2023 (9) TMI 536 - AT - Income Tax

Unexplained cash payment and cash receipts - several incriminating documents and evidences were seized from the premises of M/s Param Properties third party which contain entries pertaining to and information contained therein related to assessee - AO held that to tax the amount reflecting in the seized documents, in hands of the assessee on substantive basis, which is based on a sound footing is proper - CIT(A) deleted the addition - HELD THAT - As documents were found from the 3 rd party premises, these are not in the hand writing of the assessee and these are not signed by the assessee and moreover the party from whom documents were found, did not identify, the name of the assessee, the AO is not justified in relating these documents or the transactions written on these documents to the assessee. The complete name of the assessee is also not written on these papers and there are other names also written on these papers. Thus, ld CIT(A) noted that these facts clearly shows that these documents are dumb documents as far as the assessee is concerned and relying upon these documents for making additions in the hands of the assessee is not justified. The assessee's case is covered on this issue by the binding judgments of Hon'ble Supreme Court t in the case of CBI vs. V.C Shukla 1998 (3) TMI 675 - SUPREME COURT and common Common cause Vs. UOI 2017 (1) TMI 1164 - SUPREME COURT Additions made by the AO are not found sustainable and deserved to be deleted. Moreover the AO stated that in the backup of i-phone taken from mobile phone of Shri Agam Vadecha, Phone Number of the assessee were in his mobile. Storing of assessee s telephone number in other person s phone cannot be made the basis for making additions particularly, even after taking backup of the i-phone, no sms/communication was found which remotely indicate that the assessee had transactions with the Param Properties, as written in these documents. As there is no Cheque entry tallying with any of the bank account of the assessee and there is no such reference in the assessment order by the AO, CIT(A) correctly deleted the addition - Decided against revenue.

Summary

Issues Involved:
1. Deletion of addition on account of unexplained cash payment.
2. Deletion of addition on account of unexplained cash receipts.
3. Validity of documents found from third-party premises.

Summary:

1. Deletion of Addition on Account of Unexplained Cash Payment:
The Revenue challenged the deletion of an addition of Rs. 2,35,00,000/- made by the Assessing Officer (AO) on account of unexplained cash payments. The AO based the addition on documents seized during a search at M/s Param Properties, which allegedly contained entries related to the assessee, identified as "Abhishek/ABK." The AO argued that these documents were genuine and linked to the assessee. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, noting that the documents were found at a third-party premises, were not in the handwriting of the assessee, and were not signed by the assessee. The CIT(A) emphasized that the person from whose premises the documents were found did not identify the assessee as being involved in the transactions. The Tribunal upheld the CIT(A)'s decision, agreeing that the documents were "dumb documents" as far as the assessee was concerned and that the presumption under section 292(c) of the Act applied to the person from whose premises the documents were seized, not the third party.

2. Deletion of Addition on Account of Unexplained Cash Receipts:
The Revenue also contested the deletion of an addition of Rs. 36,43,710/- made on account of unexplained cash receipts. Similar to the first issue, the AO made the addition based on documents seized from M/s Param Properties. The CIT(A) deleted the addition on the grounds that the documents were not found at the assessee's premises, were not in the assessee's handwriting, and were not signed by the assessee. The Tribunal upheld the CIT(A)'s decision, reiterating that the documents were "dumb documents" concerning the assessee and that the presumption under section 292(c) of the Act did not apply to the assessee.

3. Validity of Documents Found from Third-Party Premises:
The Tribunal addressed the broader issue of the validity of documents found from third-party premises. It was noted that the documents in question were not in the handwriting of the assessee, were not signed by the assessee, and the person from whose premises the documents were found did not identify the assessee. The Tribunal cited several case laws, including judgments from the Supreme Court, to support the view that documents found from third-party premises cannot be used to make additions in the hands of the assessee without direct evidence linking the assessee to the transactions. The Tribunal concluded that the CIT(A) was correct in deleting the additions and dismissed the Revenue's appeal.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the additions made by the AO on account of unexplained cash payments and receipts, emphasizing that the documents found from third-party premises were not sufficient to justify the additions. The appeal filed by the Revenue was dismissed.