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TMI Blog2025 (1) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 7,00,000/- made by the AO which was based on the seized Document No. B - 1/16 and the said document have the evidentiary value. 4. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 37, 45,500/- made by the AO which was based on the seized Document No. B - 2/1 and the said document have the evidentiary value. 5. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 71, 93,666/- made by the AO which was based on the seized Document No. B - 2/19 and the said document have the evidentiary value. 6. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 22, 50,000/- made by the AO which was based on the seized Document No. B-2/21, and the said document have the evidentiary value. 7. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 26,00,000/- made by the AO which was based on the seized Document No. B-2/30, and the said document have the evidentiary value. 8. On the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration declaring total income at Rs. 34,88,760. Subsequently, notice under section 143(2) of the Act dated 08/10/2020 was issued and served. Thereafter, notices dated 08/02/2021 and 30/08/2021, under section 142(1) of the Act were issued and served to the assessee. The Assessing Officer completed assessment under section 153C r/w section 143(3) of the Act, by passing assessment order dated 28/09/2021, determining total income of Rs. 2,32,54,426/- after making following additions:- 1 Unexplained money u/s 69A Rs. 16,73,500/- 2 Unexplained money u/s 69A Rs. 2,50,000/- 3 Unexplained money u/s 69A Rs. 7,00,000/- 4 Unexplained money u/s 69A Rs. 37,45,500/- 5 Unexplained money u/s 69A Rs. 71,93,666/- 6 Unexplained money u/s 69A Rs. 22,50,000/- 7 Unexplained money u/s 69A Rs. 3,53,000/- 8 Unexplained money u/s 69A Rs. 26,00,000/- 9 Unexplained Expenditure u/s 69C Rs. 10,00,000/- The assessee being unsuccessful before the Assessing Officer, challenged the assessment order passed by the Assessing Officer by filing appeal before the first appellate authority challenging the additions, except the addition for Rs. 3,53,000, as per ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the authorities below. However, for the sake of brevity and convenience, we reproduce the written submissions made by the learned Counsel for the assessee which are as follows:- "1. The agreement to sale documents are drafted under the instruction of various customers of assessee's in discharge of his professional duty / obligation. When a document shows a fixed price, there would be a presumption that it is the correct price agreed upon by the parties. It is true that on the basis of the agreement, the sale deed is executed, in such cases the agreement to sale must be registered. But in the said case the agreement to sale is unregistered and in the case of unregistered agreement to sale it is not necessary that the price stated in the agreement will be the price shown in the sale deed. No addition is tenable in view of non-availability of the corroborative evidence. It is necessary to bring some corroborative evidences on record before making the addition against the assessee. The sale deed clearly shows that amount is paid to the assessee through banking channel only and thus, the contents of sale deed cannot be disregarded. Merely having deviation in agreement to sale and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oose paper, which is not conclusive evidence and, therefore, the same is not sufficient to make the addition. 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 received on-money from customers over and above the sale deed. 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. 2. In the case of assessee the Assessing Officer had not been able to adduce or bring on record any corroborative evidence to show that higher consideration was actually received by assessee outside the books of account to match with the figures of difference appearing in loose sheet. He has just made a one sided assessment based only on the loose sheet without bringing on record the other corroborative evidences. The addition made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and no cash has been paid over and above the agreed sale consideration as per sale deed. Thus, the cross examination of all customers had been done to ascertain whether the payment of "on money" was made by them or not which had been clearly denied by all the customers. Hence, no additions ought to have been made without considering the statements of the customers given to Deputy Director of Income Tax (Investigation). 7. Also, in the instant case the Assessing officer had presumed that the Difference amount is received on-money by assessee without any corroborative evidence. Prayer : In view of above the Order passed by Commissioner of Income Tax (Appeals) may be upheld. Ground No. 7 : Addition made of Rs. 26,00,000/- being unexplained money u/s 69A of the Act. A.O. - Para 10 - Page No. 57 to 58 CIT (A) Page No. 130 to 132 The addition to total income of Rs. 26,00,000/- has been made on account of document found and impounded from the business premises of M/s Tirupati Developers framed as unexplained money u/s 69A as per Para 10 of Assessment order. The transactions are duly accounted in the books of Tirupati Developers through the capital account of Shri Prashant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The material difference between sections 68 and 69A is that section 68 does not require that the amount is to be owned by the assessee. It only deals with any amount shown in the books of account of the assessee. Whereas section 69A deals with money, etc., owned by the assessee and found in his possession. Therefore, ownership is one of the considerations when the matter comes under section 69A. 3. Hon'ble Punjab-Haryana High Court in the case of CIT vs Ravikumar (paper book page no.33) it was held that the assessee was found to be in possession of loose slips and not of any valuable articles or things. Neither the possession nor the ownership of any jewellery mentioned in the slips could prove. In view thereof, the provisions of Section 69A of the Act had rightly not been applied by the Tribunal to the facts of the case in hand. Accordingly, question No. 1 is answered against the Revenue and in favour of the assessee. 4. Hon'ble Delhi High Court Order in the case of CIT vs, Jai Pal Aggarawal (paper book page no.9)it was held that the seized document which is to be treated as dumb document, the addition cannot be justified. 5. Hon'ble ITAT New Delhi in ITA No. 933/Del/2012, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of confession without any corroborative evidence. Moreover the said confession made by the assessee was subsequently retracted and since the addition was not supported by any cogent, convincing independent documentary evidence, therefore, considering the totality of facts and circumstances, judicial precedents referred above as well as following the decision of the Coordinate Bench of this Tribunal in the case of DCIT Vs. 72 ITA 256/JP/2018 JKD Pearl India Developers Pvt. Ltd.(supra) wherein the present Author of this order was also the Author of that order, therefore, we direct the A.O. to delete the addition so made. 9. Hon'ble ITAT New Delhi in the case of Samta Khinda vs ACIT (paper book page no.106) it was held that The addition has been made merely on the basis of this loose paper without any corroborating evidence and on conjecture and surmises. Therefore, the presumption u/s. 292C of the Act is a rebuttable presumption. The presumption as envisaged in section 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation had been raised were vague and could not be relied upon as it appeared that the total area with respect to the sale deeds and that reflected in the loose sheet was discrepant. 13. Hon'ble Punjab-Haryana High Court in the case of CIT vs M/s. Atam Valves (P) Ltd. (paper book page no.150) it was held that in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the Assessing Officer. 14. Hon'ble ITAT Hyderabad in the case of Nagarjuna Construction Co. Ltd. vs DCIT (paper book page no.180) it was held that the basis for addition is only note book/loose slips. These note book/loose slips are unsigned documents. The assessing officer has not established nexus between the note book/loose slips with actual accrual/ receipt of interest. The note book/loose slips seized marked A/NCCL-1/1 found during the course of search is a dumb document having no evidentiary value, no addition can be made in the absence of corroborative material. If there is circumstantial evidence in the form of promissory notes, loan agreement and bank entries, the addition is to be made on that basis to the extent of material available. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of undisclosed income on the basis of seized material. 17. Hon'ble Delhi High Court Order in the case of CIT vs. Atul Kumar Jain (paper book page no.210)it was held that This addition is also based on the impugned piece of paper seized during the course of search. On the right hand side in the said paper, there is an entry of "550" with a narration "flat". There is no detail recorded of the purchase of any flat nor there are any details recorded of the sale consideration paid in the said paper. The assessing officer however, decided "550" as 5,50,000 by adding "000" to the figure given "550,'. Here also there is no basis given for reading the figure "550" as Rs. 5,50,000. There is also no supporting or corroborative evidence for treating the figure "550" as Rs. 5,50,000. Moreover, we have already considered and given a finding above that the said paper was neither a document nor a book of account and accordingly no reliance could be placed thereon without any supporting or corroborative evidence which the Revenue failed to bring on record. 18. Hon'ble Delhi High Court Order in the case of CIT vs. Anil Bhalla (paper book page no.3) it was held that no independent materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not registered. The same was stated by Shri Prashant Bongirwar, Partner of the assessee firm in his statement given to the Dy. Director of Income Tax (Investigation). However, subsequent to this, the customer informed assessee regarding non-eligibility for higher loan amount. Therefore, customer requested the assessee to execute sale deed for actual agreed consideration of Rs. 20,00,000, and not as per the agreement to sale value. We further find that the assessee had mentioned the same during the assessment proceedings, but the same was not been considered by the Assessing Officer while passing the assessment order and resultantly the addition of Rs. 16,73,000, was made to the income of the assessee. The learned Departmental Representative could not bring any material or evidence to take a view other than the view taken by the learned CIT(A). The evidentiary value of registered sale deed cannot be dislodged whimsically. Hence, keeping this in view, we do not find any infirmity in the impugned order passed by learned CIT(A) which is hereby upheld by deleting the addition. Ground no.1, raised by the Revenue is hereby dismissed. 11. With regard to ground no.2, which relates to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh being unexplained money under section 69A of the Act is concerned, we find that the Assessing Officer made the addition while dealing with this issue at Para-5 / Page-42 to 47 of the assessment order. The learned CIT(A) directed to delete the addition vide Page no.118 of the impugned order. The addition to total income of Rs. 7 lakh was made on account of difference between agreement to sale value and final sale deed value which has been framed as unexplained money under section 69A as per Para-5 of assessment order. While going through the record, we find that the document exhibited at B-1/16, as referred to in said Para contained details regarding agreement to sale and final sale deed with respect to Flat no.202 in "A" Wing of Kanyakapuran Project of the assessee. It was stated by the learned Counsel for the assessee that during the course of assessment proceeding, the assessee had stated that on the request of customer, agreement to sale were prepared for Rs. 25 lakh so that the customer can avail maximum possible housing loan amount. The same was stated by Shri Prashant Bongirwar, Partner of the assessee firm in his statement given to Dy. Director of Income Tax (Investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The details mentioned in the loose papers is compared with the actual transactions and sale deed executed the difference is as follows:- Page No. Name of Customer Flat No. Area as per loose Paper Sq. Ft. Area as per sale Deed Sq. Ft. Diffn in Area Rate as per loose paper Sale Deed Amount Amount Considered in Order 1 2 3 4 5 6 7 8 9 68 Back Rajesh Modhak 404-A 766.08 2200000 2000000 63 Mahesh Ramdohkar 305 950 766.08 183.92 3100 2125000 1500000 60 Rajendra Singh 703-A 1250 756.97 493.03 3161 3500000 3500000 14. If the area mentioned in the sale deed as per col.5 is compared with area mentioned in the loose paper as per col.4, the area as per sale deed is much less than the area as per loose paper. The difference in area is mentioned in col. 6 of the above chart. It can also be seen that the sale consideration as per sale deed mentioned in col.8 is higher than the sale consideration mentioned in the loose papers mentioned in col.9. The chart prepared by the Assessing Officer at Para-6 of the assessment order is produced below:- Page no. Name of the purchaser Flat no. Total Flat Cost Agree-ment Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f notings framed as unexplained money under section 69A of the Act as per Para-7 of Assessment Order. We further noticed that the document no.B-2/19 mentioned in said Para contained notings made by office staff on daily basis regarding work done or to be done by them. The said pages contained notings by the staff about their day to day working and were not in the knowledge of the assessee. As could be seen, the exhibited Document no.B-2/19 as furnished before us, which is a diary of the calendar year 2014, maintained by the office staff. If the said document is verified carefully, it can be found that the notings are rough notings regarding remainders, work to be done, MSEB meter demand, VAT, Service Tax, Maintenance, extra work to be done, etc. The dates on the pages of diary are taken and presumed as the dates of calendar year 2016. But the notings on Page-1, i.e. of 1st January are considered as the notings of 04/10/2016, where the date mentioned is "as on 04/10/2016". Hence, it can be concluded as the notings in the diary are rough and vague notings and cannot be relied upon. Hence, in our considered opinion, no addition ought to have been made on account of amount mentioned on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the assessee. Further, the additions made in above grounds, i.e. grounds no.1 to 6 are on the basis of On-Money received from the customers by the assessee. There was no action taken on the customers as after receiving summons under section 131 of the Act from the Investigation Department, the customers have categorically denied having paid any cash amount as on-money to the assessee. The Revenue has accepted their reply, but added the same amount in the income of the assessee without accepting its explanation. We further find that the addition was made on the basis of impounded documents, as the Assessing Officer had not been able to adduce or bring on record any corroborative evidence to show that higher consideration was actually received by assessee outside the books of account to match with the figures of difference appearing in loose sheet. Further, the Assessing Officer's examination was very casual and not based either on the possible further enquiries or workings. No effective arguments were made to counter the arguments of the learned Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this regard, it is relevant to extract Section 69A of the Act, which reads thus: "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.". The lack of corroborative evidence to show how the loose sheets found at the house of Sri K Rajandran are connected to the Respondents herein, or their occupation, is evident from the panchanama provided by the Assessing officer. 22. The entire allegation is made out on the basis of loose sheets of documents, which does not come under the ambit and scope of 'books of entry' or as 'evidence' under the Indian Evidence Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only its probative value need be assessed. 18. "Book" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed:- " In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book...I think the term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following words: "70. ....an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to." 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in accordance with facts. 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court." 26. It is established in law by the Hon'ble Apex Court that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a common Partner in M/s. Tirupati Developers, and the assessee firm, where the entries are accounted. Thus, we are unable to reverse the order passed by the learned CIT(A) and thus decline to interfere. The impugned order passed by the learned CIT(A) is hereby upheld by dismissing the ground no.7, raised by the Revenue. 20. Ground no.8, relates to the addition of Rs. 10 lakh, being unexplained expenditure under section 69C of the Act. 21. The Assessing Officer made addition by holding that the assessee made repayment in cash of Rs. 10,00,000, for which no source was available with the assessee and the same was treated as unexplained expenditure under section 69C of the Act. Before us, the learned Departmental Representative relied upon the order passed by the Assessing Officer. The learned Counsel for the assessee assailing the assessment order passed by the Assessing Officer, reiterated the submissions made before the authorities below and prayed that the order passed by the learned CIT(A) be upheld. The learned Counsel further submitted that the Assessing Officer ignored the reply submitted by the assessee while passing the assessment order. The addition to the total income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the principles laid down under Section 68 of the Act are satisfied. Section 68 states that there must be books of accounts or any books with credit entry. The said Act reads thus: "Section 68: Where any sum is found credited in the books of an assessee maintained for any previous years and the assessee offers no explanations about nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year." The language of the Law is vague and subjective, thus making us rely on an Apex court decision in the case of CBI vs. V.C. Shukla ((1998) 3 SCC 410), wherein the relevant portion reads thus: "Collection of sheet fastened or bound together so as to form material whole. Loose sheets or scraps of paper cannot be termed as books." In this regard, it is relevant to extract Section 69A of the Act, which reads thus: "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. "Book" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of entries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423-27, paras 14 and 20) "14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under Section 34 with the following words: "70. ....an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) "37. In Beni Vs. Bisan Dayal [ A. I. R 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal Vs. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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