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2023 (7) TMI 129 - AT - Income TaxAssessment u/s 153A - Addition u/s 68 - search u/s 132 - unsecured loans were in the nature of accommodation entries and these loans were received after giving equivalent amount of cash to mediator for providing the accommodation entries - HELD THAT - As undisputed no regular assessment proceedings were pending as on date of search for the assessment year 2012-13. Therefore, it is a case of unabated assessment. Therefore, in the case of unabated assessment, in the absence of any incriminating material the concluded assessment cannot be disturbed. Then, we proceed to examine whether or not any incriminating material was found by the Department as result of search and seizure operations. As gone through the notings found in the seized material i.e. Diary of 2009 certain payments as well as receipts were recorded without recording the dates and full details. It is not even a record of daily transactions. Certainly it does not form part of books of account regularly maintained by it in the course of business. It is not clearly depicted from the said entries on standalone basis that a transaction had taken place, which gives rise to any taxable event for the reason that there is no indication from the entries found therein that a transaction was undertaken during the previous year relevant to the assessment year under consideration giving rise to the taxable event. The entries are non-speaking, it cannot be concluded that it represents the undisclosed income of the assessee for the reason that the entries does not disclose four components required to be satisfied to constitute a taxable event. On mere perusal of the statement recorded of the assessee u/s 132(4) it would be evident that the assessee was examined and confronted on the statements given by Shri Praveen Agarwal, Shri Anuj Agarwal and Shri Jeevendra Mishra recorded during the course of search and seizure proceedings in their case. The assessee was never examined on the notings found in the Diary - Therefore, in view of the legal position discussed supra the statement recorded from the assessee u/s 132(4) cannot be considered as incriminating material to be used for the purpose of assessment to be made pursuant to notice u/s 153A of the Act. Mere statement of the assessee cannot form the basis to make addition in the assessment under 153A r.w.s. 143(3) of the Act. Unexplained expenditure - AO had failed to bring on record any conclusive evidence to prove that the assessee had made investment in purchase of lands over and above the stated consideration and received on-money consideration on sale of property. Therefore, in our considered opinion, the findings of the Assessing Officer as well as the ld. CIT(A) are based on surmises and conjectures not based on any material/evidence, accordingly, the orders of the AO and CIT(A) are hereby reversed direct the AO to delete the addition on account of on-money payment and on account of on-money receipt. Interpretation of the notings found in the diary - The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, this component has no value in determining total income on the basis of seized document. Therefore, the entries/notings found in diary can be safely terms as dumb documents in view of the legal position discussed by us in the assessee s own appeal for the assessment year 2012-13 that a dumb document cannot form a basis for the addition.
Issues Involved:
1. Addition of unsecured loans as unexplained income. 2. Addition on account of alleged on-money consideration received or paid. 3. Addition based on the statement recorded under section 132(4) of the Income Tax Act. 4. Evidentiary value of documents found during search and seizure operations. 5. Application of the doctrine of human probabilities and presumption under section 292C. Summary: 1. Addition of Unsecured Loans as Unexplained Income: The assessee contested the addition of unsecured loans of Rs. 13,27,54,925/- as unexplained income under section 68 of the Income Tax Act, 1961. The assessee argued that the loans were genuine, received through banking channels, and supported by documentary evidence. The Assessing Officer (AO) rejected the explanation based on the statement recorded under section 132(4) and alleged that the loans were accommodation entries from shell companies. The Income Tax Appellate Tribunal (ITAT) held that in the absence of any incriminating material found during the search, no addition could be made in respect of unabated assessments. The ITAT directed the AO to delete the addition of unsecured loans. 2. Addition on Account of Alleged On-Money Consideration: The AO made additions for on-money consideration received or paid based on notings found in a seized diary and the statement recorded under section 132(4). The ITAT found that the notings in the diary did not constitute incriminating material as they were non-speaking documents and did not reveal any taxable event. The ITAT held that no addition could be made based on such dumb documents without corroborative evidence. The ITAT directed the AO to delete the additions made on account of on-money consideration. 3. Statement Recorded Under Section 132(4): The AO relied on the statement recorded under section 132(4) of the Income Tax Act, where the assessee allegedly confessed to receiving accommodation entries. The ITAT held that the statement recorded under section 132(4) should be considered in its entirety and cannot form the sole basis for addition without corroborative evidence. The ITAT also noted that the statement was retracted and subject to verification and reconciliation. The ITAT concluded that the statement had no evidentiary value and could not be used to make additions. 4. Evidentiary Value of Documents Found During Search: The ITAT examined the evidentiary value of documents found during the search and seizure operations. The tribunal held that the notings in the seized diary were non-speaking and did not indicate any taxable event, person, or period of transaction. The ITAT concluded that such dumb documents could not form the basis for making additions in the assessment. 5. Doctrine of Human Probabilities and Presumption Under Section 292C: The AO invoked the doctrine of human probabilities and the presumption under section 292C to justify the additions. The ITAT held that the doctrine of human probabilities could not be applied in the absence of any incriminating material. The tribunal also noted that the presumption under section 292C could only be raised when the documents were speaking and indicated a taxable event. In the absence of such evidence, the ITAT directed the AO to delete the additions. Conclusion: The ITAT allowed the appeals filed by the assessee and directed the AO to delete the additions made on account of unsecured loans, on-money consideration, and other related issues. The tribunal emphasized the need for incriminating material to justify additions in the assessment and held that statements recorded under section 132(4) without corroborative evidence could not form the basis for making additions. The cross appeals filed by the Revenue were dismissed.
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