TaxTMI 
TaxTMI 
2015 (12) TMI 1835
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....law, the Ld. CIT(a) erred in holding that Pg. No. 7 of BRI/20 is a dumb document. 2. That in the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the additions of Rs. 5.,10,33,507/- on account of undisclosed purchases and investment in stock. 3. That in the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting additions of Rs. 5,98,10,222/- on account of undisclosed expenditure/investment." 3. Briefly stated facts are that a search and seizure operation u/s. 132 of the Act was conducted on the group companies of the assessee on 06.11.2006. Simultaneously, a survey u/s. 133A of the Act was conducted on the business premises including show rooms of the assessee company on 06.11.2006. During the course of search and seizure operation following books of account and documents found and seized from the premises of the assessee (the same is noted in the assessment order at page 2): Name and Address Books of a/cs seized 1 Subrara Banik, 7/2B, Ballygunge Park, Kol-19 Books of Accounts/documents with ID Marks SB/1 to SB/3. 2 Banik Rubber Industries, 79/2, AJC Bose Road, Kol-14. Books of a/cs/documents with ID Marks....
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....ontain some rough notings. It is undisputed fact that it does not indicate the name of the assessee or any other concern. In the remand report the AO has observed that certain "pay", "pur", "sale" figures have been jotted down but neither any date nor any year to which the document relates have been mentioned specifically except a short mention of "06-07" against one row of "pay" and "pur". The appellant denied the ownership of such seized document and further contended that there being no mention of specific date or specific year the document cannot be relied upon for any addition. After perusing this document and all the facts material to the issue I find that this is only a "dumb document" on the basis of which no interpretation can be made to establish the ownership of such document and the period to which it pertains. This document has evidentiary value only if it can be corroborated by any other cogent material or evidence. In the assessment order no definite finding regarding stock discrepancy detected in the course of survey was spelt out although generalized comment was made regarding discrepancy in stock. In the remand report the AO. has clearly stated that the figures re....
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....nses etc. are given for FY 2006-07 and also purchases and payments made against the same as well as sales and receipt of payments for FY 2006-07 is given. According to him, CIT(A) has wrongly described the same as 'dumb document'. According to him, this is very much qualitative and it cannot be called as dumb document. Hence, he requested the bench to reconsider the same and uphold the order of AO. 6. On the other hand, the Ld. Counsel for the assessee also drew our attention to page 7 of BRI-20, which is given at page 85 of assessee's paper book and stated that the sheet contains certain figures which have been jotted but it neither gives any dates nor gives any year to which it is related except a short mention of 06-07 against one particular item and it does not indicate either the name of the assessee or anybody. According to Ld. Counsel, it appears that figure jotted there may have been for several accounting years representing 2004-05, 2005-06 and 2006-07 and if sales and purchases of all these three years and the itemized purchases are taken together, it will be seen that purchases and sales recorded in the books of account are much more than the figures appearing a....
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....reciated by your Honour that purchase during the year ended 31.3.2007 relevant to the A.Y 2007-08 could not suddenly jump to Rs. 7,77,35,925/- which will appear to be an impossibility. (b) As will appear from the Audited Accounts for several years filed with appeal for earlier years during the none of the earlier years the purchase of your petitioner had exceeded Rs. 2. 5 crores and hence it can be appreciated by your Honour that purchase during the year ended 31.3.2007 relevant to the A.Y 2007-08 could not suddenly jump to Rs. 7,77,35,925/- which will appear to be an impossibility. (c) Even during course of search and or survey no indiscriminating papers or any other evidences proving any purchases or sales outside the books of accounts were found. (d) Your petitioner maintained day-to-day Stock Register and the stock found during survey having tallied with the stock as per books, no addition had at all been made on account of such excess stock found on survey. (e) As will appear from the assessment order even the A. O while making the addition has not made any addition on account of alleged excess stock found during survey except making a general and casual reference to t....
