TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1607
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....ct. Precisely stated the facts relevant to this appeal are such that the assessee is a company. A search u/s 132 of the act was conducted on various premises of Sagar Group on 21.10.2011 / 22.10.2011 where in certain documents relating to the assessee were found. No search was, however, conducted on the assessee and therefore the assessee is not a "searched person", although the assessee falls within the framework of "other person" for the provisions of the act. Accordingly, treating the assessee as "other person", the Ld. AO issued notice u/s 153C dated 11.09.2013 for making assessment. Since the assessee-company was incorporated on 12.11.2010 and it had only purchased lands but not commenced actual business activities during the year, the assessee filed Income-tax Return ["ITR"] declaring a total income of Rs. Nil. The Ld. AO, however, completed assessment u/s 153C read with section 143(3) after making a total addition of Rs. 2,17,98,000/- as per details given below: On-money payment against purchase of land 64,45,000 On-money payment against purchase of land 64,92,000 On-money payment against purchase of land 39,56,000 On-money payment against purchase of la....
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....that the assessee has purchased lands from various sellers and the department has recorded statements of those sellers, wherein it was revealed that the assessee has paid on-moneys to the sellers in cash. Ld. DR submitted that the payments of on-money are neither mentioned in the registered-deeds nor recorded in the books of account of assessee. Ld. DR contended that in such a situation where the payment of on-money is clearly confirmed by sellers, the Ld. AO had a sound basis to make additions. Therefore, the additions must be upheld. 6. Per contra, the Ld. AR appearing on behalf of assessee, critically analysed the assessment-order passed by Ld. AO. Ld. AR referred to Para 3 of the assessment-order where the Ld. AO has cited a list of various documents seized during the course of search-proceeding. Ld. AR submitted that the seized documents are in the nature of registered sale deeds of the lands purchased by the assessee, site-maps, receipts of fee paid to Govt. offices, letters exchanged with Govt. offices, project-report, etc. Ld. AR submitted that none of these documents is an "incriminating document". Ld. AR submitted that even the Revenue realized this glaring shortcoming....
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....age No. 39 of his order "This is an admitted fact that statements of sellers were recorded by DDIT(Inv), Bhopal and not by the AO." Thus, viewed from both angles, the additions do not have legs to stand. Being so, we do not find any infirmity in the action of Ld. CIT(A). We, therefore, uphold the action of Ld. CIT(A). Accordingly, the appeal of revenue being ITA No. 111/Ind/2019 is dismissed. Revenue's IT(SS)A No. 112/Ind/2019: 8. This appeal relates to assessment-year 2012-13 whose assessment has been made u/s 143(3) of the act. Precisely stated the facts relevant to this appeal are such that the assessee-company has not commenced its business activities and hence filed Income-tax Return ["ITR"] declaring a total income of Rs. Nil. The Ld. AO, however, completed assessment u/s 143(3) after making a total addition of Rs. 3,55,71,190/- as per details given below: On-money payment against purchase of land 3,50,000 On-money payment against purchase of land 3,50,000 On-money payment against purchase of land 17,04,000 On-money payment against purchase of land 8,52,000 On-money payment against purchase of land 3,23,15,190 9. Aggrieved by order of as....
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....on was given to the assessee, (ii) there are contradictions in the replies given by the sellers in the statements, (iii) the sellers have not given corroborative evidences to support their replies in the statements, and (iv) Ld. AO did not make any independent enquiry and solely relied upon the oral-statements without any supportive evidence to prove that the assessee has really paid on-money. Based on these findings, the Ld. CIT(A) has deleted all additions. Ld. AR submitted that the order of Ld. CIT(A) is self-explanatory and does not require much deliberation. We have given mindful consideration to the shortcomings observed and conclusions noted by Ld. CIT(A) in his order and do not find any infirmity. Therefore, we agree that the Ld. CIT(A) has rightly deleted these additions made by Ld. AO. Accordingly, we dismiss Ground No. 1 to 4 of the Revenue. 11. Ground No. 5: In this Ground, the revenue has claimed that the Ld. CIT(A) has erred in deleting the addition of Rs. 3,23,15,190/- (wrongly mentioned as Rs. 3,55,71,190/- in the Ground) made by Ld. AO on account of on-money payment against purchase of land. 11.1 Facts qua this addition are such tha....
