TaxTMI 
TaxTMI 
2025 (1) TMI 1176
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....ocument have the evidentiary value. 3. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 7,00,000/- made by the AO which was based on the seized Document No. B - 1/16 and the said document have the evidentiary value. 4. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 37, 45,500/- made by the AO which was based on the seized Document No. B - 2/1 and the said document have the evidentiary value. 5. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 71, 93,666/- made by the AO which was based on the seized Document No. B - 2/19 and the said document have the evidentiary value. 6. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 22, 50,000/- made by the AO which was based on the seized Document No. B-2/21, and the said document have the evidentiary value. 7. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 26,00,000/- made by the AO which was based on the seized Document No....
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....the Act, was issued and served upon the assessee, in response to which, on 25/09/2020, the assessee again filed its return of income for the year under consideration declaring total income at Rs. 34,88,760. Subsequently, notice under section 143(2) of the Act dated 08/10/2020 was issued and served. Thereafter, notices dated 08/02/2021 and 30/08/2021, under section 142(1) of the Act were issued and served to the assessee. The Assessing Officer completed assessment under section 153C r/w section 143(3) of the Act, by passing assessment order dated 28/09/2021, determining total income of Rs. 2,32,54,426/- after making following additions:- 1 Unexplained money u/s 69A Rs. 16,73,500/- 2 Unexplained money u/s 69A Rs. 2,50,000/- 3 Unexplained money u/s 69A Rs. 7,00,000/- 4 Unexplained money u/s 69A Rs. 37,45,500/- 5 Unexplained money u/s 69A Rs. 71,93,666/- 6 Unexplained money u/s 69A Rs. 22,50,000/- 7 Unexplained money u/s 69A Rs. 3,53,000/- 8 Unexplained money u/s 69A Rs. 26,00,000/- 9 Unexplained Expenditure u/s 69C Rs. 10,00,000/- The assessee being unsuccessful before the Assessing Officer, challenged....
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..... This clearly represented undisclosed income and the learned CIT(A) had fallen into error in allowing the impugned additions. He prayed that the assessment order be restored in its entirety. 7. The learned Counsel appearing for the assessee, per-contra, reiterated the submissions made before the authorities below. However, for the sake of brevity and convenience, we reproduce the written submissions made by the learned Counsel for the assessee which are as follows:- "1. The agreement to sale documents are drafted under the instruction of various customers of assessee's in discharge of his professional duty / obligation. When a document shows a fixed price, there would be a presumption that it is the correct price agreed upon by the parties. It is true that on the basis of the agreement, the sale deed is executed, in such cases the agreement to sale must be registered. But in the said case the agreement to sale is unregistered and in the case of unregistered agreement to sale it is not necessary that the price stated in the agreement will be the price shown in the sale deed. No addition is tenable in view of non-availability of the corroborative evidence. It is necessar....
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.... No reliance can be placed on such loose papers Therefore, in the present case the addition which is not premised on any cash, bullion, jewelry or other valuable item but is purely based on some vague noting cannot be a source for making additions under Sec 69A of the Income Tax Act, 1961. 1. The addition made by the Assessing Officer based on the loose paper, which is not conclusive evidence and, therefore, the same is not sufficient to make the addition. No addition can be made on the basis of dumb documents/note book/loose slips in the absence of any other material to show that the assessee has received on-money from customers over and above the sale deed. Noting on the note book/diary/loose sheets are required to be supported/corroborated by other evidence and should also include the statement of a person who admittedly is a party to the noting and statement from all the persons whose names there on the note book/loose slips and their statements to be recorded and then such statement undoubtedly should be confronted to the assessee and he has to be allowed to cross examine the parties. 2. In the case of assessee the Assessing Officer had not been able....
