TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 965
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....al premises of the assessee. Thereafter, the assessee has filed the return of income on 30.09.2010, declaring total income at INR 2,85,18,570/-. The case of the assessee was selected for scrutiny and the order u/s 143(3) was passed on 09.12.2011 at total income of INR 9,92,33,190/- by making various additions/disallowances. 3. Against that order, the assessee preferred appeal before Ld.CIT(A) who vide order dated 15.09.2014 allowed the substantial relief to the assessee. 4. Aggrieved by the order of Ld.CIT(A), the Revenue filed appeal before the Tribunal wherein the Co-ordinate "G" Bench of the Tribunal, New Delhi vide order dated 31.10.2018 in ITA No.6185/Del/2014 partly allowed the appeal of the Revenue and set aside the issue of addition of INR 6,81,55,760/- and INR 16,25,000/- to the file of AO with a direction to the assessee to produce all details and information of the persons whose names are appearing in seized paper Nos. 23 & 24 of Annexure A-2. In compliance to such directions, AO proceeded with the present proceedings wherein after considering the submissions made passed the order on 29.03.2019 u/s 254/143(3) of the Act by making addition of INR 6,81,55,760/- u/s 6....
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....ure A-2. In the said diary two pages bearing Nos. 23 & 24 were also seized, for which it was stated by the wife of the assessee that these papers were written by the assessee. Ld. AR for the assessee submits that from the perusal of the said two papers, it could be seen that these papers contained names and in two columns amounts were written. In one column, the amounts were written in lakhs whereas in other column full amounts were written. Ld.AR submits that during the course of search, the assessee explained the entries contained in the said pages as "memoranda entries" written by him where he was identifying the persons from whom loans could be obtained, as the assessee was planning to purchase a property. It was further stated by Ld.AR that when he calculated the interest to be paid on such amounts, he dropped the idea of borrowings and buying of property due the high cost of interest. 6.1. Ld.AR further submits that the paper does not speaks about the nature of entry whether they pertained to the receipt of loan or giving the loan and further it is not clear whether the amount stated in last column is interest and further whether such interest is receivable or payable. Ld.....
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....ents, it is presumed that the entries found noted in the said papers are of loans taken for the purchase of property than it is not understandable that why a person borrow money of INR 6.81 crores on interest when the property has market value of INR 1.10 crores only. 8. Ld.AR further placed reliance on the written submissions filed before us which reads as under:- A) "The Assessing Officer has erred in making addition of Rs. 6,81,55,760/-u/s.69A and interest of Rs. 16,25,500/- on it on the basis of dumb documents. 1. Following the directions of the Hon'ble ITAT, the Ld. AO has gone through the procedure of 143(3) of the Act and completed the assessment by making addition of Rs. 6,81,55,760/- considering the same as loan/advances by the assessee and Rs. 16,25,500/- as interest income on it. 2. The above additions were made on basis of page 23 & 24 of Annexure-2 of seized documents which were found during the course of search conducted on assessee. Copies of these seized documents are enclosed as page no.10 to 11 of PB. 3. With regard to the said pages, the assessee in his reply to a question in survey proceedings answered as follows: ....
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....her, Sh. Ravi Malhotra (jijaji), one of the persons in the list, appeared before the Assessing Officer and in his statement, he has denied any cash transaction with the assessee. Copy of statement recorded is enclosed at page no.22 of PB. Further, with respect to other parties in the list, it is submitted that the transactions noted as rough jottings in the seized documents never actually took place and was just a rough estimation made by assessee as explained above, and therefore, the other parties were not available/ were reluctant to appear before the Ld. AO and get their statements recorded. 8. The Ld. AO has made the addition on the basis of surmises and conjecture. The AO has assumed that the said figures are loans/advances given by the assessee to the persons named on the seized pages. In the assessment order, the Ld. AO has stated as follows: "It is also pertinent to mention here that as the figures mentioned in the seized documents represent loan/advances given by the assessee 'in cash' out of his unaccounted income, therefore even on verification, no party would accept its receipt as it will attract penal provision for accepting cash loans in the....
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....s of accounts of the assessee and thus these extracts do not constitute admissible evidences. 13. Dumb documents are the documents which do not speak anything independently. These are the documents which are found during the course of search or survey and do not indicate whether the figures mentioned therein refer to anything meaningful or corroborative with the affairs of the assessee. It means which require evidences in its support to derive any conclusion. The assessee has given plausible explanation about it and the Ld. AO has not been able to rebut this explanation by any material evidence. The Ld. AO has neither brought any material on record nor established any nexus between the figures mentioned in the seized pages and the assessee. The Ld. AO has only cooked an imaginary story about the seized pages and derived an arbitrary conclusion. Such assumptions without corroborative evidences are not sustainable. Thus, no adverse inference can be drawn against the assessee relying on the said loose sheet. 14. Entries in loose papers/ sheets are irrelevant and inadmissible as evidence. Such loose papers are not "books of account" and the entries therein are not suf....
