TaxTMI 
TaxTMI 
2025 (9) TMI 791
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....e by the AO u/s 69C on account of unexplained expenditure on foreign travelling. 2.1 That the CIT (A) has erred in confirming addition to the tune of Rs. 400000/- without appreciating that the said expenditure was incurred on leisure trip to Canada out of regular income earned during the year under consideration and common pool of funds of the family members. 2.2 That the CIT (A) has erred in confirming addition on adhoc basis without any cogent or credible evidence much less incriminating evidence. 2.3 That the CIT (A) has erred in confirming addition on ad hoc basis without appreciating that all the expenses in respect of fare, hotel stay, lodging and food were incurred by assessee's daughter who resided in Canada and as such, the addition confirmed to the tune of Rs. 400000/- is non tenable. 3. That the CIT (A) has erred in confirming addition of Rs. 277415/- out of total addition of Rs. 693536/- made by AO on account of disallowance of vehicle running and maintenance expenses. 3.1 That the CIT (A) has erred in confirming addition of Rs. 277415/- without appreciating that the vehicle was solely used for business purposes. 3.2....
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....00,000/- made by the AO on account of ON MONEY in respect of cash receipts on sale of immovable property. 3.1 That the CIT(A) has erred in confirming the addition of Rs. 1.49 crore made by the AO without appreciating that the AO failed to record the statements of purchaser or witnesses. 4. That the CIT(A) has failed to appreciate the fact that the seized document relied upon by the AO could not be considered to be correct as the sale deed was executed in the name of firm M/s Krishna Poultries and the seized document is in the name of Latiza Singla. 4.1 That on the facts and circumstances of the case and in law, the CIT(A) has erred in brushing aside the recitals so recorded in the validly executed registered sale deed against the seized agreement which was not in the name of the buyer. 4.2 That on the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that the photocopy of document is not a permissible evidence in terms of Indian Evidence Act 1872. That the CIT(A) has erred in not appreciating that the AO has erred in not following the manual for the use of digital evidence. 5. That the CIT(A) has er....
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....d, the disallowance on account of use of vehicle for personal purposes can only be made in respect of vehicle running and maintenance expenses and not insurance, depreciation and interest on car loan. 7. That on the facts and circumstances of the case, the Ld. Additional Commissioner of Income Tax, Range Central failed to apply due application of mind in giving approval u/s 153D of the Act and as such the order deserves to be quashed on this ground alone. 8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off. 5. Brief facts of the case as per the order of the Ld. CIT(A) for AY 2020-21 and AY 2021-22 are as under: 5.1 That the appellant was covered under the search action so conducted over M/s Universal Educational Society &Desh Bhagat Memorial Educational Trust ('UES'&'DBMET' for short). The jurisdiction of this case was transferred to the office of Ld. A.O. - ACIT- Central Circle II, Chandigarh vide order under section 127of the Income Tax Act, 1961. 5.2 Accordingly, assessment in the case under consideration has been made u/s 153A r.w.s 143(3) of the Act, vide order dated 31.....
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....ble property 14,90,00,00/- 2. Estimated disallowance for Personal use of vehicle (Restricted to 20% as against 50% made by the AO) 1,91,074/- 3. Jewelry 4,02,605/- Total addition 1,54,93,679/- 8. That the facts in both the appeals are common and, for common issues, the counsel has preferred to take up the appeal for the assessment year 2020-21 as the lead case, specifically relating to the disallowance of foreign travel expenditure, estimated use of vehicle, and jewellery. 9. That the Ld. counsel argued that the addition of Rs. 4,00,000 made on account of foreign travel, as confirmed by the CIT(A) for AY 2020-21, was made merely on an estimated basis without proper verification. It was further submitted that all the travel expenses relating to Canada were borne by the husband, Shri Sukhwinder Singh, and in support of this, a copy of the bank statement from Indian Bank has been enclosed at page no. 21-26 of the paper book, where the payment made to the travel agent (Grand Travelers) amounting to Rs. 1,12,144/- is clearly reflected. 10. The Ld. counsel also submitted that no material was found during the course of the search relating to o....
