Income Tax Appellate Tribunal - Indore
Dcit ,Central-1 Bhopal, Bhopal vs Shri Jasjeet Singh Walia, Bhopal on 28 November, 2022
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER
AND
SHRI B.M. BIYANI, ACCOUNTANT MEMBER
(Conducted through Virtual Court)
ITA No.183/Ind/2020
Assessment Year: 2013-14
DCIT, Central-1, Shri Jasjeet Singh Walia
Bhopal बनाम/ (Shri J.S. Walia),
Bhopal
Vs.
(Appellant / Revenue) (Respondent / Assessee)
PAN: AAGPW 9630 G
Assessee by Shri Vijay Bansal & Ms. Nisha Lahoti, ARs
Revenue by Shri P.K. Mitra, CIT-DR
Date of Hearing 31.08.2022
Date of Pronouncement 18.11.2022
आदे श / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 02.07.2020 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal ["Ld. CIT(A)"], which in turn arises out of assessment-order dated 27.03.2015 passed by learned DCIT, Central-1, Bhopal ["Ld. AO"] u/s 143(3) of Income-tax Act, 1961 ["the Act"], to the extent it concerns Assessment-Year ["AY"] 2013-14, the assessee has filed this appeal on following grounds:
"1. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.47,88,597/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
2. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.1,27,226/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
3. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.7,00,000/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
4. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.3,16,214/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
5. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.6,25,000/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
6. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.22,50,000/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
7. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.2,15,00,000/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
8. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.3,00,000/- made by the AO on account of unexplained expenditure u/s 69C of the Income Tax Act 1961.
9. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.64,35,000/- made by the AO on account of unexplained expenditure u/s 69B of the Income Tax Act 1961.
10. On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs.13,39,598/- and Rs.13,55,598/- made by the AO on account of Benami Investment."Page 2 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
2. Heard the learned Representatives of both sides at length and case- records perused. During hearing before us, the Ld. DR placed a heavy reliance on the assessment-order and reiterated the observations/ conclusions made by Ld. AO therein. As against this, the Ld. AR vehemently supported the order of first-appeal and emphasized the observations/ conclusions made by Ld. CIT(A) therein. Ld. AR also placed reliance on the documents placed in Paper-Book and Written-Submission filed by him.
3. The registry has informed that that the present appeal is filed after a delay of 60 days and therefore time-barred. The Ld. AR prayed that the delay has occurred due to Covid-19 Pandemic. The Ld. AR further placed reliance on the order of Hon'ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 read with Misc. Applications, by which suo motu extension of the limitation-period for filing of appeals w.e.f. 15.03.2020 under all laws has been granted and hence there is no delay in fact. We confronted the Ld. DR who agreed to the submission of Ld. AR. In view of this, the appeal is proceeded with for hearing, there being no delay.
4. Briefly stated the facts leading to present appeal are such that the assessee-individual was subjected to a search u/s 132 of the act on 20.06.2012. The assessee filed return declaring a total income of Rs. 1,57,69,000/- (including a surrender of excess-cash of Rs. 1,50,10,000/- found during search) which was subjected to scrutiny assessment by issuing statutory notices u/s 143(2) / 142(1). Finally, the assessment was completed u/s 143(3) at a total income of Rs. 5,41,66,635/- after making certain additions. Being aggrieved, the assessee filed first-appeal to Ld. CIT(A) and got a substantial relief. Now the revenue has come in appeal before us assailing the order of first-appeal passed by Ld. CIT(A).
Ground No. 1 to 2:
Page 3 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
5. These grounds relate to the addition of Rs. 47,88,597/- and Rs.
1,27,226/- made by Ld. AO on account of unexplained expenditure u/s 69C of the act.
6. Facts qua these additions are such that during the course of search, the revenue-authorities seized certain documents marked as LPS-1/Page No. 1 to 38, which contained handwritten details of expenses incurred by assessee in two parts, viz. LPS-1/Page No. 1 to 21 was a notebook called "classmate" containing details of payments made to various persons, travelling, Bare Saheb, Mini Peon, Directorate Peon, DFO (Sidhi), Medicine, Bhayiya, Site Expenses, etc. and LPS-1/Page No. 22 to 38 was a notebook called "sarvottam" containing details of travelling, hotel, dinner expenses, etc. Thereafter, during assessment-proceeding, Ld. AO confronted the assessee to explain the transactions mentioned therein. In response, the assessee made following submissions which is noted by Ld. AO in assessment-order:
"8.2 The assessee vide reply dated 21.01.2015 stated that:-
"In Para B-3 & B-4, you have referred two documents (i) LPS-1 page 1-21 and
(ii) LPS-1 Page 22-38. The assessee submits that these two are petty cash memorandum books. The one bearing document no. LPS-1 page 1-21, was maintaining by Motilal Jain, who was the senior accountant at that time, maintaining the accounts of all the business concerns. The other i.e. LPS-1 page no. 26-38 is also a petty cash book which was being maintained by Jr. Account clerk Rajinder Singh. It is further submitted that whenever, some small cash is given to Rajinder Singh by Motilal Jain for meeting petty expenses, Motilal Jain use to note down in his petty cash memorandum book on the outflow side and correspondingly Rajinder Singh use to note down the said small sums on the receipt side of his petty cash book and, therefore, at many place, your honour will find such notings also. The perusal of the two documents would also show that on their debit side, the business expenditure mainly related to mining business have been noted and on its credit side, the sources of meeting such expenditure have also been reflected but the tenor of your notice gives a reflection that your honour is looking at only on the debit side and not the other side showing the sources thereof. The assessee submits that this is neither fair nor judicious and humble request you to kindly read the two documents as a whole.
The assessee submits that the aforesaid two documents are also part of the accounts. From the petty cash book, time to time reconciliation is made and Page 4 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 after ascertaining the nature of transaction and after the receipt of pending bills or vouchers, the transactions are incorporated in the main cash book. The transactions noted in the aforesaid two petty cash books are explained as under:-
(i) The nature of noting of entries in LPS-1/Page 1 to 21 are explained in the chart marked as "Chart-L" - (Copy attached - Encl.
Page No. --------). From the perusal of the said chart, it would be seen that out of the total entries on the debit side of Rs. 4181416, Rs. 1777967 are incorporated in the main cash book, Rs. 1615013 are the entries of business expenditure relating to mining business, Rs. 42000 are the petty cash amounts given to Rajinder Singh which are reflecting on the receipts side of LPS-1/Page 22 to 38 and the other Rs. 746436 are the personal transactions. The total of credit side of the said chart is Rs. 4203668. Out of which Rs. 640000 is incorporated in the main cash book, Rs. 2967000 are Karan Mineral Sales (K.M Sales) & the other items are not in the nature of income. Thus from the chart, it is seen that against the total sales receipts of Rs. 2967000, there is an expenditure noted are Rs. 1615013, thus the difference between the two revenue items is Rs. 1351987 and at the best this could be the income though noted in the petty cash memorandum book but due to the reasons explained in the chart, could not be incorporated in the main cash book and the said income stands covered in the cash surrendered in the search.
(ii) The nature of notings of entries in LPS-1/Page 22 to 38 are explained in the chart marked as "Chart-Z" - (Copy attached - Encl. Page No. --------). In the chart, it has been shown that if the revenue items are considered then there is a loss of Rs. (-) 12985 and, therefore, the aforesaid seized documents does not show any income escaping assessment rather loss of Rs. 12985 be set off against the income of Rs. 1351987 as explained in Para (i) above.
The assessee submits further that in para B-3, you had mentioned the total expenditure in LPS-1/Page 1-21, noted are Rs. 4788597. The assessee submits that this is a wrong total, the correct total is Rs. 4181416. It is also submitted further that in the said memorandum cash book, there are some stray notings of personal withdrawal/transactions but there is no noting of a bribe and categorically submits that there are no payments of bribe or any illegal gratification."
7. However, the Ld. AO rejected the submissions of assessee with respect to LPS-1/Page No. 1 to 21 and made addition of Rs. 47,88,597/- by observing and holding as under:
"8.3 The submission of the assessee has been considered and examined but the same is not acceptable.
A The assessee has not submitted any material evidence to substantiate his Page 5 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 claim.
B. As per the loose papers it is evident that the assessee has made cash expenditure of Rs. 47,88,597/- to various persons. The above cash expenditure of Rs. 47,88,597/-- has not been entered in the books of accounts of assessee. Name of the persons is also appearing in the above loose papers like Bare Saheb, Mini Peon, Directorate Peon, DFO (Sidhi), Medicine, Bhayiya.
C. The assessee has also not submitted any evidence as the above loose papers has been written by the other persons.
D. This above handwritten note book has been found and seized from the premise of the assessee. Therefore, in view of provisions of section 132(4A) of the Income tax Act, 1961, it is presumed that the transactions recorded in this loose paper pertain to the assessee and the content of these transactions is true.
8.4 Therefore, in view of above facts and circumstances of the case, it is established and held that the above loose papers records the cash expenditure of Rs. 47,88,597/- for AY. 2013-14 made by the assessee. These cash expenditure are not recorded in the books of accounts of the assessee.
8.5 Thus based on above facts and circumstance, it is evident that the assessee had made total cash expenditure of Rs 47,88,597/- to above persons. The source of above cash payments remains unexplained. This cash payment of Rs. 47,88,597/- was paid by the assessee as unexplained expenditure and is covered by section 69C of the IT Act, as the explanation offered by the assessee about cash expenditure is not satisfactory.
