TaxTMI 
TaxTMI 
2023 (4) TMI 99
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....IA of Rs.4,60,000/-. A search and seizure u/s 132 of the Act was conducted on 12/09/2017 on GPT Group of cases including the assessee. During the course of search and seizure, mobile data was retrieved and printout of SMS were taken out from the mobile of Shri Atul Tantia. As per the mobile messages, unaccounted cash transactions were carried out between concerns of GPT Group and others. The SMS and WhatsApp printouts were suggestive of instructions of Shri Shivratan Sharma and Shri Atul Tantia. Thereafter, statements were recorded of Shri Atul Tantia, in which he never admitted that the money either belonged to him or exchanged hands at his instructions. The Assessing Officer finally added the same to the income of the assessee as undisclosed income u/s 68 of the Act as the assessee did not offer any plausible explanation in the assessment framed u/s 143(3) of the Act dt. 30/12/2019. 3.1. Aggrieved the assessee carried the matter before the ld. First Appellate Authority. The ld. CIT(A) confirmed the addition by holding as under:- "4.2. I have perused the submission of the assessee, assessment order and case laws relied upon by the assessee. The assessee's 1st conte....
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....ion has been made on the basis of printouts taken out from the mobile recovered from the possession of Shri Atul Tantial, which was stated to be not belonging to the assessee but to Shri Shivratan Sharma, who was an employee of the assessee. In the WhatsApp message, there was a discussion about two entries of Rs.10,00,000/- each and according to the Assessing Officer these entries were suggestive that the transactions were carried out at the instance of Shri Atul Tantia. The printouts suggested that the transactions took place between the concerns/parties of GPT Group and others but nowhere it has been mentioned that the money belonged to Shri Atul Tantia. The Assessing Officer added this amount on the ground that the assessee failed to offer any explanation. The ld. CIT(A) confirmed this addition reasoning that the mobile was recovered from the possession of the assessee and the WhatsApp messages testified these transactions between the persons/concerns of GPT Group and others. The ld. A/R vehemently argued before us that the mobile did not belong to the assessee which has been denied right from the beginning and nowhere the WhatsApp messages suggested that money was transferre....
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....atement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the assessee to cross examine the third party nor disproved the explanation given by the assessee. As found from the order of the AO Sri Lanka Anil Kumar is an employee of M/s Navaratna Estates and drawing the salary of Rs.25000/- per month. He explained that the sums mentioned in the whatsapp messages were related to the amounts given to Sri Lanka Anil Kumar in the range of Rs.5,000/- to Rs.10,000/- to meet the petty cash and miscellaneous expenses. No evidence was found with regard to the investment made by Shri Anil Kumar in his own business out of the loans stated to have given by the assessee. In the above facts and circumstances there is no reason to disbelieve the statement given by the assessee that the payments were given for meeting petty cash or miscellaneous expenses. The Ld.CIT(A) following the decisions of Hon'ble Jurisdictional High Court as well as this Tribunal held that on the basis of notings and loose s....
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....ve evidence and independent enquiries. Applying the above ratio to the facts of the case, it is held that the addition made is not warranted, the same is deleted." 6.1. No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search and no evidence was found regarding utilization of purported advances by Shri Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the statement and clarified that he has not received any cash loans from the assessee. Addition was made merely on the basis of whatsapp messages and the statement recorded from section 132(4) from Shri Lanka Anil Kumar which was subsequently retracted. Therefore we are of the view that the addition made by the AO is unsustainable and the Ld.CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed." A. Johnkumar vs. DCIT (Supra):- "9.4 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The sole basis for....
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....ash and destiny of cash distributed by the assessee. In other words, the AO has abruptly concluded in his own understanding of the messages, the assessee has received so much of cash and distributed so much of cash and which is nothing but cash for votes and hence, concluded that the assessee has incurred a sum of Rs.17 Crs. for distribution of cash to voters and which is nothing but unexplained expenditure taxable u/s.69C of the Act. 9.5 We have given out thoughtful consideration to the reasons given by the AO and we ourselves do not subscribe to the reasons given by the AO for the simple reason that first of all, the assessee was not contested for election held at Nellithope Constituency. Therefore, the question of assessee spending such huge money to distribute to voters does not arise. Secondly, the AO has solely relied upon the photo identity cards issued by M/s.Johnkumar Trust and inferred that each photo identity cards, the assessee has paid a sum of Rs.4,000/-. We find that neither the AO has found any physical cash distribution to voters nor examined any of the photo identity card holding to ascertain the fact that cash was distributed to them. Further, the AO had....
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.... no additions could be made on the basis of loose papers without any corroborative evidence. The relevant case laws cited by the assessee are reproduced as under: 1. The Following Judgments shall be taken into consideration for the above appeal:- Hon'ble Supreme Court has held in State of Kerala Vs. M.M.Mathew-18.08.1978, courts of law have to judge evidence before them applying the well-recognized test of basic human probabilities. Further held that, strong suspicion, strange co- incidences and grave doubts cannot take place of legal proof and further held how to establish the handwriting for which the Hon'ble Supreme Court has given guidelines which are illustrative. 2. The Hon'ble Supreme Court has held in Commissioner of Income Tax salem Vs. P.V.Kalayanasundaram - 14.09.2007 in para 5, the ratio laid down in this case squarely applicable to the case of appellant/assesse, that the notings on the use pieces of paper on the basis of which the initial suspicion with regard to the undervaluation had been raised were vague and could not be relied upon, when the assesse did not give any explanation. The Hon'ble CIT Appeal had merely plagiarized the su....
