2018 (3) TMI 1406 - AT - Income Tax

Addition of interest income - dumb/ bald seized documents - addition by invoking section 292C - Held that - Addition on account of alleged interest income is not sustainable in the eyes of law, because the document does not mention the name of the assessee, does not bear the signature of the assesee, not in the handwriting of the assessee, documents has imply jottings of certain figures and does not indicate whether it is an investment or deposit or loan, hence, the said seized document is dumb/bald and even otherwise, the same was never found either in the possession or control of the assessee. - Decided in favour of assessee

Summary

Issues Involved:
1. Confirmation of the addition of ?5,31,217/- on account of alleged interest income based on a seized document.
2. Application of Section 292C of the I.T. Act, 1961, regarding the possession or control of the seized document.
3. Onus of offering suitable explanation by the appellant.

Issue-wise Detailed Analysis:

1. Confirmation of the Addition of ?5,31,217/- on Account of Alleged Interest Income Based on a Seized Document:

The assessee challenged the addition of ?5,31,217/- made by the AO on the basis of a seized document, arguing that it was a "dumb/bald" document. The document did not bear the name, signature, or handwriting of the assessee, nor did it indicate whether the figures represented receipt of payment, investment, deposit, or loan. The assessee contended that the document was found at his residence, which was frequently visited by various individuals, and thus, he had no control over the document. The Tribunal noted that the case laws cited by the assessee were on similar facts and circumstances, particularly the ITAT decision in the case of Praveen Juneja, which was upheld by the Hon’ble Delhi High Court. The Tribunal found that the addition was made on the basis of suspicion and without corroborative evidence, and thus, the addition was not sustainable in the eyes of law.

2. Application of Section 292C of the I.T. Act, 1961:

The Revenue argued that the document bearing computations of interest @18% on a base quantum of ?12 lacs was found from the residential quarters of the assessee, and the calculations depicted regular periodicity. The Tribunal, however, found that the document did not bear any identifying marks linking it to the assessee and was found in a place frequented by various visitors. The Tribunal referred to the decision in Praveen Juneja, where it was held that documents seized during search and seizure operations must be corroborated with evidence to sustain additions. The Tribunal concluded that the seized document did not meet the criteria for invoking Section 292C, as it was not found in the possession or control of the assessee.

3. Onus of Offering Suitable Explanation by the Appellant:

The Tribunal observed that the assessee had provided a reasonable explanation regarding the seized document, stating that it did not belong to him and was found in a place accessible to many visitors. The Revenue failed to provide any corroborative evidence to counter the assessee's explanation. The Tribunal emphasized that the onus of proof lies with the Revenue to substantiate the addition with credible evidence. The Tribunal found that the Revenue's reliance on the seized document was based on suspicion and lacked concrete evidence, thus failing to discharge the onus of proof.

Conclusion:

The Tribunal, after considering the facts and circumstances of the case and following the precedents, concluded that the addition on account of alleged interest income was not sustainable. The Tribunal found that the seized document was "dumb/bald" and did not bear any identifying marks linking it to the assessee. The Tribunal held that the document was not found in the possession or control of the assessee and lacked corroborative evidence. Consequently, the Tribunal deleted the addition and reversed the orders of the authorities below, allowing the appeal of the assessee.