8.6 In view of the above, I am to hold that the assessee has not been able to explain the source of expenditure of Rs. 47,88,597/- and hence it is treated as undisclosed income of the assessee of Rs. 47,88,597/- for AY. 20l3-14 u/s 69C of the Act. In this connection reliance is placed on the judgment of the Calcutta High Court in the case of Bhagwati Developers Pvt. Ltd. (261 ITR
658) and Madras High Court in the case of Grand Bazar (292 ITR 269) wherein the addition on account of unexplained expenditure for want of satisfactory explanation on the source of such payment was held to be justified. The ITAT, Calcutta in the case of Balurghat Transport Co. Ltd.(105 Taxman 155) was of the view that the payment made to ULFA recorded in a document found during search which was not accounted for in the books, has to be treated as unexplained expenditure to be hit by provisions of section 69C of the Act. In the light of above observations and the cited case law (supra), I am to hold that the source of such expenditure of Rs. 47,88,597/- for AY.2013-14 does not stand explained by the assessee and therefore, deserves to be added as undisclosed income of the assessee u/s 69C of the Act. Accordingly sum of Rs.47,88,597/- for A.Y.2013-14 is hereby added to the total income of the assessee."
Further, the Ld. AO also rejected the submissions of assessee with respect to LPS-1/Page No. 22 to 38 and made an addition of Rs. 1,27,226/- in the Page 6 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 relevant AY 2013-14 under consideration, by observing and holding as under:
"9.3 The submission of the assessee has been considered and examined but the same is not acceptable:
A. The assessee has not submitted any material evidence to substantiate his claim.
B. As per the loose papers it is evident that the assessee has made cash expenditure of Rs. 1,68,313/debited against various person for travelling, hotel, dinner etc. The above cash expenditure of Rs. 1,68,3l3/- has not been entered in the books of accounts of assessee.
C. The assessee has also not submitted any evidence as the above loose papers has been written by the other persons.
D. This above handwritten note book has been found and seized from the premise of the assessee. Therefore, in view of provisions of section 132(4A) of the Income tax Act, 1961, it is presumed that the transactions recorded in this loose paper pertain to the assessee and the content of these transactions is true.
9.4 Therefore, in view of above facts and circumstances of the case, it is established and held that the above loose papers records the cash expenditure of Rs. 1,68,313/- in the name of various persons for travelling, hotel, dinner etc. for A. Y. 2012-l3 and 2013-14 made by the assessee. These cash expenditure are not recorded in the books of accounts of the assessee.
9.5 Thus based on above facts and circumstance, it is evident that the assessee had made total cash expenditure of Rs 1,68,313/- to above persons.
The source of above cash payments remains unexplained. This cash payment of Rs. 1,68,313/- was paid by the assessee as unexplained expenditure and is covered by section 69C of the IT Act, as the explanation offered by the assessee about cash expenditure is not satisfactory .
9.6 In the light of above observations and the cited case law (supra), I am to hold that the source of such expenditure of Rs. 1,68,313/- made by the assessee in A. Y. 2012-13 and 20 l3-14 does not stand explained by the assessee and therefore, deserves to be added as undisclosed income of the assessee uls 69C of the Act. Accordingly sum of Rs. 1,68,313/- is hereby added to the total income of the assessee as per below mentioned A.Yrs.
A.Y. Amount (In Rs.)
2012-13 41,087/-
2013-14 1,27,226/-
Total 1,68,313/-
8. During first-appeal, the assessee made a detailed submission to Ld. Page 7 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 CIT(A). After considering submission of assessee, the Ld. CIT(A) deleted both of the additions of Rs. 47,88,597/- and 1,27,226/- by observing and holding as under:
"4.9.2 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant during the course of appellate proceedings has explained that page no 1 to 21 and page no 22-38 of LPS-1 are two petty cash books being maintained by Shri Motilal Jain, Senior accountant and Shri Rajinder Singh, account clerk. Shri Rajinder Singh was provided with petty cash by Shri Motilal Jain to meet petty expenses, the noting of the exchange of cash was done by both Shri Motilal Jain (on payment side) and Shri Rajinder Singh (On receipt side). The petty cash books were part of books of account and were reconciled time to time. The appellant has taken a plea that the AO has only taken debit side into consideration and has totally neglected credit side which clearly explains source of such expenditure.
I find a strong force in the plea raised by the appellant that the impunged document was to be considered in totality. The AO cannot pick and choose one side as per his liking and left the other side. It is settled law that any evidence (here in this case diary with page no 1 to 21 and page no 22 to 38 of LPS-1) has to be seen as a 'whole' in its entirety and any authority is not permitted to 'pick and choose' the same piece of evidence and give a totally different interpretation. The A.O has accepted the payments made as per the impunged diaries as genuine and has completely ignored the receipts clearly mentined in the impunged diaries. Hon'ble Gujarat High Court in the case of CIT v/s Tirupati Construction Co (2015) 55 Taxmann.com 308 (Guj) wherein it was held that while appreciating a document (in this case a diary), it is required to be considered in its entirety and it cannot be considered in part. It is also important to note that the assesse has explained the repetition of same amount one of debit side and other on credit side amounting to Rs. 42,000/- being cash paid by Shri Motilal Jain to Shri Rajinder Sngh to meet out petty expenses, further, assessee has explained that debit entries of Rs. 17,77,967/- were already incorporated in audited books of account and expenses of Rs. 7,46,436/- are personal in nature. The assessee has satisfactorily discharged his onus and the A.O. was not justified in 'shifting the onus back' on appellant and that too on flimsy grounds.
4.9.3 On perusal of the page no 1 to 21 of LPS-1, the first diary, it is seen that the total of debit entries comes at Rs. 41,81,416/- against Rs. 47,88,597/- (calculated by the AO) and the parallel credit entry is of Rs. 42,03,668/- which in itself shows that the credit are on higher side than debits. Further, out of debit entries of the said cash book sum of Rs. 17,77,967/- has been duly incorporated in regular books of accounts and sum of Rs. 42,000/- was paid to Shri Rajinder Singh for day-to-day petty expenses. Thus, the expenditure which has not been explained by the appellant comes at Rs. 23,61,449/-. On the other hand the credit entry which are incorporated in books of account comes at Rs. 6,40,000/-. Thus, the source of income which has not been explained comes at Rs. 35,63,668/-. Further, on perusal of Page no 22 to 38 of LPS-1, the second diary, it is seen that the total debit side comes at Rs. 1,68,313/- and total credit side comes at Rs. 1,80,000/-. Out of entire credit Page 8 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 side, sum of Rs. 42,000/- was received from Shri Motilal Jain. Thus, the source of income which has not been explained by the appellant comes at Rs. 1,38,000/- which was generated out of sale of scrap material. Collectively, when both the cash books are considered the income which has not been explained by the appellant comes at Rs. 37,01,668/- and the expenditure which has not been explained comes at Rs. 25,29,762/-. The appellant before me as well as before the AO has claimed that the said expenditure was incurred out of income earned as mentioned in the cash books. On perusal of both the cash book, it is seen that there is receipt of funds and then expenditure was made out of the received funds. Thus, it can be presumed that the said expenditure was made out of income earned as mentioned on page nos 1 to 21 and Page no 22 to 38 of LPS-1. Therefore, the only difference which is to be added to the income of the appellant comes at Rs.11,71,906/-.
4.9.4 Nonetheless, the appellant has also strongly contended that a sum of Rs. 1,50,10,000/- was found during the course of search, out of which sum of Rs. 1,50,00,000/- was offered as additional income. The cash found during the course of search includes cash of various business concerns of appellant where he is a partner or director which comes at Rs. 29,81,186/-. The appellant in support has filed copies of cash book of various concerns as on date of search i.e. 20.06.2012. The brief details of the cash books of various concerns of appellant are as under:-
Cash balance of business Amount concerns as on 20.06.2012 Blue Circle Mining Corporation Rs. -2830/- Blue Hill Mining Company Rs. 11,827/- Blue Mountain Minerals Pvt Ltd Rs. 16,119/- Blue Mountain Mining Company Rs. 6,523/- Broken Hill Mining Company Rs. 4,503/- C & C Mining Company Rs. 12,340/- Guruji Minerals Rs. 16,663/- Heera Minerals Rs. 24,772/- Highland Mining Company Rs. 8,105/- Honey Dew Mining Company Rs. 2,262/- Karan Minerals Rs. 2,53,033/- Kymore Iron Ores Pvt Ltd Rs. 4,48,978/- Page 9 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Lake City Minerals Rs. 7,425/- Mrs Nanhi J Walia Rs. 83,267.50 Sonima Minerals Rs. 4,168/- Super carriers Rs. 84,031.43 Cash from sale of land Rs. 20,00,000/- Total Rs. 29,81,186.93
The appellant has claimed set-off of undisclosed income against voluntary surrender of Rs. 1,50,10,000/-. The appellant has paid taxes on declared additional income. It is also important to mention that the income earned by the appellant as per the impunged diaries was in cash and corresponding expenditure was also made in cash, leaving surplus cash of Rs. 11,71,906/- which was also found during the course of search. Further, addition will lead to double taxation which is not justified in the eyes of law. Therefore, the appellant is provided the set-off of income of Rs. 11,71,906/- against voluntary disclosure made during the course of search.
4.9.5 In view of the above discussion, additions made by the AO amounting to Rs. 41,087/- in AY 2012 and Rs. 47,88,597/- & Rs. 1,27,226/- in AY 2013-14 are Deleted. Therefore, appeal on these grounds is Allowed."
9. Before us, Ld. DR supported the action of Ld. AO. He submitted that the Ld. AO has made additions after a careful analysis of the documents found during search and for the reasons that the assessee's explanation was not found satisfactory. Therefore, the additions must be upheld. Per contra, Ld. AR vehemently supported the analysis and observations made by Ld. CIT(A) and argued that the Ld. CIT(A) has deleted the additions after a thorough and careful analysis of the seized documents and the submissions made by assessee. Therefore, his action deserves credence.
10. We have considered rival submissions of both sides and perused the material held on record. On a careful consideration of the orders of lower authorities, we observe that during assessment-proceeding, the assessee has given a concrete explanation to the Ld. AO about the notings made in the seized material being LPS-1/Page No. 1 to 38 but the Ld. AO has not considered the same adequately and properly. However, during appellate-
Page 10 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 proceeding, Ld. CIT(A) has given a mindful consideration and made a reasoned analysis, which is already reproduced earlier and we do not repeat the same for the sake of brevity. We further observe that after such analysis, Ld. CIT(A) has computed the quantum of unexplained payments at Rs. 11,71,906/- and thereafter also given the benefit of set-off against voluntary surrender made by assessee. During hearing, Ld. DR could not point out any fallacy in these conclusions arrived by Ld. CIT(A). Being so, we are not able to find any infirmity in the order of Ld. CIT(A). Therefore, the Ground No. 1 and 2 of revenue are dismissed being devoid of any merit.
