Income Tax Appellate Tribunal - Delhi
Solitare World Pvt. Ltd., New Delhi vs Acit, Central Circle- 25, New Delhi on 31 May, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B', NEW DELHI
Before Sh. Amit Shukla, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 2638/Del/2018 : Asstt. Year : 2013-14
Solitare World Pvt. Ltd., Vs ACIT,
Shop No. 6, Second Floor, 2633 & 2634, Central Circle-25,
Plot No. 2490250, Gurudwara Road, New Delhi
Karol Bagh, New Delhi-110005
(APPELLANT) (RESPONDENT)
PAN No. AAOCS1369R
Assessee by : Sh. Nirbhay Mehta, Adv. &
Sh. Hiren Mehta, CA
Revenue by : Ms. Yagya Saini Kakkar, CIT DR
Date of Hearing: 14.03.2022 Date of Pronouncement: 31.05.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-17, New Delhi dated 21.11.2017.
2. The only tangible ground taken up by the assessee is as under:
"2. That on the facts and circumstances of the case and in law the ld. CIT(A) was not justified in upholding the action of AO in making addition of Rs.55,00,000/- on the basis of contents of the seized document, page
- 8 of Annexure A-5/RS-1, by treating the amount as unexplained and invoking section 69C of the Income Tax Act, 1961."2 ITA No. 2638/Del/2018
Solitare World Pvt. Ltd.
3. A search and survey operation u/s 132/133A of the Income tax Act, 1961 was carried out on 15.10.2013 in SRM group of eases by the Investigation Wing, New Delhi. Simultaneously, a survey was carried out on M/s Shree Raj Mahal Jewellers Ltd., M/s PLB Infrastructure Pvt. Ltd., M/s Shree Raj Mahal Diamonds Pvt. Ltd., at 2633 & 2634, Bank Street, Karol Bagh, New Delhi wherein papers/documents related to M/s Solitaire World Pvt. Ltd. was found and impounded. Subsequently, the case was centralized from Ward-68(2), New Delhi u/s 127 of the IT Act, 1961, by the jurisdictional CIT vide order F.No.CIT- B/Delhi/Centralization/2014-15/686 dated 06.02.2015 and the assessment u/s 143(3) has been completed on 29.03.2016.
4. During the survey proceedings Annexure A-5, Page No.8was impounded which shows transactions and on top of the paper 'Received A/c' and 'Payment A/c' is written. In the said document, in the 'Received A/c' side property description "62/1 Ajmal Khan Park" was found mentioned. During the post survey proceedings, on being asked to explain the contents of the said document, it was submitted that the above property description belong to M/s Solitaire World Pvt, Ltd. which is a part of SRM group of company. During the assessment proceedings, the assesses was asked vide letter dated 23.02.16 to furnish the following details with respect to aforesaid document. The letter of the Assessing Officer is as under:
i. E xp l ain t h e n at u r e o f p r o p er t y d e s c rip t i on ' P r op e rl y n o . 1 , A j m al K h an Pa r k ' as d e p i c t ed i n t h e d ocu m en t an d al s o ex plain a s h ow t h e sa m e is b o ok ed in the b o ok s of a c cou n t for the y e ar under c on s id e rat i on .
ii. E xp l ain t h e m od e o f p a ym en t wit h d o cu m en t a r y e vid en c e . iii. Pr o vid e b an k d et a il s sh o win g t h e a f o r es aid t ran sa cti on .3 ITA No. 2638/Del/2018
Solitare World Pvt. Ltd.
iv. Pr o vid e l ed g e r o f t h e c on c e rn ed p ar t i e s wit h wh o m t r an s a ct i on wa s m ad e al on g wit h v. c op y of t h e ag r e e m en t w it h t h e s e p a rt i e s . A l s o p r o vid e t h e n am e , ad d r e ss an d PA N o f t h e s e c on c e rn ed p a r t ie s al on g wit h t h ei r ITR f il ed f or t h e ye a r u n d e r c on sid e ra t i on .
vi. E xp l ain s ou r c e o f in v est m en t in p r op e rt y "A j m al K h an Pa rk " .
