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TMI Blog2014 (8) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... nd evidence - the AO made addition without any basis and justified reason which was rightly deleted by the CIT(A) by holding that the document is a dumb document which cannot be a basis for making addition in regard to investment in purchase of land out of income from undisclosed sources u/s 69 of the Act – Decided against Revenue. - ITA No. 933/Del/2012 - - - Dated:- 25-7-2014 - Shri Shamim Yahya And Shri Chandra Mohan Garg,JJ. For the Appellant : Shri Ramesh Chandra, CIT DR For the Respondent : Shri K. Sampath ORDER Per Chandra Mohan Garg, Judicial Member This appeal has been preferred by the revenue against the order of the CIT-III, Delhi dated 1.12.2011 in Appeal No. 715/10-11 for AY 2006-07. 2. The sole ground raised by the revenue in this case reads as under:- On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 4,47,00,000/- made by the AO on account of undisclosed income by holding that the seized documents were dumb in nature. 3. Briefly stated the facts giving rise to this appeal are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 (fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firms and cash withdrawal from bank. 5. The AO rejected the submissions and explanation offered by the assessee with regard to Annexure A-1 and made an addition of ₹ 4,47,00,000/- u/s 69 of the Act with following observations and findings:- 4.1. I have considered the submission of the assessee. The paper cannot be termed as a dumb paper as it clearly reflects the narration of event beginning from area of land, rate of land, payment details as well as consideration. A copy of the document is annexed as Ann- A-I with the order. The assessee for apparent reasons is trying to term the document as a dumb document. The document contains chronological details of event and reflects period of payments in respect of the property referred to in the document. The fact emerging out of the documents clearly demonstrate that this paper is not a dumb paper and has been maintained to keep an account of date wise details of receipt/payments. The onus lies on the assessee to refute the facts emerging from the document as the same has been found from the possession of the assessee. In spite of being allowed specific opportunity to explain the paper vide order sheet entry date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estments reflected in their statement of affairs or balance sheet. Further from the jottings/notings made on the lower part of the seized paper it is seen that these relate to a total of 32,450/- on the left hand side and another amount of 4,47,000/- on the right hand side is referred to which the appellant has submitted as relating to enquiry for purchase of battery and UPS required by the assessee for his firm which has subsequently also been purchased as substantiated from the enclosed copy of bills for purchase of battery. The fact that these notings on the lower part of the page relates to battery is apparent for the reason that on the seized paper 4700 IC Betty is written and that IC battery bearing no. 4700 does exist. Further the cost of one of such battery was around ₹ 3,500/- in the month of Sep. /Oct.2006 when these batteries have been purchased by the firms where appellant is a partner further substantiates the explanation given by the appellant. Thus the amount of ₹ 4,47,000/- written on lower right hand part of seized page relates to the price of 99 and 25 number of batteries (372000 75000 respectively). In view thereof there is no basis on which the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR further submitted that the document Annexure A-1 contained chronological details of events and reflected a period of payment in respect of the property referred in the document. The DR further submitted that the document clearly demonstrated that the document was not a dumb paper and the assessee wrote and maintained the same including an account of date wise details of receipts and payments. 9. The DR vehemently contended that the onus lies on the assessee to reflect/rebut a fact emerging from the document i.e. Annexure-1 and the same has been found from the possession of the assessee appellant. The DR pointed out that as per submissions and explanation offered by the assessee Annexure A-1 document is rough notings of the various proposals/offers in respect of immoveable property which were never attributed/materialized but on perusal of upper part of the document, the amount of transaction noted as 2.25 c (75 bigha x 30 L) and then second part of noting is related to land measuring 11.5 bigha @17.50 lakh/22.50 lakh per bigha which clearly establishes that the investment amount was correctly recorded and document Annexure A-1 was clearly reflecting the details of unaccount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res