Taxpayer’s Father’s Dairy Found during Search falls into “Dumb Document”: ITAT says ‘No Addition’ Can be Made’ [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, held that the appellant’s father’s dairy found during search and seizure under Section 132 of the Income tax Act, 1961 falls into the category of dumb documents and no addition can be made based on such dumb document.

The appellant, Vikas Agarwal, premises were subjected to a search under Section 132of the Income Tax Act, 1961 on 05.02.2017. During the search, two documents Annexure A-5 ( father’s dairy) and Annexure A-1 were seized.

TheAssessing Officer (AO) treated the same as undisclosed interest income and made additions of ₹19,25,300 for Assessment Year (AY) 2014-15, ₹42,12,800 for AY 2015-16, and ₹46,05,100 for AY 2016-17 based on entries recorded in Annexure A-5. Further, an addition of ₹22,50,000 was made under Section 69 of Income Tax Act for AY 2016-17 based on Annexure A-1.

The CIT(A) upheld the additions, observing that the appellant failed to satisfactorily explain the nature and source of the entries and did not rebut the statutory presumption under Section 292C.

Rohit Agarwal, the appellant counsel, contended that the seized diary belonged to his deceased father and was not in his handwriting. It was further submitted that he was merely a member of a joint family and that the documents could not be attributed solely to him.

The appellant counsel also contended that the documents lacked clarity and evidentiary value, and therefore qualified as “dumb documents”.

Rajesh Kumar, representing the Revenue Department, contended that the documents found during search are deemed to belong to the appellant unless proved otherwise.

The bench of Madhumita Roy, Judicial Member and Amitabh Shukla, Accountant Member, observed that the respondent has failed to establish any direct nexus between the appellant and the contents of the seized documents.

The Tribunal noted that the documents were neither in the handwriting of the appellant nor supported by any corroborative evidence. The Tribunal further said that mere possession of documents does not justify addition in the absence of proper inquiry.

The appellate tribunal held that such documents fall within the category of “dumb documents”, and it is a settled principle that no addition can be made solely on their basis without independent corroboration.

Accordingly, the Tribunal set aside the orders of the lower authorities and deleted the additions made.

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