TaxTMI 
TaxTMI 
2021 (3) TMI 406
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....(A) which has been added by the AO on the basis of snapshot found in the i-phone of the assessee during the course of search u/s.132 of the Act at the residence of the assessee. 4. The facts in brief are that a search u/s.132 of the Act was conducted on 03/12/2015 on the assessee. The assessee filed the return of income on 05/08/2016 declaring total income of Rs. 68,27,800/-. Thereafter, statutory notice was duly issued and served on the assessee. The AO on the basis of snapshot taken by the assessee during the course of search action u/s.132 of the Act on assessee observed that on page No.6 of the snap shot, assessee has shown net worth of Rs. 1.56 Crores referring 23,00,000/- as "C", Rs. 20,00,000/- as "P" and Rs. 65,50,000/- as "I" and also mentioned the entry of Rs. 47.50 lakhs. The said snap shot is reproduced by the AO in page No.2 of the assessment order in para No.5 and on the bottom of the page the amount of Rs. 156 is mentioned. Accordingly, the explanation was called from the assessee vide letter dated 22/01/2016 which was replied by the assessee by submitting that these snapshots of i-phone represented old disputed matters pertaining prior to the year 2008. The....
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....-Phone seized from the Appellant from his residence A-403, Meghdoot Apartment, Raheja Township, Malad (East), Mumbai-400097. The AO had noted that on Page No. 6 of the snapshot, the Appellant had shown its net worth of Rs. 1.56 cores mentioning "C" as 23 Lakhs, "T as 20 Lakhs and "I" as 65.50 Lakhs and Rs. 47.50 Lakhs. The AO had concluded in the assessment order that "C" represents cash "P" represents profit and "I" as general interest. 9.3. The Appellant had during the course of the assessment proceedings stated that these are rough and very old disputed matter in respect of finance activity carried on by the Appellant prior to the year 2008. He has further stated that he was doing small activity of finance brokerage prior to 2008. It was also categorically stated by him that the snapshots seized as pages number 1 to 65 mostly relates to disputes related to finance activity, which was carried on by him. It was also contended that he was entitled to get small commission/brokerage subject to the settlement of such finance disputes. It was also emphasized by the Appellant that most of the parties to whom finance was provided became bad debts and disappeared. To corroborate ....
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.... seized paper is in the nature of a dumb document, which have no evidentiary value and the same cannot be taken as sole basis for the determination of undisclosed income of the appellant. Reliance has been placed by the Appellant on the judgment of the Hon'ble Mumbai Tribunal in case of ITO vs. Kranti Impex Pvt. Ltd. (ITA No. 1229/Mum/2013). Reliance was also placed on the judgment of Prarthana Construction Pvt. Ltd. vs. DCIT (2001) 70 ITJ (Ahd.) 122 in which it was held that addition on the basis of loose papers without any corroborating evidence cannot be the basis for making addition. 9.8 The Appellant had also contended that the amount cannot be added u/s 68 of the Act as unexplained cash credits, since the amounts noted in the seized page are not found to be credited in the books of accounts of the appellant maintained for the previous year under consideration. Further, the seized page also doesn't reflect that any amount had been received by the Appellant in cash from any third party. Thus, the dumb document cannot be considered as books of account of the Appellant and hence, no addition can be made u/s 68 of the Act. 9.9 I have noted that mere suspi....
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....Officer that the Assessee generated a sizeable amount of loss out of prearranged transactions, so as to reduce the quantum of income liable for tax might have been the view expressed by the Assessing Officer but he miserably failed to substantiate the same. The High Court held that the transactions were at the prevailing price and therefore the suspicion of the Assessing Officer was misplaced and unsubstantiated. 9.12 It is a trite law that the suspicion howsoever strong cannot partake the character of legal evidence. Reference in this regard is made to the decision of Hon'ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT [37 ITR 288 (SC)]. Raising of presumption itself, does not amount to proof. Presumption however strong, cannot take the place of evidence. Reliance is placed on the decisions of Pooja Bhatt 66 TTJ (Mum) 817& D. M. Kamani (HUF) 65 TTJ (Pat) 504. It is well settled by the Hon'ble Supreme Court in more than one decision that courts have to be watchful and avoid the danger of suspicion to take place of legal proof for sometime, unconsciously it may happen to be a short step between moral certainty and legal proof. In this regard, ref....
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....ed as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all There must be something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case ofSeth Gurmukh Singh v. Commissioner of Income-tax, Punjab." 9.17 The Punjab & Haryana High Court in CJT v. Anupam Kapoor 120081 299 ITR 179 did not believe on the allegation: "A cheque had been taken by the beneficiary i.e. by paying cash equivalent to the cheque amount and the premium thereon". The Hon'ble Court at page 182 observed: There was no material before the Assessing Officer, which could have led to a conclusion that the transaction was, simplicitera device to camouflage activities, to defraud the Revenue. No such presumption could be drawn by the Assessing Officer, merely on surmises and conjectures". 9.1....
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....cument and fifth, the rate or rates at which tax is to be imposed. 9.21 The rates are prescribed in the annual Finance Act and, therefore, this component has no value in determining the total income arising from a seized document. Thus, the other four elements are relevant and in the present case and the same are not discernible from the seized documents. Thus, for affixing the tax liability on the basis of seized documents, the following four ingredients are required to be established on a reasonable basis:- (i) Name of the assessee, (ii) Nature of transaction, ; (iii) Quantum involved : (iv) Period of transaction. 9.22 If any of the abovementioned ingredients is missing and cannot be reasonably inferred from the seized document then only a seized document would be called a dumb document. In this regard, reliance is placed on the judgment of the Hon'ble ITAT, Jabalpur dated 27 February, 2007 in the case of ACIT v. Satyapal Wassan (2007) 295ITR (A.T.) 352 (Jbl), wherein it was held, as under:- "....The component which enter into the concept of a tax are well known. The first is the character of the imposition known ....