Revenue's appeal dismissed as diary entries linked to declared partnership firm transactions, not unexplained income under sections 269SS, 269T, 271AAB

ITAT Ahmedabad dismissed Revenue's appeal challenging CIT(A)'s deletion of addition based on diary entries seized from assessee. AO treated diary entries as unexplained income and initiated penalty proceedings under sections 269SS, 269T and 271AAB. CIT(A) found AO failed to disprove assessee's claim that entries related to money transactions for housing projects of partnership firms where assessee maintained accounts. AO provided no material evidence to rebut assessee's explanation and failed to justify the computed unexplained cash amount. Assessee produced partnership firms' returns and CIT(A) orders showing declared undisclosed income, supporting the deletion.

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Issues involved:
The appeal against the appellate order relating to assessment under section 143(3) of the Income Tax Act, 1961 for Assessment Year 2014-15.

Issue 1: Addition of unexplained income based on seized diary entries
- The Revenue made an addition of Rs. 2,53,04,000 as unexplained income of the assessee based on entries in a seized pocket diary.
- The AO disbelieved certain entries in the diary, alleging they were personal transactions of the assessee and not related to the partnership firms.
- The CIT(A) deleted the addition, stating that the AO's findings lacked material evidence and did not disprove the connection of diary entries to the partnership firms.
- The Revenue appealed, arguing that the deletion of the addition was erroneous.

Issue 2: Discrepancy in disclosed income of partnership firms
- The partnership firms, M/s. Dev Corporation and M/s. Yash Buildcon, disclosed undisclosed income in their returns for AY 2014-15.
- The CIT(A) considered the disclosed income of the firms while deciding the penalty, leading to the deletion of the addition in the assessee's case.
- The Revenue contended that the undisclosed income found in the firms' returns did not align with the entries in the seized diary.
- The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence disproving the connection between the diary entries and the firms' transactions.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition of unexplained income based on seized diary entries. The Tribunal found no merit in the Revenue's arguments, stating that the CIT(A)'s order was sound and lacked any defects.

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