2017 (8) TMI 1187 - AT - Income Tax

Unexplained investment - addition on basis of seized document - several round of litigation - Held that - since inception viz. order passed by the A.O u/s 143(3) on 27.03.1998 the revenue had remained confused as to whether the amount (as is stated to have been decoded by the revenue) gathered from the seized document viz. Page 128 represented a loan given or a loan taken . We are of the considered view that now when it remains as a matter of fact that not only the impugned contents of the seized document viz. Page 128 could be correlated by the revenue with any seized material which could have justified drawing of adverse inferences in the hands of the assessee therefore it can safely be concluded that till date it remains an unsolved mystery for the revenue as to whether the same represented loans given or taken. - No additions - Decided in favour of assessee.

Issues Involved:
1. Addition on account of alleged unexplained investment of Rs. 5,08,870/-
2. Levy of penal interest
3. Condonation of delay in filing the appeal

Detailed Analysis:

1. Addition on Account of Alleged Unexplained Investment of Rs. 5,08,870/-:

The primary issue revolves around the addition of Rs. 5,08,870/- made by the Assessing Officer (A.O) on the basis of a seized document (Annexure A/12 - Page No. 128) during search and seizure proceedings. The A.O decoded the document to infer that Rs. 4,60,000/- pertained to loans advanced by the assessee and Rs. 48,868/- was interest received on these loans. The assessee contested this addition, arguing that the document did not belong to him and that there was no corroborative material linking him to the amounts mentioned.

The CIT(A) initially deleted the addition but the Tribunal restored the matter to the A.O for fresh adjudication, emphasizing the need for verification of whether the amounts represented loans given or taken. The A.O, in his remand report, admitted the inability to correlate the amounts with other seized materials or determine if they represented loans given or taken.

The Tribunal, in its final judgment, noted the inconsistency in the revenue's stance and the lack of corroborative evidence. It emphasized that the document was not found in the possession of the assessee and that no date was mentioned to link the amounts to the assessment year in question. The Tribunal referenced the Supreme Court's judgment in Common Cause (Registered Society) and Others Vs. Union of India and Others, which held that loose papers without corroborative evidence have no evidentiary value. Consequently, the Tribunal deleted the addition, finding no material justifying the adverse inference drawn by the A.O.

2. Levy of Penal Interest:

The assessee denied liability for penal interest on merits. However, the Tribunal's judgment primarily focused on the addition of unexplained investment and did not provide a detailed analysis on the issue of penal interest.

3. Condonation of Delay in Filing the Appeal:

The assessee filed the appeal with a delay of 3 days, attributing the delay to personal family disputes that kept him away from Mumbai. The Tribunal found the reasons for the delay to be beyond the assessee's control and condoned the delay, allowing the appeal to be heard on merits.

Conclusion:

The Tribunal allowed the appeal, setting aside the CIT(A)'s order and deleting the addition of Rs. 5,08,870/- in the hands of the assessee due to lack of corroborative evidence and inconsistencies in the revenue's stance. The decision underscores the necessity of concrete evidence for making additions based on seized documents.

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