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....e nos. 21-26 of the paper book, wherein the payment made to the travel agent (Grand Travelers) amounting to Rs. 1,12,144/- is clearly reflected. In the absence of any cogent evidence brought on record by the Revenue to the contrary, and considering the explanation tendered by the assessee, we are of the view that the addition of Rs. 4,00,000/- sustained by the Ld. CIT(A), merely on estimation basis, particularly in a search case, is not justified. Such an addition, being without supporting material, cannot be sustained in law and is accordingly directed to be deleted. 14. That the Ld. CIT(A) confirmed an addition of Rs. 2,77,415 for Assessment Year 2020-21 on account of alleged personal use of vehicle, and Rs. 1,91,074 for Assessment Year 2021-22 on the same ground. The Ld. CIT(A) sustained these additions by restricting the estimation to 20% of the total vehicle expenditure debited in the regular books of account for both years. The assessee has challenged these additions before us. 15. It was submitted by the AR that the disallowance @20% confirmed by the CIT(A) was purely on an estimated basis, without bringing any cogent evidence on record to demonstrate that the vehicle ....
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.... In the absence of any cogent evidence brought on record by the Revenue to the contrary, and considering the explanation tendered by the assessee, we are of the view that the additions of Rs. 2,77,415/- and Rs. 1,91,074/-, sustained by the Ld. CIT(A) for AYs 2020-21 and 2021-22 respectively, merely on estimation basis, are not justified. The assessee has already demonstrated sufficient withdrawals to meet household requirements, and in the context of a search assessment, such ad hoc disallowances, without any supporting material, cannot be sustained in law. Accordingly, the additions sustained by the Ld. CIT(A) are directed to be deleted. 20. The Ld. CIT(A) has confirmed an addition of Rs. 34,110/- in respect of jewellery for the assessment year 2020- 21 by relying upon a jewellery bill dated 28th October 2020. Similarly, for the assessment year 2021-22, the CIT(A) has confirmed an addition of Rs. 4,02,605 based on jewellery bills seized during the course of search. 21. As per Ld. AR the addition of Rs. 34,110/- for AY 2020-21 is uncalled for, as the said amount represents investment sourced from withdrawals of Rs. 1,57,489/-, separately reflected in the capital account of th....
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....TAT Delhi) (Relevant para 13) 25. The Ld. CIT DR relied upon the order of CIT(A) and argued that the addition on account of jewellery bill amounting to Rs. 34110 for AY 2020-21 and 402605 for AY 2021-22 should be confirmed. 26. We have carefully considered the arguments advanced by the learned counsel, the paper book filed, the judicial precedents relied upon by the assessee, as well as the brief synopsis submitted by the AR. It is noticed that the total withdrawals of the family members over the past 10 years amount to Rs. 86,34,003, which are more than sufficient to explain the jewellery bills of Rs. 34,110 and Rs. 4,02,605. Further, it is noted that the husband of the assessee made a withdrawal of Rs. 10,55,000 during the financial year 2019-20, as per the paper book at page nos. 28-29, which is sufficient to explain the jewellery expenses, particularly when considered in the light of the family's status, past returns, and customary practices. Moreover, the jewellery bills found during the course of search are not substantial, and the total value of jewellery held by the family members was below the threshold prescribed in CBDT Instruction No. 1916. 26.1 At this stage, ....
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.... That the said photocopy of the agreement to sell dated 08.09.2020, relied upon by the department, is alleged to be between the appellant as the seller and Ms. Latiza w/o Abhinav Singla as the buyer, for a consideration of Rs. 2,43,00,000/-. c) It is further submitted that as per the contents of the said unverified agreement to sell, a sum of Rs. 63,00,000/- is stated to have received as advance-out of which Rs. 20,00,000/- was purportedly received by cheque (No cheque number mentioned) and Rs. 43,00,000/- in cash. The agreement further mentions that an additional Rs. 40,00,000/- was to be received by 10th November 2020, another Rs. 40,00,000/- by 10th December 2020, and the remaining balance was to be paid at the time of registration of the sale deed. d) Further, the department has also placed reliance on a slip dated 27.10.2020 allegedly retrieved from the mobile phone of Shri Sukhwinder Singh, which was purportedly sent by one Mr. Abhinav to Sukhwinder Singh. An attempt has been made to link this slip with the aforesaid unverified photocopy of the agreement to sell. (Please refer page no 6 and 7 of the Assessment Order). e) The slip relied upon the dep....