5. In response, the above said query, the assessee submitted reply dated 07.03.2016 which is as under:
"With regard to the captioned subj ect matter, this has re fere nce to your no tice dated 23.02.2016, asking assesses to furnish info rmation/de tails pertaining to seized document marke d as Annexure A- 5/RS- 1, page 8, found during the course of search proceedings at premises, RS-1, 2633 & 2634, Bank Street, Karo l Bagh, De lhi. In this regard, on be half of and unde r instructio ns from our subject clie nt, it is submitted is as unde r:
With re gard to above, it is submitted that contents of Page no . 8", RS-1/A-5 are similar & ove rlapping with contents of Page-4 & 5 o f RS-1 /A-5 on which rent re ceived from certain pro perties is mentione d. During the post search inve stigation, vide letter dated 28.01.2014, the assessee has reco nciled figures on se ized page s with rent accounted fo r in books of accounts. The balance amount of Ms, 11J 7,000/- has been surrendere d as undisclosed Inco me."
6. After going through the replies, the Assessing Officer held that the assessee failed to reconcile the amounts mentioned therein with its books of accounts. It was held that the assessee has only mentioned that figures on seized Pages were reconciled with some other page and rent accounted for in books of accounts and accordingly, an amount of Rs. 11,17,000/- has been surrendered on the basis Annexue A-1 seized, from 4 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
premises R-4 for pages 4-6, As far as the impounded document is concerned, the assessee admitted that the amounts are written in thousands and accordingly made the surrender. In the same manner, in this document also, the amounts are bound to be mentioned in thousands. Hence, the amount of Rs.55,00,000/- and an amount of Rs.20,00,000/- totaling to Rs.75,00,000/- has been added to the total income of the assessee based on the notings on the documents on 04/12 being 5500 and 2000 CHQ.
7. Aggrieved the assessee filed appeal before the ld. CIT(A).
8. The ld. CIT(A) gave remission of Rs.20,00,000/- paid by cheque as forming part of the regular books of accounts. The relevant portion of the ld. CIT(A) is as under:
Ground no .2 for the AY 2013- 14 relates to contention of the appe llant against addition of Rs.75,00,000/- made by the AO. The fact of the case is that the A O made additio n on the basis of contents o f a document, annexure A-5, page no .8 im pounded during the course of survey actio n, in which certain transactions was mentione d. T his document was impounde d from the office premises of the appe llant I n the said do cument une xplained expenditure of Rs.55 lacs and Rs.20 lacs respectively was no ted, since, the source of the impugned expenditure remained unexplained before the AO, there fore , he made addition of the same under sectio n 69C o f the IT Act.
5.1 The appellant has submitted as unde r:-
"1. Gro und No . 2 of the appe al memo pertains to the action o f the Assessing Officer in making an additio n o f Rs. 75,00,000/- on the basis o f co ntents of se ize d documents Page 8 o f Annexure A 5/RS1.5 ITA No. 2638/Del/2018
Solitare World Pvt. Ltd.
2. Vide earlie r writte n submissions it has been conte nded that the figures mentione d on the seized do cuments are mere rough jo ttings not warranting additio n of any kind. F urther, to the same, it is submitted that the seized documents contains the following info rmation :-
62/ 1 Ajmal Khan Park
4/12 5500
4/12 2000 - CHQ
From the above reproduced contents, it is cle ar that the payment of Rs. 20,00,000/- has been effected by cheque and therefore it has been re flected in the books o f accounts. Without prejudice to the submissions made earlier, it is contended that under no circumstances amount of Rs.20,00,000/- can be added as unexplaine d expe nditure / investm ent since the said amount has been paid by cheque and is forming part of re gular books of accounts. I n substantiatio n of the same, it is e xplained that the aforesaid payment of Rs. 20,00,000/- was made by the sister concern M/s Krishna Jewellers o n be half of the appellant company to M/s SKG Doors Pvt. Ltd. on 04.12.2012. A copy o f Ledger account is enclosed here with at Page 1. F urther, a co py o f bank statement reflecting co rresponding de bit of an amount of Rs. 20,00,000/- in bank acco unt with Federal Bank is enclosed here with at Page 2......."
