TaxTMI 
TaxTMI 
2026 (9) TMI 996
X X X X Extracts X X X X
X X X X Extracts X X X X
....021-22 as under: Particulars AY 2019-20 2020-21 2021-22 Return filed on 21-08-2019 26-11-2020 26-02-2022 Returned income Rs. 35,52,230 Rs. 49,59,680 Rs. 3,88,860 3. A search and seizure action u/s. 132 of Act was carried out on 17-03-2021 on Rubberwala Group and Others (including Bhajwad Group). During the search proceedings business premises as well as residential premises of the key persons of the group were also covered by way of search action u/s. 132 of the Act. 4. During the search certain excel sheet, loose papers were recovered from the premises of the assessee. Further 'we-chat' was also found in mobile phone if the employee one Mr. Suraj Patel. During the assessment proceedings the Assessing officer made the following additions which is summarized in the following table: Addition on account of A.Y 2019-20 A.Y 2020-21 A.Y 2021-22 CIT(A) Return Income 35,52,230/- 49,59,680/- 3,88,860/- A. Unexplained Investment u/s. 69 - Excel Sheet found in respect of Loan whereas Peak of Loan Amount 7,00,67,699/- 20,09,74,534/ 1,28,72,009/- Deleted 100% B. Unexplained Money u/s. 69A - Interest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ized during search, without appreciating that the statutory presumption under Sections 132(4A) and 292C applies and shifts the onus to the assessee only after independent evidence is produced to rebut it." 2. "Whether the Ld. CIT(A) erred in law and on facts in relying on the self-serving explanation of the appellant and the statement of a third-party accountant as sufficient to rebut the statutory presumption, without any corroboration from other records OR confirmation from the alleged clients." 3. "Whether the Ld. CIT(A)erred in law and on facts in disregarding the evidentiary value of the structured and detailed Excel sheets, which contained ledger entries, balances, receipts, payments, and interest computations, and treating them as "dumb documents" by relying on precedents concerning loose papers and unverified notes and directed to delete the peak component of Rs. 7,09,15,207/-. Including the interest amount of Rs. 8,47,508/-" Asst. Year: 2020-21 (ITA No.990/Mum/2026) "1. "Whether the Ld. Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs. 20,09,74,534/- made under section 69 of the Income-tax Act, 1961, on account of unex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4. "Whether the Ld. Commissioner of Income Tax (Appeals) erred in restricting the addition on account of unrecorded receipts u/s. 69Aof Rs. 12,65,84,996/- to 8% thereof, thereby deleting the balance 92% amounting to Rs. 11,64,58, 196/-, despite the fact that the unrecorded receipts were detected on the basis of incriminating material seized during search and the assessee failed to explain the nature and source of such receipts; the addition made by the Assessing Officer deserves to be fully restored under the provisions of the Income-tax Act, 1961."" 7. The Assessee has also preferred appeals against the order of the Ld. CIT(A) for the assessment years 2020-21 and 2021-22 and has raised the following grounds:- Asst. Year: 2020-21 (ITA No.1143/Mum/2026) "1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer in initiating and completing proceedings under section 153A of the Income Tax Act, 1961, which are without jurisdiction, invalid, and bad in law. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... addition untenable in law." Asst. Year: 2021-22 (ITA No.1144/Mum/2026) "1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer in initiating and completing proceedings under section 153A of the Income Tax Act, 1961, which are without jurisdiction, invalid, and bad in law. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer, who failed to furnish the mandatory certificate as required under Section 65B of the Indian Evidence Act, 1872, in respect of the electronic records relied upon, thereby rendering such evidence inadmissible in law. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition based on alleged loose sheets and excel sheets found during the course of search, without appreciating that such documents, being unverified and unauthenticated, do not constitute reliable evidence. 4. On the facts and in the circumstances of the case and in law, the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned CIT(A) erred in confirming the addition of Rs.1,93,114/- on account of alleged excess stock treated as unexplained investment under section 69 of the Act, without properly considering the appellant's submissions and without bringing any cogent material on record to justify the addition. 11. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in making the impugned addition based purely on surmise and conjecture, without appreciating the material facts on record or bringing any cogent evidence on file to support the addition." 8. We shall first take up the appeals filed by the revenue for assessment years 2019-20, 2020-21 and 2021-22, in respect of the ground Nos. 1 to 3 (A.Y. 2019-20); 1 and 2 (A.Y. 2020-21); 1 and 2 (A.Y. 2021-22), concerning the additions based on the impugned excel sheet, allegedly relating to the loan transactions and interest thereon as the grounds are common for all the three appeals of the revenue and also the corresponding grounds in assessee's appeals. 9. The Ld. Departmental Representative (DR) invited our attention to the assessment order and submitted that, during the course of survey proceedings conducted....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The Ld. CIT(A) had rightly deleted the addition upon finding that the entries contained in the impugned excel sheets were uncorroborated by any independent evidence. The Ld. Counsel further submitted that the assessee carried on business in the mobile accessories market, which is a common and largely unorganized market dominated by persons having limited formal education. In such a market the sharing and copying of data and the use of computers for taking printouts are common practices. It was further submitted that during the post search proceedings, vide submission dated 26-07-2021, the assessee had categorically denied the ownership of both the excel files. 14. The Ld. Counsel further submitted that neither the word "cash" nor any description indicating cash loan transactions appeared anywhere in the impugned excel sheets. Further, no admission regarding the ownership or contents of the said files was made by the assessee during the course of the search or post search proceedings. 15. The Ld. Counsel also explained that the part time accountant occasionally used the assessee's computer system for taking printouts. Therefore, the impugned files might have been inadvertent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ption, without any corroborative evidence, is wholly unsustainable in law. 19. Further Ld. Counsel for the assessee submitted that sheet titled "kk" reveals several unusual and impractical figures. It is evident from the excel sheet that the amount was received and repaid on the very same day. A genuine loan transaction normally involves a time gap between disbursement and repayment it is not ordinarily taken and squared up on the same day. When receipts and payments occur on the same date for the same amount, the transaction loses the essential characteristics of a loan. Accordingly, the impugned excel sheet does not support the contention that there was a loan transaction. It was also pointed out the presence of arbitrary figures itself creates serious doubt regarding the authenticity and practical utility of the alleged entries. 20. Further, Ld. Counsel for the assessee submitted that the sheet titled "after diwali" merely contains certain numerical figures without any narration, description, particulars of parties, nature of transaction or supporting details. In the absence of any meaningful information, threes entries cannot be relied upon for making addition under the I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r unverified data. In the present case, the Assessing Officer has not discharged this burden. 21. Further referring to sheet titled "jrc" Ld. Counsel submitted that it contains certain figures without complete dates or narration. More importantly, it reflects a negative closing balance of Rs. 9,95,000/- as on 21-01-2019. It is submitted that if the sheet were genuinely recording cash transactions or cash loans, a negative cash balance would be commercially impossible. This inherent inconsistency clearly demonstrates that the sheet was not maintained as a genuine cash book or loan ledger. The sheet titled "G Power" merely contains certain dates without corresponding transaction details or complete monetary particulars. Such incomplete data cannot form the basis of any addition under the Act. In the absence of complete particulars such as dates, names of parties nature of transactions and corroborative evidence, no addition can validly be made merely on the basis of a suspicious and unverified excel sheet which is in the nature of a dumb document and has negligible evidentiary value. Any addition resting solely on such conjectures and presumptions, without proper enquiry, cross ve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rroborative