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....iries, The Deputy Director of Income Tax (Investigation) had called for information from customers and cross-examined whose agreement to sale was found or whose notings were found on loose paper during search and seizure. Statement of all the "customers" of assessee were recorded by the Deputy Director of Income Tax (Investigation) wherein they had stated that all the payments were made as per sale deed and no cash has been paid over and above the agreed sale consideration as per sale deed. Thus, the cross examination of all customers had been done to ascertain whether the payment of "on money" was made by them or not which had been clearly denied by all the customers. Hence, no additions ought to have been made without considering the statements of the customers given to Deputy Director of Income Tax (Investigation). 7. Also, in the instant case the Assessing officer had presumed that the Difference amount is received on-money by assessee without any corroborative evidence. Prayer : In view of above the Order passed by Commissioner of Income Tax (Appeals) may be upheld. Ground No. 7 : Addition made of Rs. 26,00,000/- being unexplained money u/s 69A of th....
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....he series of case laws which are as follows:- 1. Hon'ble Kerla High Court Order in the case of Bhasy vs Thoman, where reference was taken from Prem Singh V. Birbal [2006 (2) KLT 863 (SC)] the Apex Court held that there is a presumption that a registered document is validly executed. 2. Hon'ble Calcutta High Court in the case of Durga Kamal Rice Mills vs CIT(paper book page no.30) it was observed that Section 69A deals with unexplained money of which the assessee is found to be the owner. The material difference between sections 68 and 69A is that section 68 does not require that the amount is to be owned by the assessee. It only deals with any amount shown in the books of account of the assessee. Whereas section 69A deals with money, etc., owned by the assessee and found in his possession. Therefore, ownership is one of the considerations when the matter comes under section 69A. 3. Hon'ble Punjab-Haryana High Court in the case of CIT vs Ravikumar (paper book page no.33) it was held that the assessee was found to be in possession of loose slips and not of any valuable articles or things. Neither the possession nor the ownership of any jewellery mentioned i....
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.... be but it cannot take place of proof and thus the A.O. has acted more on suspicion and doubt than on evidence. It is settled principle of law that suspicion however strong cannot take the place of evidence. In following cases it has been time and again held that suspicion howsoever cannot take place of evidence. The AO has interpreted a dumb document having no legal validity as per his suitability and addition based on this paper deserves to be deleted more particularly when the paper itself contained errors and addition is made merely and solely on the basis of confession without any corroborative evidence. Moreover the said confession made by the assessee was subsequently retracted and since the addition was not supported by any cogent, convincing independent documentary evidence, therefore, considering the totality of facts and circumstances, judicial precedents referred above as well as following the decision of the Coordinate Bench of this Tribunal in the case of DCIT Vs. 72 ITA 256/JP/2018 JKD Pearl India Developers Pvt. Ltd.(supra) wherein the present Author of this order was also the Author of that order, therefore, we direct the A.O. to delete the addition so made. ....
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..... In the absence of corroborative material, circumstantial evidence, we are not in a position to sustain the addition. In our opinion, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence on record and the evidence on record is not sufficient to support the Revenue's action. 12. Hon'ble Supreme Court of India in the case of CIT vs P.V. Kalyanasundaram (paper book page no.147) it was observed that the notings on the loose pieces of paper on the basis of which the initial suspicion with regard to the under valuation had been raised were vague and could not be relied upon as it appeared that the total area with respect to the sale deeds and that reflected in the loose sheet was discrepant. 13. Hon'ble Punjab-Haryana High Court in the case of CIT vs M/s. Atam Valves (P) Ltd. (paper book page no.150) it was held that in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the Assessing Officer. 14. Hon'ble ITAT Hyderabad in the case of Nagarjuna Construction Co. Ltd. vs DCIT (paper book page no.180) it was held that the basis for addition is onl....
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.... books of accounts. The tribunal returned a finding of fact that there is no corroborative or direct evidence to presume that the notings / jottings had materialised into transactions giving rise to income not disclosed in the regular books of accounts. 16. Hon'ble Delhi High Court Order in the case of CIT vs. Shri Girish Choudhary(paper book page no.186) it was held that the document Annexure A-37 recovered during the course of search in the present case is a dumb document and lead us nowhere. Thus, the Tribunal rightly deleted the addition of Rs. 48 lacs made by the Assessing Officer on account of undisclosed income on the basis of seized material. 17. Hon'ble Delhi High Court Order in the case of CIT vs. Atul Kumar Jain (paper book page no.210)it was held that This addition is also based on the impugned piece of paper seized during the course of search. On the right hand side in the said paper, there is an entry of "550" with a narration "flat". There is no detail recorded of the purchase of any flat nor there are any details recorded of the sale consideration paid in the said paper. The assessing officer however, decided "550" as 5,50,000 by adding "000" to th....
