TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1317
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.... Act') was carried out at residential/business premises of the assessee on 14.11.2015. Consequently, notice u/s.153A of the Act was issued on 01.04.2019 for A.Y.s2012-13 to 2017-18. In response to the above notice, the assessee filed return of income for A.Y.2012-13 to 2017-18 on 26.10.2016. The details of the return of income for A.Y.2017-18 are as under: A.Y. Date of filing of return u/s. 139(1) Returned income (in Rs.) Date of filing of return by the assessee against notice u/s. 153A Income declared in return u/s. 153A Additional income offered by the assessee (In Rs. ) 2017-18 08.06.2018 25,94,92,990/- 17.04.2019 26,03,17,880/- 8,24,890/- The A.O made the addition of Rs. 1,50,37,554/- on account of @2% of total revenue of Rs. 75,18,77,696/- and Rs. 5,50,00,000/- on account of capital investment for obtaining 35 group shops u/s. 69C of the Act and to be charged u/s. 115BBE of the Act. 4. The Ld. CIT(Appeals) after considering the assessment order and the submissions placed on record by the assessee held and observed as follows: "4.1 Ground no. 1 to 4:- Through these grounds of appeal the appellant had challenged the addition of Rs. 1,50,37,554/- on account of @2%....
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.... As a matter of fact the appellant is a manufacturer of liquor and as per prevailing excise guidelines the appellant cannot apply for license of any shop in its name. Therefore, the findings of the AO that unaccounted income was earned out of sale of liquor through licensed shops is out rightly rejected. The AO has alleged that various loose papers were found during the course of search stating the unaccounted sale made by the appellant amounting to Rs. 268,75,47,643/-. The presumption made by the AO was on the basis of loose paper i.e. page no 22-25 of LPS-I and 25-29 of LPS-2. On perusal of the impugned loose papers it was seen that the same represents details of liquor shops in different districts of Chhattisgarh. Further, on perusal of notification of Excise department No. कमांक /आव/ ढेका /२०१६ /४९१ दिनांक १०.०२.२०१६ which is also available on website of excise department Chhattisgarh and can be verified by this link https://excise.cg.nic.in/Uploads/nirdesh%2016-17.pdf., it was observed th....
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....8.11.2017 and more than 100 questions were raised. Shri Kedia was even pressurized by prosecution proceedings in the middle of statement at Q.No 29 and therefore, Shri Kedia surrendered himself and signed the statement at the instance of search party. The said statement was retracted on 22.11.2017 which is within 4 days. Thus, the statement has no evidentiary value and that too in absence of any cogent evidence on record. Appellant has argued that the said transaction has never taken place through appellant. Neither any of the person/firm/company nor any of the director or Shri Uday Rao has ever stated that any such transaction actually took place and the entire addition has been made on sheer presumption and assumption basis. The appellant in his statement recorded on oath has also denied to have any information about these transactions. On the other hand the AO failed to establish how the said transactions materialized when no license was issued in the name of appellant. Also, the AO failed to bring on record any cogent evidence, creating direct nexus of unaccounted sales and capital investment. Therefore, in absence of any cogent evidence having direct nexus with the impugned tr....
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....ets of paper cannot be termed as 'book' within the meaning of s. 34 of Evidence Act. It has also been held therein by the Hon'ble Supreme Court that even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person. The Hon'ble Supreme Court also observed that even assuming that the entries in loose sheets are admissible under s. 9 of the Evidence Act to support an inference about correctness of the entries still those entries would not be sufficient without supportive independent evidence. Rakesh Goyal Vs. ACIT (2004) 87 TTJ (Del) 151 - The findings of Hon'ble Tribunal was as under:- "20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly the finding of the CIT(A) has not been controverted by the learned Departmental Representative by filing any positive evidence. The copies of the pages found from the possession of the assessee are placed in the paper book and after going through these papers, we find that these are simply deaf and dumb documents and they cannot be considered for making any add....
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....ts of the document. These are the findings of fact recorded by both the authorities i.e. CIT(A) and the Tribunal." "15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration". Jayantilal Patel Vs. ACIT & Ors (1998) 233 ITR 588 (Raj) - Held that - "During search at the residence of Dr. Tomar, the Department official found a slip containing some figures» This piece of paper claimed to have been recovered at the time of search contains figures under two columns. In one column, the total of these figures comes to Rs. 17,25,000 from 31st May, 1989, to 8th Dec., 1989, and in the other column, the total of these figures comes to Rs. 22,12,500. An addition of Rs. 22,12,500 on the basis of figures on a small piece of paper in respect of purchase of Plot No. B-4, Govind Marg, Jaipur was made by the AO. This plot B-4, Govind Marg, Jaipur, has been purchased jointly by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF.....
