diary mentioned therein is written blue coloured-cover contents of these pages. In in nor you are aware of the contents such case, how this diary has been found in your personal cupboard in your own bedroom?
Ans. I do not know how this diary has landed up in my personal cupboard in my bedroom."
13.11 The above statement of the appellant clearly shows sho that during the course of the search, he has completely disowned the said diary found from his possession. Further, he has feigned ignorance about the contents of the said diary. At the time of the search operation, it has never been Shri Sanjay Shantilal Jain 15 ITA No. 6123 & 6124/M/2018 claimed that the cash cash entries recorded in the seized page represents his unaccounted cash sales. Thus, the claim of the appellant during the course of the assessment proceedings after the lapse of a considerable period of time that the entries depicted cash sales is just an afterthought, which has been stated only for the purpose of reducing the tax liability. This leads to the irresistible conclusion that the appellant has given false explanation about the cash entries recorded in the seized documents.
13.12 It needs to be emphasized emphasized here that no incriminating documents relating to cash purchase and sale were found during the course of search / survey operation, but on the other hand substantial documents relating to unaccounted cash financing transactions have been founds For Fo the sake of brevity, the same are not discussed here but such incriminating documents relating to financing transaction of taking and giving unaccounted cash loans / advances have been discussed in the present appellate order, at appropriate places. Thus on the basis of the seized material, it is concluded that the appellant has taken unaccounted cash from various parties, which is not recorded in the regular books of account and needs to be taxed u/s 68 of the Act.
Act, the burden For taxing such amounts u/s 68 of the Act, doesn't lie on the Revenue, it squarely lies on the assessee, who has to prove the nature and source of such entries."
8.1 The Ld. CIT(A) also relied on the following decisions in support of his claim:
Shri Sanjay Shantilal Jain 16 ITA No. 6123 & 6124/M/2018 i. SumatiDayal v. CIT [1995] 80 Taxman/89/214 Taxman/89/214 ITR 801 (SC) ii. Roshan Di Hatti v. CIT [1997] 107 ITR 983 (SC) iii. Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC) iv. Sreelekha Banerjee v. CIT (1963) 49 ITR 112 (SC) v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) vi. Vijay Kumar Talwar v. CIT [2011] 196 Taxman 136/[2010] 8 taxmann.com vii. CIT v. Om Prakash Mittal [2005] 273 ITR 326/143 Taxman 373 (SC) viii. CIT &Ors. V. Saravana Construction (P) Ltd. reported in (2012) 82 CCH 249 (Kar) HC : (2012) DTR (Kar) 258 ix. Commissioner of Income-tax Income tax (Central) v. Settlement Commission (IT & WT) [2017] 77 taxmann.com 167 (Kerala) x. H. Nabhiraja v. Deputy Commissioner of Income Income-tax, Circle 7(1), [2007] 163 Taxman 501 (Kar) xi. Nandlalkhanchand Khatri v. Commissioner of Income-tax Income [2004] 139 Taxman 51 (MP) xii. Smt. Neeta R. Lad, the Hon'ble Shri Kamlesh G. Mehta and Smt. 1, Mumbai, vide order dated 22.09.2017 ITSC Bench--1, xiii. Income tax Officer [2004] 91 ITD 42 Haji Nazir Hussain v. Income-tax (Delhi) (TM) Shri Sanjay Shantilal Jain 17 ITA No. 6123 & 6124/M/2018 8.2 Relying on the above decisions,, the Ld. CIT(A) held the sum recorded in seized papers/documents papers found during the course of the search operation as unexplained cash credit under section 68 of the Act as against holding the same as cash sales by the ld. AO.
9. Before us the Ld. counsel of the assessee filed a common paperbook for AY 2010 nd assailed observations of 2010-11 to 2014-15, and the Ld. CIT(A). The Ld. Counsell of the assessee submitted that proceeding a detailed cash flow of during the course of assessment proceedings his unaccounted funds and unaccounted income and expenditure page 32 and 33 of the common was filed, which is available on page paperbook for assessment year 2010-11 2010 11 to assessment year 2014- 2014
15. The Ld. Counse sell submitted that the assessee had initially crores, which was obtained unsecured loans to the tune of ₹1.10 crores accepted as undisclosed income during the assessment ut no addition for which has been made by the proceedings. (But order . The Ld. Counsel further Assessing Officer in the assessment order) submitted that purchase and consequent sales of bullion up to July 2010 (as as appearing in the seized pages no. 3 -5 of Annexure A-2), A Shri Sanjay Shantilal Jain 18 ITA No. 6123 & 6124/M/2018 were made out of said unsecured loans. It was contended by the Ld. counsel that considering the above facts only the real income i.e. the unaccounted net profit should only be taxed applying the normal profit margin of 0.5% on bullion sal sales.
es. The Ld. counsel as duly accepted further submitted that the Assessing Officer has those entries as cash sales. The Ld. Counsell further assailed each contention of the Ld. CIT(A).
