TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 99
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....32 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 contention is that the mobile does not belong to him and it b....
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.... 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 transferred or was owned by the assessee. The ld. A/R also argued that WhatsApp or SMS mess....
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....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 sheets found from third parties and the statement of third parties, the additions cannot be made without ha....
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..... 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 the AO to make addition u/s.69C of the Act, was election held for Nellithope Constituency of Pondicherry Union Territory. The search was conducted on 17.11.2016. the AO had linked photo ide....
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....tributed 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 relied upon the WhatsApp messages sent from assessee's mobile phone to Mr.Somu and had given his own meaning to those messages. In the process, the AO neither tested the admissibility of Whats....
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....en 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 substantial portions from the order of the Deputy Commissioner of Income Tax (AO) in arriving at its conclusion and no independent assessment on the question of law. 3. The Law is well settled, a non-speaking document ....
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....sse 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 and S.Muthuveerapandian were not examined in the presence of the Appellant/Assesse and no opportunity was given to cross examine the witness. When the Show Cause Notice quantifies and fixes the liability and responsibility of the Appellant there ....
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....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 against another; (v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correc....
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....ence 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 all necessary details for AO to make necessary inquiries and a letter from director of that company confirming that the said company did not have any transaction with assesse". 14. It is pertinent to mention that the aforementioned judgments of the apex court have been rendered not in direct context and interpretation of the Income Tax Act'1961 but still holds go....
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....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 evidence, the estimate of household expenses in a particular year with reference to income of later year or future year was arbitrary and illogical. The Tribunal was held to be justified in deleting the additions. 24. The Calcutta Bench of ITAT in case of T.S. Venkatesan vs. Asstt. CIT [2000] 74 ITD 298 (Cal.) held that in the absence of corroborative evidence, addition of undisclosed income could not be made simply on the basis of entrie....
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....e 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 in loose papers found during search because the addition on account of alleged on-money receipts made simply on the basis of uncorroborated noting and scribbling on loose of papers made by some unidentified person and having no evidentiary value, is unsustainable and bad-in-iaw. 29. In the case of PCIT V. Umesh Ishrani [2019] 108 taxmann.com 437 (Bombay) held that since the tribunal concluded that entries reflected in loose papers were not corroborated with any other evi....
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....ellant/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 - DB, dt.04.07.2007 -Para 5.1, followed the decision in Pullankode Rubber Produce Co. Ltd., Vs. State of Keraia 1973 (91) ITR 18 the Apex court held that an admission is extreme to an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. 38. The provision u/s. 132(4) the power to examine a person on oath whereas u/s.133(A) does not empower any income tax officer to examine on oath. Whatever statement recorded u/s.!33(A) is not given an....