Commissioner Of Income Tax Central v. Shri Jai Kumar Jain Through Lrs

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 139 / 2008 Commissioner Of Income Tax Central ----Appellant Versus Shri Jai Kumar Jain through LRs ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. N.S. BhatiFor Respondent(s) : Mr. Ananat Kasliwal _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHURJudgment 23/05/2017 1.By way of this appeal, the appellant has challenged thejudgment of the Tribunal whereby the Tribunal has dismissed theappeal of the Department and allowed the appeal filed by theassessee. 2.While admitting the appeal, this Court framed the followingsubstantial question of law: “(i) Whether the ITAT was justified in reducing thetotal income of the assessee from Rs. 1,34,65,680/-to merely Rs. 5,03,199/-, inspite of the fact thatmajority of the additions were admitted or notexplained by the assessee? (ii) Whether the ITAT was justified in not confirmingthe addition of Rs. 3,18,370/- made on account ofunexplained cash found during search, when theaddition was made on the basis of statement of sonof the assessee and the fact that it was nor recordedin the books of accounts? (iii) Whether the ITAT was justified in not confirmingthe addition of Rs. 4,43,693/- made on account ofunexplained jewellery found during the search, whenthe assessee itself during the assessment has failedto explain the same and changed his own stand? (iv) Whether the ITAT was justified in not confirmingthe addition of Rs. 86,46,406/- made on account of unexplained sale of loose diamonds, when thepurchaser itself has denied the transactions and thefamily members, who have sold the diamond werealso not aware of the said transaction? (v) Whether the ITAT was justified in not confirmingthe addition of Rs. 86,46,406/- made on account ofunexplained sale of loose diamonds, when it wasprove that the said transaction was nothing but acolourable device to invest the unaccounted money ofthe assessee in the business? (vi) Whether the ITAT was right & justified in notconfirming the addition of Rs. 2,39,876/- and Rs.95,705/- made on account of profit on unrecordedsales, when the said transactions was not reflected inthe books of accounts and the assessee itself failed toprovide any explanation to the same? (vii) Whether the ITAT was justified in deleting theentire addition of Rs. 9,43,300/-, made on account ofinvestment in unrecorded sales, inspite of the factthat the assessee in his own statements haveadmitted these as unrecorded. (viii) Whether the ITAT was right & justified in notconfirming the addition of Rs. 5,55,810/- and Rs.3,00,000/- made on account of unrecordedtransactions found with Shri Atul Jain, who himselfhas admitted the said transactions with the assessee? (ix) Whether the ITAT was right and justified indeleting the interest of Rs. 20,99,285/- charged u/s158BFA(1) ignoring the fact that admittedly thereturn for the block period was filed late by theassessee as specified in the notice u/s158BC and alsoconsidering the fact that the provisions of Section158BFA(1) are mandatory in natur? (x) Whether the ITAT was justified in AssessingOfficer to provide the benefit of telecoping to theassessee without considering the fact that the nexusbetween income earned and investment/expendituremade is required to be established?” 3.Heard learned counsel for the parties. 3.1Counsel for the appellant has taken us to the order of AO aswell as CIT (A) and thereafter to the order of the Tribunal. Hereferred to the following findings of the authorities on differentsubstantial questions which can be summarized by the followingtable: (x) Whether the ITAT was justified in AssessingOfficer to provide the benefit of telecoping to theassessee without considering the fact that the nexusbetween income earned and investment/expendituremade is required to be established?” 3.Heard learned counsel for the parties. 3.1Counsel for the appellant has taken us to the order of AO aswell as CIT (A) and thereafter to the order of the Tribunal. Hereferred to the following findings of the authorities on differentsubstantial questions which can be summarized by the followingtable: SQOL NO.A.O.CIT(A)ITAT1.ITAT was justified in reducing income 1,34,65,680 to merely 5,03,199 (Page No. 180)2.CASHCASHCASH Addition of Relief of Rs.291460 Deleted the addition Rs.3,18,370 and 26910 addition (page no. 229, para unexplained cash sustained (Page no. 6)(page no. 39)189, para 7)3.JewelleryJewelleryJewelleryAddition made Deleted Rs.3,13,301 Deleted the addition 4,43,693 (page 44 to of jewellery and (page no 150, para 52)deleted Rs.1,30,092 44)of silver (page no. 191 para no. 12,13)4.Loss of diamondDeleted page Deleted Page no.258 no.201(para 22)(Para 49)Addition of Rs.86,46,406/- (page no. 137)5.DoDoDo6.Unrecorded