Ground No. 3:
11. This ground relates to the addition of Rs. 7,00,000/- made by Ld. AO on account of unexplained expenditure u/s 69C of the act.
12. Facts qua this addition are such that during the course of search, the authorities seized certain a document marked as LPS-1-Page No. 46a, which contained details of diesel purchased from M/s Kesarwani Service Station, Shahdol against which cash-payments of Rs. 7,00,000/- were made. A scanned copy of the document is reproduced in the assessment-order. Thereafter, during assessment-proceeding, Ld. AO confronted the assessee to explain the transactions mentioned therein. In response, the assessee submitted that the impugned transactions were actually related to the diesel purchased by M/s Karan Minerals, a partnership firm in which the assessee was a partner and not to the assessee himself. The assessee also submitted a copy of ledger A/c of Keswarani Service Station extracted from the books of account of M/s Karan Minerals to demonstrate that the relevant transactions belonged to M/s Karan Minerals and that M/s Karan Minerals had already recorded those transactions in their books of account.
13. However, the Ld. AO rejected the submissions of assessee and made addition of Rs. 1,27,226/- by observing and holding as under:
Page 11 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 10.3 The submission of the assessee has been considered and examined but the same is not acceptable:-
A. The assessee has not submitted any material evidence to substantiate his claim.
B. As per the loose paper it is evident that the assessee has made cash expenditure of Rs. 7,00,000/- to Kesharwani Service Station, Sahdole. The above cash expenditure of Rs. 7,00,000/- has not been entered in the books of accounts of assessee. The assessee has also stated that the above cash expenditure recorded in the account of Karan Mineral, however no documentary evidence has been produced by the assessee during the course of assessment proceedings.
C. This above handwritten note book has been found and seized from the premise of the assessee. Therefore, in view of provisions of section 132(4A) of the Income tax Act, 1961, it is presumed that the transactions recorded in this loose paper pertain to the assessee and the content of these transactions is true.
10.4 Therefore, in view of above facts and circumstances of the case, it is established and held that the above loose paper records the cash expenditure of Rs.7,00,000/- for A.Y.2013-14 made by the assessee. These cash expenditure are not recorded in the books of accounts of the assessee."
14. During first-appeal, the assessee made a detailed submission to Ld. CIT(A). After considering submission of assessee, the Ld. CIT(A) deleted addition by observing and holding as under:
"4.10.1 I have considered the fact of the case, plea raised by the appellant and findings of the AO. The appellant before me as well as before AO has taken a plea that the said transaction pertains to M/s Karan Minerals are fully recorded in books of accounts of M/s Karan Minerals. In support appellant has filed copy of ledger account of M/s Kesarwani Service Station in the books of M/s Karan Minerals for F.Y. 2012-13. On perusal of the ledger account it is seen that payments of Rs.1,50,000/- on 21.05.2012 Rs.1,00,000/- on 28.05.2012 Rs.1,50,000/- on 03.06.2012, Rs.1,50,000/- on 07.06.2012 and Rs.1,50,000/- on 11.06.2012 were paid in cash to M/s Kesarwni Station by M/s Karan Minerals. Further, it is pertinent to mention that M/s Karan Minerals while filing return of income has disallowed payment of Rs.6,00,000/- u/s 40A(3) and Rs.1,00,000/- was not disallowed being payment made on Sunday. Also both credit and debit entries on impugned loose paper is fully recorded in books of accounts of M/s Karan Minerals. Therefore, the loose paper does not belongs to appellant.
4.10.2 In view of the above discussion addition made by the AO amounting to Rs.7,00,000/- is deleted. Therefore, appeal on this ground is allowed."Page 12 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
15. On a careful consideration, we straightaway observe that the transactions noted in the seized-material belonged to M/s Karan Minerals, a partnership firm of which the assessee was a partner and not to the assessee himself. We further observe that the assessee had filed sufficient evidences before the Ld. AO in this regard but the Ld. AO has brushed aside assessee's submissions without serious efforts. We observe that the Ld. CIT(A) has considered the documentary evidences submitted by assessee with a judiciously and thereafter rightly concluded that the transactions belonged to M/s Karan Minerals; that the transactions stand recorded in the books of M/s Karan Minerals; and that M/s Karan Minerals had already made a disallowance u/s 40A(3) relatable to those transactions while filing its own return of income. After these facts on record which are not controverted by revenue, there could hardly be any dispute with the fact that the transactions belonged to M/s Karan Minerals and not to assessee. Thus, we are of the firm view that when transactions do not belong to the assessee at all, no addition could have been made in the hands of assessee. Hence, we countenance the decision taken by Ld. CIT(A) and dismiss Ground No. 3 of revenue which is meritless.
Ground No. 4 to 8:
16. These grounds relate to the addition of Rs. 3,16,214/-, Rs. 6,25,000/- , Rs. 22,50,000/-, Rs. 2,15,00,000/- and Rs. 3,00,000/- made by Ld. AO on account of unexplained expenditure / investment u/s 69C of the act. Ld. CIT(A) has adjudicated these grounds in a common para, hence we deem it appropriate to deal analogously with separate findings wherever required.
17. Facts qua these additions are such that during the course of search, the authorities seized certain documents detailed as under:
Document Page No. Amount LPS-1 47 3,16,214 LPS-13 161 & 162 6,25,000 Page 13 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 BS-1 13 22,50,000 BS-1 23 TO 25 2,15,00,000 LPS-13 291 3,00,000
Thereafter, during assessment-proceeding, Ld. AO confronted the assessee to explain the transactions mentioned therein. In response, the assessee made submissions. Further, the Ld. AO also recorded statements of assessee. The submissions of assessee and the statements are noted by Ld. AO in various paragraphs of assessment-order. However, the Ld. AO rejected the submissions of assessee and made additions.
18. During first-appeal, the assessee made a detailed submission to Ld. CIT(A). After considering submission of assessee at length, the Ld. CIT(A) deleted additions by observing and holding as under:
"4.8.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. There is no denial of the facts that the impugned loose papers were found from residential and office premises of the appellant. I find it appropriate to discuss each and every content of these loose papers in depth. My finding on these loose papers is as under:-
[A] Page No 47 of LPS-1:-
The loose paper found during the course of search contain detail of rough noting under the title 'Shree Ram or Shri Raus'. There is no mention of any date, no description of amount whether it represent payment or receipt and no details of beneficiary or payer are mentioned. The relevant extract of loose paper is as under:-Page 14 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 [B] Page No 161 & 162 of LPS-13:-
The loose paper found during the course of search contain detail of rough noting under the title 'Vineka Dhamaki'. There is no mention of any description of amount whether it represent payment or receipt and no details of beneficiary or payer are mentioned. It is also unclear that Vineka Dhamaki are two different people or one. The noting under the heading advance is unclear whether the same is paid or received is unclear. The relevant extract of loose paper is as under:-
[C] Page No 13 of BS-1:-Page 15 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 The loose paper found during the course of search contain detail of rough noting under the title 'Bore Hole & Pit'. There is no mention of any date, no description of amount whether it represent payment or receipt and no details of beneficiary or payer are mentioned. The relevant extract of loose paper is as under:-
[D] Page No 23, 24 & 25 of BS-1:-
The loose paper found during the course of search contain detail of rough noting under various heading such as ' Requirement, Min, OSD, US, Jolly and others'. There is no mention of any date, no description of amount whether it represents payment or receipt, the exact amount paid or received is completely missing and no details of beneficiary or payer are mentioned. The relevant extract of loose paper is as under:-Page 16 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Page 17 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 [E] Page No 291 of LPS-13:-
The loose paper found during the course of search contain detail of rough noting under the title 'Sanjay Singh'. There is no mention of any date, no description of amount whether it represent payment or receipt or quantity and no details of beneficiary or payer etc. The relevant extract of loose paper is as under:-Page 18 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 If the facts of the case, findings of the AO on above count, evidences available on record and submission of the appellant are kept in juxtaposition and analysed, it can be reasonably inferred that there is substantial force in the arguments of the appellant that the impugned loose papers/documents do not have much bearing on the determination of the total income of the appellant. On perusal of entries of the impugned LPI, it is evident that these loose papers are conclusive and represents escapement of unaccounted income, in fact they represent some rough noting/jottings and involvement of any third party cannot be ruled out. Further, there are no corroborating evidences to support the entries of the impugned loose papers/documents with books of the appellant/other related parties or any other document. The entries in various pages of the impugned LPI do not coincide with each other and further even does not represents any actual amount paid/received by appellant. Further, the AO has determined the amount paid by appellant to different concerns even when the actual amount is not mentioned on these loose papers. Various important details such as date of payment/receipt or may be quantity of goods, name of the beneficiary/receiver/payer is completely missing. It is also Page 19 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 not clear whether the same amount was paid in cash/cheque/kind and other details are completely missing. This approach of the AO leads to apprehend that the addition has been made on pure 'guess work'.
Appellant has argued that the said transaction has never taken place through appellant. Neither any of the person/firm/company nor any other person has ever stated that any such transaction actually took place and the entire addition has been made on sheer presumption and assumption basis. The appellant in his statement recorded on oath has totally denied of actual occurrence of any such transaction. The AO failed to establish whether the transactions represents receipt/payment or balance and in few of the cases very basic details such as date of payment/receipt, mode of payment/receipt, place of payment/receipt, correct amount whether in lakhs or in thousand or in hundred etc are missing. Also, the AO has failed to bring on record any cogent evidence, creating direct nexus of these impunged payments by the appellant. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impunged papers i.e. page nos 47 of LPS-1, Page No 161 & 162 of LPS-13, Page No 13 of BS-1, Page No 23, 24 & 25 of BS- 1 and Page No 291 of LPS-13 cannot be used against the assessee.
