2018 (3) TMI 2045 - AT - Income Tax

Addition on account of alleged interest income on the basis of a seized document which is dumb/ bald - addition by invoking section 292C in spite of the fact that the document was not found either in the possession or control of the appellant - 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. Therefore, on this basis, delete the addition in dispute and accordingly reverse the orders of the authorities below. Appeal of the assessee is allowed.

Summary

Issues Involved:

1. Whether the addition of Rs. 5,31,217/- on account of alleged interest income based on a seized document was justified.
2. Whether the application of Section 292C was appropriate given the circumstances of the case.
3. Whether the assessee discharged the onus of providing a suitable explanation for the seized document.

Issue-wise Detailed Analysis:

1. Addition of Rs. 5,31,217/- on Account of Alleged Interest Income:

The core issue in this appeal was the addition of Rs. 5,31,217/- made by the Assessing Officer (AO) based on a seized document. The document was considered by the AO as evidence of interest income. However, the assessee contended that the document was a "dumb/bald" document, lacking any details such as the name, signature, or handwriting of the assessee, and did not clearly indicate whether the figures represented a receipt of payment, investment, deposit, or loan. The Tribunal found that the document did not provide sufficient evidence to substantiate the addition. The Tribunal relied on a precedent set in the case of Praveen Juneja, where similar additions based on ambiguous documents were deleted. Consequently, the Tribunal ruled that the addition was not sustainable in law and reversed the orders of the lower authorities.

2. Application of Section 292C:

The Revenue relied on Section 292C to presume that the seized document belonged to the assessee since it was found at the assessee's residence. The assessee argued that the document was not in his possession or control and that the residence was frequently visited by others, which could account for the presence of the document. The Tribunal noted that the document did not bear any identifying marks linking it to the assessee, such as signatures or handwriting, and thus the presumption under Section 292C was not applicable. The Tribunal emphasized that the mere presence of a document at the residence was insufficient to draw a presumption of ownership or control without corroborative evidence.

3. Onus of Providing Suitable Explanation:

The lower authorities held that the assessee failed to discharge the onus of providing a suitable explanation for the seized document. However, the Tribunal found that the assessee had adequately contested the relevance and ownership of the document. The Tribunal observed that the document lacked any direct connection to the assessee, and the Revenue did not provide further evidence to substantiate the claim of interest income. The Tribunal concluded that the onus was not on the assessee to prove a negative, especially when the document itself was ambiguous and lacked evidentiary value.

In conclusion, the Tribunal allowed the appeal, stating that the addition based on the seized document was not justified, the application of Section 292C was inappropriate, and the assessee had sufficiently challenged the relevance of the document. The Tribunal's decision was consistent with the principles established in prior similar cases, leading to the deletion of the disputed addition.