9911796707
TMI Blog2014 (8) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... and in response, the appellant filed a return on 26.03.2010 declaring income of Rs. 16,01,567/-. The AO completed the assessment u/s 153A r/w section 143(3) of the Act at an income of Rs. 4,63,01,570/- vide order dated 27.12.2010, thereby making an addition of Rs. 4,47,00,000 on account of undisclosed income under section 69 of the Act on the basis of certain written pages containing rough noting found during the course of search and seizure from the residence of the assessee appellant. 4. Admittedly, the assessee is a partner of various partnership firms and sources of income consist of income from salary, profit from various partnership firms, and income from capital gain and interest during the year under consideration. The assessee appellant also made investment in immoveable properties and earned short term/long term capital gains which were also duly considered in the return of income. During the search and seizure operation, certain loose papers and documents were found and seized from the residential premises of the assessee appellant which were named as Annexure A-1 to A-7 and which include certain pages related to transaction of immoveable properties which were duly cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.50 lacs per bigha clearly established that the investment amount is in crores and paper is clearly containing detail of unaccounted transaction of the assessee. Under the circumstances the investment along with income reflected in this document is treated to be made outside the books of account and peak balance of Rs. 4,47,00,000/- is added to the income being investment as well as undisclosed profit on the deal. I am satisfied that the assessee has concealed particulars of income and penalty proceedings u/ s 27I (1)(c) of the I.T. Act are being initiated separately." 6. Being aggrieved by the above assessment order, the assessee preferred an appeal before the CIT(A) which was allowed with following conclusions and findings:- "I have carefully gone through the notings recorded on page no. I of Annexure A-I seized from / the residential premises of the assessee and which has been reproduced in the assessment order. A copy of the said seized document has also been enclosed by the appellant in the paper book. As the finding of the AO with respect to the notings on the said seized paper and the submission of the appellant on the said seized paper has already been reproduced verbati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on whom the burden lies to refute the facts recorded in a document, in my considered view, in a case where the A.O. is of the view that the assessee's explanation is not acceptable or satisfactory regarding the contents of the document seized from his premises/possession (the notings being unintelligible and cryptic in nature) then the burden to substantiate or prove the contents of the document shifts over to the person who is making such assertion, that is the assessing officer in this case. This substantiation or drawing of logical and reasonable inference could either be derived by the A.O." from the contents written on the document itself when these are speaking in nature or in case the same are not entirely speaking/ coherent then too a rational correlation can be made by the assessing officer in conjunction with other corroborative material. Section 292C of the Act does raise a presumption against the assessee who has been searched upon that the contents of books of accounts and other documents found from his possession or control are true. However, in my considered view the word contents used in this section presupposes that the contents are intelligible, comprehensibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied reasons. The DR finally submitted that the impugned order may be set aside by restoring that of the AO. 10. Replying to the above submissions of ld. DR, the ld. Counsel of the assessee submitted that the AO erred both in fact and in law in making the impugned addition on account of undisclosed income u/s 69 of the Act only on the basis of doubt, suspicion, conjectures and surmises without bringing out any adverse material on record about the details and imaginary seller of the land property on which the said alleged undisclosed investment was made by the assessee appellant. Ld. counsel of the assessee reiterated the submissions made before the CIT(A) vide letter dated 18.11.2011(Para 04 of the impugned order of the CIT(A) and submitted that the AO made addition on the basis of certain written pages containing rough notings found during the course of search and seizure from the residence of the appellant. Ld. Counsel of the assessee further submitted that the said loose papers also contain rough notings or various proposals/offers in respect of immoveable properties which were never acted upon or executed or materialized. It was also submitted on behalf of the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del) iv) CIT vs Atam Valves (P) Ltd. 184 Taxman 6 (P&H) v) ACIT vs Satya Pal Wassan (2007) 295 ITR (AT) 352 (Jabalpur) 13. On careful consideration of above submissions and contentions of both the parties, at the outset, we observe that admittedly, during the course of search and seizure operation held on 15.1.2009, Annexure A-1 to A-7 were found and seized from the residential premises of the assessee and except document Annexure A-1, the details and contents of other seized and found documents include certain pages related to transactions of immoveable properties which were duly considered and reflected in the return of income of the assessee and the investment on the said properties were made from the disclosed sources of income of the assessee. Now, the fact remains that the AO picked up document Annexure A-1 and held that from this document, the fact is clearly established that the assessee made investment in crores and relying on the details of the document Annexure A- 1, the AO treated the document reflecting the investment made outside the books of accounts and the AO made an addition of Rs. 4,47,00,000/- the income of the assessee u/s 69 of the Act. For the sake of cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in reference has never been registered or transferred in the name of the assessee. The document relied upon is unsigned. The other party of the document Mrs. Jind was examined and she denied to have received any cash amount of Rs. 1 crore from the assessee. The AO has also not brought out any material on record to prove the transfer of Rs. 1 crore by the assessee to Jind particularly when both have denied the transfer and also the purchase and sale of such land as mentioned in such document which is only a performa document. The performa document does not contain the signatures of both and besides it does not contain the signature of any witnesses. No evidence has been brought on record by the AO that there is any investment and there is any transfer of cash. There is no question of investment when the land has not been transferred and registered in the name of Gian Gupta. On the contrary, the AO himself admits in the assessment order that the addition was made on the basis of assumption. Therefore in my considered opinion the addition made by the AO on this ground is not tenable and therefore, the appeal of the appellant is allowed and the AO has been directed to delete the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unsigned documents and the transaction had not materialized." 