I h av e c on sid e r e d t h e f ac t s an d ci r cu m st an c e s o f t h e ca s e , su b m i ss i on o f t h e ap p e llan t an d p e ru s ed t h e o rd e r o f t h e A O. I fin d t h at s o fa r a s R s ,2 0 ,0 0, 0 0 0/ - ch e q u e , i s c on c e rn ed , t h e s am e w a s paid b y ch eq u e wh i ch is f o r m in g p ar t o f t h e r eg u l a r b o ok s o f a cc ou n t s . Th e s aid p a ym en t wa s m ad e b y M / s K ri sh n a J ew ell e r s on b eh al f o f t h e ap p el lan t t o M/ s S K G D o o rs P. Lt d . on 0 4 .1 2 . 2 0 1 2 wh i ch i s v er ifi ab le f r om t h e l ed g er ac c ou n t a s w ell as b an k st at em en t , h o w ev e r , t h e ap p ell an t h a s fai l ed t o e x p lain t h e s ou r c e of R s .5 5, 0 0 ,0 0 0/ - eit h e r before the AO or b ef o r e me by fil in g the su p p o rt in g d o cu m en t s w h ic h wa s sp en t in ca sh . Under these 6 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
ci r cu m st a n c e s7 +a m o f t h e c on sid e r ed vi ew t h a t s o fa r a s t h e ex p en d it u r e o f R s .2 0 ,0 0, 0 0 0/ - p aid in ch eq u e i s c o n c e rn ed , sin ce , t h e ap p e llan t c ou ld e xp la in t h e s ou r c e o f t h e sa m e b y fi lin g su p p o rt in g d o cu m en t s b u t s ou r c e of the b a lan c e e xp en d i t u r e of R s . 5 5, 0 0 ,0 0 0/ - r e m ai ned ex p lai n ed , t h e r e f o r e, t h e A O i s d ir e ct ed t o r es t ric t t h e ad d iti on t o R s. 5 5, 0 0 ,0 0 0/ - a s ag ain st R s. 7 5 ,0 0 ,0 0 0/ - , t h e r e b y , t h e ap p e llan t g et s p a rt r e li ef on t h i s g r ou n d . "
9. The revenue accepted the decision of the ld. CIT(A) on the issue of remission of Rs.20,00,000/- and no appeal has been filed. Aggrieved the assessee filed appeal before the Tribunal against the confirmation of Rs.55,00,000/-.
10. Before us, the ld. AR argued that the entries cannot be read in isolation but they have to be read holistically. It was argued that the total receipts on the said impounded page have to be taken into consideration. It was argued as per the page the total receipts (Received A/C) were to the tune of Rs.2,19,70,000/- whereas the total expenditure (Payment A/C) was Rs.3,32,89,000/- (Payment A/C).
11. He relied on the orders of the Co-ordinate Bench of ITAT in the case of D. Suresh Vs. ACIT in ITA Nos. 462 & 463/Bang./2020, ACIT Vs Sharad Chaudhary 55 Taxmann.com 324 and the judgment of Hon'ble Kolkata High Court in the case of Pr. CIT Vs. Ajanta Foot Care 84 Taxmann.com 109.
12. On the other hand, the ld. DR relied on the order of the ld. CIT(A). Placing reliance on the ld CIT(A)'s order and that no explanation was provided in appellate proceedings nor any supporting document was adduced as regards to the figure of 5500 as stated by CIT(A) in para 5.2 of impugned appellate order dated 21.03.2018. It was argued that the assessee has 7 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
not explained as to the source of Rs.55 lacs and the additions under section 69C of the Act are, therefore, justifiable and may kindly be upheld. The ld. DR's written submissions are as under:
"1.2. Reliance on AO's orde r page 2, para 9 where asse ssee has himself admitted that jottings are writte n by him , further AO has state d that that assessee has been unable to reco ncile entries with his books o f acco unts despite be ing given ample opportunitie s as state d in penpenultimate & penultimate line o f para 9 of assessment order.
1.3. CIT vs. Babulal N im (1963) 47 ITR 864 (MP) , does no t enable the assessee o r the department to te nder fresh evidence to support a new point o r to , m ake out a new case in appe llate proceedings.