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....nt page-7 of BRI/20. We further find that AO has given his remand report in this regards as under:- Addition of Rs. 6,08,43,727/- i.e. ( Rs. 51033507/- + Rs. 9810220/-) has been made as per discussion in paragraph 5.4 on the basis of page-7 of BRI/20 . On a perusal of page-7 of BRI/20 it is seen that certain "pay ", "pur ", "sale" figures have been jotted down but neither any date nor any year to which the document relates have been mentioned specifically. There is a short mention of "06-07" against one row of "pay" and "pur" but it does not indicate the name of the assessee specifically. From the arguments of Ld. Counsel Sh. Bajoria that the figures jotted down might have been for several accounting years 2004-05, 2005- 06 and 2006-07 relevant to assessment years 2005-06, 2006-07 and 2007-08 respectively, hence this cannot applied to this year clearly. We find from this document that if sales and purchases of all these 3 items are taken up together, the consolidated purchases and sales recorded in the books of accounts would be much more than the figures appearing at page no. 7 of seized document BRI/20. However, the assessee denied the ownership of such seized document and fur....
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.... stock discrepancy detected in course of survey, neither quantum of stock discrepancy detected and work out of such detection was discussed in the assessment order. Here also, the AO having failed to pin point the value of any stock found during survey as unaccounted or un-disclosed, it was argued that no addition could be made on this account. 11. We find from the facts of the case as well from the remand report of the AO, who has simply mentioned that the relevant document has been seized from the custody of the assessee and hence, the assessee is obliged to explain the seized document properly. Further, the AO in its remand report has mentioned that no clear cut explanation has been furnished. In this connection the CIT(A) sought certain clarifications from the AO relating to the remand report furnished by him. To put the matter in proper perspective the relevant portion of CIT(A)'s letter dated 13.12.2011 is reproduced below: "In this case you have submitted a remand report dated 29.03.2011. Ground No. 3 (v) of the appeal relates to additions of Rs. 5,10,32,507/- and Rs. 98,10,222/- on account of undisclosed purchase and unexplained expenditure made in show room respecti....
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.... from the assessee, cannot come to the conclusion that the assessee lends money. The basis for addition is only note book/loose slips. These note book/loose slips are unsigned documents. The AO has not established nexus between the note book/loose slips and business of the assessee. There is no narration regarding the address of the parties, the exact amount of loan, period of advance, rate of interest and instalments due. Also there is no evidence for repayment of money towards the loan. There is no valid seized material to come to the conclusion that the assessee has actually made an advance of that amount i.e. Rs. 2,55,50,000. The note book/loose slips marked A/GAR/05 found during the course of search is a dumb document having no evidentiary value, no addition can be made in the absence of corroborative material. If there is circumstantial evidence in the form of promissory notes, loan agreement and address of the parties or bank entries, the addition is to be made on that basis to the extent of material available. The assessee is not expected to explain the loose papers found as there is no evidence other than note book/loose slips carrying on money lending business of the asse....
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....and if the assessee wants to cross-examine any of the parties whose statement was relied on by the AO the same is to be provided to the assessee. In the present case the assessee is having grievance for not providing the opportunity of cross-examining the parties whose statements were relied on by the AO while completing the assessment. The circumstances surrounding the case are not strong enough to justify the rejection of assessee's plea asking the opportunity of cross-examination. In view of this, we set aside the block assessment order and remand back the matter to the file of the AO. We direct the AO to give an opportunity of cross-examination of the parties as required by the assessee and thereafter if there is any sufficient evidence other than the unsubstantiated note book/loose slips marked as document A/GAR/5 or if this document (viz., A/GAR/05) is substantiated by any other evidence to establish that the assessee is having undisclosed income, then the AO shall complete the assessment in accordance with law determining the undisclosed income covering this block period in addition to the other undisclosed income uncontested before us. It is needless to say that the evi....
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.... did not contain full details about the dates of payment and its contents were not corroborated by any material and could not be relied upon and made the basis of addition. The Tribunal considered this aspect and observed that on comparison of the seized documents and ledger accounts of the parties, the seized documents could not be regarded as "dumb documents". 14. While dismissing the appeal, the Court held:- ". . .That the Tribunal had come to a certain factual conclusion about the nature of the papers seized. On the question whether the documents did or did not contain the particulars, the Tribunal observed that they did contain certain materials which were sufficient to come to a conclusion about cash payments having been made in addition to those made by cheques and drafts. The conclusion was essentially factual. No substantial question of law arose from its order." (p. 298) 15. Similarly, in the present case as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of Commissioner of Income-tax (Appeals) and the Tribunal to this effect. Since the conclusions are essentially factual,....