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2022 (2) TMI 318 - AT - Income TaxUnexplained investment u/s 69 - Addition based on loose papers found in search - legal admissibility of the dumb document - During the course of search action at the premises of Signature Group, some unsigned draft MOU/Agreements between Simara Reality and the assessee were found - HELD THAT - We are of the view that the additions have been made on the basis of a dumb paper as the agreements were not executed nor they were signed by any of the parties and simply on the basis of unsigned unexecuted documents, the additions cannot be made on merely assumptions and surmises. Nothing has been brought on record that these agreements were executed subsequently or the said transaction took place. In some of the agreements, the assessee s name does not appear. There is no iota of any evidence that the assessee has made the payment in cash in execution of these agreements. Under these circumstances, we do not find any reason to interfere with the findings of the ld. CIT(A) on this issue. Therefore, we confirm the same. Accordingly, ground no.1 raised in the departmental appeal is dismissed. Unexplained unsecured loan - assessee before AO failed to furnish the desired documents - HELD THAT - The assessee could not submit the necessary details as the same were not available at the time of the assessment and the Assessing Officer made the addition on the ground that in absence of the bank statement and the income tax returns the genuineness and the credit worthiness of the parties are not established - we find that in the appellate proceedings, all details like the bank statements, income tax returns etc. were filed before the ld. CIT(A) with an application under rule 46A. CIT(A) sent all the papers to the Ld. A.O. for his comment and the remand report. CIT(A) after considering the submissions and facts of the case deleted the additions on the ground that the assessee has furnished all details such as, the documents relating to the identity, credit worthiness of the lender and genuineness of the transaction. Thus, prima facie the liability of the assessee to prove the genuineness, identity and credit worthiness stands discharged. We also find that the necessary papers to establish genuineness of the transaction were filed and the assessee had proved beyond doubt the identity of the lender, credit worthiness and the genuineness. By filing these requisite documents, the assessee established the Identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. Thus, the assessee had satisfied all the three conditions required for genuineness of the transaction. - Decided against revenue. Admission of undisclosed income - additional income surrendered by the assessee u/s 132(4) - assessee surrendered the income on account of cash receipt outside the books of account jointly in the case of the assessee and in case of the other relevant firms - while filing the returns, the assessee retracted from the said surrender and filed the returns on the basis of the accounts which are duly audited - HELD THAT - No addition can be made without finding any incriminating material merely on the basis of the declaration u/s 132(4). Our view is supported by the direct judgment of the this Indore Bench of Tribunal in the case of Shri Sudeep Maheshwari 2019 (2) TMI 1641 - ITAT INDORE and in the case of M/s Ultimate Builder 2019 (9) TMI 1172 - ITAT INDORE As common statement of Shri Rajkumar Khilwani was recorded during the course of the search in which he offered the various undisclosed incomes in various concerns of Signature Group. On the basis of this statement recorded u/s 132(4), the ld. A.O. made the additions in the cases of Ultimate Builders, Signature Builders and Signature Infrastructure and these additions have been deleted by the Tribunal in the respective cases holding that without finding any incriminating material, no additions can be made merely on the declaration u/s 132(4). We find that on the basis of the same statement and with the same reasoning, the addition has been made by the Ld. A.O. in the present case and the same has been deleted by the ld. CIT(A) following the judgment of the Tribunal (supra). In view of above discussion, we hold that the ld. CIT(A) rightly deleted the addition made by the Assessing Officer on account of additional income surrendered by the assessee u/s 132(4) - Decided against revenue.
Issues Involved:
1. Deletion of addition on account of unexplained investment under Section 69 of the Income Tax Act. 2. Deletion of addition on account of unexplained unsecured loan. 3. Deletion of addition on account of admission of undisclosed income. Detailed Analysis: 1. Deletion of Addition on Account of Unexplained Investment under Section 69 of the Income Tax Act: The Revenue challenged the deletion of an addition of ?3,40,00,000/- made by the Assessing Officer (AO) on account of unexplained investment under Section 69. During a search, unsigned draft agreements/MoUs for land purchases were seized, indicating payments by the assessee which were not recorded in the books of accounts. The AO argued that these drafts were evidence of actual cash payments. However, the assessee contended that these were mere drafts that never materialized into actual transactions. The Commissioner of Income Tax (Appeals) [CIT(A)] accepted the assessee's explanation, noting the lack of corroborative evidence and the unsigned nature of the drafts. The CIT(A) emphasized that the onus of proof lies on the Revenue to establish that the investment was not recorded in the books, which the AO failed to do. The Tribunal upheld the CIT(A)'s decision, citing various judicial precedents that mere unsigned documents without corroborative evidence cannot be used to make additions. 2. Deletion of Addition on Account of Unexplained Unsecured Loan: The Revenue also contested the deletion of an addition of ?25,00,000/- made by the AO on account of unexplained unsecured loans. The AO had required the assessee to furnish confirmations, bank statements, and ITRs of the creditors, which were not initially provided. During appellate proceedings, the assessee submitted the necessary documents, including confirmations, bank statements, and ITRs of the lenders. The CIT(A) accepted these documents, noting that the amount was an advance against the sale of land and not an unsecured loan. The Tribunal upheld this decision, stating that the assessee had satisfactorily established the identity, creditworthiness, and genuineness of the transaction. 3. Deletion of Addition on Account of Admission of Undisclosed Income: The Revenue appealed against the deletion of an addition of ?3,00,00,000/- made by the AO based on a statement recorded under Section 132(4) during a search, where a partner of the assessee firm admitted to undisclosed income. However, the assessee retracted this admission while filing the return, arguing that no incriminating evidence was found during the search to substantiate the admission. The CIT(A) deleted the addition, relying on various judicial pronouncements that a statement under Section 132(4) without corroborative evidence cannot justify an addition. The Tribunal upheld this view, emphasizing that the addition was based solely on the statement without any supporting incriminating material. The Tribunal cited its own previous decisions and those of higher courts, reinforcing that mere statements without corroborative evidence are insufficient for making additions. Conclusion: The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s decisions to delete the additions on account of unexplained investment, unexplained unsecured loans, and admission of undisclosed income. The Tribunal emphasized the necessity of corroborative evidence to substantiate additions based on statements or unsigned documents.
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