ANNU ANIL AGARAWAL, MUMBAI v. ACIT (OSD-I)- CC-7, MUMBAI

ITA 320/MUM/2010 | 2006-2007
Pronouncement Date: 18-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 32019914 RSA 2010
Assessee PAN ADMPA0248F
Bench Mumbai
Appeal Number ITA 320/MUM/2010
Duration Of Justice 1 year(s) 10 month(s) 4 day(s)
Appellant ANNU ANIL AGARAWAL, MUMBAI
Respondent ACIT (OSD-I)- CC-7, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 18-11-2011
Date Of Final Hearing 10-10-2011
Next Hearing Date 10-10-2011
Assessment Year 2006-2007
Appeal Filed On 13-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 320/MUM/2010 (ASSESSMENT YEAR: 2006-07) SMT. ANNU ANIL AGRAWAL ACIT (OSD-1) CENTRAL CIRCLE 7 501 SIDDHI BUILDING MARVE ROAD 4TH FLOOR AAYAKAR BHAVAN MALAD (W) MUMBAI 400064 VS. M.K. ROAD MUMBAI 400020 PAN - ADMPA 0248 F APPELLANT RESPONDENT APPELLANT BY: SHRI S.C. TIWARI RESPONDENT BY: SMT. USHA NAIR DATE OF HEARING: 11.10.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-40 MUMBAI DATED 13.11.2009. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HON. CIT (APPEAL) ERRED IN CONFIRMING THE ADDIT ION OF RS.3 75 731/- MADE BY THE LD. AO U/S. 69C OF THE AC T AS UNEXPLAINED PURCHASES OF THE APPELLANT. B. HON. CIT APPEAL FURTHER ERRED IN IGNORING T HE FACT THAT THE SAID ADDITION WAS MADE ON THE BASIS OF NOTHING IN N OTE BOOM ANNEXURE A-9 FOUND IN APPELLANTS OFFICE PREMISES DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND THE APPELL ANT HAD DENIED THE OWNERSHIP THEREOF. 2.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE HON. CIT (APPEAL) ERRED IN CONFIRMING THE ADDIT ION OF RS.3 01 276/- MADE BY THE LD. AO U/S. 69C OF THE AC T AS UNEXPLAINED PAYMENT OF SALARY MADE BY THE APPELLANT . B. HON. CIT APPEAL FURTHER ERRED IN IGNORING T HE FACT THAT THE SAID ADDITION WAS MADE ON THE BASIS OF NOTING IN NO TE BOOK ANNEXURE A-9 FOUND IN APPELLANTS OFFICE PREMISES DURING THE COURSE OF SEARCH AND SEIZURE ACTION AND THE APPELL ANT HAD DENIED THE OWNERSHIP THEREOF. ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 2 3.A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE HON. CIT (APPEAL) ERRED IN CONFIRMING THE ADDIT ION OF RS.17 21 592/- MADE BY THE LD. AO U/S. 69A OF THE A CT AS UNEXPLAINED INVESTMENTS MADE BY THE APPELLANT IN GI VING LOANS. B. HON. CIT APPEAL FURTHER ERRED IN IGNORING T HE FACT THAT THE SAID ADDITION WAS MADE BY AO ON THE BASIS OF NOTING IN NOTE BOOK MARKED AS ANNEXURE A-9 FOUND IN APPELLANTS OFFICE PREMISES DURING THE COURSE OF SEARCH AND SEIZURE AC TION AND THE APPELLANT HAD DENIED THE OWNERSHIP THEREOF. 3. ALL THE THREE GROUNDS ARE INTERRELATED IN THE SENSE THAT THE A.O. MADE ADDITIONS UNDER SECTION 69C ON THE BASIS OF ANNEXUR E A-9 FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION. IT WAS THE SUBMISSION THAT THE SAID NOTEBOOK DOES NOT BELONG TO ASSESSEE WHERE AS THE A.O. INVOKING PROVISIONS OF SECTION 292C MADE THE ADDITIONS. 