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....papers which are detachable and replaceable at a moments notice, can hardly be characterized as ground of evidence of some books of accounts. CBI v Shukla [VC] (1998) 3 SCC 410 (SC)]. c) Addition was deleted by the CIT(A) on this basis that the loose-papers on the basis of which the addition are made by the AO are without any particulars or date or name etc. and, therefore, these are dump-papers and cannot be made the basis for addition. This finding of the CIT(A) could not be controverted by the DR of the Revenue by bringing any evidence on record to show that this essential information such as date, name or particulars are available on the seized paper on the basis of which the addition was made by the AO and, hence, on this issue also, there is no reason to interfere with the order of the CIT(A). [DEPUTY COMMISSIONER OF INCOME TAX vs. KAWARJEETSINGH P. CHHABDA (2013) 37 CCH 0368 Ahd-Trib] That leaves the Court with the addition initially made by the AO for the sum of Rs. 3.64 crores. Here too the addition was made only on the basis of some loose papers and a chit. This too would fall in the same category of material which could not have been the sole basis for addition ....
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....s. Noting (i) states that "it is presumed that the building will be completed and fully let out in the month of November 2002." Another note states "Further, the sale of the building will took place over a period of nine months." Admittedly, as on the date of the search the construction was still in progress. Flats up to the fourth floor had been sold. The view taken by the ITAT that mere fact that the print out states that the flats on second and third floor have been sold, does not necessarily mean that they were sold at the rates indicated therein is definitely a plausible view to take. 45. As pointed out in Commissioner of Income Tax v. S.M Aggarwal (supra) the said document can at best be termed as a 'dumb' document which in the absence of independent corroboration could not possibly have been relied upon as a substantive piece of evidence to determine the actual rates at which the flats were sold. Further as pointed out in Commissioner of Income Tax v. D.K. Gupta (supra) merely because there are notings of figures on slips of paper, it did not mean that those transactions actually took place. Likewise in Commissioner of Income tax vs Girish Chaudhary (supra),....
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...., Mumbai vs. Karthik Construction Co., ITA no.2292/Mum./2016, order dated 23 February, 2018: ".......the only thing which requires to be examined in the present appeal is whether the addition made under section 69A of the Act can be sustained. A reading of section 69A of the Act makes it clear, addition can only be made when the assessee is found to be in possession of money bullion jewellery, etc., not recorded in his books of account. It is not the case of the Department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilised in repaying the loan is doubtful. That being the case, the addition under section 69A of the Act cannot be made. Therefore, the decision of the learned Commissioner (Appeals) has to be sustained." 17. It is pertinent to note that presumption u/s. 292C is not a significant matter in the case of the assessee. The assessee has not denied the fact that both the seized pages are not belong to him. He has also has admitted that he has written the figures in the pages however, these are only imaginary figures as he was planning to collect funds from these parties to purchase a pro....
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....of search, a diary was found which was marked as Annexure A-2 having many pages including two pages bearing No.23 & 24 which are admittedly written by the assessee. The relevant extract of the pages are as under:- 11. For convenience, entries contained in the said pages are tabulated as under:- 1 2 3 1 Srl No. Name of Party Amount Interest 1. Mahesh Ji 50,00,000/- 1,12,500/- 63,00,000/- 94,500/- 2. Love Choudhary 10,00,000/- 25,000/- 3. Prem Ji 32,00,000/- 96,000/- 4. Gupta Ji 20,00,000/- 45,000/- 5 Rajesh Chawla 25,00,000/- 62,500/- 6 Ajay Ji 35,00,000/- 1,05,000/- 7. Bubba 30,00,000/- 90,000/- 8 Jaswani 2,55,760/- 3,68,000/- 9 Ram Sahab 10,00,000/- 20,000/- 10 Jija ji 38,00,000/- 57000/- 56,00,000/- - 11. Saudagar 2,00,00,000/- 4,00,000/- 12. Bebu 1,00,00,000/- 1,50,000/- 13. Nemimama 10,00,000/- - Total 68155760 1625500 12. Since beginning of proceedings, assessee was stating that these are rough papers thus the entries contai....
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.... the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee. 15. Further while making the addition the AO himself was not sure whether he is making addition on account of loans given or advance taken or for the payments made or received and has played blow hot and blow cold. The assessee in his preliminary statements stated that these entries represent the list of possible parties from whom loans could be taken in future which were never taken due to high interest cost however, the addition is made treating them as loans given by the assessee as unexplained money u/s 69A of the Act and interest thereon as unexplained income of the assessee. The Hon'ble Punjab & Haryana High court in the case CIT vs Ravi Kumar reported in 294 ITR 78, on the application of provisions of section 69A of the Act has held that "the assessee was found to be in possession of loose slips and not any valuable article or things. Neither the p....