10. The Ld. DR on the other hand relied on the finding of the Ld. CIT(A) and d submitted that seized papers nowhere indicate purchase or sales of the bullion i.e. bullion trade carried out by the assessee and, therefore Ld. CIT(A) is justified in treating the entries appearing in the relevant seized papers as unexplained cash credi credit of the assessee.
11. We have heard rival submission of the parties on the issue in record. The Ld. CIT(A) dispute and perused the relevant material on record.
has summarized ed the details of the papers as under:
13.2 On the top of page 5 "CASH A/C" has been written. The total of the cash account on page 3 and 4 is Rs.12,77,44,800/-.
Rs.12,77,44,800/ Shri Sanjay Shantilal Jain 19 ITA No. 6123 & 6124/M/2018 Further, the seized Page No. 3 is in continuity of page 4 and 5. Page 3 and 4 is cash account till 25.05.2010 and Page 3 starts with the date 02.06.2010. On 02.06.2010, there is a noting 'HisabMilaya', which means the account has been tallied. The total amount after tallying the account works out to Rs.14,24,00,000/-.. After tallying the account, there are three Rs.14,24,00,000/ each written on the seized page on entries of Rs. 1 crore each different dates.Thus, the total of cash account, as worked out on the seized page amounts to Rs. 17,24,00,000/-
17,24,00,000/ after reconciliation/tallying.
13.3 The financial year wise breakup of the "Cash Account" is year-wise tabulated, as FY 2009-10 Date Amount (₹) 19.12.2009 3904900 19.12.2009 1095100 19.12.2009 51000 21.12.2009 5000000 23.12.2009 3000000 24.12.2009 5000000 29.12.2009 1500000 29.12.2009 2500000 30.12.2009 1500000 04.01.2010 1500000 06.01.2010 1500000 08.01.2010 1000000 18.01.2010 10000000 02.03.2010 5000000 03.03.2010 7450000 17.03.2010 7500000 23.03.2010 2000000 24.03.2010 2500000 24.03.2010 500000 Total 62501000 Shri Sanjay Shantilal Jain 20 ITA No. 6123 & 6124/M/2018 FY 2010-11 Date Amount (₹) 14.04.2010 5000000 14.04.2010 9900000 17.04.2010 5000000 20.04.2010 5000000 22.04.2010 5000000 18.05.2010 8000000 19.05.2010 5000000 19.05.2010 12000000 20.05.2010 5000000 25.05.2010 5000000 2 PC Metal 343800 20.06.2010 15000000 30.06.2010 10000000 12.07.2010 10000000 22.07.2010 10000000 Total 110243800 13.4 Thus, the unaccounted cash amounting to Rs.6,25,01,000/ pertain to the F.Y. 2009-10 Rs.6,25,01,000/- 10 and balance 11,02,43,800/ pertains to F.Y.2010 amount of Rs. 11,02,43,800/- F.Y.2010-11.
11.1 The contention of the assessee that those entries are of bullion trade sales made in cash but not accounted in the books of accounts. According to the Ld. counsel,, the initial purchase corresponding to the sales have been made out of the unsecured loans of ₹1.10 crores (unexplained),, which were accepted by the es (unexplained) assessee during the course of the assessment proceeding based on the cash flow of unaccounted income and expenditure filed, but no addition has been made by the Assessing Officer for said unexplained unsecured loans of ₹1.10 crores. The Ld. counsel is of Shri Sanjay Shantilal Jain 21 ITA No. 6123 & 6124/M/2018 the view that since the unexplained purchase of bullion corresponding to the sales recorded in relevant seized paper stands explained by way of unsecured loans of ₹1.10 cro 1.10 crores available, therefore no addition should be made for unexplained purchase of the bullion and only addition which could be made is of the profit earned on the bullion sales, which according to the assessee should be determined at the rate of the 0.5% of the sales. The Ld. CIT(A) has rejected those se con contentions which were raised before him.
