2023 (7) TMI 129 - ITAT PUNE

Assessment u/s 153A - Addition u/s 68 - search u/s 132 - unsecured loans were in the nature of accommodation entries and these loans were received after giving equivalent amount of cash to mediator for providing the accommodation entries - HELD THAT:- As undisputed no regular assessment proceedings were pending as on date of search for the assessment year 2012-13. Therefore, it is a case of unabated assessment. Therefore, in the case of unabated assessment, in the absence of any incriminating material the concluded assessment cannot be disturbed. Then, we proceed to examine whether or not any incriminating material was found by the Department as result of search and seizure operations.

As gone through the notings found in the seized material i.e. Diary of 2009 certain payments as well as receipts were recorded without recording the dates and full details. It is not even a record of daily transactions. Certainly it does not form part of books of account regularly maintained by it in the course of business. It is not clearly depicted from the said entries on standalone basis that a transaction had taken place, which gives rise to any taxable event for the reason that there is no indication from the entries found therein that a transaction was undertaken during the previous year relevant to the assessment year under consideration giving rise to the taxable event.

The entries are non-speaking, it cannot be concluded that it represents the undisclosed income of the assessee for the reason that the entries does not disclose four components required to be satisfied to constitute a taxable event.

On mere perusal of the statement recorded of the assessee u/s 132(4) it would be evident that the assessee was examined and confronted on the statements given by Shri Praveen Agarwal, Shri Anuj Agarwal and Shri Jeevendra Mishra recorded during the course of search and seizure proceedings in their case. The assessee was never examined on the notings found in the Diary - Therefore, in view of the legal position discussed supra the statement recorded from the assessee u/s 132(4) cannot be considered as incriminating material to be used for the purpose of assessment to be made pursuant to notice u/s 153A of the Act. Mere statement of the assessee cannot form the basis to make addition in the assessment under 153A r.w.s. 143(3) of the Act.

Unexplained expenditure - AO had failed to bring on record any conclusive evidence to prove that the assessee had made investment in purchase of lands over and above the stated consideration and received on-money consideration on sale of property. Therefore, in our considered opinion, the findings of the Assessing Officer as well as the ld. CIT(A) are based on surmises and conjectures not based on any material/evidence, accordingly, the orders of the AO and CIT(A) are hereby reversed direct the AO to delete the addition on account of on-money payment and on account of on-money receipt.

Interpretation of the notings found in the diary - The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, “this component” has no value in determining total income on the basis of seized document.

Therefore, the entries/notings found in diary can be safely terms as “dumb documents” in view of the legal position discussed by us in the assessee’s own appeal for the assessment year 2012-13 that a dumb document cannot form a basis for the addition.