SaleUnrecorded SaleUnrecorded SaleAddition-2,39,876 Deleted-1,19,938 out Deleted-2,39,876 (Page No. 141 point of 2,39,876(page (page no. 234 to 236,5) no.208, Para 35)Para 18,19,20)Addition -95,705/- Deleted-95,705/-Deleted -95,705/- (Page no.150)(Page no.210, Para (page no.239, 38)Para28,29,30)7.Investment made onInvestment made onInvestment made onaccount unrecordedaccount unrecordedaccount unrecordedsalesalesaleAddition of Addition by AO:-DeletedRs.9,43,300 (Page Rs.9,43,300(page no. 237 to 238,no. 154)CIT confirmed the para no.25 amd 26)Addition:-8,67,836Relief granted:-75,464 page 212 para448.Unrecorded Deleted:-5,55,810 Page no 243 point 36transaction found (page no. 216, para with Shri Atul Jain54)Addition:-5,55,810 Deleted:- 3,00,000 (Page no. 172)(Page no. 218, para 58)Addition:-3.00,000 (Page no. 177)9.Section 158BFA(1) DeletedDeletedinterest of Rs.20,99,285 3.2However, in view of the observations made by the Tribunal which reads as under: “18. The brief facts of these ground are that the AOheld that above loose paper shows transaction ofsales of Rs. 23,98,760/-. Since assessee has notreplied on this paper, he applied rate of 10% to makeaddition of Rs. 2,39,876/-. the ld. CIT (A) held thatthe said transaction relate to purchase of goods inname of Valia Steel Industries. He assumed that profitarising out of this deal must have been shared byboth the parties and therefore addition of Rs.1,19,938/- was confirmed and balance deleted. 28. The brief facts of this ground are that the AOobserved that page 53 of annexure A-24 showsweight of 95,705 Kg. Which is unrecorded sales. Hetook its sale value at Rs. 9,57,050/- and applyingprofit rate of 10% made addition of Rs. 95,705/-. 36. We have considered the rival submission andperused the material on record. We find that additionis made on the basis of the papers found from ShriAtul Jain. In search these papers were not confrontedto the assessee. From the assessment order it isborne out whether Atul Jain stated these papers aspertaining to the assessee. No presumption can bedrawn against the assessee u/s 132 (4A) of theIncome Tax Act 1961 in respect of a paper not fromhim. No addition can be made on the basis ofdocuments found from the third party and in theabsence of corroborative evidence as held in case ofJCR Bhandari vs. ACIT 79 TTJ 1 (Jd) where it was heldas under: “In our considered opinion, it may hardly be deniedthat the India Evidence Act or for that matter theStatutory provisions of the Indian Evidence Act maynot be applicable strictly to the proceedings under theI.T. Act but the basic/broad principle of the law or “In our considered opinion, it may hardly be deniedthat the India Evidence Act or for that matter theStatutory provisions of the Indian Evidence Act maynot be applicable strictly to the proceedings under theI.T. Act but the basic/broad principle of the law or evidence do apply to the said proceedings, it is settledposition of law that the slips or loose sheets do notfall within the purview of ‘book’. An entry in a bookofaccounts, maintained in the regular course of busies,is relevant to be considered in respect of thetransactions reflected thereby, no doubt, but is notconclusively decisive thereof or of the mattercontained therein or liability reflected thereby, andmuch less so an entry in a loose sheet. It is only someother evidence whether in the form of statement ofthe author of the entry or the statement of someother person connected with the transactionscontained in the entry, or in the some other form,supportive of the entry, ehich lends weight/credenceto the entry in the book, depending upon thetrustworthiness of the said deponent or reliability ofthe said entry assumes the nature of reliable evidenceon the basis of which some addition can bemade/sustained. An entry in a loose sheet is of a stillfeeble nature, and an entry in a loose sheet found inthe possession of another/third person is much moreso. As such a mere entry is a loose sheet, by itself,without sworn statement of the learned persons,supportive of the entry, hardly has any evidentiaryvalue, worth the name. The legal position being asemerging above, we are of the considered opinionthat no liability can be fastened nor can an addition bemade on the basis of a mere entry in a loose sheetwithout there being some further trustworthy/reliablecorroborative evidence lending credence to such anentry”. 4.We are in complete agreement with the view taken by theTribunal. All questions raised in this appeal are questions of factand the same are decided by the final fact finding authorityagainst the Department in which no interference is required. 3.3The issues are answered in favour of assessee and againstthe Department.the Department. 4.The appeal stands dismissed. (VIRENDRA KUMAR MATHUR),J.