11.2 Firstly, according to the Ld. CIT(A) there is no reference of unaccounted sales in those seized papers which are titled as 'cash account'.. According to him all the figures are in hundreds or thousands i.e. in round figu figures and therefore, does not represent sales. Before us the Ld. Counsell of the assessee has contended that these allegations of the Ld. CIT(A) are based on surmises and him there are only three pages without any evidence. According to him, in the diary representing represen sales, which were maintained simply for the remembrance by the assessee.. The Ld. CIT(A) has rejected this explanation of the assessee as only an afterthought, thought, because at the Shri Sanjay Shantilal Jain 22 ITA No. 6123 & 6124/M/2018 time of search h operations, operations the assessee had never claimed those th s unaccounted cash sales. The Ld. counsel on the cash entries as other hand before us submitted that during search proceeding proceeding, the assessee had denied the knowledge of the cash noting recorded in diary and did not explain, exp , but he cannot be deprived to explain the same during the assessment proceeding. In our opinion, it is normal that during search proceedings being in an unfamiliar atmosphere, the assessee might not have readily responded respond to the questions raised and he can explain those papers in assessment proceedings before the AO, which the Ld. AO can't brush aside simply on the ground that no explanation was given in respect of those papers during the course of search.
11.4 Secondly, the Ld. CIT(A) observed that no incriminating documents relating to cash purchase and cash sales ales of bullion has been found during the course of search, but on the other hand substantial documents relating to unaccounted cash financial transactions have been found. Before us the Ld. counsel of the assessee submitted that assessee carrie carriedd out such bullion trade in Shri Sanjay Shantilal Jain 23 ITA No. 6123 & 6124/M/2018 cash upto 2010 whereas search was conducted in 2013, thus it was not practical to retrieve any such documents of purchase and sales.
He further submitted that Ld. CIT(A) has not pointed out any evidence of unaccounted cash financing financing transactions. The Ld. counsel further submitted that in one narration as "2 submitted " Pc Metal"
against Rs. 3,43,800/-
3,43,800/ the assessee treated ated the same as sale but the Ld. CIT(A) held the same as bullion purchase because it was received in lieu of the cash. According to the Ld. counselif counsel said entry can be considered as sale or purchase, why the other entries cannot be accepted as sales or purchases. In our opinion, there is at least zed papers, whereas mention of metal trade in the relevant seized whereas, there is no mention of taking loan or financial transaction in seized papers under reference.
nce.
11.5 Regarding the contention of the Ld. CIT(A) that no quantitative details of bullion is mentioned in the seized paper, the Ld. counsel submitted that it was not necessary to mention such details and the noting were recorded for own purpose.
Shri Sanjay Shantilal Jain 24
ITA No. 6123 & 6124/M/2018
11.6 Further, regarding the contention of the Ld. CIT(A) that
no unaccounted stock of the bullion of such huge amount had been found in the course of the search to corroborate the claim of bullion trade by the assessee, the Ld. counsel submitted that impugned transactions belong to financial year 2009 10, whereas 2009-10, where the search action had taken place in 2013, therefore it was not possible or etrieve or maintain details of the stock more so when practical to retrieve the assessee already stopped said bullion trading cash after conversion of his proprietary concern into private limited company.
11.7 In view of the above arguments, the issue before us is whether the noting in seized records reflects carrying of 'unaccounted bullion trade trade' by the assessee or 'cash financing transactions'' by the assessee.
11.8 In our opinion, the finding of the Ld. CIT(A) CIT( are based on presumptions only. The Ld. CIT(A) has made his conclusion on the presumption that amounts are in round figure so same cannot be the sales. He further presumed that since no quantitative details are mentioned in seized paper, so it cannot be cash sales of bullion.
Shri Sanjay Shantilal Jain 25 ITA No. 6123 & 6124/M/2018 He further presumed that since no amount of any bullion stock has been found from the premises of the assessee so, so therefore he cannot be said to have engaged in the bullion trade. Whereas contention of the assessee, that he was carrying carrying business of bullion trade in his books of accounts and proprietary concern before conversion of the same into private limited company. As per the submission,, the assessee was running his proprietorship business namely M/s Abhushan till 2008 and thereafter thereafter from 01/04/2009 it got converted into private limited company namely M/s Abhusan ornaments private limited and he was earning director Thus,, assessee was engaged in bullion trading remuneration only. Thus in regular course, then probability of carrying such trade out of such books is more as compared to carrying of financing activity i.e. other activity by the assessee, assessee which has been presumed by the Ld. Ld CIT(A) for which no incriminating documents have been referred by the Ld. CIT(A). As far as evidences lion trading in cash, the Ld. evidence of bullion CIT(A) himself has accepted one such transactions in para 13.7 of the impugned order, where he held that the transactions transactio of "2 Pc Metal"" as purchase of the bullion. This transaction is part of the Shri Sanjay Shantilal Jain 26 ITA No. 6123 & 6124/M/2018 transactions recorded in the relevant seized paper, which also leads to the probability that transactions recorded in the relevant seized paper are of the bullion trade. It is evident that in the seized paper it is not clearly mentioned whether these are the cash transactions therefore, one has to infer on the basis of the or cash sales and therefore probability and surrounding evidence, which leads to carrying of bullion trade in cash by the assessee. The assessee has accepted profit at the rate of 0.5% based on the comparable cases cases. As far as unexplained purchase of bullion corresponding to the cash sales is concerned, the assessee has attempted to explain the same by way of unsecured loan of Rs.1.10 R crores,, which has been accepted by the Assessing income, but we find that g Officer as undisclosed income, Assessing Officer has not made any addition in respect of the such undisclosed income, because he made addition dition for unexplained purchase, therefore we feel it appropriate to restore this issue of considering amount of unexplained purchase and profit thereon sales, to the file of the Ld. Assessing Officer. corresponding to the sales Officer The ground of the appeal of the assessee is accordingly allowed for statistical purposes.
