TMI Blog2022 (2) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... ation theory. Book ordinarily mean a collection of sheet or papers or other material, blank or written or printed, fastened or bounded together so as to form a material as a whole. Loose sheets are scraps of papers cannot be termed as books for they can easily be detached and replaced. Therefore, these are not admissible evidences. The impugned addition of unexplained investment in loans u/s 69B is not sustainable - grounds thus raised by the assessee allowed. Addition u/s 69A - unexplained money representing cash seized from the assessee - HELD THAT:- This addition would also stand deleted since it is undisputed fact that the partners of the firm have introduced capital of Rs. 130 Lacs during the year. This credit of the same was already allowed by Ld. AO while computing addition u/s 69B. Therefore, consequent to deletion of addition u/s 69B, this addition would stand deleted. Addition of undisclosed interest and undisclosed commission income - HELD THAT:- Upon perusal of orders of lower authorities, we find that these additions are merely extrapolated additions by taking average of such income earned in other months. However, there is no incriminating material whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apers were found and seized besides seizure of cash of Rs.8.78 Lacs. Consequently, notice u/s 153A was issued to the assessee on 08.06.2013 in response to which the assessee offered income of Rs.100.28 Lacs for AY 2011-12 in the return of income filed on 13.09.2013. 3.2 Upon perusal of ledger as requisitioned u/s 132A, it transpired that the details of interest received by the assessee were available only up-to 31.01.2011. However, interest receipts for the month of February, 2011 and March, 2011 were not recorded in the ledger. The assessee submitted that it had stopped money lending business from 31.01.2011 onwards and thus, no interest was earned. However, the seized document loose sheet No.12 of Annexure PAF/DAM/LS/S, Sl. No.1 contained the list of persons against whom loans were outstanding as on 31.07.2011. Therefore, rejecting assessee s submissions, Ld. AO extrapolated the income for these two months by taking average interest income of ten month. The same resulted into addition of Rs.2.62 Lacs in the hands of the assessee. 3.3 Another addition of Rs.13.26 Lacs stem from the fact that the details of money transfer business were not available for the month of November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Balance Sheet for 31.03.2011 as well as for 31.03.2012, the assessee had not shown any loan outstanding. The Ld. AO opined that the amount of loan outstanding on the date of search was to be ascertained from loose sheet no.12 of Annexure PAF/DAM/LS/S, Sl. No.1 seized u/s 132. The loose sheet was stated to be computerized printout of the working of interest earned on individual loan accounts for the month of July, 2011 i.e., one month prior to the date of search. As per this sheet, the loans outstanding as on 30.07.2011 was Rs.620.54 Lacs and interest pending was shown to be Rs.10.41 Lacs. Accordingly, the assessee was directed to explain the source of the loan given by the firm and also explain as to why these loans were not reflected in the Balance Sheet. 4.2 However, the assessee, vide reply dated 07.03.2014, refuted the allegations of Ld. AO and submitted as under: - a. In continuation of reply filed earlier, we hereby submit the following particulars regarding the computerized printout sheet no. 12 in Annexure PAF/DAML/LS/S, Sl.No. 1 containing the loan outstanding of Rs. 6,20,54,000 as on 31.07.2011 from various persons. b. The computerized printout sheet had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but still it was accepted by the assessee that the bundles belonged to the firm. Further, it was not possible to go through every paper at the initial stage since there were numerous print outs of money transfer business and Annexure-12 may have remained unnoticed. The assessee did not maintain proper books of accounts. Even after the date of search, the assessee did not furnish any details of money lending business from 01.02.2011 to the date of search i.e., 01.09.2011. This would show that the assessee did not want to present correct state of the business for income tax purpose. The onus was on assessee to explain the documents as seized from its premises. Another objection of the assessee that the loan creditors as per manual books did not match with Annexure-12 was to rejected since manual book was a rough book and maintained from 25.02.2010 to 31.01.2011 wherein outstanding loans as on 31.01.2011 were reflected at Rs.66.91 Lacs. After that, there was no books maintained for the business. The assessee was unable to explain as to how the amounts of loans were received back and about further utilization of loans received back. The assessee gave loan for short period of up-to 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nference made by hm was correct. Guess work is not possible in case of search proceedings and it is not permissible to assess the undisclosed income in the absence of any evidence. The unsubstantiated loose sheets cannot be considered as conclusive evidence to make additions of undisclosed income. Regarding addition of cash seized, it was submitted by the assessee that cash stood explained in the Balance Sheet filed along with the return of income. 5.2 The Ld. CIT(A), after considering the findings of Ld. AO as well as assessee s submissions, held that any document found in the premises of the assessee is presumed to be belonging to the assessee unless otherwise proved. Shri T. Kanan, who was actually managing the affairs, identified, owned and described the documents in serial no. 11,13,14,17 22 of the said annexure in reply to question no. 5 to 9 of the statement. Though the assessee disowned this document, Ld. AO countered the submissions of the assessee. Therefore, both the additions were justified. The relevant observations were as under: - 11. The assessee has simply claimed that the incriminating documents do not belong to them without stating to whom it belongs to. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no other evidence on record that the assessee was doing money lending business after 31.01.2011. In fact, no such interest income has been offered to tax by the assessee during this year and no such interest income has finally been assessed by Ld. AO for any part of the year in the assessment order. Pertinently, this document supposedly contains the amount of interest earned by the assessee. However, even the same has not been considered to be the income of the assessee which would show that the lower authorities, themselves, were unsure as to the contents of this document. Considering all these facts, the inescapable conclusion would be that the impugned addition is based merely on the suspicion, conjecture and surmises. The same stem from the allegation that the aggregate of loans purportedly contained in this document was advanced by the assessee and the assessee earned interest on such loans. However, such a conclusion is bereft of any corroborative positive evidence which would show that the assessee was even in this kind of business during the year and advanced loans and earned interest income during the year. No investigation, whatsoever, has been carried out by Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d solely on tangible material and not on the basis of estimations or extrapolation theory. 8. The aforementioned legal position is duly supported by the judgment of Hon'ble Supreme Court in case of CBI v. V.C. Shukla (1998 3 SCC 410) wherein it was held that any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. The Hon ble Court observed that Book ordinarily mean a collection of sheet or papers or other material, blank or written or printed, fastened or bounded together so as to form a material as a whole. Loose sheets are scraps of papers cannot be termed as books for they can easily be detached and replaced. Therefore, these are not admissible evidences. Similar is the subsequent decision of Hon ble Supreme Court in Common Cause v. UOI, [2017] 77 taxmann.com 245 wherein it was reiterated that only when the entries are in the books of account regularly kept, would be admissible. Similarly, Hyderabad bench of Tribunal in the case of DCIT V/s Shri K. Babu Rao (ITA No.329/Hyd/2012 24/01/2014) held that other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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