TMI Blog2023 (4) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... tive evidence such application of money for alleged expenditure, renovation/construction material bills, payment of labor or even Department Valuation Officer report in order to estimate the expenditure is not tenable and cannot be approved. Addition was being made on the basis of uncorroborated rough noting in a diary. CIT(A) has deciphered the figures by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures to multiple of 00 (stands 100) is not justified. AO had made no enquiry regarding the alleged disputed expenditure based on rough blank figure/jotting in a diary that what are the renovation/construction material bills, payment of labor or even not referred Department Valuation Officer s report in order to estimate the expenditure on the said rough noting of the paper of diary which does not fall within the definition of books of account or document. If, a rough diary paper seized without being corroborated with relevant documentary evidence to the effect to understatement the alleged renovation e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the facts and circumstances of the case, Hon ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition without considering the submission of assessee that the total of cash expenses of Rs. 36,000/- was incurred against renovation and not Rs. 36 Lakhs as alleged by the Ld. Assessing officer and had not used any codes i.e Rupee =Paise to mention the cash expenses. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. Ground of appeal in ITA No. 628/Asr/2019 1. That the order passed by the Hon ble CIT(A) u/s 143(3) r.w.s 153A of the Act dated 29.07.2019 is against the law and facts of the case. 2. That having regard to the facts and circumstances of the case, Hon ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 153A/143(3) of the Act which is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. 3. That having regard to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of hearing and all the above grounds are without prejudice to each other. 5. There are identical grounds involving common issue except variation of figures in these three appeals challenging the impugned orders of the Ld CIT (A) in confirming the addition on account of unexplained expenditure in cash on the renovation of her house no. 435, New Jawahar Nagar. Therefore, we decided to hear these three appeals together and disposed of by this common order for brevity. We have chosen to take ITA No. 627/Asr/2019, Assessment Year: 2012-13 as a lead case for facts and discussion. 6. Briefly the facts as per record are that the assessee is an individual, who filed his original return declaring an income of Rs.4,44,040/- on 31.07.2012 that a Search and seizure was conducted u/s 132 at the premises of the assessee on 08.09.2016 and notice u/s 153A of the Income Tax Act was issued. In compliance to which assessee filed return of income declaring same amount of income as that of original return i.e. Rs.4,44,040/- on 29.04.2018 and filed all the documents called for during the assessment proceedings. The AO being not satisfied with the submission of assessee made disputed addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures. In fact, the figures of 25 30 above which 'CH' is written, represents the amount of Rupees twenty five lacs (Rs. 25,00,000/-) and Rupees thirty lacs (Rs. 30,00,000/-) each received by Sh. Sushil Sabharwal Sh. Rakesh Sabharwal through cheques as detailed below:- Cheque No. Amount Name 093989 dt. 03.05.2012 Rs. 25,00,000/- Sh. Sushil Sabharwal 093990 dt. 03.05.2012 Rs. 25,00,000/- Sh. Rakesh Sabharwal 093995 dt. 31.07.2012 Rs. 30,00,000/- Sh. Rakesh Sabharwal 093999 dt. 31.07.2012 Rs. 30,00,000/- Sh. Sushil Sabharwal Since, the payments made through cheque are verifiable from the records, it cannot be denied that the writings of above figures are in coded form. On the verification of these amounts from the bank accounts of Sh. Sushil Sabharwal and Sh. Rakesh Sabharwal, it cannot be said that these figures of 25 represents only 25 rupee and 00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, it is concluded that the AO was right in his inference that the amounts recorded in seized annexure A-2 are written in coded form and the code to be applied to read the figures and to arrive the actual amount is to be inferred, as per the other noting, by putting '00' after the figure written in coded form. Hence, the figures written as '36000=00' is to be read as Rs. 36,00,000/-. The argument of the AR that the amount represents only Rs. 36000=00 relating to daily wages payments to Labour for renovation of house is not found acceptable because the pattern of payments also does not support the above contention since the labour is to be paid either on weekly or monthly basis which is not so in this case. Had it been the case of labour payment, then the figure for each month/week should have appeared on regular basis that also without the abnormal variations from month to month basis as is noted in the present case. In view of the discussion above, it is held that the figure mentioned in the diary which are accepted by the AR also as relating to the 'summary of construction material and other expenses/payments made by the assessee, are in coded form and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Nagar, Jalandhar, during the period October, 2009. The AR repeatedly contended that these do not pertain to the year under consideration. The Ld. AR further argued that nothing has been brought on record to show that the amount was not actual but coded as alleged with corroborative evidence to multiply figure with 00. Thus the Ld. AR contended that the jotting in the diary by no stretch of imagination can be treated as conclusive proof of alleged unexplained expenditure by the assessee and hence presumption u/s 292C cannot be taken against the assessee. The AR argued that the expense cannot be restricted to an extent incurred by some other persons, on the basis of presumptions, conjectures surmises only. In support, he filed a written brief note which reads as under: 1. That the addition made by Ld. AO is not based on corroborative evidence which could substantiate the claim of Ld. AO that assessee used any coding. 