4. BRIEFLY STATED THERE WAS A SEARCH AND SEIZURE ACTI ON UNDER SECTION 132(1) OF THE I.T. ACT ON 28.06.2006. THE PLACES CO VERED INCLUDED ASSESSEES RESIDENTIAL AND OFFICE PREMISES WHICH WAS ALSO USE D BY ASSESSEES HUSBAND A CHARTERED ACCOUNTANT AS HIS OFFICE PREMISES. DUR ING THE COURSE OF SEARCH A NOTEBOOK MARKED ANNEXURE A-9 WAS SEIZED WHICH HAS 75 PAGES. THE OWNERSHIP OF THE NOTEBOOK WAS DENIED BY ASSESSEES HUSBAND IN THE COURSE OF HIS STATEMENT RECORDED UNDER SECTION 132(4). IT SEEMS THAT THE SEARCH PARTY ALSO VERIFIED THE HANDWRITING OF THE STAFF ME MBERS AND THIS WAS ALSO NOTED IN THE ASSESSMENT ORDER VIDE PARA 2.1 THAT TH E NOTEBOOK WAS NEITHER WRITTEN IN HIS HANDWRITING OR IN THE HANDWRITING OF ANY OF THE STAFF MEMBERS. THERE WAS NO QUESTION RECORDED FROM THE ASSESSEE AB OUT THE OWNERSHIP OF THE NOTEBOOK IN THE COURSE OF SEARCH AND SEIZURE PR OCEEDINGS. THE SEARCH WAS CONDUCTED IN ORDER TO EXAMINE THE ISSUE OF BOOK ING PROFITS BY WAY OF LONG TERM CAPITAL GAINS ON TRANSACTION OF SHARES IN PENNY STOCK COMPANIES. THE SEARCH RESULTED IN IDENTIFYING THAT ASSESSEE HA S NEITHER BOOKED ANY CAPITAL GAINS NOR THERE WERE ANY SHARE TRANSACTIONS PERTAINING TO PENNY STOCKS. NO ADDITIONS WERE MADE IN THE ASSESSMENT OR DER ON THE ISSUE OF CAPITAL GAINS EVEN THOUGH ASSESSEE VOLUNTARILY MAD E DECLARATION OF ` 7 00 000/- IN THE NEXT ASSESSMENT YEAR TO COVER ANY LAPSE. ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 3 5. A.O. ASKED THE ASSESSEE TO EXPLAIN ABOUT THE CONTEN TS OF THE NOTE BOOK SEIZED AS ANNEXURE-9. ASSESSEE DENIED THE OWNERSHIP OF THE NOTEBOOK AND SUBMITTED THAT THIS MAY PERTAIN TO ANY CLIENT OF HE R HUSBAND WHO COULD HAVE COME TO THE PREMISES AND LEFT WITHOUT TAKING T HIS NOTEBOOK ALONGWITH HIM. IT WAS ALSO EXPLAINED THAT ASSESSEE MADE EFFOR TS IN LOCATING FROM THE SOCIETY MEMBERS AND OTHERS TO ESTABLISH THE OWNERSH IP OF THE NOTEBOOK BUT COULD NOT GET ANY INFORMATION ABOUT THE OWNERSHIP O F THE NOTEBOOK. ASSESSEE MAINTAINED THAT THE SAID NOTEBOOK DID NOT BELONG TO HER AND AN AFFIDAVIT WAS FILED IN SUPPORT OF THE CONTENTIONS. THIS WAS NOT ACCEPTED BY THE A.O. AND INVOKING PROVISIONS OF SECTION 292C W HICH PLACES ONUS ON THE ASSESSEE MADE ADDITIONS ON THE BASIS OF ENTRIES I N THE NOTE BOOK WHICH ARE CATEGORISED AS UNEXPLAINED: PURCHASES TO THE TUNE O F ` 3 75 731/- PAYMENT OF SALARY OF ` 3 01 276/- AND LOAN OF ` 17 21 592/-. THE FIRST TWO ITEMS WERE ADDED UNDER SECTION 69C AND LOANS UNDER SECTION 69A . 6. BEFORE THE CIT(A) IT WAS SUBMITTED THAT DURING TH E SEARCH PROCEEDINGS THERE IS NO ENQUIRY ABOUT THE SAID SE IZED NOTE BOOK FROM ASSESSEE. THE QUESTION OF INVOKING THE PROVISIONS O F SECTIONS 292C SEC.69C AND SEC. 69A CAME AT THE LATER STAGE. IN THE COURSE OF STATEMENT U/S 132(4) ASSESSEES HUSBAND HAD REPLIED THAT HE WOULD PROVID E THE NECESSARY DETAILS TO THE ANNEXURES A. 1 TO A. 10 LATER AND HE VOLUNTA RILY MADE DECLARATION OF ADDITIONAL INCOME OF ` 7 00 000/- IN THE HANDS OF ASSESSEE SO AS TO COVER THE LAPSES IF ANY. THEREFORE THERE SHOULD NOT HAVE BEE N ANY FURTHER ADDITION IN ASSESSEES HANDS FOR A.Y. 2006-07. THE AVERMENTS MA DE IN THE DULY SWORN AFFIDAVIT IN ABSENCE OF ASSESSEES STATEMENT RECOR DED DURING THE SEARCH PROCEEDINGS SHOULD BE CONSIDERED AS HER REBUTTAL O F THE PRESUMPTION UNDER THE ACT. THE NOTE BOOK WAS FOUND IN THE OFFICE PREM ISES OF THE ASSESSEE DURING THE COURSE OF SEARCH AND SEIZURE AT THE TIME WHEN THE ASSESSEE OR HER HUSBAND WAS NOT PRESENT. THEREFORE IT