2020 (11) TMI 493 - AT - Income Tax

Unaccounted investment recorded in the seized document - CIT(A) deleted addition holding that the documents found and seized from the premises of the assessee on which an addition was made by the AO is a dump document - HELD THAT - AO did not carried out any inquiry either during the course of search or during the course of assessment proceedings to find out the nature of transactions and the period in which these transactions were carried out or to locate and being on record the where abouts of the land alleged as purchase. No summons were issued to Sub-Registrar to find out as to whether any such document referred to in the paper was readly executed in favour of assessee or not, he had simply presumed that the figures were unaccounted investment made by the assessee for the year under consideration, without there being any material on record to support such presumption. The entries on the page 10 of Exhibit 4 of Annexure AS are merely rough scribbling. Such Scribbling were not in the handwriting of assessee. Such document was undated and noting did not bear any signature and the name appearing therein are not of assessee. No registered document whatsoever was found during the course of search, which was registered in the name of assessee with amount for which addition is made. No efforts whatsoever were made by the AO to bring on record such alleged registered document in the name of assessee more particularly when the AO had vast powers U/s 133(6) to even call for information from Sub-Registrar office. No material was brought on record to prove from which sources assessee had made such alleged investment . AO had drawn inferences, made presumption, relied on surmises and thus made unsustainable additions. Therefore CIT(A) had also after appreciating the facts had rightly concluded that these documents i.e. page 10 of exhibit- 4 of Annexure- AS has no relatibility with any assets in the name of the assessee therefore, the addition made by the AO cannot be based on scribbling on the impugned document - Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of addition of ?1,26,84,602/- on account of unaccounted investment recorded in the seized document.
2. Classification of the seized document as a "dumb document."

Issue-wise Detailed Analysis:

1. Deletion of Addition of ?1,26,84,602/- on Account of Unaccounted Investment:

The Revenue's appeal challenges the deletion of an addition of ?1,26,84,602/- made by the Assessing Officer (AO) based on a document seized during a search operation. The AO had concluded that the amount noted on the document represented unaccounted investment by the assessee. The assessee, however, argued that the document contained rough notings and did not pertain to any actual transaction. The Commissioner of Income Tax (Appeals) [CIT(A)] accepted the assessee's explanation and deleted the addition.

The Tribunal evaluated the AO's reliance on the seized document, which recorded ?1,20,80,572/- as cash and ?6,04,030/- as stamp duty. The AO considered these notings as actual transactions, leading to the conclusion that the assessee made unaccounted payments for undisclosed investments. The assessee contended that these were mere estimations and provided explanations, including that the transactions pertained to a group company and were duly recorded in the company’s books.

The Tribunal observed that the AO failed to substantiate the addition with corroborative evidence. The document lacked necessary details such as the year of transaction, ownership, and nature of the transaction. No inquiry was made to verify the nature and period of the transactions or to locate the alleged land purchase. The Tribunal upheld the CIT(A)'s decision, noting that the AO's addition was based on presumptions and lacked material evidence.

2. Classification of the Seized Document as a "Dumb Document":

The Tribunal examined whether the seized document could be classified as a "dumb document." A "dumb document" is one that does not provide clear and unambiguous information necessary to levy a tax charge. The document in question lacked dates, signatures, and clear narration. It did not correlate with any transactions, disclosed or undisclosed, in the assessee's books or other seized materials.

The Tribunal referred to the case of ACIT vs. Satyapal Wassan, which outlined that a document must be a "speaking one" to levy a tax charge. It should clearly reflect all transaction details without ambiguity. The Tribunal found that the seized document did not meet these criteria and was bereft of necessary details. The AO had merely presumed the figures represented unaccounted investments without any supporting material.

The Tribunal concurred with the CIT(A)'s classification of the document as a "dumb document," noting that the AO's addition was unsustainable. The document was considered rough scribbling, not in the handwriting of the assessee, undated, and lacking any corroborative evidence of actual transactions.

Conclusion:

The Tribunal upheld the CIT(A)'s decision to delete the addition of ?1,26,84,602/-, classifying the seized document as a "dumb document." The Tribunal found that the AO's addition was based on presumptions and lacked material evidence, and the document did not meet the criteria to levy a tax charge. The appeal filed by the Revenue was dismissed.