TMI Blog2020 (1) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... any assumption or belief that the entry belongs to the assessee did not arise and hence entry found in diary without any corroborative evidence, 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, 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. - ITA No.568/Asr/2018 - - - Dated:- 16-1-2020 - SH. N.K.CHOUDHRY AND DR. A.L.SAINI, JJ. Appellant by : Sh. Ashray Sarna (Ld. CA) Respondent by: Smt. Prabhjot Kaur (Ld. CIT- DR) ORDER N.K.CHOUDHRY, J. This appeal has been preferred by the Assessee/Appellant against the impugned order dated 19.09.2018 passed by the Ld. CIT(A)-5, Ludhiana, u/s 250(6) of the Income Tax Act, 1961 (hereinafter called as the Act ). 2. In the instant case, the Assessing Officer made various additions including the addition of ₹ 28,50,001/- which is under challenge, on the basis of noting made in the dairy of the husband of the assessee. The said addition was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and contents of such documents are true. The AO corroborated the entries on page no. 10 and 13 of the diary by reproducing the copies in the assessment order at page 4 5 of the assessment order. As per AO, the heading on the top of the page no.13 'DIV- 3' indicate that these payments pertain to sale of the property near Chowki Divison3. As per the AO, the noting shows that total amount of ₹ 1,15,00,000/- has been received on sale consideration of this plot which is also proved when these entries are seen along with entries on page no. 10 of the same diary. The AO mentioned that this page shows amount of cash actually with Sh. Ruby (i.e. Sh. Balwinder Singh Kohli, the son of the assessee) and the figure of ₹ 28,50,000/- pertains to another unaccounted sale consideration of shop in MBD Mall. The AO also mentioned the co-relation of the other entries on these pages and the dates mentioned against the two entries as 25th and 26th February at place Goraya for receipt of cash from the purchaser. On the basis of the documents, the AO concluded that a total cash of ₹ 1,15,00,000/- was received as sale consideration of this property near Divison-3, Chowki while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like confirm that no capital gain arose from the transaction of S-9, Ludhiana and the amounts on the page of dairy referred by your goodself. It is also on record that Sh. Mohinder Singh, the husband of the assessee was owner of the half share in the property under consideration and he being head of the family, used to manage the financial matters of the family. The AR has also accepted that the diary seized from the residence of the assessee was being maintained by Sh. Mohinder Singh. It is also relevant to mentioned that for assessment year 2008- 09, the assessee relied upon the noting of the same diary seized as Annexure A-14 to put forward the arguments relating to addition of ₹ 24,50,000/- added as 'short term capital gain' on account of sale of shop in MBD Mall. During the appellate proceeding for assessment year 2008-09 in appeal no. 24/IT/CIT(A)-5/Ldh/2014-15, the co-relation of entries and figures on different pages of the diary (seized annexure A-14) was elaborately discussed in relation to sale of shop no. S-9, MBD Neopolis, Ludhiana along with other seized documents found during the search. Similar type of corelation exists between entries on page n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la [1998] Crl.LJ 1905 known as Jain Hawala Case and laid down the ratio. Let us to reproduce the same. That entries in the Jain Hawala Diaries, note books and file containing loose sheets paper not in the form of Books of Accounts and has held that such entries in loose papers/ sheets are not relevant and not admissible u/s 34 of the Evidence Act, and that only where the entries in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. Further as to value of the entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. Further the Apex Court laid down that Meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below. 14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etached and replaced in dealing with the word book appearing in Section 34 in Mukundram v. Dayaram a decision on which both sides have placed reliance, the Court observed:- In its ordinary sense it signifies collection of sheets of paper bound together in a manner; which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book.... I think the term 'book' in Section 34 aforesaid may properly be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of Section 34, and I have no hesitation in holding that unbound sheets of paper, in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of Section 34. We must observe that the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the pen drive, hard disk, computer loose papers, computer printouts. Since it is not disputed that for entries relied on in these loose papers and electronic data were not regularly kept during course of business, such entries were discussed in the order dated 11.11.2016 passed in Sahara's case by the Settlement Commission and the documents have not been relied upon by the Commission against assessee, and thus such documents have no evidentiary value against third parties. On the basis of the materials which have been placed on record, we are of the considered opinion that no case is made out to direct investigation against any of the persons named in the Birla's documents or in the documents A-8,A9 and A-10 etc. of Sahara. 7. Coordinate Bench of ITAT at Delhi in the case of Pramod Pandey v. ACIT Circle 10 New Delhi (in ITA No. 4295/Del/2012 decided on 06- 12-2013, while dealing with the identical issue as involved in this case, has held as under: 15. Now we adjudicate upon the merits of the case. In this case addition of ₹ 35 lacs has been made on the basis of seized material found in the shape of diary which contains the following entries:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to discharge the burden cast on it. 19. We also place reliance from the Hon'ble Apex Court decision in the case of CIT vs. Kalyansundaram in (2007) 294 ITR 49 (SC) in which allegations of on money transaction on the basis of non-convincing loose sheets found during the course of search and conflicting statement of the seller, was deleted by the Tribunal and the same was affirmed by the Hon'ble High Court and Hon'ble Apex Court. 8. Delhi High Court in the case of Commissioner of Income Tax v. Sh. Parveen Juneja while (in ITA No. 57/2017) decided on July 14, (2017) 99 CCH 0115, while dealing with the similar facts and circumstances as involved in this case, has held as under: 3. A search took place in the premises of the Respondent/Assessee pursuant to which certain documents were seized. The document on the basis of which the above addition was made was a piece of paper (identified as Annexure-2. This was a hand written paper purportedly containing details of house construction expenses of ₹ 49 lakhs out of which ₹ 29. 70 lakhs has already been paid. 4. The explanation offered by the Assessee was that the said paper was not related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner of the share of the property under consideration and therefore the contention of the assessee that she has nothing to do with the contents of the diary, was unacceptable. The Assessing Officer while making the addition also relied upon section 292C of the Act on the reasons that in terms of section 292C of the Income Tax Act, 1961 the documents found in the possession of persons during the course of search are to be taken as belonging to them and contents of such documents are true. 10. On appeal the Ld. CIT(A) upheld the said addition on the same footings as held by the Assessing Officer. 11. The Tribunal in the case of Pramod Pandey v. ACIT (supra) has clearly held that jottings in the diary by no stretch of imagination can be treated as conclusive proof of on money transaction by the assessee. Further, there is no case that any part of the jottings in the diary has been corroborated from any other findings. Further, it is also not the case that the circle rate or the value as per stamp registration authorities of the impugned property is more than what has been disclosed. Hence in the background, the presumption u/s 132(4A)/292C of the Act cannot be taken against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Common Cause (A registered Society and Ors Vs. Union of India Ors.(supra) analyzed the position of law with regard to the loose sheets/diary in which some noting has been made by the person other than the persons searched and clearly held that the said document do not have any value in the eyes of law. Further entries in the Diaries, note books and file containing loose sheets paper not in the form of Books of Accounts and has held that such entries in loose papers/ sheets are not relevant and not admissible u/s 34 of the Evidence Act. Further as to value of the entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 13. On the basis of the aforesaid judgments, we are of the view, diary seized during the survey/search operation, without corroboration, have no authenticity and therefore, cannot be relied upon. Even entry recorded in the diary qua amount of sale was not confirmed from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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