1.4. Circumstantial evide nce that assessee has also surre ndere d in para 9 o f Rs.11.17 lacs
ii) The fact that jo ttings were e xplained as re gards material extent and rele vant to additions made and are co rrobo rated by assesses ple a him self and his explanatio n.
iii) The Hon'ble Madras High Co urt in the case of Sunil Balasubramaniam Shankar vs. Income Tax Officer, Non Corporate Ward 18(3) [2019] 107 taxmann.co m 55,. Having he ard the learned counsel for the parties, we are satisfied that no substantial questio n of law arises in the pre sent Appeal requiring our furthe r conside ratio n under Section 260A o f the Act. The very nature of the transactio ns invo lved in the prese nt case by allo wing usage of 5 Credit Cards by the Assessee to his allege d friend Mr. Neelamegan and the cre dit entries given through vario us F irms named abo ve, in the bank acco unt of the Assessee , create d suspicion in the mind o f the Assessing Authority and the refo re, they called upon the Assessee to prove such credit entries. Despite the oppo rtunity, by way o f 8 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
second round of litigation, provided by the learned Tribunal, it appe ars that the A ssessee failed to prove the cre dit entries.
6. We are also unable to appreciate the usage of cre dit cards in the name of the Asse ssee by third party, which requires signatures of the pe rson concerned using such Credit Cards. A ppare ntly, therefo re, all those transactions were undertaken by the third parties on behalf of the Assessee himself and the refore, the de fence pleaded by the Assessee that the y we re allege dly loan taken by Mr. Neelamegan and repayments made by him to the Bank: account of the Assessee does not inspire any co nfidence . In our o pinion, the refore, the fact finding Body below have rightly adde d the said amount in the hands of the Assessee as unexplaine d income/expenditure of the Assessee. Such addition does no t appe ar to be perverse re quiring our consideratio n unde r Section 260A of the Act...'' The Co-ordinate Bench of ITAT in the case of Somabhai Ambaalal Praj apati Vs. Assistant Commissioner of Income-tax, Central Ciircle- 2(2) , A hmadabad [2017] 88 taxmann.com 369 (Ahmadabad - Trib.)
4.Ld. Counse l for the assessee conte nds as under:--
(i) The incriminating pape r based on which the additio n was made was a dump document and a rough pape r;
(ii) Exact conte nts of the paper were neither opinion o f the assessee nor the Assessing Office r co uld e xplain them;
(ii) This amount was de ducte d from opening cash balance which has arise n o n account of cash rece ipts o n sale o f land.
4.1 Ld. Counsel fo r the assessee further contends that the joint cash flo w statement o f three brother viz. Shri So mabhai Ambalal Praj apati, Chandubhai Ambalal Prajapati & Vishnubhai Ambalal Praj apati was file d, out o f which joint withdrawal o f Rs.5 lakhs in the month of February 2003 was] not accepte d as cash in hand on the 9 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
point that whe n the assessee was having cash in hand, there wo uld be no reason to withdraw the funds from the bank. Therefo re, the amount of Rs.5 lakhs was split into Rs. 1,66,666/- and disallowed in the hands of three bro the rs.
4.2 Apropos unacco unted sales it is contended that entire sales canno t be tre ate d as net profit and the GP should be applie d. Reliance is placed on following judgments o f Ho n'ble jurisdictional High Co urt:--
(i) CIT vs. President Industries [2002] 258 ITR 654/124 Taxman 654 ( Guj .)
(ii) Pipush Kumar O. Desai vs. CIT [2001] 247 ITR 568/114 Taxman 281 ( Guj .)
5. Ld. DR relied on the orde rs of ld. CIT(A). It is conte nded that the findings of ld. CIT(A) are pure finding of facts o n the peculiar facts and circumstances of these cases, the refo re, the case laws cited by assessee being on differe nt facts cannot be applie d in the absence of factual parity.
6. I have heard the rival contentions, perused the material available on reco rd and gone through the o rde rs o f the authorities below. Adverting to the appeals of Somabhai Ambaalal Prajapati & Chandubhai Ambalal Prajapati for A .Y. 2004- 05, the assessees could not explain as to how the amount o f Rs.5 lakhs withdrawn from the common bank account was utilized. Looking at the e ntire facts and circumstances, the issues were to be decide d on surrounding circumstances and human conduct. The burde n to prove the cash entries is on the assessee since the requisite burde n has not bee n discharged by the assessee in this behalf in view thereof, the o rde rs of the Id. CIT(A) on this issue are uphe ld. Thus, assessees' appeals are dismissed.
