TMI Blog2023 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Rajesh Kumar, Hon ble Accountant Member And Shri Sonjoy Sarma, Hon ble Judicial Member For the Assessee : Shri A.K. Tibrewal, A/R and Shri Amit Agarwal, A/R For the Revenue : Shri Subhrajyoti Bhattacharjee, CIT, D/R ORDER PER RAJESH KUMAR, ACCOUNTANT MEMBER : This is the appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) - 21, Kolkata (hereinafter referred to as the Ld. CIT(A) ], passed u/s 250 of the Income-tax Act, 1961 (hereinafter the Act ), dated 16/09/2021 for the Assessment Year 2018-19. 2. The only issues raised before us is against the confirmation of addition of Rs.20,00,000/- by the ld. CIT(A) as made by the Assessing Officer u/s 69A of the Act in respect of unexplained money. 3. Facts in brief are that, the assessee filed return of income on 31/08/2018 declaring total income of Rs.58,45,250/- after claiming deduction under chapter VIA of Rs.4,60,000/-. A search and seizure u/s 132 of the Act was conducted on 12/09/2017 on GPT Group of cases including the assessee. During the course of search and seizure, mobile data was retrieved and printout of SMS were taken out from the mobile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, I have no option but to hold that the cash transaction as per instructions in mobile pertains to the assessee. The assessee has submitted during the assessment proceedings that the said statement was retracted by him by act of non-including this unaccounted cash transaction in his return of income. The assessee has not filed any retraction statement either during the assessment proceedings or appeal proceedings. Non-inclusion of income in the return filed does not tantamount to retraction. Retraction has to be with logical reason and corroborative evidence which assessee has failed to substantiate. In view of this, it is held that the alleged unaccounted cash belongs to the assessee and addition made of Rs.20 lakhs treated as undisclosed money of the assessee is upheld. These grounds are dismissed. 4. After hearing rival parties and perusing the material available on record, we observe that the addition has been made on the basis of printouts taken out from the mobile recovered from the possession of Shri Atul Tantial, which was stated to be not belonging to the assessee but to Shri Shivratan Sharma, who was an employee of the assessee. In the WhatsApp message, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business purposes. When confronted with the assessee, he explained that the amounts mentioned in thousands are correct and the total amount would be in the range of Rs.5,000/- and Rs.10,000/- given to Shri Anil Kumar to meet the petty cash or miscellaneous expenses from M/s Navaratna Estates during registration of properties. A search u/s 132 was conducted in the case of Shri Lanka Anil Kumar as well as the assessee and the survey u/s 133A was conducted in the case of M/s Navaratna Estates. No evidence was found by the department either in the premises of the assessee or in the premises of M/s Navaratna Estates, having given loan to Sri Anil Kumar to the extent of Rs.1,05,00,000/-. In the search proceedings in the residence of Shri Anil Kumar also, no evidence with regard to unaccounted investment or expenditure representing the loan supposed to be taken from the assessee was found. Merely on the basis of the statement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AO to come to conclusion and make addition in the assessment order. The low or the issue is laid down by the jurisdictional High Court, and followed by ITAT consistently in the following cases. i) K. V. Lakshmi Savitri Devi Vs ACT 148 ITJ 517 (Hyd). ii) K. V. Lakshmi Savjtri Devi Vs ACIT ITTA 563 of 2017 (AP)(HC) iii) Jawahar Bhai Atmaram Hathiwala Vs ITO 128 ITJ 36 (Ahd) iv) DCIT Vs B. Vijaya Kumar ITA No.930 931 of 2009 (Hyd). v) CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) vi) CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 vii)i. Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. vii) P.Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012 The ratio laid down is that solely on the basis evidences such as notings in loose sheets found with third parties and the statement of third parties, additions cannot be made without corroborative evidence and independent enquiries. Applying the above ratio to the facts of the case, it is held that the addition made is not warranted, the same is deleted. 6.1. No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose WhatsApp messages, which is available in the assessment order and we find that nothing could be made out from those messages. In some messages, it was written inward on various dates and some tonnes. In some messages, it was written in outward in tonnes. From those messages, the AO given his own meaning and inferred with tonne means lakhs, inward means cash received for distribution and outward means cash distributed. The AO had also in his own meaning for some other contents recorded in WhatsApp messages and inferred cash distribution timings, shift change timings, etc., and concluded that the assessee has received so much cash and distributed so much of cash to various persons in the process. The AO neither bring on record from which person, the assessee has received cash and to whom the assessee has distributed cash. The AO neither made out a case of source for cash and destiny of cash distributed by the assessee. In other words, the AO has abruptly concluded in his own understanding of the messages, the assessee has received so much of cash and distributed so much of cash and which is nothing but cash for votes and hence, concluded that the assessee has incurred a sum of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on by them. The AO rejected explanation offered by the assessee on the ground that the assessee could not substantiate its claim. In our considered view, the AO is grossly erred in denying the explanation offered by the assessee, because whether or not any explanation offered by the assessee on the messages, but the fact remains that the AO could bring some positive evidence to link the WhatsApp messages to allege that the contents of WhatsApp messages depicts the undisclosed income or expenses of the assessee. In this case, on perusal of those WhatsApp messages what we could understand is that those messages are a dumb document without any corroborative evidence on record and therefore, no addition can be made on the basis of said documents. 9.6 The assessee has relied upon the plethora of judicial precedents in support of his arguments and contended that no additions could be made on the basis of loose papers without any corroborative evidence. The relevant case laws cited by the assessee are reproduced as under: 1. The Following Judgments shall be taken into consideration for the above appeal:- Hon'ble Supreme Court has held in State of Kerala Vs. M.M.Mathew-18.