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....or for funds invested. Further if we calculate the percentage of each individual entry in some cases it would be as high as more than 100% which is an impossibility. In the statement of Smt. Sharda Taneja, wife of the assessee recorded at the time of search, she stated that these loans were taken for purchasing the property for their company M/s Taneja Complete Home Solutions Pvt. Ltd. However, the said company was incorporated on 06.03.2010 and the property for which the proposed loans were stated to have been taken, was purchased by the assessee on 14.07.2009 that too for a sum of Rs. 35.00 lakhs only and the DVO has valued the same at Rs. 1,09,40,700/-. If for argument sake, it is presumed that the loans as stated in the seized papers were taken to acquire such property than in such case, the maximum requirement of funds would be of 1.10 crores and not of 6.81 crores as were found noted in the said paper. This aspect is totally ignored by the lower authorities. In this regard the Co-ordinate bench of Tribunal in the case of Habitat Royale Projects Pvt. vs ACIT in I.Τ.Α. No. 1539/DEL/2015 dated 08.11.2017 under identical circumstances where the addition was made on the ....
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....n the Assessee offered a plausible explanation for the document. The burden shifted to the Revenue to show, on the basis of some reliable and tangible material, how rate at which the flats on the second and third floors of VT was higher than that dictated in the sales register or the sale deeds themselves. 47. In the circumstances, the Court is of the view that the ITAT was justified in coming to the conclusion that the addition of Rs. 5,60,73,380 made by the CIT (A) was not sustainable in law. 18. It is thus, appears that the scribbling as found noted in the seized pages does not speak about the true nature whether they were in respect of receipt of money or payment of money nor was any effort made by the AO though he had all the whereabouts of the persons whose names are written therein. It appears that the AO was bent upon to make the addition of this amount by any means without bringing any corroborative evidence on record to hold that the amounts noted against these 13 persons is the unexplained money of the assessee. More particularly, when one person, namely Shri Ravi Malhotra, whose identity was written as "Jijaji" in the seized papers had appeared and denied an....
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....real and honest transactions and that the moneys were paid in accordance with those entries. The legislature however does not require any particular form or kind of evidence in addition to entries in books of account, and I take it that any relevant facts which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true." 23. While concurring with the above observations the other Ld. Judge stated as under: "If no other evidence besides the accounts were given, however strongly those accounts may be supported by the probabilities, and however strong may be the evidence as to the honesty of those who kept them, such consideration could not alone with reference to S. 34, Evidence Act, be the basis of the decree." 24. Thus, Hon'ble Apex Court in above judgment has observed that even if certain transactions are found to be recorded in books of accounts, same have to be corroborated with independent documentary evidence before any liability could be fastened upon assessee, whereas in the instant case, loose paper found is mere a rough noting without any date and any....
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....of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed and he fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislation scheme defining any of those components of the levy will be fatal to its validity. 14. Now let us examine these components in detail and how they are relevant for taxing an item. 15. The first component shows that it is necessary to find out the nature of transaction which is the source of generating income. It has to be clearly spelt out as to whether a particular transaction is of income yielding nature as per Income-tax law. Not all transactions yield taxable income. Firstly it is only the financial transactions which yield taxable income and secondly it is of revenue character. The cap....
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.... Wassan admitted that it belonged to her husband, it could not be inferred without rebutting those evidences (filed in the form of affidavits before the AO) that document and transactions recorded therein, in fact, belonged to Sri Satyapal Wassan. Onus under Section 132(4A) is always shifting. This sub-section provides that Section 132 (4A) Where any books of account, other documents, money, bullion jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed. (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested by the person by whom it purpo....
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....ng is shown by the AO that there was other material correlated with the impugned document clearly showing that it belonged to the assessee. Under these circumstances, the assessee has successfully shifted the onus on to the AO by filing the affidavits. They may be self-serving but carry enough weight to shift the burden or rebut the presumption. Once the onus is shifted to the AO, he was duty boud to collect evidence so as to belie the contents of the affidavit and hold that document and transactions recorded therein, in fact, belonged to Satyapal Wassan. If the AO has not done so, it could not be said that the second component of levy of charge has been properly established by him. 17. The third component in levy of charge is assessment year. The document and/or follow up investigation must establish the period of transaction before charge of income-tax could be levied during the current assessment year. The document is silent on this aspect. It is only post search investigation and correlation with other documents that could have filled up the gap. Since there is no material on record to indicate in certain terms the period of transaction, it is not possible to infer tha....
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....een that this addition was challenged by the assessee in first round of appeal before Ld.CIT(A) who vide its order dated 15.09.2014, has confirmed the disallowance in terms of para 17 of the very same order. This fact is also observed by AO in the present order passed u/s 254/143(3) in para 2. Further, the assessee has not challenged the order of Ld.CIT(A) and accepted such disallowance. Therefore, we find no occasion to challenge this disallowance before us in the present appeal accordingly, Ground No.5 raised by the assessee is dismissed. 28. Ground No.6 raised by the assessee is in relation to addition of INR 3,76,026/- made on account of unexplained cash. From the perusal of the order of Ld.CIT(A) dated 15.09.2014 wherein while deciding the appeal of the assessee, Ld.CIT(A) has confirmed the said addition in terms of para 12 of the said order and in the present impugned order, this fact is observed by the AO in para 2 of the order. Accordingly, we find no occasion to challenge this addition before us in the present appeal. Hence, Ground No.6 raised by the assessee is dismissed. 29. Ground No.7 is general in nature, requires no adjudication hence, dismissed. 30. Ground ....