IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM ITA No. 476 & 477 /JP/2015 Assessment Year : 2005-06 & 2006-07 Shri Shailendra Maheshwari cuke JCIT (OSD) 2-K-11, Dada Badi Extension, Vs. Central Circle- 3 Kota Jaipur PAN/GIR No.: ACCPM 2816 J Appellant Respondent Assessee by: Shri Vijay Goyal , CA Revenue by:Shri Mukesh Verma, CIT-. DR Date of Hearing : 10/10/2016 Date of Pronouncement : 17 /10/2016 ORDER PER BHAGCHAND, AM Both these appeals have been filed by assessee against common order of ld. CIT(A), Alwar dated 13-03-2015 for assessment years 2005-06 and 2006-07 wherein assessee has raised following grounds of appeal. 1. On facts and in circumstances of case and ld. CIT(A) erred in confirming addition of Rs. 9,50,000/- (A.Y. 2005-06) and Rs. 14,28,268/- (A.Y. 2006-07) made by AO u/s 69 of Act on account of alleged unexplained transaction recorded on page 14 of Annexure AS 5, seized during 2 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . course of search from 2-ka-11,Dada Badi, Kota without appreciating facts of case and submission made by assessee during course of appellate proceedings. 2. That order of ld. CIT(A), confirming addition made by AO is arbitrary, whimsical capricious, perverse and against law and facts of case. order of ld. CIT(A) in this regard deserves to be set aside and addition made by AO deserves to be deleted. 3. assessee prays for leave to add, to amend, to delete or modify all or any grounds of appeal on or before hearing of appeal. 2.1 Ground Nos. 2 and 3 of assessee in both appeals are general in nature which does not require any adjudication. 3.1 Apropos Ground No. 1 of assessee for assessment years 2005-06 and 2006-07, brief facts of case are that search was conducted on 4-12-2009 in case of M/s. Career Point Group of Kota to which assessee belongs. It is noted that from assessment order that assessee derived income from salary from M/s. Career Point and assessee had also declared income from other sources. In response to notice u/s 153A, assessee filed his return of income on 29-07-2010 declaring total income of Rs. 2,94,800/- & Rs. 3,87,850/- for A.Y. 2005-06 and A.Y. 2006-07 respectively. assessment of assessee was completed by AO assessing total income of assessee at Rs. 12,48,400/- for A.Y. 2005-06 and Rs. 18,19,710/- for A.Y. 2006-07. 3 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . It is also noted that AO had made addition of Rs. 9,50,000/- for A.Y. 2005-06 and Rs. 14,28,268/- for A.Y. 2006-07 totaling to Rs. 23,78,268/- under section 69 of I.T. Act, 1961 on account of alleged unexplained transactions recorded on Page No. 14 of Annexure-AS-5 seized during course of search from 2-K-11, Dadabari, Kota which was confirmed by ld CIT(A) by observing as under. 4.3 I have perused assessment order as well as submissions made by appellant and find that total addition of Rs. 23,78,268/- has been made to income of appellant u/s 69 of I.T. Act on account of incriminating documents page 14 of AS-5, found and seized during course of search. amount of Rs. 9,50,000/-has been assessed in A.Y. 2005-06 and balance amount of Rs. 14,28,268/- has been assessed in A.Y. 2006- 07. AO has discussed nature of transactions recorded on this paper and after going through evidence filed by appellant has given credit for amount of Rs. 2,76,000/- out of total amount of transactions of Rs. 26,54,268/- recorded on this paper. Therefore, only addition of balance amount which remained unexplained to extent of Rs. 23,78,268/- was made to income of appellant. 4.4 appellant has stated that his main source of income is on account of salary income from M/s. Career Point. paper contains notings made for collection of fees and which in turn was handed over to Shri Om Ji. It is further explained that page no. 14 is printout of computer and page no. 22 is handwritten document having same transactions. On page no. 22, it is written that given to Om Ji and therefore, no income be assessed in hands of appellant. It is submitted that no addition be made on account of this paper as case of company as well as directors have been settled by order of Settlement Commission. additional income has been determined over and above what was declared by appellant before Commission. 4 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . 4.5 Having considered material available on record alongwith judicial citations relied upon by appellant, I find that appellant has duly accepted that these transactions explain receipt of unaccounted income which stands invested in purchase of immovable properties at Ajmer. appellant has claimed that this unaccounted income stands declared in hands of other parties of group. However, appellant has failed to furnish any evidence as to where this income has been disclosed after search and in whose hands same has been offered for taxation. appellant has made effort to explain same in round about manner by stating that it was disclosed in additional income assessed by Settlement Commission. copy of order passed by Commission has been filed and I have carefully examined that same and fail to find as to where same has been disclosed. order passed by Commission has given details of additional income disclosed by each applicant and source of income/ investment. No where in order of Commission any reference to papers found & seized from premises of appellant has been made or unaccounted receipts mentioned therein which were received by other applicant before Commission. appellant has also for this reason, failed to specify, as to where it stands disclosed in order of Settlement Commission and that is why no specific reference to any part or para of order of Commission was made, in course of appellate proceedings. 4.6 Thus I find that AO was justified in assessing same as income of appellant from whose possession documents were found. Further, appellant has failed to furnish any evidence either before AO or in course of present proceedings to substantiate its contentions. Therefore, I confirm addition of Rs. 9,50,000/- for A.Y. 2005-06 and of Rs. 14,28,268/- for A.Y. 2006-07 made by AO u/s 69 of I.T. Act. 3.2 During course of hearing, ld. AR of prayed for deletion of addition confirmed by ld. CIT(A) amounting to Rs. 23,78,268/- 5 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . (Rs. 9,50,000/- A.Y. 2005-06 and Rs. 14,28,268/- A.Y. 2006-07) for which assessee filed following written submission. (i) assessee was employee of M/s Career Point. assessee has no source of business income. At pg 1 of assessment order, ld AO mentioned Income from salary & other sources in nature of business of assessee. department carried out search and seizure operations over Career Point Group on 04-12-2009. Career Point Group is engaged in coaching and education activities and assessee is Accountant in group. department also covered assessee in search operations. (ii) During course of search, department seized documents from possession of assessee. During course of assessment proceedings assessee submitted page to page reply of documents seized from his possession. main issue is on pg 14 and 22 of AS-5 seized from 2-Ka -11 Dadabari, Kota. copy of these seized papers is placed at PB page 6 & 7. iii) During course of assessment proceedings assessee explained that he collected part of fees of Career Point, and gave it to proprietor of M/s Career Point. On this paper, assessee made rough notings for collection of fees of M/s Career Point through him and he submitted this paper and collected amount to proprietor of M/s Career Point. iv) Seized Page No 14 is printout of computer and page 22 is hand written. On page 14 some entries with dates are mentioned which are same as mentioned on pg 22. Therefore, both paper should be read as whole. On page 22 of Annexure AS-5, remark is written Given to Shri Omji . This remark clearly establishes that transactions do not pertain to assessee. Neither this paper shows income of assessee nor investment of assessee. No any narration is mentioned. (v) entries on page no 14 and page 22 are common. As regard page 22 of AS-5, findings of ld AO are as under:- on page no 22 of Annexure AS-5, Panchnama of 2-K-11, Dadabari, Kota account of `28,30,000/- is recorded with remarks given to Omji Sir. It has been furnished vide letter dated 13/12/2011 that transaction on this page represent collection of Career Point given to Shri Om Prakash Maheshwari. Shri Om Prakash Maheshwari is proprietor of M/s Career Point and his case is before Settlement Commission. Since, there is no occasion to verify transaction from books of M/s Career Point nor assessee has filed any confirmation of Career Point, this issue is left to be decided by Settlement Commission in case of Shri Om Prakash Maheshwari. 