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive finding is not justified. Moreover, in this scribbling in the note is examined on the touch tone on the common law maxim of approbate and reprobate, the addition is further not justified. Relying on the decision of the Hon'ble Apex Court in the case of CIT Vs. P.V.Kalayanasundaram 2007 (294) ITR 49 SC. 5. The Hon'ble CIT(A), erred in confirming the addition, made by the Learned Assessing Officer, while the Show Cause Notice dated 11.12.2018 referred to only one issue i.e., Distribution of Cash to Voters of Nellithope Constituency but the Final Assessment Order passed by A.O. dated 30.12.2018 is on 4 issues and thus the Appellant was denying an opportunity which is against the well-established principles of Natural 3ustice which vitiates the entire proceedings u/s.263 of IT Act, 1961. The admitted position is that, with regard to the other two issues no opportunity was allowed to the Appellant to submit suitable reply to the SCN before passing the Order of Assessment. On these 3 issues, there v.as complete denial of natural justice, for the reason that, the assesse was not allowed any opportunity whatsoever to present his case on these issues threshold. It is an est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on suspicion and non-furnishing of opportunity to cross examine. Without recording statement from the author of the information and the ultimate beneficiary namely Mr.Somasundaram and his father the candidate of Nellithope Constituency and who became the Chief Minister of Puducherry namely Mr.Narayanasamy, and affording any opportunity for cross examine them is violative of the Principles of Natural Justice. The above view further gathers reinforcement from the judgement of the Hon'ble Supreme Court in case of Common Cause (A registered society) and others Vs. UOI, [2017] 77 taxmann.com 245-11.01.2017popularly known Sahara dairies and Aditya Birla diaries case. In this case, the Hon'ble Supreme Court, following the judgment rendered in case of V.C. Shukla (supra), laid down the following principles: - (i) Entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible; (ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... say evidence unless the writer is examined before the court. The Hon'ble Court, thereof held that the attempt to prove the contents of the document by proving the signatures of the handwriting of the author thereof is to set at nought, the well-recognized rule that hearsay evidence cannot be admitted. If we consider the said piece of paper seized during the search in light of definition of the word Document as given in the Indian Evidence Act and General Clauses Act and truthfulness of the contents thereof in the light of the aforesaid decision of the Hon'ble SC, we find that said paper contains jottings of certain figures by the same dose not describe or express the substance of any transaction and even if the said paper has been seized from the possession of the assesse the contents thereof are not capable of describing the transactions the way AO has deciphered them without support of corroborative evidence of the parties attributed to alleged transaction. The said paper, therefor does not come within the compass of definition of Document , to be used as an evidence. The papers seized have no evidently value and hence same cannot be a basis to tax undisclosed income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta [2008] 174 TAXMAN 476 (DELHI): Dumb Document without any corroborating evidence or documents have materialized into transactions cannot be deemed to be held income of the assesse. 18. Ashwani Kumar Vs. ITO - 1999 (39) ITD 183 Delhi - ITAT-08.08.1999 In the case of dumb documents, the revenue should collect necessary evidence to prove that the figures represent incomes earned by the Assesse. 19. S.P.Goel Vs. Deputy CIP - 2002 (85) Mumbai The loose paper in itself has got no intrinsic value. When it is a mere entry on a rule sheet of a paper. Then there has to be circumstantial evidences to support that the entry relates to income. 20. D.A.Patel Vs. Dy. CIT 2000 72 ITD 340 Mumbai held that simply because a sheet of paper was found during the search at the premises of an assesse, he could not be saddled with a tax liability unless it could conceivably be related to the assesse in some reasonable manner. 21. Amarjith Singh Bakshi Vs. Asst, CIT 2003 (86) ITD 13 Delhi, held that any noting in the loose sheet is no evidence itself. Notings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumption under section 132(4A) was not available and the addition made on the basis of the said jottings was deleted. 27. In the case of M.V. Mathew v. ITO [1993] 46 TTJ 353 (Coch.) unaccounted sum found noted in a diary and the assessee claimed that the same represented deposits from certain parties. The parties denied having deposited the amount. The Assessing Officer treated the amount as advance made by the assessee and addition on that account was made. In the absence of clinching evidence to show that the impugned sum was advanced the amount was treated as deposited and the addition made was deleted. 28. The Mumbai ITAT in case of ITO Vs Kranti Impex Pvt. Ltd. in ITA No. 1229/Mum/2013 vide order dated 28/02/2018 held that since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the Revenue wants to make use of it, the onus rests on the Revenue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in had rightly held the sale of agricultural land in Income Tax officer Vs. Shri. P.V. Abraham, dt.06.02.2019 and Income Tax Officer Vs. Abraham Varghese Charuvil 26.04.2017 rely upon ITO Vs. Dr.Koshi George 2009 (317) ITR, AT 116 Kochin - Para 16. 33. The Hon'ble Supreme Court in P.R.Metrani Vs. Commissioner of Income Tax, reported in 2006 (287) ITR, dealing with the scope of Sec. 132, 132(4A), 132(5) 132(B), held while the statement rendered at the time of search u/s. 132(4) may be used in evidence in any proceedings, yet that by itself does not become sole material to rest the assessment when the assesse seeks to withdraw the same by producing material evidence in support of such retraction. 34. The law declared by the Hon'ble Apex Court decision reported in 1973 (91) ITR 18 Pullankode Rubber Produce Co. Ltd., Vs. State of Keraia and another it is held it is always open to a person, who made the admission, to show that the statement to offer income is incorrect and had material to substantiate so, the tribunal is not justified in placing undue emphasis on the statement made by the assesse. The Hon'ble Supreme Court has laid down the Principles for Admiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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