material/evidenced such as tally data, bank statements, promissory notes, cash books, receipts, corresponding ledger accounts, unaccounted assets or any other supporting documents were discovered to establish the existence of the alleged loan transaction aggregating to Rs. 31.03 crores. Further, no corresponding business transaction, movement of cash, acquisition of assets, bank entry or other financial evidence connecting the assessee with the alleged transactions was found either during the search or in the post search proceedings. The magnitude of the alleged transactions was also wholly disproportionate to the assessee's disclosed business operation, financial capacity and net worth. Moreover, the assessee discharged the initial burden by furnishing the names, PAN and addresses of the parties appearing in the excel sheets. During the post search and assessment proceedings, the assessee consistently explained that the tiles had been mistakenly saved on the laptop by a part time accountant. Despite the availability of completed particulars of the concerned parties, the Assessing Officer did not conduct any independent enquiry to verify the alleged transactions appeari....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., cannot be made basis of addition. The authorities below in the instant case, made the addition only on the basis of surmises, suspicion and guess work. Hence, respectively following the judgments referred above we are unable to sustain the addition made by the Assessing Officer and affirmed by the Ld. CIT(A). Consequently we are inclined to delete the same, resultantly the appeal of the assessee is liable to be allowed." 29. Thus the impugned excel sheet found at the assessee's premises cannot, by itself, be relied upon as conclusive evidence, particularly when its contents are not contemporaneous, not corroborated by any independent or external material. The sheet merely contains rough workings and arithmetical calculations without complete particulars capable of establishing any actual transaction. At best, such an excel sheet could constitute a starting point for further investigation. However, in the absence of cross verification, independent enquiry or supporting evidence, it cannot form the sole basis for sustaining the impugned addition. 30. In view of the foregoing facts and circumstances, we find no infirmity in the well reasoned findings of the Ld. CIT(A). Accordi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were identically recorded both in the excel file and in the regular ledger account of Onyx Collections. On this basis, the Ld. DR contended that once the banking entries appearing in the excel worksheet stood corroborated by the regular books, the cash payments recorded in the same worksheet were also liable to be treated as unexplained payments made towards unaccounted purchases. 34. On the other hand, the Ld. Counsel for the assessee submitted that the alleged invoices contained in the excel file were merely drafts, estimates or proposals and did not represent actual payments. It was explained that M/s Patel Mobile, the proprietary concern of Shri Shravan Choudary, had admittedly purchased goods from M/s Onyx Collections, however, the worksheets titled SH, HB, MHB and others contained only proposed estimates relating to the possible supply or delivery of goods. The abbreviations used as worksheet names were merely internal identification mark and did not establish completed purchase transaction. 35. The Ld. Counsel further submitted that, in his statement recorded on oath on 6-8-2021, the assessee was confronted, vide question Nos.16 and 17 with the "PAYMENT" worksheet of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the bill numbers and dates of delivery. 39. The Assessing Officer has also referred at page 52 of the assessment order, to the worksheet titled "PAYMENT". The columns appearing therein are Date, Bill No., Marks, CTNS, Total and Payment. The worksheet is in the nature of a running account and records certain payments described as having been made through cash as well as banking channels. 40. The Assessing Officer compared certain bank payments appearing in the excel worksheet with the Tally data of Shri Shravan Kumar Choudhary and observed that a few such payments closely corresponded with entries appearing in the ledger account of "Onyx Collection" in the assessee's regular books of account. A table containing a few entries selected on a sample basis was reproduced in the assessment order to demonstrate the alleged correspondence between the excel worksheet and the Onyx Collection ledger. 