2. That Ld. AO on his own has deciphered the figures on the paper by adding 00 at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for adding the zeros. 3. That Ld. AO did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome on the basis of seizure of a document which showed certain unexplained entries totalling 48 Not justified There is no material on record to show as to an what basis the AO has reached the conclusion that the figure 48 is to be read as Rs. 48 lacs Said document is a dumb document and leads to now here Addition rightly deleted by the Tribunal There is no error in the order of the Tribunal and it does not give rise to a question of law, much less a substantial question of law 3. Atul Kumar Jain V/s DCIT, Hon ble Delhi ITAT, (1999) 64 TTJ 0786 in which it was held as under: Search and seizure Block assessment Computation of undisclosed income Addition on the basis of uncorroborated chit of paper AO has deciphered the figures on the paper by adding 00 , 000 or 0000 at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for adding the zeros Not justified He has not examined the assessee or the author of the said paper AO has not brought any material on record to show that the figures related to sale or purchase of property He made no enquiry from the purchaser Said paper does not fall within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantum of income from the face of the document without there being any investigation There is no evidence on record to show that the assessee or his LRs took any steps to recover the amounts or the AO has taxed the amounts as wealth of the assessee Addition could not be sustained under s. 68 also because on the one hand, the AO had made addition under s. 69 and on the other, the document being only a loose paper could not be construed as book within the meaning of s. 68 For the same reasons, additions of Rs. 20,000 and Rs. 90,000 on the basis of yet another dumb document were also uncalled for Consequently, there is no question of charging of tax on notional interest on such amounts However, in respect of document showing name of assessee, 50 items in different quantities at different rates purchased also showing expenditure quantified at Rs. 1,31,736 bearing date, lower authorities were justified in treating the amount as expenditure/investment and making addition in the absence of any evidence brought by the assessee to show that it was not purchase but only a quotation 5. Hon ble Cuttak Tribunal in the case of ADD. CIT VS. Prashant Ahluwalia 92 TTJ 464 (CTK) in which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court (2007) 293 ITR 0043 in which it was held as under: Appeal (High Court) Substantial question of law Block assessment Both CIT(A) and Tribunal having deleted addition in block assessment by concurrent findings that document relied on by Revenue was dumb document, such findings were essentially of fact not giving rise to any substantial question of law Appeal dismissed Sir, it is submitted that Ld. AO made similar addition on the basis of alleged coding in the case of husband of assessee Sh. Susheel Sabharwal and that casehas been decided inn favour of assessee by the Hon ble ITAT Amritsar vide order dated 16.09.2022 in ITA no.68//ASR/2019, copy of order is enclosed herewith in which it was held as under: 17. In the present case, the addition was being made on the basis of uncorroborated rough noting of paper/diary. The Ld. CIT(A) has deciphered the figures on the paper by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures is not justified. Further, the AO had made no enquiry from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant assesse. 11. It is seen that the rough noting/jotting in the diary, found during search, appears to be pertains to estimation of expenses regarding house renovation. It is not deciphered that the figures/jotting in the alleged Diary were in multiple of 100 as presumed by the authorities below by way of multiplying with 00 (Double Zero) without support of corroborative evidence on records that the amounts were actually in lakhs as against thousands claimed by the appellant. 12. The Ld. AR argued that neither of the authorities below had drawn independent nor collective meaning of noting/entries written in the rough diary to supported the conclusion/findings. He contended that the contents of the diary thereof are not capable of describing the transactions the way A.O. and the Ld. CIT(A) have deciphered them. He further contended that since the diary jottings have not been corroborated with the any supporting material evidence on record from any other findings on alleged renovation of house, hence, the jottings in the diary by no stretch of imagination can be treated as conclusive proof of expenditure transaction by the assessee as observed by the Ld. AO. and end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assumption, presumption and conjectures in absence of supporting corroborative evidence such application of money for alleged expenditure, renovation/construction material bills, payment of labor or even Department Valuation Officer report in order to estimate the expenditure is not tenable and cannot be approved. 15. From the above, it is evident that the addition was being made on the basis of uncorroborated rough noting in a diary. The Ld. CIT(A) has deciphered the figures by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures to multiple of 00 (stands 100) is not justified. Further, the AO had made no enquiry regarding the alleged disputed expenditure based on rough blank figure/jotting in a diary that what are the renovation/construction material bills, payment of labor or even not referred Department Valuation Officer s report in order to estimate the expenditure on the said rough noting of the paper of diary which does not fall within the definition of books of account or document. If, a rough di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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