4.8.2 This is settled legal position that any 'dumb document' cannot be used as an evidence to draw an adverse inference against the assessee. Case laws supporting this proposition are as under:-
ACIT Vs. Satyapal Wassan (2007) 295 ITR (AT) 352 (Jabalpur)"
Held that "the crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income Tax Act must be filled up by the Assessing Officer through investigations and correlations with the other material found either during the course of the search or on the investigation. As a result, we hold that document No.7 is a non-speaking document."
Most important ratio laid down in the said judgment is that "impugned document" must be speaking one and without any second interpretation and must reflect all the details about transactions of the assessee. In the instant case, such vital details viz. details of transaction, date of transaction, mode of payment whether in cash/cheque/kind, place of payment, owner and author of the loose paper, actual amount paid, whether the amount represents receipt/payment/balance, are conspicuously missing in most of the cases. It would not be out of world to point that any independent enquiry was carried out by the AO other than presuming that appellant was the owner & author of these loose paper. The AO in support of his presumption has relied upon provisions of section 132(4) of the Act and presumed that the transactions recorded in these loose papers pertains to the assessee and the content of these transactions is true. It is worth mentioning here that Hon'ble ITAT Delhi Page 20 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Bench in the case of Ashwani Kumar Vs. ITO (1992) 42 TTJ (Del) 644 has held as under:
"Then for presuming that the contents of the books of account or document are true the document must be a speaking one. In this case the slip, said to have been recovered by the revenue, does not contain any narration in respect of the various figures noted therein. The slip does not indicate whether the figures referred to quantities of money or to quantities of goods and whether one side, and if so, which side represents receipts and which side represents outgoings. This is. thus a dumb document and as the orders of the authorities below would show they have merely added the total of the right side of the slip without supplying the figures any language to indicate their meaning. In the case of such a dumb document, the provisions of Section 132(4A) do not permit anyone to presume that the total of the figures of right side of the slip represents the assessee's income. The presumption at the most is attracted to the figures and a further presumption that they represent the income of the assessee is not permissible under Section 132(4A). When a dumb document, like the present slip, is recovered and the revenue wants to make use of it, it is the duty of the revenue to collect necessary evidence which may provide an acceptable narration to the various entries. The evidence collected should be such that any reasonable man would accept, the hypothesis advanced by the revenue that the figures written on the right side of the slip represent incomes earned by the assessee. It was conceded by the learned Departmental Representative that no such evidence has been brought on record Therefore the additions cannot be sustained and they are hereby deleted. "
The AO does not have any independent corroborative evidence having nexus that the alleged unaccounted payments have been made by the appellant in individual capacity. Absence of these vital details is making these loose papers under consideration i.e. page nos 47 of LPS-1, Page No 161 & 162 of LPS-13, Page No 13 of BS-1, Page No 23, 24 & 25 of BS-1 and Page No 291 of LPS-13 as "deaf & dumb document". The onus was solely on the AO to fill such vital gaps by bringing positive evidence on record and prove the allegation about alleged "unaccounted cash payments" by the assessee, which he utterly failed to do so.
CBI vs VC Shukla 3 SCC 410 The Hon'ble Supreme Court has held that loose sheets of paper cannot be termed as 'book' within the meaning of s. 34 of Evidence Act. It has also been held therein by the Hon'ble Supreme Court that even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person. The Hon'ble Supreme Court also observed that even assuming that the entries in loose sheets are admissible under s. 9 of the Evidence Act to support an inference about correctness of the entries still those entries would not be sufficient without supportive independent evidence.
Page 21 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Rakesh Goyal Vs. ACIT (2004) 87 TTJ (Del) 151 -
The findings of Hon'ble Tribunal was as under:-
"20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly the finding of the CIT(A) has not been controverted by the learned Departmental Representative by filing any positive evidence. The copies of the pages found from the possession of the assessee are placed in the paper book and after going through these papers, we find that these are simply deaf and dumb documents and they cannot be considered for making any addition. This is a settled principle of law that any document or entry recorded in those documents should be corroborated with positive evidence. Here in the present case nothing has been corroborated or proved that assessee was dealing in money lending business."
Mohan Foods Ltd Vs. DCIT (2010) 123 ITD 590 (Del) -
Held that --
although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence of any other evidence found during the course of search or brought on record by the AO to show that the said expenditure was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee by invoking the provisions of s. 69C--Assessee explained that the said entries represented estimates made by its employees in respect of proposed expenditure--There is no evidence on record to rebut/controvert the said explanation- Additions not sustainable CIT Vs. S M Agarwal (2007) 293 ITR 43 (Del) -
Held that -
"In this case the department seized documents "Annexure A-28 p. 15, - gives the details of certain handwritten monetary transactions which shows that the assessee had given a loan of Rs. 22.5 lacs on interest and earned interest income of Rs. 3.55 lacs on it. The Tribunal hold this document as dumb document.
The relevant findings of the Tribunal as mentioned in the above order is as under:-
"We have ourselves examined the contents of the document and are unable to draw any clear and positive conclusion on the basis of figures noted on it. The letters 'H.S.', 'T.2' and 'D-Shop' cannot be explained and no material has been collected to explain the same. Likewise, the figures too are totally unexplained and on the basis of notings and jottings, it cannot be said that these are the transactions carried out by the assessee Page 22 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 for advancing money or for taking money. Thus, in our opinion, this is a dumb document."
Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under:-
"12. It is well settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person, on such document by itself cannot prove the contents of the document. These are the findings of fact recorded by both the authorities i.e. CIT(A) and the Tribunal."
"15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration".
Jayantilal Patel Vs. ACIT & Ors (1998) 233 ITR 588 (Raj) -
Held that -
"During search at the residence of Dr. Tomar, the Department official found a slip containing some figures. This piece of paper claimed to have been recovered at the time of search contains figures under two columns. In one column, the total of these figures comes to Rs. 17,25,000 from 31st May, 1989, to 8th Dec., 1989, and in the other column, the total of these figures comes to Rs. 22,12,500. An addition of Rs. 22,12,500 on the basis of figures on a small piece of paper in respect of purchase of Plot No. B-4, Govind Marg, Jaipur was made by the AO. This plot B-4, Govind Marg, Jaipur, has been purchased jointly by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF.
Held that no addition on account of entries on a piece of paper which is claimed to have been found at the time of search, can be made, treating the figures as investment for purchase of plot No. B-4, Govind Marg, Jaipur in the hands of Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF."
N K Malhan Vs. DCIT (2004) 91 TTJ (Del) 938 -
Held that -
"We have perused the aforesaid explanation and the seized document placed at assessee's paper book-I pp. 48 and 50. The document does not state of any date or the year against the entries written therein. It does not show whether the assessee has made or received any payment. It also cannot be deciphered from the said documents that the entries therein pertain to the block period. The AO also did not bring on record any material to show that any investment has been made by the assessee in Page 23 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 any chit fund company or otherwise. The document found and seized might raise strong suspicion, but it could not be held as conclusive evidence without bringing some corroborative material on record. The document contained only the rough calculations and was silent about any investment. On the basis of such a dumb document, it cannot be said that there were investments made in fact by the assessee. Heavy onus lay upon the Revenue to prove that the document gives rise to undisclosed investment by the assessee. This onus has not been discharged. Accordingly no addition of undisclosed income could be made on the basis of such a document. Such a view has also been entertained by the Hon'ble Allahabad High Court in CIT vs. Dayachand Jain Vaidya (1975) 98 ITR 280 (All). The addition so made, therefore, is directed to be deleted."
Stanamsingh Chhabra vs. Dy. CIT (2002) 74 TTJ (Lucknow) 976:
None of the loose papers seized are in the hand writing of the assessee. There is some jotting by pencil in some coded form on the loose papers made by the surveyed person or some other person. Moreover, no entries are supported by any corroborative evidence; such loose papers can not be called even the documents as they are simply the rough papers to be thrown in the waste paper basket. In this connection, the assessee relies upon the court decisions.
CIT Vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.):
It is held that -
(i) Additions can be made only when evidence is available as a result of search or a requisition of books of accounts or documents and other material. However additions cannot be made on the basis of inferences.
(ii) No facts were available to AO after search and inference of AO did not fall within the scope of Section 158BB.
(iii) Deletion of additions made by Tribunal of assumed undeclared payments made for purchase of property was on basis of facts.
Ashwani Kumar V. ITO (1991) 39 ITD 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITD 85 (Mum):
Nine out of 19 slips found were without any name or amount and therefore were dumb documents and no adverse inference could be drawn.
Common Cause (A Registered Society) Vs. Union of India - 30 ITJ 197 (SC).
In this case, the Hon'ble Court held that without any independent evidence or corroborative material, no addition is permissible on the basis of loose paper jottings & notings. The relevant paras of the order are as under :-
Page 24 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
16. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla's case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also. This Court has considered the entries in Jain Hawala diaries, note books and file containing loose sheets of papers not in the form of "Books of Accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible
17. It has further been laid down in V.C. Shukla (Supra) as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability.
18. This Court has further laid down in V.C. Shukla (Supra) that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted hereinbelow:-
"14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words:
"An account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debits and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arises to do so for his future purpose. Admittedly the said diaries were not being maintained on day-to-day basis in the course of business. There is no mention of the dates on which the alleged payments were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to."
19. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus;
"37. In Beni v. Bisan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of Page 25 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely 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."
20. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 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 this Court.
4.8.3 Further, in numerous other case laws courts have consistently upheld the view that no addition could be made in the hands of the assessee on the basis of the dumb loose papers seized during search, in absence of any corroborative material to show unaccounted cash/cheque/kind payment by the appellant. Some of the case laws are as under:-
(i)M M Financiers (P) Ltd Vs. DCIT (2007) 107 TTJ (Chennai) 2000 Held that "no addition could be made in the hands of assessee on the basis of the dumb loose slips seized from his residence, in the absence of any corroborative material to show payment of any undisclosed consideration by the assessee towards purchase of land".
(ii)Monga Metals (P) Ltd Vs. ACIT 67 TTJ 247 (All. Trib):
Holding that Revenue has to discharge its burden of proof that the figures appearing in the loose papers found from assessee's possession constitute undisclosed income. [In the present case, loose papers were not even seized from assessee's possession].
(iii) Pooja Bhatt Vs. ACIT (2000) 73 ITD 205 (Mum. Trib) Held that where document seized during search was merely a rough noting and not any evidence found that actual expenditures were not recorded in books of account, additions not justified. [In the instant case, similarly no other corroborative evidence was found in search to prove that details/figures mentioned in notings on page 117 to 119 of A/1 represent 'on money' payments by the assessee].
(iv)Atual Kumar Jain Vs. DCIT (2000) 64 TTJ (Del.Trib) 786 -Page 26 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Held that additions based on chit of paper, surmises, conjectures etc could not be sustained in the absence of any corroborative evidence supporting it. [Similarly in present case, neither either parties have admitted payment/receipt of 'on money' nor any corroborative evidence was seized to support the findings of the AO].
(v)S K Gupta Vs. DCIT (1999) 63 TTJ (Del.Trib) 532 Held that "that additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question."
(vi)Jagdamba Rice Mills Vs. ACIT (2000) 67 TTJ (Chd) 838:
Held that "No addition can be made on dump documents".
The AO has made allegation against the assessee that cash payment has been made by appellant. In absence of any admission, by any of person or by appellant, addition cannot be made on basis of sheer imagination and guess work. It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal maxim "affairmanti non neganti incumbit probation" means burden of proof lies upon him who affirms and not upon him who denies. Similarly as per doctrine of common law "incumbit probation qui digit non qui negat" i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. Further, it is most important to mention that nowhere in the said impunged loose papers name of the appellant is mentioned and suggesting any such unaccounted payment/receipt. The AO has failed to discharge his onus of proof especially when addition has been made under "deeming fiction". In view of this lacune on the part of AO, impunged addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hon'ble Apex Court in absence of evidence that actually assessee paid more amount than declared in registered deed, no addition can be made. In the case of Bansal Strips (P) Ltd & Ors Vs. ACIT (2006) 99 ITD 177 (Del) it has been held that:-
"If an income not admitted by assessee is to be assessed in the hands of the assessee, the burden to establish the such income is chargeable to tax is on the AO. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed document".
4.8.4 This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor any person has ever admitted about receipt/payment of the said amount, as per loose papers, from the appellant. In absence of any corroborative evidence to prove that there was any exchange of money by CASH/Cheque/Kind, AO has no locus to assume that appellant has paid such amounts. The AO has nothing on record which could establish that the said amount was actually paid by the appellant. Also, Page 27 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 the amount does not have any clear cut indication or narration whether the same represents receipt/payment or balance amount or quantity of goods sold. Also, the amount or numbers written are incomplete and cannot be treated as amount in lakhs as treated by the AO. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC).
4.8.5 In view of the above discussion, material evidences on record and case laws cited, firstly, the loose papers or rather say it as dumb document should be a speaking one having direct nexus with the assessee, which was not in the case of appellant. Secondly, the AO did not find any major discrepancies in books of accounts and therefore, books of accounts were not rejected by the AO. Thirdly, the AO ought to have explained by which formula or methodology the amounts were treated as amounts in lakhs. Fourthly, the impunged transactions does not have even basis details of transactions such as whether the amount represents receipt/payment/balance amount/quantity of goods, date of payment, mode of payment, details of payer/beneficiary, purpose of transaction etc. My findings on the issue under consideration are based on the various conclusions drawn by me which have been discussed in the above paras. Therefore, the AO was not justified in making additions simply of guess work and solely on the basis of some dumb loose papers. Thus, the additions made by the AO amounting to Rs. 3,16,214/-, Rs. 6,25,000/-, Rs. 22,50,000/-, Rs. 2,15,00,000/- & Rs. 3,00,000/- in AY 2013-14 are Deleted. Therefore, appeal on these grounds is Allowed."
19. On a careful consideration, we observe and find as under:
(i) LPS-1/Page No. 47 - Addition of Rs. 3,16,214/-:
Ld. CIT(A) has rightly observed that this loose-paper contains detail of rough noting with the caption "Shree Ram" only and there is no mention of any date; no description of nature of transaction whether it represents payment or receipt; no details of beneficiary or payer. We agree with the observation of Ld. CIT(A) that it is a "dumb document" for the very reason that it does not provide necessary details for taxation under income-tax. Therefore, we hold that no addition can be made on the basis of such "dumb document".Page 28 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
(ii) LPS-13/Page No. 161 & 162 - Addition of Rs. 6,25,000/-:
Ld. CIT(A) has observed that this loose paper contains detail of rough noting under the title 'Vineka Dhamaki' and there is no mention of any description whether it represents payment or receipt; no details of beneficiary or payer. However, we observe that this paper is dated 10.5.2012. Further it contains title "Vineka Dhamaki" and also mentions "Advance". Although it is not clear whether the "Advance" represents a payment or receipt, but the facts on record demonstrate that the assessee has not recorded this transaction of "Advance" in his books of account. In our view, it would certainly be taxable as income of assessee in either case i.e. whether it is an unaccounted "payment" or "receipt". We observe that the assessee has simply claimed the benefit of "dumb document" and the Ld. CIT(A) has also accepted the version of assessee, but this document does not deserve to be characterized as a "dumb document" for the reason that it contains name, date and description of transaction. Therefore, we are persuaded to reverse the view taken by Ld. CIT(A) and uphold the addition of Rs. 6,25,000/- made by Ld. AO.
(iii) BS-1/Page No. 13 - Addition of Rs. 22,50,000/-:
Ld. CIT(A) has rightly observed that this loose-paper contains detail of rough noting with the caption "Bore Hole & Pit" only and there is no mention of any date; no description of nature of transaction whether it represents payment or receipt; no details of beneficiary or payer. We agree with the observation of Ld. CIT(A) that it is a "dumb document" for the very reason that it does not provide necessary details for taxation under income-tax. Therefore, we hold that no addition can be made on the basis of such "dumb document".
(iv) BS-1/Page No. 23 to 25 - Addition of Rs. 2,15,00,000/-:Page 29 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Ld. CIT(A) has observed that this document contains detail of rough noting under various heading such as 'Requirement, Min, OSD, US, Jolly and others' and there is no mention of any date; no description of amount whether it represents payment or receipt; the exact amount paid or received is completely missing and no details of beneficiary or payer are mentioned. We further observe that based on these documents, Ld. AO framed a view that the assesee had made cash-payments to different authorities for acquiring mining work at Jolly Village. But, however, vide letter dated 21.11.2014, the assessee explained categorically to Ld. AO that he had never acquired any mine at village Jolly. Further, in the statement recorded on 18.03.2015 and 25.03.2015, the assessee has explained the meanings of the "Min", "OSD", "US", "Jolly" as signifying "Mine" "Over Surface Drilling", "Under Surface", "Jolly Village" respectively and also submitted that though the assessee had made some rough working of mine at Village Jolly, but there was no actual purchase / allotment of land or mine at Village Jolly. It is also noteworthy that the document is captioned as "Requirement" which in itself supports the assessee's contention that there is no actual transaction, though there might have been some expectation of transaction.
Keeping in view these factors, we agree with the observation of Ld. CIT(A) that it is a "dumb document" for the very reason that it does not provide necessary details for taxation under income-tax. Therefore, we hold that no addition can be made on the basis of such "dumb document".
(v) LPS-13/Page No. 291 - Addition of Rs. 3,00,000/-:
Ld. CIT(A) has observed that this document contains the detail of rough noting under the title 'Sanjay Singh' and there is no mention of any date; no description of amount whether it represent payment or receipt or quantity; and no details of beneficiary or payer, etc. We further observe that based on this document, Ld. AO once framed a view that there was unaccounted receipt of Rs. 2,50,000/- (Para No. 17.1 of the assessment-order) and later framed a different view that there was unaccounted expenditure of Rs.Page 30 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 3,00,000/- (Para No. 17.3 of the assessment-order). This happened so for the reason that the document does not reflect the nature and details of any transaction. Further, in the statement recorded by AO (Para No. 17.4 of the assessment-order), the assessee clearly stated that the document was a rough working; not in assessee's handwriting; and neither dated. Keeping in view these factors, we agree with the observation of Ld. CIT(A) that it is a "dumb document" for the very reason that it does not provide necessary details for taxation under income-tax. Therefore, we hold that no addition can be made on the basis of such "dumb document".
20. The law of "dumb-document" is well recognized by several courts including the apex court and it is loudly held that no addition can be made on the basis of dumb-document. The Ld. CIT(A) has himself noted several decisions in Para No. 4.8.2 to 4.8.5, which we have reproduced earlier and do not want to repeat for the sake of brevity. Therefore, applying those decisions to the factual matrix of various additions as narrated by in preceding paragraphs, we are of the view that out of those additions, the addition of Rs. 6,25,000/- (challenged in Ground No. 5) is only sustainable and rest of the additions (challenged in Ground No. 4, 6, 7 and 8) are unsustainable. Begin so, we allow Ground No. 5 of the revenue and dismiss Ground No. 4, 6, 7 and 8.
Ground No. 9:
21. This ground relates to the addition of Rs. 64,35,000/- made by Ld. AO on account of unexplained investment u/s 69B of the act.
22. Facts qua this addition are such that during the course of post-search enquiries, Ld. AO framed a view that the assessee had purchased certain immovable properties, the details are mentioned at S.No. 6 and 7 in the Table on Page No. 66 of the assessment-order. Ld. AO further observed that those properties were purchased for Rs. 58,50,000/- which is below the prevailing market rates. Ld. AO assumed that the assessee must have paid Page 31 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 on-money @ 110% of Rs. 58,50,000/-, amounting to Rs. 64,35,000/-, which is not recorded in the books of account. With this understanding, Ld. AO concluded unexplained investment of Rs. 64,35,000/- and made an addition therefore.
23. During first-appeal, the assessee made a detailed submission to Ld. CIT(A). After considering submission of assessee, Ld. CIT(A) deleted additions by observing and holding as under:
"4.6.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant before me has strongly contended that the said properties were not purchased by the appellant, however, the said properties were sold by appellant. Since the lands were rural agricultural lands and therefore, capital gain from such sale was exempt u/s 10(37) of the Act. In support appellant has filed copies of registered deeds. On perusal of copies of registered deed it was found that the observations made by the AO were factually incorrect. The appellant has sold the abovementioned lands. Both the lands were rural agricultural lands. Since, the lands under consideration were rural land, therefore, the capital gain arising on same of such land is exempt uls 10(37) of the Act which has been claimed" by the appellant in return of income at Rs. 11,11,220/-. The AO has accepted the exemption claimed by the appellant and no addition was made on this account.
4.6.2 In. view of the above discussion, the addition made by the AO was factually incorrect and deserves to be deleted. Thus, addition made by the AO amounting to Rs. 64,35,000/- is Deleted. Therefore, appeal on this ground is Allowed."
24. On a careful consideration, we observe that the Ld. CIT(A) has clearly observed that the Ld. AO has made addition on a factually incorrect footing that the assessee had purchased the lands. In fact, the assessee has sold the lands and not purchased as claimed by Ld. AO. Thus, the very foundation of addition adopted by Ld. AO is incorrect. We further observe that the Ld. CIT(A) has also found that the impugned lands sold by assessee were rural agricultural lands whose capital gain was not taxable under the scheme of Income-tax Act. During hearing before us, the Ld. DR could not contradict these finding made by Ld. CIT(A). Therefore, we have no reason to upset the finding of Ld. CIT(A). Consequently, we are inclined to uphold the action of Ld. CIT(A). Thus, Ground No. 9 of Revenue is also dismissed.
Page 32 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Ground No. 10:
25. This ground relates to the additions of Rs. 13,39,598/- and 13,55,598/- made by Ld. AO on account of benami investment.
26. Facts qua this addition are such that during the course of search, the authorities seized a document marked as LPS-3/Page No. 9, which contained a list of the bank accounts held in the names of various persons. Thereafter, during post-search enquiries and assessment-proceeding, Ld. AO called bank statements of those accounts from respective banks and found cash-deposits made therein. The Ld. AO framed a view that since the list of bank accounts was found in the premise of assessee, the bank accounts were benami accounts in the names of different persons in which the deposits were made by assessee. Ld. AO made a summary of the cash- deposits (Para No. 25 of the assessment-order).
27. When the Ld. AO confronted the assessee in the matter, the assessee filed a reply dated 20.03.2015. But, however, the Ld. AO rejected the submissions of assessee and made additions of Rs. 13,39,598/- + Rs. 13,55,598/- by observing and holding as under:
"25.3 The submission and the argument put forward by the assessee have been considered and is found to have no merit of the basis of following grounds:-
i. The assessee has not made part compliances of notices u/s 142(1) dated 09.03.2015.
ii. Perusal of the record shows that the assesse had made a total investment of Rs.1,02,84,082/- in the form of Cash deposits in the above bank accounts of above named persons during the assessment year for A.Y.2007-08 to 2013- 14 and therefore, the source of such funds ought to be explained from the true and real income earned by the assessee. The assessee was also required submit name, complete postal address and copy of ITR, however the assessee has not made complete submission.
iii. The assessee has also not produced any of the persons for examination before the Assessing Officer in spite of the specific requirement of the Assessing Officer on this count.
Page 33 of 48Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 iv. The assessee has stated that all these persons are employee, ex-employee on the venders of M/s. Karan Minerals, however, no evidence of the same has been given by the assessee.
v. The seized loose papers also shows that these accounts were maintained by the assessee.
vi. The assessee has also not submitted any documentary evidence which substantiate his claim."
28. During first-appeal, the assessee made a detailed submission to Ld. CIT(A). After considering submission of assessee, the Ld. CIT(A) deleted addition by observing and holding as under:
"4.4.1 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant during appellate proceedings has claimed that he is in the business of mining and the business is being carried out in the name of different concerns. During the routine course of business the business constituents invariably gave their bank account statements so that funds could easily be transferred/deposited in their bank accounts through local branches. Further, payment of salary/remuneration can be made directly to their accounts and therefore, bank details of various persons were found in possession of appellant. The appellant has also taken a plea that no incriminating material was found during the course of search and the additions have been made on presumption, assumption and surmises basis. I have also given my thoughtful consideration to the facts and findings of the AO inter alia material brought on record. The Ld AR has vehemently challenged the arbitrary approach of the AO mainly on two major Counts:
(a) The AO erred in making additions on suspicion, surmise and conjecture basis and without having any incriminating material on record found from the residential premises of the appellant relating to the year in which additions have been made;
(b) The AO erred in treating cash deposit in bank account of various persons as benami investment of the appellant.
(a) The AO erred in making additions on suspicion, surmise and conjecture basis and without having any incriminating material on record found from the residential premises of the appellant relating to the year in which additions have been made:-
The AO has grossly erred in making addition simply on the basis of guess work, assumption and presumption. It is well settled that no addition can be made as a leap in the dark. The AO is not entitled to make a guess without evidence. The assessment of any particular year cannot be based on mere suspicion or bare guess, but on a legitimate material from which a reasonable inference of any unexplained cash credit can be made. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 Page 34 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 (SC) has held that although strict rules of Evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). Also, once the assessee has discharged its onus of proving that the parties under consideration are genuine, now the ball lies in the court of AO to prove that the claim of appellant is false. It is utmost important to mention that a search u/s 132 of the Act was carried out on the premises of the appellant and during the course of search not a single iota of doubt and evidence was found regarding the appellant's engagement in cash deposit in bank accounts of various persons as held by the AO. Nonetheless, no incriminating material relevant to the additions made has been referred by the AO which pertains to the impunged cash depsoit. It is seen that during the course of appellate proceedings, the AO was provided with details of alleged benamidras of the appellant, however, no negative inference was drawn by the AO in remand report dated 03.06.2019. Even the said alleged benamidars have admitted before the AO that the cash deposited in their bank account is out of their source of income. This is now a settled principle which has also been categorically held in favor of the assessee that additions made in absence of incriminating material are unjustified. It is important to note that residential and business premises of appellant was covered in search u/s 132 of the Act from where nothing incriminating was found during the course of said search relating to the additions made by the AO. The plethora of judgments supporting the statements are as under:-
• The Hon'ble High Court of Delhi in the case of CIT vs. Kabul Chawla (2015) 9 TMI 80 (Del.), after considering all the available decisions on the issue has held that in respect of the completed assessment, additions can be made only on the basis of incriminating documents. The Hon'ble High Court was pleased to observe as under:
"37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.
ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate Page 35 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".
iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."
v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings.
vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.
vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."
• Hon'ble High Court of Rajasthan in the case of Jai Steel (India) vs. CIT (2013) 259 CTR 281 (Raj.) has also held that in respect of the assessment years which have got abated due to initiation of the search, an AO is free to make addition on any ground but in respect of the assessment years which have got completed before the date of the search, the assessment has to be made on the basis of the material seized during the course of search. The Court was pleased to observe as under:
"22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that:
(a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under Page 36 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 his original jurisdiction, for which, assessments have to be made;
(b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and
(c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made."
XXXX XXXXXXXXXXXX
26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words 'assess' or 'reassess' have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible conclusion that the word assess has been used in the context of an abated proceedings and reassess has been used for completed assessment proceedings, which would not abate as they are not pending on the date of initiation of the search or making of requisition and which would also necessarily support the interpretation that for the completed assessments, the same can be tinkered only based on the incriminating material found during the course of search or requisition of documents."
• In the case of Commissioner of Income Tax v. Continental Warehousing Corporation (NhavaSheva) Ltd. [2015] 58 Taxmann.Com 78 (Bom)the question addressed by the Hon'ble Bombay High Court was whether the scope of assessment under Section 153A encompasses additions, not based on any incriminating material found during the course of search? It was held that no addition could be made in respect of the assessments that had become final in the event no incriminating material was found during search. The Bombay High Court relied on the earlier decision in CIT v. M/s. Murli Agro Products Ltd.and discussed the scope and ambit of the proceedings for assessment and reassessment of total income under Section 153A (1) of the Act and the provisos thereto. One of the specific pleas taken by the Assessee was that if no incriminating material was found during the course of search in respect of an issue then no addition in respect of any issue can be made to the assessment under Sections 153A and 153C. It was observed that the assessment or reassessment under Section 153A arises only when a search has been initiated and conducted and, therefore, "such an assessment has a vital link with the initiation and conduct of the search." The Court then reproduced and affirmed the decision of the Special Bench of the ITAT in All Cargo Global Logistics Ltd. v. Deputy Commissioner of Income Tax [2012] 23 taxmann.com 103 (Mum.) (SB)and answered Page 37 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 the question as regards the scope of the assessment of total income as under:
"53. ....We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be taken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results:
(a) Insofar as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search"
• Your Honour, the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla has been followed by the Hon'ble Gujarat High Court in the case of Pr. CIT vs. Saumya Construction Pvt. Ltd. (2016) 387 ITR 529 (Guj.) and again in the case of Pr. CIT vs. Deepak Jashwantlal Panchal (2017) 397 ITR 153 (Guj.). In the case of Saumya Construction supra, the Hon'ble High Court was pleased to observe as under :
"18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.11,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment orreassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Page 38 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made.
19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur v. Assistant Commissioner of Income Tax (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Commissioner of Income-tax-1 v. Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year."
• Hon'ble jurisdictional Indore Bench of ITAT in case of Kalani Brothers in IT(SS)A No. 71/Ind/2014 and again in the case of Anant Steel Pvt. Ltd. in IT(SS)A Nos. 31, 28, 29 & 30/Ind/2010 and in many other cases, has held that in respect of the completed assessment years, in absence of any incriminating documents found and seized during the course of search, no addition can be made.
• Reliance is also placed on the following judicial pronouncements:
i) Pr. CIT vs. Smt. Kusum Gupta (2015) 9 TMI 1406 (DelHC)
ii) CIT vs. RRJ Securities Ltd. (2016) 380 ITR 612 (DelHC)
iii) Pr. CIT vs. Mrs. Lata Jain (2016) 384 ITR 543 (DelHC)
iv) Pr. CIT vs. Jai Infrastructure & Properties Pvt. Ltd. (2016) 10 TMI 1022 (GujHC)
v) CIT vs. Anil Kumar Bhatia 211 Taxman 453 (Del) Page 39 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14
vi) Amandeep Singh Bhatia vs. Addl. CIT (2016) 29 ITJ 1 (Indore-Trib)
vii) Bhatia International Ltd. vs. Addl. CIT (2016) 29 ITJ 109 (Trib-Indore)
viii) Pr. CIT vs. DharampalPremchand Ltd. (2018) 408 ITR 0170 (Del.
HC)
ix) Pr. CIT &Ors. vs. MeetaGutgutia&Ors. (2017) 295 CTR 0466 (Del.)
x) Pr. CIT vs. Dipak J Panchal (2017) 397 ITR 0153 (Guj.)
xi) Pr. CIT vs. Devangi Alias Rupa (2017) 98 CCH 0051 (Guj.)
xii) Rakesh Kumar Jain vs. DCIT (2019) 57 CCH 0098 (Jaipur Trib.)
xiii) DCIT vs. SMS SME Ltd. (2019) 57 CCH 0031 (Gau. Trib.)
xiv) RashmiMetaliks Ltd. and ANR vs. DCIT and ANR (2019) 72 ITR (Trib.) 0226 (Kolkata)
xv) AmitbhaiManubhaiKachadiya and Ors. vs. DCIT (2019) 56 CCH 0189 (SuratTrib.) xvi) Smt. Sanjana Mittal vs. DCIT (2019) 55 CCH 0644 Asr Trib. xvii) SVM Buildcon Pvt. Ltd. vs. DCIT [IT(SS) A no. 71/Ind/2016 Order dated 26-10-2017] xviii) Chugh Real Estate Pvt. Ltd. vs. DCIT [IT(SS) A no.
60&61/Ind/2016 Order dated 26-10-2017] xix) Kamta Prasad Dwivedi vs. ACIT-1(1), Bhopal 2018 (9) TMI 1746 - ITAT Indore xx) Smt. Rashmi Mujumdar vs. DCIT(Central)-1, Bhopal 2018 (12) TMI 688 - ITAT Indore xxi) ACIT vs. Sudeep Maheshwari [ITA No. 524/Ind/2013, Order dated 13-02-2019] xxii) M/s. Ultimate Builders vs. ACIT [ITA No. 134/Ind/2019, Order dated 09-08-2019] xxiii) Sainath Builders vs. ACIT (2019) 35 ITJ 77 (Trib.-Indore) xxiv) DCIT-2(1), Indore vs. Shri Satish Neema [IT(SS) 149, 150 & 152/Ind/2016; Order dated 07-02-2020] The AO ought to have connected the cash deposit in bank account of third party to be benami transaction of the appellant with independent cogent evidence that the moneys emanated from the coffers of the appellant and which could prove that the claim of appellant is incorrect, which is missing in the instant case. Thus, there lies no locus standi with the AO to assume that the cash deposit in bank account of various third party are benami transactions of the appellant.
(b) The AO erred in treating cash deposit in bank account of various persons as benami investment of the appellant.Page 40 of 48
Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 The AO during the course of assessment proceedings vide showcause notice dated 09.03.2015 required the assessee to furnish copy of ITR, postal address and also to produce these persons for examination and the date for compliance was fixed for 13.03.2015. The assessee in reply requested for more time and also stated that the bank accounts are of third party and the transactions therein could be explained by them and requested to issue summons u/s 131 of the Act. The AO vide letter dated 05.06.2018 was also directed to issue notices u/s 133(6)/131 of the Act and carryout enquiry from the concern bank account holders regarding source of cash deposit in their bank accounts. The appellant was also requested to file details of bank account holders. The assessee in reply submitted names, complete address and bank account statement of the account holders which were also forwarded to AO for further examination. The AO after several reminders submitted remand report on 04.06.2019. On perusal of the remand report submitted by the AO it is seen that Shri Syed Subur Ali, Smt Usha Agrawal, Shri Sanjay Singh Raguwanshi, Smt Namita Singh and Shri Sandeep Singh attended before the AO and admitted that the cash deposit in their bank account was relating to business/salary from M/s Karan Minerals/past savings and none of them have confirmed that cash was deposited by the appellant. Further, the evidences provided by the appellant were also examined and it was found by the AO that the cash deposit was out of salary/funds received from M/s Karan Minerals against supply of goods/business transactions. Again none of the person have admitted that the cash was deposited by Shri JS Walia and the account was used for benami investment by appellant.
Summons were also issued to M/s Parth Trading Company, Shri Rakesh Kumar Sharma, Shri Shaikh Jeelani and M/s Stone Age India when none attended nor any details were filed, however, details such as name, complete postal address and bank account statement were provided by the appellant to AO. The AO could have issued summons to the concerned bank and desired PAN details and subsequently, details of return of income could have been easily collected. Rather doing so, the AO alleged appellant and found guilty of not furnishing the desired documents. Hon'ble Apex court in the case of Krishnanand Agnihotri vs State of MP reported in AIR 1977 SC 796, 806-807 and in the case of Jayadayal Poddar vs Bibi Hazra reported in AIR 1974 SC 171 & 172 has held as under:-
"It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of Benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of benami is the intention of the party or parties concerned ; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rest on him ; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or Page 41 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs."
It is now abundantly clear that the onus to prove that the apparent is not real is on the party, who claims it to be not real. In this case, the AO who claimed that the amount of cash deposit belongs to the appellant even through the bank account belongs to the third party, the burden lies on the AO to prove that that the appellant was the owner of the amount. The only solution to this controversy was to trace the source of origin of the amount and find out its ultimate destination. Similar view was taken by Hon'ble Supreme Court in the case of CIT vs Daulatram Rawatmull 87 ITR 349 (SC). In the instant case, the AO has examined the alleged benami concerns/persons whose bank details were found in possession of the appellant and none of them has admitted that the cash deposited in their bank account belongs to appellant. Legally, the onus of proving source of cash deposit in bank account of the said persons is on the bank account holder and not on the appellant.
The case laws where it has been held that the onus lies on department to prove that the investment was benami in nature and also the department has to create a link with supportive documents in support of allegation. Few of the case laws are as under:-
1. In the case of Prakash Narayan vs CWT (1981) 134 ITR 364 (All HC) Hon'ble Allahabad Hight Court has held that:-
1. Some of the well-settled propositoins in respect of benami transactions are: ( a) the burden of proof regarding benami is upon the one who alleges benami; (b ) to prove benami, the most important point is to examine the source of consideration; (c) a finding regarding benami is a finding of fact; (d) a finding of fact cannot be questioned in the reference proceedings unless it is without any evidence in support of it or is perverse; (e) the mere rejection of an explanation would not entitle the department to claim that the consideration for the purchase of the property in the name of other person was provided by the assessee; and (f) apart from the relationship between the parties, there must be some material or evidence to support the case of benami transaction.
2. In the instant case, the first point relied on by the Tribunal was not relevant since the mere fact that the version of the assessee's father-in-law had not been accepted by it did not lead to the inference that the impugned properties were purchased benami. So far as the second point was concerned, there was no direct nexus between the conclusion drawn by the Tribunal and the facts found.
The Tribunal's finding in this regard was to a great extent without any evidence in support thereof and was based on a misreading of evidence. The Tribunal did not at all consider the assessee's mother- in-law's statement that she had a cash of Rs. 5,000 and jewellery worth Rs. 15,000 in her possession. Unless the said version was rejected, the Tribunal was not entitled to a finding that assessee's parents-in-law were dependent on him. Further, apart from a single Page 42 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 sentence in the assessee's version stating that they were all living in the same house (which was Strictly applicable only to the time when the statement was made), there was nothing to show that the parents-in-law were so dependent. Again, normally among the Hindus the parents of a married daughter are most reluctant to be dependent upon their daughter and son-in-law and, therefore, the witnesses who were examined, should have been put more explicit questions in this regard if the revenue wanted to rely on this aspect of the case. As regards the third point, the fact that the assessee's wife was the only issue of her parents could not lead to the conclusion derived by the Tribunal. The said circumstances were a neutral one and it was equally possible that the purchases might have been effected by the parent themselves as well as by her husband. So far as the fourth point was concerned, the Tribunal allowed itself to suffer from a misconception in law, since it is well- settled that benami transactions in India here never been considered to be dishonest. Lastly, in respect of the fifth point, the Tribunal had again misinterpreted the AAC's order and was not right in observing that there was no material on record to justify the AAC's order. More significqntly, the Tribunal seemed to be indulging in a contradiction since, on the one hand, it questioned the AAC's finding that the assessee had considerable income and could have easily purchased the properties from his savings and, on the other hand, it held that the assessee had purchased the impugned properties benami.
3. Inasmuch as the burden of proof lay upon the department, it was necessary for it to have led evidence to show that the wife of the assessee was not in possession of any independent funds of her own from which the impugned properties could have been purchased. No such effort was made by the department and there was no finding that the assessee's wife did not have any funds of her own. In such a situation, it could not be inferred that the only funds available for financing the purchase of impugned properties were in the hands of the assessee.
4. An important criterion for deciding a controversy about benami is the motive for the benami purchase. In the instant case, no motive had been suggested as to why the assessee desired to purchase the impugned properties benami.
5. For the reasons given above, there was no material or evidence on record to support the Tribunal's finding and, accordingly, it was not justified in holding that the impugned properties were purchased by the assessee-benami.
