DEPUTY COMMISSIONER OF INCOME TAX 1 (1), BHOPAL vs. SHRI NEERAJ MANDLOI, NEW DELHI

24.05.2018 which is arising out of the order u/s 143(3) r.w.s. 147 of the Income Tax Act 1961(In short the ‘Act’) dated 31.12.2016 framed by ACIT-1(1), Bhopal.

Assessment Year 2009-10 “On the facts and in the circumstances of the case of the case, the CIT(Appeal) has erred in:

1.“Whether on the facts and in the circumstances of the case the ld. CIT(A) 2 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 has erred in deleting the addition of Rs. 2.21 Crores by holding that in the absence of any cogent, incriminating or positive corroborative material, the loose papers found and seized from the premises of Shri Mukesh Sharma have no evidentiary value, when one of the awardee’s of contract, Nagarjuna Construction Ltd, admitted to explained expenditure of Rs.9.68 crores in Indore Project, which tantamount to siphoning the cash from books of accounts, and therefore, establishes the nexus between the documents seized (coded documents) from the premises of Shri Mukesh

Sharma, the liaison agent and the need for siphoning money from the Indore sewerage project?

2.The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal..

C.O.No.04/Ind/2020 Assessment Year 2009-10

1.That the Ld CIT (A) erred both in law and on facts in upholding the validity of reassessment proceedings u/s 147. 2.That the Ld CIT (A) failed to appreciate that reassessment was initiated pursuant to search and seizure operation carried out at the premises of third parties wherein certain documents were found which allegedly belonged to the present appellant and thus under such facts reassessment could have be done only u/s 153C and not u/s 147 and thus the impugned assessment order was liable to be quashed as being without Shri Neeraj Mandloi & C.O.No.04/Ind/2020 jurisdiction. 3.That the Ld CIT(A) failed to appreciate that section 153 C overrides section 147/148 and thus proceedings which are initiated pursuant to document seized under search & seizure operations in third persons premises can only be under section 153C and not under section 147/148.

Nagarjuna Construction Co. Ltd., Hyderabad and M/s. Simplex Infrastructure P. Ltd., Kolkata while holding the post of Commissioner, Nagar Nigam, Indore and therefore, he acted as mediator agent in providing commission to the concerned authorities for awarding the contracts. The following documents (scanned) were seized from the residence of Shri Mukesh Sharma: - Shri Neeraj Mandloi & C.O.No.04/Ind/2020 Shri Neeraj Mandloi ITA No.680/Ind/2020 & C.O.No.04/Ind/2020 Analysing the above seized documents, the Assessing Officer noted that letters “M”, “P”, “C” and “M” written denote the vertical chain of Govt. hierarchy involved in the ‘sewerage deal’. The Assessing Shri Neeraj Mandloi ITA No.680/Ind/2020 & C.O.No.04/Ind/2020 Officer noted that “M”, “P”, “C” and “M” denote Minister of Department of Urban Development, Principal Secretary of Department Urban Development, Commissioner of Department of Urban Development and Mayor, Indore Nagar Nigam and the last “C” denotes the Commissioner, Indore Nagar Nigam. Thus, the Assessing Officer noted that all these persons played a vital role in awarding of sewerage contracts. The Assessing Officer was of the view that the last person in respect of whom “267 ---- ½ % 1.33.50” is mentioned is the Commissioner, Indore Nagar Nigam as though “C” was not written explicitly, it was clear that the missing person was the Commissioner, Indore Nagar Nigam, under whose signature, work orders were issued and who played key role in awarding contracts. Thus, the Assessing Officer noted that apart from other persons, the assessee is presumed to have received 0.5% of the total contract amount. The Assessing Officer further noted that during search operation on 06.10.2010 in the case of M/s.

