2017 (12) TMI 1393 - AT - Income Tax

Addition on the basis of notings on seized document - payment by cheques - document are presumed to belong to the assessee found in search - assessment u/s 153A - Held that - The assessee has admittedly, paid cheque in two accounting years i.e. one ending March, 2005 and the second by April, 2005. The assessee had advanced sum of ₹ 62,50,000/- by three different cheques upto 31.03.2005 i.e. relating to assessment year 2005-06 and in the next year, had paid sum of ₹ 25 lakhs which was also returned by the said concern M/s. SAAR Properties. The second aspect which has to be noted that except for narration in front of Bora of 50, which admittedly, was paid by cheque, no other entry has been used as basis for making any addition in the hands of other persons, who admittedly, were the partners of M/s. SAAR Properties and had made investment in purchase of property. The third aspect which has to be kept in mind is the total investment in purchase of property of ₹ 92,10,000/-, which included both cash and cheque components. After inclusion of related expenditure, total investment is ₹ 1.35 crores, sum of ₹ 29,60,000/- has already been added in the hands of Shri Ashok Jain on account of his cash contribution though the entries at page 9 in front of his name were 190 1945 2135. In the entirety of the above said facts and circumstances, we are of the view that the said document which beside noting the acts to be carried out by the group of persons related to M/s. SAAR Properties, had talked of some projected figures; on account of such projected figures, no addition can be made in the hands of assessee. In any case, the assessee had advanced sum of ₹ 87,50,000/- by cheques and the breakup of cheques do not tally with the breakup of 110 noted on the said documents. In the entirety of the above said facts and circumstances, we direct the Assessing Officer to delete the addition made in the hands of assessee - Decided in favour of assessee.

Issues Involved:
1. Addition of ?1,10,00,000/- as undisclosed investments in M/s. SAAR Properties.
2. Confirmation of addition to the extent of ?22,50,000/- by CIT(A).
3. Validity of the evidence from seized documents.
4. The presumption under section 132(4A) of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Addition of ?1,10,00,000/- as Undisclosed Investments in M/s. SAAR Properties:
The Assessing Officer (AO) made an addition of ?1,10,00,000/- to the assessee's income, citing undisclosed investments in M/s. SAAR Properties based on a seized document found at the residence of Shri Ashok Jain. The document indicated that the assessee had introduced ?1.10 crores. The assessee contended that the document contained projections and did not evidence actual transactions. The AO dismissed this argument, stating that other entries on the document were accurate, thus implying the ?1.10 crores entry was also valid.

2. Confirmation of Addition to the Extent of ?22,50,000/- by CIT(A):
The CIT(A) confirmed the addition to the extent of ?22,50,000/-, noting that the document was not in the assessee's handwriting and was not found at the assessee's residence. However, the CIT(A) observed that the document's evidentiary value was established, as some financial transactions were genuine. The CIT(A) acknowledged that the document did not bear a date and lacked corroborating evidence for the full ?1.10 crores. Hence, the CIT(A) restricted the addition to ?22,50,000/-.

3. Validity of the Evidence from Seized Documents:
The assessee argued that the seized document was found at the residence of Shri Ashok Jain and not at the assessee's premises. The document was said to contain estimated contributions and not actual transactions. The assessee had advanced ?87,50,000/- to M/s. SAAR Properties by cheque, out of which ?25 lakhs was returned. The assessee stressed that no other document confirming the entry was found, and the figures on the seized document did not match the actual transactions. The Tribunal noted that except for the entry of ?50 lakhs, which was acknowledged as a cheque payment, no other entries were used to make additions in the hands of other individuals involved.

4. The Presumption Under Section 132(4A) of the Income Tax Act:
The Revenue argued that under section 132(4A) of the Act, entries in the seized document were presumed to belong to the assessee, placing the onus on the assessee to disprove them. The Tribunal, however, found that the document lacked a date and was more likely to contain projected figures rather than actual transactions. The Tribunal also noted that the total investment in the property was ?92.10 lakhs, including both cash and cheque components, and the figures on the document did not align with the actual cheque payments made by the assessee.

Conclusion:
The Tribunal concluded that the seized document, which contained projected figures and lacked a date, could not substantiate the addition of ?1.10 crores as undisclosed investments. The Tribunal directed the AO to delete the addition, allowing the assessee's appeal for the assessment year 2005-06 and dismissing the Revenue's appeal. The assessee's appeal for the assessment year 2006-07 was dismissed as not pressed.

Order Pronounced:
The appeal of the assessee for the assessment year 2005-06 is allowed, while the appeal of the Revenue for the assessment year 2005-06 and the appeal of the assessee for the assessment year 2006-07 are dismissed. The order was pronounced on October 17, 2017.

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