IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "F": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA.No.5364/Del./2017
Assessment Year 2014-2015
The ACIT, Central Circle-15, Mr. Rajesh Gupta,
Room No.353, E-2, B-393, New Friends
ARA Centre, Civic Centre, vs., Colony, New Delhi
New Delhi. 110025
PIN 110 002. PAN AAAPG7884Q
(Appellant) (Respondent)
For Revenue : Shri Sushma Singh, CIT-DR
Shri Salil Agarwal, Advocate
For Assessee : And
Shri Shailesh Gupta, C.A.
Date of Hearing : 26.02.2020
Date of Pronouncement : 28.02.2020
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by Revenue has been directed against
the Order of Ld. CIT(A)-25, Delhi, Dated 24.03.2017, for the
A.Y. 2014-15, challenging the deletion of addition of Rs.1.90
crores on account of undisclosed interest receipts.
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Mr. Rajesh Gupta, New Delhi.
2. We have heard the Learned Representatives of
both the parties and perused the findings of the authorities
below.
3. Briefly the facts of the case are that assessee is
an individual and filed return of income declaring total
income of Rs.11.39 crores, which was processed under
section 143(1) of the I.T. Act, 1961. In this case action
under section 132 of the I.T. Act was carried out on
17.12.2013 and various documents/books of account etc.
were found and seized. The statement of the assessee was
also recorded. The assessee has declared additional income
of Rs.11.31 crores under the head "Speculative income". The
A.O. issued statutory questionnaire in which documents
found and seized during the course of search were also
confronted to the assessee. During the year, the assessee
has declared income from business and profit from
partnership firm, income from salary, income from house
property, capital gains and income from other sources etc.
The A.O. issued show cause notice as to why Rs.1.90 crores
should not be treated as his unaccounted interest income.
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Mr. Rajesh Gupta, New Delhi.
The A.O. in the show cause notice brought to the notice of
assessee the seized paper and sought explanation regarding
receipt of interest amounting to Rs.1.90 crores paid to
assessee by M/s. Allied Strips Limited ["ASL"]. The assessee
submitted before the A.O. that it is an admitted fact that
the alleged Laptop which contain entry of Rs.1.90 crores
paid by ASL neither seized from the assessee not it belong
to the assessee. It was informed that statement of Shri
Gaurav Aggarwal was recorded during the course of search
wherein it was categorically stated by him that these in fact
were the calculation of notional interest on the investment
made by BDR group. It is notional figures only. It was also
submitted that M/s Renu Realtech Pvt. Ltd, a Group
Company is one of the collaborators in the Bahadurgarh
project of the ASL group and its associates. The Investment
of Rs.25.01 crores was explained above was made in the
project in anticipation of the profits at the time of sale of
project. There were no agreement to earn or receive any
interest. The seized documents do not belong to the
assessee. The A.O, however, did not accept the contention
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Mr. Rajesh Gupta, New Delhi.
of assessee because seized dairy as Annexure-4, Party DA-6
has been written by Shri Ravinder Gupta one of the
Directors of ASL Group companies and the impugned
Laptop which contains the entry of Rs.1.90 crores shown to
have been paid as interest to assessee through Shri Rajesh
and Shri Vikram as also been operated by Shri Ravinder
Gupta and secondly, when most of the entries in the said
Diary have been explained by collaborating documents
including the Company, then, how the entries in the Laptop
do not belong to the assessee. Further explanation of
assessee was called for in which assessee reiterated the
same facts and denied to have receive any interest from ASL
Group. It was also explained that statement of Shri Gaurav
Aggarwal of ASL group was also recorded during the course
of search in which he has denied the entries. The assessee,
therefore, submitted that since the maker of the entry do
not support the case of the Revenue and assessee did not
receive any interest, therefore, no addition could be made
against the assessee. The assessee relied upon Judgment of
the Hon'ble Bombay High Court in the case of Addl. CIT vs.,
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Mr. Rajesh Gupta, New Delhi.
Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom.) It was
submitted that since Author of the seized document himself
denied to have given any interest, therefore, no addition
could be made. The A.O, however, did not accept the
contention of assessee and made the addition of Rs.1.90
crores on account of interest paid by the aforesaid parties
to the assessee.
