Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs Sh. S.K. Gupta, New Delhi on 25 May, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'G' BENCH,
NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND
SHRI N.K. BILLAIYA ACCOUNTANT MEMBER
ITA No. 2718/DEL/2014
[Assessment Year: 2008-09]
The A.C.I.T Vs. Shri S.K. Gupta
Circle - 17 4827/24, Ansari Road
New Delhi Darya Ganj, New Delhi
PAN : AAOPG 8888 N
ITA No. 2038/DEL/2014
[Assessment Year: 2008-09]
Shri S.K. Gupta Vs. The A.C.I.T
4827/24, Ansari Road Circle - 17
Darya Ganj, New Delhi New Delhi
PAN : AAOPG 8888 N
[Appellant] [Respondent]
Date of Hearing : 21.05.2018
Date of Pronouncement : 25.05.2018
Assessee by : Shri Anil Jain, CA
Revenue by : Shri S.S. Rana, CIT- DR
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ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
The above two cross appeals by the Revenue and the assessee are preferred against the very same order of the CIT(A) - III, New Delhi dated 28.02.2014 pertaining to A.Y 2008-09. Since both these appeals were heard together and pertain to same assessee, these are being disposed off by this common order for the sake of convenience and brevity.
2. Before proceeding further, it would be pertinent to understand the facts of the case in hand as they are emanating from the orders of the authorities below vis a vis relevant documentary evidences brought on record in the form of paper books.
3. Briefly stated, the facts of the case are that a search and seizure operation u/s 132 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] was conducted by the INV Wing of the department on 30.07.2009 in the case of Standard Watch Group. Search also included residential premises of the members of the group. During the course of search proceedings, various documents were 3 impounded which included financial statements of the assessee group which were not fully incorporated in the regular books of account of the assessee group. Trading profit and loss account and balance sheet from 1.4.2001 to 30.9.2008 were found and the same are exhibited at pages 201 to 217 of the paper book. These financial statements are consolidated financial statements which contain details of the members of the group including their bank accounts.
4. With the aforesaid factual matrix, we first take up ITA No. 2038/DEL/14 appeal by the assessee. The assessee has raised five substantive grounds of appeal. Ground No. 1, 2 and 3 are taken up together for disposal as the same are covered against the assessee and in favour of the Revenue by the order of the coordinate bench in assessee's own case for assessment years 2006-07 and 2007-08 in ITA Nos. 6764/DEL/2013 and others.
5. In so far as Ground Nos 1 and 2 are concerned, a similar issue was considered by the coordinate bench [supra] vide para 13 of its order and the findings read as under:
"We have heard both the parties and have carefully gone through the material available on record and the 4 case laws cited before us. In our considered opinion, as the Assessing Officer has completed the assessment on the basis of the first notice for which the learned counsel for the assessee has not raised any legal objection with regard to its validity, there is no defect in the validity of the assessment as held by the Commissioner of Income Tax (Appeals). So far as the issuance of the second notice is concerned it may be treated as having been issued by way of clerical mistake covered u/s 292B of the Act and it cannot discard the sanctity of the first notice. If the Assessing Officer had completed the assessment on the basis of the second notice then the position would have been different. Although there is no direct authority with regard to the issue involved in this case, we can take the shelter of the decisions, as relied upon by the learned DR, which have been pronounced in the cases of section 148 proceedings viz. KLM Royal Dutch Airlines v. Assistant Director of Income Tax: 292 ITR 49 and CIT vs. K.M. Ranchayappan; 304 ITR 264. The judgments relied upon by the learned AR are not applicable to the facts of the case. In these judgments only one notice was issued and the same also was not as per the procedure prescribed under the Act whereas in the present case there is no defect in the first notice and the assessment has been completed on the basis of the first notice. We, therefore, find no force in this legal ground of the assessee and accordingly reject the same."5
6. In so far as the issues raised vide Ground No. 3 is concerned, the same were considered by the coordinate bench at para 21 of its order and the same read as under:
"21. On careful consideration of the above rival submissions and vigilant and careful perusal of the material available on record and on respectful consideration of the case laws cited at bar before us. we observe that the documents and consolidated balance sheet, as available in the assessee's paper book-1 from pages 196 to 22 1 it is vivid that these consolidated balance sheets reflect the assets in the shape of bank balance, investment in properties in the names of various group members and companies relating to the present assessees i.e. Shri S.K. Gupta and Shri Y.K. Gupta. We further observe that the debtors, stock, loans, advances and creditors of various group companies belonging to the present assessees and bank borrowings show that the loans have been taken in the names and Smt. Madhu Gupta wife of Shri S.K. Gupta and Smt. Meena Gupta, wife of Shri V.K. Gupta. Therefore, the income arising or, account of these assets cannot be exclusively attributed or held as belonging to late Shri Suraj Bhan Gupta only. The charging section 4 of the Income Tax Act provides that the tax is to be charged on the income of a person to the extent it belongs to him. In 6 the present case, the income belongs to various individuals and group companies from the assets, investments, etc. which cannot be held as exclusively belonging to late Shri Suraj Bhan Gupta and the same belongs to various family members including the present assessees, their wives and children. We may also point out that as the seized documents are cash book, ledger account, consolidated balance sheets and other documents and these have been maintained just to briefly record the assets and liabilities of the family members and group companies, therefore, various complexity and uncertainties are there in the identification of exact income, which belongs to the individual members of the group companies and thus it is not possible to allocate the income therefrom personwise and companywise. Therefore, we are inclined to agree with the findings of the Commissioner of Income Ta (Appeals) mat the income should be allocated between Shri S.K Gupta and Shri V.K. Gupta as they are the key players after death of Shri Suraj Bhan Gupta and they also agreed before the Company Law Board vide order dated 13.1.2009 to divide the assets of the family and group companies in the ratio of 60:4 0 respectively among them. Hence, we decline to agree with the contention of the assessee that the entire income discernible from the consolidated balance sheets should be assessed in the hands o: late Shri Suraj Bhan Gupta.7
22. So far as the alternative prayer of the assessee is concerned that the income should be assessed in the hands of AGP is concerned, we do not find any force in this contention as there was no AOP in existence during the relevant assessment years and it is also not clear as to which AOP the income should be assessed. At this juncture, we again point out that vide Company Law Board order dated 13.1.2009 both the assessees have agreed to divide the assets of the group which was headed by late Shri Suraj Bhan Gupta between them in the ratio of 60 : 40 and being a beneficiary of the assets in such ratio, the authorities below were right in taxing the income therefrom in the same ratio in the hands of respective assessee -
appellant. Consequently ground No. 3 of the
assessee is dismissed."
7. Respectfully following the findings of the coordinate bench, Ground Nos. 1, 2 and 3 are dismissed.
8. Ground No. 4 relates to the addition of Rs. 1,23,72,993/- on account of undisclosed interest.
9. While scrutinizing the seized material, the Assessing Officer found that the assessee has earned interest on loans and advances 8 which have not been included in the returned income. The interest component was bifurcated by the Assessing Officer as under:
0) Interest earned on loans and advances of Rs.8,05,75,164 (refer seized ledger A-10 page 95) Rs. 2,06,21,655
(ii) Interest calculated @ 30% by the AO on the loans of Rs.8,12,00,000(given to parties at S.No. (ii) to (v) and (vii to ix) on the slips discussed above. Rs. 2,43,60,000
(ii) Interest calculated @ 30% by the AO on the loans of Rs.5,49,21,110 given outside the books in the assessment year 2006-07 which was added in assessment year 2006-07. Rs. 1,64,76,333 Total Rs. 6,14,57,988
10. The assessee pointed out that there are some clerical mistakes and correct detail of the interest received is as under:
Annexure Pages Amount as per Period Page Actual Amount No. Questionnaire as per seized Annexure A-28 96,97,98,100 62,34,649/- Oct-Dec, 07 182 59,40,901/- A-10 106,107,108,110 49,77,704/- Jan-Mar, 08 182 49,41,475/-
9,92,840/- Apr-Jun, 08 174 -
A-30 103,30,109,111,8
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A-13 88,94,100 18,75,000/- Jul-Sep, 08 161 1,60,106/-