6 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . In view of above findings, addition on basis of seized page 14 cannot be made in hands of assessee more so when entries on page 14 and page 22 are common. Hon ble Settlement Commission has decided application of (i) M/s Career Point Infosystem Ltd (ii) Shri Om Prakash Maheshwari (iii) Shri Pramod Kumar Maheshwari and (iv) Shri Nawal Kishore Maheshwari wherein huge additional income (over and above to returned income) of Rs.15,43,48,130/- determined. copy of order of Hon ble Settlement Commission is placed at PB page 8-72. (vi) ld CIT(A) has wrongly mentioned in para 4.5 at pg 10 of his order that appellant has duly accepted that these transactions explain receipt of unaccountant income, which stands invested in purchase of immovable properties at Ajmer. assessee nowhere admitted so. Further, even ld AO has not alleged so. ld CIT(A) made this finding without any basis and without going to submission made by assessee before ld AO in respect to properties. For ready reference submission of assessee before AO in respect to property 708 and 1656 was as under:- Shri Shailendra Maheshwari Explanation of documents seized from 2-Ka-11, Dadabari, Kota Whether disclosed Relates to in books Exibit Page No Period Detail Description Person of accounts or not 3 1 to 13 Shailendra 2004-05 Yes Property papers related to Plot Maheshwari No 708 B.K. Kaul Nagar, Ajmer purchases by assessee payment of which was made from regular sources. 27 to 39 Shailendra 2002-03 Yes Property related papers of Plot Maheshwari No 1656, Sriram Krishan Puram, sector A, Kota. property was purchased by assessee in FY 2002-03 payment of which was made from regular sources. 7 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . Even ld AO found payment of Rs. 2,40,000/- and Rs. 36000/- against property 708 is from disclosed source. Therefore, ld CIT(A) sustained addition on basis of wrong factual incorrect and perverse findings. (vii) ld CIT(A) mentioned that no where reference of these pages are made in order of settlement commission, therefore, assessee failed to specify as to where income against these papers stands disclosed in order of Hon ble Settlement Commission. In this regard, humble assessee submits that ld CIT(A) failed to appreciate manner in which income was computed in order of Hon ble Settlement Commission. Hon ble Settlement Commission has computed income on basis of asset and expenditure theory. Kindly see para 19.2 and 19.3 of (PB pg 63-64) order of Hon ble Settlement Commission.) Undisclosed Income has been determined on account of jewelry, payments to faculty members etc. In order of Hon ble Settlement Commission issue as regard income on basis of receipts/credit side has not been dealt with, it does not mean that undisclosed income on account of investment and expenditure was over and above to what undisclosed receipts recorded in seized documents. undisclosed income assessed on basis of asset expenditure theory covers unaccounted receipts also. (viii) surrounding circumstances and capability to earn undisclosed income should be taken into account before making addition u/s 69 of Income Tax Act. assessee is employee of M/s Career Point, Kota. His only source of income is salary and interest from banks, and ICICI /IDBI Bonds. department has carried out intensive search operations and no any document was found to visualize any undisclosed business activity of assessee. No any undisclosed assets or investments were found to justify addition on basis of seized documents. In such circumstances, assessee cannot earn such huge income. lower authorities failed to consider this aspect. Therefore addition cannot be sustained in hands of assessee. Reliance is placed on decision of Hon ble Supreme Court in case of Commissioner of Income Tax Vs Smt. P. K. Noorjahan 237 ITR 570 (SC) and CIT Vs Bharat Engineering and Construction Co. (1972) 83 ITR 187 (SC) (ix) ld AO made addition u/s 69 of Income Tax Act. This seized paper does not show any investment. assessing officer merely disbelieved explanation given by assessee and has converted good proof