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....ny, he was also required to explain the transactions contained in these documents, reconcile the same with its books of accounts and also to show cause as to why the amount of Rs. 3,23,15,190/- paid in cash on account of on money not be added to its total income. He has also submitted reply similar to the assessee company. 20.5 In order to take a final view in the matter, it would be worthwhile to examine this issue considering the totality of facts narrated as under:- 1. The backside of this document i.e. page 129 records the details of various lands containing Khasra number, area, name of the seller etc. All these lands have been duly purchased by the assessee company. 2. The total area of lands mentioned in the document under reference i.e. back side of page 129 and page 129 is 47.65 acres. The total lands purchased by the assessee company is more than this and all of these lands have been purchased by the assessee company. 3. This loose paper has been found and seized from the registered office of the company and other group concerns. Therefore, in view of provisions of section 132(4A) "of the Income tax Act, 1961, 'it is presumed that th....
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.... that except the lands mentioned in the foregoing paragraphs, no other land was purchased by the assessee. Thus the allegation of the A.O. that the assessee had purchased agricultural land 47.65 acres by making cash payment of Rs. 32315190 is wholly false, incorrect and unlawful. The entire addition has been made on assumptions, presumptions, conjectures and surmises and, therefore, it is wholly unlawful and unjustified and, therefore, be deleted 3. The assessee refers a decision of ITAT Mumbai Bench in the case of Jaya S. Shetty Vs. ACIT reported in 64 ITJ (Mum) 551. In this case, the Appellate Tribunal held that the addition cannot be made on the basis of piece of paper found in the assessee's restaurant at the time of search by drawing presumptions u/s.132(4A), when assessee was out of station at the time of search. 4. The assessee also refers the following decisions which are relevant for the adjudication of the issue involved:- J.R.C. Bhandari Vs. A CIT - 79 ITJ 0001 (Jd): In this case, it is held as under:- It may hardly be deniable that the Indian Evidence Act or for that matter the statutory provisions of the Indian Evidence Act may n....
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....s being agitated in five appeals of assessee under consideration, on the basis of loose sheet, are uncalled for and legally not sustainable.- Hemraj Jagetia vs. Dy. CIT [ITA No. 543/Jul2000 dt. 10th May, 2002} followed; T.S Venkatesan vs. Asstt. CIT (2000) 69 ITJ (Cal) 66 : (2000) 74 lTD 298 (Cal), ITO vs. MA. Chidambaram (1997) 63 lTD 203 (Mad), Associated Stone Industries (Kota) Ltd. vs. Dy. CIT (1999) 64 TTJ (Jp) 708 : (1999) 68 lTD 312 (Jp) and Asstt. CIT vs. Shailesh S Shah (1997) 59 TTJ (Mum) 574: (1997) 63 lTD 153 (Mum) relied on; CBIvs. Vc. Shukla 3 SCC 410 and Kedarnath Jute Manufacturing Ltd. vs. CIT (1971) 82 ITR 363 (SC) applied. Further in para 17 of the order - 17. In T.S Ventakesan vs. Asstt. CIT (supra), Tribunal, Calcutta has held as under: "In CBI vs. V.C. 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 o(their trustworthiness, fix a liability upon a person. The Hon&#....
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....ndian Evidence Act may not be applicable strictly to the proceedings under the IT Act but the basic/broad principles of the law of evidence do apply to the said proceedings. It is a settled position of law that the slips or loose sheets do not fall within the purview of book'. An entry in a book of accounts, maintained in the regular course of business, is relevant to be considered in respect of the transactions reflected thereby, no doubt, but is not conclusively decisive thereof or of the matter contained therein or liability reflected thereby, and much less so an entry in a loose sheet. It is only some other evidence, whether in the form of statement of the author of the entry or the statement of some other person connected with the transactions contained in the entry, or in some other form, supportive of the entry, which lends weight/credence to the entry in the book, depending upon the trustworthiness of the said deponent or reliability of the said other evidence, and it is only then that the said entry assumes the nature of a reliable evidence on the basis of which some addition can be made/sustained An entry in a loose sheet is of a still feeble nature, and an entry in a....
