TaxTMI 
TaxTMI 
2025 (2) TMI 1304
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.... a handwritten document was impounded from i-phone of assessee which is scanned and re-produced by AO on Page 4 of assessment- order as under: The survey authorities interrogated assessee qua this document in the statements recorded u/s 131 during survey. Subsequently, from this very document, the AO inferred that the assessee purchased 30% share in 11 acres of land from "M/s Pramada Estates India Private Limited" for Rs. 16,58,78,160/- and paid Rs. 14,20,00,000/- upto 11.11.2016 and balance Rs. 2,38,78,160/- remained payable. Accordingly, the AO selected case of assessee for re-opening u/s 147 and submitted a proposal dated 17.01.2020 to Addl. CIT, Bhopal and obtained sanction. Thereafter, the AO issued notice dated 19.03.2020 u/s 148 calling the assessee to re-file return. In response, the assessee re-filed return on 27.06.2020 repeating the original total income of Rs. 1,08,34,890/-. The assessee also filed objection dated 21.09.2021 to AO against re-opening of case. Vide letter dated 22.09.2021, the AO rejected assessee's objection and continued with the proceeding of re-opened assessment. During proceeding of re-opened assessment, the AO asked the assessee to explain source....
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....ortunity of cross examination of Shri Om Prakash Kriplanai and Pritpal Singh Bindra to whom the alleged on-money was paid. 5. On the facts and in the circumstances of the case. the Id. CIT(A) erred in sustaining the impugned addition relying upon the statement recorded during survey u/s 133A of the Act particularly when the statement recorded during survey has no evidentiary value and the admission made during statement cannot be allowed to be the basis of addition. 6. On the facts and in the circumstances of the case, the Id. CIT(A) erred in sustaining the impugned addition based on a 'dumb' document impounded from the i-phone of the appellant, which has no evidentiary value in the eyes of law also having no mention of any details of on-money for purchase of land and the appellant was not the author of the alleged document which was sent by a third party to his i-phone, without following the guide lines regarding impounding the digital evidence, in absence of which it is impossible to relate the document with the period, to which this document relates and doubts on its integrity also. 7. On the facts and in the circumstances of the case, the Id. ....
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....e total cost of Rs. 16,58,78,160/- and thus balance of Rs. 2,38,78,160/- was payable upto 11.11.2016. 4. The nature and content of the impounded hand written document reveals that there is concealment of the income and tax evasion on the part of the assessee. Further during statement on oath u/s 131 at the time of survey proceedings, assessee could not explain satisfactorily the nature and content of the hand written document." Referring to these reasons, Ld. AR demonstrated that the case of assessee was re-opened by AO u/s 147 for the purpose of assessing the income reflected by document impounded during survey u/s 133A conducted on 28.11.2016. 7. Then, Ld. AR referred CBDT's Instruction No. 5/2017 dated 07.07.2017 reading as under: Instruction No. 5/2017 Government of India Ministry of Finance Department of Revenue (CBOT) North-Block, New Delhi the 7th of July, 2017 To All Pr. Chief-Commissioners of Income-tax/Chief-Commissioners Of Income-tax All Pr. Directors-General of Income-tax/Directors-General of Income-tax Sir/Madam Subject: Compulsory manual selection of cases for scrutiny during the Financial Year 2017-20....
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....order to cover up his latch, the AO resorted to section 147 by issuing notice dated 19.03.2020 u/s 148 after lapse of a period of about 1 year and 6 months. Therefore, Ld. AR contended with full force, the AO is grossly wrong in assuming jurisdiction u/s 147. To support his stand, Ld. AR relied upon a decision ITAT, Ahmedabad in Sonal Arpit Doshi Vs. ITO, ITA No. 366/Ahd/2015, order dated 21.10.2015, holding as under: "4. From the above, it is evident that the Assessing Officer has simply reopened the assessment for the purpose of verification of the certain transactions. In our opinion, when the Revenue wanted to verify the correctness of certain transactions, the proper course is to issue the notice u/s 143(2) within time. If the Revenue failed to issue notice u/s 143(2), it cannot resort to section 148 for the purpose of verification of certain transactions. Notice u/s 148 can be issued only when the Assessing officer records his satisfaction with regard to escapement of income. In the reasons recorded, there is no mention of the escapement of income; therefore, in our opinion, reopening of assessment is not valid and the same is quashed and consequentially, the assessm....