CANNOT B E REGARDED AS IN THE POSSESSION AND UNDER THE CONTROL OF THE ASSESSEE. THE ASSESSING OFFICER HAS NOT BROUGHT ANY CORROBORATIVE EVIDENCE TO PROVE THA T THE TRANSACTION/ENTRIES ARE RELATED TO THE ASSESSEE. THE ASSESSING OFFICER HAS NOT GIVEN ANY SPECIFIC SHOW CAUSE BEFORE MAKING SUCH A HUGE ADDITION. THE SEARCH TEAM HAS NOT FOUND ANY INVENTORY OF ANY IMITATION OR ARTIFICIAL JEWELLERY EITHER FROM THE ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 4 OFFICE OF THE ASSESSEE OR FROM THE RESIDENCE OF THE ASSESSEE. THE ONLY THING THAT THE SAID NOTE BOOK WAS FOUND IN THE PREMISES O F THE ASSESSEE CAN NOT BE REGARDED THAT THE SAID NOTE BOOK BELONGS TO THE ASSESSEE. 7. IT WAS FURTHER CONTENDED THAT ASSESSEE HAD MADE EFF ORTS TO ASCERTAIN THE IDENTITY OF THE OWNER OF THE NOTEBOOK AND RELIE D ON THE FOLLOWING DECISIONS: - I. ASHWANI KUMAR VS. ITO 42 TTJ (DEL) 644 II. S.K. GUPTA VS. DCIT 63 TTJ (DEL) 532 III. CHNADER MOHAN MEHTA VS. ACIT 65 TTJ (PUNE) 327 IV. CBI VS. V.C. SHUKLA 3 SCC 410 V. UMACHARAN SHAH & BROS VS. CIT 37 ITR 271 (SC) VI. PUSHKAR NARAIIN SARRAF VS. CIT 183 ITR 388 (ALL ) 8. THE CIT(A) HOWEVER CONSIDERED PROVISIONS OF SECTI ON 292C AND ASSESSEES INABILITY TO SUBSTANTIATE HER STAND AGR EED WITH THE A.O. NOT ONLY THAT HE ALSO CONFIRMED THE ADDITIONS SO MADE ON THE BASIS OF THE SEIZED NOTEBOOK WITHOUT CONSIDERING ANY OF THE OBJECTIONS RAISED BY THE ASSESSEE. HENCE ASSESSEE IS IN APPEAL AND RAISED THE GROUNDS ACCORDINGLY. 9. THE LEARNED COUNSEL REFERRED TO ANNEXURE A-9 PLACED IN THE PAPER BOOK FROM PAGE NO. 6 TO 84 TO SUBMIT THAT THE OWNER SHIP OF THE NOTEBOOK WAS NOT ESTABLISHED. ASSESSEE TRANSACTS IN SHARE MA RKET AND NOT IN ARTIFICIAL JEWELLERY. IT WAS NOT EVEN IN THE HANDWRITING OF TH E ASSESSEE. IT WAS ALSO NOT CONNECTED WITH THE BUSINESS OF EITHER THE ASSESSEE OR OF HER HUSBAND. IT MAY BE THAT SOMEBODY WANTED TO SEEK ADVICE CAME TO ASSE SSEES HUSBAND AND MIGHT HAVE LEFT THE NOTEBOOK BUT THE TRANSACTIONS T HEREIN DOES NOT CORRELATE TO ANY OF ASSESSEES TRANSACTIONS. REFERRING TO SEC TION 292C IT WAS SUBMITTED THAT THERE IS NO DISPUTE WITH REFERENCE TO SEIZURE OF THE NOTE BOOK FROM ASSESSEES PREMISES BUT IT CANNOT BE STATED THAT IT WAS SEIZED FROM THE POSSESSION OF THE ASSESSEE AS ASSESSEE DOES NOT HA VE ANY CONTROL OF COMMON OFFICE PREMISES AND THIS BOOK IS NOT IN THE CONTROL OF THE ASSESSEE. IN FACT THE TRANSACTIONS DO NOT PERTAIN TO ASSESSEE AT ALL AND REFERRED TO THE AFFIDAVIT PLACED ON RECORD BEFORE THE A.O. ITSELF T O SUBMIT THAT THE TRANSACTIONS DO NOT PERTAIN TO ASSESSEE. REFERRING TO THE ENTRIES IN THE ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 5 NOTEBOOK IT WAS STATED THAT THESE PERTAIN TO SOME P URCHASES AND SALES OF ARTIFICIAL JEWELLERY AND AMOUNTS RECEIVABLE/AMOUNT PAYABLE TO VARIOUS PARTIES. REFERRING TO THE TRANSACTIONS PERTAINING T O PURCHASES THE LEARNED COUNSEL SUBMITTED THAT THESE ARE PURCHASE OF KUNDAN JEWELLERY AND CHAKRI CRISTAL INCLUDING COST OF TRANSPORTATION ON RICKSHA W ETC. IT WAS SUBMITTED THAT THE A.O. HAS ADDED THE ENTIRE AMOUNTS EVEN THO UGH IT WAS NOT PERTAINING TO ASSESSEE AS ASSESSEE IS NOT IN THE BU SINESS OF PURCHASE AND SALE OF ARTIFICIAL JEWELLERY AND THERE