Nagarjuna Construction Co. Ltd., Mr. AGVK Raju offered Rs.9,68,16,275/- as income on account of unexplained expenditure to contractors, involved in sewerage project in Indore which tantamount to admission of payment of commission in the award of 8 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 contracts. Thus, the Assessing Officer issued a show cause notice to the assessee on 19.12.2016 and the assessee contended that the papers and notings referred by the Assessing Officer did not have evidentiary value and the allegation is based on assumptions, presumptions, conjectures and surmises. However, the Assessing Officer did not agree with the submission of the assessee and held that the assessee had received Rs.1.335 crore and Rs.0.875 crore on account of illegal gratificatioin @0.5% of the contract amount awarded to the aforesaid parties. Thus, the Assessing Officer added Rs.2,21,00,000/- to the total income of the assessee as undisclosed income. Felt aggrieved, the assessee filed an appeal before the ld. CIT(A) who having gone through the facts/circumstances, material and submissions thereof deleted the addition. The Operative part/findings recorded by the ld. CIT(A) are reproduced hereunder:

“8. I have carefully considered the facts of the case, assessment order, remand report and the submissions made by the appellant. The appeal is decided in the succeeding paragraphs.

14. ShriNarottam Mishra filed appeal against the aforesaid assessment. The Ld CIT (A) decided the appeal of ShNarottam Mishra vide his order dated 12.12.2012 in Appeal No. 215/11-12. A copy of the appeal order has been filed. It is seen that the Ld CIT (A) allowed the appeal and deleted both the additions holding that both these additions were not sustainable in law as the same were made only on the basis of inferences and suspicion and without substantiating any direct nexus with the appellant.

20. Similar view has been taken by the Apex Court in a decision in the case of Common Cause v. Union of India, 30 ITJ 197 (SC). Relevant paragraphs of the Court's decision are reproduced below:

Shri Neeraj Mandloi & C.O.No.04/Ind/2020 Para 14 of the order "Placinq implicit reliance of the decision of this Court in C.B.I. versus V. C. Shukla (supra), it was submitted that it is open to any unscrupulous person to make any entry any time against anybody's name unilaterally on any sheet of paper or computer excel sheet. There being no further corroborative material with respect to the payment, no case IS made out so as to direct an investigation, and that too against large number of persons named in the documents. Such entries have been held to be prima facie not even admissible in V. C. Shukla's case. He urged that in case investigation is ordered on the basis of such documents, it would be very dangerous and no constitutional functionary/ officer can function independently, as per the constitutional imperatives. No case is made out on the basis of material which is not cognizable in law, to direct investigation." Para 16 of the order (( With respect to the kind of materials which have been placed on record, this Court in v.c. Shukla's case (supra) has dealt with the matter though at the stage of discharge when investigation had been completed but same is relevant for the purpose of decision of this case also. This Court has considered the entries in Jain Hawala diaries, note books and file containing loose sheets of papers not in the form of "Books of Accounts" and has held that such entries in loose papers/ sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible" Para 19 &20 of the order (( 19. With respect to evidentiary value of regular account book, this Court has laid down in V. C. Shukla, thus; ((37. In Beniv. BisariDayalit was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to 14 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In HiraLal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. "

