2014 (8) TMI 309 - AT - Income Tax

Undisclosed income - Seized documents were dumb in nature or not Held that - The addition was made by the AO based on the loose paper cannot be considered as conclusive evidence - except relying , the notings in the loose slips, no attempt has been made to corroborate the notings with independent evidence - The parties to the transaction particularly the vendor has not examined - In every transaction there is a circle concerning two parties - It is not known whether the vendor has disclosed the consideration as noted in the diary - merely on the basis of presumption and some corroborated notings additions cannot be made Relying upon COMMISSIONER OF INCOME TAX (CELTRAL) -I. NEW DELHI Versus ANIL BHALLA 2010 (2) TMI 7 - DELHI HIGH COURT - the AO made addition on the basis of Annexure A-1 on his own whims, surmises and conjectures and also by converting and moulding the contents of the impounded document to gather support for his baseless findings - the Annexure A-1 stand alone cannot be used as a basis of making addition without the company of any other supportive material and evidence - the AO made addition without any basis and justified reason which was rightly deleted by the CIT(A) by holding that the document is a dumb document which cannot be a basis for making addition in regard to investment in purchase of land out of income from undisclosed sources u/s 69 of the Act Decided against Revenue.

Issues Involved:
1. Legality of the deletion of Rs. 4,47,00,000/- addition by the CIT(A).
2. Validity of the seized documents as evidence.
3. Burden of proof regarding the seized documents.
4. Interpretation of the seized documents.
5. Application of legal precedents.

Detailed Analysis:

1. Legality of the Deletion of Rs. 4,47,00,000/- Addition by the CIT(A):
The Revenue appealed against the order of the CIT(A), who had deleted an addition of Rs. 4,47,00,000/- made by the AO on account of undisclosed income. The AO had made this addition based on certain rough notings found during a search and seizure operation. The CIT(A) concluded that the notings on the seized document were "dumb" and incapable of any interpretation that could lead to an unambiguous inference of unaccounted investment or sale of land by the assessee.

2. Validity of the Seized Documents as Evidence:
The AO argued that the seized document (Annexure A-1) was not a dumb document as it contained chronological details of events, including the area of land, rate, payment details, and consideration. However, the CIT(A) and the Tribunal found that the document lacked essential details such as the description or address of the property, any payment details, or the names of the parties involved. The Tribunal observed that the document did not provide a coherent recording from which a clear and unambiguous inference could be drawn.

3. Burden of Proof Regarding the Seized Documents:
The CIT(A) held that the burden of proof shifted to the AO to substantiate the contents of the document once the assessee provided an explanation. The Tribunal supported this view, stating that the AO failed to bring any corroborative material or evidence to support the addition. The Tribunal emphasized that the AO's interpretation of the document was based on assumptions and conjectures without any factual basis.

4. Interpretation of the Seized Documents:
The AO interpreted the notings on the seized document as reflecting an investment of Rs. 4,47,00,000/- in land. However, the Tribunal found that the document contained rough notings related to proposals/offers for land that were never executed or materialized. The Tribunal noted that the AO had erroneously treated the amount of Rs. 4,47,000/- as Rs. 4,47,00,000/- by deleting the decimal point. The Tribunal concluded that the document was a "dumb document" and could not be used as a basis for making the addition.

5. Application of Legal Precedents:
The Tribunal relied on several legal precedents to support its decision. It cited the decision of the Hon'ble Jurisdictional High Court of Delhi in CIT vs Gian Gupta, where it was held that unsigned documents and documents lacking essential details could not be used to make additions. The Tribunal also referred to other decisions, including CIT vs Anil Bhalla, CIT vs Girish Chaudhary, and CIT vs Atam Valves (P) Ltd., which emphasized that loose papers and documents lacking corroborative evidence could not form the basis for additions.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 4,47,00,000/-, concluding that the seized document was a "dumb document" and lacked sufficient evidence to support the AO's findings. The Tribunal emphasized that the AO's addition was based on assumptions and conjectures without any corroborative material. The appeal of the Revenue was dismissed.

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