IS NO ARTIFI CIAL JEWELLERY SEIZED FROM ASSESSEES PREMISES. REFERRING TO THE SALARY PAYMEN TS ALSO THE NAMES ARE GIVEN IN THE ASSESSMENT ORDER AND THE SEARCH PARTY ITSELF HAS EXAMINED THAT NONE OF THE PERSONS ARE EMPLOYED BY ASSESSEE. THOSE NAMES MENTIONED LIKE ANJALI VARSHA RAJU ETC. IN PARA 5.2 OF THE ASSES SMENT ORDER ARE NOT EMPLOYED BY ASSESSEE NOR THEIR SALARY IS PAYABLE OR PAID FROM HER BOOKS OF ACCOUNT. WITH REFERENCE TO THE OTHER TRANSACTIONS O F LOANS IT WAS SUBMITTED THAT THESE TRANSACTIONS WERE TAKEN AS LOANS ADVANCE D BY ASSESSEE BUT IT CAN ALSO BE CONSIDERED THAT EITHER THE AMOUNT RECEIVED FROM THE PARTIES AS THAT NOTEBOOK IS NOT INDICATIVE OF EITHER THE LOANS RECE IVED OR ADVANCED. IT ONLY CONTAINS NAME OF A PERSON AND AN AMOUNT AGAINST HIM WHICH THE A.O. HAS TAKEN IT AS LOANS ADVANCED AND INVOKING THE PROVISI ONS OF SECTION 69A ADDED TO THE INCOME OF THE ASSESSEE. IT WAS SUBMITTED THA T THE TRANSACTIONS DOES NOT PERTAIN TO ASSESSEE AT ALL. HE REFERRED TO THE STATEMENT OF ASSESSEES HUSBAND UNDER SECTION 132(4) WHEREIN IT WAS STATED THAT THIS NOTEBOOK DOES NOT PERTAIN TO ASSESSEE WHICH THE A.O. ALSO RECORDS IN THE ASSESSMENT ORDER. COMING TO THE PROVISIONS OF SECTION 292C THE LEARN ED COUNSEL SUBMITTED THAT THIS PROVISION IS A LEGAL FICTION AND IT IS FO REIGN BODY INJECTED IN TO THE BODY OF JUSTICE. THEREFORE ONE CANNOT TRAVEL OUTSI DE THE PROVISIONS AND STRICTLY LEGAL CONSTRUCTION SHOULD BE CONSIDERED. I T IS TRUE THAT IT IS AN OFFICE PREMISES BUT THE PREMISES IS OPEN TO THE PUBLIC WHO VISIT HER HUSBAND AS CLIENTS AND JUST BECAUSE THE BOOK WAS FOUND IN THE PREMISES IT CANNOT BE INFERRED THAT IT BELONG TO ASSESSEE. IT IS THE REVE NUE TO ASCRIBE THE OWNERSHIP WHEN ASSESSEE DENIES THE OWNERSHIP. AS FA R AS ASSESSEE IS CONCERNED ASSESSEE GAVE THE NAMES OF HER EMPLOYEES AND EXPLAINED THAT THERE IS NO CORRELATION WITH ASSESSEES BUSINESS AN D FURTHER FILED AN AFFIDAVIT ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 6 TO SUBMIT THAT IT HAS NO CONNECTION WITH THE ASSESS EE. A.O. DID NOT COUNTER THESE ARGUMENTS BUT SIMPLY INVOKED PROVISIONS OF SE CTION 292C WHICH UNFORTUNATELY THE CIT(A) ALSO ACCEPTED. IT WAS SUB MITTED THAT WHAT SORT OF EVIDENCE IS TO BE PRODUCED WHEN ASSESSEE DENIES OWN ERSHIP OF THE NOTEBOOKS SEIZED FROM THE OFFICE OF ASSESSEES HUSB AND WAS NOT SPECIFIED. THE BURDEN IS ON REVENUE TO ESTABLISH THAT THE TRAN SACTIONS IN THE NOTEBOOK PERTAIN TO ASSESSEE AND NO ADDITION CAN BE MADE ON ASSUMPTIONS AND PRESUMPTIONS. 10. FURTHER IT WAS SUBMITTED THAT THE NOTEBOOK CONTAINS ONLY DETAILS OF PURCHASES SO THE ADDITION OF ENTIRE PURCHASES WITHO UT CONSIDERING THE SALES OR PROFIT IS ALSO NOT CORRECT. IT WAS FURTHER SUBMI TTED THAT THE ASSESSING OFFICERS TALLY OF THE AMOUNTS WERE ALSO NOT CORREC T AS FAR AS LOANS ARE CONCERNED. IT CAN BE INFERRED AS LOANS RECEIVED BY THE PERSON (WHO EVER IS THE OWNER OF THE BOOK) AND CANNOT BE CONSIDERED AS LOANS ADVANCED BY THE SAID PERSON. ON THESE FACTS IT WAS THE SUBMISSION O F THE LEARNED COUNSEL THAT THE ADDITIONS ARE NOT WARRANTED. 