Mr. Sadiq Shaikh, Panaji v. DCIT, Panaji

ITA 89/PAN/2013 | 2007-2008
Pronouncement Date: 31-07-2013 | Result: Allowed

Appeal Details

RSA Number 8924114 RSA 2013
Assessee PAN AMFPS2073J
Bench Panaji
Appeal Number ITA 89/PAN/2013
Duration Of Justice 2 month(s) 22 day(s)
Appellant Mr. Sadiq Shaikh, Panaji
Respondent DCIT, Panaji
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 31-07-2013
Assessment Year 2007-2008
Appeal Filed On 09-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH PANAJI BEFORE SHRI P.K. BANSAL HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA HONBLE JUDICIAL MEMBER ITA NO. 89/PNJ/2013 : (ASST. YEAR : 20 07 - 08 ) MR. SADIQ SHAIKH FR5 4 TH FLOOR SOUZA TOWERS OPP. MUNICIPAL GARDEN PANAJI GOA 403 001. (APPELLANT) PAN : AMFPS2073J VS. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE PANAJI GOA (RESPONDENT) ITA NO. 90/PNJ/2013 : (ASST. YEAR : 2007 - 08) MR S . SADIA SHAIKH FR5 4 TH FLOOR SOUZA TOWERS OPP. MUNICIPAL GARDEN PANAJI GOA 403 001. (APPELLANT) PAN : AKQPS9076A VS. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE PANAJI GOA (RESPONDENT) ITA NO. 127/PNJ/2013 : (ASST. YEAR : 2007 - 08) ASST. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE PANAJI GOA (APPELLANT) VS. MR. SADIQ SHAIKH NEAR DON BOSCO ODXEL DONA PAULA GOA (RESPONDENT) PAN : AMFPS2073J ITA NO. 128/PNJ/2013 : (ASST. YEAR : 2007 - 08) ASST. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE PANAJI GOA (APPELLANT) VS. MR S . SADIA SHAIKH NEAR DON BOSCO ODXEL DONA PAULA GOA (RESPONDENT) PAN : AKQPS9076A REVENUE BY : SMT. ASHA DESAI DR ASSESSEE BY : P.Y. VAIDYA ADV. & S.C. ANVEKAR CA DATE OF HEARING : 25 / 06 /2013 DATE OF PRONOUNCEMENT : 31 / 07 /2013 2 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) O R D E R PER D.T. GARASIA : 1. THESE TWO APPEALS FILED BY THE ASSESSEE HUSBAND AND WIFE AND TWO APPEALS FILED BY THE DEPARTMENT AGAINST THE HUSBAND AND WIFE FOR A.Y. 2007 - 08 ARE AGAINST THE ORDER OF CIT(A) DT. 27.3.2013 . THE COMMON GROUNDS IN THE ASSESSEES APPEAL READS AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED CIT ( A ) IN MAKING ADDITION OF RS.8 49 49 888/ - (50% EACH IN THE HANDS OF THE ASSESSEE AND SPOUSE AS PER SECTION 5A OF I.T.ACT 1961 ) IN RESPECT OF AMOUNT R ECEIVED FROM PRASAD PROPERTIES 2. THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE SAID AMOUNT WAS RECEIVED THROUGH NORMAL BANKING CHANNEL AND WAS A LIABILITY PAYABLE AS ON DATE. 3. THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE SAID AMOUNT WAS IN TERMS OF A GREEMENT DATED 21.12.2006 BETWEEN PRASAD PROPERTIES AND THE ASSESSEE FOR SETTING UP A FILM PROJECT IN GOA. 4. THE LEARNED CIT (A) ERRED IN UPHOLDING ADDITION BASED ON CONSTITUTION AND CH ANGES IN CONSTITUTION OF PRASAD PROPERTIES WHICH IS A SEPARATE LEGAL E NTITY. 5. THE LEARNED CIT (A) ERRED IN DRAWING AN INFERENCE THAT RECEIPT OF RS.8 49 49.88/ - BY THE ASSESSEE IS NOT EXPLAINED BASED ON OTHER FACTS AND EVENTS RELATING TO PRASAD PROPERTIES. 6. WHILE CONFIRMING ADDITION OF RS8 49 49 888.00( 50% EACH IN THE HA NDS OF THE ASSESSEE AND SPOUSE AS PER SECTION 5A OF I.T.ACT 1961 ) IN RESPECT OF AMOUNT RECEIVED FROM PRASAD PROPERTIES OUT OF THE TOTAL AMOUNT OF RS. 19 CR THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT ENTIRE ADDITION OF RS. 19 CR MADE BY A.O WAS ON THE BASIS OF LOOSE SHEET FROM THE SAME THIRD PARTY MR. SURYANARAYANA WHICH WAS ALREADY SUFFICIENTLY CROSS EXAMINED AT THE ASSESSMENT STAGE IN THE ASSESSMENT PROCEEDINGS U/S 153 OF I.T. ACT. 1961 FOR WHICH THE LEARNED ASSESSING OFFICER HAD NO REBUTTA L O N THE SAME. THE SAME IS PRAYED TO BE DELETED IN ENTIRETY. 7. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.30 00 000/ - IN RESPECT OF ADVANCE PAYMENT TO ARMANDO GONSALVES FOR PURCHASE OF RIGHTS IN PROPERTY KNOWN AS MOSPOTEM & MOROD CAUDANA SITU A TED AT TALIGAO. 8. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS.30 00 000/ - AS ABOVE WITHOUT MAKING CROSS EXAMINATION OF THE OTHER PARTY. 3 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) THE COMMON GROUNDS IN DEPARTMENTS APPEALS READS AS UNDER : THE LEARNED CIT(A) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.5 63 25 056/ - (BEING 50% OF RS.11 26 50 112/ - AS PER SECTION 5A OF THE I.T. ACT) MADE ON ACCOUNT OF CASH RECEIPT FROM SHRI N. SURYANARAYANA A. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER : 2.1 ON THE BASIS OF SEARCH PROCEEDINGS U/S 132 DT. 25 .2.2010 IN THE CASE OF THE ASSESSEE MR. SADIQ SHAIKH PROCEEDINGS U/S 153A WERE INITIATED. THE RETURN OF INCOME WAS FILED ON 2.8.2011 DECLARING TOTAL INCOME O F RS. 7 36 910/ - AND AGRICULTURAL INCOME OF RS.30 000/ - . THE ASSESSMENT HAS BEEN COMPLETED AFTER MAKING ADDITION OF RS.19 76 00 000/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT BY THE ASSESSEE. THESE FINDINGS OF THE AO ARE BASED ON THE SEARCH AND SUBSEQUENT INV ESTIGATION IN THE CASE OF SHRI SADIQ SHAIKH THE ASSESSEE. THE ASSESSEE S SHRI SADIQ SHAIKH AND SMT. SADIYA SHAIKH ARE HUSBAND AND WIFE. 50% OF THE INCOME ASSESSED IS ASSESSABLE IN THE HANDS OF EACH SPOUSE AS PER SECTION 5A OF THE INCOME TAX ACT. THEREF ORE COMMON ISSUES ARE INVOLVED AND T HE FOUR APPEALS ARE TAKEN UP TOGETHER FOR DISPOSAL VIDE THIS COMMON ORDER. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS RETAINED THE ADDITION OF RS.8.49 CRORES AND DELETED THE BALANCE AMOUNT OF RS.11 26 50 112/ - BY OBSE RVING AS UNDER : FROM THE ABOVE IT IS CLEAR THAT THE APPELLANT HAS FAILED TO EXPLAIN THE SOURCES OF ` 8.5 CRORE IN HIS BANK ACCOUNT CREDITED ON 15.03.2007. (ON THE STRENGTH OF WHICH THE PROPERTY IN QUESTION WAS REGISTERED ON 12.03.2000 MAJOR PORTION OF PAYMENT HAVING BEEN MADE BY WAY OF POST DATED CHEQUES AS DETAILED ABOVE.) FROM THE ABOVE IT IS CLEAR THAT THE CREDIT/DEPOSIT OF ` 8.5 CRORE IN THE BANK ACCOUNT OF THE APPELLANT IS NOT EXPLAINED. THESE HAVE CLEARLY BEEN TRANSFERRED FROM BANK ACCOUNT OF ONE MR SIRAJ SHEIKH WHO IS BROTHER OF THE APPELLANT AND ONE MR VIJAY KUMAR RAO WHO IS KNOWN TO BE A FRIEND OF THE APPELLANT. THE ASSESSING OFFICER HAS CLEARLY BROU GHT ON RECORD THAT THESE AMOUNTS WERE DEPOSITED IN THE ACCOUNTS OF MR SIRAJ SHEIKH AND MR VIJAY KUMAR RAO ON 10.03.2007 IN CASH. THE CLAIM OF THE APPELLANT MR VIJAY KUMAR RAO AND MR SIRAJ SHEIKH THAT THESE AMOUNTS WERE GIVEN TO THEM BY M/S PRASAD PROPERTI ES FOR PAYING IT TO MR SADIQ 4 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) SHEIKH IS NOT AN ACCEPTABLE EXPLANATION AS DETAILED BY THE ASSESSING OFFICER. IT IS OBSERVED THAT PRASAD PROPERTIES IS NOT AN INCOME TAX ASSESSEE NEVER EVEN OBTAINED A PAN NUMBER THE SAID FIRM HAS NO BANK ACCOUNT OF ITS OWN THE SAID FIRM WAS CONSTITUTED ONLY THROUGH PARTNERSHIP DATED 03.04.2006 AND DISSOLVED ON 29.03.2007. THE SAID FIRM IS SAID TO BE OPERATING AT CHENNAI WHEREAS CASH HAS BEEN DEPOSITED IN GOA BANK ACCOUNTS AND THE APPELLANT IS UNABLE TO EXPLAIN HOW AND WHY SUCH A HUGE AMOUNT OF MONEY WAS TRANSPORTED THROUGH SUCH A LONG DISTANCE. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THAT CASH WITHDRAWN AS PER THE SAID BOOKS OF PRASAD PROPERTIES AND THE ACTUAL DEPOSIT IN BANK ACCOUNTS SHOWS A CLEAR DISCREPANCY WHICH SHO WS THAT THE DOCUMENTS ARE TAILOR MADE ON PAPER ONLY AS A RESULT OF WHICH ERROR IS APPARENT. IT IS ALSO BROUGHT ON RECORD THAT STAMP PAPERS PURCHASED FOR EXECUTION OF PARTNERSHIP DEED AGREEMENT BETWEEN THE APPELLANT AND PRASAD PROPERTIES THE AGREEMENT BETWEEN THE PARTNERS AND DEED OF DISSOLUTION ARE ALL VERY OLD I.E. AS FAR BACK AS 2000 AND 2002 WHERE AS THE DATES OF EXECUTION OF THE SAID DOCUMENTS ARE IN 2006 - 07 WHICH CLEARLY SHOW THAT THESE DOCUMENTS ARE SIMPLY AN AFTER THOUGHT AND TAILOR MADE AND A N EFFORT BY THE APPELLANT TO GIVE SOME CREDENCE TO THE RECEIPT OF OR INTRODUCTION OF ` 8.49 CRORE IN HIS BANK ACCOUNT. THIS TRANSACTION AS CLAIMED BY THE APPELLANT IS CLEARLY NOT EXPLAINED FOR THE REASONS EXPLAINED ABOVE. IN SUCH CIRCUMSTANCES THIS CREDIT OF ` 8.49 CRORE IS TREATED AS THE APPELLANTS UNEXPLAINED INCOME. IN THE BACKGROUND OF THE DOCUMENTS FOUND IN THE PREMISES OF THE APPELLANTS FIRM GENUINENESS OF THESE CREDITS AND IN THE APPELLANTS ACCOUNT UNDER THE FACTS NARRATED ABOVE ARE CLEARLY NOT ACCEPTABLE AND THEREFORE TREATED AS THE APPELLANTS UNEXPLAINED INCOME. IT IS ALSO BROUGHT OUT BY THE ASSESSING OFFICER THAT THE SAID AMOUNT OF ` 8 49 49 888/ - SAID TO BE A LOAN FROM M/S PRASAD PROPERTIES REMAINED OUTSTANDING EVEN AFTER DISSOLUTION OF THE FIRM SHOWING THAT THE WHOLE CLAIM IS A SHAM ARRANGEMENT AND THEREFORE NOT ACCEPTABLE. AS REGARDS THE OBSERVATIONS OF THE ASSESSING OFFICER THAT INDIRECT PAYMENTS HAVE BEEN MADE TO MR ATANASIO MONSERRATE THROUGH TRANSFER OF LAND PURCHASED BY THE APPELLA NT TO M/S GOOD EARTH DEVELOPERS AND ADVANCE OF ` 15 CRORE TO M/S RAJ HOSPITALITY PVT LTD IT IS OBSERVED THAT IT IS CERTAINLY VERY STRANGE THAT THE PROPERTY OF VALUE ` 12.08 CRORE AS PER REGISTERED DEED DATED 08.12.2008 HAS BEEN TRANSFERRED TO MR ATANASIO MO NSERRATE ON 08.12.2008 MERELY ON PAYMENT OF ` 50 LAKHS WHEREAS THE BALANCE ( ` 11.58 CRORE) WAS STILL PAYABLE. OUT OF THE BALANCE ONLY ` 3 75 00 000/ - HAS BEEN PAID IN 2010 (AFTER 2 YEARS) AND THE REMAINING PAYMENT ( ` 8.3 CRORE) HAS BEEN COLLECTED BY THE I NCOME TAX DEPARTMENT IN 2012 TOWARDS TAX DUES OF THE APPELLANT. IT IS ALSO RELEVANT TO NOTE THAT BUT FOR THE IT DEPARTMENT THIS MONEY SUPPOSEDLY DUE TO THE APPELLANT WOULD HAVE REMAINED WITH THE BUYER I.E. M/S GOOD EARTH DEVELOPERS A CONCERN IN WHICH MR ROHIT MONSERRATE SON OF MR. ATANASIO MONSERRATE IS THE ONLY CAPITAL CONTRIBUTING 5 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) PARTNER. ALSO IT IS STRANGE THAT ` 15 CRORE ADVANCED TO M/S RAJ HOSPITALITY PVT LTD ON 14.03.2008 REMAINED PAYABLE AND THE SAME HAS NOT BEEN SQUARED UP TILL NOW. HOWEVER NO FURTHER INFERENCE IS BEING MADE WITH REGARD TO THESE PAYMENTS AS IN MY VIEW IT IS IN THE HANDS OF THE SAID RECIPIENTS THAT THESE PAYMENTS WILL BE RELEVANT (TO BE EXAMINED) AND NOT IN THE HANDS OF THE APPELLANT. WITH THE ABOVE FINDINGS AND OBSERVATIONS I UPHOLD A SUM OF ` 8 49 49 888/ - CREDITED IN THE APPELLANTS BANK ACCOUNT NO.05520200000277 WITH DEVELOPMENT CREDIT BANK PANAJI ON 15.03.2007 AS UNEXPLAINED INVESTMENT WHICH IS USED FOR PURCHASE OF THE PROPERTY AT SANCOALE FOR ` 11.58 CRORE AS DETAILED ABOV E. AS REGARDS THE REMAINING AMOUNT OUT OF ` 19.76 CRORE ADDED ON THIS ISSUE THE SAME IS DELETED IN ABSENCE OF ANY FURTHER EVIDENCE. THE DEPARTMENT IS IN APPEAL AGAINST DELETING THE ADDITION OF RS.11 26 50 112/ - . ITA NOS. 127 & 128/PNJ/2013 (DEPARTMENTS APPEALS) : 3. THE LD. DR SUBMITTED THAT THE EVIDENCE RELATING TO PAYMENT OF RS.19.76 CRORES WAS FOUND AND SEIZED FROM THE RESIDENCE OF SHRI N. SURYANARAYANA DURING THE SEARCH ON 9.10.2009. THE SEIZED EVIDENCE CONTAINED COMPLETE BACKGROUND OF TRANSACTIONS TOTAL PAYMENTS PERIOD ON WHICH PAYMENTS WERE MADE MODE OF PAYMENT AND DETAILS OF ACTION INITIATED FOR RECOVERY OF THE AMOUNT PAID BY CHEQUE. SHRI N. SURYANARAYANA CONFIRMED THE ABOVE EVIDENCES WERE FOUND AND SEIZED FROM THE RESIDENCE IN CARANZALEM GO A. THE EVIDENCE RELATING TO LAND AND PAYMENT AGAINST EACH OF THEM ALONGWITH THE MAPS WERE FOUND AND SEIZED FROM THE OFFICE OF SHRI SADIQ SHAIKH. EVIDENCE RELATING TO DETAILS OF LAND AND PAYMENTS WERE FOUND BOTH FROM THE PLACE BELONGING TO THE PAYER AND PAYEE. DURING THE ASSESSMENT PROCEEDINGS ASSESSEE REQUESTED TO CROSS EXAMINE SHRI N. SURYANARAYANA AND ACCORDINGLY CROSS EXAMINATION WAS CARRIED OUT AND IT HAS ALSO COME OUT FROM THE CROSS EXAMINATION THAT THERE WAS MUTUAL UNDERSTANDING BETWEEN PARTIES W HEREIN BOTH THE PARTIES ONCE AGAIN REITERATED THE EARLIER STAND IN RESPECT OF TRANSACTIONS. THEREFORE THE ENTIRE SET OF INVESTIGATION AND POST SEARCH INQUIRY ESTABLISHED BEYOND DOUBT THAT SHRI SADIQ 6 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) SHAIKH HAS RECEIVED CASH OF RS.19.76 CRORES FROM SHRI N . SURYANARAYANA AND ADOPTED A COLOURABLE DEVICE TO PASS ON BENEFIT TO SHRI MONSERRATE IN ORDER TO SETTLE THE BENEFIT RECEIVED BY HIM. 4. DURING THE HEARING THE LD. AR HAS FILED THE WRITTEN SUBMISSION OF THE ASSESSEE WHICH IS REPRODUCED BELOW : FACTS OF THE CASE: 1 . BRIEFLY THE FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED AS ACT) IN THE PREMISES OF ONE MR.N.SURYANARAYANA ON 9.10.2009. FURTHER THERE WAS A SEARCH AN D SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT 1 961 ON M/S ESSAR BUILDERS AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 25.2.2010. DURING THE COURSE OF SEARCH ON MR.N.SURYANARAYANA LOOSE SHEET CONTAINING DETAILS OF CERTAIN LAND AND AMOUNTS MENTION ED AGAINST IT WAS FOUND. A LOOSE SHEET CONTAINING LAND DESCRIPTION AND AMOUNT MENTIONED AGAINST IT WAS ALSO FOUND DURING THE COURSE OF SEARCH ON M/S ESSAR BUILDERS. 2. T H E ASSESSEE IS GOVERNED BY PORTUGUESE CIVIL CODE AND AS PER THE PROVISIONS OF SECTION 5 A OF THE ACT THE INCOME OF THE ASSESSEE AS WELL AS HIS WIFE IS APPORTIONED EQUALLY BETWEEN THE ASSESSEE AND HIS WIFE AND THE INCOME SO APPORTIONED SHALL BE INCLUDED SEPARATELY IN THE TOTAL INCOME OF THE ASSESSEE AND HIS RESPECTIVELY AND THE REMAINING PRO VISIONS OF ACT SHALL APPLY ACCORDINGLY. THE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 153A ON 2.8.2011 DECLARING TOTAL INCOME OF RS . 7 36 910 AND A GRI CU L TURAL INCOME OF RS.30 000. THE DCIT CENTRAL CIRCLE PANAJI FINALIZED THE ASSE SSMENT BY MAKING FOLLOWING ADDITIONS: (I) UNACCOUNTED CASH RECEIPTS FROM N SURYANARAYANA RS.19 76 00 000 (II)UNEXPLAINED INVESTMENTS .... RS. 30 00 000 THE ADDITION OF RS.19 76 00 0 00 IS BASED ON SEIZED DOCUMENT A/ E/B/ 1 SEIZED FROM THE PREMISES OF M/S ESSAR BUILDERS WHEREIN ASSESSEE IS A PARTNER AND ALSO ON THE BASIS OF SEIZED DOCUMENT FOUND IN THE PREMISES OF THIRD PARTY MR. SURYANARAYANA. THE AO ON THE BASIS OF THESE TWO DOCUMENTS (PAGES 11 AND 12 OF PAPER BOOK) CONC LUDED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.19.76 CRORES IN CASH FOR SE RV ICES IN CONNECTION WITH LAND PROPERTIES BELONGING TO MR.N.SURYANARAYANA. THE AO FURTHER CONCLUDED THAT THESE MONIES WERE INVESTED BY THE ASSESSEE IN PROPERTY AT SANCOALE FOR RS.1 1 58 16 250 ON 12. 