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TMI Blog2023 (4) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... rpretation made on the basis of assumption, presumption and conjectures in absence of supporting corroborative evidence such application of money for alleged expenditure, renovation/construction material bills, payment of labor or even Department Valuation Officer report in order to estimate the expenditure is not tenable and cannot be approved. Addition was being made on the basis of uncorroborated rough noting in a diary. CIT(A) has deciphered the figures by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures to multiple of 00 (stands 100) is not justified. AO had made no enquiry regarding the alleged disputed expenditure based on rough blank figure/jotting in a diary that what are the renovation/construction material bills, payment of labor or even not referred Department Valuation Officer s report in order to estimate the expenditure on the said rough noting of the paper of diary which does not fall within the definition of books of account or document. If, a rough diary paper seized without being corrob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition without considering the submission of assessee that the total of cash expenses of Rs. 36,000/- was incurred against renovation and not Rs. 36 Lakhs as alleged by the Ld. Assessing officer and had not used any codes i.e Rupee =Paise to mention the cash expenses. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. Ground of appeal in ITA No. 628/Asr/2019 "1. That the order passed by the Hon'ble CIT(A) u/s 143(3) r.w.s 153A of the Act dated 29.07.2019 is against the law and facts of the case. 2. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 153A/143(3) of the Act which is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout prejudice to each other." 5. There are identical grounds involving common issue except variation of figures in these three appeals challenging the impugned orders of the Ld CIT (A) in confirming the addition on account of unexplained expenditure in cash on the renovation of her house no. 435, New Jawahar Nagar. Therefore, we decided to hear these three appeals together and disposed of by this common order for brevity. We have chosen to take ITA No. 627/Asr/2019, Assessment Year: 2012-13 as a lead case for facts and discussion. 6. Briefly the facts as per record are that the assessee is an individual, who filed his original return declaring an income of Rs.4,44,040/- on 31.07.2012 that a Search and seizure was conducted u/s 132 at the premises of the assessee on 08.09.2016 and notice u/s 153A of the Income Tax Act was issued. In compliance to which assessee filed return of income declaring same amount of income as that of original return i.e. Rs.4,44,040/- on 29.04.2018 and filed all the documents called for during the assessment proceedings. The AO being not satisfied with the submission of assessee made disputed addition on account of unexplained expenditure on renovation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten, represents the amount of Rupees twenty five lacs (Rs. 25,00,000/-) and Rupees thirty lacs (Rs. 30,00,000/-) each received by Sh. Sushil Sabharwal & Sh. Rakesh Sabharwal through cheques as detailed below:- Cheque No. Amount Name 093989 dt. 03.05.2012 Rs. 25,00,000/- Sh. Sushil Sabharwal 093990 dt. 03.05.2012 Rs. 25,00,000/- Sh. Rakesh Sabharwal 093995 dt. 31.07.2012 Rs. 30,00,000/- Sh. Rakesh Sabharwal 093999 dt. 31.07.2012 Rs. 30,00,000/- Sh. Sushil Sabharwal Since, the payments made through cheque are verifiable from the records, it cannot be denied that the writings of above figures are in coded form. On the verification of these amounts from the bank accounts of Sh. Sushil Sabharwal and Sh. Rakesh Sabharwal, it cannot be said that these figures of 25 represents only 25 rupee and 00 paisa as claimed by the AR in his written submission to argue that the figure of 3600000=00 represents an amount of 'rupees thirty six thousand only' (i.e. Rs. 36000/-) and not an amount of 'Rs. 36 lacs'. From the discussion, it is clear that coding was used in writing the figures in the diary seized as Annexure A-2 referred by the AO in making the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead as Rs. 36,00,000/-. The argument of the AR that the amount represents only Rs. 36000=00 relating to daily wages payments to Labour for renovation of house is not found acceptable because the pattern of payments also does not support the above contention since the labour is to be paid either on weekly or monthly basis which is not so in this case. Had it been the case of labour payment, then the figure for each month/week should have appeared on regular basis that also without the abnormal variations from month to month basis as is noted in the present case. In view of the discussion above, it is held that the figure mentioned in the diary which are accepted by the AR also as relating to the 'summary of construction material and other expenses/payments made by the assessee, are in coded form and the figure of 36000=00 in fact, represents Rs. 36,00,000/-. Under the facts and in the circumstances of the case, the additions of Rs. 4,50,000/-, Rs. 31,50,000/- and Rs. 21,85,000/- for the assessment year 201213, 2013-14 and 2014-15 respectively made by the AO are found acceptable and upheld. Accordingly, this ground of appeal is dismissed. Before concluding it is relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence presumption u/s 292C cannot be taken against the assessee. The AR argued that the expense cannot be restricted to an extent incurred by some other persons, on the basis of presumptions, conjectures & surmises only. In support, he filed a written brief note which reads as under: 1. That the addition made by Ld. AO is not based on corroborative evidence which could substantiate the claim of Ld. AO that assessee used any coding. 2. That Ld. AO on his own has deciphered the figures on the paper by adding '00' at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for adding the zeros. 3. That Ld. AO did not carry any enquiry whatsoever to find the nature of transactions. 4. That jottings on loose paper found during search operation was mere estimation of petty expenses incurred and no corroborative evidence is on records that the amounts were actually in lakhs. 5. That neither independent nor collective meaning of notings or entries written therein is supported by conclusion of Ld. AO. 6. The contents thereof are not capable of describing the transactions the way A.O. has deciphered them an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s DCIT, Hon'ble Delhi ITAT, (1999) 64 TTJ 0786 in which it was held as under: Search and seizure--Block assessment--Computation of undisclosed income--Addition on the basis of uncorroborated chit of paper--AO has deciphered the figures on the paper by adding '00', '000' or '0000' at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for adding the zeros--Not justified-- He has not examined the assessee or the author of the said paper--AO has not brought any material on record to show that the figures related to sale or purchase of property--He made no enquiry from the purchaser--Said paper does not fall within the definition 'books of account' or document--Paper seized had no evidentiary value and it does not prove that consideration was understated--Same cannot form the basis for assessing the undisclosed income 4. ACIT V/s Satyapal Wassan, Hon'ble Jabalpur ITAT, (2008) 5 DTR 0202 in which it was held as under: Income from undisclosed sources--Addition under s. 69--Addition on the basis of dumb document found during search--Document found during search containing the figure '22.30'--AO simply presumin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons, additions of Rs. 20,000 and Rs. 90,000 on the basis of yet another dumb document were also uncalled for--Consequently, there is no question of charging of tax on notional interest on such amounts--However, in respect of document showing name of assessee, 50 items in different quantities at different rates purchased also showing expenditure quantified at Rs. 1,31,736 bearing date, lower authorities were justified in treating the amount as expenditure/investment and making addition in the absence of any evidence brought by the assessee to show that it was not purchase but only a quotation 5. Hon'ble Cuttak Tribunal in the case of ADD. CIT VS. Prashant Ahluwalia 92 TTJ 464 (CTK) in which it was held as under: Income from undisclosed sources--Addition--Jottings on loose paper found during search operation--Explanation of the assessee that the amount written on said paper was mere estimation of expenditure for forthcoming period was probable--Only round figures were found indicating that the estimated figures were noted for planning purposes--No corroborative evidence on records that the amounts were actually expended--Hence, addition was rightly deleted 6. ACIT V/s Shara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of husband of assessee Sh. Susheel Sabharwal and that casehas been decided inn favour of assessee by the Hon'ble ITAT Amritsar vide order dated 16.09.2022 in ITA no.68//ASR/2019, copy of order is enclosed herewith in which it was held as under: 17. In the present case, the addition was being made on the basis of uncorroborated rough noting of paper/diary. The Ld. CIT(A) has deciphered the figures on the paper by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures is not justified. Further, the AO had made no enquiry from the purchaser on the said rough noting of the paper of diary which does not fall within the definition of 'books of account' or document. Even if, a rough diary paper seized without being corroborated with relevant documentary evidence to the effect of understatement of the sale consideration had no evidentiary value and it would not prove that consideration was understated, According, same cannot form the basis for presumption u/s 292C of the act for the purpose of assessing the undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR argued that neither of the authorities below had drawn independent nor collective meaning of noting/entries written in the rough diary to supported the conclusion/findings. He contended that the contents of the diary thereof are not capable of describing the transactions the way A.O. and the Ld. CIT(A) have deciphered them. He further contended that since the diary jottings have not been corroborated with the any supporting material evidence on record from any other findings on alleged renovation of house, hence, the jottings in the diary by no stretch of imagination can be treated as conclusive proof of expenditure transaction by the assessee as observed by the Ld. AO. and endorsed by the Ld. CIT(A). He contended that, in the circumstances, presumption u/s 292C of the Act cannot be taken against the assessee. 13. On similar facts, the coordinate Bench vide order dated 16.09.2022 in ITA no.68//ASR/2019, has deleted the addition by observing as under: "17. In the present case, the addition was being made on the basis of uncorroborated rough noting of paper/diary. The Ld. CIT(A) has deciphered the figures on the paper by decoding in the form of Indian style and international ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yle and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures to multiple of 00 (stands 100) is not justified. Further, the AO had made no enquiry regarding the alleged disputed expenditure based on rough blank figure/jotting in a diary that what are the renovation/construction material bills, payment of labor or even not referred Department Valuation Officer's report in order to estimate the expenditure on the said rough noting of the paper of diary which does not fall within the definition of 'books of account' or document. If, a rough diary paper seized without being corroborated with relevant documentary evidence to the effect to understatement the alleged renovation expenditure on the house, then it had no evidentiary value and it would not disprove the claim of the appellant that the jottings in the diary were actual figure of renovation expenditure on her house, According, same cannot form the basis for presumption u/s 292C of the act for the purpose of assessing the undisclosed income of the appellant assessee. 16. Thus, without substantiati ..... 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