11. THE LEARNED D.R. IN REPLY SUBMITTED THAT ASSESSEE H AS NOT DISPUTED THAT THE NOTEBOOK WAS FOUND IN ASSESSEES PREMISES. HE THEN REFERRED TO THE STATEMENT OF ASSESSEES HUSBAND WHEREIN HE HAS DECL ARED AN AMOUNT OF ` 7 00 00/- IN THE COURSE OF SEARCH WHERE IN ALL THE ANNEXURES INCLUDING ANNEXURE A-9 WERE REFERRED TO IN MAKING THE DISCLOS URE THEREFORE IT CAN NOT BE STATED THAT ASSESSEE IS NOT AWARE OF THE NOTEBOO K. HE REFERRED TO THE THE STATEMENT IN PAGE 104 QUESTION NO. 6 RECORDED FROM SHRI ANIL AGRAWAL IN THE COURSE OF SEARCH BY THE ADIT (INV) TO STATE THA T ANNEXURE A1 TO A10 WERE ASKED TO EXPLAIN AND ASSESSEES HUSBAND SUBMITTED T HAT HE IS IN THE PROCESS OF PREPARING THE DETAILED REPLY AND THEREFORE IT CA NNOT BE STATED NOW THAT THE BOOK DOES NOT BELONG TO ASSESSEE. HE THEN REFERRED TO THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS AMBAY ABHUSHAN BHANDAR 259 ITR 699 (RAJ) TO SUBMIT THAT VARIOUS L EGAL FICTIONS CREATED UNDER VARIOUS PROVISIONS OF INCOME TAX ACT ARE TO B E MADE APPLICABLE WHEN THE ASSESSMENTS WERE MADE UNDER SECTION 153A CONSEQ UENT TO THE SEARCH AND SEIZURE OPERATIONS. HE SUBMITTED THAT THE A.O. HAS NO OPTION THAN TO ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 7 INVOKE THE LEGAL FICTION AS THE ASSESSEE FAILED TO EXPLAIN THE CONTENTS OF THE NOTEBOOK AND ALSO OWNERSHIP OF THE NOTEBOOK TO THE SATISFACTION OF THE A.O. 12. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE PAPER S PLACED ON RECORD. AS FAR AS SEIZURE OF A-9 IS CONSIDERED IT W AS SEIZED FROM ASSESSEES PREMISES WHICH WAS ALSO USED BY HER HUSBAND A CHAR TERED ACCOUNTANT BY PROFESSION. IT IS ALSO ON RECORD THAT A STATEMENT U NDER SECTION 132(4) WAS RECORDED FROM ASSESSEES HUSBAND NOT FROM ASSESSEE ABOUT THE SEIZURE OF VARIOUS PAPERS INDEXED AS A-1 TO A-10. ASSESSEE DIS CLOSED A TOTAL OF ` 10 00 000/- ` 3 00 000/- ON ACCOUNT OF GOLD JEWELLERY AND ` 7 00 000/- TO COVER VARIOUS DISCREPANCIES IN THE STATEMENT RECOR DED FROM HER HUSBAND. IT MAY BE THAT SOME CLIENT MIGHT HAVE LEFT THE NOTEBOO K WHILE SEEKING ADVICE OR FOR PREPARATION OF STATEMENTS. AS SEEN FROM THE CON TENTS OF THE NOTE BOOK THEY PERTAIN TO SOME PURCHASE TRANSACTIONS OF ARTIF ICIAL JEWELLERY ADVANCES/RECEIPTS OF AMOUNTS FROM VARIOUS PARTIES PAYMENT OF SALARY MONTH-WISE TO EMPLOYEES. WHAT THE A.O. HAS DONE IS TO TOTAL ALL THE ENTRIES AVAILABLE IN EACH PAGE AND CATEGORISED INTO THREE T YPES OF PURCHASE SALARY AND LOAN AMOUNTS AND MAKING THE ADDITION OF THE AMO UNTS. AS PER THE ASSESSMENT ORDER PASSED DATED 10.12.2008 ASSESSEE DERIVES INCOME FROM HOUSE PROPERTY AND TRADING IN SHARES. THE SEARCH AN D SEIZURE OPERATIONS NEITHER UNEARTHED ANY UNACCOUNTED TRANSACTIONS OF S HARE TRADING NOR ANY OTHER BUSINESS IN WHICH ASSESSEE WAS ENGAGED. THERE WAS SOME EXCESS JEWELLERY AND SOME DOCUMENTS SEIZED AS PER ANNEXURE 1 TO 9 AND ASSESSEE HONOURED THE DISCLOSURE MADE BY HER HUSBAND UNDER S ECTION 132(4) BY FILING THE ADMITTED INCOMES IN THE LATER YEAR. NOWHERE IN THE ASSESSMENT ORDER THE A.O. HAS ANALYSED ANNEXURES 1 TO 10 TO EXAMINE WHETHER THERE IS ANY CORRELATION TO THE ENTRIES IN ANNEXURE 9 WITH OTHER ENTRIES IN THE ANNEXURES SEIZED. THERE ARE CERTAIN NOTEBOOKS SEIZED AS A-5 A-6 A-7 & A-8 WHICH ALSO WERE SEIZED IN THE PREMISES BUT THE FATE OF THESE N OTEBOOKS AND THE ENQUIRIES WITH REFERENCE TO