TaxTMI 
TaxTMI 
2014 (4) TMI 345
X X X X Extracts X X X X
X X X X Extracts X X X X
....necessary jottings in the personal diary which is maintained for confidential things. He, therefore, inferred that the said entries relate to advance or payment made to one Kalubhai on 04.07.2004 and therefore, treated the same as unexplained investment and made addition for Rs 31,68,750/-. 5. Being aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) and submitted as under: "4.1 The appellant, on this issue, submitted that during the course of assessment proceedings, the Assessing Officer had neither asked any explanation nor any show cause notice was served regarding aforesaid noting and jottings found in seized document. Hence the entire addition was without granting any opportunity of being heard and against the principles of natural justice, and therefore was unjustified. It was stated that explanation of aforesaid seized paper was asked in case of Kiranbhai R. Vasani, different legal identity: The appellant has referred to the explanation given in case of Kiranbhai R. Vasani which was as under: 'As per point No. 12 your good selves have asked the explanation of page No. 4 of Annexure A-2 seized from 24/25, Krishnanagar shows n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....750. Further on the perusal of the assessment order, your good selves would appreciate the fact that even while making the impugned addition the assessing Officer has not brought out any other corroborative evidence to that appellant has actually made investment of Rs. 31.68.750. Thus in view of the fact that except the notings on the loose paper no other evidence hi as been forwarded by the Assessing Officer so as to allege that Rs. 31.68.750/- has been actually paid to Mr. Kalubhai on 4.7.2004, the impugned addition made by the assessing officer deserves to be deleted. In this connection the appellant relies on following: (i) Decision of Delhi tribunal in case of Mahan Foods Ltd. v. CIT (2009) 27 DTR 185, wherein the Hon'ble ITAT have held as under: Search and Seizure - Block assessment - Computation of undisclosed income -Although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence of any other evidence found during the course of search or brought on record by the AO to show that the said expenditure was actually incurred by the assessee, the same cannot be added to the undisclosed income of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Tribunal in Goyal (S.P.) v DCIT (2004) 269 ITR 496 (HP). A similar view was ken again by a Third Member in Babros Machinery Manufactures Pvt. Ltd v DCIT (2004) 269 ITR (AT) 36 (Ahd). (v) The appellant states that the Honourable Supreme Court in the case of Mohd. Yusuf & ANR. Vs.D & ANR. AIR 1968 Bom 112 has observed that the content contained in document is hearsay evidence unless the writer thereof examined before the Court. The Honourable Court, therefore, held that attempt to prove the contents of the document by proving the signature of the handwriting of the author thereof is to set at naught, the well recognized rule at hearsay evidence cannot be admitted. If we consider the said piece of paper seized during search in light of the definition of the word "document" is given in the Indian Evidence Act and General Clauses Act and truthfulness of the contents thereof in light of the aforecited decisions of the Honourable Supreme Court, we find that the said paper contains jottings of certain figures by the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee the contents thereof are n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... evidence to suggest that the assessee has advances/ paid a sum of Rs.31,68,750/- to one Kalubhai. Hence there is no justification for presuming that the appellant must have paid a sum of Rs.31,68,750/-. The Assessing Officer has also not carried out any inquiry with the other party of the transaction to find out the facts and has simply rejected the explanation of the appellant and addition has been made on estimate basis. Therefore, considering the facts of the case, I am of the view that there is no justification for making the addition on merely presumptive basis. Accordingly, the addition of Rs.31,68,750/- is directed to be deleted." 7. The Ld. DR supported the order of the Assessing Officer. 8. The Ld. AR of the assessee relied on his submissions made before Ld. CIT(A) and supported the order of the Ld. CIT(A). 9. We find that the Ld. DR could not point out any specific error in the above quoted order of the Ld. CIT(A). The Ld. DR could not bring any material before us to show that Rs 31,68,750/- was any actual transaction made by the assessee during the year under consideration and the relevant seized document was dumb document having no corroborative material found. We, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction made reference to the decision of Allahabad High Court: Lukhnow Behch in case of CIT v/s B. K. Agrawal (2009) 227 CTR (All) 173 and decision of Delhi High court in case of Commissioner of Income Tax v/s Manoj Jain 2006- (287)-ITR -0285 -DEL. It was submitted by the appellant that it has maintained regular books of accounts, and copy of annual accounts alongwith capital account of assessee were filed with original return of income prior to search according to which the appellant has shown total investment of Rs.22,01,350/- towards building purchased during the year. The books were also produced before the A.O. for verification, and the Assessing Officer has not pointed out any single defects in such book's of accounts and accepted the payment made to seller of bungalow as genuine transactions, hence, there was no justification in considering the value of building as per DVO report. 5.2 It was argued by the appellant that the entire purchase document has been registered with valuation officer and stamp duty on the property purchased and stamp duty computed on purchase deed has been undisputedly accepted by the assessing officer since the assessment proceedings were carried....