41. We have also examined the paper book filed by the assessee on 24.6.2026. The ledger account of Onyx Collection is placed at pages 51 to 53 of the paper book and was also available with the investigation wing as well as the Assessing Officer. The said ledger, which has also been repro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns. The assessee, however, categorically denied that the impugned sheet constituted the ledger account of Onyx Collections. Assessee consistently explained that it merely contained a tentative payment plan or proposal relating to the future delivery of goods. Thus, at no stage did the assessee admit that the impugned excel sheet was the ledger account of Onyx Collection or that the entries recorded therein represented actual concluded transactions. 45. The Assessing Officer appears to have merely proceeded on the basis of the material and conclusion contained in the investigation report without independently examining the entire data or carrying the enquiry to its logical conclusion. Once the Assessing Officer possessed certain material suggesting a possible connection with Onyx Collection, it was incumbent upon him to conduct the necessary enquiry and verify the transactions from the alleged supplier. A few selectively matched bank entries cannot substitute for such verification or justify the presumption that all the unmatched entries represented unaccounted cash purchases. 46. We further find that the impugned excel sheet which the assessing officer treated as a running le....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 01.06.2020 Purchase v&u2020-1 1,02,973.00 12.06.2020 Purchase v&u2020-2 4,83,180.00 13.06.2020 Purchase v&u2020-3 4,96,381.00 18.06.2020 Purchase v&u2020-4 4,23,054.00 01.07.2020 Purchase 0c01072020-4 3,46,139.00 02.07.2020 Purchase 0c02072020-2 4,56,617.00 03.07.2020 Purchase 0c03072020-3 3,55,397.00 04.07.2020 Purchase 0c04072020-1 3,44,142.00 02.08.2020 Purchase 0c02082020-1 3,50,351.00 07.08.2020 Purchase 0c07082020-1 3,29,706.00 01.10.2020 Purchase 0c01102020-1 3,10,111.76 03.10.2020 Purchase 0c03102020-1 3,91,082.46 05.10.2020 Purchase 0c05102020-1 2,99,830.76 09.11.2020 Purchase 0c09112020-1 2,73,185.00 12.11.2020 Purchase 0c12112020-1 2,30,468.00 16.11.2020 Purchase 0c16112020-1 2,88,169.00 16.12.2020 Purchase 0c16122020-1 3,15,886.00 17.12.2020 Purchase 0c17122020-1 3,22,782.00 22.12.2020 Purchase 0c22122020-1 3,36,595.00 14.01.2021 Purchase OC14012021-1 5,02,090.00 22.01.2021 Purchase OC22012021-1 5,01,677,.00 29.01.2021 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies, but there are no corroborative evidence like sale bills, cash receipts and invoices etc in the cash entries in excel sheets. Notings by way of cash transactions are highly suspicious in nature because they are susceptible for embezzlement and also prone to create prejudice to the concerned parties. Therefore, in our considered view, the reasons given by the AO to make additions u/s. 69A of the Act on the basis of entries in excel sheets without any corroborative evidence is incorrect. Further, had the department proved at least some of the entries of cash transactions noted in the excel sheet with proper corroborative evidence, one can extrapolate the same to all other entities of cash transactions in the seized excel sheets. But in the present case, the AO has failed to link any cash transactions recorded in excel sheet with any other corroborative evidence which means the cash transactions alleged to be recorded in excel sheet cannot be considered as transactions of the assessee." 50. However, in the case of the assessee before us, we find that the Assessing Officer adopted pick and choose method while framing the assessment. It is a well settled position of law that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l conclusions. The Assessing Officer is required to act fairly as a reasonable person, not arbitrarily and capriciously. The assessment under section 153C should have been supported by adequate material and it should stand on its own leg. This notebook or loose sheets found during the course of search is only circumstantial evidence and not full proof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence I the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has any unaccounted transactions. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated wrigings in the loose papers found during the course search cannot be sustained. The evidence on record is not sufficient to uphold the stand of Assessing Officer that assessee has unaccounted transaction. 4.18 .....................................................................