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....ccount of difference between agreement to sale value and final sale deed value which has been framed as unexplained money under section 69A, as per Para 3 of assessment Order. We find that the document exhibited at B/36, as referred to in said Para contained details regarding agreement to sale and final sale deed with respect to Flat no.104, "B" Wing of Kanyakapuran Project of the assessee. During the course of assessment proceeding, the assessee had stated that on the request of customer agreement to sale were prepared for Rs. 36,73,500, so that the customer can avail maximum possible housing loan amount. The agreement to sale was not registered. The same was stated by Shri Prashant Bongirwar, Partner of the assessee firm in his statement given to the Dy. Director of Income Tax (Investigation). However, subsequent to this, the customer informed assessee regarding non-eligibility for higher loan amount. Therefore, customer requested the assessee to execute sale deed for actual agreed consideration of Rs. 20,00,000, and not as per the agreement to sale value. We further find that the assessee had mentioned the same during the assessment proceedings, but the same was not been conside....
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....s made to the income of the assessee. The customer was not cross-examined at any point of time to dislodge the assessee's submissions. The learned D.R. could not bring any corroborative material or evidence to controvert the submissions so made by the learned Counsel for the assessee to enable this Bench to take a view other than the view taken by the learned CIT(A). Hence, keeping this in view, we find no infirmity in the impugned order passed by the learned CIT(A) is hereby upheld by deleting the addition. Ground no.2, raised by the Revenue is hereby dismissed. 12. As far as ground no.3, which relates to the addition of Rs. 7 lakh being unexplained money under section 69A of the Act is concerned, we find that the Assessing Officer made the addition while dealing with this issue at Para-5 / Page-42 to 47 of the assessment order. The learned CIT(A) directed to delete the addition vide Page no.118 of the impugned order. The addition to total income of Rs. 7 lakh was made on account of difference between agreement to sale value and final sale deed value which has been framed as unexplained money under section 69A as per Para-5 of assessment order. While going through the record, w....
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....Order. We further find that the document no.B-2/1 as referred to in said Para contains papers having details of enquiry of bookings prepared by marketing executive. The executive explains the total cost to be incurred by the customer to make the flat ready for occupation. The actual cost of flat mentioned by the executive was an estimate of the total cost to be borne by the customer in order to make the flat ready for occupation. The amount mentioned in the loose paper was not the sale value of flat. The final sale value is negotiated with the customer by the assessee and it is decided accordingly by mutual consent with the assessee. The details mentioned in the loose papers is compared with the actual transactions and sale deed executed the difference is as follows:- Page No. Name of Customer Flat No. Area as per loose Paper Sq. Ft. Area as per sale Deed Sq. Ft. Diffn in Area Rate as per loose paper Sale Deed Amount Amount Considered in Order 1 2 3 4 5 6 7 8 9 68 Back Rajesh Modhak 404-A 766.08 2200000 2000000 63 Mahesh Ramdohkar 305 950 766.08 183.92 3100 ....
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....for the assessee to enable this Bench to reverse the impugned order. We, therefore, see no legal infirmity in the impugned decision of the learned CIT(A) warranting interference at the instance of the Revenue. Accordingly, upholding the impugned order passed by the learned CIT(A), we dismiss ground no.4, raised by the Revenue. 17. Insofar as ground No.5 is concerned, the issue relates to the addition made of Rs. 71,93,666, being unexplained money under section 69A of the Act. While going through the material available on record, we find that the Assessing Officer has dealt with this issue in the assessment order at Para-7 / Page-49 & 50, wherein he made the said addition. The learned CIT(A), however, directed to delete the said addition. The addition of Rs. 71,93,666, has been made on account of notings framed as unexplained money under section 69A of the Act as per Para-7 of Assessment Order. We further noticed that the document no.B-2/19 mentioned in said Para contained notings made by office staff on daily basis regarding work done or to be done by them. The said pages contained notings by the staff about their day to day working and were not in the knowledge of the assessee.....
