2018 (8) TMI 127 - AT - Income Tax

Addition on account of income from undisclosed sources - Held that - We note that assessee has candidly admitted the fact that the impugned seized document was written by himself. It has been also stated by the assessee that in the letter filed before the AO that this page contains a brief summary of future fund flow position. Thereafter the assessee has also given explanation about the transactions stated therein. Now in these circumstances this document cannot be considered to be a dumb document as considered by the first appellate authority while deleting the entire addition made by the Assessing Officer. The first part is of Rs. 1, 40, 00, 000/- whereby it has been written that the same has been given already which denotes the payments made by the assessee. The transaction mentioned therein has also been explained by the assessee as recorded in the books of accounts. In this regard the assessee has placed before us copy of the ledger account in the Paper Book. Thus the contention of the Ld. DR that assessee has failed to discharge its onus that the transactions are accounted for in the books of accounts is not correct. When such transactions have been recorded in the books of accounts there is no justification for making addition of the same in the hands of the assessee. The ld. CIT(A) has correctly deleted the addition of Rs. 1.40 crore. As regards the balance of Rs. 31, 04, 166/- the nature of amounts aggregating to Rs. 32.00 lakhs (Rs.25.00 lacs Rs. 2.00 lacs and Rs. 5.00 lacs as given/paid to MMTL Aeroplast and towards S. Tax respectively as noted on the paper). These amounts of Rs. 25.00 lakhs and Rs. 2.00 lakhs should therefore be considered as payment by the assessee as also explained before us with reference to PB 32 and Rs. 5.00 lakhs is accepted by the Assessing Officer itself as explained. Taking all the above figures into account in our considered opinion it would be justified to sustain the addition to the extent of Rs. 31, 04, 166/- Accordingly the addition made by the Assessing Officer deserves to be restricted to Rs. 31, 04, 166/- and the ld. CIT(A) was not justified in deleting the entire addition made by the Assessing Officer. As a result the appeal of the Revenue deserves to be allowed in part by restricting the addition to Rs. 31, 04, 166/- as against Rs. 1, 87, 04, 166/- made by the Assessing Officer. - Appeal of the Revenue is partly allowed.

Summary

Issues Involved:
1. Deletion of addition of Rs. 1,87,04,166/- made by the Assessing Officer (AO) on account of income from undisclosed sources.
2. Admissibility of the seized document as evidence of actual transactions.
3. Burden of proof regarding the nature of entries in the seized document.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 1,87,04,166/-:
The Revenue appealed against the CIT(A)'s order, which deleted the addition of Rs. 1,87,04,166/- made by the AO based on a seized document. The AO treated the entries in the document as actual transactions and added the amount to the assessee's income from undisclosed sources. The CIT(A) deleted this addition, stating that the AO did not provide corroborative material to prove that the entries represented actual transactions.

2. Admissibility of the Seized Document:
The AO considered the seized document as evidence of actual transactions. The document contained entries of receipts and payments, which the AO treated as actual transactions. However, the assessee contended that the document was a rough planning of future fund flows. The CIT(A) found that the document did not establish any specific transaction and noted that the AO did not bring any corroborative material to prove the entries represented actual transactions.

3. Burden of Proof:
The AO argued that the document represented actual transactions and added the entire amount to the assessee's income. The CIT(A) deleted the addition, stating that the AO did not provide evidence to support the claim that the entries were actual transactions. The Tribunal noted that while the document could not be considered a "dumb document," the AO failed to provide corroborative evidence to prove that the entries represented undisclosed income.

Tribunal's Findings:

Deletion of Rs. 1,40,00,000/-:
The Tribunal upheld the deletion of Rs. 1,40,00,000/-, as the assessee provided evidence that these transactions were recorded in the books of accounts. The Tribunal found no justification for adding this amount to the assessee's income.

Addition of Rs. 31,04,166/-:
The Tribunal sustained the addition of Rs. 31,04,166/-, noting that the assessee failed to explain these entries adequately. The Tribunal found that the entries on the left side of the document were not corroborated by any evidence and were contradictory. Therefore, the Tribunal restricted the addition to Rs. 31,04,166/-.

Conclusion:
The Tribunal partly allowed the Revenue's appeal, restricting the addition to Rs. 31,04,166/- instead of the entire Rs. 1,87,04,166/- made by the AO. The Tribunal found that while the document could not be dismissed as a "dumb document," the AO failed to provide corroborative evidence for the entire amount. The Tribunal upheld the CIT(A)'s deletion of Rs. 1,40,00,000/- but sustained the addition of Rs. 31,04,166/- due to lack of adequate explanation by the assessee.