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....to the other two issues no opportunity was allowed to the Appellant to submit suitable reply to the SCN before passing the Order of Assessment. On these 3 issues, there v.as complete denial of natural justice, for the reason that, the assesse was not allowed any opportunity whatsoever to present his case on these issues threshold. It is an established legal position that, there must be a complete nexus between the reasons or grounds indicated in the Show Cause Notice. The opportunity to be granted reply to the show cause notice must be effective and not an empty formality. A person who is required to show cause must know the basis on which action is proposed as held in Colorcraft Vs. ITO - 303 ITR (AT) 7. 6. The Hon'ble High Court in Rajam Industries (P) Ltd., Vs. The Deputy Commissioner Commercial Tax officer- MANU/TN/0629/2010-07.06.2010, (Para 6, 28, 46, 54 and 59) the Show Cause Notice itself is opposed to the principles of natural justice. The Snow Cause Notice was issued as a mere formality. The notice has predetermined the issue against the Assesse/Appellant. The Notice has been issued on assumption and presumption. The statements of Hithayath Ali, K.Venkadesan ....
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....les: - (i) Entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible; (ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability; (iii) The meaning of account book would be spiral note book/pad but not loose sheets; (iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim ag....
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....sesse the contents thereof are not capable of describing the transactions the way AO has deciphered them without support of corroborative evidence of the parties attributed to alleged transaction. The said paper, therefor does not come within the compass of definition of "Document", to be used as an evidence. The papers seized have no evidently value and hence same cannot be a basis to tax undisclosed income." 12. It is held in Patel (DJU Vs. DCIT (200(n 72 ITD 340(Mum), "it was concluded with reference to sheet of paper found during the search by AO that the word "Rs." figuring with the sheet of belongs to the appellant, because he belonged to "Radhaswamy", cult and hence it belongs to him, but such an inference was not found sustainable on the basis of such slender evidence, so that the addition based on the sheet of paper was deleted". 13. It is held in PCIT Vs. Deico (India) Pvt. Ltd. (2016) 67 Taxmann.Com 357 (Del), "no addition could be made under Section 68 on the basis of loose papers found during search in this case indicating assessee's transaction with a company, when assesse not only denied having any dealing with the said company but also produced....
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....found during the search at the premises of an assesse, he could not be saddled with a tax liability unless it could conceivably be related to the assesse in some reasonable manner. 21. Amarjith Singh Bakshi Vs. Asst, CIT 2003 (86) ITD 13 Delhi, held that any noting in the loose sheet is no evidence itself. Notings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person who admittedly is a party to the notings. 22. Nagarjuna Construction Co. Ltd., Vs. Dy. CIT 2012 (23) Taxmann.com 239. The basis for addition is only loose slips. These note books, loose slips are unsigned documents not established nexus between the loose slips with actual receipt of interest. The loose slips seized during the course of search is a dump document having no evidentiary value, no addition can be made as material. 23. The Hon'ble MP High Court in case of CIT v. C.L Khatri [2005] 147 Taxman 652 held that on the basis of loose slip not bearing any date and also not stating as to which period they related, no estimate of household expenses could be made for a particular year. In the absence of any other ev....
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....der dated 28/02/2018 held that since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the Revenue wants to make use of it, the onus rests on the Revenue to collect cogent evidence to corroborate the noting therein. The Revenue has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the unaccounted on-money receipts of the assessee. Further, no circumstantial evidence in the form of any unaccounted cash, jewellery or investments outside the books of account was found in course of search in the case of assessee. Thus, the impugned addition was made by the AO on grossly inadequate material or rather no material at all and as such, deserves to be deleted, that an assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting ....
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....such retraction. 34. The law declared by the Hon'ble Apex Court decision reported in 1973 (91) ITR 18 Pullankode Rubber Produce Co. Ltd., Vs. State of Keraia and another it is held it is always open to a person, who made the admission, to show that the statement to offer income is incorrect and had material to substantiate so, the tribunal is not justified in placing undue emphasis on the statement made by the assesse. The Hon'ble Supreme Court has laid down the Principles for Admission by the Appellant/Assesse. 35. The Learned Commissioner Appeal had merely plagiarized substantial portions from the order of the Assessing Officer in arriving its conclusion and no independent assessment on the question of fact and law that arose for consideration. 36. The Learned Commissioner Appeal borrowed extensively almost in toto from the Assessment Order of the Assessing Officer and the Commissioner Appeal and passed them off as if they were he himself the author, as held in Commissioner of Income Tax Salem vs. P.V.Kalayanasundaram. 37. The Hon'ble High Court of Judicature at Madras in Commissioner of Income Tax Salem Vs. M/s.S. Khader Khan Son -....