The Commissioner Of Income Tax, Central Iii, Mumbai v. Jayant Vithaldas

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1696 OF 2009 The Commissioner of Income Tax, Central III, Mumbai..Appellant. Versus Jayant Vithaldas ..Respondent. Mr.Vimal Gupta for the appellant.Mr.J.D. Mistri, Senior Advocate with Ms.Pamnani i/by Pamnani & Pamnani for the respondent. CORAM : J.P. Devadhar & A.A. Sayed, JJ. P.C. : DATE : 8[th] August, 2011. 1.Whether the Income Tax Appellate Tribunal was justified in deleting the addition made on account of hundis seized from the premises of the assessee under Section 132 of the Income Tax Act, 1961 is the question raised in this appeal. 2.The assessment year involved herein is assessment year 1984-85. Admittedly, similar orders were passed by the Income Tax Appellate Tribunal relating to the assessment years 1985-86 and 1986-87 and the Revenue has not filed appeal against the order of the Income Tax Appellate tribunal for assessment year 1986-87 on account of smallness of the tax effect and the appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal for assessment year 1985-86 has been dismissed for want of removal of office objections and thus the orders of the Income Tax Appellate Tribunal for those assessment years have attained finality. 3.In the present case, the Income Tax Appellate Tribunal has deleted the additions made in the hands of the assessee, by the assessing officer mainly on the ground that blank hundies duly signed by Mr.Dilip Sardesai (former test cricketer) were found at the premises of the assessee, and that Mr.Sardesai had stated in his cross-examination (recorded pursuant to the order of the Income Tax Appellate Tribunal dated 29[th] September 1999) that he had not received any money under the hundies signed by him. Mr.Dilip Sardesai further explained the circumstances in which the hundies were issued by him by filing an affidavit and also by stating in his cross-examination as follows : “Let me clarify that there were some undated hundies and other hundies were signed in the year 1983 and 1984. These undated hundies also belongs to the same period. I further reiterate that I was working for Shri Jayant Vithaldas family company Wallace Flour Mills and I.P.M.L. I was having absolute trust in Shri Jayant Vithaldas. I wanted to raise certain finances to my firm M/s.R.S. International for which these hundies were signed and given to Shri Jayant Vithaldas. Shri Jayant Vithaldas could not raise the require Finances and I verbally told him to tear these hundies. Infact because of non raising of these finances my firm could not enter into any contract. I was taken by surprise when I came to know during the search that these hundies were still lying with Shri Jayant Vithaldas.” Though the assessing officer has rejected the explanation given by the assessee and Mr.Dilip Sardesai, the Income Tax Appellate Tribunal has accepted the said explanation. Thus, the decision of the Income Tax Appellate Tribunal is based on appreciation of evidence. 4.Apart from the above, the hundies seized from the residence of the assessee, which bear the signature of Mr.Dilip Sardesai record that Mr.Sardesai has received the amounts set out in the hundies in foreign currencies. Based on the said hundies, FERA authorities had initiated action against the assessee on the footing that the foreign currencies were allegedly advanced to Mr.Sardesai by the assessee. Admittedly, the said proceedings initiated by the FERA authorities have been quashed by the Appellate Authority for Foreign Exchange on 10[th] July 2003 and the appeal filed by the Revenue against the said decision of the Appellate Tribunal has also been dismissed by this Court on 19[th] July 2005. We are further informed that the prosecution launched against the assessee has also been quashed. 5.In these circumstances, we see no merit in the appeal and the same is hereby dismissed with no order as to costs. (A.A. Sayed, J.)