2017 (3) TMI 1921 - AT - Income Tax

Unaccounted cash receipts - Revenue carried out search and seizure operation u/s. 132 - reliability of the loose sheets - interpretation given by the Assessing Officer to the noting made in the loose papers - HELD THAT - We have noticed earlier that the assessing officer has taken the figures noted in these loose sheets as representing lakhs - A careful perusal of the same would show that a sum of Rs.50.0 was withdrawn on 18.9.07 with the narration Drawings . The drawings could not be normally in lakhs, but only in thousands. Hence the statement given by Shri Vinod Faria, in our view, would stand corroborated by this entry. Hence we are of the view that the tax authorities are not justified in interpreting the figures as in lakhs . When this point was put to Ld D.R, he also admitted that the possibility of taking the figures in thousands is more in the facts and circumstances of the case. Hence the aggregate amount for consideration should be taken as Rs.65,000/- and not Rs.65,00,000/- as presumed by tax authorities. Nature of payment - contention of the assessee is that he has not received any payment as alleged by the tax authorities - There is no evidence to show that there were certain business transactions which resulted in payment of any income by Shri Vinod Faria to the assessee. Hence, even if it is considered for a moment that the payments have been made to the assessee under the name Milan bhai , yet the question would remain as to whether those payments can be considered as assessee s income?. In the absence of any other material to show that these payments have been made towards business dealings, we are of the view that the alleged payments cannot be considered as income of the assessee. In any case, the noting made in page no.16 pertains to the period relevant to AY 2008-09 as per the dates noted against other transactions. Hence, on a conspectus of the matter, we are of the view that the transactions noted in these loose sheets cannot be considered as representing income of the assessee. In view of our finding given above, we do not find it necessary to go into the question of reliability of the loose sheets. Decided in favour of assessee.

Summary

Issues:
1. Exemption claimed u/s. 54F of the Act
2. Addition of ?65,00,000 as unaccounted cash receipts from Shri Vinod Faria

Analysis:
1. Exemption claimed u/s. 54F of the Act:
The learned AR did not press ground No. 1 related to the exemption claimed u/s. 54F of the Act, leading to its dismissal as not pressed. This issue was not further discussed in the judgment.

2. Addition of ?65,00,000 as unaccounted cash receipts from Shri Vinod Faria:
The dispute revolved around the interpretation of loose papers seized during a search operation, indicating cash payments from Shri Vinod Faria to the assessee. The Assessing Officer (AO) interpreted the figures noted in the loose papers to be in lakhs, totaling ?65 lakhs, representing unaccounted income of the assessee. The CIT(A) confirmed this addition, prompting the appeal.
- The assessee and Shri Vinod Faria denied the passage of money as interpreted by the AO. Shri Vinod Faria admitted the loose sheets were in his handwriting, representing personal transactions, not specifically involving the assessee.
- The term "Milanbhai" was considered too general to solely implicate the assessee, with no conclusive evidence of income received outside the books.
- The loose sheets were argued to be "dumb documents," lacking substance for income assessment.
- The Departmental Representative argued the business relationship between the parties, asserting that the entries were related to legitimate business dealings.
- The Tribunal examined the loose sheets and statements, noting that the figures were likely in thousands, not lakhs, as presumed by the tax authorities.
- With no evidence of income from the transactions and the relevant period being for AY 2008-09, the Tribunal concluded that the alleged payments did not constitute the assessee's income.
- The Tribunal set aside the CIT(A)'s order, directing the AO to delete the addition of ?65.00 lakhs.
- The interest charged under section 234B was deemed consequential and not requiring further adjudication, resulting in the partial allowance of the appeal.

The judgment was pronounced on 23.3.2017 by the Appellate Tribunal ITAT Mumbai, with detailed analysis and findings on the issues raised regarding the addition of unaccounted cash receipts.