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....AO erred in comparing the agreement with only sale deed of Rs. 94 Lakhs. j) Your Honour will appreciate that the Ld. CIT(A), while confirming the addition, has failed to take into account the fact that there exists a separate and independent agreement for the sale of poultry birds and feed grains, executed on 12th January 2021, for a consideration of Rs. 18,80,000/-. This agreement predates the date of search and is a contemporaneous document available on record. Accordingly, by no stretch of imagination can it be alleged that the explanation offered by the assessee is an afterthought or a concocted story. The said agreement is duly supported by payment received through banking channels, which further reinforces the genuineness of the transaction and establishes the factual correctness of the assessee's explanation k) At para 25, page 28 of the assessment order, the Ld. AO has rejected the assessee's explanation by observing that the bird flu outbreak occurred between December 2020 and January 2021, whereas the alleged agreement to sell is dated 8th September 2020, and hence, the explanation is an after thought. The said assertion of the Ld. Assessing Officer is i....
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....ction or agreement cannot be subjected to different treatments by the department. Accordingly, in the absence of any adverse material or action against the buyer, the sale consideration as stated in the registered sale deed should be accepted as the correct and final transaction value, and not the unverified figure mentioned in the alleged agreement to sell. n) It was further submitted that not even the statement of any witness to the alleged agreement was recorded to confirm the transaction. In the absence of examination or verification of the witnesses named in the purported agreement, the document remains uncorroborated and lacks evidentiary value. This further weakens the foundation of the addition made solely on the basis of an unverified photocopy of the alleged agreement to sell. o) Additionally, no inquiry whatsoever was conducted by the Assessing Officer from the alleged buyer during the assessment proceedings. The failure to examine the buyer-who is an essential party to the purported agreement-renders the entire addition unsupported by any independent verification or corroborative evidence, thereby making it arbitrary and unsustainable in law. ....
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....rt in the case of Principal CIT vs. Umesh Ishrani [reported in 108 taxmann.com 437], wherein it was held that no addition can be made solely on the basis of a loose paper without conducting any inquiry or verification from the alleged seller of the property. The Hon'ble Court emphasized that in the absence of independent inquiry, from the seller/shops of the developers and solely relying upon digital record cannot be the basis for making an addition. (Page No 5-6 of Case Law Paper book) u) This view has been consistently followed by the Hon'ble ITAT, Mumbai in the case of [2017] 88 taxmann.com 620 (Mumbai - Trib.) IN THE ITAT MUMBAI BENCH 'A' Assistant Commissioner of Income-tax, Central Circle-21, Mumbai v. layer Exports (P.) Ltd. wherein it was held that no addition could be sustained merely on the basis of uncorroborated notings and scriblings on loose sheets of paper without making proper inquiry. (Page No 7-56 of Case Law Paper book) v) Furthermore, reliance is also placed on the judgment of the Hon'ble ITAT, Surat Bench in the case of CIT vs. Shankar Nebhumal Uttamchandani [161 taxmann.com 536] (Relevant para 7), where it was categorically held that ....
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....summary of arguments raised and our final findings thereon are as under: 29.1 Basis of Addition:- It is observed that the addition has been made solely on the basis of (i) a photocopy of a scanned agreement to sell dated 08.09.2020, allegedly retrieved from WhatsApp chats, and (ii) a slip dated 27.10.2020 retrieved from the mobile phone of the assessee's husband. Neither of these documents bears independent corroboration, nor has the genuineness of the same been verified from the alleged buyer, seller or witnesses. Reliance on such unverified documents, without inquiry, is legally untenable. 29.2 Nature of the Agreement The alleged agreement to sell is only a photocopy and is uncorroborated by the signatures of the partners of Krishna Poultries. It also contains vague details regarding the mode of payment. Importantly, the purported cheque numbers are missing, and the alleged cash component is unsupported by any contemporaneous evidence. It is a settled legal position, as held in various judicial precedents, that a mere photocopy or loose sheet, without independent corroboration, cannot constitute admissible evidence for the purpose of making an addition. Furthermore, t....