TMI Blog2013 (2) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax(A) has erred in deleting the addition of ₹ 84,42,000/- made by the Assessing Officer on protective basis on account of unaccounted in case on the basis of documents and seized during the course of search and seizure operation u/s 132(1) of I.T.Act, 1961. ITA No.5342/D/2012 A.Y. 2008-09 On the facts and in the circumstances of the case, the ld. Commissioner of Income Tax(A) has erred in deleting the addition of ₹ 1,47,30,000/- made by the Assessing Officer on protective basis on account of unaccounted in case on the basis of documents and seized during the course of search and seizure operation u/s 132(1) of I.T.Act, 1961. 3. Briefly stated, the facts of the case giving rise to this appeal are that the assessee is a partnership firm and a notice u/s 153C of the Income Tax Act, 1961 (for short the Act) was issued to the assessee requiring it to file the returns of income and the same was filed by the assessee on 18.11.2011 declaring a total income of ₹ 67,08,660 for AY 2008-09, ₹ 64,66,740 for AY 2007-08 and ₹ 7,90,386/- for AY 2004-05 respectively. From the assessment order, we also observe that earlier to above notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of trading transaction. The Assessing Officer also observed that though on the documents in question, the name of Shri Mukesh Garg is mentioned but the associated firm/family concern, i.e. the assessee firm was the main supplier of Katha (Catechu) to RMD Group during the period to which these chits and documents are related. Therefore, the Assessing Officer made a substantive addition in the hands of Shri Mukesh Garg and protective addition in the hands of assessee partnership firm was made in respect of documents seized during the search and seizure operation. 8. During the proceedings of appeal filed by present assessee firm, the ld. Commissioner of Income Tax(A) noticed that substantive addition in the hands of Shri Mukesh Garg could not be sustained as per order of the first appellate authority i.e. Commissioner of Income Tax(A). The findings in the appellate order of Shri Mukesh Garg are as under:- The whole addition hinges on evidence gathered from third party document or statement. Now the issue is can third party statement or entry in absence of any corroborative evidence despite using ultimate weapon of search, can result in justified addition. The legal prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such sales were made outside the books. It was held that mere entries in the accounts of a third party were not sufficient to prove that the assessee indulged in such transactions. Assitt CIT v Prabhat Oil Mills [1995] 52 TT J (Ahd.) (iii) Mere statement of the third party that. property was sold to the assessee for a higher amount than shown, no protective assessment could be made in the case of the assessee. The alleged transactions mentioned in the seized diary of a third party were not handwritten by the appellant. The unaccounted purchases has alleged were not corroborated from the search material in the appellant own case. The assessing officer while using the statement of third party should have allowed the appellant to cross examine in order to use this as evidence which was not done. It is well settled in law that the loose papers and documents cannot possibly be construed as books of account regularly kept in the course of business. Such evidence would, therefore, be outside the purview of Section 34 of the Evidence Act, 1972. Therefore, the revenue would not be justified in resting its case on the loose papers, diary and documents found from third party if such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot found credible at all, it could not be said that there was any iota of evidence to support revenue's case that a huge figure over and above figure booked in records and accounts changed hands between parties and therefore, no addition could be made based on such document in hands of assessee. Their Lordship in the case of L.K. Advani vs Central Bureau of Investigation on 1 April, 1997 held that I am tempted here to cite a few lines from Murphy on Evidence, page 180 At common law, an admission made by one party is evidence against the maker of the statement, but not against any other party implicated by it. When the Assessing Officer in the instant case was placing sole reliance on the statement only of Shri Rasik Lal Dhariwal, Shri Prakash Dhariwal, Sohan Raj Mehta for making addition. It was therefore, more so necessary to make arrangement for the cross examination of the witness by Shri Mukesh Garg , the appellant, in the interest of natural justice before taking a final view in the matter. However, from the assessment order it is found that such recourse was not taken by the AO. despite being asked for vide appellant request letter dated 26.12.2011. The Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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