3.2007. 7 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) BESIDES THE AO HIMSELF HAS STATED THAT THESE AMOUNTS WERE INDIRECTLY PAID TO SRI.ATANASIO MONSERRATE AS UNDER: (I) LAND AT SANCOALE AS STATED ABOVE TRANSFERRED WITHOUT RECEIPT OF SALE CONSIDERATION OF RS.1 1 58 16 250 TO M/S.GOOD EAR TH DEVELOPERS IN WHICH SRI.ROHIT MONSERRATE SON OF ATANASIO MONSERRATE IS THE ONLY CAPITAL CONTRIBUTING PARTNER. (II) ADVANCES OF RS.15 CRORES GIVEN TO M/S .RAJ HOSPITALITY PVT LTD WHEREIN ATANASIO MONSERRATE IS A DIRECTOR. THE AO ON THE BASIS OF ABOVE P RESUMPTIONS HELD THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.19.76 C RO RES AND BROUGHT IT TO TAX WITHOUT APPRECIATING THE FACTUAL ASPECTS OF THE ASSESSEES CASE . THE A.O ALSO MADE ADDITION OF RS.30 LAKH ADVANCED TO MR.ARMANDO GONSALVES FOR PURCHASE OF RIGHT S OF PROPERTY. THE FACTUAL DETAILS ARE AS UNDER . I )PROPERTY AT SANCOLE FOR RS. 1 1 58 1 6 250/ - WAS PURCHASED OUT OF RS 8.50 CR FROM M/S PRASAD PROPERTIES & OUT OF RS.3 . 08 CR FROM ASSESSEES MONEY. SUBSEQUENTLY IT WAS NOTICED THAT THERE IS CLAIM MADE ON THE PROPERTY BY A PARTY OTHER THAN ACTUAL SELLER ON THE SAID LAND. HENCE IT WAS DECIDED TO SELL THE PROPERTY IMMEDIATELY. THE PROPERTY WAS SOLD TO M/S GOOD EARTH DEVELOPERS FOR A CONSIDERATION OF RS.12.08 CR. M/S GOOD EARTH DEVELOPERS INITIALLY PAID RS.50 LAKH AND SUBSEQUENTLY IN THE YEAR 2010 PAID RS.3.75 CR TO THE ASSESSEE. THE BALANCE OF RS8.33 CRS RECEIVABLE BY THE ASSESSEE WAS ALREADY RECOVERED BY THE HON DEPT IN ATTACHMENT PROCEEDINGS FROM M/S GOOD EARTH DEVELOPERS WHICH WAS DONE BY THE SAME A.O. THIS EST ABLISHED THAT THE BELIEF OF THE LEARNED A.O WAS NOT RIGHT AS HE HIMSELF HAS RECOVERED THE AMOUNT RECEIVABLE TO THE ASSESSEE OF RS.8.33 FROM M/S GOOD EARTH DEVELOPERS. THE SALE CONSIDERATION OF RS12.08 CRS WAS PROPERLY ACCOUNTED IN BOOKS OF ACCOUNTS AND THE CAPITAL GAIN ON THE SALE WAS ALSO RETURNED IN R/ I FOR A.Y : 2009 - 10 FILED WELL BEFORE THE SEARCH ACTION TOOK PLACE. II) AMOUNT OF RS.15 CR WAS ADVANCED TO RAJ HOSPITALITY OUT OF ADVANCE OF RS.15.50 CR RE CEIVED FROM M/S AUDI CONSTRUCTION COMPANY ON 14.3.2008 VIDE AGREEMENT OF SALE FOR THE SALE OF 18 FIATS . THE PAYMENT MADE TO M/S RAJ HOSPITALITY WAS ON 15.3.2008 MADE OUT OF THESE RECEIPTS. ALL THE TRANSACTIONS OF RECEIPTS AND PAYMENTS ARE BY CHEQUE AND THR OUGH NORMAL BANKING CHANNELS. THESE TRANSACTIONS ARE PROPERLY RECORDED IN THE BOOKS OF ACCOUNT. THUS THE SOURCE OF AMOUNT ADVANCED TO M/S RAJ HOSPITALITY IS CLEARLY EXPLAINED. HENCE THERE IS NO NEXUS BETWEEN THE LOOSE SHEET FOUND AT THE PREMISES OF MR.N.SU RYANARAYANA AND INVESTMENT IN PROPERTY AT SANCOALE FOR RS.11.58 CR. ALSO THERE IS NO NEXUS BETWEEN THE LOOSE SHEET FOUND AT THE PREMISES OF 8 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) MR.N.SURYANARAYANA AND AMOUNT OF RS.15 CR ADVANCED TO M/S RAJ HOSPITALITY. SIMILAR IS THE CASE WITH LOOSE SHEET FOUN D IN THE PREMISES OF M/S ESSAR BUILDERS WHICH IS NOTHING MORE THAN A DUMB DOCUMENT BY ITSELF. THE SOURCE OF INVESTMENT OF RS.11.58 CR AT SANCOALE AND RS. ADVANCE OF RS.15 CR TO M/S RAJ HOSPITALITY IS CLEARLY EXPLAINED AS ABOVE. 3. THE ASSESSEE IN THE OATH STATEMENT DATED 12.04.2010 HAS CLEARLY STATED THAT LOOSE SHEET FOUND IN THE PREMISES OF M/S ESSAR BUILDERS WAS GIVEN TO HIM BY MR.N.SURYANARAYANA TO ASCERTAIN MARKET FEASIBILITY. ( PAGE NO 8 ANSWER TO Q.NO 36 AND Q.NO 37 OF PAPER BOOK). IT IS PERTINENT TO S TATE THAT DURING CROSS EXAMINATION ON 20.12.2011 MR.N.SURYANARAYANA HAS SPECIFICALLY DENIED THAT HE HAD MADE ANY PAYMENT TO THE ASSESSEE. (PAGE 13 TO PAGE 15(CROSS EXAMINATION) OF PAPER BOOK). HE CLEARLY STATED THAT HE HAS NOT DONE ANY TRANSACTION WITH THE ASSESSEE. THERE IS NO MATERIAL TO DISPROVE THE DEPOSITION BY MR. N.SURYANARAYANA. THESE CRUCIAL FACTS HAVE NOT BEEN BROUGHT ON RECORD IN THE ASSESSMENT ORDER BY THE A.O. PRESUMING BUT NOT ADMITTING EVEN IF THE CASH WAS GIVEN TO THE ASSESSEE AS ALLEGED IN THE SAID PAPER NO DETAILS ARE AVAILABLE ON RECORD AND THE INVESTIGATION AUTHORITIES FAILED TO CONSIDER HOW AMOUNTS COULD BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE LOOSE SHEET ALSO STATES THAT MR.N.SURYANARAYA HAS INITIATED LEGAL ACTION IN R ESPECT OF CHEQUE PAYMENTS AND NOT INITIATED ANY ACTION ON THE ASSESSEE WHICH ITSELF INDICATES THAT HE HIMSELF HAS NOT DONE ANY PAYMENT TO THE ASSESSEE. ALSO THERE IS NO EVIDENCE TO PROVE THAT HE HAS GIVEN SUCH A HUGE MONEY WITHOUT ANY WORK TO THE ASSESSEE. THIS REVEALS THAT MR.N.SURYANARAYANA IS WELL AWARE THAT THE PAYMENT REFERRED IN THE PAPER WAS NOT GIVEN TO THE ASSESSEE AND COULD BE GIVEN TO THIRD PERSON THOUGH CLAIMED IN THE LOOSE SHEET TO BE TO THE ASSESSEE AND THUS THERE IS NO INVOLVEMENT OF THE AS SESSEEE IN THE ACTIVITY AS SPECIFIED IN THE LOOSE SHEET FOUND AT THE PLACE OF MR.N.SURYANARAYANA. 4. THUS IN THE PRESENT CASE THE ASSESSEE HAS DISCHARGED HIS ONUS TO PROVE THAT THE AMOUNT MENTIONED IN LOOSE PAPER DOES NOT BELONG TO HIM NEITHER HE GOT AN Y BENEFIT FROM THE SAID MONEY NOR HE HAS RENDERED ANY SERVICES IN CONNECTION WITH THE SAID MONEY SO AS TO BRING IT TO TAX AS UNDISCLOSED INCOME OF THE ASSESSEE. THE DEPARTMENT COULD TAX THE SAID MONEY IF AT ALL IT IS TO BE TAXED IN THE HANDS OF THE REAL B ENEFICIAL PERSON AND NOT IN THE HANDS OF THE ASSESSEE. 5.I ) THUS THE LOOSE SHEETS FORMING A PART OF SEIZED MATERIAL IS A DUMB DOCUMENT AND NO ADDITION CAN BE MADE IN THE HANDS OF ASSESSEE ON THE BASIS OF DUMB DOCUMENT. ASHWIN KUMAR V / S ITO 39 I TD 183 ( DEL) . II) IN THE CASE OF NEM CHAND DAGA VIS ACIT 1 SOT 515 IT WAS HELD THAT WHETHER ENTRIES FOUND IN LOOSE PAPERS CAN HAVE ANY AUTHENTICITY OR EVIDENTIARY VALUE IN ITSELF HELD NO. WHETHER WHERE ASSESSEE CLAIMED THAT HE DID NOT RECEIVE ANY MONEY AND OPPOSITE PARTY CONCERNED ALSO CONFIRMED ASSESSEES 9 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) VERSION ASSESSING OFFICER COULD GIVE ANY SIGNIFICANCE TO SCIBBING IN LOOSE SHEETS HELD NO. THIS DECISION SQUARELY APPLIES TO THE FACTS OF OUR CASE. III) IN THE CASE OF S.P.GOYAL V/S DCIT 82 I TD 85 ( MUM ) ( TM ) IT WAS HELD WHETHER AS IT WAS A MERE ENTRY ON LOOSE SHEET OF PAPER AND ASSESSEE CLAIMED THAT IT WAS ONLY PLANNING NOT SUPPORTED BY ACTUAL CASH THEN THERE HAD TO BE CIRCUMSTANTIAL EVIDENCE TO SUPP ORT THAT ENTRY REALLY REPRESENTED CASH - HELD YES. WHETHER WHERE NO SUCH EVIDENCE FOUND IN THE FORM OF EXTRA CASH JEWELLERY OR INVESTMENT OUTSIDE BOOK EXPLAINATION OFFERED BY ASSESSEE COULD NOT BE REJECTED HELD YES. WHETHER ADDITION MADE WAS ON MERE SUS PICION WITHOUT ANY CORROBORATIVE EVIDENCE AND HAD TO BE DELETED - HELD YES. IN THE PRESENT CASE ALSO DURING SEARCH ACTUAL CASH OF ONLY RS. 2 LAKH WAS FOUND AND EXPLAINED AND FOUND CORRECT. ALL THE OTHER INVESTMENTS ARE EXPLAINED WITH SOURCE AND