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....he actual sale value is negotiated with the customer and it is decided accordingly. No addition ought to be made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers. Hence, no addition ought to have been made on account of amount mentioned on loose paper. The assessee had mentioned the same during the assessment proceedings, but had not been considered by the learned Assessing Officer while passing the assessment order and the addition of Rs. 22.50 lakh was made to the income of the assessee. In the above grounds, grounds no.1 to 6, the Assessing Officer made addition relying on the dumb documents, loose paper containing scribbling, rough/vague notings in the absence of any corroborative material, evidence on record and finding that such dumb documents had materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the assessee. Further, the additions made in above grounds, i.e. grounds no.1 to 6 are on the basis of On-Money received from the customers by the assessee. There was no action taken on the customers as after receiving summons under section 131 of the Act from the Inves....
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.... 68 of the Act are satisfied. Section 68 states that there must be books of accounts or any books with credit entry. The said Act reads thus: "Section 68: Where any sum is found credited in the books of an assessee maintained for any previous years and the assessee offers no explanations about nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year." The language of the Law is vague and subjective, thus making us rely on an Apex court decision in the case of CBI vs. V.C. Shukla ((1998) 3 SCC 410), wherein the relevant portion reads thus: "Collection of sheet fastened or bound together so as to form material whole. Loose sheets or scraps of paper cannot be termed as books." In this regard, it is relevant to extract Section 69A of the Act, which reads thus: "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the boo....
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....een made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. "Book" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be ter....
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....he books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of entries in the books of account, that such statements 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. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423-27, paras 14 and 20) "14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: "70. ....an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entri....
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....' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) "37. In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s 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 an din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a....
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....earned CIT(A). The learned Counsel for the assessee in support of its claim reiterated the arguments made before the authorities below and prayed that the order of the learned CIT(A) be upheld on this count. The addition to total income of Rs. 26 lakh was made by the Assessing Officer on account of document found and impounded from the business premises of M/s.Tirupati Developers, which was framed as unexplained money under section 69A as per Para-10 of Assessment order. We find that the transactions are duly accounted in the books of Tirupati Developers through the capital account of Shri Prashant Bongirwar, the common Partner in both the firms. The assessee had mentioned the same during the assessment proceedings, but had not been considered by the Assessing Officer while passing the assessment order and addition of Rs. 26 lakh was added to the income of the assessee. We also find that the assessee has furnished copy of Capital Account in respect of Shri Prashant Bongiwar, who also said to be a common Partner in M/s. Tirupati Developers, and the assessee firm, where the entries are accounted. Thus, we are unable to reverse the order passed by the learned CIT(A) and thus decline t....
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.... below:- "21. Both the Appellant-Revenue and Respondent-Assessee entered appearance and submitted their arguments extensively. On hearing the learned counsel for both the parties, this Court finds it relevant to examine the following questions that arises for consideration in these writ appeals, which are as under: 1) Whether 'Loose Sheets' and 'Diary' have any evidentiary value? 2) Whether Centralization is in violation of Section 127 of the Income Tax Act, 1961, is valid? 3) Whether the Notice under Section 153C of the Income Tax Act, 1961 is valid herein? As regards Question No.1: Upon reading the material provided and the order of the learned Single Judge delivered on 12.08.2022, it is evident that the income that has escaped assessment and notices under Section 153C of the Income Tax Act, 1961, were solely issued based on loose sheets and documents which are termed as 'diaries' found during the search. The applicability of Section 69A of the Act arises only when the principles laid down under Section 68 of the Act are satisfied. Section 68 states that there must be books of accounts....
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....s by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under:- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability." 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularl....
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....re in full agreement with it. Applying the above tests, it must be held that the two spiral note books (MR 68/91 and 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are "books" within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/91 and MR 73/91)." 25. The Hon'ble Supreme Court in the case of COMMON CAUSE AND OTHERS v. UNION OF INDIA, reported in (2017) 11 SCC 731, at paragraphs 278 to 282 of the judgment, has observed thus: "278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of "books of accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are ad....
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....n benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under Section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regula....