The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the addition based on seized scribbling on rough notes found during the search proceedings.
Rakesh Natwarlal Thakkar, the taxpayer, was engaged in construction of real estate project through his proprietary concern. The assessee also running another concern which was engaged in wholesale trading of food grain.
The assessee filed a return of income electronically. Then the case was selected for scrutiny.
When a search action conducted on the premises of assessee partner, the AO found that certain scribbling on rough notes and concluded that which was part of the sale of flat carried out by the assessee. On the basis AO made additions.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)[CIT(A)] who dismissed the appeal of the assessee. Therefore, the assessee filed a second appeal before the tribunal.
During the proceedings before the tribunal, Dharan Gandhi, counsel for the assessee contended that scribbling on the rough notes could not be considered sole basis for addition for undisclosed income.
Additionally, the counsel stated that the note in question was prepared by the seller for the buyer, providing information about the different charges associated with acquiring the flat. No discrepancies were found in the assessee’s book of accounts. Furthermore, the Assessing Officer’s addition was based on a presumption.
Riddhi Mishra, Counsel for revenue supported the decision for the lower authorities.
The tribunal after reviewing the facts observed that assessee did not produce any documentary evidence before the bench supports his contentions.
After verifying the scan copy of seized document shown the total amount of sale record in the registered sale agreement is matching with the amount mentioned against “A” category of amount. Moreover, the area of the flat noted in the seized document also matches with the registered sale document.
Further, it was also observed that the amount received from the customer for sale of the flat would be reflected in the books of accounts of assessee.
Hence, a bench consisting of two members, Om Prakash Kant (Accountant Member) and Aby T Varkey (Judicial Member) reviewed the arguments presented by both parties. The bench concluded that the document seized from search proceedings is not a dumb document and been properly analysed with supporting corroborative evidence. Thus, the bench upheld the decision of the CIT(A).
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