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....s of accounts or documents and other material. However additions cannot be made on the basis of inferences. (ii) No facts were available to AO after search and inference of AO did not fall within the scope of Section 158BB. (iii) Deletion of additions made by Tribunal of assumed undeclared payments made for purchase of property was on basis of facts. Ashwani Kumar V. ITO (1991) 39 ITD 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITD 85 (Mum.) Nine out of 19 slips found were without any name or amount and therefore were dumb documents and no adverse inference could be drawn. Common Cause (A Registered Society) Vs. Union of India - 30 1TJ 197 (SC). In this case, the Hon'ble Court held that without any independent evidence or corroborative material, no addition is permissible on the basis of loose paper jottings & notings. The relevant paras of the order are as under :- 16. With respect to the kind of materials which have been placed oil record, this Court in V.C. Shukla 's case (supra) has dealt with the mater though at the stage of discharge when investigation had been completed but same is relevant for the purpose of....
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.... down in V.C. Shukla, thus; "37. In Beni v. Bison Dayol it was observed that entries in books of account ore not by themselves sufficient to charge any person with liability, the reason being that o man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the bock 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. In Hiro Lol v. Ram Rakho 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 proved, said that the rule as laid down in Section 34 of the Act that entries in the which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein a....
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....Held that "that additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question." (vi) Jaddamba Rice Mills Vs. ACIT (2000) 67 TTJ (Chd) 833 Held that "No addition can be made on dump documents". It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim "affairtnanti non neganti incumbit probation'' means burden of proof lies upon him who affirms and not upon him who denies. Similarly as per doctrine of common law "incumbit probation qui digit non qui negat" i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. Further, it is most important to mention that nowhere in the said impugned loose papers are nothing but proposed business deal for acquiring license for liquor shops in various district of Chhattisgarh. The AO has failed to discharge his onus of proof especially when addition has been made under "deeming, fiction". In view of this lacune on the part of A....
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....s to appellant company and no such unaccounted sales was made. However, the A.0 giving reference to the statement of Shri Naveen Kedia and copies of impugned loose papers found during the search, made addition for undisclosed investment in 35 liquor shops. However, no specific reference was made to any incriminating material having its bearing on the surrendered income. The A.O has also failed to bring on record any positive evidence having nexus with the impugned investment or the alleged unaccounted sales. Thus, it can be safely concluded that the addition made by the A.O was not on the basis of the incriminating material found during the course of search but only on the basis of retracted statement of Shri Naveen Kedia. Even in post search enquiries no irregularity has been brought on record and the only addition made is towards income declared in the statement recorded u/s 132(4). Hon'ble ITAT Indore in the case of ACIT(1) VS. Sudeep Maheshwari ITA No 524/Ind/2013 dated 13.02.2019 has held as under:- "6. It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found. It is stated that ....
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....T - (2008) 14 DTR 257 (Guj.) has held that merely on the basis of admission the assessee could not have been subject to additions unless and until some corroborative evidence is found in support of such admission. 4.1.7 Hon'ble Jharkhand High Court Shree Ganesh Trading Co. V/s Commissioner of Income-tax Tax Case No.8 of 1999 order dated 03.01.2013 held as under; "4. We considered the submissions of the learned counsel for the parties and perused the reasons given in the impugned orders as well as reasons given in the case of Kailashben Manharlal Chokshi (supra). 5. It appears from the statement of facts that there was a search in the business premises of the petitioner's firm as well as in the residential premises of its partner Shri Sheo Kumar Kejriwal on 24th September 1987. During the course of search the statement of Shri Sheo Kumar Kejriwal had been recorded under section 132(4) of the Income Tax Act and in the statement he stated that he was partner in the Ganesh Trading Company i.e. the present assessee-firm in his individual status and that he surrendered Rs. 20 lacs for the assessment year 1988-89 as income on which tax would be paid. He further stated that o....
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....icer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation where during the course of search there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation no assets or cash was recovered from the assessee in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. Therefore we are of the considered opinion that in the present case a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs. 7. In view of the above reasons without answering the question about retrospective operation of the proviso to section 134(4) we are holding that the authorities below have committed error of law in drawing inference from the materials placed on record i.e. admission of the assessee coupled with its retraction by the assesse....
