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TMI Blog2023 (12) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... apart from the impugned loose sheets, there is no further corroborative evidence suggesting undisclosed investment was available on record. As A.Y 2014-15 is the first year of incorporation. Therefore, by no stretch of imagination it can be said that the assessee company has brought in its own unaccounted funds for making the unaccounted purchases. Since the business has not even commenced in the subsequent A.Y. i.e. 2015-16 also, the assessee company had no funds on its own, whether accounted or unaccounted from revenue operation. There is nothing on record to suggest that the Assessing Officer has taken any action against the promoters/directors of the assessee company. Similar view was taken by the Hon'ble High Court of Allahabad in the case of Lal Mohar [ 2017 (12) TMI 133 - ALLAHABAD HIGH COURT] wherein as held that since it was the first year of business of the AOP, and no business activity having shown to have been conducted by it that could lead to generation of unaccounted income on the first day of relevant accounting period itself, the Tribunal has not committed any error in deleting the impugned addition. No merit in the additions made by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued and served upon the assessee, in response to which, the assessee filed its return of income declaring NIL income. 5. During the course of search and seizure operation, scanned pages were found and seized pertaining to A.Y 2014-15. Scanned copies are exhibited at pages 3 to 6 of the assessment order. Taking a leaf out of the entries/jottings/notings made in the lose sheets, the assessee was asked to explain the nature of all the transactions recorded in the scanned pages. 6. In its reply, the assessee explained that it has engaged one Shri Sanjeev Garg who was an expert in setting up industrial units and offered help to establish the industrial units and land was purchased through Shri Sanjeev Garg who also helped in supervising and managing the construction of factory building. It was explained that the figures contained in the loose sheets are estimates made by Shri Sanjeev Garg. 7. The Assessing Officer was of the firm belief that the manner in which the entries in the scanned loose sheets have been made cannot be believed that they are just estimates. The Assessing Officer observed that in the loose sheet, amount of Rs. 3,67,32,240/- included cash payment of Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A), the ld. CIT(A) confirmed addition for A.Y 2014-15 and 2015-16 modified the addition to be in line with the expenses for cash written on the loose sheets and made addition of Rs. 1,72,37,565/-. The entire controversy revolves around the following summary of alleged expenses which is page 91 of the seized material and page 20 of the Supplementary Paper Book: 12. The above loose sheet is neither signed by any person nor it contains any stamp and it is not known in whose handwriting it has been made. It appears that it is a working sheet of Shri Sanjeev Garg. But Shri Sanjeev Garg was never examined by the Assessing Officer though he has mentioned of issuing summons which was not responded but we are of the considered view that the Assessing Officer has all the powers in forcing the attendance of any witness he wants to. 13. The assessee has purchased land on which construction was commenced in respect of factory building. The matter was referred to the DVO and the DVO has very categorically mentioned in his report which reads as under: Any Special Observations: The subject property is factory for AAC block production, situated in village Patadi Near ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be converted into a legal evidence against the petitioners Section 34 of the Act reads as under:- Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book. that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence. still. the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. S.34. Evidence Act, lays down that the entries in books of account, regularly kept in the course of business are relevant, but such a statement will not alone be sufficient to charge any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced in the subsequent A.Y. i.e. 2015-16 also, the assessee company had no funds on its own, whether accounted or unaccounted from revenue operation. There is nothing on record to suggest that the Assessing Officer has taken any action against the promoters/directors of the assessee company. 21. On similar facts, the Hon'ble High Court of Delhi in the case of Satkar Infrastructure Ltd 145 Taxmann.com 461 declined to interfere with the findings of the Tribunal given in ITA No. 1198/DEL/2019. 22. Similar view was taken by the Hon'ble High Court of Allahabad in the case of Lal Mohar 88 Taxmann.com 260 wherein the Hon'ble High Court has held that since it was the first year of business of the AOP, and no business activity having shown to have been conducted by it that could lead to generation of unaccounted income on the first day of relevant accounting period itself, the Tribunal has not committed any error in deleting the impugned addition. The relevant findings read as under: 22. .Having considered the arguments so advanced by learned counsel for the parties, we find, in the case of Abhyudaya Pharmaceuticals (supra), this Court considered the decision in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k drafts. The accounting period being financial year i.e. ending on 31 st of March, 1991, the Firm could not have any income at the time of its formation. The identity of the depositor i.e. Master Shishir Garg was not in issue atany point of time before the Income Tax Authorities. They treated the said deposit by Master Shishir Garg. This being so, if for one reason or the other, they were not satisfied with the financial capability of Master Shishir Garg, the amounts could have been added at the hands of Master Shishir Garg and not at the hands of Firm. 18. It may be noted that the decision given in the case of Jaiswal Motor Finance (supra) is being constantly followed by this Court in the subsequent decisions. Reference can be made to Surendra Mohan v. CIT [1996]221 ITR 239 (All.) 19. The Rajasthan High Court in CIT v. Kewal Krishna Partners [2009] 18 DTR 121 has also taken similar view. 20. In view of the above, we are of the considered opinion that on the facts of the present case, the Tribunal was not justified in holding that the unexplained cash credit recorded in the assessee's book be added in the hands of the assessee. We, therefore, hold that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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