and added the same as income though no documents for purchase of land in respect of rough noting mentioned in Annexure A-1 were found during the search and seizure operation nor any other evidence or paper/document showing investment of the assessee in purchase of land was there on record. It was also submitted on behalf of the assessee that on Annexure A-1 in front of amount of ₹ 4,47,000 ₹ 4700 IC Battery 25 quantity is also written which clearly indicate that the amount of ₹ 4,47,000 relates to the inquiry of Betty and UPS required by the assessee for the office of his firm and the same has also been purchased subsequently. Ld. Counsel of the assessee also placed reliance on following decisions including recent decision of Hon ble Jurisdictional High Court of Delhi vide dated 8.5.2014 in the case of CIT vs Gian Gupta i) CIT vs Gian Gupta in ITA No. 955/2011 dated 8.5.2014 (Hon ble High Court of Delhi) ii) DCIT vs Dr. G.S.C. Rao in ITA No. 221/Del/2011 for AY 2007-08 ITAT Delhi Bench C dated 9.9.2011 iii) DCIT vs M. Aja Babu in ITA No. 1755, 1756 1757/HYD/2012 dated 23.04.2014 12. From the impugned order, we observe that the CIT(A) has grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is detail of date wise amount and its total comes to ₹ 32450. In our considered opinion, this detail has no relevance with the above mentioned two entries/details of land. On the right side, it has been mentioned 99- 372000.00, then the down line 25-75,000.00 and further total of these two entries ₹ 4,47,00,000 has been mentioned. Ld. Counsel of the assessee vehemently contended that the AO has deleted the decimal from the total of ₹ 4,47,000/- and made an addition of ₹ 4,47,00,000 based upon this dumb document which was containing noting on three counts: a) the amount of household expenditure incurred by the assessee out of drawing from partnership firms and cash withdrawn from the banks; b) cost of IC battery proposed to be purchased for the office of the firm of the assessee and, c) on the top, there was detail of two proposals/offers in respect of immoveable properties which were never acted upon or executed or materialized. The ld. Counsel of the assessee also added that during the search and seizure operation, the revenue authorities have not found any other incriminating document which could support that the assessee made investment from undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer has given unnecessary weightage to the copy of MoU. The factum of transfer of a capital asset by Mrs Jind Singh in favour of the assessee was not established. The case of the assessee is that he has not purchased any land. The alleged MoU is a document exhibiting the negotiation of the purchase of land, but it never materialized. The Assessing Officer has erroneously observed that it is for the assessee to establish that land was not purchased. In our opinion, for charging the assessee with tax on account of unexplained investment, it is the Assessing Officer who ought to have established that land was purchased by the assessee and he failed to disclose the source of such purchase. Instead of discharging this onus, learned Assessing Officer treated a document as gospel truth and tried to put an onus upon the assessee to prove a negative fact which is not permissible in law. Learned First Appellate Authority has rightly considered this aspect and deleted the addition. 6. After having heard the counsel for the parties on this issue of the deletion of the addition of ₹ 1 crore on account of the alleged unexplained investment, we are of the view that the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in any financial year, which is not recorded in the books of account, if any, maintained by him, and the assessee offers no explanation about the nature and source of investment or the explanation offered by him is not satisfactory in the opinion of the assessing officer, the value of investment made may be deemed to be the income of the financial year. As already held in the case of Chiraayu Estate Development Pvt. Ltd. (supra), the burden is on the revenue to show that the assessee has made an investment. Thereafter, the investment has to be related to a financial year. The course of events show that revenue has not proved that investment in the immovable property was made by the assessee. The year in which the investment was made is also not discernible from the document. Therefore, we are of the view that this document alone cannot form basis for making any addition. Accordingly, it is held that the ld. CIT(Appeals) rightly deleted the addition. Ground nos. 1 and 2 are, thus, dismissed. 17. Ld. Counsel of the assessee has also placed reliance on the decision of ITAT Hyderabad B Bench in the case of DCIT vs M. Aja Babu (supra) wherein following the decision of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Jaipal Aggarwal [2013] 212 Taxman 1 (Delhi)- wherein it was held that Dumb documents seized, i.e. from which nothing could be clearly understood, cannot form a justified base for making additions to income of the assessee. 17.1 In view of the above discussion, we are of the view that the addition made by the Assessing Officer based on the loose paper, which is not a conclusive evidence and, therefore, the same is not sufficient to make the addition. In our opinion, no addition can be made on the basis of dumb documents/note book/loose slips in the absence of any other material to show that the assessee has made investments in land. Noting on the note book/diary/loose sheets are required to be supported/corroborated by other evidence and should also include the statement of a person who admittedly is a party to the noting and statement from all the persons whose names there on the note book/loose slips and their statements to be recorded and then such statement undoubtedly should be confronted to the assessee and he has to be allowed to cross examine the parties. The vendor has not examined in this case. Therefore, we do not find any infirmity in the order of the CIT(A) in di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclined to hold that the AO has not brought out any other incriminating material or evidence to support the impugned addition as the AO has deleted the decimal mentioned in ₹ 4,47,000.00 and treated the same entry of ₹ 4,47,000 as ₹ 4,47,00,000 for creating basis of the addition. We are unable to accept and uphold the basis on which the AO held that the assessee has made investment in land out of its undisclosed income as entry No. 1 2 on the top of Annexure A-1 itself are ambiguous and there is no relation of entry No. 1 2 with the noting below the line which reflects total of ₹ 4,47,000 with a mention of specification of IC Battery. We are also unable to see any acceptable and cogent basis on which the AO held that the assessee has made investment in land (as per entry No. 1 2 on the top) out of books of account from income of undisclosed sources and picked up the amount of ₹ 4,47,00,000 for making addition u/s 69 of the Act by accepting total of ₹ 4,47,000.00 as sacrosanct and also deleting the decimal for converting ₹ 4,47,000 into ₹ 4,47,00,000 for making impugned addition. 21. On the basis of our aforementioned discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that no addition can be made. 23. From above decision of ITAT Jabalpur Coordinate Bench we note that a charge can be levied on the basis of document only when the document is a speaking one. The document should speak either out of itself or in the company of other material found on investigation and /or in the search. The document should be clear and unambiguous in respect of all four components of charge of tax. If it is not so, the document is only a dumb document and no charge of tax can be levied on the assessee on the basis of a dumb document. 24. While granting relief for the assessee, the CIT(A) has also relied on the decision of Hon ble Punjab and Haryana High Court in the case of CIT Jalandhar vs. Atam Valves (P) Ltd. (supra) wherein it has been held that : During the pendency of assessment proceedings, a survey was conducted by the Department under section 133A of the Act on 27.9.2005 in the premises of the assessee and certain incriminating documents were found including a Slip Pad containing payment of Wages to various persons. The slips were written by Manoj Jain, an employee of the assessee who was confronted with the slips, apart from questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd alone is not sufficient to draw an inference that the assessee made investment of ₹ 4,47,00,000 in purchase of land out of books of accounts and statement of investments and assets furnished before Revenue Authorities by using income earned from undisclosed sources. We are also of the opinion that the AO deleted the decimal to convert ₹ 4,47,000 into ₹ 4,47,00,000 for making addition without any basis and corroborative evidence at his own whims which is not permissible. We are also in agreement with the findings of the CIT(A) that the impugned document i.e. Annexure A-1 is a dumb document as on logical analysis, neither the independent nor the collective meaning of the notings or entries written therein support the conclusion of the AO that the assessee made investment against ₹ 4,47,00,000 in purchase of land out of income earned out of books of accounts from undisclosed sources in absence of any other supportive or corroborative evidence or materials. We, therefore, are of the opinion that the notings and contents of Annexure A-1 show noting of household expenses made by the assessee out of drawings and cash withdrawn from banks and details about quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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