TaxTMI 
TaxTMI 
2022 (2) TMI 1512
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....iness premises as well as residential premises of various persons connected to and related to one Doshi Group including the assessee firm which was a group concern of said Doshi Group. During the course of search operation, premises of one Shri Aashish Pallod and his brother Shri Manish Pallod was also covered and action u/s 133A of the Act was conducted in their cases. During the action u/s 133A, mobiles phones of Pallod Brothers were impounded and deleted data was recovered. In one of the mobile phone of Samsung Galaxy SIV belonging to Shri Aashish Pallod an image was recovered. On the basis of the said image, it was noticed by the AO that a transaction was done between Shri Sharad Doshi partner of the assessee's firm and Aashish Pallod. On the basis of the said information, the AO asked the assessee to explain the said transaction. The assessee filed its reply but the AO was not satisfied with the same and made the addition to the assessee's income. The AO made the addition mainly of undisclosed income from suppressed sale of D-Block in Niranjanpur Project. Being aggrieved, the assessee approached learned CIT(A) and learned CIT(A) considering the facts, the submissions and the m....
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.... the Act was initiated on the basis of loose paper found and seized from the data recovered from the mobile of other person which was never confronted to the appellant. The AO has made the addition mainly of undisclosed income from suppressed sale of D-Block in Niranjanpur Project. The appellant has further stated that the assessment was completed on the basis of mobile image retrieved during the course of survey proceedings u/s 133A of the Act from the residence of Shri Aashish Palod (third party) which were related to transaction of immovable properties at Niranjanpur developed by the appellant. The appellant has taken the plea that the AO ignored the settled principle that loose papers/slips have no evidentiary value unless it is corroborated by independent evidences. 4.3 It is clear from the assessment order that during the survey proceedings, at the premise of Shri Ashish Palod, the AO had found some documents which the AO had contended that belonged to the appellant firm just on the basis of image retrieved from the mobile phone found at the place of third party. Shri Ashish Palod had also denied to have any knowledge of the same. The AO has also mentioned in this fa....
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....bstantiate the allegations levied of unaccounted sales because it is a settled law that seized material cannot be considered as conclusive proof of evidence unless and until corroborated by other material as from the image relied on by the department, complete details of the alleged financial transaction cannot be worked out. Thus, the said document is nothing but a dumb document and do not possess any evidentiary value as per law. We also find that during the assessment proceedings, no inquiry regarding the said alleged transaction was made by Ld. Assessing Officer from the assessee to examine the said transaction and also no show-cause notice was issued before making such alleged addition which constitutes violation of principles of natural justice. 7. We find that ITAT, Indore in the case of Mahesh Bansal ITA No. 499/2018 had dealt with the similar issue relying on the following judicial pronouncements:- (i) In the case of K.P. Varghese vs ITO, (1981) 131 ITR 597 (SC) Supra, Hon'ble High Court held that "Mere seizure of note books of documents at the personal residence of an employee would not conclude the issue against the employer company that the on money has been....
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....e of CIT vs Naresh Khatter (HUF) (2003) 261 ITR 664 ( Del) (Supra) Hon'ble High Court held that " The Tribunal was correct in holding that merely because counsel for the assessee made a statement in the civil court that the total investment in the property was Rs. 13 Crores and odd, it would not be sufficient material to come to the conclusion that the said figure represented the actual investment. There had to be something more than that. The tribunal's finding that the Revenue had failed to prove that the total investment of the assessee was Rs. 13 Crores was not preserve." 8. We also find that the ITAT, Indore had dealt with the similar issue in the case of ITO vs Pukhraj Soni ITA No 585/Ind/2015 order dated 21.09.2016 wherein also documents relating to transactions of Shri Pukhraj Soni with Shri Nilesh Ajmera were found at the residence premises of M/s Phoenix Devcon Pvt. Ltd in the form of loose papers and the Tribunal set aside the finding of Ld AO holding that the inference of the AO that the assessee has advanced the money was merely based on suspicion, surmises and conjectures and there was no material to support the connection. Relevant extract of the findings of the T....
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.... 10. In the result, the appeal of the Revenue is dismissed" We find that the above finding of the Tribunal was confirmed by the Hon'ble Jurisdictional MP High Court vide order dated 06-02-2019 wherein the Hon'ble High Court placing reliance on the judgment of Hon'ble Supreme Court in the case of Central Bureau of Investigation vs V.C. Shukla & Ors 91998) 3 SCC 410 (SC) and another judgment of Apex Court in the case of Common Cause (A registered Society) vs Union of India (2017) 30 ITJ 197 (SC) (Supra) held as follows; "6. The tribunal has considered the aforesaid judgment while dismissing the appeal of the Revenue. The apex Court in the case of common cause (A Registered Society) versus Union of India reported in (2017) 77 taxmann.com 245 (Hon'ble Supreme court) 22, 24 and 27 has held as under:- 22. In case of Sahara, in addition we have the adjudication by the Income Tax Settlement Commission. The order has been placed on record along with IA No 4. The settlement Commission has observed that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives etc have revealed that the transactions noted on documents were no genuine and have no evid....
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....irect investigation, keeping in view principles laid down in the cases of Bhajan Lal and VC Shukla (Supra). 7. The Apex Court has been taken into account in similar circumstances the incriminating materials in form of random sheets, loose papers, computer prints, hard disk and pen drive etc and has held that they are inadmissible in evidence, as they are in the form of loose papers. 8. In the present case also entries found during search and seizure which are on loose papers are being made the basis to add income of third respondent. 9. Resultantly, in light of the Supreme Court judgments, referred above, no case for interference is made out with the order passed by the Tribunal. Moreover no substantial question of law arises in the present appeal, the appeal is dismissed." 9. We find that in case of Punjab Traders vs. ITO (2004) 88 TTJ 394 (Chd), it was held that addition on the basis of diary found in search proceedings of a third party could not be sustained in the absence of any corroborative evidence. 10. ITAT, Jabalpur Bench, in the case of ACIT vs. Satyapal Wassan (2008) 5 DTR (Jab) (Trib) 202 held that a charge on the basis of document can b....