Failure to Carry Investigation by AO: ITAT discredits Seized Loose Papers as Dumb Documents [Read Order]

Income Tax Appellate Tribunal (ITAT), Pune discredited seized loose papers as dumb documents on the ground of failure to carry investigation by Assessing Officer (AO).

A search and survey operation were conducted in the cases of Jai Corp Group on 05-03-2009 u/s. 132 of the Act. The said search was conducted on its employees and close associates involved in the process of acquiring land. According to the Assessing Officer, plethora of incriminating evidences were gathered during search operations on many places and at the residence of Mr. Dilip Dherai. M/s. Krupa Land Ltd. is belonged to Jai Corp Group. The said company had purchased various lands from the assessee, Mansukh Timbadia, Manitej in Nevali village.

There is a clear mention of payment of Rs.2 crore to assessee for Nevali village by Krupa Land Pvt Ltd. and also cash receipts duly signed by the assessee for a sum of Rs.20,00,000/-. Further, an unaccounted cash of Rs.24,36,00,000/- for sale of land of 8.70 acre and Rs.10,00,00,000/- for sale of land of 3.79 acre totalling to Rs.34,36,00,000/- was accepted by the assessee. The assessee before the AO the receipt of said Rs.34.36 crores in cash or even otherwise and profit thereon on Nevali land was offered to tax under scrutiny assessment u/sec 143(3) of the Act.

 It was also contended that the seized documents were found from third party cannot be basis for reassessment in the hands of assessee and also disputed the seized material confronted by the AO regarding highly improbable and impossible received by the assessee. The AO found the explanation offered by the assessee not acceptable and since no expenditure was claimed, the AO added an amount of Rs.34,36,00,000/- to the total income of the assessee under reassessment passed u/s. 143(3) and 147 of the Act vide order dt:18-03-2016.

The CIT(A) held the 40% of cash amount workout at Rs.3,33,06,667/- admitted to had been received by the assessee vide seized documents and deleted the remaining addition of Rs.31,02,93,333/- (Rs.34,36,00,000/- - Rs.3,33,06,667/-) and hence is in appeal before the Tribunal.

The Bench consisting of SS Vishwanetra Ravi, Judicial Member and GD Padmahshali, Accountant Member observed that “There had been no corroborative evidence and no adverse inference could be drawn against the assessee in terms of alleged entries of loose papers Even the CIT(A) clearly held that the AO squarely failed to carry out necessary investigation/enquiries from the buyer M/s Krupa Land, meaning thereby, the CIT(A) also discredited the entries alleged to have been found in the seized loose papers as dumb documents.

When the seized loose papers did not indicate receipt of alleged cash payment and no relevancy to the year under consideration, therefore, addition confirmed by the CIT-A to the extent of Rs.3,33,06,667/- is not justified.”

To Read the full text of the Order CLICK HERE

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