TRANSACTIONS ARE PROPERLY RECORDED IN THE BOOKS. HENCE APPLYING THE RATIO OF ABOVE DECISION THE ADDITION DESERVES TO BE DELETED. IV ) IN THE CASE OF CIT V. MAULIKKUMAR K SHAH 307 ITR 137 (GUJ) HONBLE HIGH COURT HAS HELD THAT ADDITIONS MADE BY THE A O TOWARDS ON MONE Y ON THE BASIS OF SEIZED PAPER ALONE WITHOUT ANY CORROBORATIVE EVIDENCE CANNOT BE SUSTAINED. AS STATED EARLIER IN THE CASE OF THE ASSESSEE ALSO THE NOTINGS ON THE SEIZED LOOSE PAPER FOUND FROM THE PREMISES OF MR.N.SURYANARAYAN IS THE ONLY MATERIAL ON TH E BASIS OF WHICH THE WING HAS PROPOSED FOR ADDITION ON ACCOUNT OF UNDISCLOSED INCOME WHICH CANNOT BE CONSIDERED AS INCOME AT ALL AS DISCUSSED ABOVE. THUS THERE IS NO CORROBORATIVE MATERIAL ON RECORD TO PROVE THAT SO CALLED MONEY HAS BEEN RECEIVED BY THE A SSESSEE FOR ANY SERVICES RENDERED OR TO BE RENDERED FOR MR.N.SURYANARAYAN. THEREFORE UNLESS AND UNTIL THERE IS ANYTHING TO PROVE WITH CORROBORATIVE EVIDENCE THAT THE ENTRIES MENTIONED IN THE SAID PAPER ACTUALLY REPRESENT THE INCOME OF THE ASSESSEE AND MER E MENTION IN THE PAPER IS NOT SUFFICIENT TO PROVE THAT THE ASSESSEE HAS INDULGED IN SUCH A TRANSACTION AND MORE SO FOR CONSIDERATION OF ANY MONEY ETC. THEREFORE ADDITION ARE MERELY BASED ON SUSPICION AND SURMISES AND THERE IS NO MATERIAL WHATSOEVER TO SUP PORT THE CONCLUSION OF THE DEPARTMENT THAT THE ASSESSEE HAS IN FACT RECEIVED ANY MONEY. V) HAD MR.N.SURYANARAYAN MADE SUBSTANTIAL CASH PAYMENT SPECIFIED IN THE LOOSE SHEET DOCUMENTS CONTAINING AGREEMENT FOR PAYMENT SIGNED BY THE ASSESSEE WOULD ALSO HAVE TO BE FOUND AND AS SUCH NO ADDITION CAN BE MADE BASED ON SURMISES AND GUESS WORK. RELIANCE IS PLACED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT V. KULWATN RAI 291 ITR 36 (DELHI) . RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE MADRAS HIGH C OURT IN THE CASE OF ACIT V. KENCES FOUNDATION PVT LTD 289 ITR 509 WHEREIN IT HAS BEEN HELD THAT SEIZED DOCUMENTS ARE NOT A CONCLUSIVE PROOF TO ARRIVE AT UNDISCLOSED INCOME. 10 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) VI) IT IS COMMON FACT THAT EVERY BUSINESSMAN IN NORMAL COURSE WOULD MAKE ESTIMATIO NS NOTINGS/JOTTINGS ETC EITHER IN DIARIES OR ON LOOSE PAPERS TO FINALISE WITH THEIR CLIENTS/CUSTOMERS/BUYERS/BANKERS ETC ETC AND AS SUCH MERELY BECAUSE THERE WERE NOTINGS OF OFFERS DOES NOT MEAN THAT THE TRANSACTIONS HAD ACTUALLY TAKEN PLACE. THUS IT I S INCORRECT TO CONCLUDE THAT NOTINGS/JOTTINGS IN THE LOOSE SHEET FOUND AT THE PLACE OF MR.N.SURYANARAYANA OR M/S ESSAR BUILDERS HAD RESULTED INTO INCOME WHICH HAD NOT BEEN DISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. SINCE THERE IS NO CORROBORATIVE O R DIRECT EVIDENCE TO PRESUME THAT THE NOTINGS/JOTTINGS HAD MATERIALISED INTO TRANSACTIONS GIVING RISE TO INCOME NOT DISCLOSED IN THE BOOKS BY THE ASSESSEE THE DEPARTMENTS PRESUMPTION CANNOT BE TENABLE IN LAW. RELIANCE IS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. D.K. GUPTA 308 ITR 230 (DEL) . IT IS OF IMMENSE SIGNIFICANCE THAT SRI.SURYANARAYANA HAS CATEGORICALLY DENIED ABOUT THESE TRANSACTIONS IN HIS DEPOSITION DURING CROSS EXAMINATION MADE. IN THIS REGARD THE ASSESSEE HAS A LSO FIND AN AFFIDAVIT BEFORE THE AO TO THE EFFECT THAT HOW THE TRANSACTIONS MENTIONED IN THE SAID PAPER WERE NOT WORTH GIVING CREDENCE. THEREFORE NO ADDITION CAN BE MADE ON THE BASIS OF PAPER FOUND IN POSSESSION OF MR.N.SURYANARAYANA WHICH WAS NOW RETRACTED BY HIM. RELIANCE IS PLACED ON THE DECISION IN THE CASE OF PRAKASH CHAND NAHTA V. CIT 301 ITR 134 (MP) . FURTHER IN THE CASE OF ACIT V. SATYAPAL WASSAN 295 ITR 352 (JABALPUR ITAT) HAS HELD THAT ADDITION NOT SUSTAINABLE WHERE PAPER NOT CONTAINING ANY DETAILS TO INDICATE NATURE OF TRANSACTION PERIOD OF TRANSACTION PERSONS INVOLVED OR CODE FOR DECIPHERING FIGURES AND ASSESSEE DENYING KNOWLEDGE AND FILING AFFIDAVIT TO INDICATE TRANSACTIONS RELATED TO SOMEBODY ELSE. IT HAS BEEN FURTHE R HELD THAT DOCUMENT MUST BE SPEAKING DOCUMENT; NO ADDITION PERMISSIBLE ON BASIS OF DUMB DOCUMENT. VII) THE SUPREME COURT IN P.R. METRANI V. CIT 287 ITR 209 (SC) HAS RESOLVED THE ISSUE OF PRESUMPTION POINTING OUT THAT EVEN THE PRESUMPTION FOR SEIZURE UND ER SEC 132(4A) IS A REBUTTABLE ONE SINCE THE EXPRESSION USED IS MAY BE PRESUMED. THIS PROPOSITION EVEN HOLDS GOOD AFTER THE INSERTION OF SECTION 292C OF THE ACT AS THE WORDS MAY BE PRESUMED EXIST IN SECTION 292C OF I .T.ACT 1961. CIRCULAR NO.3/2008 ONLY CLARIFIES THAT PROVISIONS OF SECTION 132 (4A ) APPLY TO REGULAR PROCEEDINGS ALSO . THE SUPREME COURT HAS ALSO POINTED OUT TO THE DIFFERENCE BETWEEN THE THREE TYPES OF PRESUMPTIONS IS LAW (I) MAY PRESUME (II) SHALL PRESUME AND (III) CONCLUSIVE PROOF. WH ILE ONE HAS A DISCRETION AS REGARDS THE FIRST PRESUMPTION THE SECTION LEAVES NO OPTION AS REGARD SECOND ONE UNLESS THERE IS EVIDENCE TO DISPROVE IT SO THAT EVEN WHERE LAW PROVIDES FOR SUCH A PRESUMPTION IT IS REBUTTABLE BUT THE THIRD PRESUMPTION OF C ONCLUSIVE PROOF GIVES AN ARTIFICIAL PROBATIVE EFFECT UNDER THE LAW SO THAT NO EVIDENCE TO DISPROVE THE SAME CAN BE ENTERTAINED. EVEN AFTER INSERTION OF SECTION 292C THE DECISION HOLDS GOOD AS FAR AS THE WORD MAY PRESUME IS CONCERNED AND THAT THE PRESU MPTION IS REBUTTABLE. 11 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) THE PRESUMPTION UNDER SECTION 292C IS REBUTTABLE PRESUMPTION AND THE DOCUMENT HAS TO BE CONSIDERED CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE. THE DEEMING PROVISION CAN NOT BE APPLIED MECHANICALLY IGNORING THE FACTS OF THE CASE AND THE SURROUNDING CIRCUMSTANCES. VIII) RELIANCE IS ALSO PLACED ON THE DECISION IN THE CASE OF NIRMAL FASHIONS ( P ) LTD V/S DCIT 25 SOT 387 ( KOL ) WHEREIN IT WAS HELD WHETHER SINCE PAPER S/ DOCUMENTS SEIZED ON SEARCH WERE FOUND TO BE UNTENABLE AND CONT RARY TO OTHER EVIDENCE ON RECORD IMPUNGED ADDITIONS MADE ON THE BASIS OF SAID PAPERS WAS NOT JUSTIFIED. 6. FURTHER THE ATTENTION OF HON BENCH IS ALSO INVITED AT THE GROUND NO 16 OF THE FORM 35 FILED WITH HON CIT APPEALS VI BANGALORE ( PAGE NO 30 OF PAPER BOOK) READ AS: 16.THE ASSESSMENT PROCEEDINGS U/S 153A IN A CASE OF THE APPELLANT ARE ALSO BAD IN LAW AND NULL AND VOID INASMUCH AS THE SAID ADDITION IF THE SATISFACTION NOTE FOR CONDUCTING THE SEARCH WAS BASED ON THE THIRD PARTY LOOSE SHEET WHICH LACKS ANY LEGAL SANCTITY. THE OFFICE RECORDS MAY BE REVIEWED AND CALLED FOR IN DETAILED ON THESE. IT IS ALSO PRAYED TO ALLOW ELABORATING ON THIS GROUND ON THE FACTS BECOMING AVAILABLE ON THE SAME TO CHALLENGE THE ASSESSMENT ORDERS. THE SAME GROUND WAS NOT PREFE RRED AT THE HON I TAT SINCE THE CIT APPEALS HAS GIVEN MERITS TO THE CASE AND DELETED THE SUBSTANTIAL ADDITIONS MADE IN THE IMPUGNED ASSESSMENT ORDER; HOWEVER THE SAME GROUND IS PRESSED BEFORE THE HON ITAT TO BE CONSIDERED AS A NATURAL JUSTICE. THE C.I.T ( A ) HAS AFTER APPRECIATING THE EVIDENCE HAS CLEARLY ARRIVED AT A CONCLUSION THAT THERE IS NO CONCLUSIVE PROOF THAT THE APPELLANT WAS ACTUALLY IN RECEIPT OF RS.19.76 CR WHICH IS TAXABLE AS HIS INCOME. 