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer to delete the additions made towards unexplained expenditure u/s. 69C of the Act for the assessment years 2020-21 and 2021-22. The grounds raised by the Revenue on this are rejected and the grounds raised by the Assessee on this issue are allowed. 55. We shall now take up the ground No.4 and ground No.6 of Revenue and Assessee respectively relating to the addition made on account of alleged unaccounted sales for the assessment year 2020-21 which were based on WeChat screenshots recovered from the mobile phone of the assessee's employee one Mr.Suraj Kumar Patel. 56. The Ld. DR submitted that during the course of search proceedings a data backup of an iPhone 11 belonging to Mr. Suraj Kumar Patel an employee was found and seized on 20-03-2021 from Flat No.2201, Shaad Heights, Kamathipura, Mumbai. Upon examination of the said data backup, certain screenshots from the WeChat application were found showing communications with a contact saved as "Big Boss". According to the Revenue, these screenshots contained entries relating to cash receipts and cash payments. 57. The Ld. DR further submitted that a small image of a diary page was visible in the bottom-right corner of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... represented cash payments. 60. The Ld. Counsel for the assessee further submitted that nowhere in the statement of Shri Suraj Kumar Patel recorded under section 132(4) of the Act, or in any other statement recorded during the search or assessment proceedings was it admitted that a figure such as "150" represented Rs. 15,000/- or that the entries were maintained in 1/100th denomination. The inference that every figure was required to be multiplied by 100 was drawn solely by the Assessing Officer without any supporting material, admission, evidence or independent corroboration. Neither the assessee nor Shri Suraj Kumar Patel accepted such an interpretation at any stage of the proceedings. 61. Without prejudice to the above, the Ld. Counsel submitted that even if the entries appearing in the screen shots were taken into consideration though not admitted, the action of the assessing officer in multiplying every figure by 100 was wholly arbitrary, speculative and unsupported by any evidentiary basis. Neither the seized material nor the statements of Shri Suraj Kumar Patel or the assessee indicates that the figures were recorded in coded form or represented 1/100th of their actual....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cer. It was contended that in the absence of the prescribed certification, the screenshots extracted from the mobile-data backup did not satisfy the statutory requirements governing the admissibility and authenticity of electronic records. Furthermore, the Revenue failed to establish an unbroken chain of custody relating to the seizure, preservation, extraction, forensic examination and analysis of the electronic data until its production before the Assessing Officer. Consequntly, the authenticity, integrity and reliability of the electronic record remained wholly unsubstantiated. 66. The Ld. Counsel further alternatively, and without prejudice to the foregoing submissions, submitted that even if the contents of the screenshots were accepted for the sake of argument, though not admitted, the document was required to be read as a whole and could not be relied upon selectively. The screenshots reflected aggregate cash receipts of only Rs. 2,68,330.00 on the left hand side and aggregate cash payment of Rs. 5,90,370.00 on the right hand side. The Assessing Officer disregarded the nature of these entries, erroneously treated the cash payments as cash receipt and thereafter artificial....
X X X X Extracts X X X X
X X X X Extracts X X X X
....kept wherein amount against 234 is written as Rs. 900? Kindly explain the same? Ans. Sir, all the receipts from the cash sales are handled by Mr. Shravan Choudhary. So, Mr. Shravan Choudhary will be the right person to explain the difference in amounts. Q.69 Kindly provide name, address, contact number & PAN of the shop owner of shop 234 mentioned in answer to question no. 64 of this statement. Ans. Sir, he was a random shop owner who used to come for cash purchase. I do not have any detail available of shop owner of shop 234. Q.70 From the content of the screenshot, it is seen that cash received from 3389 is mentioned as Rs. 150-00, 3391 is mentioned as 105=00. Kindly explain the same. Ans. Sir 3389 & 3391 mentioned in the screenshot is the shop number 3389 & 3391 in City Centre Mall who used to buy material in cash from M/s. Patel Mobile and M/s. Gopal Telecom and 150-00 mentioned is the amount Rs. 150&Rs. 105. Q.71 It is seen that at the bottom of the screenshot, a small notepad is kept wherein amount against 3389 is written as Rs. 15,000? Kindly explain the same? Ans. Sir, I do not exactly remember what is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ference finds no support in the statement of Shri Suraj Kumar Patel. On the contrary, when specifically confronted with the differences between the figures appearing in the main screenshot and those in the small notepad, he either expressed his inability to explain the differences or stated that Shri Shravan Choudhary would be appropriate person to explain them. Thus, there was no admission by Shri Suraj Patel that the figures in the main diary were recorded in 1/100th denomination or were liable to be multiplied by 100. 