Interest received - Apr-Sep, 07 - 97,39,279/-
1,40,80,193/- 2,07,81,761/-
11. It was explained that the interest received amounting to Rs.
2,07,81,761/- has already been taken into account as income in the consolidated profit and loss account and balance sheet of the group 9 for the period 1.4.2007 to 30.09.2008. It was strongly pointed out that taxing the same income once again will tantamount to duplicity. The contention of the assessee was rubbished by the Assessing Officer who was of the opinion that apart from this interest income, the assessee has not disclosed interest on loan of Rs. 8.12 crores and also has not shown interest on unaccounted loan of Rs. 5.49 crores. The Assessing Officer accordingly computed the interest for F.Y. 2007-08 and worked out the same at Rs. 4.08 crores.
12. When the matter was agitated before the ld. CIT(A), the ld. CIT(A) was convinced that the interest of Rs. 2.06 crores is reflected in the ledger account and the authenticity of the said ledger account has been accepted in the appellate order of assessment year 2006-07 and since the same has not been reflected in the regular books of account, confirmed the addition of Rs. 2.06 crores.
13. In so far as balance interest of Rs. 4.08 crores is concerned, the ld. CIT(A) observed that since interest on loans and advances of Rs. 5.49 crores has already been deleted by the appellate order of assessment year 2006-07, accordingly, interest amounting to Rs. 1.64 crores on these loans and advances was deleted. Proceeding further, 10 the ld. CIT(A) observed that as regards the interest of Rs. 2.43 crores, the Assessing Officer was not right in concluding that the assessee has given loan of Rs. 8.12 cores to various persons. The ld. CIT(A) proceeded by deleting the same.
14. Finally, the ld. CIT(A) sustained an addition of Rs. 2.06 crores and since in the earlier assessment year he has given a categorical finding that interest is to be divided in the ratio 60:40 between the two brothers, namely, the assessee and his brother Shri Vinod Kumar Gupta. Taking a leaf out of his earlier order, the ld. CIT(A) confirmed the addition of Rs. 1,23,72,993/-. Aggrieved by this, both the assessee and the revenue are before us.
15. The ld. counsel for the assessee vehemently contended that if on the basis of notings in the seized documents the income part is added, then on the basis of the notings relating to interest/ bad debts should also be allowed as a deduction.
16. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and vehemently pointed out that the claim of deduction is not tenable in law.
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17. We have given thoughtful consideration to the orders of the authorities below and with the assistance of the ld. Counsel, we have carefully considered the relevant documentary evidences brought on record in the form of paper books in the light of Rule 18(6) of the ITAT Rules. There is no denying that voluminous documents were impounded during the search proceedings. It is equally true that the seized material contained financial statements of the assessee and its group members. As mentioned elsewhere, these financial statements were in the form of consolidated trading profit and loss account and balance sheet of the assessee and its family members. There is no denying that on the basis of notings found in these seized material, the Assessing Officer has made various additions.
18. The Hon'ble Jurisdictional High Court of Delhi in the case of Indigo Airways P. ltd in Tax Appeal No. 1620 & 1622 of 2010 has held that :
"Full effect of the presumption should be given effect to whenever the statute directs a particular non existent state of affairs to be assumed. Under these circumstances, the effect of presumption which bade the Revenue when it chose to invoke it, to presume that the contents of such books of account and other documents are true. Therefore, in the absence of any material in the form of 12 documents, the revenue could not have denied the benefit of any expenses which would otherwise have inured to the assessee as an allowable deduction u/s 37(1) of the Act."