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....ding on the department from an administrative standpoint, failure to adhere to these guidelines does not render the reassessment proceedings under Section 147 invalid. (i) The CBDT guidelines are intended to guide the internal functioning of the Department but cannot override or limit the statutory remedies available under the Act. (ii) Statutory powers cannot be curtailed by administrative instructions. 8.01.4 AO's Duty to Tax Escaped Income Prevails It is submitted that in the present case, the AO acted within the framework of law to protect the interest of revenue. The following points are emphasized: (i) The material collected during the survey under Section 133A clearly pointed to unaccounted income, which had escaped assessment. (ii) The AO, therefore, exercised his statutory powers under Section 147 to reopen the assessment and bring the escaped income to tax. (iii) The failure, if any, to initiate compulsory scrutiny does not take away the AO's power or duty to act under Section 147, which is a remedial provision specifically provided for cases where income has escaped assessment. In view of the....
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....sessee filed regular return of AY 2017-18 on 31.10.2017 u/s 139(1), (iii) by virtue of proviso to section 143(2), no notice could be issued to assessee after 30.09.2018 for scrutiny assessment, (iv) the AO did not issue any scrutiny notice till 30.09.2018, accordingly the AO accepted assessee's returned income in the original assessment framed; (v) subsequently, the AO took up case of assessee for re- assessment u/s 147 vide notice dated 19.03.2020 u/s 148 by recording reason of escaped income having been found during survey. It is submission of assessee, in these facts, that the CBDT Instruction No. 5/1027 dated 07.07.2017 (supra) mandated the AO to select assessee's case under compulsory scrutiny but the AO failed to comply with CBDT's Instruction within the stipulated time [i.e. uptill 30.09.2018 as per section 143(2)] and that is why the AO set up a new inning of section 147 which is invalid. On a careful consideration, we find a strong merit in assessee's claim which is supported by following authoritative pronouncements: (i) Para 1(ii) of CBDT Instruction No. 5/1027 dated 07.07.2017 (supra) clearly prescribes that the assessment of survey case shall be compulsorily m....
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.... formation of such belief. Since in the instant case, the issues/items for which the Assessing Officer has reopened the assessment had already been disclosed by the assessee in the return of income filed by him u/s 139(1) of the Act. The Assessing Officer having not carried out the scrutiny assessment within the prescribed statutory limit, cannot be given another innings for no fault of the assessee and therefore in the facts and circumstances of the case, we are of the considered opinion that reason to believe' which is the jurisdictional precondition to reopen the assessment as required by the law has not been met in the reasons recorded in the instant case and therefore the action of the Assessing Officer to reopen the assessment is null in the eyes of law and hence we are inclined to quash the initiation of reassessment proceedings being ab-initio void." (v) In TANMAC India vs. Deputy Commissioner of Income-tax, Circle I, Pondicherry [2017] 78 taxmann.com 155 (Madras) [19-12-2016], it was held thus: "8. A perusal of the Reasons would indicate that the assessing officer proceeds solely on the basis of the return of income and the enclosures thereto, being t....
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....sessment, unless it is supported by tangible material. The materials collected and the statement obtained under Section 133A of the Act would not automatically bind upon the assessee. In the assessee's case as per the statement the director of the company the payments appearing in laptop were confronted to her (Director) and as per her statement, the amount appearing in the laptop are not recorded in the books of accounts. The survey team of the Income Tax department did not find any corroborative evidence or any tangible material that cash appearing in the laptop was belongs 10 the assessee company, and assessee- company had actually received the cash, in fact, during the assessment proceedings, the director has denied, having received such cash. Therefore, reasons recorded by the assessing officer fails. Therefore, in the light of the aforesaid judicial precedents, we note that to initiate reopening of the assessment, the assessing officer must have 'reason to believe that income chargeable to tax has escaped assessment. Such reason to believe must be based on some material coming to the possession of the Assessing Officer which may trigger reason to suspect. It must be k....
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....ng authority in the hands of M/s Pramada in the very same AY 2017-18 based on the very same document impounded from assessee's cell phone (re-produced earlier) but in first appeal of M/s Pramada itself, the addition was deleted by CIT(A). Thereafter, the revenue went in next appeal before ITAT, Indore whereupon the Co-ordinate Bench approved the order passed by CIT(A). The relevant paras of order of ITAT are re-produced below for an immediate reference: Order in IT(SS)A No. 10/Ind/2024 "13. By means of above grounds, the revenue has challenged the CIT(A)'s action in deleting the addition of Rs. 10,57,00,000/- made by AO. 14. The AO has made this addition in Para 7.1 of assessment-order on the basis of a document impounded from i-phone of Shri Sanjeev Agarwal during impugned survey on 28.11.2016 revealing a calculation of 10.80 acres of land alongwith a noting "Advance adjusted from JV Partners - Rs. 10,57,00,000/-". This document is re-produced here: During assessment-proceeding, when the AO show-caused assessee to explain the transactions noted in document, the assessee filed a reply which is also reproduced by AO in assessment-order. However, the AO ....
