In a recent ruling, the two-judge bench of the Supreme Court of India held that the entries in loose papers/sheets are not ‘books of accounts’ and has no evidentiary value under section 34 of the Indian Evidence Act. The benches, while dismissing the writ petition filed by common cause, a registered society, refused to give nod to investigate against the Sahara and Birla groups in the alleged pay-off scandal.
The factual settings of the case are that, a search were conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminatory materials and an amount of Rs. 25 croress were recovered. The CBI referred the matter to the Income Tax Department.
In another earch, the IT department recovered certain incriminatory materials and unaccounted money of Rs. 135 crores from Sahara Group of Companies. Allegedly, the Department recovered certain printouts of excel sheets showing that Rs. 115 Crores were paid to several public figures.The Settlement Commission, granted immunity to the Sahara Group of Companies on ground that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disk and pen drive etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence.The Commission has also observed that Department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. The petitioners, common cause, impugned the orders before the Supreme Court.
Dismissing the petitions, the two-judge bench comprising of Justice Arun Misra and Justice Amitava Roy clarified that the evidence that had surfaced was not credible and cogent. The attorney general contended that the documents which have been filed by the Birla as well as Sahara Group are not in the form of account books maintained in regular course of business. They are random sheets and loose papers and their correctness and authenticity, even for the purpose of income mentioned therein have been found to be un-reliable having no evidentiary value, by the concerned authorities of income tax.
Analyzing the veracity of the evidences procured from the companies, the bench relied upon the ration in V.C shukla case and observed that the entries in loose sheets of papers are not in the form of “Books of Accounts” and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible.
Read the full text of the judgment below.