19. In our considered opinion, when seized financial statements were made the basis for making additions, then the entries relating to expenditure in the form of interest payment and also bad debt written off cannot be ignored. The Revenue cannot add the credit side and ignore the debit side of the same document.
20. The coordinate bench in the previous assessment year i.e. 2006- 07 and 2007-08 in ITA Nos 6764/DEL/2013 [supra] have taken a view which reads as under:
"In our considered opinion for arriving at the net interest income, as discernible from the entries recorded in the consolidated balance sheet, the amount of interest paid to State Bank of India and Allahabad Bank amounting to Rs.78,72,708/- should also have been deducted therefrom. At the same time we further observe that when the Assessing Officer wants to tax the amount of interest income earned by the assessor from loans and advances then the amount of bad debt of Rs.30,79,835/- as appearing in the debit side of the P&L act aunt should also have been allowed to the 13 assessee as deduction because the amount of bad debts pertain to the activity of financial business of the assessee wherein loans and advances are given b\ the assessee on which the impugned interest income has been earned It is a well accepted proposition that the amount of bad debts is incidental 10 the financing business and the same should have beer, allowed fully u/s 37(1) of the Act. As laid down by the Hon'ble High Court of Delhi in the case of CIT vs. Indigo Airways Pvt. Ltd. [supra] the document has to be accepted or rejected in toto. It is not proper and justified approach to accept part entries of the documents favouring the revenue and rejecting the part entry of the same document favouring the assessee. Therefore, we direct the Assessing Officer to recompute the amount of undisclosed interest income by giving credit of the amount of interest paid it State Bank of India and Allahabad Bank and the amount of bank debt shown in the consolidated balance sheet. After allowing credit of interest paid and bad debts, the remaining part of interest income should be allocated in the ratio of 60 :
40 between the present assessees, Shri S.K. Gupta and Shri Y.K. G pm Consequently, ground no. 4-of the assessee is partly allowed in the manner as indicated above and ground no. 2 of the revenue is dismissed."14
21. Respectfully following the findings of the coordinate bench [supra] we direct the Assessing Officer to allow the expenditure relating to the payment of interest and bad debts, as per Annexure A- 10 page 93 back [internal pg 180] & Annex A-5 pg 14 [both party X-I]. The AO is further directed to allocate the balance interest income if any in the ratio of 60:40 as done in the earlier year between the assessee and his brother Shri V.K. Gupta. Thus, Ground No. 4 of assessee's appeal is treated as allowed for statistical purposes.
22. On the very same issue, the revenue is aggrieved by the deletion of addition of Rs. 4.08 crores. As mentioned elsewhere, the family group has already shown interest income of Rs. 2.06 crores in assessment year 2006-07 and the same has been accepted as such in the appellate order for assessment year 2006-07. Therefore, to this extent, deletion by the ld. CIT(A) is justified. In so far as the balance interest of Rs. 4.08 crores is concerned, the same is calculated @ of 30% per annum on loans and advances of Rs. 5.49 crores which was given in assessment year 2006-07. Since in assessment year 2006-07 the addition of Rs. 5.49 crores have been deleted by the appellate authorities, there is no question of charging any interest on the said amounts. To this extent, deletion of Rs. 1.64 crores is upheld. The balance interest of Rs. 2.43 crores can also not be sustained as the 15 Assessing Officer has presumed that the assessee must have given loan of Rs. 8.12 crores to various persons. Hence, deletion of the same is justified as the same has been added on assumption, surmises and conjectures. Accordingly, Ground No. 2 of Revenue's appeal is dismissed.
23. Ground No. 5 of the assessee relates to the addition of Rs. 5.06 crores on account of undisclosed amount received in sale of R-57, GK-1 property.
24. In the search proceedings, one loose sheet was found which is exhibited at page 220 of the paper book. From the notings in the sheet, the Assessing Officer came to know that the assessee has sold a property No. R-57, at GK-1 for a consideration of Rs. 11.51 crores. The Assessing Officer further found that the assessee has received on money of Rs. 8.45 crores. Since the income has been apportioned in the ratio 60:40 between the assessee and his brother Shri V.K. Gupta, the ld. CIT(A) apportioned Rs. 5.06 crores to be added in the hands of the assessee.
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25. Before us, the ld. counsel for the assessee vehemently stated that the assessee was having only 1/6th share in the impugned property. The ld. counsel for the assessee further stated that the assessee has incurred expenditure amounting to Rs. 22 lakhs on the said property, therefore, only 1/6th share should be added after allowing deduction for the expenditure incurred on the said property. It is the say of the ld. counsel for the assessee that since the property was a long term capital asset, therefore, tax rate applicable for long term capital gains should be charged.
26. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and stated that no proper evidence has been filed by the assessee in support of its claim. It is the say of the ld. DR that since the addition has been made as undisclosed income of the assessee, therefore, special rate of tax applicable to long term capital gain cannot be applied.
27. We have considered the rival submissions and perused the orders of the authorities below. Exhibit 125 to 128, 129 to 132, 133 to 136 and 137 to 140 are sale deed of the impugned property. We find that in each of the sale deed, it has been specifically mentioned that the 17 assessee is having only 1/6th share in the impugned property. Exhibits 141 to 147 is the sale deed wherein 1/6th share of Shri V.K. Gupta is mentioned. There is no denying that the on money has been received on the sale of the impugned property. It is equally true that the undisclosed sale consideration has been treated as undisclosed income of the assessee. Considering the fact that the assessee was only holding 1/6th share in the said property, in our considered opinion, only 1/6th of the undisclosed sale consideration should be added in the hands of the assessee. Exhibit 210 shows that the assessee has incurred expenditure of Rs. 14,91,407/- on the said property and Exhibit 213 shows that expenditure of Rs. 7,16,961 has been incurred. After deducting these expenses, the Assessing Officer is directed to add 1/6th share from the balance undisclosed consideration to the income of the assessee. To this extent, grievance of the assessee is allowed.
28. In so far as the tax rate is concerned, since addition has been made as undisclosed income of the assessee, no benefit of special tax rate applicable to long term capital gain can be given. This plea of the assessee is dismissed.
29. In the result, the appeal filed by the assessee is partly allowed. 18
30. Coming to the Revenue's appeal in ITA No. 2718/DEL/2014, first grievance relates to the deletion of addition of Rs. 29.50 crores. Taking a leaf out of the impounded financial statements, the Assessing Officer came to the conclusion that the assessee has given loans and advances outside the books of account during the period 1.10.2007 to 30.09.2008
31. Relevant documents and other analysis by the Assessing Officer is as under:
(i) Loans appearing in the seized Ledger (refer parties at S.No.l to 24 mentioned on page 49 of assessment order) Rs. 14,64,06,612
(ii) Loose slips affixed on the ledger pages of account of SRS Group(refer parties at S.No.29 to 32 and 36 mentioned on page 49 of assessment order) Rs. 9,80,20,000
(iii) Loose slip affixed on the ledger page of account of Realtech Group (refer parties at S.No.33 to 35 and 37 mentioned on page 49 of assessment order) Rs. 5,05,90,000 Total Rs. 29,50,16,612
32. Addition of Rs. 29.50 crores was made by the Assessing Officer. 19
33. The assessee agitated the matter before the ld. CIT(A) and pointed out that the loan of Rs. 14.64 crores was given out of the opening balance of earlier years amounting to Rs. 11.11 crores and balance amount was out of sale proceeds of the property R-57, GK-1 and also out of the interest accrued on loans given during the year.
