Indian Kanoon - Search engine for Indian Law

        Page No.35           1934 Grams         Date 28.07.06
        Page No.36           3868 Grams         Date 14.06.06
        Page No.37           8767 Grams         Date 10.05.06
        Page No.38           17548 Grams        Date 21.08.06

The AO held that these unrecorded transactions pertained to sale of silver and in absence of any plausible explanation, these unrecorded sales computed at Rs,6,10,223/- were added to the income of the assessee, u/s. 69A of IT Act, 1961.

34. On appeal before the CIT(A), the assessee submitted that the AO confronted the assessee, to explain the jottings/scribblings on the loose papers found during search. In response, it was submitted in categorical terms that the same were only rough jottings/scribblings, representing unmaterialised proposals and they neither proved the incomings or outgoings. In any event, it was requested that evidence to prove the contrary, if any, be communicated to the assessee for submitting further defence in the matter. "Without communicating same, the AO, vide Para ITA Nos.91&92/BLPR/2011 No.28-29/Page No.21-22 of the order appealed against, concluded that the sum of Rs.903163/- was held to be added to the income of the assessee as unexplained money. Although no such addition was made in the computation of total income made on Para No.29/Page No.22 of the order appealed against, since these conclusions of the AO, unsubstantiated on the strength of any evidence, were unsustainable on facts and in law, therefore, the assessee submitted that the additions should be deleted.

35. The CIT(A) after considering the submissions of assessee deleted the addition after observing as under :-

"I have gone through the relevant scribblings /jottings noted on the impugned seized documents and I find that the rough jottings, neither represent purchases nor sales, much less they represent any investment or receipt in respect of any dealings finalized. Such dump documents, in my considered view, have no evidentiary value for the purpose of resorting to deeming provisions u/s.68, 69, 69A to 69C and no addition could be made, on account of undisclosed income, merely by arithmetically totaling various figures jotted therein, particularly when no evidence whatsoever was brought on record to prove the nature and ownership of the impugned jottings. If they were unrecorded sales, as assumed by the AO, then the name of the purchaser should have appeared therein. Prime facie, there is no evidence on record to conclusively prove that the impugned jottings represented the transactions in fact materialized. No doubt, u/s. 132(4A), there is a presumption against the appellant that such loose papers pertained to the appellant and its contents were correct. However, such presumption is rebuttable. Loose papers, in question, contained scribblings or rough notes and do not mean anything. Hence income should not be estimated by applying multiplier of thousand or even lac. Over the course of time, the courts have held ITA Nos.91&92/BLPR/2011 that the AO has no such authority and unless meaningful data could be culled out, which could be corroborated from other material, no addition is called for on the basis of such dump documents. It is for the AO to supply language to dump documents, substantiated on the strength of evidence. In the absence of any evidence, about the nature of figures noted on the impugned loose papers seized, date, name of the party etc., no addition could be made merely on suspicion. (ACIT v Shailesh S. Shah (1997) 63 ITR 153 (Bom.). In the instant case, the only known facts are that certain papers were found in the business premises of the appellants and they contained certain calculations, (origin and connection of which is not known) and no intelligible inference therefrom can be drawn. No sensible inference of any fact can be drawn from such known facts. In this view of the matter, the additions made were held imaginary as a result of suspicion. (Brinjal Rupchand v ITO (1991) 40 TTJ 668 (Indore). It is trite law that, if an income not admitted by an appellant is to be assessed in the hands of the appellant, the burden to establish that there is such income chargeable to tax, is on the AO. With a view to assist the AO and to reduce the rigour of the burden that lay upon the AO, provisions of Sec.68, 69,69A to 69C have provided for certain deeming provisions, where an assumption of income is raised, in the absence of satisfactory explanation from the appellant. As these are deeming provisions, the conditions precedent for invoking such provisions, arc required to be strictly construed. The facts and circumstances giving rise to the presumptions have to be established, with reasonable certainty. The AO cannot first make certain, conjectures and surmises and thereafter apply the deeming' provisions based on such conjectures and surmises. In the absence of adequate material as to the nature and ownership of the impugned transactions, undisclosed income could not be assessed in the hands of the appellant, merely by arithmetically totaling various figures jotted down on the impugned loose documents. In other words, for the purpose of resorting to deeming provisions, dump documents or documents, with no certainly, have ITA Nos.91&92/BLPR/2011 no evidentiary value. For the reasons aforementioned, the impugned presumptive addition, unsubstantiated on the strength of any evidence brought against the appellant, in my considered view, is unsustainable on facts and in law and hence the same is deleted."

36. On the above facts of the case, though the DR supported the order of AO but could not point out any specific error in the order of the CIT(A). No material was brought on record to controvert the finding of CIT(A) that loose papers, in question, contained scribblings or rough notes and do not mean anything. No material was also brought on record to controvert the finding of CIT(A) that the nature of figures noted on the impugned loose papers seized and that there was no date, name of the party etc., on the said loose papers, and, hence, the same cannot be the basis for making addition but at best could a suspicion. No corroborative material was brought on record by the revenue to show that the figures mentioned in the impugned loose sheets were, in fact, the undisclosed income of the assessee. In absence of the same, we do not find any reason to interfere with the order of CIT(A), which is confirmed and this ground of appeal of Revenue is dismissed.