25. The ITAT, Delhi in the case of S.K. Gupta v DCIT reported in 63 TTJ 532 (Del) has held as under :- « The basis of addition in this case IS a seized paper 17 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 relating to purchase/sale of property. The document bears the caption "Estimates". There seems some truth in the explanation of the assessee where it is alleged that the entries relate to some futuristic planning. Since the assessee is carrying on the business of estate agent, in the process of this business, he is required to discuss vanous plans, projects and proposals with vanous parties like brokers, builders, etc. These discussions generally take place before a project for purchase of development, plans are discussed as the assessee acts as an agent on behalf of the buyer or seller. Therefore, notings on the piece of paper do not indicate the actual transaction. The paper in question does not indicate that any transaction had ever taken place because it does not contain any information as to what was the nature of transaction. If at all, any such transaction took place for the parties to the transaction, what was the date of the transaction, what did the figure noted on the piece of paper represent, and whether in any manner the paper in question has any relevancy to the determination of the income in the hands of the assessee. No evidence has been brought on record to corroborate the allegation that the assessee had entered into any transaction or had earned any income. There was no evidence to show that there was any undisclosed investment or any sale of any property for the amount as given in this piece of paper. The assessee has alleged that the properties in question were not sold during that period. These properties were sold after the date of the search. This fact has not been controverted by any material or evidence on record. Therefore, there was no question of any income arising from sale of these properties at the time of search. There is no material that the sale of this property took place earlier and the assessee had earned any income. It is alleged by the assessee that the acquisition of the said property as well as sale thereof was duly disclosed in the return of income of the company owner and the assessment of the said company had been duly completed without any dispute. Particulars of acquisition and further investment in the property in question are placed on the paper-book and particulars of sale which took place after search are also placed. No material has been brought on record by the Department to come to the conclusion that the property belonged to the assessee and the figure mentioned in the seized paper could be treated as the income of the assessee. Similarly, it is alleged by the assessee that other 18 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 property belongs to the company A Ltd., which is also an independent entity and its assessment is completed under s. 143(3) and under s. 158BC and no additions were made there. The Department could not controvert this allegation by any material on record. Some jottings were found on the piece of paper, from which it could not be presumed that any purchase or sale has taken place with regard to these properties. The AD has not raised any dispute regarding the facts about the properties standing in the names of R. Ltd. and A. Ltd. Therefore, no corroborating evidence is brought on record to corroborate the conclusion that the assessee has entered into any transaction or had earned any income. The AO himself has mentioned that the paper in question is a bald estimate. Therefore, unless there is a corroborating evidence to show that the purchase and sale of these properties has taken place and the assessee has earned income, no amount can be added in the hands of the assessee. The Department had not brought on record any evidence conclusively that the seized documents contained details of sale of properties and profit earned, which was chargeable to tax. On the other hand, the assessee has now brought on record that no such sale of these properties had taken place prior to the date of search. No doubt the seized papers contained statement, the figures of which appeared to be certain unnamed transaction but there was nothing either in law or in logic to warrant the conclusion that the figures noted therein pertain to sale of properties and secret profits. Thus, going merely on the basis of the seized paper and nothing more, it could not be predicated that what was shown in the paper was secreted profits and sale proceeds. In other words, the details contained in the seized papers did not by themselves represent a preponderance of probabilities so as to support the Department's case that what was shown was taxable income. As the AO had not given any reasoning or finding or had not mentioned any evidence or material as to how and on what basis the figures were considered as income. Contrary to that as there was no sale of the properties, it was clear that he had not invoked any deeming provisions. The Revenue can tax only those receipts which must have been proved to be income in the hands of the recipient. Therefore, it is the Revenue's onus to prove, if the assessee had received any income. Therefore, it is the Revenue's onus before assessing any receipt as taxable income to prove that the receipt in the hands of the 19 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 recipient is income and this can be proved or established only on the basis of some material or evidence.

26. In J.R.c. Bhandari vs. ACIT ,79 TTJ 0001, the ITAT Jodhpur has held as under: "It may hardly be deniable that the Indian Evidence Act or for that matter the statutory provisions of the Indian Evidence Act may not be applicable strictly to the proceedings under the IT Act but the basic/ broad principles of the law of evidence do apply to the said proceedings. It is a settled position of law that the slips or loose sheets do not fall within the purview of 'book'. An entry in a book of accounts, maintained in the regular course of business, is relevant to be considered in respect of the transactions reflected thereby, no doubt, but is not conclusively decisive thereof or of the matter contained therein or liability reflected thereby, and much less so an entry in a loose sheet. It is only some other evidence, whether in the form of statement of the author of the entry or the statement of some other person connected with the transactions contained in the entry, or in some other form, supportive of the entry, which lends weight/ credence to the entry in the book, depending upon the trustworthiness of the said deponent or reliability of the said other evidence, and it is only then that the said entry assumes the nature of a reliable evidence on the basis of which some addition can be made/ sustained. An entry in a loose sheet is of a still feeble nature, and an entry in a loose sheet found in the possession of another/third person is much more so. As such a mere entry in a loose sheet, by itself, without the swam statement of the related person, supportive of the entry, hardly has any evidentiary value, worth the name. The legal position being as emerging above, no liability can be fastened nor can an addition be made on the basis of a mere entry in a loose sheet without there being some further trustworthy/ reliable corroborative evidence lending credence to such an entry. "

Shri Neeraj Mandloi & C.O.No.04/Ind/2020 33. In the case of CIT v. MaulikkumarK Shah 307 ITR 137 (Guj) , Hon'ble Gujarat High Court has held that additions made by the AO towards "on money" on the basis of seized paper alone without any corroborative evidence cannot be sustained.