THAT NOTEBOOKS WERE NOT PLACED ON RECORD WHETHER THEY PERTAIN TO ASSESSEE OR NOT. THE A.O. I N THIS YEAR HAS CONSIDERED ANNEXURE A-9 ALONE PHOTOCOPY OF THE SAM E WAS PLACED ON RECORD BY ASSESSEE FROM PAGE 6 TO 84. AS SEEN FROM THE TRA NSACTIONS IT IS PRIMA FACIE EVIDENT THAT THIS NOTEBOOK DOES NOT RELATE TO ANY OF THE TRANSACTIONS OF ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 8 THE ASSESSEE. IT CANNOT BE CONSIDERED AS UNACCOUNTE D BUSINESS OF THE ASSESSEE IN THE ABSENCE OF ANY CORRELATION WITH REF ERENCE TO THE ENTRIES IN THE OTHER NOTEBOOKS OR AT LEAST SEIZURE/ INVENTORY OF ANY ARTIFICIAL JEWELLERY FROM ASSESSEES PREMISES. IT IS ALSO STATED THAT TH E SEARCH PARTY ENQUIRED FROM THE EMPLOYEES OF ASSESSEE CORRELATED THEIR HA NDWRITING/SIGNATURES WHICH DID NOT TALLY WITH THE HANDWRITING IN THE NOT E BOOK. EVEN THESE ENTRIES EVEN THOUGH IN ENGLISH DID NOT INDICATE TH AT IT IS MAINTAINED IN A REGULAR FASHION BUT MAINTAINED BY A SEMI-LITERATE P ERSON AS THERE ARE SPELLING MISTAKES AND ALSO REPETITION IN THE ENTRIE S. THEREFORE WE ARE OF THE OPINION THAT JUST BECAUSE THE BOOK WAS SEIZED FROM ASSESSEES PREMISES ONE CANNOT CORRELATE THE ENTRIES THEREIN TO ASSESSEES TRANSACTIONS MORE SO WHEN ASSESSEE DENIES ANY CONNECTION WITH THE ENTRIES THE REIN. 13. PROVISIONS OF SECTION 292C DO EMPOWER THE A.O. TO P RESUME THAT SEARCH BOOKS OF ACCOUNT AND DOCUMENTS BELONG TO THE PERSON. THE PROVISIONS OF SECTION 292C(1) ARE AS UNDER: - 292C. (1) WHERE ANY BOOKS OF ACCOUNT OTHER DOCUMENTS M ONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COUR SE OF A SEARCH UNDER SECTION 132 [OR SURVEY UNDER SECTION 133A] I T MAY IN ANY PROCEEDING UNDER THIS ACT BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MO NEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SU CH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HAND WRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE AS SUMED TO HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON ARE IN THAT PERSONS HANDWRITING AND IN THE CASE OF A DOCUMENT STAMPED EXECUTED OR ATTESTED T HAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. 14. AS PER THE ABOVE IT CAN BE PRESUMED THAT SUCH BOOK OF ACCOUNTS AND OTHER DOCUMENTS BELONG TO SUCH PERSON AND THE CONTE NTS OF SUCH BOOK ARE TRUE. HOWEVER IT IS ONLY A PRESUMPTION WHICH IS RE BUTTABLE. ASSESSEE HAS FILED AN AFFIDAVIT STATING THAT THE CONTENTS OF THE BOOK DOES NOT BELONG TO HER ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 9 AND IT SEEMS THE SEARCH PARTY ALSO ENQUIRED FROM TH E EMPLOYEES OF THE ASSESSEE TO EXAMINE WHETHER THE HANDWRITING IS TALL YING OR NOT. IN THE ABSENCE OF ANY CORRELATION WITH ASSESSEES BUSINESS TRANSACTIONS THE CONTENTS OF THE AFFIDAVIT CAN NOT BE REJECTED BY TH E A.O. WITHOUT ANY EXAMINATION OF THE TRANSACTIONS WITH ASSESSEES BUS INESS OR WITH ANY OTHER SEIZED MATERIAL. THEREFORE EXCEPT RELYING ON THE P ROVISIONS OF SECTION 292C A.O. DID NOT ESTABLISH ANYTHING WHICH ATTRIBUTE THE TRANSACTIONS THEREIN TO THAT OF ASSESSEES. IN THE ABSENCE OF ANY CORRELAT ION WITH THAT OF ASSESSEES BUSINESS JUST BECAUSE THE SAME WAS FOUND IN ASSESSE ES PREMISES THE ENTRIES THEREIN CANNOT BE IN OUR VIEW CONSIDERED