7. SECTION 292C IS A PRESUMPTIVE PROVISION WHERE CERTAIN FACTS ARE TO BE PRESUMED BY OPERATION OF LAW. HOWEVER IT IS SETTLED LAW THAT SUCH PRESUMPTIONS ARE REBUTTABLE PRESUMPTIONS AND DOCUMENT HAS TO BE CONSIDERED CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE. THE PROVISION CAN NOT BE APPLIED MECHANICALLY I GNORING THE FACTS OF THE CASE AND THE SURROUNDING CIRCUMSTANCES. I ) IN THE PRESENT CASE THE ADDITION WAS MADE ON THE BASIS OF LOOSE SHEET FOUND IN THE PREMISES OF MR.N.SURYANARAYANA AND M/S ESSAR BUILDERS. THERE WAS NO CORROBORATIVE EVIDENCE TO HOLD THAT THE ASSESSEE HAS RECEIVED CASH OF RS.19.76 CR. NO ADDITION CAN BE MADE AS SUCH MERELY ON THE BASIS OF LOOSE SHEET. RELIANCE IS PLACED ON VARIOUS CASE LAWS CITED ABOVE. II) EVEN AFTER INSERTION OF SECTION SECTION 292C SIGNIFICANCE OF THE WORD MA Y PRESUME HO LDS GOOD AND PRESUMPTION IS REBUTTABLE . THE ASSESSEE IN THE OATH 12 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) STATEMENT HAS CLEARLY STATED THAT THE SHEET FOUND IN PREMISES OF M/S ESSAR BUILDERS WAS GIVEN BY MR.N.SURYANARAYANA TO ASSESS MARKET VIABILITY. MR.N.SURYANARAYANA HAS ALSO DURING CROSS EXAMIN ATION DENIED HAVING ANY TRANSACTION WITH THE ASSSESSEE AND HAS STATED THAT HE HAS NOT MADE ANY PAYMENT TO THE ASSESSEE. III) THE C.I.T ( A ) HAS AFTER APPRECIATING THE ENTIRE EVIDENCE ARRIVED AT A CONCLUSION THAT THERE IS NO CONCLUSIVE PROOF THAT THE APPELLANT WAS ACTUALLY IN RECEIPT OF RS.19.76 CR. IV) DURING SEARCH ACTUAL CASH OF ONLY RS.2.50 LAKH WAS FOUND WHICH WAS EXPLAINED AND ACCEPTED . FURTHER THE SOURCE OF INVESTMENT OF RS.11.58 CR IN SANCOALE PROPERTY AND ADVANCE OF RS. 15 CR TO M/S RAJ HOSPITALITY IS CLEARLY EXPLAINED. THE ABOVE TRANSACTIONS ARE THROUGH NORMAL BANKING CHANNELS AND ARE RECORED IN BOOKS OF THE ASSESSEE. V) IF THE ASSE SSEE HAD HUGE UNRECORDED INCOME OF CRORES OF RUPEES AS ALLEGED IT WOULD HAVE REFLECTED IN THE FORM OF ASSET OR EXPENDITURE OUTSIDE THE BOOKS. AS STATED ABOVE IN THE PRESENT CASE NO SIGNIFICANT ASSET OUTSIDE BOOKS OR NO OBSTENSIBLE EXPENDITURE OUTSIDE BOOK S IS FOUND. APART FROM THE LOOSE SHEET THERE IS NO OTHER EVIDENCE THAT THE ASSESSEE HAS RECEIVED SUCH AMOUNT. VI) WITHOUT PREJUDICE TO THE ABOVE WE RESPECTFULLY SUBMIT THAT THE C.B.D.T IN ITS CIRCULAR NO.286 DATED 10.03.2003 HAS INSTRUCTED THE DEPARTMENTAL AUTHORITIES NOT TO EXTRACT CONFESSIONAL STATEMENT IN RESPECT OF UNDISCLOSED INCOME. SUCH CONFESSION DURING THE SEARCH NOT BASED UPON CREDIBLE EVIDENCE DOES NOT SERVE ANY USEFUL PURPOSE. BASED ON THIS ALSO NO ADDITION CAN BE MADE UPON THE CONFESSIONAL STATEMENT DURING THE COURSE OF SEARCH. IN VIEW OF THE ABOVE WE RESPECTFULLY SUBMIT THAT ADDITION OF RS.19.76 CR MADE BY THE A.O HAS BEEN RIGHTLY DELETED BY LEARNED C.L.T (A). THE LD. AR SUBMITTED THAT THE PROPERTY AT SANCOLE F OR RS.11 58 16 250/ - WAS PURCHASED OUT OF RS.8.50 CRORES FROM M/S. PRASAD PROPERTIES AND RS.3.08 CRORES FROM ASSESSEES MONEY. THERE WAS ALSO CLAIM ON THESE PROPERTIES OTHER THAN BY ACTUAL SELLER OF THE SAID LAND. SO IT WAS DECIDED TO SELL THE PROPERTY IMMEDIATELY. THE PROPERTY WAS SOLD TO M/S. GOOD EARTH DEVELOPERS FOR CONSIDERATION OF RS.12.08 CRORES. M/S. GOOD EARTH DEVELOPERS INITIALLY PAID RS.50 LACS AND SUBSEQUENTLY IN THE YEAR 2010 PAID RS.3.75 CRORES TO THE ASSESSEE. THE BALANCE OF RS.8.33 CRO RES RECEIVABLE BY THE ASSESSEE WAS 13 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) ALREADY RECOVERED BY THE DEPARTMENT IN ATTACHMENT PROCEEDINGS FROM M/S. GOOD EARTH DEVELOPERS. THIS ESTABLISHES THAT THE BELIEF OF THE AO WAS NOT RIGHT AS HE HIMSELF HAS RECOVERED THE ENTIRE AMOUNT RECEIVABLE TO THE ASSE SSEE OF RS.8.33 CRORES FROM M/S. GOOD EARTH DEVELOPERS. THE SALE CONSIDERATION OF RS.12. 0 8 CRORES WAS PROPERLY ACCOUNTED IN THE BOOKS OF ACCOUNTS AND CAPITAL GAINS ON SALE WAS ALSO RETURNED FOR A.Y. 2009 - 10 FILED BEFORE SEARCH TOOK PLACE. THE AMOUNT OF R S. 1 5 CRORES WAS ADVANCED TO M/S. RAJ HOSPITALITY OUT OF ADVANCE OF RS.15.50 CRORES RECEIVED FROM M/S. AUDI CONSTRUCTION CO. ON 14.3.2008 VIDE AGREEMENT OF SALE OF 18 FLATS. THE PAYMENT MADE TO M/S. RAJ HOSPITALITY ON 15.3.2008 WAS MADE OUT OF THIS RECEIPT . ALL THESE TRANSACTIONS OF RECEIPT AND PAYMENTS ARE BY CHEQUE AND THROUGH NORMAL BANKING CHANNEL. THESE TRANSACTIONS ARE PROPERLY RECORDED IN THE BOOKS OF ACCOUNTS. THUS THE SOURCE OF AMOUNT ADVANCED TO M/S. RAJ HOSPITALITY IS CLEARLY EXPLAINED. HENC E THERE IS NO NEXUS BETWEEN THE LOOSE SHEET FOUND AT THE PREMISES OF SHRI N. SURYANARAYANA AND THE INVESTMENT IN THE PROPERTY AT SANCOLE FOR RS.11.58 CRORES. THERE IS NO NEXUS OF THE LOOSE SHEET FOUND AT THE PREMISES OF SHRI N. SURYANARAYANA AND THE AMOUNT OF RS.15 CRORES ADVANCED TO M/S. RAJ HOSPITALITY. SIMILARLY THE LOOSE PAPER FOUND IN THE PREMISES OF M/S. ESAR BUILDERS IS NOTHING MORE THAN A DUMB DOCUMENT ITSELF. THE SOURCE OF THE INVESTMENT OF RS.11.58 CRORES AT SANCOLE AND ADVANCE O F RS.15 CRORES TO M/S. RAJ HOSPITALITY IS CLEARLY EXPLAINED. THE ASSESSEE ON OATH STATEMENT DT. 12.4.2010 CLEARLY STATED THAT THE LOOSE PAPER FOUND IN THE PREMISES OF M/S. ESAR BUILDER S WERE GIVEN TO HIM BY SHRI N. SURYANARAYANA TO ASCERTAIN THE MARKET FE ASIBILITY. DURING THE CROSS EXAMINATION OF SHRI N. SURYANARAYANA HE DENIED THAT HE HAS MADE ANY PAYMENT TO THE ASSESSEE. THUS HE HAS NOT DONE ANY TRANSACTION WITH THE ASSESSEE. THUS THE ASSESSEE HA S DISCHARGE D HIS ONUS TO PROVE THAT THE AMOUNT MENTIO NED IN THE LOOSE PAPER DOES NOT BELONG TO HIM. NEITHER HE GOT ANY BENEFIT FROM THE SAID MONEY NOR HAS HE RENDERED ANY SERVICES 14 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) IN CONNECTION WITH THE SAID MONEY SO AS TO BRING IT TO TAX AS UNDISCLOSED INCOME OF THE ASSESSEE. HE RELIED ON THE VARIOUS DECI SIONS IN SUPPORT OF HIS CLAIM. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE G ONE THROUGH THE ORDER OF CIT(A). CIT(A) IN HIS ORDER HAS HELD AS REGARDS THE OBSERVATION OF AO THAT INDIRECT PAYMENT HAVE BEEN MADE TO MR. ATANASIO MON SERRATE THROUGH TRANSFER OF LAND PURCHASED BY APPELLANT TO M/S. GOOD EARTH DEVELOPERS AND ADVANCE OF RS. 15 CRORES TO M/S. RAJ HOSPITALITY THAT IT IS CERTAINLY VERY STRANGE THAT PROPERTY OF RS.12. 0 8 CRORES AS PER REGISTERED DEED DT. 8.12.2008 HAS BEEN TRANSFERRED TO MR. ATANASIO MONSERRATE ON 8.12.2008 MERELY ON PAYMENT OF RS. 50 LACS WHEREAS THE BALANCE OF RS.11.58 CRORE WAS STILL PAYABLE. OUT OF THIS BALANCE ONLY RS.3.75 CRORES HAS BEEN PAID AFTER TWO YEARS AND REMAINING AMOUNT C OLLECTED BY THE INCOME TAX DEPT. TOWARDS THE TAX DUES OF THE ASSESSEE. CIT(A) FURTHER OBSERVED THAT IT IS RELEVANT TO NOTE THAT BUT FOR THE INCOME TAX DEPARTMENT THIS MONEY SUPPOSEDLY DUE TO THE ASSESSEE WOULD HAVE REMAINED WITH THE BUYER M/S. GOOD EART H DEVELOPERS A CONCERN IN WHICH SHRI ROHIT MONSERRATE S/O OF SHRI ATANASIO MONSERRATE IS THE ONLY CAPITAL CONTRIBUTING PARTNER. HOWEVER NO FURTHER INFERENCE HAS BEEN MADE AS REGARDS TO THIS PAYMENT. THEREFORE CIT(A) HAS DELETED THE ADDITION. WE FIND THAT CIT(A) HAS PASSED A WELL - REASONED ORDER. THE DEPARTMENT HAS NOT BROUGHT ANY CONTRARY EVIDENCE OR MATERIAL AGAINST THE FINDING OF CIT(A). THEREFORE WE HAVE NO ALTERNATIVE EXCEPT TO ENDORSE THE ACTION OF CIT(A). IN THE RESULT BOTH THE DEPARTMENTS APPEALS ITA NO S . 