DCIT, CENTRAL CIRCLE-3, JAIPUR, CENTRAL CIRCLE-3, JAIPUR vs. SHRI RAJENDRA KUMAR KEDIA, A-15, SHYAM NAGAR, NEAR NADI KA PHATAK, BAINAD ROAD, JHOTWARA, JAIPUR, JAIPUR

lquokbZ dh rkjh[k@ Date of Hearing : 09/11/2020 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 11/11/2019 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the Revenue against the order of CIT(A)-IV, Jaipur dated 26.04.2019 for the assessment year 2017-18.

3. Aggrieved by the order of the AO, assessee preferred appeal before ld. CIT(A) and the ld. CIT(A) after considering the case of both the parties, deleted the additions made by the AO and thus partly allowed the appeal filed by the assessee.

4. Aggrieved by the order of ld. CIT(A), Revenue has filed the present appeal before us on the grounds mentioned hereinbelow:-

“1. Whether on the facts and in the circumstances of the case and in law that the CIT(A) was right in deleting the addition of Rs. 1,26,84,602/- made by the AO on account of unaccounted investment recorded in the seized document. 2. Whether on the facts and in the circumstances of the case and in law that the ld. CIT(A) was right in holding that the document found seized from the premises of the assessee, on which an addition was made by the AO is a dumb document.

4. Ground No. 1 and 2 raised by the Revenue are interrelated and interconnected and relates to challenging the order of the ld. CIT(A) in DCIT vs. Shri Rajendra Kumar Kadia deleting the additions made by the AO on account of unaccounted investment recorded in the seized documents. The ld. DR appearing on behalf of the Revenue had relied upon the order passed by the AO and submitted that the ld. CIT(A) was not right in holding that the documents found and seized from the premises of the assessee on which an addition was made by the AO is a dump document. The ld. DR has also relied upon para 5 and 5.1 of the order of the AO and the same are reproduced as under:-

“5. During the search proceedings at the residential premises of Shri Rajendra Kumar Kedia at Kedia House, Benar Road, Ganesh Nagar, Near Nadi Ka Phatak, Jhotwara, Jaipur, several incriminating documents were found and seized. These documents were inventorized as AnnexureAS, Exhibits- 01 to 05. On page No. 10 of Exhibit 4 of Annexure AS, certain transactions were found recorded. On this page, Rs.1,20,80,572/- cash and Rs. 6,04,030/- stamp were written. During the assessment proceedings, the assessee was asked to furnish the explanation of the writings on the said paper. In its reply, the assessee stated that, “…… the same represents conlculation of registration charges or a land if costing Rs. 12080572/- @ 5%=604030/- just estimation no actual transaction…..” "...that with regard to page 10 of Annexure A-4 found and seized from the residence of the assessee, as submitted in the explanation tendered before the ADIT (Inv.), the said paper contained the details of the registered documents of some land situated at Rajawas, Tehsil Amer which was purchased by the company M/s 3 DCIT vs. Shri Rajendra Kumar Kadia Salasar Balaii Developers Pvt. Ltd., a group company of assessee and the entire transaction is duly recorded in the books of accounts of the company. The copy of the registered sale deed is enclosed herewith for your ready reference and record..." 5.1 The reply of the assessee has been considered but not found acceptable. On perusal of the notings on the said paper, it is seen that the amount of cash paid and stamp duty are written specifically, which shows that these notings pertain to actual transactions and are not mere estimations as claimed. Further, the claim of the assessee that these transactions pertain to M/s Salasar Balaji Developers P. Ltd. is also not acceptable, as the cash and stamp duty amount noted on the said paper are different from those noted in the registered sale deed submitted by the assessee. Hence, the cash amount payment and stamp duty payment recorded in the impugned documents are not relatable to the copy of the sale deed furnished by the assessee. In view of these facts, it is clear that the assessee made an unaccounted payment of 21,20,80,572/- in cash for making undisclosed investment and also paid stamp duty of 26,04,030/- on the same. Thus, the amount of 21,26,84,602/- is held as unaccounted investment of the assessee for the AY 2017-18 and added to the total income of the assessee u/s 69 r.w.s. 115BBE of the IT Act, 1961. Accordingly, penalty proceedings u/s 271AAB(1)(c) are also initiated on this issue on account of detection of undisclosed investment during the course of search from the seized document by way of issue of notice u/s 274 r.w.s 271AAB(1)(c) of the Act, 1961.”

