TMI Blog2021 (11) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... orroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized paper reveled the unaccounted income of the assessee. Further, no circumstantial evidence in the form of any unaccounted cash, jewelry or investment outside the books of account was found in the course of search action in the case of assessee. Thus, the impugned addition was made by the AO on gross relief in advocate material or rather no sufficient material at all and as such neither to be deleted. We are of the view that an assessment carried out in pursuance of such action, no addition can be made on the basis of un-corroborative noting and scribbling on loose paper made by unidentified person having no evidentiary value, is unsubstantiated and is bad in law. Addition towards unexplained expenditure - addition on the basis of loose sheet - HELD THAT:- As we have deleted the various additions in all these assessment years, which are based on the seized material marked as A/BHB/11 and not supported by any material evidence. Being so, the amount voluntarily offered by the assessee in his return of income at ₹ 3,03,05,017/- is to be taxed and as such there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 (Asst. Year 2008-09) 5. The ground in this appeal is with regard to making addition under section 69A of the Act, though there was no finding that the assessee was found to be the owner of the money, and by ignoring the case laws cited by the assessee. According to the assessee, the provisions of section 69A of the Act is not applicable but section 69 is applicable. Further, the AO not recorded any satisfaction as required under section 69A of the Act. 6. The ld.DR relied on the order of the lowest authorities and also submitted that presumption u/s 132(4A) is a rebuttable presumption, the assessee herein has been unable to rebut that presumption. Hence, no fault with the conclusion arrived by the lower authorities. He relied on the following judgments :- 1) Surendra M Khandhar Vs. ACIT reported in 224 CTR 409, by the Hon ble Bombay High Court 2) ITO Vs. Legal heirs of Nazmin Jamal 33 taxmann.com 208, the Hon ble ITAT, Mumbai 3) Hazari Lal Vs. CIT reported in 20 taxmann.com 714 by the Hon ble Punjab Harayana High Court 4) CIT Vs. Naresh Kumar Agarwala, reported in 198 taxman 194, the Hon ble Delhi High Court. 7. Finally he submitted that considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not satisfactorily explained the reason for making entries in the loose sheet and actually it is out of the books of account. The assessee advanced money and the same was brought to tax. Further, it was submitted that the document was seized from the possession of the assessee and he did not deny the said document, hence the AO presumed that the amount shown in documents which has not reflected in the accounts made by assessee was his income by way of unexplained investment. He relied on the order of the CIT(A). 15.1 The ld.DR also relied on the following case laws:- 1. Surendra M.Khandhar vs ACIT reported in 224 CTR 409, by the Hon'ble Bombay High Court. 2. ITO vs Legal heirs of Nazmin Jamal 33 taxmann.com 208, the Hon'ble ITAT, Mum ba. 3. Hazari Lal vs CIT reported in 20 taxmann.com 714 by the Hon'ble Punjab Haryana High Court 4. CIT vs Naresh Kumar Agarwala, reported in 198 taxman 194, the Hon'ble Delhi High Court. 15. We have heard both the parties and perused material on record. In the present case, the basis for addition is entry in the loose sheet, which shown as 25/4/2007 to Shri Vijaya Kumar on the basis of this entry in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get hold of books of account or documents which has not been or will not be otherwise produced by the assessee in regular course on issue of summons or notice. For this purpose, we place reliance on the finding of the coordinate Bench in the case of Devraj Urs Educational Trust for Backward Classes in ITA No.500 to 506/Bang/2020 dated 16/8/2021 wherein held as under- The contention of the ld. DR is that the department relied upon the statement of assessee s own employee, who need not cross-examine its own employee and there is no mistake in not providing opportunity of cross-examination to the assessee. However, we are not in agreement with the contention of the ld. DR. The right to cross-examine is not dependent upon the assessee s relationship with the witnesses. The right to cross-examine depends upon the fact that statement of the party is used against the assessee. Therefore the mere fact that the statement sought to be relied upon by the AO is that of the employee would not disentitle the assessee to cross-examine. Therefore, the ratio relied upon by the assessee squarely applies and it is the prerogative of assessee whether it wants to cross-examine or not. It was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee rests on shaky and incorrect foundation and thus deserves to be quashed. 17. The Tribunal in the case of Sri Y. Siddaiah Naidu, Tirupathi vs. Asst. Commissioner Of Income-Tax 2015 (2) TMI 403 - ITAT HYDERABAD held that it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction as no names have been mentioned. In these circumstances, no addition can be made on the basis of such document. 19. In CIT v. M/S Khosla Ice General Mills 2013 (1) TMI 451 - Punjab Haryana High Court, the Hon ble Court held that assessee rightly contended that the impugned document was a non-speaking 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. When a dumb document, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 of Evidence Act so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by the Court. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. (para 7) If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show- Cause Notice. (para 8) 24. The Delhi Tribunal in the case of Veena Gupta v. ACIT in ITA No.5662/Del/2018 dated 27.11.2018 relying on the above judgment of Hon ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded. 25. The Hon ble Supreme Court in the case of Mehta Parikh Co. v. CIT, 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness profits tax purposes, representing the value of the high denomination notes which were encashed. 26. Further the Hon ble Supreme Court in the case of CIT v. Odeon Builders (P.) Ltd., 418 ITR 315 (SC) headnote is as follows:- Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re-examination, if necessary. 9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result we decline to answer the question. 