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.... preceding para) The ld AO during assessment proceedings has alleged that the said loose paper contained unexplained transactions qua JV agreement on premise of jotting "Advance adjusted from JV partners" made in the said document. Per contra the appellant has contended that the jotting does not mention any detail of transaction being carried out by appellant, name of the appellant is completely missing, date of transaction is missing, details of beneficiaries, payers/receiver of the consideration are missing. Further, the JV agreement has been executed for 8.71 acres, however, the said document mentions jotting for 10.80 acres. Further, the onus u/s 292C/132(4A) of the Act was applicable qua Shri Sanjeev Agrawal and not the appellant. Shri Sanjeev Agrawal in his statement recorded during survey proceedings stated that he once decided to sell the parcel of land of the appellant admeasuring 10.8 acres @ 1400 sq.ft after getting it developed through JV and on sale of entire land he would received his share of 30% and transfer balance proceeds to Shri Bindra and Shri Kriplani other directors of appellant company. However, due to delay in permission from planning authorities a....
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....acts qua impounded document. It is also worth mentioning that statement of Shri Sanjeev Agrawal was also recorded by the ld AO and he was specifically asked about payment of Rs. 10.57 crores. However, he showed his inability to explain anything about the adjustment of Rs. 10.57 crores. These facts, show that the conclusion drawn with regard to the said documents and abbreviations mentioned therein, is made on guess work and presumption basis. The documents do not even mention the name of the appellant. There is no mention of actual receipt of amount by the appellant. Dates of transactions are completely missing and the only reason for making addition in AY 2017-18 is that the JV agreement was executed in AY 2017-18. Also, the JV was entered into for 8.71 acre, however, the ibid document mentions land area of 10.80 acres. Therefore, no meaningful conclusion can be drawn from this document. The Ld. AO has treated the jottings made on the impounded document as true and determined the quantum of cash received by appellant without establishing a direct nexus with the alleged amounts with supportive independent evidence. Therefore, in absence of any cogent evidence having direct....
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....pers under consideration a "deaf & dumb document" qua the appellant company. The onus was solely on the Ld. AO to fill such vital gaps by bringing positive evidence on record and prove the allegation about alleged "undisclosed income" of the assessee, which he utterly failed to do. The said document has not been corroborated with the independent evidences seized qua search proceedings and such document cannot be termed as books of account and thus, cannot be used to assess total income of the appellant. These propositions are also well supported by the following judicial pronouncements: CBI 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 wou....
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.... his future purpose. Admittedly the said diaries were not being maintained on day-to-day basis in the course of business. There is no mention of the dates on which the alleged payments were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a 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. Bisan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back 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 cla....
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....uring search was merely a rough noting and not any evidence found that actual expenditures were not recorded in books of account, additions not justified. [In the instant case, similarly no other corroborative evidence was found in search to prove that details/figures mentioned in notings on page 117 to 119 of A/1 represent 'on money' payments by the 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 have 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) Jagdamba Rice Mills Vs. ACIT (2000) 67 TTJ (Chd) 838 Held that ....
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....of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, 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). In view of the above discussion, the Ld. AO was not justified in making additions simply on guess work and solely on the basis of a dumb document. (d) The AO erred in making additions on suspicion, surmise and conjecture basis and without having any incriminating material on record found from the residential/business premises of the appellant relating to the year in which additions have been made:- The AO has grossly erred in making addition simply on the basis of guess work, assumption and presumption, as discussed above. It is well settled that no addition can be made as a leap in the dark. The AO is not entitled to make a guess without evidence. I have no hesitation to conclude that ld A.O failed to discharge his onus of proving his allegations with concrete evidence. Asking the assessee to prove that he has not received any such alleged unaccounted money is more like asking him to prove the 'negative' which is an impossibil....
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....rd by the ld AO or has been unearthed during the course of the search. Fourthly, the document does not portray all the facts of the transaction viz. name of the appellant, date of transaction, mode of payment, amount paid by whom (either by Shri Sanjeev Agrawal or by JV developer), details of beneficiary etc. Therefore, the document under consideration is deaf and dumb. Fifthly, no addition was made in the hands of JV developer (M/s Shree Signature Developer). In view of the above discussion, the Ld. AO has erred in making addition on a sheer presumption. Thus, the addition made by the Ld. AO amounting to Rs. 10,57,00,000/- in AY 2017-18 is hereby deleted. Therefore, appeal on this ground is partly allowed." [Emphasis by underline ours] 16. Before us, Ld. DR for revenue/appellant submitted strongly supported the order of AO. He submitted as follows: (i) That, in reply to Q.No. 8 of statements recorded during survey on 28.11.2016, Shri Sanjeev Agarwal clearly admitted that he had 30% shareholding in assessee-company. Therefore, Shri Sanjeev Agarwal is closely related to assessee-company. Further, even if the assessee-company had a separate corporate existence, i....
