9911796707
TMI Blog2022 (9) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... borative documentary evidence either from the witnesses end or purchaser end that assessee has received any on money. In our view, such an addition being made purely on the basis of inferences drawn from diary rough noting without any nexus or support of the authentic documentary evidences such as registered deed/ or agreement to sale were being brought on record to prove that assessee has received On money , cannot be sustained. Thus without substantiating the content of the noting in the diary, the value adopted by way of decoding by the authorities below based on assumption, presumption and guess work is illegal and against the law. Since, the diary jottings have not been corroborated from any relevant material documentary evidence and hence, the jottings in the diary by no stretch of imagination can be accepted as an evidence or conclusive proof of on money transaction by the assessee for the purpose of presumption u/s 292C of the Act against the assessee. Addition was being made on the basis of uncorroborated rough noting of paper/diary. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. Grounds of appeal in ITA No. 683/Asr/2019:- "1. That the order passed by the Hon'ble CIT(A) dated 05.09.2019 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 circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs 74,57,194/- as long term capital gain on account of sale of property on the basis of rough paper, without considering the submissions of the assessee. 4. 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. AO in disallowing cost of improvement amounting to Rs.10,65,254/- and restricting the same to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther pages i.e. 'page no. 8 (backside)' and also on 'page no. 9' of this seized diary 'Annexure-2' which indicates that coding was used in writing figures in this diary seized as 'Annexure-2'. For reference, the two pages are reproduced below:- The figures on this page is in fact the record of payments in which the amount to SK (i.e. Sh. Susheel Sabharwal), to RK (i.e. Sh. Rakesh Sabharwal) and Sh. Nitin Sabharwal have been mentioned as'115=50/115=50 and 10=00 respectively out of total 241=00. On the right side, the figures represent payments on different occasions written vertically with sum at the bottom. In the middle of the page, the distribution of the amount received on different occasion (as mentioned vertically on the right side) amongst the three persons is indicated. 1 represents 34 each to SK & RK. 50 represent 25 each to SK & RK. 35 represent 15 each to SK & RK and 5 to Nitin. 95 represents, 45 each to SK & RK and 5 to Nitin. 60 represents, 30 each to SK & RK. These payments are partly through cheque for which 'CH' is written above the figures and the other figures represent the amount received in cash. In fact, the figures of 25 & 30 above which ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived on different occasion as mentioned vertically on the right hand side is given and the amounts received through cheque have been marked by writing CH above the figures of 25 & 30. In fact., the total of ½ + 25 (CH) + 15 + 45 + 30(CH) comes to 115=50 which are to be read as representing Rs. 0.5 lacs + Rs. 25 lacs cheque + Rs. 15 lacs + Rs. 45 lacs + 30 lacs cheque giving a total of Rs. 115.50 lacs as share of Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal which matches with the figures written vertically on the left hand side of this page as 115=50 (which is to be read as Rs. 115.50 lacs). The figures written in the middle without CH over them are in fact the amounts received in cash. The first line in the middle (written as ½ + 25 + 15 + 45 + 30) represents the equal shares of Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal, whose total comes to 115.50 lacs, out of which the amounts received through cheque was Rs. 55 lacs by each which is represented by the figures of 25 and 30 above which CH is written and the balance amount of Rs 60.5 lacs was received in cash represented by the figures ½, 15 & 45. The sum of these figures is given on the left hand side as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons is mentioned along with the mode of receipt for which CH is written for the amounts received through cheque and the amounts without anything written over them representing the cash. On the left hand side the total shares of the three persons is mentioned and the sum of the figures written vertically on the left side also comes to 241=00 (to be read as Rs. 241 lacs). Thus, the figures on the right hand side, in the middle and on the left hand side corroborate with the other and explain each other. It is also clear that the AO has duly confronted the seized documents on the basis of which the addition was made. The entries in the diary relate to both cash transactions and transactions through cheques. The cheques amounts have been validated from the bank account statements and the confirmation of these cheque payments support the fact that all other figures also relate to sale of the house. Hence, the argument of the AR that the addition has been made without any basis and on the basis of surmises and conjectures, are not found tenable. The fact about the use of coding in the diary has also been adjudicated in other cases where the additions on the basis of noting in the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en against the assessee. Similarly, for the disallowance of cost of improvement and restricting the same to the extent of Rs. 12,77,786/-, the AR submitted that the AO has drawn a wrong conclusion without any logical reasoning for the same. 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: Brief Note: During the year under consideration assessee along with his brother Sh. Susheel Sabharwal sold property vide registered sale deed situated at 434-New Jawahar Nagar, Jalandhar for the total consideration of Rs.1,10,00,000/- on 09.08.2012 as under: Sr. No Particulars Share 1. Smt. Susheel Sabharwal 1/2nd 2. Sh. Rakesh Sabharwal (assessee) 1/2nd The aforesaid property was inherited by the assessee along with brother from his father wherein the share of assessee and his brother stood computed at Rs.55,00,000/- each. The assessee therein going as per the aforesaid facts and figures duly reflected the income with true and correct facts and income including the income under the head 'Capital Gain' inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed. Also Ld. AO wholly and solely relied on diary noting being reproduced on page 2 of assessment order. 3. That the present case is not the case where circle rate or the value as per stamp registration authorities of the impugned property is more than what has been disclosed. 4. That in the impugned diary notting there is name of Nitin Sabharwal also but he had nothing to do the property as the property belongs to Rakesh Sabharwal and Susheel Sabharwal and Ld. AO, on assumption and presumption basis, on page 3 of the Assessment Order states that Nitin Sabharwal may have been given gift of Rs.10,00,000/- by both Susheel Sabharwal and Rakesh Sabharwal and no evidence have been brought on record in this regard. 5. That it is pertinent to mention that Ld. AO in his initial questionnaire states that "Amount of Rs.2,41,000/- (SK, RK, & Nitin)" and in the subsequent questionnaire sates that "this amount is Rs.2,41,00,000/-." Thus Ld. AO himself is not clear about the contents of the diary whereas ultimately made addition by relying on said diary noting. Both the questionnaires are enclosed herewith 6. That the figures relates to some expense incurred by the assessee dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude transaction of the later period, more so when no dates of the later period are mentioned on the relevant page. Reliance is further placed on the following decisions: 1. The apex Court in Central Bureau of Investigation vs. V. C. Shukla [1998] 3 SCC 410 has laid down that :-- "File containing loose sheets of papers are not 'book' and hence entries therein are not admissible under s. 34 of the Evidence Act, 1872." 2. CIT v/s Sh. Praveen Juneja, Delhi High Court in ITA 57/2017 dated 14.07.2017 in which its was held as under: "Search and Seizure--Addition--Search took place in premises of Assessee pursuant to which certain documents were seize--AO based on document made addition of amount in return income of assessee--Document on basis of which addition was made was piece of paper and document was hand written paper purportedly containing details of house construction expenses--Since said document had been seized from residence of Assessee, CIT (A) drew presumption under Section 292C of the Act was that it belonged to assessee--Further, CIT(A) proceeded to hold that amount constituted unexplained income of Assessee since Assessee had not submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined 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 Addition on account of Cost of Improvement Sir, it is further submitted that Ld. AO has disallowed the cost of improvement expense claimed by the assessee and restricted the same to the extent of Rs.12,77,786/- being lower of the cost of improvement claimed by assessee or his brother in the FY 2008-09 and 2009-10 respectively. In this regard it is submitted as under: 1. That in this regard no incriminating material is found during search and the return was already processed u/s 143(1) of the Act on 23.06.2014 and the same is reflected/stated on page 1 of the Assessment Order and date of search is 08.09.2016. Thus, there was no incriminating material, much less, in respect of the impugned addition and hence impugned addition has been made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings and the assessment proceedings remain un-abated as on the said date, no addition cane be made validly in the hands of assessee…." 2. That Ld. AO has drawn a baseless conclusion which bring bringing on record any logical reasoning for the same. 3. That expense to be incurred depends upon and also varies from person to person, how can the same be restricted to an extent incurred by some other person. 4. That assessee has provided the details of expenses incurred on the improvement of the property sold and the same are substantiated by the withdrawals made from the bank account. 5. That Ld. AO states that assessee has not provided the complete details of improvement on the property but he has not appreciated the fact that details of the major portion of the expenses have already been furnished. 6. Further this addition is not based on any incriminating material but on the basis of details furnished by the assessee as per his return of income. Thus no addition is warranted when it is not based on any incriminating material. Sir, since the addition made by the Ld. Assessing Officer is only on the basis of conjecture and surmises and that too on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nging relevant corroborative documentary evidences to establish the veracity of the receipt of "On money" if any and improvement cost qua the loose papers viz -a- viz rough diary allegedly seized, during the search from the assessee's premises. 10. From the registered sale deed, it is evident that the subject property situated at 434, New Jawahar Nagar, Jalandhar was sold for the total consideration of Rs.1,10,00,000/- on 09.08.2012. It is admitted fact on record that this property was inherited by the assessee along with brother. Thus, the share of assessee and his brother @ 50% each, stood computed at Rs.55,00,000/-. The Ld. AR contended that the assessee has duly reflected the said income under the head 'Capital Gain' income in his 'Return of Income' for the year under consideration. 11. It is seen that the rough noting/jotting in the diary, appears to be pertains to some petty expenses, under the head '434 Ex' which stands for 'Expense' being incurred on renovation of house no.434, New Jawahar Nagar, by the assessee during the month of October 2009 and these do not pertain to the year under consideration. It is also seen that the actual transaction relating to the said proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s work is illegal and against the law. Since, the diary jottings have not been corroborated from any relevant material documentary evidence and hence, the jottings in the diary by no stretch of imagination can be accepted as an evidence or conclusive proof of 'on money' transaction by the assessee for the purpose of presumption u/s 292C of the Act against the assessee. 14. In case of "Central Bureau of Investigation vs. V. C. Shukla" (Supra), the Hon'ble Apex Court observed that "File containing loose sheets of papers are not 'book' and hence entries therein are not admissible under s. 34 of the Evidence Act, 1872." 15. The Hon'ble Delhi High Court in the case of "CIT v/s Sh. Praveen Juneja", (Supra), held as under: "Search and Seizure--Addition--Search took place in premises of Assessee pursuant to which certain documents were seize--AO based on document made addition of amount in return income of assessee--Document on basis of which addition was made was piece of paper and document was hand written paper purportedly containing details of house construction expenses--Since said document had been seized from residence of Assessee, CIT (A) drew presumption unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 undisclosed income of the appellant assessee. The Ld. CIT (DR) has not filed any judgement in rebuttal to the contentions raised by the Ld. Counsel for the assessee. 18. Considering the factual matrix of the case and the judicial pronouncements, we hold that the impugned order passed by the Ld. CIT(A) at his whim and caprice based on presumption and conjectures which suffered from legal infirmity and perversity on facts of the case. Accordingly, the addition of Rs 74,57,194/- on account of on money receipt fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