16. On behalf of the assessee reliance has also been placed on the decision of ITAT Delhi 'C' Bench in the case of DCIT vs Dr. G.S.C. Rao wherein credence of a seized document has been interpreted as under:- "3.3 We have considered the facts of the case and submissions made before us. The facts are that in the course of search of the residence of the assessee a computer print out was found, which shows receipts in respect of sale of some immovable property and payments made in respect of some immovable property. The receipts exceed the expenditure by an amount of Rs. 13,900/-. The paper does not contain any name, the dates of transaction, details of bank or the descriptions of the property. The AO has ignored the receipt portion but has brought to tax the amount of investment of Rs. 27,90,000/-. The assessee right from the beginning denied that the paper belongs to him or any of his family member. He gave some indication about the person to whom the transaction may relate but his or his successor's full details have not been furnished, with a result that it was not feasible to get the facts verified. Section 132(4) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the addition. The Tribunal also held that no addition can be made on the basis of dumb document/notebook/loose slips in absence of any other material to show that the assessee has made investment in land. The relevant observations and findings of the Tribunal in this case read as under:- "16. Aggrieved by the order of the CIT(A), the revenue is in appeal before us. 17. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the AO based on the loose paper and the same, in our view, cannot be considered as conclusive evidence. As held by the CIT(A) in the impugned order "except relying , the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the 'transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made." In our opinion, the deletion of addition by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anil Bhalla (supra), has held that when no independent material or evidence had been brought on record by the AO to establish that the noting/jottings recorded on loose sheet or on the paper represented an unaccounted transaction, then the CIT(A) was right in accepting the explanation of the assessee and their lordships further held that the Tribunal was right in holding that the loose sheet does not represent any expenditure incurred by the assessee, then the findings of the Tribunal do not warrant any interference. 19. In the case of CIT vs Girish Chaudhary (supra), the Hon'ble Jurisdictional High Court of Delhi dismissing the appeal of the revenue held that when there was no material on record to show on what basis the AO had reached to the conclusion that the figure '48' was to be read as Rs. 48 lakh, then the document recovered during the course of search was a dumb document and led nowhere. The relevant observations and conclusion of their Lordship read as under : "Hence, in the present case there is no material on record to show as to on what basis the Assessing Officer has reached at the conclusion that the figure "48" is to be read as Rs. 48 lakhs. The apex court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of books of accounts out of income from undisclosed sources. Accordingly, in view of our above findings and observations, we are of the considered opinion that the benefit of the ratio of the decision of Hon'ble High Court of Delhi is available for the assessee which clearly supports finding of the CIT(A) in the impugned order that the addition cannot be made and sustained on the basis of Annexure A-1 as the same is dumb document which cannot be used against the assessee for making impugned addition. 22. The CIT(A) has also relied on the decision of ITAT Jabalpur in the case of ACIT vs Satyapal Wassan (supra) wherein elucidating with respect to the same issue, the coordinate bench of the Tribunal has held as under : "The crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income Tax Act must be filled up by the Assessing Officer through investigations and correlations with the other material found either during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e papers did not relate to payment of wages during the year in question may not be accepted in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the Assessing Officer." 25. In this case the guiding ratio laid down by their lordship is that when the loose papers did not relate to certain payment during the relevant period in question, then in absence of any other supportive material or evidence these loose sheets by itself were not found to be enough and justified basis to make addition. 26. The CIT(A) has also relied on the decision of ITAT Delhi 'E' Bench in the case of Atul Kumar Jain vs. DCIT (Supra) wherein the coordinate bench of this Tribunal went on to hold that when the AO decided "550" as 5,50,000 by adding "000" to the figure given i.e. "550" without any basis and supportive and corroborative evidence then the AO was not justified in deciphering the figures on a seized paper at his own whims and caprice based on unfounded presumptions and conjectures without bringing any corroborative material evidence in support thereof and the same cannot form the basis for assessing undisclosed income by way of sale proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence, stand alone is not sufficient proof of investment in land of Rs. 4,47,00,000 by the assessee as the contents of main three parts of the notings are not interlinked and inference drawn by the AO is also not supported by the mathematical calculation of the contents as details of land in first and second part of notings are not itself sufficient to support the impugned addition and in the third part in which there is a noting of total Rs. 4,47,000.00 is written below the details of model / make and quantity of IC Battery from which the AO deleted the decimal for reading and accepting the same as Rs. 4,47,00,000 which is not permissible in absence of other supportive evidence. 28. On the basis of foregoing discussion and respectfully following the ratio of the decisions relied on by the CIT(A) and the assessee, we reach to a conclusion that the AO made addition on the basis of Annexure A-1 on his own whims, surmises and conjectures and also by converting and moulding the contents of the impounded document to gather support for his baseless findings. We further hold that the Annexure A-1 stand alone can not be used as a basis of making impugned addition without the company of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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