10 ITA No. 2638/Del/2018Solitare World Pvt. Ltd.
The Hon'ble Punjab & Haryana High Co urt in the case of Commissioner o f I ncome-tax-II , Chandigarh vs. N arender Kumar 55 taxmann.com 371 (Punj ab & Haryana) held that, "..9. A perusal of the re port re veals that the inspector could not find these firms/entities. Upo n receipt of the re port and as recorde d in the o rder passed by the assessing o fficer, the assesse e was afforded an opportunity to produce the co nce rned persons so as to pro ve the genuineness of the bills. The assessee file d replies which were primarily rejected on the gro und that the assessee could no t prove the existence of these partie s. A relevant extract from the assessment orde r reads as follo ws:--
"The re ply submitted by the assesse e has been considered and is no t acceptable. The assessee not only failed to pro duce the said pe rsons but was also no t able to provide the PAN No./Sales Tax No. or Pollution Clearance certificate of these parties from which he has claimed to have m ade substantial purchase which have been made in cash. Furthe r, the supplie rs mentioned have addresses which are clearly mentioned on their respective bills. Spot ve rificatio n carrie d out has clearly shown that no such parties existed at those addresses even in the year under conside ration. Thus the conte ntion of the assessee that they we re present on-site is not also acceptable.
It is also wo rth mentio ning that no tices u/s 133( 6) of the Income-tax Act, 1961 fo r furnishing of information were also sent to the above mentione d concerns requiring them to pro vide a co py of the ledger o f M/s. Harso ria Constructio n Co . These lette rs returne d to the o ffice unde livered."
The Tribunal, ho wever, has not dealt with this aspect nor has it chosen to reco rd any opinion on the failure o f the assessee to produce these parties or to pro ve their existe nce or to rebut the 11 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
report pre pared by the inspecto r but abruptly directe d the assessing officer to apply a net pro fit rate of 6%, without assigning any ostensible reaso n. The Tribunal having ignore d re levant facts, in our conside red o pinio n, has committed an erro r o f jurisdiction. We wo uld like to clarify that we are no t reco rding any o pinion as to the legality or othe rwise of the bills, the vo uchers and the expenses etc. particularly as the assessee who is a contractor must have purchased some material but as the Tribunal has directed assessment at a net profit rate without examining the material o n record, refe rre d to in detail by the assessing o fficer particularly the paragraphs extracte d hereinbefo re , the questions of law have to be answere d in favour of the re venue by ho lding that the Tribunal has erred in applying a net profit rate witho ut conside ring the material collected by the assessing office r and by ignoring relevant facts and factors re ferred to lay the assessing officer, the reby leading to miscarriage of justice and an erro r of jurisdiction that must necessarily be rectified by the Tribunal itse lf.
The Delhi Special Bench of ITAT in the case o f CI T Vs. Subhash Verms 125 TTJ 865, the ld. CIT(A) delete d this addition by fo llo wing observations:
"A sum o f Rs. 3,05,000 has been added by the A O o n account of cash payments made for LIC. T he AO in his order has state d that the assessee had obtained a loan o f Rs. 3,60,000 from the LIC and paid an inte rest o f Rs. 6,17,000. The assessee paid Rs.3,05,000 in cash and did not have any e xplanation regarding the so urces from which these payments have been made. I n appe al it has been state d that there is no seized material to sugge st the payment as contended by the A O. The issue has bee n examine d. I t is not disputed by the appellant that a sum of Rs.3,05,000/- has indee d been paid in cash to LI C as repayment of loan. I t is also without dispute that the appe llant does 12 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
not have any e xplanation re garding the sources of these payments made to LIC, under the circumstances the AO was fully justified in treating a sum of Rs.3,05,000/- as undisclosed income of the appe llant. The additio n is confirmed."
103. Learned Departm ental Represe ntative suppo rte d the order of CIT(A).
104. Learned counsel for the assessee co ntends that the addition is unjustified.
105. We have heard the rival contentions and pe rused the material available on reco rd. In the give n facts, we are inclined to dismiss this ground of the assessee inasmuch as the assessee did no t furnish any e xplanation before any of the autho rities, in respect of repayment of LIC loan of Rs.3,05,000/- in cash hand nothing has been e xplained be fore us as well.