2. In the case of Laduram Tapadia vs CIT (1962) 44 ITR 521 (SC) Hon'ble Apex Court has held as under:-
Firm - Position prior to 1-4-1993 - Assessment year 1945-46 - 'L', 'G' and several outsiders were partners in a firm - In anticipation of dissolution of said firm, six firms were started and separate deeds of Page 43 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 partnership were executed in respect thereof - While completing assessment ITO found that 'L', his brother 'G' and their sons had constituted said six firms, that they had started innumerable shops benami and that all these business belonged to 'L' and his brother 'G'
- ITO further found that 'L' and his sons were in control of funds of said firms - He, therefore, held that firms were not genuine and refused registration to said firms - He also determined income of all those firms and assessed it in hands of Firm No. 1 - Tribunal confirmed finding of ITO - High Court dismissed application under section 66(2) of 1922 Act holding that no question of law arose out of order of Tribunal - Whether order of High Court was justified - Held, yes
3. In the case of Ashok Nanda vs DCIT Hon'ble jurisdictional ITAt Indore has held as under:-
In our opinion, for holding the concerns to be benami of the Assessee following proposition of law has to be fulfilled : i) the burden to prove whether the concerns of Shri Umesh Kajve and Shri Satyendra Sahu are the benami concerns of the Assessee lies with the Revenue and not with the Assessee. (Krishnanand vs. State of M.P, AIR 1977 SC 797 (supra) ii) Revenue should prove that the Assessee had made investment in these concerns and source of the capital in these concerns have arisen from the Assessee. iii) The Assessee has control over the business. iv) The Assessee has derived benefit from such concerns and the profit from these concerns has been enjoyed by the Assessee.
4. In the case of Kurella Pullayya vs. CIT, 45 ITR 364 (AP) Hon'ble AP high Court has held as under:-
In this case also the proposition of law was that the burden of establishing the benami is on the party who alleges so. In this case the business was carried on in the name of the wife. Benami transaction was alleged. It was found the onus was on the AO to prove that the business was benami in the name of the wife of the assessee. In the case before us the Revenue in our opinion has not discharged the onus that the business belong to the assessee.
5. In the case of Ramaswami Naidu (V.) vs. CIT, 93 ITR 341 (Mad). It was held that the burden of proof was on the Department to show that the real owner was the assessee and the amount belonged to the assessee.
6. In the case of Prakash Narain vs. CIT, 134 ITR 364 the Hon'ble Allahabad High Court has held as under :
"The burden of proof regarding benami is upon the one who alleges benami. No absolute formula or acid test, uniformly applicable in all situations, laid down; yet, in weighing the probabilities and for gathering the rd indicia, the courts are usually guided by these Page 44 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 circumstances: (1) the source which the purchase money came; (2) the nature and possession of the pr after the purchase; (2) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between claimant and the alleged benamidar; (5) the custody of the title deeds aft sale; and (6) the conduct of the parties concerned in dealing with the after the sale. The above indicia are not exhaustive and their efficacy according to the facts of each case. Nevertheless, the source whence the purchase money came is by far the most important test for determining whether the sale standing in the name of one person, is in reality for the benefit of another. The mere rejection of an explanation would not entitle the department to claim the consideration for the purchase of the property in the name of another provided by the assessee. Apart from the relationship between the parties, must be some evidence or material to support the case of the benani nature of the transaction. A finding regarding benami is a finding of fact. When a, finding of fact is based on material, partly relevant and partly irrelevant, then a finding is vitiated in law. The ITO held the following purchases made in The years 1965-66 to 1968-6 9 So be benami, (1) a house in the joint names of the assesseé?s wife and mother-in-law; (ii) four shops in the names of the assessee?s wife, his mot her-in-law and his father-in- law; (iii) a house in the name of his father-in-law; and (iv) a house in the name of the assessee?s wife, which alone the assessee admitted was purchased by him in his wife?s name. The AAC held that the transactions were not benami but, on further appeal, the Tribunal held that the transactions were benami for the following reasons: (i) B, the father-in-law of the assessee, „coi4d not be believed when he said that he had a sum of Rs. 1,00,000 in cash with him since he had discontinued his business in 1946. (ii) B had no source of income and at the relevant period he along with his wife was living with his son-in-law and both of them were dependent on the assessee. (iii) The assessee?s wife was The only issue of her parents, and (iv) The assessee was not 41 IT(SS) NOS. 371 TO 375, 383 & 385/IND/2012 (ASST. YEAR : 2004-05 TO 2008-09) honest as he L?. had admittedly purchased a house property benami, in the name of his wife. On a reference Held, that the mere fact that the statement of B that he had cash amounting to Rs.1,00,000 was not accepted by the Tribunal, would not lead to the inference that the properties in question were purchased benami by the assessee himself. The assessee?s mother- in-law had stated that she had in her possession jewellery worth Rs.15,000 and cash of Rs.5,000. The Tribunal had not stated that this statement was not acceptable or was being rejected and, unless it were rejected, the Tribunal could not enter a finding that both the father-in-law and mother-in-law of the assessee were dependent on him. The fact that the assessee?s wife was the only child of her parents could not lead to the conclusion jlhal the purchases of the properties were financed not by her parents but by the assessee. In India benami transactions were not considered to be dishonest and the Tribunal erred in concluding that the assessee was dishonest because he had admittedly purchased one house benami in the Page 45 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 name of his wife. No motive had been suggested for the benami purchases by the assessee. There was no material or evidence on record in support of the finding of benami recorded by She Tribunal. The purchases of the first three items of properties were not benami purchases for purposes of income-tax. They could not be included in the total wealth of the assessee."
4.4.2 From the above discussion, it is abundantly clear that the additions have been made by the AO on presumption and assumption basis and it is also held that there exists no nexus of appellant in depositing cash in bank accounts mentioned by the AO. Thus, in the light of case laws cited above, the AO was not justified in presuming that the appellant is the actual owner of the alleged benami account and cash was deposited by appellant out of unaccounted income. The appellant vide additional ground of appeal No 10 in AY 2013-14 has taken a plea that the actual addition as per findings of the AO ought to have been made at Rs. 13,55,598/- in AY 2013-14, however, while computing the final income an amount of Rs. 13,39,598/- was inadvertently added to the income of the appellant in addition to the actual amount of Rs. 13,55,598/-. On perusal of the assessment order it is seen that no finding regarding the addition of Rs. 13,39,598/- has been given by the AO in the body of assessment order and it seems to be a clerical mistake made in final computation of income for AY 2013-14. Therefore, addition made by the AO amounting to Rs.3,79,500/- in AY 2007-08, Rs.8,01,800/- in AY 2008- 09, Rs.7,98,950/- in AY 2009-10, Rs.20,05,861/- in AY 2010-11, Rs.30,15,334/- in AY 2011-12, Rs. 27,00,389/- in AY 2012-13 and Rs. 13,39,598/- & Rs.13,55,598/- in AY 2013-14 are Deleted. Therefore, appeal on this ground is Allowed."
29. We have considered the submissions of both sides and perused the orders of lower authorities. Firstly, we observe that during the course of search, a list of bank accounts was found at the premises of assessee and nothing more, much less any iota of corroborative evidence, was found. Secondly, we observe that it is the Ld. AO who conceived a notion that because the list of bank accounts was found with the assessee, those accounts must be belonging to the assessee. Such notion has been made without any evidence and in utter disregard of the assessee's submission that those accounts belonged to the vendors/ employees to which funds have to be transferred towards business-payments and therefore the assessee was keeping details of bank accounts. Thirdly, we observe that it is the Ld. AO who obtained statements of those accounts from respective banks, the statements or passbooks of those bank accounts were not found with the assessee. Thus, it is quite manifest that just because the list of Page 46 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 bank accounts was found with the assessee, the Ld. AO proceeded with a mindset that the bank accounts must be belonging to the assessee which culminated in ultimate conclusion that the cash deposits in those accounts were also made by assessee. This clearly shows that the Ld. AO has proceeded and concluded on the basis of mere presumption, assumption and surmises without having any incriminating material. We further observe from the findings noted by Ld. CIT(A) that during assessment-proceeding, the assessee requested the Ld. AO to issue direct summons u/s 131 to the respective parties. We further observe that during the course of first-appeal, the Ld. CIT(A) has obtained a remand-report from AO. We also observe that the Ld. CIT(A) has carefully examined the twin-claims of assessee, viz. (a) the AO erred in making additions on suspicion, surmise and conjecture basis and without having any incriminating material on record found from the residential premises of the appellant relating to the year in which additions have been made; and (b) the AO erred in treating cash deposit in bank account of various persons as benami investment of the appellant; in the light of applicable judicial rulings and thereafter rightly deleted the addition of Rs. 13,55,598/- after an elaborate discussion. Regarding addition of Rs. 13,39,598/-, we are in agreement with the Ld. CIT(A) that the Ld. AO has not given any finding in the assessment-order and it seems to be an addition having been made due to clerical mistake only. Thus, we do not find any fallacy in the order of Ld. CIT(A) which is well-reasoned and carefully considered. Accordingly, we uphold the deletion made by Ld. CIT(A). Resultantly, Ground No. 10 of Revenue is also dismissed.
30. In the result, this appeal of revenue is partly allowed.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 28/11/2022.
Sd/- Sd/- (SIDDARTHA NAUTIYAL) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Page 47 of 48 Shri Jasjeet Singh Walia ITA No.183/Ind/2020 Assessment year 2013-14 Indore दनांक /Dated : 28.11.2022 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad Benches, Ahmedabad 1. Date of taking dictation 14.11.2022 2. Date of typing & draft order placed before the Dictating Member 3. Date on which the approved draft comes to the Sr. P.S./P.S.
4. Date on which the approved draft is placed before other Member
5. Date on which the fair order is placed before the Dictating Member for pronouncement
6. Date on which the file goes to the Bench Clerk
7. Date on which the file goes to the Head Clerk
8. Date on which the file goes to the Assistant Registrar for signature on the order
9. Date of dispatch of the Order Page 48 of 48