Shri Neeraj Mandloi & C.O.No.04/Ind/2020 (C ••••• it is also settled law that any document found and seized during the course of search has to be interpreted literally and nothing can be added or subtracted. If facts of the assessee's case are evaluated in the light of the aforesaid settled principles of law, it will be revealed that the documents found and seized and relied upon for making the addition under appeal by the Revenue have neither date nor the name of the assessee and therefore, it cannot be assumed or presumed as to when and by whom the notings were recorded. It is also not known as to in what connection the notings even if considered as giving and taking-of money were made; meaning thereby that these documents being dumb documents, no addition can be made on the basis of assuming or presuming the notings in those documents relating to any other transaction nor recorded in the documents. "

challenging the procedural aspects including reopening of assessment u/s 147 of the Act.

47. In the result, the appeal is allowed.”

5. Ld. CIT-DR relied upon the order of the Assessing Officer and submitted that the Assessing Officer has, on the basis of analysing the documents seized from the residence of Shri Mukesh Sharma, rightly formed the view that the assessee has illegally been paid gratification at Rs.2,21,00,000/- by the aforesaid two companies.

Therefore, the order of the ld. CIT(A) is unjust and improper which needs to be reversed. On the other hand, ld. Counsel for the assessee relied upon the order the ld. CIT(A) and submitted that the assessee never received any payments from the said two companies 26 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 as the documents seized do not show in any manner that the assessee has been paid by these two companies. The Assessing Officer made the addition simply on the basis of presumption.

Further, ld. Counsel for the assessee also relied upon certain judicial pronouncement as detailed in the paper books filed before us and submitted that view drawn in these judicial pronouncements supports the order of the ld. CIT(A). Hence, the order of the ld. CIT(A) is justified.

6.1 We find that in the case of Ashwin Kumar vs. ITO (1991) 39 ITD 183 (Del), the Tribunal held that “when a dumb document, like the present slip, is recovered and the revenue wants to make use of it, it is the duty of the revenue to collect necessary evidences which may provide acceptable narration to the various entries. The evidences collected should be such that any reasonable man would accept the hypothised advanced by the revenue, that the figure written on the right side of the slip represent incomes earned by the assessee. It was conceded by the Departmental Representative that no such evidence have brought out on record.

6.2 Hon’ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd V/s CIT 1954 261 ITR 775 held that “in making assessment u/s 23(3) of the Indian Income Tax Act, the ITO is not fractured by technical rules of evidence and fluctuations and he is entitled to act on material which may not accept an evidence in the 28 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 court of law, but the it is not entitled to make and power comes and making assessment without reference to any evidence or any material delivered. There must be something more than more where suspicion to support the assessment u/s 23(3)”. The rule of law on this subject has been fully and rightly stated by Hon’ble High Court in the case of Sree Shanmugar Mills Ltd v/s Commissioner of Income Tax, Punjab 1944 12 ITR 393. Similar view was also taken by Delhi Tribunal in the case of Bansal Strips V/s ACIT (supra) observing that “the A.O cannot first make certain conjectures and surmises and thereafter deemed provisions based on such conjectures and surmises”. In the absence of material as to the nature of ownership of the transaction, undisclosed income cannot be assessed in the hands of the assessee summarily by arithmetically total various figures dotting down on the loose document. Any other seized for the purpose of exercising to deemed provisions dumb documents order documents with no certainty for no evidential value”.

6.3 Hon’ble High Court of Delhi in the case of CIT V/s Anil Bhalla (2010) 322 ITR 191 (Del) also held that “when no independent Shri Neeraj Mandloi & C.O.No.04/Ind/2020 material or evidence has been brought on record by the A.O to establish that the notices of jottings of loose sheets or on the paper written on accounted transactions cannot be made”. Hon’ble High Court of Gujarat in the case of CITV/s Maulikumar K Shah 2008 307 ITR 137 has held that “the additions made by the A.O on the basis of seized paper alone without any corroborative evidence could not be sustained”.

