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2022 (2) TMI 1378 - AT - Income TaxUnexplained investment in loans u/s 69B - Addition based on loose unsigned and undated computer sheets - HELD THAT:- AO was obligated to establish that the notings revealed either unaccounted income or unaccounted investment or unaccounted expenditure of the assessee. Additions could not be made simply on the basis of loose unsigned and undated computer sheets. These sheets were to be considered in the nature of ‘dumb document’ having no evidentiary value and could not be taken as the sole basis for determination of undisclosed income of the assessee. No fact-based finding has been rendered by Ld. AO that such transactions gave rise to the income in the hands of the assessee. It is trite law that in case of search proceedings, the additions are to be based solely on the basis of incriminating material found during the course of search operations. Guess work or estimation or extrapolation of income is not permissible unless there are strong evidences to suggest otherwise. The additions are to be based solely on tangible material and not on the basis of estimations or extrapolation theory. Book’ ordinarily mean a collection of sheet or papers or other material, blank or written or printed, fastened or bounded together so as to form a material as a whole. Loose sheets are scraps of papers cannot be termed as books for they can easily be detached and replaced. Therefore, these are not admissible evidences. The impugned addition of unexplained investment in loans u/s 69B is not sustainable - grounds thus raised by the assessee allowed. Addition u/s 69A - unexplained money representing cash seized from the assessee - HELD THAT:- This addition would also stand deleted since it is undisputed fact that the partners of the firm have introduced capital of Rs. 130 Lacs during the year. This credit of the same was already allowed by Ld. AO while computing addition u/s 69B. Therefore, consequent to deletion of addition u/s 69B, this addition would stand deleted. Addition of undisclosed interest and undisclosed commission income - HELD THAT:- Upon perusal of orders of lower authorities, we find that these additions are merely extrapolated additions by taking average of such income earned in other months. However, there is no incriminating material which would show that both the income was earned by the assessee. These are not supported by any incriminating material found during the course of search operations and merely based on the assumption that the assessee would have earned such income. This being so these additions are not sustainable in the eyes of law. We allow the appeal for AY 2011-12.
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