127 /PNJ/2013 & 128/PNJ/2013 ARE DISMISSED. ITA NOS. 89 & 90/PNJ/2013 (ASSESSEES APPEALS) : 6. THE FIRST ISSUE RELAT ES TO CONFIRMATION OF ADDITION OF RS.8 49 49 8 88/ - (50% EACH IN THE HANDS OF THE ASSESSEE AND SPOUSE AS PER SEC. 5A OF THE 15 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) INCOME TAX ACT 1961) IN RESPECT OF AMOUNT RECEIVED FROM M/S. PRASAD PROPERTIES. 6.1 DURING THE HEARING THE LD. AR HAS FILED THE WRITTEN SUBMISSION OF THE ASSESSEE WHICH IS REPRODUCED BELOW : IN APPEAL THE LEARNED C IT (APPEALS) HAS CONFIRMED THE ADDITION TO THE TUNE OF RS.8 49 49 888 CREDITED IN THE ASSESSEES BANK ACCOUNT NO.05520200000277 WITH DEVELOPMENT CREDIT BANK PANAJI ON 15.3.2007 AS UNEXPLAINED INCOME WHICH IS USED FOR THE PURCHASE OF PROPERTY AT SANCOALE FOR RS.11.58 CRORES AND ADDITION OF RS.11 26 50 112 IS DELETED ON THE GROUND THAT THERE WAS NO EVIDENCE AVAILABLE TO INDICATE SO MUCH OF AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE. THE C. I .T ( A ) HAS ALSO CONFIRMED ADDITION OF RS.30 00 000 / - AS UNEXPLAINED INVESTMENT IN RESPECT OF AMOUNT GIVEN TO MR ARMANO GONSALVES BY A/ C PAYEE CHEQUE BY M / S EMGEE HOUSING PVT LTD. ON BEHALF OF THE ASSESSEE. WE RESPECTFULLY SUBMIT AS UNDER. A. INVESTMENT IN PROPERTY AT SANCOALE OF RS.11 58 16 250/ - WAS MADE FROM RS.8 50 00 000/ - RECEIVED FROM M/S PRASAD PROPERTIES AND BALANCE OF RS.3 58 16 250 / - FROM ASSESSEES OWN MONEY. THE AMOUNT OF RS.8.49 CR WAS ADVANCED BY M/S PRASAD PROPERTIES FOR ACQUISITION OF LAND AT SANCOALE VIDE AGRE EMENT DATED 22.12.2006 ( PAGE 64 TO 67 OF PAPER BOOK ) ACCORDING TO WHICH BALANCE AMOUNT OF RS.3.58 CR WOULD BE CONTRIBUTED BY THE ASSESSEE. A COPY OF THE AGREEMENT IS ON PAGES 64 TO 67 OF THE PAPER BOOK. B. THE AMOUNT OF RS.8.49 CR WAS RECEIVED BY CHEQUE THROUGH NORMAL BANKING CHANNEL WHICH WAS NOT DISPUTED. C. M/S PRASAD PROPERTIES HAVE CONFIRMED THE PAYMENT OF RS.8.49 CR. A COPY OF THE CONFIRMATION OF M/S PRASAD PROPERTIES IS ON PAGE 63 OF THE PAPER BOOK. D. THE SURVEY CONDUCTED AT THE PREMISES OF PRASA D PROPERTIES CHENNAI ALSO PROVES THAT THEY HAD SUFFICIENT CASH BALANCES TO LEND TO THE ASSESSEE. E. AT THE TIME OF INQUIRY AT M/S PRASAD PROPERTIES IT WAS REVEALED THAT SOURCES OF MONEY BY PRASAD PROPERTIES WAS AMOUNT BROUGHT IN BY PARTNER MR.MANOHAR PRAS AD F. IT IS PERTINENT TO MENTION THAT THE AO HIMSELF HAS ADMITTED THAT THE FIRM M/S PRASAD PROPERTIES HAD CASH BALANCE WHICH WAS INTRODUCED IN BY PARTNER MR.MANOHAR PRASAD. (PAGE NO 14 OF THE ASSESSMENT ORDER). 16 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) G. THUS ALL THE INGREDIENTS REQUIRED TO BE D ISCHARGED BY THE ASSESSEE AS REGARDS THE SOURCE OF RECEIPT HAVE BEEN BROUGHT ON RECORD BY THE AO HIMSELF AND THE DETAILS AS TO THE SOURCE OF SOURCE HAS NOTHING TO DO WITH THE AFFAIRS OF THE ASSESSEE AS FAR AS THESE CREDITS ARE CONCERNED. H. THE LEARNED CIT (A) HAS OBSERVED THAT THE ASSESSEE HAS NOT EXPLAINED THE CREDIT/DEPOSIT OF RS.8.49 CRORES IN THE BANK ACCOUNT IGNORING THE DETAILS AND EVIDENCE AS STATED ABOVE. I. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAS PROVED THE REQUIREMENT OF LAW IN REGARD TO HIS CLAIM OF AMOUNT OF RS.8.49 CRORES WITHIN THE PROVISIONS OF SECTION 68. J. THE LEARNED CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS NOT EXPLAINED THE CREDIT/DEPOSIT OF RS.8.5 CRORES IN THE BANK ACCOUNT IGNORING THE CORROBORATED EVIDENCES VIZ (A) MONEY RECEIVED THROUGH ACCOUNT PAYEE CHEQUES WHICH WAS NOT DISPUTED (B) THE PERSONS WHO GAVE MONEY CONFIRMED IN THEIR CONFIRMATION AS WELL AS STATEMENT BEFORE THE AO (C) THE SURVEY CONDUCTED AT THE PREMISES OF PRASAD PROPERTIES CHENNAI ALSO PROVES THAT THE IDENTITY OF THE PARTNERSHIP FIRM THEIR BOOKS WERE AVAILABLE AND ALSO THEY HAD SUFFICIENT CASH BALANCES TO LENT TO THE ASSESSEE. WHAT IS TO BE PROVED UNDER LAW IN VIEW OF SECTION 68 BY THE ASSESSEE H AS ALREADY BEEN PROVED B Y THE ASSESSEE AND THER E WAS NO MATERIAL TO SUGGEST THAT THE ASSESSEE HAS BROUGHT HIS OWN MONEY THROUGH THE SAID TRANSACTIONS . BASED ON THE ABOVE IT IS SUBMITTED THAT THE ASSESSEE HAS DISCHARGED HIS ONUS THAT LAY UPON HIM UNDER THE LAW BY PROVIDING IDENTITY OF THE PERSONS WHO G AVE THE AMOUNT; CONFIRMATION IS ON RECORD TRANSACTIONS ARE THROUGH BANKING CHANNELS; DULY SUPPORTED BY MOA AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. 3. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS. A. LABH CHAND BOHRA VIS INCOME TAX OFFICER 189 TAXMAN 141 (RAJ) WHETHER WHERE AMOUNTS FOUND AS CASH CREDITS IN ASSESSEES ACCOUNT BOOKS HAD BEEN ADVANCED BY LENDERS BY ACCOUNT PAYEE CHEQUES IDENTITY OF CREDITORS HAD BEEN ESTABLISHED THEIR CONFIRMATIONS WERE AVAILABLE AND THEY HAD ALSO C ONFIRMED CREDITS BY MAKING STATEMENT ON OATH IT COULD BE SAID THAT ASSESSEE HAD DISCHARGED BURDEN OF PROVING IDENTITY AND GENUINENESS OF TRANSACTION; SO 17 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) FAR AS CREDITORS CAPACITY TO ADVANCE MONEY TO ASSESSEE WAS CONCERNED IT WAS NOT A MATTER WHICH WOULD REQUIRE ASSESSEE TO ESTABLISH AS THAT WOULD AMOUNT TO CALLING UPON HIM TO ESTABLISH SOURCE OF SOURCE HELD YES. B. ARAVALI TRADING CO. V/S INCOME TAX OFFICER 187 TAXMAN 338 ( RAJ) WHETHER ONCE EXISTENCE OF PERSONS IN WHOSE NAME CREDITS ARE FOUND IN BOOKS OF ASSESSEE IS PROVED AND SUCH PERSONS OWN SUCH CREDITS WITH ASSESSEE ASSESSEE IS NOT REQUIRED TO PROVE SOURCES FROM WHICH CREDITORS HAVE ACQUIRED MONEY TO BE DEPOSITED WITH IT H ELD YES. MERELY BECAUSE DEPOSITORS EXPLAINATION ABOUT SOURCES WHEREFROM THEY ACQUIRED MONEY IS NOT ACCEPTABLE TO ASSESSING OFFICER IT CANNOT BE PRESUMED THAT DEPOSITS MADE BY SUCH CREDITORS ARE MONEYS OF ASSESSEE ITSELF HELD YES WHETHER IN ORDER TO FASTEN LIABILITY ON ASSESSEE BY INCLUDING SUCH CREDITS AS ITS INCOME FROM UNEXPLAINED SOURCES A NEXUS HAS TO BE ESTABLISHED BY REVENUE THAT SOURCES OF CREDITORS DEPOSIT FLOW FROM ASSESSEE HELD YES. C. JAIKISHAN DADLANI VLS IN COME TAX OFFICER WARD 1 (5 ) 4 SOT 138 ( MUM) WHETHER WHILE EXAMINING APPLICABILITY OF SECTION 68 SOURCE OF SOURCE CANNOT BE INVESTIGATED HELD YES D. NEMI CHAND KOTHARI V/S C.I.T. 264 ITR 254 ( GAUH) SECTION 68 OF THE INCOME TAX ACT 1961 R.W.S. 106 OF THE INDIAN EVIDENCE ACT 1872. IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE SOURCE OF A SOURCE OF THE TRANSACTION. E. C.I.T V/S METACHEM INDUSTRIES 245 ITR 160 ( MP) WHETHER WHEN CASH CREDIT IS FOUND IN ASSESSEES BOOKS AND ASSESSEE HAS ESTABLISHED THAT AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON RESPONSIBILITY OF THE ASSESSEE IS OVER AND THERE IS NO REQUIREMENT TO FURTHER SHOW WHETHER AMOUNT INVESTED HAS BEEN PROPERLY TAXED IN CREDITORSS NAME HELD YES. IN VIEW OF THE ABOVE ADDITION OF RS.8 .49 CR AS UNEXPLAINED INCOME DESERVES TO BE DELETED. 4. ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.30 IAKH. PAYMENT OF RS.30 L AKH WAS MADE TO ARMANDO GONSALVES FOR PURCHASE OF RIGHTS IN THE TITLE OF PROPERTY KNOWN AS MOSPOTEM & MOROD CAUDANA SITUATED AT TALEIGAO VIDE DEED OF ASSIGNMENT ON 1.12.2006. A COPY OF DEED OF ASSIGNMENT IS ON PAGES 68 TO 78 OF THE PAPER BOOK. THE PAYMENT WAS MADE BY CHEQUE BY EMGEE HOUSING PVT LTD ON BEHALF OF THE ASSESSEE WHO OWED MONEY TO THE ASSESSEE. THE LEDGER E XTRACT CONFIRMATION OF ARMANDO GONSALVES PROP.HOME MAKERS WAS FILED. EMGEE 18 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) HOUSING PVT LTD HAVE ALSO CONFIRMED THE PAYMENT. COPY OF CONFIRMATIONS BY MR.ARMANO GONSALVES AND EMGEE HOUSING PVT LTD ARE ON PAGES 79 TO 80 OF THE PAPER BOOK. THUS THE TRANSACTION IS RECORDED IN BOOKS AND CONFIRMATIONS ARE AVAILABLE. SECTION 69 CAN BE APPLIED IF THE INVESTMENT IS NOT ACCOUNTED FOR WHEREAS IN THE PRESENT CASE THE TRANSACTION IS RECORDED IN BOOKS & CONFIRMATIONS OF THE PARTIES ARE AVAILABLE. THUS ADDITION AS UNEXPLAI NED INVESTMENT IS WITHOUT ANY BASIS AND DESERVES TO BE DELETED. THE LD. AR SUBMITTED THAT CIT(A) HAS CONFIRMED THE ADDITION OF RS.8 49 49 8 88/ - CREDITED IN ASSESSEES BANK ACCOUNT WITH DEVELOPMENT CREDIT CO - OPERATIVE BANK PANAJI AS UNEXPLAINED INCOME WH ICH IS USED FOR PURCHASE OF PROPERTY AT SANCO A LE FOR RS.11.58 CRORES. THE LD. AR SUBMITTED THAT THE INVESTMENT IN PROPERTY AT SANCOLE OF RS.11 58 16 250/ - WAS MADE FROM RS.8.50 CRORES RECEIVED FROM M/S. PRASAD PROPERTIES AND BALANCE OF RS.3 58 16 250/ - FR OM ASSESSEES OWN MONEY. THE AMOUNT OF RS.8.49 CRORES WAS ADVANCED BY M/S. PRASAD PROPERTIES FOR ACQUISITION OF LAND AT SANCOLE VIDE AGREEMENT DT. 22.12.2006 WHICH IS AT PG. 64 TO 67 OF THE PAPER BOOK ACCORDING TO WHICH THE BALANCE AMOUNT OF RS.3.58 CROR ES WOULD BE CONTRIBUTED BY THE ASSESSEE. THE AMOUNT OF RS.8.49 CRORES WAS RECEIVED BY CHEQUE THROUGH NORMAL BANKING CHANNEL WHICH WAS NOT DISPUTED. M/S. PRASAD PROPERTIES HAVE CONFIRMED PAYMENT OF RS.8.49 CRORES. COPY OF THE CONFIRMATION BY M/S. PRASAD PROPERTIES IS AT PG. 63 OF THE PAPER BOOK. THE SURVEY CONDUCTED IN THE PREMISES OF M/S. PRASAD PROPERTIES CHENNAI ALSO PROVES THAT THEY HAD SUFFICIENT BALANCE TO LOAN THE ASSESSEE . AT THE TIME OF INQUIRY AT M/S. PRASAD PROPERTIES IT WAS REVEALED THAT THE SOURCE OF MONEY OF M/S. PRASAD PROPERTIES WAS AMOUNT BROUGHT IN BY PARTNER SHRI MANOHAR PRASAD. IT IS PERTINENT TO MENTION THAT THE AO HIMSELF HAS ADMITTED THAT THE FIRM M/S. PRASAD PROPERTIES HAD CASH BALANCE WHICH WAS INTRODUCED BY PARTNER SHRI MANOHAR PRASAD. THUS ALL THE INGREDIENTS REQUIRED TO BE PROVED BY THE ASSESSEE AS REGARDS THE SOURCE OF RECEIPT HAVE BEEN BR OUGHT ON RECORD BY AO HIMSELF AND THE DETAILS OF THE SOUR CE OF SOURCE HAS NOTHING TO 19 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) DO WITH THE AFFAIRS OF THE ASSESSEE AS FAR AS TH E S E CREDIT S ARE CONCERNED. THE ASSESSEE HAS PROVED THE REQUIREMENT OF LAW REGARDING THE CLAIM OF AMOUNT OF RS.8.49 CRORES READ WITH THE PROVISIONS OF SEC. 68. THE ASSESSEE RELIED ON THE DECISION OF LA BH C HAND BOHRA VS. ITO 189 TAXMANN.COM 141 ARAVALI TRADING CO. VS. ITO 187 TAXMANN.COM 338 (RAJ.) JAI KISHAN DADLANI VS. ITO 4 SOT 138 ( MUM ) NEMI C HAND KOTHARI VS. CIT 264 ITR 254 (GAUH) CIT VS. MET ACHEM INDUSTRIES 245 ITR 160 (MP). 6.2 ON THE OTHER HAND THE LD DR. RELIED UPON THE ORDER OF THE COMMISSIONER AND THE AO. 6.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT DURING THE COURSE OF SEARCH AND SEIZURE ONE AGREEMENT DT. 22.12.2006 WAS FOUND. THE AGREEMENT WHICH IS AT PG. 64 TO 67 OF THE PAPER BOOK SHOWS THAT THE MANAGING DIRECTOR OF M/S. PRASAD PROPERTIES SHRI MANOHAR PRASAD HAS AGREED TO INVEST A SUM OF RS.8.50 CRORES IN THE PROPERTY WITH SHRI SADIQ SHAIKH AND THIS AGREEMENT WAS FOUND DURING THE COURSE OF SEARCH. THIS AGREEMENT WAS FOR PURC HASING PROPERTY AT SANCOLE. THE AMOUNT OF RS.8.49 CRORES WAS RECEIVED THROUGH BANKING CHANNEL. M/S. PRASAD PROPERTIES HAS PAID THIS AMOUNT BY BANKING CHANNEL TO THE ASSESSEE AND THIS IS NOT IN DISPUT E. THE DISPUTE IS AS REGARDS THE SOURCE OF PAYMENT OF RS.8.49 CRORES. FROM WHERE THIS MONEY WAS BROUGHT BY M/S. PRASAD PROPERTIES IS IN DISPUTE. M/S. PRASAD PROPERTIES HAVE CONFIRMED THIS PAYMENT OF RS.8.49 CRORES. PAGE 63 OF THE PAPER BOOK IS THE CONFIRMATION LETTER FILED BY SHRI A. MANOHAR PRASAD BEFORE THE AO. AFTER THE SEARCH AND SURVEY WAS CONDUCTED IN THE BUSINESS PRE MISES OF M/S. PRASAD PROPERTIES THE AO IN HIS ASSESSMENT ORDER AT PG. 14 HAS MENTIONED THIS FACT BY OBSERVING AS UNDER : 20 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) DURING THE COURSE OF SURVEY AT CHENNAI THE ASSESSEE PRODUCED THE CASH BOOKS WHICH SHOWED CASH BROUGHT IN BY MR MANOHAR PRASAD INTO THE PARTNERSHIP FIRM M/S PRASAD PROPERTIES AND THE FIRM CLAIMED THAT THERE WERE SUBSEQUENTLY WITHDRAWAL BY THE PARTNERS MR VIJAY KUMAR RAO AND MR SIRAJ SHEIKH. THE ONLY ASSET W ITH THE FIRM WAS STATED TO BE CASH OF RS 8 50 08 700/ - AND FIRM CLAIMED THAT THE SAME WERE TAKEN AS WITHDRAWAL BY THE PARTNERS. IT IS NOT CLEAR WHY AND FOR WHAT PURPOSE THE CASH OF RS.8.5 CRORES CLAIMED TO HAVE BEEN COLLECTED BY M/S PRASAD PROPERTIES. THER E IS NO EVIDENCE WHY THE CASH WAS DISBURSED TO MR VIJAYKUMAR RAO AND MR SIRAJ SHEIKH EVEN THOUGH THEY HAD CONTRIBUTED RS 10 000 EACH AS CAPITAL. MR A MANOHAR PRASAD FAILED TO SATISFACTORILY EXPLAIN THE TRANSACTION. THE RELEVANT PORTION OF THE STATEMENT RE CORDED U/S 133A ON 21 - 04 2010 IS REPRODUCED UNDER QNO6 WHETHER THE PRASAD PROPERTY IS ACTIVELY INVOLVED IN SETTING UP OF THE STUDIO IN GOA? IF SO WHAT IS THE STAGE OF ITS COMPLETION? ANS: NOW THERE IS NO ACTIVITY IN PRASAD PROPERTIES. WE HAVE ABAND ONED THE PROJECT AND M/S PRASAD PROPERTIES ALSO DISSOLVED ON 29.03.2007. I AM PRODUCING THE ORIGINAL DISSOLUTION DEED DATED 29 - 03 - 2007 FOR YOUR PERUSAL. QNO 7 DO YOU HAVE PAN FOR PRASAD PROPERTIES AND HAVE YOU FILED LNCOME TAX RETURNS REGULARLY? ANS NO WE ARE NOT OBTAINED PAN FOR M/S PRASAD PROPERTIES. NO RETURNS WERE FILED SO FAR. QNO9 DO YOU HAVE ANY BANK ACCOUNTS? ANS NO THE FIRM DOES NOT HAVE ANY BANK ACCOUNTS QNO 12: HOW DID YOU TRANSPORT RS8. 