Loose Paper Documents proved with Corroborative Evidence is not 'Dumb Document': ITAT upholds Estimation of On-Money [Read Order]

The Income Tax Appellate Tribunal (ITAT), Surat Bench comprising of Shri Pawan Singh, J M and Dr A L Saini, AM has held that estimation and scribbling made on loose pages proved with corroborative evidence is not “dumb document” and upholds estimation of ‘on-money’.

The appellant assessee is a partnership firm engaged in real estate business. The assessee filed a return of his income on 31-07-2011, declaring total income at NIL in response to the notice issued u/s 153A of the Income Tax Act. Shri Naresh Talavia who was an active partner has disclosed Rs.15,00,00,000/- as an unaccounted additional income in the hand of the firm vide statement u/s 132(4) of the Income Tax Act. Further, the AO found loose paper out of books of account which are relevant to the ‘on money’ or unexplained cash which was corroborated by the statement of the partner Shri Naresh Talavia.

The appellant assessee contended that the statement made by the partner was out of coercion and threat. CIT(A) on appeal observed that it is impossible to hold any threat or coercion for 19 months without any explanation for the delay and upheld the additions of undisclosed investment in land of Rs.6,50,00,000/- in A.Y. 2011-12 and Rs.9,35,91,500/- in A.Y. 2012-13. In contra, Revenue argued that the addition made by the assessing officer should be sustained. It was observed that the assessee-firm made cash payments for purchasing the land. Amount paid by way of cash was added under section 40A (3) in both years.

The Tribunal observed that payment was made in cash, thus violating the provisions of section 40A (3) of the Act, therefore Assessing Officer made an addition to the tune of Rs.26,19,720/-, which was deleted by CIT(A). CIT(A) observed that seized documents and the statements of the partners prove that substantial transactions have been done out of the books of account. The Tribunal held that the order made by the CIT(A) in deletion of addition made by the assessing officer was right. The appeal filed by the assessee and the revenue was dismissed.

 Shri Mitish S. Modi and Shri Akshay Modi appeared on behalf of the assessee and Shri H. P. Meena appeared on behalf of the respondent.

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