The Hon'ble Madras High Co urt in the case o f Grand Bazzar Vs. ACIT 166 Taxman 232 held that "in the present case, the assessee had no t explained as to the source of purchases and the additio ns under section 69C of the Act are , therefore , sustainable . Further, the Commissioner of income-tax (A ppeals) is no t justified in reducing/ dele ting the additions. As rightly o bserved by the Tribunal, the funds introduced by the assesse e as cash credits in the books of account had gone into the assesse e's business acco unt and so , the same could not have been utilise d fo r making the unaccounted purchases and the assessee could not be given cre dit to any amount alre ady introduce d as cre dits in the account books as available to meet any unaccounte d expenditure including the unaccounted purchases. We are, there fore , o f the opinio n that the Tribunal was justifie d in restoring the additions unde r section 69C of the Act fo r both the assessment years..."
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The Hon'ble Supre me Court in the case of Sushil Bansal Vs. PCIT 115 taxmann.com 226 (SC) which uphe ld [ 2020] 115 axmann.com 225 (Delhi) HIGH COURT OF DELHI in S ushil Bansal vs. PCIT wherein it was state d "1. This Court is unable to agree with the above submissions. The Court finds that the AO has taken pains to summon Shri Bhati, the father- in-law of the Assessee and record his statement. Unfortunately, the statement made by the Assessee's father- in-law was not helpful in explaining the source of payment o f Rs. 2.3 lacs as capitation fees. Shri Bhati only explaine d the payment o f Rs.7.18 lacs as regular fees. With there be ing no credible explanation offered by the Assessee for the payment made as capitatio n fee, the AO is justifie d in adding it to the Assessee's income."
The Hon' ble S upreme Court in the case o f Pradee p Kumariyani Vs. ITO 101 taxmann.com 131 held that "in fact, the order of CIT (A) which is elaborate, refe rs to other materials co llected during the course o f survey such as gross pro fit rate in the line of business done by the assessee. It was notice d that the gross profit declared by the assessee was much lesser than the profit in the trade . CIT (A) also no ted that during the surve y as well as after the survey, assessee failed to submit the stock reconciliation. He had in fact conveye d that no stock was maintained. The assessee had failed to provide stock re gister despite se ve ral o ppo rtunities. Inter alia on such grounds, the CIT (A) had confirmed the addition. It is true that the Tribunal has discusse d the issue somewhat briefly. Nevertheless, the T ribunal has o bserve d that the informatio n given by..."
The Hon'ble Madras High Co urt in the case of T hiru S. Shyam Umar Vs. Assistant Co mmissioner of I ncome-tax, Ce ntral Circle-III( 3), Chennai 99 taxmann.com 39 held that "8. The argument of the learned Counsel for the assessee is that there sho uld be corrobo rative evidence to sustain the entries to link the same and 14 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
treat it as an un-explained investment to bring the case under Section 69 of the Act. In our co nside red view no thing more is require d than the facts, which were conside red by the Assessing Office r as we ll as the Commissioner of Income Tax (A ppeals) and the Tribunal. T he notings are clear and it is not any scribbling, which shows the figures and also shows whether the payments were in cash or in cheque. The retraction made by the assessee , after a period of two ye ars, was rightly rejected as an afte rtho ught. As held in the case of T . Rangro opchand Chordia ( supra), the loose sheets are also 'documents' . In te rms of Section 2 o f the I ndian Evide nce Act, 1872, they can be relied upo n. In fact, the Divisio n Bench too k into conside ratio n whe ther the loose she ets seize d from the premises of the assessee wo uld constitute 'do cuments', within the meaning o f exception unde r Sub-Section (4) o f Section 132 of the Act and has held as fo llo ws:
"21. Coming to the two questions o f law no w be fore us, it is see n that the y re volve around the loose sheets picked up during se arch. These loose sheets are documents within the meaning of sectio n 2 of the I ndian Evidence Act. I t reads as follows:-
"Document means any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, inte nded to be used, or which may be used, for the purpose of recording that matter."
22. It is re levant to note that this definition is a re-pro duction in Section 3( 18) of the Gene ral Clause s Act. There fore, it is cle ar that loose sheets recovered from the pre mises of the assessee constitute documents within the meaning of the explanatio n under Sub-section (4) of Section 132. Sub-section (4) of Section 132 speaks about the admissibility of evide nce of those documents. S ub-section ( 4) togethe r with the explanation thereunder to section 132 re ads as follows:
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"(4) The autho rize d office r may, during the course of the se arch or seizure, examine on oath any person who is fo und to be in possessio n or control o f any boo ks of account, documents, money, bullio n, jewe lle ry or other valuable article or thing and any statement made by such perso n during such examination may there after be use d in e vidence in any procee ding under the Indian Income-tax Act, 1922 ( 11 o f 1922), or unde r this Act."
