IN HIGH COURT OF DELHI AT NEW DELHI INCOME TAX APPEAL NOS. 122/2014, 123/2014 & 126/2014 Date of decision: 11th December, 2014 COMMISSIONER OF INCOME TAX-X Appellant Through Ms. Suruchi Aggarwal, Sr. Standing Counsel. versus AMAR NATH VIRENDER KUMAR ..... Respondent Through Mr. Rajat Navet & Mr. Kushagra Pandit, Advocates. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE V. KAMESWAR RAO SANJIV KHANNA, J. (ORAL): These three appeals by Revenue, relating to Assessment Years 2001-02, 2002-03 and 2005-06, arise from order dated 19th July, 2013, passed by Income Tax Appellate Tribunal (Tribunal, for short). 2. On 15th December, 2004, search and seizure operations under Section 132 of Income Tax Act, 1961 (Act, for short) were conducted in case of Brij Mohan Gupta, Gali Hinga Beg, Tilak Bazar, Delhi. Incriminating documents, diaries and loose papers were found and seized. Brij Mohan Gupta was apparently involved in clandestine money lending business of undeclared or black money and was acting as broker or middleman in cash loan transactions. ITA Nos. 122/2014, 123/2014 & 126/2014 Page 1 of 7 3. Brij Mohan Gupta, revenue claims, for record had maintained coded entries. These diaries/papers were seized and investigation revealed that they were written by Ram Avtar Singhal, accountant of Brij Mohan Gupta in cryptic or coded form. It is stated that Amar Avtar Singhal had decoded entries and had implicated respondent assessee. 4. list of individual firms, HUFs etc., who were either lenders or borrowers, was forwarded to Assessing Officers of persons identified. Along with list, Deputy Commissioner of Income Tax, Central Circle-19 had enclosed satisfaction note recording that Ram Avtar Singhal in his statement dated 15 th December, 2004, had decoded entries in respect of amount received/advanced by veiled borrowers/lenders. respondent-assessee, partnership firm, finds mention in one such list. said list gives address of respondent- assessee and months in which entries were made. list indicates that alphabets AV had been decoded and would read M/s Amar Nath Virender Kumar, Khari Baoli, Delhi . 5. In first round, Assessing Officer by assessment order dated 30th December, 2008 made additions of Rs.1,56,25,000/-, Rs.61,25,000/- and Rs.60,00,000/- in respect of Assessment Years 2001-02, 2002-03 and 2005-06 relying upon Section 69A of Act. said additions were deleted in first appeal, inter alia, recording that respondent-assessee had made specific request for furnishing of complete statements of Brij ITA Nos. 122/2014, 123/2014 & 126/2014 Page 2 of 7 Mohan Gupta, his son Rajeev Gupta and his accountant Ram Avtar Singhal and had sought cross-examination. Assessing Officer had failed to provide said statements and afford opportunity of cross-examination. Commissioner of Income Tax (Appeals) observed that Assessing Officer should have conducted further enquiries after receiving information from Deputy Commissioner of Income Tax, Central Circle-19, but had failed to proceed and collect relevant evidence or material to implicate respondent-assessee. 6. Revenue preferred appeal before Tribunal. By order dated 29th October, 2010, order of remand was passed setting out that Assessing Officer had failed to provide adequate and fair opportunity to assessee but directed that copy of statements should be provided and assessee should be granted opportunity to cross-examine. It was open to Assessing Officer to carry out further enquiry and investigation. said order of Tribunal has attained finality and was not challenged by revenue or assessee. 7. In remand proceedings, Assessing Officer made additions of Rs.1,56,25,000/-, Rs.61,25,000/- and Rs.60,00,000/- for Assessment Years 2001-02, 2002-03 and 2005-06, respectively, recording that respondent-assesseee had not disclosed said transactions in returns of income. Brij Mohan Gupta did not appear as he had died in July, 2011. On 21st December, 2011, Ram Avtar Singhal and Rajiv Gupta had appeared and ITA Nos. 122/2014, 123/2014 & 126/2014 Page 3 of 7 deposed that they had not known any party by name of M/s Amar Nath Virender Kumar. They also failed to identify assessee. Assessing Officer held that Rajiv Gupta and Ram Avtar Singhal were trying to evade direct replies to protect assessee and their statements dated 21st December, 2011 cannot be relied upon. He preferred to rely upon seized documents and statements made by Ram Avtar Singhal, Brij Mohan Gupta and Rajiv Gupta at time of search. He held that onus was on M/s Amar Nath Virender Kumar to produce positive evidence that entries as decoded did not relate to them and they were not involved in aforesaid unaccounted /black money lending business. Late Brij Mohan Gupta, it was observed, had admitted his involvement as broker in advancing unaccounted cash loan/hundi transactions. 