AS THAT OF ASSESSEE. MOREOVER UNDER SECTION 132(4) ITSELF ASSESSEES HU SBAND DENIED THE CONTENTS THEREIN. IT IS NOT ON RECORD WHY THE SAME WAS CONSIDERED IN THE HANDS OF ASSESSEE WHEN THE PREMISES IS ALSO BEING U SED BY ASSESSEES HUSBAND AND STATEMENT WAS RECORDED FROM HIM. 15. BE THAT AS IT MAY THE ADDITIONS ITSELF ARE ALSO NO T WARRANTED. JUST BECAUSE THE ENTRIES CONTAINED SOME PURCHASES OF ART IFICIAL JEWELLERY IT CANNOT BE STATED THAT THE ENTIRE PURCHASES ARE OUTSIDE THE BOOKS OF ACCOUNT OR UNEXPLAINED. WHAT THE A.O. HAS DONE IN THE ASSESSME NT IS TOTALLING THE ENTRIES FROM PAGE 31 TO 55. PAGE 31 CONTAINS PURCHA SES ENTRIES FROM 18.07.2005 TO 12.08.2005. LIKEWISE PAGE 32 CONTAINS THE TRANSACTIONS UP TO 22.08.2005. HOWEVER THE NEXT ENTRY IN THE SAME PAG E PERTAINS TO 29.07.2005 AND 30.07.2005. THE NEXT ENTRIES IN THE SAME PAGE PERTAIN TO 01.09.2005 AND THE CONTINUATION ENTRIES IN PAGE 40. THIS INDICATES THAT THESE ARE TRANSACTION ON CERTAIN DATES CHRONOLOGICA LLY RECORDED. THESE AMOUNTS ARE TOTALLED PAGE WISE AND ADDED AS UNEXPLA INED PURCHASES. IT IS NOWHERE MENTIONED THAT THESE ITEMS ENTERED UNDER HE AD PURCHASE ARE AVAILABLE IN CLOSING STOCK OR SOLD ON A DAY-TO-DAY BASIS. IN THE ANXIETY TO ADD EVERY ENTRY IN THE PURCHASE ACCOUNT THE A.O. ALSO CONSIDERED IN ITS TOTAL THE TRANSACTIONS PERTAINS TO 02.04.2006 AVAILABLE IN PA GE 45 TO 16.05.2006 IN PAGE 46. THESE TRANSACTIONS PERTAIN TO NEXT ASSESSM ENT YEAR AND NOT TO THIS ASSESSMENT YEAR. THIS SHOWS NON-APPLICATION OF MIND BY THE A.O. IN ANALYSING THE TRANSACTIONS OF PURCHASES. LIKEWISE U NDER THE HEAD SALARIES WHICH THE A.O. TOTALLED FROM PAGE 19 TO 30 THERE A RE MISTAKES IN ITS ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 10 CONSIDERATION. THERE ARE CERTAIN ENTRIES WHICH ARE STRUCK OFF IN THE PAGES WHICH ARE ALSO CONSIDERED WHILE TOTALLING THE AMOUN T. FOR EXAMPLE IN PAGE 19 OF THE NOTEBOOK THERE ARE DETAILS OF SALARY PAYM ENT OF AUGUST 2005 SEPTEMBER 2005 AND OCTOBER 2005 WHICH ARE TOTALLED TO ` 31 628/- IN PARA 5.2 UNDER THE HEAD SALARY. WHILE TABULATING SALAR Y PAYMENTS IN RESPECT OF VARIOUS PERSONS A.O. TOTALLED THE AMOUNTS MENTIONED AGAINST EACH NAME. IN THE CASE OF ANJALI THERE ARE SALARIES PAID IN THE MONTH OF AUGUST SEPTEMBER AND OCTOBER. LIKEWISE TO VARSHA IN THE SAME MONTH S. SAME FOR OTHER EMPLOYEES IN THE ABOVE THREE MONTHS. THESE AMOUNTS PAID TO INDIVIDUAL EMPLOYEES WERE AVAILABLE IN DIFFERENT PAGES WERE AL SO TOTALLED AS SALARY PAYMENTS ALONG WITH THE CONSOLIDATED PAYMENT OF ` 31 682/- ACCOUNTED MONTH-WISE IN PAGE 19. THERE IS DOUBLE ADDITION TO THAT EXTENT MADE UNDER THE HEAD SALARY. THIS ALSO SHOWS NON-APPLICATION OF MIND BY THE A.O. IN ANALYSING THE TRANSACTIONS IN ITS CORRECT PERSPECTI VE. SIMILAR IS THE TRANSACTION WITH LOANS AS EXTRACTED IN PARA 5.4 OF THE ASSESSMENT ORDER. THERE ARE REPETITION OF ENTRIES WITH REFERENCE TO AKBAR IN PAGE 6 AS WELL AS PAGE 7 AND THE A.O. MADE DOUBLE TOTALLING OF THE PR EVIOUS AMOUNT ALSO. LIKEWISE THERE ARE MANY OTHER ENTRIES WHICH DO IND ICATE THAT THE A.O. HAS NOT ANALYSED THE TRANSACTIONS BUT JUST TOTALLED THE AMOUNTS SO AS TO MAKE THE ADDITION. IT IS VERY UNFORTUNATE THAT THE CIT(A ) ALSO HAS NOT