50 CRORES OF CASH TO GOA? ANS: CASH WAS TRANSPORTED BY OUR SHOOTING VEHICLE QN0 14: CAN YOU TELL WHICH VEHICLE WAS USED FOR THE TRANSPORT? ANS I DO NOT KNOW. Q NO 15: WHY THE BANKING CHANNELS WERE NOT USED TO REMIT THE MONEY TO MR SIRAJ SHEIKH AND MR VIJAY KUMAR? ANS: SINCE WE WERE MAKING PAYMENT TO TH EM IN CASH 40 % DISCOUNT PER ACRE IN RETURN WAS PROMISED TO US ON THE PREVAILING MARKET ON THAT DATE. QNO 23: WHAT IS THE SURETY YOU ARE HOLDING AGAINST THE REPAYMENT BY THE ABOVE PERSONS? DO YOU HAVE ANY WRITTEN DOCUMENTS REGARDING THE SETTLEMENT BETWEEN YOU AND THEM? ANS: WE DO NOT HAVE ANY WRITTEN CONFIRMATION EXCEPT FOR MR SADIQS ORAL CONFIRMATION AND INTENTION TO SETTLE US SINCE HE HAS ALREADY SHOWN US THE PROPERTY BELONGING TO HIS FAMILY. WE ARE NOW EXAMINING THE VIABILITY OF SETTING UP OF O UR PROJECT ON HIS PROPERTY FROM THIS ASSESSMENT ORDER IT IS CLEAR THAT THERE WAS SURVEY IN THE PREMISES OF M/S. PRASAD PROPERTIES AND IT WAS REVEALED THAT MONEY WAS BROUGHT BY M/S. 21 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) PRASAD PROPERTIES THROUGH HIS PARTNER. WE FIND THAT THE ASSESSEE HAS PRO VED THE SOURCE FROM WHERE THIS MONEY HAS BEEN BROUGHT. WE FIND THAT THE ASSESSEE HAS EXPLAINED THE DEPOSIT OF RS.8.5 CRORES IN THE BANK. THEREFORE IN OUR OPINION THE REQUIREMENT U/S 68 IS PROVED BEYOND ANY DOUBT BY THE ASSESSEE. THEREFORE WE ARE OF T HE VIEW THAT NO ADDITION IS REQUIRED /SUSTAINABLE . WE FIND THAT IN THE CASE OF CIT VS. TANYA INVESTMENT PVT. LTD. 322 ITR 394 (BOM .) THE JURISDICTIONAL HIGH COURT HAS HELD IN RESPECT OF UNEXPLAINED CASH CREDIT U/S 68 THAT AS FAR AS ENTRY IN BOOKS OF ACCOUNTS PERTAINING TO CASH CREDIT THE ASSESSEE HAS TO ESTABLISH THE IDENTITY OF THE PARTY CAPACITY AND GENUINENESS OF THE TRANSACTION . AS FAR AS THE IDENTITY IS CONCERNED THE PARTIES HAVE BEEN IDENTIFIED AND SIMILARLY IN THE BOOKS OF ACCOUNTS PRODUCED BY THEM CORRESPONDING ENTRIES WERE FOUND. THE BOOKS OF ACCOUNTS ITSELF WOULD INDICATE THE CAPACITY OF THE PARTY TO ADVANCE THE LOAN. THERE WAS NO FURTHER NEED ON THE PART OF THE ASSESSEE TO PROVE THE CAPACITY OF THE CREDITORS. IN THE INSTANT CASE THE ASSESSEE HAS RECEIVED THE AMOUNT BY BANKING CHANNEL AND THE AMOUNT WAS GIVEN BY M/S. PRASAD PROPERTIES AND MOREOVER M/S. PRASAD PROPER TIES HAVE ALSO CONFIRMED THAT THEY HAVE GIVEN THIS MONEY TO THE ASSESSEE. MOREOVER IN THE ASSESSMENT ORDER THE AO HIMSELF HAS STATED THAT THERE WAS A SURVEY IN THE PREMISES OF M/S. PRASAD PROPERTIES AND THEY WERE HAVING HUGE CASH ON THE DATE OF SURVEY. THEREFORE WHEN THE ASSESSEE HAS GIVEN THIS MUCH OF EVIDENCE ASSESSEE IS NOT REQUIRED TO GIVE FURTHER EVIDENCE. SIMILARLY WE FIND IN THE CASE OF ARAVALI TRADING CO. VS. ITO 187 TAXMANN.COM 338 (RAJ.) ( SUPRA ) THE RAJASTHAN HIGH COURT HAS HELD THAT ADDI TION U/S 68 IDENTITY OF CREDITOR ESTABLISHED. IF THE IDENTITY OF THE CREDITOR IS ESTABLISHED AND IF ALL THE MONEY HAS BEEN RECEIVED BY BANKING CHANNEL THUS PROVING EXISTENCE OF ALL DEPOSITS BEYOND DOUBT IF AO WAS OF THE VIEW THAT SOURCE FROM WHERE THE C REDITOR HAS ACQUIRED THE MONEY AND REVENUE AUTHORITY IS NOT SATISFIED THEN THE 22 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) BURDEN IS UPON THE REVENUE TO PROVE THAT THE MONEY BELONGS TO THE ASSESSEE. THE ASSESSEE HAVING DISCHARGED HIS BURDEN TO PROVE EXISTENCE OF THE DEPOSITORS AND THE DEPOSITOR H AVING THEIR OWN DEPOSITS IS NOT REQUIRED TO PROVE THE SOURCE OF THE SOURCE. WE FIND THAT SIMILAR PRINCIPLES HAVE BEEN HELD BY THE HON'BLE G UWA HATI HIGH COURT IN THE CASE OF NEMI CHAND KOTHARI VS. CIT IN APPEAL NO. 5 OF 2003 ( SUPRA ) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT WHEN THE ASSESSEE PROVES THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION WHICH HE HAD WITH THE CREDITORS AND THE CREDIT WORTHINESS OF THE CREDITORS VIS - - VIS THE TRANSACTION WHICH HE HAD WITH THE CREDITORS THE BURDEN THEN SHIFTS TO THE REVENUE TO SHOW THAT THOUGH THE AMOUNT IS COVERED BY BANKING CHANNEL THE AMOUNT IN QUESTION BELONGED TO THE ASSESSEE. THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF THE SOURCE OF THE MONEY. THEREFORE WE FIND THAT IN THE INSTANT CASE THE ASSESSEE HAS PROVED ALL THE INGREDIENTS OF SEC. 68. WE ARE OF THE VIEW THAT THE ADDITION IS NOT SUSTAINABLE AND HENCE WE DELETE THE SAME. 7. GROUND NOS. 7 AND 8 RELATE TO THE ADDITION OF RS. 30 LACS IN RESPECT OF ADVANCE PAYMENT TO ARM A NDO GONSALVES FOR PURCHASE OF RIGHTS IN PROPERTY KNOWN AS MOSPOTEM & MOROD CAUDANA SITUATED AT TALEIGAO. THIS IS A COMMON GROUND IN BOTH THE APPEALS I.E. ITA NOS. 89 & 90/PNJ/2013. THE SHORT FACTS OF THE GROUNDS ARE AS UNDER : 7.1 DURING THE COURSE OF SEARCH AND SEIZURE SEIZED MATERIAL ANNEXURE A/EB - 1/4 DT. 18.3.2010 CONTAINED DETAILS OF TRANSACTION BETWEEN SADIQ SHAIKH AND ARMANDO GONSALVES. SADIQ SHAIKH MADE PAYMENT OF RS. 36 LACS AND RS. 30 LACS UNDER THE ASSIGNMENT AGREEMENT S DT. 5.5.2007 AND 1.12 .2006 RESPECTIVELY . DETAILS OF MODE OF ABOVE PAYMENTS ARE NOT MENTIONED IN THE SAID ASSIGNMENT DEEDS. THEREFORE AO HAS MADE ADDITION OF RS. 30 LACS AS UNEXPLAINED INVESTMENT IN A.Y 2007 - 08. MATTER CARRIED TO CIT(A) AND CIT(A) HAS CONFIRMED THE SAME. 23 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) 7. 2 THE LD. AR SUBMITTED THAT PAYMENT OF RS. 30 LACS WAS MADE TO ARMANDO GONSALVES FOR PURCHASE OF RIGHTS IN TITLE OF THE PROPERTY KNOWN AS MOSPOTEM & MOROD CAUDANA SITUATED AT TALEIGAO VIDE DEED OF ASSIGNMENT DT. 1.12.2006. COPY OF THE DEED OF ASSIGNMENT I S AT PAGES 68 TO 78 OF THE PAPER BOOK. THE PAYMENT WAS MADE BY CHEQUE BY EMGEE HOUSING PVT. LTD. ON BEHALF OF THE ASSESSEE WHO OWED MONEY TO THE ASSESSEE. THE LEDGER EXTRACT CONFIRMATION OF ARMANDO GONSALVES PROPRIETOR OF HOME MAKERS WAS FILED. EMGEE HOUSING PVT. LTD. HAVE ALSO CONFIRMED THE PAYMENT. COPY OF CONFIRMATION S BY ARMANDO GONSALVEDS AND EMGEE HOUSING PVT. LTD. ARE ON PAGE 79 AND 80 OF THE PAPER BOOK. THUS THE TRANSACTION IS RECORDED IN BOOKS AND CONFIRMATIONS ARE AVAILABLE. S ECTION 69 CAN BE APPLIED IF THE PAYMENT IS NOT ACCOUNTED WHEREAS IN THIS CASE THE TRANSACTIONS ARE RECORDED IN THE BOOKS AND CONFIRMATION OF THE PARTIES IS AVAILABLE. THEREFORE ADDITION IS WITHOUT ANY BASIS AND DESERVES TO BE DELETED. 7.3 ON THE OTHER HAND THE LD. DR RELIED UPON THE ORDER OF CIT(A) . 7.4 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT DURING THE COURSE OF HEARING THE LD. AR HAS FILED THIS CONFIRMATION BEFORE US. WE FIN D FROM PAGE 80 OF THE CONFIRMATION LETTER THAT THIS PAYMENT IS MADE BY CHEQUE DT. 1.9.2006. THEREFORE WHEN ALL THE PAYMENTS ARE MADE BY CHEQUE THERE IS NO REASON TO DIS - BELIEVE THE SAME. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY WE RESTORE T HIS ISSUE TO THE FILE OF AO TO VERIFY WHETHER THIS PAYMENT IS MADE BY CHEQUE OR NOT AND IF THE AO FINDS THAT THIS PAYMENT IS MADE BY CHEQUE NO. 118996 DT. 1.9.2006 THEN ADDITION MAY BE DELETED AFTER VERIFYING THE SAME. THEREFORE THIS ISSUE IN BOTH THE APPEALS IS ALLOWED FOR STATISTICAL PURPOSE. IN THE RESULT ITA NOS. 89 & 90/PNJ/2013 ARE ALLOWED FOR STATISTICAL PURPOSE . 24 ITA NOS. 89 90 127 & 128/PNJ/2013 (ASST. YEAR : 2007 - 08) 8 . IN THE RESULT BOTH THE DEPARTMENTS APPEALS ITA NOS. 127 /PNJ/2013 & 128/PNJ/2013 ARE DISMISSED AND BOTH THE ASSESSEES APPEALS ITA NOS. 89 & 90/PNJ/2013 ARE ALLOWED FOR STATISTICAL PURPOSE . 9 . ORDER PRONOUNCED IN THE OPEN COURT ON 31 / 07 /2013. SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER SD/ - ( D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 31 / 07 / 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT PANAJI (4) CIT(A) PANAJI (5) D.R (6) GUARD FILE TRUE COPY BY ORDER SR. P RIVATE S ECRETARY ITAT PANAJI GOA