6.4 Further, we find that the same issue has been dealt with by ITAT, Indore in the case of ACIT vs. Narottam Mishra (2018) 32 ITJ 510 (Trib. – Indore) wherein on the identical facts and circumstances, the Tribunal deleted the addition made on account of money allegedly received from two companies. The relevant portion of the order dated 30.11.2017 of the Tribunal is reproduced hereunder:

27. When we analyzed the basis taken by the Assessing Officer for making second addition on account of proceeds and cash found in the lockers and possession of Shri Usman Khan, which were alleged proceeds from SIL then we found that the basis of this addition is primary evidence no.1 to 5 and corroborative evidence no.7. As we have noted above primary evidence no.1 which are documents relating to request for transfers and postings of officers and request for fund allocations in the Urban Development Department, documents relating to incurring of expenditure for travel and officials, documents relating to illegal gratifications paid to officers of Urban Development Department and documents relating to tenders/contracts of various Nagar Nigams, Nagar Palikas. Primary evidence nos.2 to 8 are loose papers collected from the residence of Mukesh Sharma during search and seizure operation u/s 132 of the Act at his office and residence. So far as corroborative evidence no.7 is concerned, it is warrant of authorization 31 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 against Shri Usman Khan under search operation Rs.73,41,000 was found and seized from locker no.268 at Axix Bank, Rs.21 lacs from locker no.151 at Bank of Rajasthan and Rs.20 lacs found and seized from locker no.137 at Bank of Rajasthan, Urja Bhavan, Bhopal. The Assessing Officer also noted in the post search inquiry that Shri Usman Khan had jointly purchased house at Arera Colony, Bhopal with mother-in-law of the assessee Smt. Rati Devi Gurbele and on this purchase of house account, the Assessing Officer made addition of Rs.20 lacs which resulted into total addition of Rs.1,53,41,000/-.

29. The CIT(A) observed that the papers which were taken basis for making addition in the hands of assessee were found during the search and seizure operation in the premises of Shri Mukesh Sharma and they were not in the handwriting of appellant. It was also correctly observed that though the persons in whose names the investment were made were belonging to the Dabra, the election constituency of the assessee – appellant but they were neither relatives nor employees nor connected in manner with the assessee and on this basis it was concluded by the first appellate authority that in absence of any direct supportive evidence the inference drawn by the Assessing Officer that those persons hail from Dabra and therefore they are benamidars of the appellant is a bais conclusion against the appellant. We are in agreement with the conclusion of the CIT(A) that to hold the persons as benamidar of the other person it needs to be established that the another person who is not infront of transaction is the ultimate beneficiary and enjoying the fruits of the transaction/venture and this fundamental requirement is missing in this case as there is no sufficient reliable evidence or material against the assessee which could show and establish that the persons in who’s name investment have been made are benamidars and the assessee and none else is the ultimate beneficiary enjoying the fruits of the investment. In absence of bringing out any such facts on record the Assessing Officer proceeded to draw inference against the assessee and thus we have no hesitation to hold that the CIT (A) was correct in dismissing the same.

Shri Neeraj Mandloi & C.O.No.04/Ind/2020 30. The Ld. Senior Counsel has placed reliance on the decision of Hon’ble High Court of Delhi in the case of CIT Vs Gian Gupta (Supra) where in it was held that when no evidence has been brought on record by the Assessing Officer that there is any investment and there is any transfer of cash than there is no any question of investment when the land has not been transferred and registered in the name of alleged assessee. In this case their Lordship held that the CIT (A) and the Tribunal have rightly deleted the addition on examination of the fact. In the present case also the presumption drawn by the Assessing Officer against the assessee was based merely on surmises and conjectures without having any reliable evidence on record to show that investment has been made by the assessee in the name of benamidars and without establishing the movement and transfer of cash from the assessee or on his behalf by any other person. Therefore ratio of this decision supports the conclusion of CIT(A).