4. The assessee challenged the addition before the
Ld. CIT(A). It is noted in the impugned order that A.O. taxed
the amount of Rs.1.90 crores as unaccounted interest paid
to assessee on the basis of entries in the Laptop and
documents seized during the course of search operation in
the case of M/s. Allied Strips Limited ["ASL"]. Such entries
were found in Diary and Laptop of Shri Ravinder Gupta,
one of the Directors of ASL. The assessee reiterated the
submissions before the Ld. CIT(A) and it was submitted
that assessee was also a collaborator with the project by
purchasing the land at Bahadurgarh, therefore, there is no
question of charging any interest and there was no
agreement to charge interest. The Author of the Laptop and
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Mr. Rajesh Gupta, New Delhi.
Diary denied to have paid any interest to the assessee. The
name of the assessee is not appearing in the seized paper
taken from the Laptop. Shri Ravinder Gupta and Shri
Gaurav Aggarwal in their statements have denied to have
made any payment on account of interest to the assessee.
He has submitted that no corroborative evidence was found
during the course of search so as to make the addition. The
Ld. CIT(A) discussed this issue in detail in the impugned
order and deleted the addition. The operative portion of the
Order of the Ld. CIT(A) in paras 8.22 to 9 are reproduced as
under :
"8.22. It is observed that the Appellant had
brought to the knowledge of the Assessing
Officer, various issues relating to the specific
facts of the instant case, particularly in the
reply dated 28.03.16, relevant portion of which
has been reproduced by the Assessing Officer
in the Assessment Order, but all such issues
have simply been brushed aside by the
Assessing Officer without any discussion or
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Mr. Rajesh Gupta, New Delhi.
adverse comment. The Assessing Officer failed
to address various issues, prominent being that
there was no Agreement to earn or receive any
Interest and that investment had been made by
the Appellant arid a Company of his Group, in
the purchase of Land as a Collaborator in the
Bahadurgarh Real Estate Project of M/s Allied
Strips Ltd. in anticipation of the profit at the
time of sale of the project, and that there was
no question of any receiving or earning of
Interest on the investment made in the
Bahadurgarh Real Estate Project. Also, no
discussion or any comment was made on the
Statement u/s 132(4) of Sh. Gaurav Aggarwal,
MD, who stated that the calculation of Interest
was only on notional basis for negotiation
purposes. The Assessing Officer recorded
Statement u/s 131 of Sh. Ravinder Gupta,
Author of the entries, who also confirmed that
the entries were on notional basis, the relevant
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Mr. Rajesh Gupta, New Delhi.
contents of such statement were confronted to
the Assessing Officer by the Assessee in the
reply dated 28.03.16, but the Assessing Officer
though reproduced the reply dated 28.03.16 of
the Assessee, failed to rebut the claims made
and simply brushed aside all the facts of the
case without any reasoning or discussion.
8.23. In view of the above discussion, it is clear
that the Assessing Officer has failed to rebut
the claims of Sh. Gaurav Aggarwal, MD of M/s
Allied Strips Ltd. in the statement u/s 132(4),
and the claims of Sh. Ravinder Gupta, Author
of the entries in the statement u/s 131 and
also the facts of the case brought out by Sh.
Rajesh Gupta, the Appellant. In such a
situation, there is no justification for any
conclusion regarding any payment or accrual of
Interest. Accordingly, the addition of
Rs.1,90,00,000/- made by the Assessing
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Mr. Rajesh Gupta, New Delhi.
Officer as Undisclosed Interest Income is
hereby deleted.
8.24. In view of the finding that there was no
payment or accrual of Interest of
Rs.1,90,00,000/-, the adjudication of the
various legal issues raised by the Appellant,
and also the other Grounds of Appeal is not
required."
5. The Ld. D.R. relied upon the order of the A.O.
and submitted that since other entries in the seized paper
were explained, therefore, adverse inference was correctly
drawn against the assessee that assessee has received
interest from ASL group. Therefore, addition was wrongly
deleted by the Ld. CIT(A).
6. On the other hand, Learned Counsel for the
Assessee reiterated the submissions made before the
authorities below and filed copies of the seized paper on
record and submitted that the same did not contain name
of the assessee. Mr. Ravinder Gupta and Mr. Gaurav
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Mr. Rajesh Gupta, New Delhi.
Aggarwal of ASL group in their statements recorded under
section 132(4) in case of search in their cases denied to
have given any interest to the assessee. The laptop and
seized diary did not belong to the assessee as it belongs to
to Mr Ravinder Gupta who has denied to have made any
payment of interest to the assessee. No corroborative
evidence was found during the course of search. Therefore,
there was no justification to make any addition against the
assessee. The Learned Counsel for the Assessee has relied
upon the following decisions.
