2022 (9) TMI 183 - AT - Income Tax

Addition u/s 69A - Cash found in search - HELD THAT - We find that the ld CIT(A) has granted relief to the assessee on appreciation of the statement recorded during the search action, wherein the assessee has firmly stated that the amount of Rs. 5.00 lakhs belong to Shital Textile, wherein he is one of the partners. No contrary facts or evidence was brought to our notice to take other view; therefore, we affirm the order of ld CIT(A) on this issues. In the result, ground No.1 of the appeal is dismissed. Addition based on loose paper found in search - HELD THAT - The hon ble Delhi High Court in CIT Vs Vivek Aggarwal 2015 (2) TMI 590 - DELHI HIGH COURT held that where Assessing Officer made addition to assessees income on basis of a document seized in course of search, in view of fact that document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed. Further in CIT Vs Maulikumar Shah 2007 (7) TMI 267 - GUJARAT HIGH COURT also held that mere entries in seized material are not sufficient to prove that assessee has indulged in such a transaction in which 'on money' has been received. Thus, in view of the aforesaid factual and legal position, we are also of the considered opinion that absence of any cogent evidence on record, we do not find any infirmity or illegality in the order passed by ld CIT(A). In the result, ground No. 2 of the appeal is dismissed. Alleged violation of Rule 46A - HELD THAT - We find that during first appellate stage no new or fresh evidence was filed by the assessee, except narration of facts. We further find that while restricting the addition under section 69, the ld CIT(A) specifically noted that new explanation offered before him, qua cash of M.D. Infra Developers of Rs. 2.00 lacs, was contrary to the initial statement and accordingly, new explanation was rejected. No new evidence relied by the assessee is specifically brought to our notice, thus, we do not find any merit in this ground of appeal. In the result, this ground of result is also dismissed.

Issues Involved:

1. Deletion of addition under Section 69 of Rs. 5,00,000/-
2. Deletion of addition of Rs. 4,48,88,893/- on account of undisclosed income
3. Onus on the assessee to prove notings on loose papers with documentary evidence
4. Admissibility of submissions by the assessee without providing opportunity to AO as per Rule 46A

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 69 of Rs. 5,00,000/-:

The revenue contested the deletion of Rs. 5,00,000/- added under Section 69 by the Assessing Officer (AO) on the grounds that the amount belonged to M/s Shital Textiles. The AO had found cash of Rs. 8,43,500/- at the assessee's residence and noted only Rs. 83,413/- as accounted for in the cash book. The assessee explained that Rs. 5,00,000/- belonged to Shital Textiles and the remaining Rs. 3,43,500/- was from M.D. Infra Developers. The CIT(A) accepted the explanation regarding Rs. 5,00,000/- but upheld the addition of Rs. 2,60,087/- (Rs. 3,43,500 - Rs. 83,413) as unexplained, considering the new explanation as an afterthought. The Tribunal affirmed the CIT(A)'s decision, finding no contrary evidence to dispute the explanation provided by the assessee.

2. Deletion of Addition of Rs. 4,48,88,893/- on Account of Undisclosed Income:

The AO made an addition of Rs. 4.488 crores based on loose papers seized during the search, which mentioned figures against the assessee's name. The AO presumed these figures as undisclosed income under Section 132(4A). The CIT(A) deleted the addition, stating that mere figures on loose papers without any corroborative evidence cannot be treated as undisclosed income. The CIT(A) referenced several judicial precedents, including the Supreme Court's decision in CBI vs. V.C. Shukla, which held that loose papers are not admissible as evidence under Section 34 of the Evidence Act. The Tribunal upheld the CIT(A)'s decision, noting the lack of independent evidence to substantiate the AO's claims.

3. Onus on the Assessee to Prove Notings on Loose Papers with Documentary Evidence:

The AO argued that the assessee failed to provide any explanation or documentary evidence regarding the figures on the seized loose papers. The CIT(A) and the Tribunal found that the AO's addition was based on assumptions and lacked corroborative evidence. The Tribunal emphasized that notings on loose papers do not indicate actual transactions and cannot be used to determine undisclosed income without substantive evidence.

4. Admissibility of Submissions by the Assessee Without Providing Opportunity to AO as per Rule 46A:

The revenue raised a revised ground, arguing that the CIT(A) admitted the assessee's submissions without giving the AO an opportunity to respond, violating Rule 46A. The Tribunal found that the CIT(A) had forwarded the assessee's submissions to the AO, who responded to the notices. Therefore, there was no violation of Rule 46A, as no new or fresh evidence was filed by the assessee at the appellate stage.

Conclusion:

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order. The Tribunal found no merit in the revenue's arguments and affirmed the CIT(A)'s findings based on the lack of corroborative evidence and adherence to procedural rules. The Tribunal's decision emphasized the necessity of substantive evidence to support additions and the proper application of legal principles in tax assessments.

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