Tribunal overturns CIT(A)'s order, directs AO to delete Rs. 2.8 crore addition based on seized documents.

The Tribunal set aside the Ld. CIT(A)'s order and directed the AO to delete the addition of Rs. 2,80,00,000 based on seized documents. The Tribunal found the addition lacked substantive basis, as the document was considered a 'dumb document' and no cross-examination was allowed. The appeal of the assessee was allowed, and the addition was deleted.

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Issues Involved:
1. General Issue (Ground No. 1)
2. Confirmation of Addition of Rs. 2,80,00,000/- based on Seized Documents (Ground Nos. 1 to 6)

Summary:

General Issue:
The issue raised in ground no. 1 is general in nature and does not require any specific adjudication.

Confirmation of Addition of Rs. 2,80,00,000/- based on Seized Documents:
A search and seizure operation was conducted on 13.03.2014 at the premises of M/S CCI Logistics Limited, leading to the seizure of various incriminating materials. The AO observed that the documents revealed the assessee had given cash totaling Rs. 2,80,00,000/- to Gopal Agarwal. The assessee explained that the cash was handed over for safekeeping and was duly recorded in the books of accounts. However, the AO added this amount to the income of the assessee as undisclosed income, citing statements from Gopal Agarwal and Satish Sharma, and the involvement of Mahendra Sethia as an entry operator.

During appellate proceedings, the Ld. CIT(A) dismissed the appeal, stating that the seized document was not a 'dumb document' and the transactions were genuine. The Ld. CIT(A) found the explanation for safekeeping unconvincing and noted that the cash transactions were unaccounted from undisclosed sources.

The Ld. A.R argued that the addition was based on a dumb document and lacked substantive basis. The Ld. A.R referred to various judicial precedents to support the argument that the document could not be the sole basis for addition and that no cross-examination was allowed.

The Tribunal observed that the addition was made on presumptions without corroborative material. The document was unsigned and considered a dumb document. The Tribunal also noted that no cross-examination was provided, making the addition bad in law. The Tribunal set aside the order of the Ld. CIT(A) and directed the AO to delete the addition.

Conclusion:
The appeal of the assessee was allowed, and the addition of Rs. 2,80,00,000/- was deleted. The order was pronounced in the open court on 25th July, 2023.

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