TaxTMI 
TaxTMI 
2025 (8) TMI 1317
X X X X Extracts X X X X
X X X X Extracts X X X X
....32 of the Income Tax Act, 1961 (for short 'the 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fication dated 10.02.2016 and does not represents any profit earned from sale of liquor. 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 verifie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s per appellant the statement started at 13.30 hrs on 16.11.2017 and continued upto 19.20 hrs 18.11.2017 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 in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see, which he utterly failed to do so. CRI vs VC Shukla 3 SCC 410 The Hon'ble Supreme Court has held that loose sheets 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person, on such document by itself cannot prove the contents 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pers to be thrown in the waste paper basket. In this connection, the assessee relies upon the court decisions. CIT Vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.): It is held that - (i) Additions can be made only when evidence is available as a result of search or a requisition of books 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 permiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the persons whom the alleged payments were mode do not find o mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to." 19. With respect to evidentiary value of regular account book, this Court has laid 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee]. (iv) Atual Kumar Jain Vs. DCIT (2000) 64 TTJ (Del.Trib) 786 - Held that additions based on chit of paper, surmises, conjectures etc. could not be sustained in the absence of any corroborative evidence supporting it. [Similarly in present case, neither either parties hove admitted payment/receipt of on money' nor any corroborative evidence was seized to support the findings of the AO]. (v) S K Gupta Vs. DCIT (1999) 63 TTJ (Del.Trib) 532 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. Sim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 4.1.5 Shri Naveen Kedia in his statement recorded on oath on 16.11.2017 has admitted that a sum of Rs. 5,50,00,000/- was invested as capital in acquiring liquor license of 35 shops. However, the said statement was retracted on 22.11.2017 and it was submitted that during the course of search it was explained to the search party that the said loose papers does not relates 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....absence of such material coupled with the fact that it is recorded by the Ld. CIT(A) that the assessee himself had surrendered a sum of Rs. 6959000/- and Rs. 7500000/- in A.Y. 2008-09 and 2009-10 respectively. The A.O. failed to co-relate the disclosures made in the statement with the incriminating material gathered during the search. Therefore no inference is called for in the finding of the Ld. CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed." 4.1.6 Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (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 statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s incriminating admission against himself then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra) the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer 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 evide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts found in his possession then the case is different. On the contra if mere statement made under s. 132(4) of the Act without any corroborative material has to be given credence than it would lead to disastrous results. Considering the nature of the order of assessment in the instant case characterized as undisclosed and on the facts and circumstances of the case we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence against the maker of the statement." 4.1.10 Hon'ble Jurisdictional Tribunal Indore in the case of ACIT Vs. Shri Yogesh Kumar Hotwani 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 T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cquisition of the said loose papers are concerned, the same has not been clearly dealt with by the Ld. CIT(Appeals). In this regard, he submitted that as per the assessment order, Para 5.1 of the A.O, it is therein stated that documents seized during search and seizure operation seized as Pages 22-25 of LPS-1 from the factory premises of Chhattisgarh Distilleries Limited situated at Village-Khapri, Taluka-Kumhari, Durg, Chhattisgarh, whereas, at Para 4.1.1 of the Ld. CIT(Appeals)'s order, it is therein mentioned that such loose papers were found from cabin of Shri Sanjeev Fathepuria as stated in Q.No 98 of the statement of Shri Naveen Kedia. 5.1 The Ld. CIT-DR further 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....counted sales of the assessee company. That further, each and every figure matches absolutely with the Notification of the Excise Department, therefore, the A.O had erred in totality in presuming that such loose papers represents unaccounted sales of the assessee and therefore, the addition have been made by the A.O on sheer presumption and guess work basis without any cogent facts and evidences. 8. Further, it is noted that in the course of search statement of one Shri Ramakant Shukla, Director of the assessee company recorded on oath u/s.132(4) of the Act wherein as per A.O, he has admitted that the said loose paper represents sales of liquor through various shops. However, 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts. There is no evidence by the department ever suggest that any unaccounted transactions have been done by the assessee which were reflected in the referred loose papers. The Ld. CIT-DR failed to establish that such loose papers were in the nature of incriminating material. 11. Regarding the contention raised by the Ld. CIT-DR regarding the place of acquisition of such loose papers referred at Para 4.1.1, in fact the assessee has contended that there is inconsistency regarding place of acquisition of such loose papers at Pages 22-25, LPS-1 whether they were found from factory premises or from cabin of Shri Sanjeev Fathepuria as stated in Q. No.98 of the statement of Shri Naveen Kedia. 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 respec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tency, he placed his belief on the particular clause mentioned in the alleged agreement that the total consideration is Rs. 25 crores, out of which Rs. 12.00 crores are to be paid by cheque and Rs. 13.00 crore to be paid in cash. Ld. AO had firmly picked para 3 of the alleged document "Sauda-Ikrarnama", that the seller will pay 20 instalments of Rs. 70 lac each to the buyer starting from 01.01.2018, accordingly, addition for first three months i.e., Jan 2018 to March 2018 amounting to Rs. 2.10 crore was made in the relevant AY, treating the same as unexplained investment u/s 69 of the Act. It is further brought to our knowledge by the Ld. AR that no addition for remaining 17 instalments of Rs. 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 th....