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....found in possession and control of appellant. The appellant is neither the author nor the owner of the paper. The loose paper does not have any reflection that appellant has made the payments. Further, the appellant submitted that the presumption u/s 132(4A) is not applicable in the case of assessee because assessee was not a searched person. The appellant has also taken a plea that no land other than that mentioned in the assessment order has been purchased by the appellant company and the entire addition is based on assumption, presumptions, conjectures and surmises basis. In support appellant has placed reliance on following judgements:- * ACIT vs Jaya S Shetty 64 TTl 551 (Mumbai ITAT) * T S Ventakesan vs SCIT (2000) 69 TTl 66 (Calcutta ITAT) * JRC Bhandari vs ACIT 79 TTl 0001 (Jd) * CIT vs Tilakraj Anand 373 ITR 113 (Delhi HC) 4.3.2 After considering the entire factual matrix and evidence/material on record inter alia written submissions filed, I reach to conclusion that impugned addition was made on the basis of assumption and presumption which neither sustainable on facts nor in law. Appellant during appellate proceedings has stron....
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....he utterly failed to do so. 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 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 C1T(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly the finding of the C1T(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 in ....
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....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 Rs. 22,12,....
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....own 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- Addition 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. (i) No facts were available to AO after search and inference of AO did not fall within the scope of Section 158BB. (ii) 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 ITO 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITO 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 ITJ 197 (SC): In this case, the Hon'ble Court held that without any independent evidence or corroborative material, no addition is permissible on the basis of loose pap....
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....ayments 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 claim against another. In Hira Lal v. Ram Rakha 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 be relevant and to have been pro....
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....arch to prove that details/figures mentioned in notings on page 117 to 119 of A/I represent 'on money' payments by the assessee]. (iv) Atual Kumar Jain Vs. DCIT (2000) 64 TTJ (DeI.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. DC IT (1999) 63 TT J (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 "No addition can be made on dump documents". Thus, the only inference which can be drawn from this is that the seized loose paper is nothing but represent rough workings/jottings/scribbling. It is settled lega....
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....has been held in the case 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). 4.3.6 In view of the above discussion, material evidences on record and case laws cited, firstly, the appellant is neither author nor the owner of the impunged loose paper. Secondly, no incriminating material was found during the course of search suggesting on money payment for purchase of land at village tamot. Thirdly, the loose paper is undated and unsigned. Fourthly, the impunged loose paper was not found in possession/custody of the appellant company. Sixthly, the impunged loose paper should be speaking one without having any second interpretation, which is not in the case of appellant. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making addition of Rs. 3,23,15,190/- being on sheer assumption and presumption basis. Thus, the addition made by the AO amounting to Rs. 3,23,15,190/- is D....
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.... addition can be made on the basis of a dumb document. Even the Ld. Ld. CIT(A) has also mentioned several judicial rulings in his order where this proposition has been clearly held. Without repeating those rulings, we too agree that no addition can be made on the basis of dumb document. Therefore, in such circumstances we are of the view that the Ld. CIT(A) has rightly deleted the addition which was made by Ld. AO. We do not find any infirmity in the action of Ld. CIT(A). Accordingly, therefore, Ground No. 5 of Revenue is also dismissed. 12. In view of foregoing discussions, the revenue's appeal being ITA No. 112/Ind/2019 is also dismissed. Assessee's IT(SS)A No. 96/Ind/2019 and IT(SS)A No. 97/Ind/2019: 13. Now we take up assessee's appeals. In both of these appeals, the assessee has taken identical grounds, as under: "(1) That on the facts & in the circumstances of the case & in law, the initiation of proceedings u/s.153C and the notice issued under the said section do not satisfy the judicial requirement of the law and, therefore, the assessment made u/s 153C r.w.s. 143(3) is unlawful and without jurisdiction and, therefore, be cancelled. (2) That on th....