8. respondent-assessee succeeded in first appeal with Commissioner of Income Tax (Appeals) deleting aforesaid additions holding that there was no material or evidence to show that respondents were involved in money lending business or had engaged services of Brij Mohan Gupta as broker. In absence of any cogent and reliable material, additions were deleted. 9. said view has been affirmed by Tribunal in impugned order dated 19th July, 2013. 10. In order to ascertain and verify whether respondent-assessee had been named in any of statements which were recorded during ITA Nos. 122/2014, 123/2014 & 126/2014 Page 4 of 7 course of search or thereafter, we had adjourned appeals. 11. In our order dated 12th September, 2014, we had recorded that issue raised was factual as findings recorded by Tribunal were under challenge on ground of perversity. Revenue, it is apparent had relied on statements made by late Brij Mohan Gupta and Ram Avtar Singhal, his accountant. said statements had not been placed on record. 12. On 25th November, 2014, again at request of counsel for revenue appeals were adjourned after recording that Senior Standing Counsel had received statements in morning. On 3rd December, 2014, adjournment slip was moved and appeals were adjourned for today. 13. Learned counsel for revenue has produced before us statement of Ram Avtar Singhal and Rajeev Gupta recorded on 15th December, 2004. Ram Avtar Singhal, it is apparent, was shown bunch of loose papers (Annexure A-1) and asked to decipher entries. In response to question No. 6, Ram Avtar Singhal deposed that word Amar referred to Amar Nath, Naya Bazar . second statement relied is again of Ram Avtar Singhal recorded on 22nd March, 2005. In response to one of questions, Ram Avtar Singhal had affirmed that he had noted down names of companies and would provide complete addresses on next date, i.e. on 23rd March, 2005. details, names and addresses provided on 23 rd ITA Nos. 122/2014, 123/2014 & 126/2014 Page 5 of 7 March, 2005 have not been placed on record or produced before us at time of hearing. On basis of said statements, it is not possible to hold that word Amar refers to Amar Nath Virender Kumar, Khari Baoli, Delhi . diary with alphabets AV and statement identifying or decoding that alphabets AV refer to M/s Amar Nath Virender Kumar have not been produced before us. Without any implicating material, it is difficult to hold or draw assumption or presumption, which revenue wants us to accept. 14. Learned counsel for Revenue has drawn our attention to list forwarded by Deputy Commissioner of Income Tax, Central Circle 19 along with his satisfaction note dated 10th April, 2007. said letter mentions that most of parties involved were located at Khari Baoli, Tilak Bazar; Naya Bans; Lal Katra; Gadodia Market; Lahori Gate; Katra Ghee, Tilak Bazar; Ansari Road; Gali Hinga Beg, Chandni Chowk, etc. close scrutiny of aforesaid list would indicate that both coded and decoded names were mentioned. Three codes AV , AV-Amar and AV- RFM were decoded by Investigation Wing as M/s Amar Nath Virender Kumar, Khari Baoli ; M/s Amar Nath Virender Kumar, Amar Lal Mill, 2647, Naya Bazar, New Delhi ; and, M/s Amar Nath, Khari Baoli Rajdhani Floor Mills, Lahori Gate . code AV as per revenue, implicates respondent-assessee. However, there is no evidence or material to show that Brij Mohan Gupta or Ram Avtar Singhal during ITA Nos. 122/2014, 123/2014 & 126/2014 Page 6 of 7 search had identified and decoded alphabets AV to stand for M/s Amar Nath Virender Kumar, Khari Baoli . As already noted above, Ram Avtar Singhal and Rajeev Gupta had refused to identify respondent and had stated that they did not know said parties. Revenue has not produced before us any statement of Ram Avtar Singhal, Rajeev Gupta or (Late) Brij Mohan Gupta implicating respondent assessee or corroborating that code AV stands for M/s Amar Nath Virender Kumar . Even relevant diary or papers seized with code AV have not been produced. assertion made in letter written by Deputy Commissioner of Income Tax, Central Circle-19, is not sufficient and good ground to uphold addition. said assertion is finding or inference. basis or foundation of said finding was alleged diaries/statements. Failure to produce said diaries/statements and relevant statement decoding entries is fatal for case of revenue. 15. In these circumstances, we do not think that decision of Tribunal is perverse and on facts can be interfered with in these appeals. appeals are accordingly dismissed. SANJIV KHANNA, J. V. KAMESWAR RAO, J. DECEMBER 11, 2014 VKR/NA ITA Nos. 122/2014, 123/2014 & 126/2014 Page 7 of 7 Commissioner of Income-tax-X v. Amar Nath Virender Kumar