TaxTMI 
TaxTMI 
2025 (7) TMI 1429
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.... in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 75,00,000/- made by the Assessing Officer under Section 69A of the Income-tax Act, 1961, based on the loose paper found during the course of search and seizure proceeding and the Ld. CIT(A) failed to appreciate that the document, though unsigned, was found at the assessee's premises during a valid search operation under Section 132 and indicated unaccounted cash transactions. The decision to disregard the evidence solely on the ground that it was a loose sheet, without considering the surrounding circumstances and the presumption under Section 132(4A) and Section 292C of the Act, is erroneous and contrary to law". 3. "The appellant craves leave to amend, alter, or add any ground of appeal as may be necessary". 3. Brief facts of the case are that the assessee filed original return declaring income of Rs. 45,65,490/- on 30.10.2019. A search had been carried out on the assessee on 11.01.2019 by the Investigation wing, Mumbai on the assessee. The assessee is a partnership firm engaged in trading of gold and diamond jewellery. The assessment was completed u/s. 143(3) of....
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....e I.T return filed. 12. The AO has not pointed out any discrepancy in the invoices submitted by the appellant and details of stock reconciliation statement. The addition was made only on the basis of the statement of Shri Nakshatra Mehta wherein he has stated that the cash is from unaccounted cash sales. However, as discussed above there is no dispute on the fact that the cash is from the sales made by the appellant which as per the AO were not accounted in the books of accounts. It was stated by Shri Nakshatra Mehta that some sale bills have not been entered into the books of accounts and hence the cash is not tallying with the cash in hand as per the books of accounts. After entering these bills in the books, the appellant has furnished the details before the AO and explained the cash found during the search. It is not a case of the AO that there is any discrepancy in the stock book. It is also a fact that the purchases are accounted in the books of account. As the appellant has disclosed these cash sales in the books of account further adding the same as income of the appellant will result in a double addition. Further, as contended by the appellant, since the source of....
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.... addition could be made on the basis of such sheets. The ruling of Hon'ble Supreme court in the case of CBI Vs. V. C. Shukla (1998) 3 SCC 410/ 1998 Taxmann.com 2155 (SC); wherein the apex court of the country held that in order to constitute an evidence within the meaning of section 34 of Indian Evidence Act, 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 regularly kept in the course of business. Further, it has to be supported with independent evidence of their trustworthiness to fix a liability upon a person. Thus, the court held that in order to fix a liability upon a person; the entries have to be in regular books of accounts or it should be supported with independent evidence of trustworthiness. 19. I find that here both the ingredients are missing; (1) the above page sheet is neither the part of regular books of accounts, nor there is any single positive evidence about its authenticity; (2) There is absolutely no independent evidence. Thus, this loose paper cannot be an admissible evidence and hence cannot be used against the appellant....
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....I.T Act. The addition made by the AO u/s 69A of the I.T Act of Rs. 75,00,000/- cannot be sustained. Therefore, the AO is directed to delete the same. Accordingly appeal on ground no 2 is ALLOWED." Aggrieved with the order of Ld. CIT(A) the department has filed an appeal before the Tribunal. 4. Ground No.1: Addition on account of unaccounted cash sales - Rs. 30,01,923/-. In this regard Ld. DR has made the following written submissions: "1. During the course of search an seizure proceedings in the case of Mehta Emporium Jewellers, certain amount of cash was found at their premises. Out of the total cash found assessee was unable to explain/provide documentary evidences of cash of Rs. 30,24,730/-. 2. In view of this an amount of Rs. 30,00,000/- was seized during the search proceedings. 3. Further during the search Shri. Nakshatra Mehta (one of the partners of the Mehta Emporium) offered this unaccounted cash of Rs. 30,24,730/- generated through unaccounted sales to M/s. Rare Heritage Private Ltd. and M/s. Mehta Emporium for taxation for AY 2019-20. (para 5.1 page 2 of AO) Shri Nakshatra Mehta confirmed during the search that his accountant Shri. Hir....
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.... on account of cash sales amounting to Rs. 30,01,923/- is justified and no interference is called for on this issue. This ground of appeal is, therefore dismissed. 7. Ground No.2: Addition on account of unexplained cash u/s. 69A - Rs. 75,00,000/-. An addition of Rs. 75,00,000/- was made by the Ld. AO on the basis of a loose paper found during the course of search proceedings from the assessee's premises. Ld. DR has made the following written submissions on these issues: "1. During the course of the search, incriminating documents was found in the form of a sheet on which it was stated that assessee had received Rs. 75,00,000/- cash from one 'Kishan Singh' the same being counter signed by the latter as confirmation for the same. (para 6.1 page 6 of AO). 2. Evasive reply given by Shri Nakshatra Mehta partner of M/s. Mehta Emporium (Refer extra statement recorded on page 6 and 7 of AO). 3. According to section 132 read with 292C if any books of accounts or other documents are found in the possession of any person in the course of search it is presumed that such books or documents belong to such person. Mere denial by the assessee does not discharge the....
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....n recorded in the seized documents. However, it was stated by Shri. Nakshatra Mehta, partner of the assessee firm that he could not recollect and recognize the handwriting or signature on the paper for which he sought to file the requisite explanation within 10 days. During the course of proceedings, the assessee firm with regard to a specific query relating to the impugned document, submitted the following explanation: * " The assessee firm or partners do not know anyone named Kisan Singh & had no transaction with the said person in any time. To substantiate this, we have already submitted details of all the employees, Debtors & Creditors of the assessee firm. We are herewith attaching the letter submitted regarding the same on 4th April 2019 for your kind perusal. * Since the explanation is already provided along with all the documents as requested by the then authorities, plea of the assessee is that kindly consider the same and allows us due relief. Assessee has no idea about that loose paper, who is Kisan Singh and what does that means. We would also like to state that we do not know the person to whom this paper belongs. * Further, the above piece o....
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....sessee-firm to explain the transaction referred to in the afore-mentioned seized document. However, the assessee has failed to provide any explanation with respect to the afore-mentioned seized document. It has simply stated that it has no relation whatsoever to the afore-mentioned seized document, and thus had failed to discharge its onus." Accordingly, Ld. AO held that since onus is on the assessee firm to explain the transaction referred to in the impugned seized document and no credible explanation has been furnished, therefore, he proceeded to make the addition u/s. 69A of the Act by treating the same as unexplained. 11. We have considered the rival submissions and the material avolated on record. The assessee's explanation that the document may have been received from some customer while giving the jewellery for repair which is wrapped in paper does not appear convincing. The screenshot of the documents reproduced in the assessment order does not look like that of a crumped paper used for wrapping of jewellery received for repair. We are, therefore, of the view that Ld. CIT(A) has erroneously accepted the explanation of the assessee which is prima facia not convincing. ....