71. We are also referring to screen shot found in the mobile phone of Shri Suraj Patel which is as under (scanned copy); 72. Further, the said screenshot was confronted to the assessee during the recording of his statement and in response to Question No.70, the assessee stated as under:- Sir, I do not remember anything about this. I will explain the same in due course." Thus, we observed that the assessee neither admitted the contents of the screenshot nor accepted the Assessing Officer's interpretation thereof. 73. We further find that the small screenshot reproduced above contains a total arrived at by adding Rs. 1,30,000/- Rs. 1,00,000/- Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terial, the multiplication of the figures by 100 is based solely on conjectures, assumptions and presumption. It is well settled that an addition cannot be sustained merely on the basis of suspicion or presumption, however strong it may be. We therefore, hold that the enhancement of the figures by applying a multiplier with 100 is unsustainable. 77. However, since it emerges from the search proceedings that the diary contained certain workings relating to the assessee's business, the figures actually recorded therein are to be treated as representing unaccounted sales aggregating to Rs. 5,90,370/-, without applying the multiplier of 100. Accordingly, the Assessing Officer is directed to restrict the addition to the gross profit element calculated at the rate of 8% on the unaccounted turnover of Rs. 5,90,370/-. Consequently, the Revenue's ground is dismissed, while the assessee's ground is partly allowed. 78. Now we take up the ground No.4 of Revenue's appeal and Ground No.7 of Assessee's appeal for assessment year 2021-22 relating to the addition of Rs. 12,65,84,996/- made on account of the alleged closing balances of sundry debtors, based on the excel sheet found during the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ugned excel sheet belonged to the assessee. Ld. DR further contended that mere appearance of the word "Samsung" in the sheet could not establish that the file was unrelated to the assessee's business, particularly when the file was recovered from his laptop, referred to his Shop No.952 and contained names corresponding with the contacts saved in his mobile phone. 83. In reply, the Ld. Counsel for the assessee submitted that assessee's statement recorded during the course of search has been reproduced at page 14 of the assessment order. In the said statement, the assessee categorically denied ownership of the impugned excel sheet and explained as under. "Sir, I have already explained that the sheet does not belong to me. I further state that someone from the common market might have used my laptop to take a printout and may have inadvertently saved the file on my system. Since the persons concerned operate in the same market and we are also engaged in the business of mobile accessories, the names of some parties may be common." 84. The Ld. Counsel for the assessee submitted that if the Revenue had obtained the details of the alleged debtors, it ought to have conducted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the number "952" allegedly corresponding to the shop occupied by the assessee. However, the Assessing officer failed to cross verify even a single transaction recorded in the sheet with the alleged debtors or with the assessee's regular books of account, bank statements, purchases or sales. The entire conclusion of the Assessing Officer was therefore based upon a chain of presumptions; first, that since the laptop belonged to the assessee every file stored therein must also belong to him; second, that since the file contained the number "952", it must relate to Shop No.952, every transaction recorded in the file must necessarily belong to assessee. Such reasoning is found entirely upon suspicion, conjecture and surmise rather than legally admissible evidence. 88. The Ld. Counsel further submitted that is a settled proposition of law that suspicion, however strong, cannot take the place of proof. In the absence of independent corroborative evidence establishing the ownership, authenticity and correctness of the excel sheet, no addition could legally be sustained merely on the basis of an unverified electronic record. Accordingly, the Ld. Counsel prayed that the entire addition ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eged debtors, with the contacts saved in the assessee's mobile phone cannot justify the conclusion that the entire file and all the transactions recorded therein belonged to the assessee. 93. Not even a single alleged debtor was examined by the Assessing Officer by issuing notice u/s. 133(6) or summons u/s. 131 of the Act. The recovery of the excel sheet could at best provide a starting point for further investigation. However, the Assessing officer failed to carry out investigation to its logical and meaningful conclusion especially when the assessee had repeatedly denied the ownership and contents of the file. It was incumbent of the Assessing Officer to verify the alleged balances from the parties concerned and bring independent corroborative evidence on record to justify the addition. 94. We further find that the Assessing Officer proceeded primarily on the basis of assumptions: that the laptop belonged to the assessee; that every file stored therein must necessarily belong to the assessee; that the number "952" in the file name referred to the assessee's shop; and consequently that the entire amount recorded in the file represented the assessee's sundry debtors. Liabilit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... evidence a clear nexus between the document, the transactions recorded therein and the assessee. 97. In this regard, we respectfully place reliance upon the decision of the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) Vs. Union of India reported in [2017] 77 taxman.com 245 (SC) wherein the Hon'ble Apex Court has held as under; "22. In case of Sahara, in addition there is adjudication by the Income Tax Settlement Commission. The order has been placed on record. The Settlement Commission has observed that the scrutiny of entries on loose papers, computer prints, hard dist, pen drives etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disk and pen drive etc. do not comply with the requirement of the Income Evidence Act and are not admissible evidence. It further observed that the department has no evidence to prove that entries in these loose papers and electronic data were kept regularly during the course of business of the concerned business house and the fact that these entries were fabricated, non-genuine was proved. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocuments" having no evidentiary value. The facts in this case are during search/survey proceedings various incriminating materials were found based on which the Assessing Officer observed from loose slips that the assessee had made payment of Rs. 95 lakhs to one vendor against disclosure of Rs. 15 lakhs and made addition u/s. 69B of the Act. The Tribunal noted that that the loose slips were unsigned documents that did not contain any details or name of parties to whom payments were made. Also investigating team did not collect any details of parties involved therein, so as to make payments and receipts of cash or cheque corresponding to these transactions. On these facts the Tribunal came to the conclusion that loose slips are nothing but dumb documents based on which no addition could be made. 101. The coordinate Bench of Mumbai Tribunal in the case of EI Resorts & Clubs (P) Ltd., Vs. DCIT [2025] 180 Taxman.com 338, held as under:- "The mere discovery of excel sheet which are not even prepared by the directors of the assessee company and remain uncorroborated by any external evidence, cannot, by itself, form the sole basis for an addition. Particularly so when the auth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made by the Assessing Officer under section 69A cannot be sustained. Consequently, the action of the Ld. CIT(A) in treating the said amount as alleged unaccounted turnover of the assessee and estimating gross profit at 8% on such alleged debtors is also unsustainable. Thus, reversing the findings of the Ld. CIT (A) on this issue, we direct the Assessing Officer to delete the above said addition made u/s. 69A of the Act for the assessment year 2021-22. The relevant grounds raised by the Assessee are allowed and the grounds raised by the Revenue are dismissed. 104. Now we take up ground No.9 of Assessee's appeal for assessment year 2021-22, relating to the addition of Rs. 2,40,000/- on account of rent paid in cash. During the course of search proceedings, the assessee admitted that he had paid rent in cash to Shri Imran Rubberwala. The assessee explained that he had taken two godowns situated at Rubberwala Fuego Tower on rent from October 2020, relevant to the Assessment year 2021-22, at a monthly rent of Rs. 40,000/-. Although no formal rent agreement was executed, the rent was paid on the basis of a mutual oral understanding between the parties. The entire rental expenditure was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see on 24.8.2021, considerably after the date of search. According to the Assessing Officer, sufficient time had elapsed for the assessee to update all the relevant entries in the trial balance. Upon comparison, the assessing officer noticed the difference between the stock reflected in the trial balance/balance sheet and the stock valued during the course of search. The Assessing Officer treated the difference as unaccounted stock and made an addition u/s. 69 of the Act as unexplained investment for AY 2021-22. The Assessee however contended that the stock difference had been duly accounted for in the books of account. 110. Having considered the rival submissions, we find that the assessee has not furnished any satisfactory reconciliation or supporting evidence to explain the difference in stock. Therefore, the addition cannot be deleted merely on the basis of an unsupported assertion that the difference has been duly accounted for. We thus sustained the orders of the authorities below and accordingly dismissed the ground raised by the Assessee on this issue. 111. In the result the Revenue appeals for the assessment years 2019-20, 2020-21 and 2021-22 are dismissed and the ap....