Shri Sanjay Shantilal Jain 27 ITA No. 6123 & 6124/M/2018
12. As far as ground No.3 of the appeal is concerned, the Ld. Counsell of the assessee though did not press the addition, however submitted that same might be considered for the purpose of telescoping. Since the Ld. Assessing Officer has s not considered the cash flow of unaccounted income and expenditure for the purpose of the he addition, therefore this issue of considering considering the unsecured loan of ₹1,10,00,000/ 000/- as unexplained and for availability of undisclosed fund, is also restored to the file of the Ld. Assessing Officer for considering undisclosed income in the hand of the assessee. This ground of the appeal is also allowed for statistical purposes.
13. The ground No. 4 to 6 of the appeal relates to unexplained cash credit under section 68 of the Act.
13.1 The relevant part of the order of the Ld. Assessing Officer related to ground no. 4 is reproduced as under:
"12. The assessee has claimed following loans taken during they under consideration other than those from family members or close relatives :
Sr. No. Name of the Party Amount (₹) Shri Sanjay Shantilal Jain 28 ITA No. 6123 & 6124/M/2018
1. Rajesh Jain 109000/-
12.1 The assessee has not even furnished confirmation of the party and no supporting documents as regards genuineness of loans are furnished.
As discussed above, the details were furnished on 29.03.2016 and it was not possible to make any verification. The amount is appearing as liability in the balance sheet of the assessee and the onus is on the assessee to explain cash credit appearing in his books of accounts as per the provisions of section on 68 of the Income tax Act that is to establish identity of Income-tax the party, genuineness of transaction any creditworthiness of the party.
The assessee failed to offer any explanation at all in this liability as appearing in his balance sheet. Mere filing of confirmation is no sufficient confirmation in view of decision of Hon'ble Supreme Court in the case of Durgaprasad More 82 ITR 510. The Hon'ble Kerala High Court in the case of M/s Diza Holdings Pvt. Ltd. 120 Taxmann 539 has held as under:
On the terms of section 68, the burden is on the assessee to offer a satisfactory explanation about the nature and source of the amount, found credited in the books of the assessee. It is also clear that the mere furnishing of particulars is not enough. The mere fact, that by way of account payee cheque is also not payment was by conclusive. Therefore, the assessing officer was entitled to consider whether notwithstanding the fact that the payments were made by Shri Sanjay Shantilal Jain 29 ITA No. 6123 & 6124/M/2018 cheques, whether the assessee has satisfactorily explained the nature and source of the amounts found credited in the books of the assessee. It is clear that the assessing officer was satisfied that the called depositors did riot have the resources to make such so-called deposits.
12.2 Hence, the onus lies on the assessee to establish the cash credit appearing in his books of accounts which the assessee failed to explain.
Hence, addition of ₹1,09,000/- is made to the total income of the assessee Income tax Act. Penalty proceedings is initiated u/s 271(1)(c) u/s 68 of the Income-tax tax Act for furnishing inaccurate particulars of income." of the Income-tax order, which relates to 13.2 The para no. 11 of the assessment order, Ground No. 5,, is reproduced as under:
"11. The assessee has shown sundry loans of ₹2,10,568/ 2,10,568/- for which no explanation is offered by the assessee as regard their source. The onus is on the assessee explain any credit appearing in his books of a accounts which the assessee failed to explain. Hence, amount of ₹2,10,568/-
assessee. Penalty proceeding u/s 271(1)(c) of the Income-tax Income Act, 1961 is income.""
initiated for furnishing inaccurate particulars of income.
13.3. The para No. 8 of the assessment order, which relates relat to Ground No. 6,, is reproduced as under:
Shri Sanjay Shantilal Jain 30 ITA No. 6123 & 6124/M/2018 "8. During the course of survey at the business premises of the appellant at 96/106, Aabhushan House, Sheikh Memon Street, Zaveri Bazar, Mumbai, Annexure A-1 A 1 was impounded.
In the seized page No. 3 and 1, there is a an 4 of Annexure A-1, working of interest on loans received by the Appellant. In the seized pages, the principal amount is depicted as Rs.1,10,00,000/ and interest amount is worked out at Rs. Rs.1,10,00,000/-
29,88,262/-.. The said noting on the seized page is reproduced, produced, as under:
under:-
9800=00 15/12/09 1200=00 1012110 Days 700=00 14/2/12 792 184=800 800=00 21/212 799 212=066 1000=00 12/3/12 819 272=999 1500=00 20/03/12 827 413=500 1000=00 30/3/12 837 278=999 2500=00 10/4/12 848 706=666 1000=00 11/4/12 792 263=999 8500=00 2334=029 1300=00 To be paid on 30.04.2012 811 351=433 1200=00 To be paid on 30.04.2012 757 302=800 2988=262 Interest"
13.4 The Ld. Counsel of the assessee submitted that additions are not based on the incriminating material found during the course of the search, and assessment in the year under consideration being unabated assessment, Assessing Officer was not permitted to make addition based without any incriminating material relyi relying on the decision of CIT v. Continental Warehousing in ITA No. 523 of Shri Sanjay Shantilal Jain 31 ITA No. 6123 & 6124/M/2018 2013 (Bombay High Court) Court). In the case of Continental Bom y High Court held as Warehousing (supra), the Hon'ble Bombay under:
36. Similar is the case with the Division Bench judgment of the High Court of Karnataka at Bangalore. There as well a real estate firm was the assessee. A return of income was filed and when an order under section 143(3) of the Act came to be passed on 31 st SRP 38/61 ITXA523.13.doc 2008 09 that a search took place in December, 2010, for assessment year 2008-09 the premises of the assessee on 12th April, 2011. In the course of search, incriminating material leading to undisclosed income was seized.
Therefore, the proceedings under un section 153A of the Act calling upon the assessee to file return of income under section 153A(1)(a) came to be initiated by a notice dated 13 th January, Janua 2012.
Return of income was filed pursuant to receipt of such notice and for six years as required by the provision. When this return was under
consideration on 14th March, 2013, the Commissioner of Income Tax initiated proceedings under section 263 of the Act on the ground that the order dated 31st December, 2010 in relation to the return of income for assessment year 2008 09 and holding that the same is erroneous and 2008-09 prejudicial to the interest of the Revenue came to be passed. The assessee filed his objection but the Commissioner maintained his action under section 263.. That is how the aggrieved assessee carried the matter and before the Tribunal it was contended that in appeal to the Tribunal and once section 263 of the Act has been invoked during the pendency of proceedings under section 153A of the Act, then, that was impermissible. That was impermissible for the assessments SRP 39/61 ITXA523.13.doc Shri Sanjay Shantilal Jain 32 ITA No. 6123 & 6124/M/2018 including for the assessment year 2008-09 2008 09 stand reopened. Once they are reopened, then, there is no order of assessment in force and in regard to which any action under section 263 of the IT Act can be initiated. It is in dealing with this argument and which was negatived by the Tribunal that all the observations of the High Court of Karnataka hav have been made. In paragraphs 5 and 6, the arguments have been noted and thereafter the provision has been reproduced. In paragraph 9, extensive reference has been made to the judgment in Anil Kumar Bhatia of the High Court of Delhi following observations in paragraphs 10 and 11 are (supra) and then the following made :
"10. Section 153A of the Acts start with a non obstante clause. The fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens.
opens The time-limit limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to so been excluded in a reopen the assessment under Section 148 has also case covered by Section 153A. limit prescribed for completion of 153A The time-limit an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A.
With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making SRP 40/61 ITXA523.13.doc reassessments without any fetters, if need be. Therefore, it is clear even if an assessment order is passed under Section 143(1) or 143(3) of the Act, the Assessing Officer is Shri Sanjay Shantilal Jain 33 ITA No. 6123 & 6124/M/2018 empowered to reopen those proceedings and reassess the total income taking note of the und undisclosed isclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the total income of the aforesaid years. The condition precedent for application of Section 153A is there should be
132. Initiation of proceedings under Section a search under Section 132.
on any undisclosed income being unearthed during 153A is not dependent on such search. The proviso to the aforesaid section makes it clear the assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment sub section on the date of initiation of the years referred to in the aforesaid sub-section search under Section 132 all abate. If such 132, the said proceeding shall proceedings are already concluded by the assessing officer by initiation of proceedings under Section 153A,, the legal effect is the assessment gets in only the undisclosed income and reopened. The block assessment roped in the regular assessment proceedings were preserved, resulting in multiple assessments. Under Section 153A,, however, the Assessing Officer has been given the power to assess or reassess the "total income" of the six assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed ring the search. He has been entrusted with the duty of bringing to tax during the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters. This means that t there can be only one assessment order in respect of each of the six assessment years, in which both the disclosed and the undisclosed income would be brought to tax. When once the proceedings are initiated under Section
3.doc Act, the legal effect is even in case 153A of the SRP 41/61 ITXA523.13.doc Shri Sanjay Shantilal Jain 34 ITA No. 6123 & 6124/M/2018 where the assessment order is passed it stands reopened. In the eye of law there is no order of assessment. Re-opened Re opened means to deal with or begin with again. It means the Assessing Officer shall assess or reasses reassess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order. Therefore, the Commissioner by virtue of the power conferred under Section 263 of the Act gets no jurisdiction to initiate proceedings under the said provision because the condition precedent for initiating proceedings under Section 263 is any order passed under the Act by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of the revenue. Once the order passed by the Assessing Officer gets reopened, there is no order is prejudicial to the interest which can be said to be erroneous insofar as it is of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction.
14. In view of above, respectfully following the finding of the Hon'ble Bombay High Court (supra),, we are of the opinion that no addition can be made in the case of the assessee as no incriminating material has been found qua the addition in dispute.
dispute Ground Nos.. 4 to 6 of the appeal of the assessee are accordingly allowed.
Shri Sanjay Shantilal Jain 35 ITA No. 6123 & 6124/M/2018
15. Now we take up the appeal of the assessee against confirming of penalty u/s 271D of the Act levied by the Joint/Additional Commissioner of Income-tax.
Income
16. The brief facts reproduced by the Ld. CIT(A) are extracted as under :
"7.0 observations of the A.O. in the 7.0 I have considered the observations assessment order, submissions of the appellant and also perused the materials available on record, on this issue. Since, the Ground No. 1 to 4 are interrelated and interconnected to each other, they are taken up together for adjudication.
judication.
7.1 The brief facts of the case are that the original return of e filed by the appellant on 19.09.2010 declaring a income was e-filed 1,59,300/ . A search & seizure action u/s. total income of Rs. 1,59,300/-.
132 of the Act was conducted in RSBL Group of cases on 11.06.2013 and the appellant was also covered in the search operation. In view of the search operation on the Appellant, an order u/s. 143(3) r.w.s. 153A dated 31.03.2016 was passed by the AO determining the total income of the appellant at Rs. 6,34,26,950/ /-, after making various additions.
7.2 During the course of survey at the business premises of the appellant at 96/106, Aabhushan House, Sheikh Memon A 1 was impounded.
Street, Zaveri Bazar, Mumbai, Annexure A-1 In the seized page No. 3 and 4 of Annexure A 1, there is a A-1, Shri Sanjay Shantilal Jain 36 ITA No. 6123 & 6124/M/2018 working of interest on loans received by the Appellant. In the seized pages, the principal amount is depicted as Rs.1,10,00,000/ and interest amount is worked out at Rs. Rs.1,10,00,000/-
29,88,262/-.. The said noting on the seized page is reproduced, as under:-
under:
9800=00 15/12/09 1200=00 1012110
Days
700=00 14/2/12 792 184=800
800=00 21/212 799 212=066
1000=00 12/3/12 819 272=999
1500=00 20/03/12 827 413=500
1000=00 30/3/12 837 278=999
2500=00 10/4/12 848 706=666
1000=00 11/4/12 792 263=999
8500=00 2334=029
1300=00 To be paid on 30.04.2012 811 351=433
1200=00 To be paid on 30.04.2012 757 302=800
2988=262 Interest
7.3 During the course of the assessment proceedings, the Appellant had admitted that he has received cash loan amounting to Rs. 1,10,00,000/-.. However, no addition was made of the principal amount by the A.O.. Since, the cash loans were in contravention of provisions of section 26955 of the Act, a proposal was sent to the Addl. Commissioner of Income Tax, Central Range-8, Range or initiating penalty Mumbai for w/s. 271D of the Income Tax Act.
Act."
16.1 The Ld. CIT(A) after considering the submission of the assessee upheld the penalty observing as under:
7.4 I have noted that the appellant has vide submissions "7.4 filed on 28.03.2016 categorically submitted during the course Shri Sanjay Shantilal Jain 37 ITA No. 6123 & 6124/M/2018 of the penalty proceedings that he had accepted cash loans of Rs. 85 lacs in December 2009, Rs. 13 lacs on 10.02.2010 and Rs. 12 lacs on 05.04.2010 totaling to Rs.
