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TMI Blog2013 (1) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... show that any objection has been raised by the assessee at the earliest opportunity against such inventory? ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT have erred in law by not appreciating the provisions of section 132(4A) of the Income Tax Act, 1961 when the document forming the basis of addition of Rs.5,95,900/- and Rs.11,17,596/- was seized (D. No. 22 of Annexure A-18) from the residence of the assessee and contains the particulars of business dealings and it is not a dumb document? iii) Whether on the facts and circumstances of the case, the Hon'ble ITAT have erred in law by not appreciating the provisions of section 132(4A) of the Income Tax Act, 1961 when the document forming the basis of addition of Rs.8,20,065/- was seized (D. No. 24) from the residence of the assessee and contains the particulars of business dealings and it is not a dumb document? iv) Whether on the facts and circumstances of the case, the Hon'ble ITAT have erred in law by not appreciating the provisions of section 132(4A) of the Income Tax Act, 1961 when the document forming the basis of addition of Rs.27,500/- was seized (D. No.4 of Annexure A-22) from the assessee? Besi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of unexplained expenditure - A.Y. 1997-98." 3. Feeling aggrieved by the assessment order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short "the CIT(A)"]. The CIT(A) vide order dated 19.3.2002 (Annexure A-2) partly allowed the appeal by deleting some of the additions and confirming some of the additions made by the Assessing Officer as noted hereunder:- "i) Addition on account of excess stock found at the time of search and reduced to Rs.33,200/- and a relief of Rs.50,087/- was allowed to the assessee. ii) Addition of Rs.5,95,000/- and Rs.11,17,596/- made on account of sale of rice and broken rice respectively have been confirmed. iii) Addition of Rs.34,500/- made on account of undisclosed investment in the purchase of scooter has been upheld. iv) Addition of Rs.8,20,065/- made on account of unaccounted purchase of paddy has been deleted. v) Addition of Rs.27,500/- on account of unexplained expenditure has been deleted." 4. Against the order dated 19.3.2002 (Annexure A-2), the assessee as well as the revenue filed appeals before the Tribunal. The Tribunal vide a common order dated 9.9.2010 (Annexure A-3) partly allowed the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether Rs. 27,500/- was liable to be added on account of unexplained expenditure ?; e) Whether the documents D.No.22 of Annexure A.18, D.No.24 and D.No.4 of Annexure A.22 found during the course of search from the residence of Shri Pardeep Khosla, son of one of the partners of the assessee-firm could be held to be relevant documents on the basis of which presumption under Section 292C of the Act was available to the revenue? 9. Taking up the issue relating to scaling of addition of Rs.83,287/- to Rs. 33,200/-, it may be noticed that at the time of search on 7.10.1998, it was found that there existed difference in physical stock of rice viz-a-viz the stock depicted in the books of account. The Assessing officer took the quantity of rice to be 75.37 quintals and applied the rate of Rs. 2251/- per quintal calculating the difference at Rs. 83,287/-. On appeal, CIT(A) scaled down the addition to 40 quintals of rice at the rate of Rs.830/- per quintal amounting to Rs. 33,200/- The CIT(A) recorded that no actual physical verification of the stock of rice had been carried out at the time of search and it was on the basis of estimation and in such circumstances, the excess stock at 40 qui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copy of the sale bill of the assessee which corroborates the adoption of the rate of Rs. 830/- per quintal by the CIT (Appeals). Considering the overall circumstances, we hereby affirm the order of the CIT(Appeals) on this aspect. Accordingly, Ground No.2 in the appeal of the assessee and Ground No.(ii) in appeal of the Revenue are dismissed." The findings of CIT(A) and upheld by the Tribunal on this addition were not shown to be perverse or erroneous in any manner warranting interference by this Court. 10. Considering the deletion in respect of Rs. 5,95,900/- and Rs.11,17,596/- added on the basis of document D-22 of Annexure A-18, it would be appropriate to refer to the findings of the Tribunal. The Tribunal while rejecting the contention of the revenue in paras 17 to 20 of the order had recorded as under:- "17. In this background, we may now consider the facts of the instant case. A copy of the seized document in question has been placed at page 95 of the Paper Book. The entries found noted on the front side as well as on the back-side have been enumerated by the Assessing Officer in para 8.1 of assessment order. Even a cursory glance at the impugned document shows that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee firm, the burden was on the Revenue to establish that the seized document reflected any income in control and possession of the assessee firm. In our considered opinion, assessee rightly contended that the impugned document was a dumb document inasmuch as it does not contain any intelligible narration in support of the inference drawn by the Assessing Officer that it reflected sales carried out by the assessee outside the regular books of account. 19. When a dumb document, like the present before us, is to be made the basis to fasten tax liability on the assessee, the burden is on the Revenue to establish with corroborative evidence that the nature of entries contained therein reflect income and also that such income was in the control of the assessee. Thus, in this case, Revenue has to establish, with necessary corroborative evidence, that various entries contained in the seized document reflect sales of rice and broken rice effected by the assessee. Ostensibly, no cogent evidence or material has been brought out by the Assessing Officer to support his inference that the entries recorded in the seized document reflect sales effectuated by the assessee outside the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to other purchasers were also excluded. However, where there were no names of purchasers specified those were sought to be added in the undisclosed income of the assessee. It has been recorded that no justification has been given for treating the same to be undisclosed income of the assessee in the absence of any deposition in that behalf by the Broker or any other material available on record. The findings recorded by the Tribunal in para 37 of its order are relevant, which read thus:- "37. We have considered the rival submissions carefully. After having perused the orders of the lower authorities, in our considered opinion, the CIT(Appeals) made no mistake in deleting the addition made by the Assessing Officer, as the following discussion would show. It is quite clear that the seized document A-24 belonged to Shri Sudesh Jain, Broker-cum-Auctioneer, who made purchases from commission agents on behalf of the assessee firm and other concerns. It also transpires from the record that Shri Sudesh Jain was examined by the Assessing Officer on 25.9.2000 during the course of assessment proceedings, who admitted the aforesaid position. The Assessing officer has also accepted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the CIT (Appeals) made no mistake in deleting the impugned addition. Accordingly, the Ground No.(iii) raised by the revenue is dismissed." Learned counsel for the revenue was unable to demonstrate that the entries where there were no names of purchasers should have been added to the undisclosed income of the assessee alone particularly when the document related to entries concerning other purchasers mentioned therein as well. The findings of CIT(A) and the Tribunal, thus, could not be faulted. 13. The addition of Rs. 27,500/- on account of unexplained expenditure was deleted by CIT(A) and upheld by the Tribunal on the ground that there was no evidence to corroborate that the assessee had incurred such an expenditure of making any contribution to Rice Miller Association. The relevant observations recorded are:- "45. We have considered the rival submissions carefully. Before an addition under Section 69C of the Act can be made for unexplained expenditure, it has to be established that expenditure has been incurred. In this case, the document in question does not prove incurrence of expenditure by the assessee. The document in question, a copy of which is placed at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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