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....ni 30 ITJ 353/380 (Ind-Trib) has held that no addition can be made merely based on statement u/s.132(4) without linking to the seized books of accounts other documents money bullion jewellery or other valuable articles or things. In para 18 of the order at page 380 the Tribunal held as under :- We also find that disclosure was not made by the assessee hence it is not binding on him. We also rely on the decision in the case of CIT v. Chandra Kumar Jethmal Kochar (2015) 230 Taxman 78 (Guj) Asstt. CIT v. Kunwarjeet Finance Pvt. Limited (2015) 61 Taxmann.com 52 (Ahm-Trib.) CIT v. Jagdish Narayan Ratan Kumar (2015) 61 taxmann.com 173 (Raj) wherein it was held that when addition of disclosure made by the assessee in statement recorded u/s.132(4) it cannot be sustained despite retraction when Revenue could not furnish any positive evidence in support of such addition. Therefore we are unable to uphold the findings of the AO and inclined to agree with Ld.CIT(A). Further the Hon'ble Rajasthan High Court in the case of Jagdish Narayan Ratan Kumar (supra) has held that statement made during search must be correlated with records which are found and if there is no ambiguity explanation g....
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....submitted relying on the finding of the A.O that the loose papers that were found based on which the A.O has made addition were not dumb documents but reflected various names corresponding to sales made. However, the Ld. CIT-DR could not establish that such figure of sales were in relation to any unaccounted sales with regard to the assessee. 6. Per contra, the Ld. Counsel for the assessee placed strong reliance on the order of the Ld. CIT(Appeals) and submitted that the additions that were made by the A.O based on the loose papers found could not be termed in any way as incriminating material. The revenue has not proved any co-relation or direct link with regard to any tax evasion and such loose papers found, therefore, are in the nature of dumb document only as held by the Ld. CIT(Appeals). Furthermore, he submits that loose papers were undated and unsigned and there is no independent incriminating material that were found by the revenue suggesting any capital investment and unaccounted sales of liquor by the assessee. 6.1 The Ld. Counsel further submitted that the additions have been made based on the retracted statement of Shri Naveen Kedia which does not have any evidentiary....
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....on perusal of the impugned statement it was observed by the Ld. CIT(Appeals) that Shri Ramakant Shukla had never admitted any unaccounted sales and in reply to Q.No.15 has stated that he did not know much about the paper which can only be explained by Shri Uday Rao. That neither the search party nor the AO has made any enquiry from Shri Uday Rao. The assessee has explained before department that Shri Uday Rao is an Excise consultant and had in fact brought those sheets as business proposal for consideration of the assessee company to participate in referred liquor license allotments. Mr. Rao had stated that the other parties as mentioned on the loose paper were ready to accept the stated percentage of share as mentioned against their names in the prospective venture and the percentage of share of appellant was also available. Mr. Rao was not aware of the legal complications that a liquor manufacture could not take liquor sales license in his own name, therefore, the said proposal was refused by the middle level management of the company and was never executed. This fact is not disputed by the department. Another statement of Shri Naveen Kedia, Director of the assessee company was r....
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....ia. Therefore, it is the assessee who had questioned it before the department regarding exact place of acquisition of those loose papers. 12. Regarding the second contention of the Ld. CIT-DR that such loose papers were not dumb document, it is noted that as has been examined by the first appellate authority who had perused notification of Excise Department and every entries in those loose papers matches with the Notification of the Excise Department wherein, it only depicts name of shops in respective district and the sales done by those different shops. There is no evidence brought on record even before this bench regarding any fact suggesting that such loose papers represents unaccounted sales of the assessee. That further the loose documents have been found are undated and unsigned. In this regard, we refer to the decision of the ITAT, Raipur Bench, in the case of Deputy Commissioner of Income Tax (Central-2) Vs. Sanjay Agrawal, (2025) 174 taxmann.com 108 (Raipur- Trib.) wherein it has was held and observed as follows: "8. We have considered the rival contentions, perused the material available on record and case laws relied upon by the parties. On a thoughtful consideration....
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....70 lac have been ever made by the department in the ensuing years, whereas such contention was not objected by the revenue, it is therefore, observed that such inconsistent approach of the department itself shows that the addition made in the year under consideration was with halfhearted conviction, as no corroborative material or evidence regarding cash payment could be brought on record by the revenue. It is clearly emanating from the aforesaid observations that the document found during the search i.e., "Sauda-Ikrarnama" which was unsigned, undated, unwitnessed, denied by the counter party, was just a loose paper having certain proposed transaction which were not carried out in toto, thus, the same constitutes a dumb document. Such dumb document was believed as a sacrosanct truth by the Ld. AO, though with respect to particular terms and conditions as per his convenience, brushing aside the remaining part of it. Admittedly, none of the parties either seller group or buyer group had admitted such cash transactions. The allegation of cash transaction could not be substantiated by support of any independent incriminating material by the revenue; therefore, we concur with the findin....