Rs.1,10,00,000/ 1,10,00,000/-. Thus, relevant to the AY. 2010-11, 2010 the appellant has accepted cash loan worth Rs. 98 lac and an amount of Rs. 12 lacs has been 2011 12. Both the said accepted to be taken in the A.Y. 2011-12. amounts have been admittedly taken in cash, which is in violation of the provisions of Section 269SS of the Act. The AO s duly sent a proposal to the JCIT, Range for levying of has penalty us 271D of the Act, vide letter on DCIT/CC8(3)/Proposal for Pen.271D/2016--17 Pen.271D/2016 dated 25.05.2016.
7.5During the penalty proceedings and the present appellate proceedings the appellant has stated that there was an acute shortage of funds and theassessee had huge loan liability of Rs. 4,52,13,051/. Further, it was stated that there was a family dispute regarding the title of the family property at assessee's native place and hence he could not arrange arra loans through banking channels and was forced to take cash loans from the market. Further, the appellant's claim was that he was not aware of the provisions of Section 269SS of the Act.
7.6 I am of the considered opinion that shortage of funds and mily dispute on property cannot be termed as a pressing a family cause for taking unaccounted cash loans. It is pertinent to note that there is a plethora of seized material found during the course of the search action on the appellant, which clearly indicates that the appellant has carried out severalunaccounted cash transactions in a systematic and Shri Sanjay Shantilal Jain 38 ITA No. 6123 & 6124/M/2018 organized manner. Thus, the present cash loans is not an isolated aberration in the case of the appellant.
7.7 The shortage of funds is a very general financial int faced by each and every business venture and constraint such an excuse can't be used to raise unaccounted cash loans. In the absence of any documentary evidence in support of the so called family dispute, no credence can be given to averments of the Appellant.In such general unsubstantiated averments the absence of any clear property available for mortgage, the appellant could have gone for unsecured loans. Further, ignorance of law cannot be termed as a valid reasonable cause, under the provisions of Section 273B of the Ac Act.
7.8 I am of the considered opinion that on the facts of the present case, there was no real exigency that has compelled the appellant to accept the loans in cash and that also from unaccounted sources. The appellant could have easily met his onstraints by opting for unsecured loan,duly financial constraints recoded in the books of account at both ends viz. in the books of the lender and the borrower. Thus, the appellant has not been able to place on record sany reasonable cause for violating the provisions of the S ection 26955 of the Section 7.9 During the course of the appellate proceedings, the appellant has stated that it does not want to press the Ground No. 3 relating to reasonable case us 273B of the Act. I am of the considered opinion that only the provisions of Sec 273B of the Act can come to the rescue of the appellant in the facts of Shri Sanjay Shantilal Jain 39 ITA No. 6123 & 6124/M/2018 the present case, which I think has been erroneously not pressed by the appellant.
7.10 It is also pertinent to note that the said cash loans were accounts of the appellant and not routed through the books of accounts hence does not deal with accounted money. These unaccounted cash loans were detected during the course of search operation conducted on the appellant. It is also pertinent to note that the said unaccounted cash loan amounting to Rs Rs.. 1 Crore 10 lacs has not been added in the assessment order passed by the A.O. u/s 143(3) r.w.s. 153A of the Act. Since, these unaccounted cash luans have not been taxed u/s 68 of the Act, there is all the more reasons that the penalty u/S271D of the Act should be levied on the Appellant.
7.11 As far as, the plea of the appellant is concerned that no statuary notice us 274 of the Act has been issued for invoking provisions of the Section 271D of the Act, it is stated that 274 of the Act, there is no under the provisions of Section 274 show cause is to be prescribed form or format in which the show-cause issued. As far as the provisions of section 274(1) are concerned, it only states that no order of penalty shall be imposed, unless the assessee has been heard or has been given a reasonable opportunity of being heard. I have noted Range 8 has vide letter dated that the JCIT, Central Range-8 08.07.2016 issued a detailed show cause notice, whereby proper opportunity was given to the appellant to explain his initiated u/s 271D of the Act. Thus, there stand on the penalty initiated is no violation of principles of natural justice in the Shri Sanjay Shantilal Jain 40 ITA No. 6123 & 6124/M/2018 proceedings conducted u/s 271D of the Act by the JCIT, Central Range Range-8, Mumbai.
7.12 The appellant has also claimed that burden lies on the Revenue to prove that the loans were taken at one stroke or 20,000/- or more from a single party. In this amounted to Rs. 20,000/ regard, a reference may be made to theentries noted on the seized page, which clearly reveals that all the entries of unaccounted cash loans are above Rs. 20,000/-.