6.1. Judgment of the Hon'ble Delhi High Court in the
case of CIT (Central)-1, New Delhi vs., Ved Prakash
Choudhary [2008] 305 ITR 245 (Del.) in which in paras 12
to 15 the Hon'ble Delhi High Court held as under :
"12. Insofar as the present case is concerned, the
Assessee had stated that in fact there was no
transfer of money between him and Ravi Talwar
and Madhu Talwar. On the other hand, Ravi
Talwar and Madhu Talwar had denied receipt of
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Mr. Rajesh Gupta, New Delhi.
any money from the assessee. In the fact of these
denials, there ought to have been corroborative
evidence to show that there was in fact such a
transfer of money. Both the Commissioner as well
as the Tribunal have come to the conclusion that
there was no such material on record.
13. The Assessing Officer relied on certain other
transactions entered into by the assessee with
Ravi Talwar and Madhu Talwar for drawing a
presumption in respect of the transfer of money,
but the Tribunal rightly held that those were
independent transactions and had nothing to do
with the MoUs, which were the subject-matter of
discussion. Even if there was something wrong
with some other transactions entered into, that
would not give rise to an adverse inference insofar
as the subject MoUs are concerned.
14. In our opinion, no substantial question of law
arises.
15. Dismissed."
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Mr. Rajesh Gupta, New Delhi.
6.2. The Hon'ble Supreme Court in the case of
Common Cause (A Registered Society) vs., Union of India
[2017] 394 ITR 220 (SC) held as under :
"Investigation could not have been directed in case of
high public functionaries on basis of legally
inadmissible evidence in form of loose papers."
6.3. The Hon'ble Gujarat High Court in the case of
DCIT vs., Mahendra Ambalal Patel [2010] 40 DTR 243
(Guj.) held as under :
"Addition in the hands of the assessee having
been made merely on the basis of a bald
statement of a third party without there being any
corroborative evidence, the Tribunal was justified
in deleting the addition particularly when the
assessee was not allowed opportunity to cross-
examine the persons who made such a statement."
6.4. We have considered the rival submissions and
perused the material on record. The Learned Counsel for
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Mr. Rajesh Gupta, New Delhi.
the Assessee has placed on record copy of the seized paper
which was found from the laptop of Mr. Ravinder Gupta
Director of ASL group of cases. In the seized paper name of
the assessee is not mentioned. It is stated cash paid to BDR
through Mr. Rajesh and Mr. Vikram. No statement of Mr.
Rajesh and Mr. Vikram, if any, have been mentioned in the
assessment order. It is not clear whether any interest have
been paid to the assessee or not. Since the laptop and
seized Diary belong to Shri Ravinder Gupta and his
statement was recorded under section 132(4) of the I.T. Act
in the course of search in their ASL Group of cases and he
denied in his statement to have made any interest payment
to assessee, therefore, no liability could be fasten on
assessee to prove that assessee received any interest.
Similarly statement of Shri Gaurav Aggarwal was recorded
under section 132(4) of the I.T. Act in the case of search in
their group of cases who has also denied payment of any
interest. Therefore, there is no evidence on record to prove if
any interest payment is made to the assessee. The assessee
also denied to have received any interest payment from any
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Mr. Rajesh Gupta, New Delhi.
of these parties. These facts, therefore, show that no
corroborative evidence was found during the course of
search to support the findings of the A.O. No agreement has
been brought on record if there was any understanding
between the parties to charge the interest. Therefore, in the
absence of any evidence connecting the assessee with the
receipt of interest, the Ld. CIT(A) rightly came to the
conclusion that it is not a case of making addition against
the assessee. The above decisions relied upon by Learned
Counsel for the Assessee squarely apply to the facts and
circumstances of the case and supports the finding of fact
recorded by the Ld. CIT(A) that it is not a case of making
any addition against the assessee. It appears from the
findings of the A.O. that A.O. on the basis of the seized
paper which were explained by ASL Group of cases partly
presumed that assessee has received some interest from
ASL Group of cases. However, it is well settled Law that
presumption whatsoever strong may be cannot take place
on legal proof. In the absence of any cogent and relatable
evidence on record, we do not find any justification to
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Mr. Rajesh Gupta, New Delhi.
interfere with the Order of the Ld. CIT(A) in deleting the
addition. The Department appeal fails and is dismissed
7. In the result, appeal of the Revenue dismissed.
Order pronounced in the open Court.
Sd/- Sd/-
(O.P. KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 28th February, 2020
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "F" Bench
6. Guard File
// BY Order //
Asst. Registrar : ITAT Delhi Benches :
Delhi.
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