5. On the other hand, ld. AR reiterated the same arguments as were raised by the AO before ld. CIT(A). Ld. AR drawn our attention to para 4 DCIT vs. Shri Rajendra Kumar Kadia 4 of the order of the ld. CIT(A) wherein the written submissions filed by the assessee are reproduced and the same are also reproduced hereinbelow:-

“4. During the course of appellate proceedings written submissions were made, the main portion of which are reproduced below. Ground of Appeal No. 1 to 1.3: In all these grounds of appeal, assessee has challenged the action of ld. AO in making addition of Rs. 1,26,84,602/- u/s 69 of the Income Tax Act, 1961, solely on the basis of rough notings found noted on an undated loose paper found and seized during the course of search, bearing no signature. Brief facts pertaining to the grounds of appeal are that during the course of search, various loose papers were found and inventorised. Out of these papers Id. AO alleged that page 10 of Exhibit-4 of Annexure as contained certain notings of cash transaction of the assessee which according to Id. AO was investment by assessee in cash in acquisition of some property out of his undisclosed sources (APB-4). During the course of assessment proceedings, Id.A0 sought explanation on such paper. In reply, it was submitted before Id.A0 that the said paper contained the details of the registered documents of some land situated at Rajawas, Tehsil Amer which was purchased by a company M/s Salasar Balaji Developers Pvt. Ltd., a group company belonging to assessee and entire transaction was duly recorded in the books of accounts of the said company. Also, copy of registered sale deed was furnished before Id.A0(APB 5-14). Explanation so furnished by the assessee was accepted by Id.A0 and no adverse inference was drawn with respect to such noting which is evident from the assessment order itself.

DCIT vs. Shri Rajendra Kumar Kadia

Subsequently, a show cause notice dated 21.03.2018 was issued to assessee stating that "On page no. 10 of Exhibit 4 of Annexure AS seized from your residence, certain transactions were found recorded. On this page, Rs.1,20,80,572/- cash and Rs. 6,04,030/- are written. On perusal of these transactions, it is evident that Rs. 1,20,80,572/- is cash paid by you for purchase of land as well as for expenses on account of payment of stamp duty. Thus, please explain as to why the amount of Rs.1,26,84,602/- may not be considered as your additional income for the relevant assessment year." It is pertinent to note here that said noting as mentioned in show cause was not in the handwriting of assessee or his family members and is a rough noting. It was submitted before Id.A0 that assessee had never entered into any such transaction and rather noting on such page appeared to be some rough nothing in respect of some random enquiry made with respect to stamp duty charges in respect of some land which was never purchased by assessee, however explanation of assessee was not accepted by Id.A0 and addition was made of entire amount u/s 69 by alleging the same as unaccounted investment. It would not be out of place to mention here that such paper was undated and noting on the other side of such paper, i.e. on which registry number of land purchased by Salasar Balaji Developers Pvt. Ltd. was mentioned, was registered on 17.10.2012, i.e. in A.Y.2013-14. In this scenario, it is beyond imagination that on what basis, AO has treated the noting on the other side of the document as pertaining to A.Y. 2017-18 that too belonging to assessee. Further, neither any asset for which the details appearing on such paper was found in possession of assessee as a result of search nor any registered document containing such details was found during the course of search in the name of assessee nor any corroborative evidence whatsoever was brought on record during the assessment proceedings, thus adverse 6 DCIT vs. Shri Rajendra Kumar Kadia inference drawn in the case of assessee solely on the basis of a loose paper is an arbitrary Act and not in accordance with law. It is submitted that there is no speck of evidence or any material to indicate that the details was ever executed by assessee or in the name of assessee, and thus it cannot be held that assessee has even entered into any transaction where such amount is involved. In fact, during the course of search, no query was made with respect to such document. It is submitted that no effort was made by Id. AO to locate and bring on record the whereabouts of the land stated to have been purchased i.e. the plot No., area, location, map of the scheme, thus addition made by simply holding that assessee has made investment out of his undisclosed is not conclusive more particularly when the land is a commodity which can be identified and cannot be sold without the existence of a legally enforceable document called ownership / title deeds. Ld. AO has miserably failed to prove the ownership of the assessee of the land alleged as purchased by the assessee as a result of search or by makingindependent enquiries during the course of assessment proceedings and in arbitrary manner has made the addition by holding the same as unexplained investment. From such action of Id. AO, it appears that she was bent upon to make the addition for the amount noted at page 10 of Exhibit 4 of Annexure AS without even trying to cross verify the transactions from the external sources more particularly when assessee has successfully satisfied her with regard to the other notings on the said paper with proper and credible evidences. It is submitted that no effort was made by Ld. AO to corroborate her observations by bringing on record any material which could show that any sort of payment of Rs.1,26,84,602/- was ever made by the assessee. Thus, she has merely acted on the presumption to this effect only on the basis of the so-called noting which are nothing but rough scribbling noted by unknown person.