2 . Thus, clearly provisions of Section 2695S of the Act are attracted in the case at hand. As far as, the identification of the lenders and their name and address is concerned, it is stated that the onus was he unaccounted on the appellant to provide the same, as tthe transactions were in the complete knowledge of the appellant.However, the appellant has failed to discharge the burden of proof, which lies on him. Needless, to mention here that the appellant himself has during the assessment and oceedings unequivocally accepted that an amount of penalty proceedings Rs. 1 crore 10 lacs have been received by him in cash.
cash."
16.2 He further relied upon the following judicial pronouncements :
i. AnantharamVeerasinghaiah& Co. v. CIT reported in (1980) 123 ITR 457 (SC) ii. Dhanji R Zalte (265 ITR 204) iii. Kum A B Shanthi (122 Taxman 574) (SC) iv. Mysore Sales International Ltd. v. Dy. CIT [2004] 134 Taxman 193 (Kar.) and Shri Sanjay Shantilal Jain 41 ITA No. 6123 & 6124/M/2018 v. State of Bihar v. CIT [1993] 202 ITR 535 (Pat.) vi. Attar Singh Gurmukh Singh (199 ITR 667) vii. Finance Bill, 1984 (146 (ST) 162) viii. Circular No. 387 dated 06.07.1984 ix. ThenamalChhajjer (96 ITD 210) x. P. Bhaskar (340 ITR 560) xi. Kasi Consultant Corporation (311 ITR 419)
17. Before us, the Ld. Counsel of the assessee submitted that there was no material before the Ld. Addl./Commissioner of tax to substantiate that cash loan in reference were Income-tax exceeding ₹20,00,000/ 20,00,000/- and therefore those authorities have levied the penalty mainly on the p resumption that cash loans are presumption exceeding ₹20,00,000/ 20,00,000/-.. According to the Ld. Counsel, it was the onus on the authority who has levied the penalty to establish that loans in question were exceeding ₹20,00,000/- and therefore, the penalty levied is liable to be deleted. However, we do not agree with the above contention of the Ld. Counsel of the assessee. The details of the loan entries found during the course of the search have been referred by the Ld. CIT(A) in para 7.1 of the impugned order where each entry is exceeding ₹20,00,000/-.. If the assessee was having any evidence that those entries are combined loan having each Shri Sanjay Shantilal Jain 42 ITA No. 6123 & 6124/M/2018 entry below ₹20,00,000/ 20,00,000/- then it was the responsibility of the assessee to forward the name and address of the parties along with relevant evidences justifying identity, creditworthiness and genuineness of transaction. Iff the assessee did not provide any details of the entry of loan of ₹98,00,000/--, ₹7,00,000/-, ₹8,00,000/-, ₹10,00,000/ 10,00,000/- etc., then the logical inference is that the amount is unexplained cash credit, which should have been assessed u/s 68 of the Act by the Assessing Officer and in that case, it is not being explained unsecured loan, having no name and address of the of parties, no penalty for violation of 269SS/T can be initiated. What is beyond the seized record is known to the assessee and therefore, the onus in on the assessee to substantiate substantiat the same. In view of the above discussion, we are of the view that the penalty levied u/s 271D of the Act is not justified. Since th the issue of addition of section 68 of the Act in respect of amount of unsecured loan claimed by the assessee has already been restored back to the file of the Assessing Officer in ITA No. 6123/Mum/2018, while deciding the issue of addition of ₹6,25,01,000/- on the basis of e feel appropriate to restore this issue of levy pages of seized diary, we Shri Sanjay Shantilal Jain 43 ITA No. 6123 & 6124/M/2018 of penalty u/s 271D of the Act to the file of the Ld. Joint/Addl.
Commissioner for deciding afresh after adjudication by the Assessing Officer whether the amount of unsecured unsecured loan in consideration is unexplained cash credit or explained unsecured loan. The grounds of the appeal of the assessee are accordingly allowed for statistical purpose.
18. In the result, the appeal of the assessee is having ITA No. 6123/M/2018 and ITA No. 6124/M/2018 are allowed for statistical purposes.
Order pronounced under Rule 34(4) of the ITAT Rules, 1963 on 31/10/2022 /10/2022.
Sd/- Sd/
Sd/-
(SANDEEP
SANDEEP SINGH KARHAIL)
KARHAIL OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 31/10/2022
Rahul Sharma, Sr. P.S.
Shri Sanjay Shantilal Jain 44
ITA No. 6123 & 6124/M/2018
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A)-
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
BY ORDER,
//True Copy//
(Sr. Private Secretary)
ITAT, Mumbai