Explanation:- For the removal of do ubts, it is hereby declare d that the e xamination of any person under this sub-section may be not merely in respect of any books o f acco unt, o the r documents o r assets found as a result o f the se arch, but also in respect of all matters rele vant for the purposes of any investigation co nnected with any proceeding under the Indian Income-tax Act, 1922(11 of 1922) or unde r this Act.
23. T herefo re, in the light of the definition of the expression 'document' and in the light o f adm issibility of the said document based upo n the statements made by the assessee , the additions made by the Asse ssing Officer cannot be found fault with. Though there was a retraction o f those statements by the assessee, those retractions were rightly rejected o n the appreciation of the return filed on 27.09.2002 whe re admittedly, a particular amount was shown as undisclo sed income. The re fore , the re tractio n is o f no avail in light o f section 132(4) and its Explanation. In vie w of the above , the question of law are answered in favour of the appe llant/ Department and the appeal is allowe d. No costs."
13. Heard the arguments of both the parties and perused the material available on record.
14. We find that the case quoted by the ld. DR of the Hon'ble Madras High Court in the case of S.S. Shankar Vs. ITO (107 16 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
Taxmann 55) dealt with issue of expenditure on credit cards which is not applicable to the facts of the instant case before us.
15. Similarly, in the case of S.A. Prajapati Vs. ACIT, CC-22, Ahmadabad (88 Taxmann 369) dealt with cash withdrawals. Hence, not applicable to the facts of the instant case before us.
16. CIT Vs. Narendra Kumar Gupta (55 Taxmann 371) dealt with the issue of bogus bills, hence, not applicable to the facts of the instant case before us. ACIT Vs. Subhash Verma (125 TTJ
865) deals with the issue of cash loans and subsequent payment to LIC. Hence, not applicable to the facts of the instant case before us.
17. Grand Bazar Vs. ACIT (166 Taxmann 232) dealt with the issue of cash credits in the books of account. Hence, not applicable to the facts of the instant case before us.
18. Similarly, the ld. DR's reliance on the judgment of Hon'ble Apex Court in the case Pradeep Kumar Vs. ITO (101 Taxmann
131) is not applicable to the facts of the instant case as the said judgment of the Hon'ble Apex Court dealt with the gross profit rate and the stock reconciliation.
19. In the instant case, the impounded material reflects receipts and payments and the assessee has already paid the difference of the amounts to taxation after going through the entire set of papers. The property 62/1, Ajmal Khan Park has been purchased on 08.11.2012 whereas the notings reflect 04.12.2012. The transaction of purchase of the said property has culminated on 08.11.2012. Hence, the probability of any 17 ITA No. 2638/Del/2018 Solitare World Pvt. Ltd.
payment post, purchase of a property is also ruled out. The assessee has offered to tax the amount on account of the payments A/c and receipts A/c. The case laws relied upon by the revenue are not applicable to the facts of the case. Reliance is being placed on the order of the Co-ordinate Bench of ITAT in the case of D.S. Suresh Vs. ACIT in ITA No. 462 & 463/Bang./2020 wherein it was held that there should be material on record to show that there is an undisclosed income on the basis of material on hand with the Assessing Officer and guess work is not possible. The Assessing Officer shall have the basis for assuming that the assessee has not disclosed the income for taxation. Reliance was also placed on the decision of Hon'ble Supreme Court in the case of CBI Vs. V.C. Shukla 3 SCC
410. In the case of ACIT Vs. Sharad Chaudhary in 55 Taxmann 324, it was held that the loose paper found on standalone could not be used as a basis for making the addition without the company of any other supportive material and evidence, more so when the contents were not interlinked. Hence, keeping in view the fact that the assessee has offered the amounts mentioned on the impounded material which has been accepted by the revenue and also keeping in view that revenue has not brought anything on record to prove that the assessee is liable to pay the taxes more than what has been already disclosed and also keeping in view the fact that the transactions of Ajmal Khan Park, 62/1 stands culminated, we hereby direct that the addition made be deleted.
18 ITA No. 2638/Del/2018Solitare World Pvt. Ltd.
20. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 31/05/2022.
Sd/- Sd/-
(Amit Shukla) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 31/05/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR