TaxTMI 
TaxTMI 
2025 (10) TMI 1109
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.... "1. That the order passed by CIT-(A) -23, Delhi (hereinafter referred to as "CIT-(A)") is contrary to facts and bad in law. 2. That on the facts and circumstances of tile case and in law the CIT-(A) was not justified in confirming the addition of Rs. 51,00,000/- as unaccounted income, merely on the basis of jotting made in the diary allegedly belonging to Smt. Sudesh Dua without any corroborative material or evidence. 2.1 That without prejudice to the above, even if it is assumed that amount of Rs. 51,00,000/- was received by the appellant, the same can at highest be treated as loan and cannot be considered as unaccounted income in the absence of any corroborative material. 3. That on the facts and circumstances of the case the AO has erred in invoking section 69A of the - Income Tax Act, 1961 (hereinafter referred to as "The Act") and the CIT-(A) has erred in confirming the addition of Rs. 51,00,000/- u/s 69A of the Act. 3.1 That on the facts and circumstances of the case the Ld. CIT (A) was not justified in confirming the addition of Rs. 51,00,000/- u/s 69A of the Act by not applying the ratio decidendi of DCIT v Yograj Arora ITA No. 24....
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....ing with the payment made to the assessee. Therefore, the abovesaid seized documents treated as genuine and the cash payment paid to the assessee during two assessment years i.e. 2018-19 and 2019-20 were assessed to tax of Rs. 150 lakhs each under section 69A of the Act. 6. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-23, New Delhi and filed detailed submissions and grounds of appeal :- "1. The relevant facts briefly stated are as under: - (i) A search action u/s 132 of the Income Tax Act was conducted on the appellant on 29.11.2018. Based upon the search action, assessment orders were passed u/s 153A of the Income-tax Act for A.Y. 2018-19 and u/s 143(3) for A.Y. 2019-20. (ii) That for A.Y. 2018-19 the Return of Income was filed on 31.08.2018 declaring total income of Rs. 39,98,590/- which was processed u/s 143(1) of the Income Tax Act on 09.02.2019 at returned income. Copy of computation is enclosed at Page No. 01 to 01 of the P/B. (iii) A notice u/s 153A of the Act was issued on 15.01.2020 for AY 2018- 19 requiring the assessee to furnish return of income within 15 days of the service of notice. In resp....
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....d to as AO) is contrary to facts and bad in law. 2. That on the facts and circumstances of the case and in law the A. O. was not justified in making an addition of Rs. 1,50,00,000/-, as unaccounted income, merely on the basis of jottings made in the diary (Anx-A-10) allegedly belonging to Smt. Sudesh Dua without any corroborative material or evidence. 2.1 That without prejudice to the above, even if it is assumed that amount of Rs. 1,50,00,000/- was received by the appellant, the same can at highest be treated as loan and cannot be considered as unaccounted income in the absence of any corroborative material. 3. That the appellant craves leave to add, amend, alter any grounds of appeal at the time of hearing or earlier. GROUND NO. 1 & 3 3. Ground no. 1 and 3 are general in nature and do not require any specific submissions. GROUND NO. 2 4. Under this ground of appeal additions made based on some rough jottings in the diary of Smt Sudesh Dua has been challenged. The addition discussed under this ground is tabulated as under: Addition AY 2018-19 AY 2019-20 Alleged cash payment made to Director Ved Prakash Chan....
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..../B Vol. I) was filed by the company which is reproduced as under: "84. With regard to the above it is submitted that the jottings written by Mrs. Sudesh Dua were for charitable purposes to feed poor persons and religious sages stationed in Haridwar during auspicious occasions, as Haridwar is one of the prominent destinations of religious gatherings and celebrations. These instructions were given to Sh. Ved Prakash Chanana to make necessary arrangements and to procure Pure ghee to make Pure ghee halwa. 85. It is further submitted that the rough jottings made in a diary cannot be considered as evidence u/s 34 of the Indian Evidence Act. Such documents are to be treated as "dumb documents". It is pertinent to mention that a charge of tax can be levied based on such a document only if such document is a speaking one in itself or becomes a speaking one if read in conjunction to some other corroborative evidence found during the course of search or post search investigation. 86. To elucidate, if it is to be assumed on the basis of jottings on page 12 of Anx-10 that payment in cash aggregating Rs. 150 lacs was made to Sh. Ved Chanana, then there is a need for so....
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....essee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed pursuant to search and seizure action. From the search and seizure perspective, such non speaking seized documents are referred to as "Dumb Documents". 88. Having said so, the predominant judicial view is that no arbitrary addition to the income can be made by the Assessing Officer based on the dumb documents, loose papers containing scribbling, rough/vague notings in the absence of any corroborative material, evidence on record and finding that such dumb documents had materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the assessee. 89. In ITO v. W.D. Estate (P.) Ltd. [1993] 46 TTJ (Bom.) 143, the Assessing Officer made addition on the basis of a file, a table diary belonging to a disgruntled employee found during search at his premises. This showed sales and sale amounts allegedly received as "on" money by the assessee. However, there was absolutely no evidence to show that the assessee in fact received "on" money payments. The assessee contend....
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.... Patil V ACIT [2018] 96 taxmann.com 377 (Panaji - Trib.) wherein the judgement of the apex court was relied upon. 93. Therefore the well settled legal position is that a non speaking document referred to as a "Dumb Document" without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed u/s 153A and 153C of the Act. 94. In view of the above discussion the contentions of the assessee are summarised as under (A) An explanation on merits was submitted during the post search proceedings describing the contents of the seized material. (B) The jottings made on the seized pages are in the nature of dumb documents and in the absence of any further evidence or corroborating material found during search or post search investigation, no addition is warranted keeping in view the settled legal position." 8. The A.O. did not find the aforesaid reply of the company as being acceptable and made the additions on substantive....
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.... Dua in the books of Sh. Ved Chanana is being attached at Page No. 168 to 169 of P/B Vol 1. Further the Statement of affairs of Sh. Bhushan Dua and Sh. Ved Chanana as on 31.03.2018 and 31.03.2019 are being attached at Page No. 170 to 172 of P/B Vol 1 wherein the respective loans are being reflected. 12. The AO in the order has alleged that certain entries are reconciled with corresponding credit entries in bank account of Sh. Ved Prakash Chanana which corroborates that the other entries made in cash are also true and actually has been made. In this regard it is the prime submission of appellant that if the amounts denoted by "Chee" are cheque payments than all the transactions must be matched with the bank statement of Shri Ved Chanana. However, the same are not matching and therefore the allegation of AO does not have any basis of existence. In this regard copy of Dank Statement of Sh. Ved Prakash Chanana is being attached at Page No. 173 of P/B Vol 1. Matching of one amount out of many rough jottings on Page 12 of Annexure A10 is nothing but a coincidence and the same should not be considered as a base for making addition in the assessment order. As explained above only ....
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....that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed pursuant to search and seizure action. From the search and seizure perspective, such non speaking seized documents are referred to as "Dumb Documents". 15. Having said so, the predominant judicial view is that no arbitrary addition to the income can be made by the Assessing Officer based on the dumb documents, loose papers containing scribbling, rough/vague noting in the absence of any corroborative material, evidence on record and finding that such dumb documents had materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the assessee. 16. In ITO v. W.D. Estate (P.) Ltd. [1993] 46 TTJ (Bom.) 143, the Assessing Officer made addition on the basis of a file, a table diary belonging to a disgruntled employee found during search at his premises. This showed sales and sale amounts allegedly received as "on" money by the assessee. However, there was absolutely no evidence....
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....o placed on the judgment of the Panaji Bench of ITAT in case of Abhay Kumar Bharamgouda Patil V ACIT [2018] 96 taxmann.com 377 (Panaji - Trib.) wherein the judgement of the apex court was relied upon. 20. Therefore the well settled legal position is that a non-speaking document referred to as a "Dumb Document" without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed u/s 153A and 153C of the Act. 21. It is submitted that the AO erred in invoking a wrong section and confirmed the addition under a wrong section. The AO confirmed the addition under section 69A of the IT Act. Section 69A of the act is a deeming provision which titles as "Unexplained money". For the sake of convenience section 69A of the act is reproduced below :- "Unexplained money, etc. [69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewelle....
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....rverse, erroneous and not tenable on facts and in law. 23. It is submitted that the assessee was in no possession or ownership of the said cash that was mentioned in the seized material. /4s contended above the seized material is mere dumb document and does not convey any meaning. 24. Reliance is placed on the case of CIT v. Hersh Washesher Chadha ITA 676/2023 copy of the order is enclosed herewith at page 182 to 193 in which Hon'ble High Court of Delhi has held that in order to confirm an addition under section 69A of the Act, books of accounts are incumbent. It would not be possible to invoke this provision if books of accounts are not there. Relevant portion of the order is reproduced herewith : - "7. Admittedly, in the present case, the respondent/assessee is non-resident Indian and his source of income in India being from interest on bank accounts and interest on income tax refund, he is not obliged to maintain any books of account in India. It appears to us prima facie that the expression "if any" specifically used in section 69A of the Act amplies that where books of account are not maintained, it would not be possible to invoke this provision.....
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....ced on record and the wife of the assessee, Smt. Neelam Chanana is the Legal heir, who has signed Form 36 and Power of Attorney. Ld. AR of the assessee brought to our notice detailed submissions and the facts of the case and he pressed basically ground nos.2 to 4 raised by the assessee in grounds of appeal. In this regard, he submitted that ld. CIT (A) sustained the addition of Rs. 51 lakhs out of Rs. 150 lakhs made by the AO and ld. CIT (A) has observed that the issue involved is mirror image of the addition confirmed in the case of SCIPL and hence held that the amount of Rs. 150 lakhs is cash amount which is not reflected in the books of SCIPL, therefore, the assessee received in cash and was the owner of the amount. Hence, ld. CIT (A) confirmed the addition u/s 69A of the Act. In this regard, ld. AR submitted that the addition for both the year(s) under consideration is confirmed u/s 69A of the Act. He brought to our notice section 69A of the Act. For the sake of convenience Section 69A of the Act is reproduced below :- [Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable artic....
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.... of money etc. which is not recorded in the books of account has to be shown, mere presumption that the said cash was available to the assessee without bringing any material fact on record in support cannot be said to satisfy the conditions for applying provisions of section 69A. Thus, emphasis was to prove that the money, etc is in "ownership" of the assessee and is not recorded in the books of account. Since no "ownership" of money was found from the assessee the Hon'ble ITAT upheld the reasoning by CIT(A) and dismissed the appeal of the revenue. 13. Thus, it is submitted that in the instant case no ownership of money was found from the premises of the assessee during search and seizure operation, furthermore, the AO did not bring any material fact on record to satisfy the applying of Section 69A. 14. Moreover, ld. AR submitted that according to Black's Law Dictionary, the word "ownership" has been defined as "the complete dominion, title, or proprietary right in a thing or claim", meaning it represents the legal right to own, possess and use something, including to convey it too other. Since, there was no cash found and the ld. AO made a mere presumption that the cash was ....
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....d on above contentions by the assessee the appeal of the assessee may be allowed. 18. On the other hand, ld. DR of the Revenue submitted that the diary is evidence of possession of cash and ownership in the present case, therefore, the assessee is the owner of the cash received by him. He submitted that corresponding bank transactions were matched with the books of the assessee, therefore, he relied on the findings of the lower authorities. With regard to Department's appeal, he brought to our notice page 14 of the ld. CIT (A)'s order wherein the cheque received by the assessee on 03.08.2017 was proved to be genuine, therefore, the information found during search is genuine. Further he brought to our notice para 17 of the appellate order and he objected to the treatment of one 'C' as lakhs instead of crores. He submitted that 'C' denotes crores and not lakhs. He objected to the observation of the ld. CIT (A) that the information found in the diary was interpreted as lakhs, the same should be treated for one which was written in the diary. He subtitled that one 'C' denotes for crores, therefore, he relied on the findings of the AO in this regard. 19. Considered the rival submi....
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....se, we have no hesitation in holding that the Ld. CIT(A) was perfectly justified in deleting the impugned addition. In no way his order can be branded as perverse, erroneous and not tenable on facts and in law." 20. Respectfully following the above decision, we are of the view that no cash was found at the possession of the assessee and the ownership of the same was presumed to be the assessee by the lower authorities. Therefore, without proving the possession and ownership of the same, the addition u/s 69A of the Act cannot be invoked as per the facts available on record. 21. Further we observe that the diary was found with the employee of the company and at the premises of the company. The payments were received by the assessee from the company, in fact one cheque payment was matching with the diary found during the search, other payments were not matching neither recorded in the books of the assessee nor in the books of the company. Therefore, from the notings of the diary, all these transactions are relating to the company. If at all, any addition has to be proposed, it should be in the hands of the company not in the hands of the assessee. By relying on the findings of t....