34. The ld. CIT(A) was convinced with the claim of the assessee and directed the Assessing Officer to accept the opening balance of Rs. 11.11. crores and deleted the addition to this extent.
35. In so far as the balance of loan is concerned, the ld. CIT(A) accepted the plea that it has been made out of on money received from the sale of property R-57, GK-1. In support of his findings, the ld. CIT(A) drew support from the judgment of the Hon'ble jurisdictional High Court of Delhi in the case of Ram Avtar Gupta in Tax Appeal No. 571 of 2012.
36. In so far as the balance addition of Rs. 9.80 crores and Rs. 5.05 crores is concerned, it was pointed out to the ld. CIT(A) that the facts of these two loans given have not been properly appreciated by the Assessing Officer in as much as the slips which were pasted on the 20 ledger of SRS and Realtech first name written is STPL which stands for Standard Times [P] ltd which is the trade name of the assessee group and therefore, the assessee cannot give loan to itself and loans advances given to SRS are given by its friends and relatives The ld. CIT(A) found force in the contention of the assessee and after verifying the seized documents i.e. balance sheet, cash book and ledger account, the ld. CIT(A) found that no reference of any loan given to persons other than SRS and Realtech is there. The ld. CIT(A) accepted that the assessee has not given loans to Deepak, Amit Gupta, Rajesh Gupta, Lalit Gupta and Amit G. Once again the ld. CIT(A) drew support from the judgment of the Hon'ble Delhi High Court in the case of Indigo Airways [supra]. Accordingly, addition of Rs. 29.50 crores was deleted.
37. Before us, the ld. DR strongly supported the findings of the Assessing Officer. It is the say of the ld. DR that presumption u/s 132(4A) r.w.s 292C of the Act is available to the Assessing Officer and burden to rebut such a presumption lies heavily on the appellant.
38. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities.
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39. We have given thoughtful consideration to the orders of the authorities below qua the underlying facts in issue. There is no denying that as per the consolidated balance sheet of earlier years, the assessee was having funds amounting to Rs. 11.11 crores. There is also no denying that in the earlier assessment years i.e. 2006-07 and 2007-08 the Tribunal has accepted the contention of the assessee in ITA No. 6764/DEL/2013 and others [supra]. To this extent, the findings given by the co ordinate bench have to be followed. It is equally true that during the year, the assessee has received on money on the sale of property R-57, GK-1 and the same has been discussed in detail elsewhere. To this extent, the assessee has available funds with him. In so far as the balance amount of Rs. 14.85 crores is concerned, the same has been added only on the basis of the slips found at the time of search. It is true that in one of the slips noting are in the name of STPL which is nothing but trade name of the group of the assessee. In our understanding of the facts, one cannot give loan to oneself. Other names mentioned in the slip relate to the loans given to SRS and Realtech which are clear from the impounded documents. We, therefore, do not find any error or infirmity in the finding of the ld. CIT(A). Ground No. 1 is accordingly dismissed.
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40. Ground No. 3 of the Revenue relates to the deletion of addition of Rs. 1.39 crores made by the Assessing Officer on account of undisclosed investment in property.
41. The underlying facts in this issue relate to loose sheets found at the time of search operation which are exhibited at pages 218 and 219 of the paper book. Taking a leaf out of the notings in these loose sheets, the Assessing Officer formed a belief that the assessee has purchased some property at Sikandrabad Road for a consideration of Rs. 1.39 crores. On the basis of his belief, the Assessing Officer added the same as unexplained investment.
42. Before the first appellate authority, the assessee strongly contended that in the impugned loose sheets the entries were for a probable future investment which never materialized. The assessee pleaded that the impugned loose sheets are nothing but dumb documents.
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43. After considering the facts and submissions and after perusing the loose sheets, the ld. CIT(A) was convinced that these are nothing but dumb documents and deleted the addition of Rs. 1.39 crores.