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the said method the value of property would have been around Rs.22 lacs as against Rs.25.5 lacs estimated by the valuer. (iii) The appellant has furnished a copy of the valuation of Rs.9,32,779/- in the year 1996-97. The cost of construction at that time was worked out at Rs.5,97,779/-. The cost of construction should be adjusted considering some appreciation in the cost of construction, but the property cannot be valued at current market rate and depreciation cannot be granted thereon treating the life of property at 60 years. In fact, the life of the property is only 35 years. Hence, the assessing officer has erred in valuing the .true life of the property. Hence, the DVO should have therefore considered the higher depreciation, as the quality of construction is not so good, the property having been constructed for sale and not for self residence. (iv) Plinth area rate considered by the Valuation Officer per square meter is applicable to first-class bungalows constructed by the private parties in their own case, while in the present case the property constructed was only for sale and material used therein cannot be of the high quality, like those in the private bungalows. If thi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... valuer submitted by assessee...." (Emphasis supplied) (iii) Vrishali Hotesl'Pvt. Limited Vs. AClf 66 TTJ 692 (Pune Tribunal) (iv) Essem Intra Port Services Pvt. Limited Vs. ACIT 72 ITD 228 (Hyd Trib) (v) Pioneer Publicity Corporation & Ors. Vs. DCIT 67 TTJ 471 (Del Tri)" 13. The Ld. CIT(A) after considering the submissions of the assessee held as under: "5.4 I have considered the assessment order and the above submissions. The Assessing Officer while making the addition has merely relied upon the report of the DVO, however, the purchase transaction at Jantari Value which was accepted by the Sub-registrar. The Assessing Officer has also failed to consider the vital point that appellant has purchased property, which was already constructed. Also the purchase document was registered with valuation officer and stamp duty on the property purchased and stamp duty computed on purchase deed was also paid by the appellant. Further as stated by the appellant, the Assessing Officer had not pointed out any single defect in the books of accounts of the appellant and had accepted the payment made to seller of bungalow as genuine transactions. It is also noticed that the difference in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ale of land. He, therefore, treated Rs 10,00,000/- as unaccounted business receipt of the assessee and added the same to the income of the assessee. 20. Being aggrieved, the assessee filed appeal before the Ld. CIT(A) and submitted as under: "4.1 The appellant, on this issue, submitted that during the course of assessment proceedings, the Assessing Officer had neither asked any explanation nor any show cause notice was served regarding aforesaid noting and jottings found in seized document. Hence the entire addition was without granting any opportunity of being heard and against the principles of natural justice, and therefore was unjustified. It was stated that explanation of aforesaid seized paper was asked in case of Kiranbhai R. Vasani, different legal entity. The appellant has referred to the explanation given in case of Kiranbhai R. Vasani which was as under: "As per point No. 11 your good selves have asked the explanation of page No. 11 of Annexure A - 3 seized from 24/25, Krishnanagar Society shows a receipt of Rs. 10 lacs on 30-06-2005. In this matter, I state that the said paper contains the notings of figure of Rs. 5,00,0007- two times total 10.00.000/- with the word ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessing officer deserves to be deleted. In this connection the appellant relies on following: (i) Decision of Delhi tribunal in case of Mahan Foods Ltd. v. CIT (2009) 27 DTR 185, wherein the Hon'ble IT AT have held as under: Search and Seizure - Block assessment - Computation of undisclosed income -Although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence of any other evidence found during the course of search or brought on record by the AO to show that the said expenditure was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee by invoking provisions of s. 69C - Assessee explained that the said entries represented estimates made by employees in respect of proposed expenditure - There is no evidence on record to rebut/controvert the said explanation - Additions not sustainable (ii) Decision of Gujarat High Court in case of DCIT v. Jivanlal Nebhumal (HUF) [2004] 134 TAXMAN 660 (GUJ.) wherein the Hon'ble High Court have held as under, Section 69 of the Income-tax Act, 1961 - Unexplained investments - Tribunal having found that there was no ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....handwriting of the author thereof is to set at nought, the well recognized rule that hearsay evidence cannot be admitted. If we consider the said piece of paper seized during search in light of the definition of the word "document" is given in the Indian Evidence Act and General Clauses Act and truthfulness of the intents thereof in light of the aforecited decisions of the Honourable Supreme Court, we find that the said paper contains jottings of certain figures the same does not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assessee the contents thereof are not capable of the describing the transactions the way the Assessing Officer has deciphered them without support of corroborative evidence of the parties attributed to the alleged transaction. The said paper, therefore, does not come within the compass of the definition of the word "document to be used as evidence. The paper seized, therefore, has no evidentiary value and accordingly the same cannot form the basis for assessing the undisclosed income. (vi) Decision of Delhi Tribunal in case of SK Gupta v/s DCIT 63 TTJ 532 wherein ITAT has held that ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 10 lacs. The Assessing Officer has also failed to bring on record any details regarding the other party involved in the transaction from which sum of money has been received by the appellant and addition has been made purely on assumption. Therefore, considering the facts of the case, I am of the view that there is no justification for making the addition on merely presumptive basis. Accordingly, the addition of Rs 10 lacs is directed to be deleted." 24. Before us, the Ld. DR relied upon the order of the Assessing Officer and submitted that the seized document evidences receipt of Rs 10,00,000/- by the assessee during the course of its business and as the said receipt was not recorded in the regular books of account of the assessee, the Assessing Officer rightly added the same to the income of the assessee. 25. On the other hand, the Ld. AR of the assessee relied upon the order of the Ld. CIT(A) and submitted that the seized document does not specify the nature of transaction, details of the recipient and/or payer of the amount and this document is a dum document wherein there was even no signature of any person and the document has no evidentiary value and is of no legal conseq....