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Income Tax Appellate Tribunal, ALLAHABAD BENCH ‘SMC’ ALLAHABAD
Before: SHRI.VIJAY PAL RAO
O R D E R PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order dated 25.09.2018 of ld. CIT(A)- Lucknow for the AY 2014-15. The assessee has raised the following grounds: “
1.That in any view of the matter the addition of Rs. 1,38,000/- as maintained by Commissioner of Income Tax (Appeal) as per para 11 of the order is totally incorrect and illegal in the facts and circumstances of the case as the facts were narrated in writing before the two lower authorities.
2. That in any view of the matter addition of Rs. 1,38,000/- as maintained is unwarranted because the point in issue is well covered as per ITAT's order dated 12/01/2018 in in the case of sister concern hence the addition maintained is unwarranted and therefore the same is liable to be deleted. f 3. That in any view of the matter the appellant reserves his right to take any fresh ground before hearing of the appeal.”
2. The assessee company is engaged in the business of real estate development. It has filed its return of income on 23.09.2014 declaring loss of Rs.6,796/-. There was a search and seizure action u/s. 132 of the Income Tax Act in the case of Hemant Kumar Sindi, Dniesh Kumar Pahuja group partners, Directors and proprietors of the group on 05.12.2013. The Assessing Officer noted that the assessee has shown NIL receipt during the year under consideration after incorporation on 26.08.2013 however, as per seized document Annexure A-1 seized during the search and seizure action it was noted that certain entries were recorded in respect of cash payment made for advances and for other expenses total amounting to Rs.1,38,000/-. Apart from this, the Assessing Officer has noted that cash loan of Rs.20,43,000/-, unsecured loan of Rs.3,43,18,000/- were not explained by the assessee. The Assessing Officer, accordingly, made the addition on account of cash payment of expenditure found recorded in the seized material as well as unexplained loan, which is treated as unexplained income u/s. 69A of the Act. The Assessing Officer has also made an addition of Rs.8,000/- being the discrepancy regarding unsecured loan found in seized document and recorded in the books of account. The assessee challenged the action of the Assessing Officer before the CIT(A) and contended that the Annexure A-1 is a rough noting not giving the correct details of the expenditure whereas the ledger account in the audited books of account give the details of payment made by the assessee and duly recorded in the books of account. The ld. CIT(A) was not impress with the explanation of the assessee and confirmed the addition made by the Assessing Officer.
3. Before the Tribunal, the ld. AR of the assessee has submitted that the ledger account of Tulsiani HK Infrahousing Pvt. Ltd. found during the course of search and seizure action is a rough document for three years w.e.f. 01.04.2011 to 31.03.2014 whereas the details of expenditure is recorded in the ledger account being part of the audited books of account. The ld. AR has pointed out that when the assessee has recorded the correct amount of expenditure in the books of account then the addition made by the Assessing Officer on the basis of single loose paper which is a rough and dumb document is not sustainable. There was no business activity during the year under consideration but expenditure was incurred. As a result, there was a loss declared in the return of income which was accepted by the Assessing Officer and it is based on the books of account. Annexure A-1, consist of number of loose papers containing 200 pages seized from the computer but the Assessing Officer has given weightage only to Page 7. The Assessing Officer has picked up only two entries dated 14.12.2013 and 19.12.2013 in respect of cash payment of Rs.30,000/- and Rs.108,000/- respectively, ignoring the total debit entries of Rs.3,36,38,000/-. The Assessing Officer has accepted the all other entries except these two entries. The ld. AR has thus pleaded that in any case only the differential amount can be added to the income after considering the expenditure recorded in the books of account. He has pointed out that the assessee has recorded the expenditure in the books of account of Rs.1,10,000/- under the same head and thus there is a difference of Rs.28,000/- only. In support of his contention, he has relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Kamlesh Kesa, SLP No. 4348/2009 dated 13.02.2009.
On the other hand, ld. DR has submitted that the seized material contains various entries in a ledger account and the assessee has not disputed the correctness of the other entries except these two entries. Therefore, the seized documents cannot be accepted in part but the entire document has to be either accepted as an evidence or to be rejected. Once all other entries are accepted as correct then these two entries cannot be treated as incorrect. The ld. DR has submitted that the entire seized document has to be accepted as a admissible evidence and consequently the entries of cash payment for advance as well as cash payment of other expenditure total amounting to Rs.1,38,000/- representing cash expenditure prove the unexplained expenditure. He has relied upon the orders of the authorities below.
Having considered the rival submissions as well as relevant material on record it is noted that in the seized material apart from several other entries, there are entries of cash payment for advance of Rs.30,000/- dated 14.10.2013 as well as cash payment for other expenditure of Rs.1,08,000/- dated 19.10.2013. Since these two entries are not recorded in the books of account therefore, the Assessing Officer has made an addition of Rs.1,38,000/-. The ld. CIT(A) has confirmed the addition made by the Assessing Officer by recording the finding that the transactions of seized document has to be taken as a whole and cannot be treated as partly true and partly false. There is no quarrel on this point that a document cannot be held as admissible evidence in part and inadmissible evidence rest of the document. A document either has to be treated as an admissible evidence in whole or to be rejected as a whole. Thus, to that extent, I do not find any error or illegality in the finding of ld. CIT(A). However, the expenditure recorded in the seized material on account of cash payment under the head advance as well as payment for other expenditure can be treated as unexplained expenditure only after considering the corresponding entries in the books of account under the same head. The assessee has shown the payment of Rs.1,10,000/- in the books of account under the similar head and therefore, only the differential amount between the expenditure recorded in the seized material and the expenditure recorded in the books of account can be considered as unexplained expenditure. Accordingly, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is restricted only to the extent of Rs.28,000/- which is the differential amount of expenditure recorded in the seized material and in the books of account.
In the result, appeal filed by the assessee is partly allowed. (Order pronounced on 20/01/2021 at Allahabad in the open Court through Video Conferencing)