into no proof. Hon ble Justice Hidayatullah of Supreme Court in case of Sreelekha Banerjee Vs CIT [1963] 49 ITR 112 (SC); 120 observed that Income Tax Department cannot by merely rejecting unreasonably good explanation, convert good proof into no proof . Hon ble Supreme Court in case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that surmises and conjectures, and conclusion is result of suspicion which 8 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . cannot take place of proof. Hon ble Punjab & Haryana High Court in case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P & H) also held that suspicion, howsoever strong cannot take place of legal proof. (x) This paper does not reflect investment made by assessee. If department considers it as investment of Assessee, it is burden on department to prove figures appearing on paper found in search represents undisclosed investment of Assessee. This burden is not discharged and therefore, on basis of this paper no addition can be made. Reliance is placed on following decisions:- i) Commissioner Of Income Tax Vs. Naresh Khattar (HUF) High Court Of Delhi (2003) 261 ITR 664 (Del) To invoke provisions of s. 69B, burden is on Revenue to prove that real investment exceeds investment shown in books of account ii) Lal Chand Agarwal Vs ACIT 21 Taxworld 213;231 ITAT Jaipur Bench initial burden u/s 69 of Income Tax Act is on department to prove investment has been made by assessee. 3.3 ld. DR relied on orders of authorities below. 3.4 We have heard rival contentions and perused materials available on record. It is noted from records that assessee is employee of M/s. Career Point and assessee was deriving income from salary and interest. AO made addition in assessee's case amounting to amounting to Rs. 23,78,268/- (Rs. 9,50,000/- A.Y. 2005-06 and Rs. 14,28,268/- A.Y. 2006-07) based on Page No. 14 of Annexure AS-5 seized from 2-K-11, Dadabari, Kota and same was confirmed by ld. CIT(A). Before us, ld. DR tried to establish difference in 9 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . page 6 and 7 of paper book placed by ld. AR of assessee. From enquiry of Bench, ld. AR admitted that most of entries of page 6 of paper book are similar to page 7 of paper book and it is clearly written that Given to Om Sir . contention of ld. AR of assessee is that assessee was employee of M/s. Career Point who used to collect part of fees on behalf of M/s. Career Point and handed over same to Proprietor of M/s. Career Point Shri Om Prakash Maheshwari which is evident from page 7 of paper book. Thus there was no income to assessee and Shri Om Prakash Maheshwari has already settled his case before Hon'ble Settlement Commission. Further, Revenue s allegation was that assessee invested amount in property at Ajmer for which ld. AR of assessee filed statement of properties and submitted that these were acquired by assessment years 2002-03 and 2004-05 but ld. DR could not specify details in which property amount was invested by assessee. It reflects from records that assessee was employee of M/s. Career Point who admitted that he used to collect fees on behalf of M/s. Career Point and handed over same to Proprietor of M/s. Career Point which is evident from seized material itself and thus it establishes that there was no taxable income in hands 10 ITA No. 476/JP/2015 Shri Shailendra Maheshwari vs. JCIT (OSD) Central Circle- 3, Jaipur . of assessee. Keeping in view these facts, circumstances of case and case laws relied on by assessee, additions confirmed by ld. CIT(A) in assessee s case relating to assessment year 2005-06 and 2006-07 amounting to Rs. 23,78,268/- (Rs. 9,50,000/- A.Y. 2005-06 and Rs. 14,28,268/- A.Y. 2006-07) are directed to be deleted. Thus order of ld. CIT(A) is reversed. appeals of assessee are allowed. 4.0 In result, appeals of assessee are allowed Order pronounced in open Court on 17 /10/2016. Sd/- Sd/- (KUL BHARAT) (Bhagchand) Judicial Member Accountant Member Jaipur Dated:- 17 /10/ 2016 Copy of order forwarded to: s 1. Appellant- Shri Shailendra Maheshwari, Kota 2. Respondent- JCIT (OSD) Central Circle- 3, Jaipur 3. CIT(A). 4. CIT, 5. DR, ITAT, Jaipur 6. Guard File (ITA No.476 & 477/JP/2015) By order, Assistant. Registrar Shailendra Maheshwari v. JCIT (OSD) Central Circle- 3 Jaipur