DCIT vs. Shri Rajendra Kumar Kadia

Reliance is also on the decision of Honible Rajasthan High Court in the case of DT Vs. R.Y. Durlabhji reported in 211-1TR-178 wherein at page 189, the Horn,le Court has observed as under: In Dhekeswari Cotton Mills Ltd. V. CIT (1954) 26 ITR 775 (SC), Omar Salay Mohamed Sait V. CIT (1959) 37 ITR 151 (SC) and Lalchand Bhagat Arnbica Ram V. CIT (1959) 37 ITR 288 (SC), it has clearly been held by the apex court that there must be something more than mere suspicion in support of an assessment and mere suspicion cannot take the place of proof for the purpose of passing an order of assessment. 25 Tax World 87 CIT V/s Rajendra Prasad Gupta (Raj. High Court) Held the assessment is to be framed in the light of material that has come in possession of the AO during the course of search which is the foundation of proceedings and the AO is not conferred with power to make estimation of income dehors the material in his possession. 72 ITD 342 D.A. Patel vs. DCIT (Mum) Section 158BC of the Income Tax Act, 1961 — Block assessment in search cases — Computation of undisclosed income — Block period 01.04.1986 to 15.07.1996 in search cases — Computation of undisclosed income — Whether simply because a sheet of paper was found during search at premises of assessee, he could not be saddled with tax liability when there was no evidence connecting appellant to seized paper — Held, Yes. Hon'ble Supreme Court in the case of CBI Vs. V.C. Shukia & Others ha's quoted certain judgements of the high courts which have bearing on the issue (page 1418 para 36 — 38) as under: "36. In Yesuvadiyan Vs. Subba Naicker, AIR 1919 Madras 132 one of the Ld. Judges constituting the Bench had this to say: "S. 34, Evidence Act, lays down that the entries in books of account, regularly kept in the course of business are relevant, but such a statement will not alone be sufficient to charge any person with liability. That merely means that the plaintiff cannot obtain a decree by merely proving the existence of 8 DCIT vs. Shri Rajendra Kumar Kadia certain entries in his books of account even though those books are shown to be kept in the regular course of business. He will have to show further by some independent evidence that the entries represent real and honest transactions and that the moneys were paid in accordance with those entries. The legislature however does not require any particular form or kind of evidence in addition to entries in books of account, and I take it that any relevant facts which can be treated as evidence within the meaning of the Evidence Act would be sufficient corroboration of the evidence furnished by entries in books of account if true." While concurring with the above observations the other Ld. Judge stated as under: "If no other evidence besides the accounts were given, however strongly those accounts may be supported by the probabilities, and however strong may be the evidence as to the honesty of those who kept them, such consideration could not alone with reference to S. 34, Evidence Act, be the basis of the decree." Thus, Hon'ble Apex Court in above judgment has observed that even if certain transactions are found to be recorded in books of accounts, same have to be corroborated with independent documentary evidence before any liability could be fastened upon assessee, whereas in the instant case, loose paper found is not in the handwriting of assessee and has no authenticity as the same is mere a rough noting without any date and any details mentioned on the same is nothing more than a dumb document having no legal validity and any addition based on this paper deserves to be deleted. In this regard further reliance is placed on the following judicial pronouncements: 35 TW 135 AC/7- Vs. Kalindee Rail Nirrnan Engg. Ltd. (17-AT; Jaipur Bench A') Further held that when a document does not speak anything or no interpretation relating to undisclosed income emerges out 9 DCIT vs. Shri Rajendra Kumar Kadia from the said documents, then such a document has to be treated as a dumb document. 