2017 (7) TMI 1172 - HC - Income Tax

Unexplained income - document had been seized from the residence of Assessee - Held that - Addition to the returned income of the Assessee was based on surmises and conjectures and that too on the basis of a single document without making any further enquiry. No attempt was made by the AO to find out if in fact it constituted the construction expenses of any project of the aforementioned company of which the Assessee was a director.

Summary

Issues:
- Appeal against ITAT order deleting addition to income of the Assessee
- Validity of the explanation offered by the Assessee
- Presumption under Section 292 C of the Act regarding ownership of seized document
- Lack of corroborative evidence and forensic proof by AO
- Addition of income based on surmises and conjectures

Analysis:
1. The appeal was filed by the Revenue against the ITAT order that deleted the addition of Rs. 49 lakhs to the income of the Assessee for the Assessment Year 2003-04.

2. The Assessee claimed that the document on which the addition was based was not related to him, as he was a professional director in a company and handled various projects. However, the CIT (A) rejected this explanation and presumed under Section 292 C of the Act that the document belonged to the Assessee.

3. The ITAT observed that the document did not clearly pertain to the Assessee, lacked essential details, and no forensic evidence was presented by the AO to prove its authenticity. The addition was made solely on suspicion without any corroborative material or further inquiry.

4. The Court concluded that the addition of Rs. 49 lakhs was speculative and not supported by evidence, emphasizing that the AO failed to establish a direct link between the document and the Assessee's income or projects. The decision of the ITAT was upheld as legally sound, dismissing the appeal by the Revenue.