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....52; रहा था कि Pramada Estate की बावड़िया कलां की भूमि को 1400 रु. Sq.ft. से JV द्वारा Develop करने के पश्चात मेरे द्वारा बेची जाए जिसका %30 हिस्सा मैं रखूंगा बाकीका श्री विंद्रा एवं श्री कृपलानी को उनके हिस्से के अनुसार पैसे दे दूँगा। परंतु शाय&#....
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....25;ो अस्वीकार किया गया था, कब आयोजित हुई थी और इसमें आपके plan को क्यों cancel किया गया था ? उत्तर -: मुझे ऐसा याद आता है कि उक्त बैठक माह जून-जुलाई में आयोजित हुई थी तथा इस बैठम में मेरे प्लान को नजूल तथा TNCP की permission में delay होने के कार....
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....search upon assessee. The CIT(A) has also made a clear finding that the impugned document was found from Shri Sanjeev Agarwal in his capacity as partner in M/s Agarwal Construction and not from the premise of assessee or during assessee's proceeding. Further, as can be seen from impounded document, it nowhere bears the name of assessee. When it is so, we agree with Ld. CIT(A) that the presumption u/s 292C is not available to AO for drawing any conclusion for or against assessee. Secondly, it becomes important to know as to what was the explanation given by Shri Sanjeev Agarwal when he was confronted by survey authorities during survey of Shri Sanjvee Agarwal/M/s Agarwal Construction itself because that explanation would be an instant explanation and credible in absence of any retraction or rebuttal. For this purpose, the Q.No. 9 and 10 as recorded by authorities becomes relevant. We have already re-produced those questions and replies in earlier para of this order. On perusal, one can find that Shri Sanjeev Agarwal instantly replied that the noting in impounded document was some calculation for making a decision but it could not materialise due to technical weakness in land and del....
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....al Order-Sheet filed in M/s Pramada's case also showed that the assessee (Shri Sanjeev Agarwal) personally attended the office of AO during assessment-proceeding of M/s Pramada and in reply to question put by AO, the assessee (Shri Sanjeev Agarwal) re- confirmed his earlier explanation made during survey. Accordingly, the Co-ordinate Bench concluded that the jotting in document never materialised. Ld. AR submitted that the AO has wrongly mentioned/ interpretated that when the assessee was asked during survey to explain the nature and contents of document in statements u/s 131 vide Q.No. 9, the assessee failed to give satisfactory explanation about the document. Further, the CIT(A) is also wrong in rejecting assessee's valid explanation and sustaining the addition made by AO. Therefore, Ld. AR requested, the addition made by AO and sustained by CIT(A) deserves to be deleted in the light of decision of Co-ordinate Bench in M/s Pramada's case. (ii) Secondly, it is submitted that no opportunity of cross-examination was allowed to assessee despite specific request by assessee. Therefore, as per settled judicial view, the addition made by AO without providing opportunity of cros....
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....r the Income Tax Act. Therefore, the plea of the appellant is not tenable in view of the Hon'ble Supreme Court's ruling. 8.03 THE LOOSE PAPER IMPOUNDED IS A DUMB DOCUMENT & THE TRANSACTIONS MENTIONED ON THE SAME NEVER MATERIALISED 8.03.1 The appellant has contended that the document should be termed as a "dumb document" containing rough notings and that the transactions mentioned therein never materialized. In this regard, we wish to challenge the said argument in light of the submissions made in the ensuing paras. 8.03.2 DOCUMENT CANNOT BE TREATED AS DUMB DOCUMENT It is submitted that the impugned document cannot be regarded as a "dumb document" for the following reasons: (i) The impounded document is dated, which gives it a time reference and links it to a specific period. The presence of a date on the document suggests its relevance to the transactions in question and establishes its authenticity. (ii) The document clearly mentions the name of the appellant. This is significant as it directly ties the document to the appellant and his involvement in the transactions recorded therein. The presence of the appellant'....
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....s "evidence" in terms of section 65B(4) of Indian Evidence Act / Section 79A of Information Technology Act, is not a valid claim. Even otherwise, in Chuharmal Vs. CIT 38 Taxman 190 (SC) it was held that the rigour of rules of Evidence contained in Evidence Act are not applicable to income-tax proceedings. 19. We have considered rival submissions of both sides and perused the case-record including the material to which our attention has been drawn. Admittedly, the impugned addition has been made on the basis of document impounded from assessee's mobile during survey. From this document, it is inferred by authorities that the assessee made payment to M/s Pramada. On the basis of very same document, addition was also made in the hands of counter party M/s Pramada. The said addition in the hands of M/s Pramada was, however, deleted by CIT(A) and the order of CIT(A) was upheld by ITAT as discussed above. In coming to such a conclusion, it was accepted by ITAT that when the document was confronted by survey authorities to the assessee (Shri Sanjeev Agarwal), there was an instant explanation in reply to Q.No. 9 & 10 that the impounded document contained some calculation for making a de....