EXAMINED THESE EVEN THOUGH THE ASSESSEE WAS SUBMITTING THAT THE TRANSACTIONS DO NOT PERTAIN TO ASSESSEE. WE ARE OF THE OPINION THAT THE ADDITIONS SO MADE BY THE A.O. CANNOT BE SUSTAINED NOT ONLY FOR THE REASON TH AT THESE AMOUNTS HAVE NO CORRELATION WITH ASSESSEES BUSINESS BUT ALSO ON THE REASON THAT THE TRANSACTIONS CATEGORISED AS SALARIES AND LOANS PERT AIN TO NEXT ASSESSMENT YEAR WERE ALSO ADDED IN THIS ASSESSMENT YEAR. AS SE EN FROM THE NOTE BOOK AND ADDITION MADE IN THE CASE OF AJAY BHAI AT PAG E 10 THE ENTRIES WHERE TOTALLED TO ` 26 100/-. THESE PERTAIN TO THE PERIOD 19.07.2005 TO 03.09.2005. AGAIN THERE ARE AJAY BHAIS TRANSACTIONS IN PAGE 1 1 WHICH WERE TOTALLED TO ` 3 63 390/-. WHETHER THESE AMOUNTS ARE RECEIVED OR P AID WAS NOT CLEARLY ESTABLISHED. AJAY BHAIS ACCOUNT CONTINUED IN PAGE 13 UP TO 09.05.2006 IE. BEYOND THE ACCOUNTING YEAR UNDER CONSIDERATION. EVE N THE TRANSACTIONS PERTAINING TO APRIL AND MAY 2006 WERE ALSO ADDED IN THE TOTAL PERTAINING TO ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 11 AJAY BHAIS LOAN. WHETHER THESE AMOUNTS ARE RECEIVE D OR PAID CANNOT BE ASCERTAINED FROM THE ENTRIES. THE ASSESSING OFFICER S ACTION IN ADDING THE AMOUNT WHICH IS TO BE PAID FOR ABRAR PLATING DO I NDICATE THAT THE AMOUNTS ARE NOT RECEIVABLE BUT PAYABLE AMOUNTS (VIDE PAGE 9 UNDER THE HEAD ABRAR PLATING; STATED WRONGLY AS AKBER IN ASSESSMENT O RDER). THE ENTRY IN THAT PAGE 9 IS LIKE THIS: AMOUNT ` 22 000/- BALANCE TO PAY ` 82 474 + 9000. THE TOTAL WAS TAKEN AT ` 1 13 474/- AS AMOUNT OF LOAN ADVANCED (IGNORING THE ENTRY OF ` 3 20 203/- STATED AS TO RECEIVE). THE ENTRIES CLE ARLY INDICATE THAT THE AMOUNT IS PAYABLE AND NOT RECEIVABLE. HOW AN AM OUNT WHICH IS TO BE PAID TO A PARTY CAN BE CONSIDERED AS LOAN GIVEN WAS NOT EXPLAINED. IN VIEW OF THIS THE ADDITION SO MADE BY THE A.O. UNDER VARIOU S HEADS AND THAT TOO INCLUDING TRANSACTIONS PERTAINING TO APRIL/ MAY 200 6 INDICATE THAT THE A.O. FAILED IN HIS DUTY IN EXAMINING THE ENTRIES THEREIN IN THE PROPER PERSPECTIVE. THEREFORE WE ARE OF THE OPINION THAT THE ADDITION SO MADE BY THE A.O. CANNOT BE SUSTAINED. 16. HOWEVER KEEPING THE FACT ASSESSEES HUSBAND GAVE A STATEMENT RELATING TO ADDITIONAL INCOME ON THE SEIZED PAPERS AND ALSO THE FACT THAT THE FULL OWNERSHIP OF THE NOTEBOOK COULD NOT BE DENIED OR ESTABLISHED WE ARE OF THE OPINION THAT AN AMOUNT OF ` 1 00 000/- AS A ROUND SUM ADDITION WOULD JUSTIFY THE FACTS OF THE CASE CONSIDERING ALSO THE FACT THAT ASSESSEE ADMITTED AN AMOUNT OF ` 7 00 000/- IN THE LATER YEAR. THEREFORE INSTEAD OF MAKING ADDITIONS UNDER VARIOUS HEADS AS WAS DONE BY THE A. O. WITHOUT ESTABLISHING THE TRANSACTIONS THEREIN WE ARE OF THE OPINION THA T A ROUND SUM ADDITION OF ` 1 00 000/- WOULD MEET THE ENDS OF JUSTICE ON A CONS PECTUS OF THE MATTER. ACCORDINGLY THE ADDITION MADE IS REDUCED TO ` 1 00 000/- AND THE GROUNDS ARE CONSIDERED PARTLY ALLOWED. 17. IN THE RESULT APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 18 TH NOVEMBER 2011 ITA NO. 320/MUM/2010 SMT. ANNU ANIL AGRAWAL 12 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 40 MUMBAI 4. THE CIT CENTRAL-II MUMBAI CITY 5. THE DR A BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.