44. Before us, the ld. DR strongly supporting the findings of the Assessing Officer. It is the say of the ld. DR that the impugned sheets were found from the premises of the assessee and therefore, presumption is against the assessee and addition has been rightly made by the Assessing Officer.
45. We have given thoughtful consideration to the orders of the authorities below vis a vis the impugned loose sheets being Exhibited at pages 218 and 219 of the paper It is true that these sheets were found from the premises of the assessee. It is equally true that the notings in the said loose sheets are neither here nor there. No logical inference can be drawn from the noting in these loose sheets.
46. Coming to the evidentiary value of the impounded loose sheet mentioned elsewhere, the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) and Others vs. Union of India 24 and Others in Writ Petition Civil Appeal No. 505 of 2015 has observed 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."25
47. The Hon'ble Supreme Court further observed:-
17. 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 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 part 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, fulfill 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."
48. With respect to evidentiary value of regular account book, the Hon'ble Supreme Court in the case of V.C. Shukla 1998 (3) SCC 410 has laid down:-
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"37. In Beni v. Bisan Dayal it was observed that entries in books 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 and in 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 v. Ram Rakha 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 proved, said, that the rule as laid down in Section 34 of Tie Act that entries in the books of account regularly kept in the course of business are 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 they were in accordance with facts."27
49. It is apparent from the aforesaid discussion that the loose sheet of papers are wholly irrelevant as evidence being not admissible u/s. 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value.
50. Considering the facts in totality in the light of the judicial decisions discussed hereinabove, we decline to interfere. Ground No. 3 is accordingly dismissed.
51. Ground No. 4 relates to the charging of interest u/s 234A of the Act.
52. An identical issue was considered by the coordinate bench in assessee's own case for assessment year 2006-07 and 2007-08 in ITA No. 6764/DEL/2013 and others [supra]. The relevant observation of the bench is as under:
"Apropos this ground, on careful consideration of the rival submissions, we have no hesitation to hold that in view of the decision of the Hon'ble Supreme Court in the case of Anum M.H. Ghaswala vs. CIT; 252 ITE 01 (SC) charging of interest u/s 234 of the Act is mandatory and consequential to the . appeal effect order.28
However, in the present case, the Commissioner of Income Tax (Appeals) has held that the interest u/s 234A not to charged for the period upto which the assessee was not provided copy of the seized material and in our humble understanding of law, this conclusion of the Commissioner of Income Tax (Appeals) is in accordance with the provisions of the Act and, therefore, we are unable to see any valid reason to interfere with the same and hence, we uphold the same. Accordingly, ground No. 3 of the revenue is dismissed."
53. Respectfully following the same, we direct accordingly. Ground No. 4 is accordingly dismissed.
54. Before closing, the ld. DR in his written submissions has stated that the undisclosed income of any assessee for any year has to be computed by comparing notings on the seized paper with returned income filed by the assessee. It is further contended that relief has been allowed by comparing one seized paper with another seized paper. As per section 132(4), the onus lies upon the assessee to explain them vis a vis their returned income. This onus has not been discharged. We do not find any merit in these submissions of the ld. DR because it is the settled proposition of law that a document should 29 be read as a whole. No doubt the presumption is against the assessee in so far as any material found from the premises of the assessee is concerned, but at the same time, that material has to be considered as a whole. We find that the Assessing Officer has taken support from the seized material and added the credit side as income of the assessee. In our considered opinion, the Assessing Officer should have also considered the debit side of the seized material. The Assessing Officer cannot blow hot and cold in the same breath. If the presumption is against the assessee in so far as the credit entries are concerned, then the presumption is also for debit side of the sheets impounded during the course of search. Hence, no interference is called for with the findings of the first appellate authority.
55. In the result, the appeal of the Revenue is dismissed whereas the appeal of the assessee is allowed.
The order is pronounced in the open court on 25.05.2018.
Sd/- Sd/-
[H.S. SIDHU] [N.K. BILLAIYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 25th May, 2018
30
VL/
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi