2019 (3) TMI 276 - AT - Income Tax

Undisclosed interest income - search & seizure operation conducted u/s 132 - dump documents relied upon - addition made on the basis of unsigned, unnamed & dumb document showing hypothetical figure for 13 years - AO has invoked the provisions u/s 292C that there is a presumption that the contents of the documents are true - HELD THAT - No money, bullion or investment was found during the search and seizure operation to corroborate the document in question. Date and amount has been jotted down in the seized document with one year gap but it is beyond imagination as to how the amount written has been attributed to the assessee having been given as loan to someone because there is neither name of the assessee nor the name of the loanee. The entire findings have been arrived at on the basis of presumptions and assumption that the amount of ₹ 12,00,000/- attracts the interest @ 18% because when we examine para 5.4, the AO has tabulated the presumptive figure of interest calculated @ 18% on the principal amount of ₹ 12,00,000/- but after 31.03.2007 till 31.10.2013 interest figures continued the same i.e. ₹ 5,31,217/-. The coordinate Bench of the Tribunal in assessee s own case in AY 2008-09 2018 (3) TMI 1406 - ITAT DELHI has deleted the addition for AY 2008-09 made on the basis of same seized document A-1 on the ground that alleged interest income cannot be attributed to the assessee on the basis of dumb document. Addition made on the basis of unnamed, unsigned, undated, vague and ambiguous document without any further corroboration is not sustainable in the eyes of law - Decided in favour of assessee.

Summary

Issues:
- Appeal against impugned orders passed by Ld. CIT (Appeals)
- Addition of interest income based on seized document
- Invocation of section 292C
- Burden of proof for offering suitable explanation
- Addition on account of notional rent
- Reliance on seized document for addition

Analysis:

1. Appeal against impugned orders passed by Ld. CIT (Appeals):
The appellant sought to set aside the impugned orders passed by Ld. CIT (Appeals) for multiple assessment years. The grounds included errors in confirming the orders passed by the Ld. AO, invoking section 292C, and not discharging the onus of offering a suitable explanation.

2. Addition of interest income based on seized document:
The AO made additions on account of undisclosed interest income based on a seized document showing a loan transaction. The appellant challenged this addition, arguing that the document was unsigned, unnamed, and hypothetical. The Tribunal found that the addition based on such an ambiguous document without further corroboration was not sustainable in the eyes of the law.

3. Invocation of section 292C:
The AO invoked section 292C, which presumes the contents of a document to be true. However, the Tribunal held that this presumption is rebuttable. The appellant successfully rebutted this presumption by demonstrating that the seized document was vague, ambiguous, and not conclusively linked to the assessee.

4. Burden of proof for offering suitable explanation:
The appellant denied ownership of the seized document and argued that it did not belong to him. The Tribunal found that the burden of proof was not discharged by the AO, as there was no evidence to establish the conscious possession of the document by the assessee.

5. Addition on account of notional rent:
The AO made additions for notional rent on a property, which was partly allowed by Ld. CIT (A). The Tribunal considered this issue and found that the addition made by the AO was not sustainable without proper substantiation.

6. Reliance on seized document for addition:
The Tribunal noted that the AO's reliance on the seized document for making additions was unfounded, especially considering the document's lack of clarity and the absence of corroborative evidence. The Tribunal ultimately ruled in favor of the appellant, ordering the deletions of the additions made by the AO and confirmed by Ld. CIT (A).

In conclusion, the Tribunal allowed all the appeals filed by the assessee, emphasizing the importance of substantial evidence and the burden of proof in such cases.