29. In the present case, as stated above, the purported search action did not leadto discovery of any unaccounted money, bullion, jewellery or other valuable article or thing. Further, no books of accounts or any undisclosed transaction of the assessee were found during the course of search. The entire assessment order revolve around scribbling in loose sheet of paper received from assessee in course of such action. It is the fact that the said rough loose sheet on paper scribbled by some anonymous person seized in the course of search cannot be termed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n recovery of any undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets. 32. Accordingly, the addition made by the AO u/s 69A of the Act is deleted. ITA No.1376/Bang/2016 (asst. year 2009-10) 33. In this asst. year, the addition is made @ ₹ 25 lakhs on the basis of loose sheet u/s 69A of the Act wherein, the entry as follows in seized material A/BHB/11 25 Anand 25 in the seized material A/BHB/11 34. The ld.AR submitted that as per the loose sheet A/BHP/11, item 13 shows Anand Prasanna Theater and also date is not recorded in the loose sheet but AO takes date of Shri KC Nagarj as 25/3. According to the ld.AR, these additions of ₹ 25 lakhs was unexplained investment as per AO to one Anand Theater, Bangalore is wrong addition since A/BHB/11, there is no such name called Anand Theater, Bangalore. According to assessee only sum of ₹ 13,407/- was paid on 6/2/2009 as per the ledger extract. This also confimed by the assessee in his reply to notice u/s 142(1) dated 24/1/2014 and figure mentioned in seized material marked A/BHB/11 at page 10 only indicate amount due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Aptha Rakshaka @ ₹ 15 lakhs relating to the assessment year 2010-11 and Sl.No 17 Aptha Rakshaka (24) totaling ₹ 39, when both are added. But the loose sheet mentions only ₹ 25 lahks and Shri Krishna Kumar also mentioned as ₹ 25 lakhs paid to Basha vide letter dated 13/04/2011. But the AO added ₹ 15 lakhs only on assumption of assessee has received by cash. Hence, this addition to be deleted. Bhadra : 25 lakhs 40. The ld.AR submitted that there has no mention of this amount in the loose sheet. The AO observed that the assessee has given 45 lakhs to Shri N Kumar, the producer of the movie. In the ledger account filed during the course of search, it was observed that an amount of ₹ 20 lakhs was shown. Thus, there was a difference of ₹ 25 lakhs with the AO without proof, he assumed that it was the payment by cash. Further, the date mentioned in the assessment order was as 08/2/2010 instead of 08/12/2010 (as per loose sheet vide item no.3 - N Kumar 45=00). The AO wrongly assumed the date as 08/12/2010 and made addition for the above assessment year under consideration. The same may be deleted. Bhanu Hassan : ₹ 25 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assumption. The argument of the AR that there is no foolproof evidence in this regard. Hence, the addition to be deleted. 46. We have heard both the parties and perused the materials on record. As discussed in earlier assessment year 2008-09 in ITA No.1375/Bang/016, the addition is deleted on similar line. 47. Now coming to the unexplained expenditure of ₹ 24.10 lakhs, the AO made addition on the basis of loose sheet marked as page-5 of seized material A/BE/6 shows as follows:- 48. According to AO, there was unexplained expenditure of ₹ 24.10 lakhs and same was brought to tax. 49. As discussed earlier, the addition is based on unsubstantiated loose sheets and on that basis addition cannot be made. Accordingly, the addition is deleted. Additional ground : ITA No.1377/Band/16 The appellant having admitted u/s132(4) a sum of ₹ 3.03 crore as his income and the same having been accepted and assessed as income from other sources by the AO, the AO ought to have given the benefit of telescoping of alleged cash payments against this admitted income, in the interest of justice. 50. This additional ground is infructuous in view of our fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara films seeking financial assistance of ₹ 25 lakhs of Kannada picture Adduri, which is made at page No.23. As per the ledger extract furnished by the assessee, the AO stated that the assessee has made the payment of ₹ 28 lakhs only by cheque and the assessee also mentioned in the ledger extract that he has advanced only ₹ 3.50 crores to the producer of Adduri, a sum much more than the amount mentioned in the seized document. As mentioned in assessment order page No.27, the AO linked the letter of CMR Production, wherein they have directed to pay 30 Lakhs directly to the assessee vide letter dated 22/03/2011. The AO overlooking the ledger extracts and without having any proof of cash transaction between Shankar Reddy and the assessee, made addition of ₹ 16 lakhs and same has to be deleted. Mass : ₹ 45 lakhs 55. As per item No.2 A.Ganesh Mass - 12/01/2011 65=00 as mentioned in the seized material. Vide letter dated 11/01/2011 written by A.Ganesh to the secretary, KFCC that Bahar films has been given negative right holder of Kannada film Mass. But nowhere there is mention of cash transaction in the letter but only the letter given by A.Ganes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of additional ground stating that it does not involve any investigation on the facts otherwise than found on the records of the department and is a pure question of law and goes into the very root of the matter. Hence, it is prayed that additional ground may be admitted for advancement of substantial case of justice having regarded to the ratio laid down in National Thermal Power Co. Ltd., Vs. CIT (1998) 229 ITR 383 (SC) and Gundathur Thimmappa and Sons Vs. CIT, Mysore (1968) 70 ITR 70 (Kar). 62. We have heard both the parties on admission of above additional grounds. In our opinion, these are legal issued and it does not require any investigation of facts which are already on record. Accordingly by placing reliance on the judgment of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., cited Supra, we admit the additional ground for adjudication. 63. Now coming to the issue relating to not giving the telescopic benefits of ₹ 3.03 crores the AO given only ₹ 1.33 crores. 64. In the present case, we have deleted the various additions in all these assessment years, which are based on the seized material marked as A/BHB/11 and not supported by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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