21 Tax World 358 Ashwani Kumar Bhardwaj Vfs DDT (lpr) Whether additions can be made on the basis of working papers - Held No. if the paper do not indicate materialization of any financial transaction, they have to be read as it is. 67 7TJ 839 Jaadambo Rice Mills V/s ACIT (Chandigarh) Search and seizure - Block assessment - Computation of undisclosed income - Document seized during search not being clear as to whether items were payments or receipts or some other calculations, no addition could be made on the basis of such a dumb documents. In view of above submission, it is submitted that addition made by Id.A0 deserve to be deleted as: Noting on the page 10 of Exhibit 4 of Annexure AS was merely a rough noting; Such document was not in the handwriting of assessee; Such document was undated and noting did not bear any signature nor the name of parties; - No registered document whatsoever was found during the course of search, which was registered in the name of assessee at amount noted in such rough noting; No effort whatsoever was made by Id.A0 to bring such alleged registered document in the name of assessee on record, if assessee had actually invested anything out of unaccounted sources when the AO had vital powers u/s 133(6) to even call for information even from Sub Registrar office; and, No material was brought on record to prove from which sources assessee had made such alleged investment. In the circumstances, it is humbly prayed that the addition made by Id. AO solely as assumptions and presumptions may please be directed to be deleted.”

DCIT vs. Shri Rajendra Kumar Kadia

6. We have heard the counsel for both the parties and we have also gone through the material placed on record, orders passed by the Revenue authorities as well as the judgment cited by the respective parties. Before we decide the merits of these grounds raised by the Revenue it is necessary to evaluate the orders passed by the ld. CIT(A) while dealing with these grounds. The ld. CIT(A) has dealt with these grounds in para 5 to 5.1 of its order and the same is reproduced as under:-

“5. I have perused the written submissions submitted by the Ld. A/R and the order of AO. I have also gone through the copy of seized document (Annexure AS, exhibit 01 to 05) on the basis of which the Ld. AO has made addition. I have perused the case law cited by the Ld. A/R. 5.2 For the sake of ready reference the scanned portion of document on the basis of which the Ld. AO has made addition is as under:

DCIT vs. Shri Rajendra Kumar Kadia

For the sake of ready reference the front and back side of the page is annexed as annexure to this order. 5.3 The Ld. AO has added the figures 12080572 (cash) and 604030 (stamp) as unexplained investment in some property. The Ld. A/R on the other hand submitted that the transaction have absolute no relateability with the appellant or any investment done by the appellant. Before the scribbling or transaction are analyzed on this page it would be worthwhile to refer what constitute a seized document. Among many judgment available a comprehensive discussion on what constitute a dumb document is discussed in decision of Hon'ble ITAT Jabalpur decision in ACIT Vs. Satyapal Wassan. 5.4 The taxability of transaction from the document found and seized during the course of search is dealt in detail in ACIT Vs. Satyapal Wassan 295 ITR (AT) 352 the Hon'ble ITAT Jabalpur has discussed as under:

DCIT vs. Shri Rajendra Kumar Kadia

“Let us now examine how all these transactions are necessary for the purposes of levying tax on the basis of a seized document. Section 4 relates to charge of Income-tax. It reads as under: Section 4(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income- tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this act income- tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under Sub-section (1), income- tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act from a reading of above section, we find following components which enter into the concept of taxation. The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, this component has no value in determining total income on the basis of seized document. Our view in this regard is supported by the decision of Hon'ble Supreme Court in Govind Saran Ganga Saran v. CST wherein it was held that for the purpose of charging to tax, there should be four components to be satisfied. For the sake of convenience, we refer to the relevant head notes from that decision: The Hon'ble ITAT Jabalpur has gone to the extent of explain what constitute a dumb document. In the word of Hon'ble ITAT Jaipur same is as under: "A charge can be levied on the basis of document only when the document is a speaking one. The document should speak either 13 DCIT vs. Shri Rajendra Kumar Kadia out of itself or in the company of other material found on investigation and/or in the search. The document should be clear and unambiguous in respect of all the four components of the charge of tax. If it is not so, the document is only a dumb document. No charge can be levied on the basis of a dumb document. A document found during the course of a search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant assessment year. Any gap in the various components for the charge of tax must be filled up by the Assessing Officer through investigations and correlations with other material found either during the course of search or on investigations. The document was bereft of necessary details about the year of transaction, ownership, nature of transaction, necessary code for deciphering the figures. The Assessing Officer presumed that the transaction belonged to the financial year. 1988-89 relevant to the assessment year 1989-90, that the figures mentioned in the document were advances made by the assessee, that the transactions belonged to the assessee, and that the transactions were in a code of lakhs and that the unit was the rupee. The Assessing Officer did not carry out any enquiry either during the course of search or during the course of assessment proceedings to find out the nature of transactions and the period i?-which those transactions were carried out; he had simply presumed that the figures were advances without there being any material on recoi.--.7d-7=1175port such presumption. The Assessing Officer had drawn inferences, made presumptions, relied on surmises and thus made unsustainable additions." 5.5 Now on the document though seized from the premises of appellant there is no date or even narration like 'Rs.' before the scribbling so evident. There is no correlation with these scribbling with any transactions, disclosed or undisclosed, with other seized material or regular books. Nor there is any statement or inquiry to reinforce the taxability based on this document.” 14 DCIT vs. Shri Rajendra Kumar Kadia

2. 25 tax world 87 CIT vs. Rajendra Prasad Gupta ( Raj. High Court)

7. CBI vs. V.C. Shukla & Others( SC)

The Assessing Officer had drawn inferences, made presumption, relied on surmises and thus made unsustainable additions. Therefore in our DCIT vs. Shri Rajendra Kumar Kadia view the ld. CIT(A) had also after appreciating the facts had rightly concluded that these documents i.e. page 10 of exhibit- 4 of Annexure- AS has no relatibility with any assets in the name of the assessee therefore, the addition made by the AO cannot be based on scribbling on the impugned document thus, rightly considered the said document as ‘dumb document’. No new facts or circumstances have been brought before us in order controvert the findings recorded by the ld. CIT(A).

We have no reason to interfere into well reasons and judicious finding so recorded by the ld. CIT(A), therefore, we uphold the same is dismissed the grounds raised by the Revenue.

Order pronounced in the open court on 11/11/2020. Sd/- Sd/- ¼lanhi xkslkbZ½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Sandeep Gosain) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 11/11/2020. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Rajendra Kumar Kedia, Jaipur. 2. izR;FkhZ@ The Respondent- DCIT, Central Circle-3, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 19