31. The Ld. Senior Counsel has also placed reliance on the decision of I.T.A.T., Hyderabad in the case of DCIT Vs M. Aja Babu in ITA 1755,1756 & 1757/HYD/2012, dated 23/04/2014 wherein the Tribunal referring to the decisions of Hon’ble High Court of Delhi in the case of CIT vs Anil Bhalla (supra), CIT Vs Dinesh Jain (HUF) 211 Taxman 23 (Del) and CIT vs Jaipal Aggarwal 212 Taxman 1 (Del), ITAT Mumbai in the case of ACIT vs. JP Morgan India Pvt. Ltd. 46 SOT 250 (Mumbai). It has been held that the addition made by the Assessing Officer based on loose papers which is not a conclusive evidence therefore such evidence is not sufficient for making addition. In this case the observations of the Tribunal read as follows: - “we have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. In this case, the addition was made by the Assessing Officer based on the loose paper and the same, in our view, cannot be considered as conclusive evidence. As held by the CIT(A) in the impugned order “except relying, the nothings in the loose slips, no attempt has been made to corroborate the notings with independent evidence. The parties to the ‘transaction particularly the vendor has not examined. In every transaction there is a circle concerning two parties. It is not known whether the vendor has disclosed the consideration as noted in the diary. Therefore, merely on the basis of presumption and some corroborated notings additions cannot be made.” In our opinion, the deletion of addition by the CIT(A) is justified and no interference is called for in the order of the CIT(A). The following cases support the action of the CIT(A):

1.

2. ACIT Vs J. P. Morgan India (P) Ltd [2011 46 SOT 250 (Mum) 3. CIT Vs Dinesh Jain HUF [2012] 211 Taxman 23 (Delhi) 33 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 4. CIT Vs Jaipal Aggarwal [2013] 212 Taxman 1 (Delhi) – wherein it was held that Dumb documents seized, i.e. from which nothing could be clearly understood, cannot form a justified base for making additions to income of the assessee. 17.1 In view of the above discussion, we are of the view that the addition made by the Assessing Officer based on the loose paper, which is not a conclusive evidence and, therefore, the same is not sufficient to make the addition. In our opinion, no addition can be made on the basis of dumb documents/note book/loose slips in the absence of any other material to show that the assessee has made investments in land. Noting on the note book/diary/loose sheets are required to be supported/corroborated by other evidence and should also include the statement of a person who admittedly is a party to the noting and statement from all the persons whose names there on the note book/loose slips and their statements to be recorded and then such statement undoubtedly should be confronted to the assessee and he has to be allowed to cross examine the parties. The vendor has not examined in this case. Therefore, we do not find any infirmity in the order of the CIT(A) in directing the Assessing Officer to delete the addition made on the basis of loose paper and the order of the CIT(A) is hereby upheld dismissing the grounds raised by the revenue onthis issue.”

32. In the present case vendor/sellers has not been examined and there is not evidence, documents, admission or averment by the alleged persons that they were instrumental or used by the assessee for making investments in purchase of lands. Per contra, these persons have denied such transactions on affidavit and in their statements recorded by the lower authorities. At this juncture it is also relevant to take note of the ratio of the decision of Hon’ble Jurisdictional High Court of Madhya Pradesh in the case of Prakashchand Nahata Vs CIT, 301 ITR 134 MP. In the case of ACIT Vs Satyapal Wassan 295 ITR 352 (Jabalpur I.T.A.T.) as relied by the Ld. Senior Counsel where in it was held by the Coordinate Bench that the addition is not sustainable where paper not containing any details to indicate nature of transaction, period of transaction, persons involved or code for deciphering figures and assessee denying knowledge and filing affidavit to indicate transactions related to somebody else. It has been further held that document must be speaking document; no addition permissible on basis of dumb document which is also a situation in the present case where the Assessing Officer has relied on the loose sheets/papers without any other corroborative evidence or material against the assessee.

34. In the case of CIT Vs Girish Choudhary the Hon’ble Delhi High Court held that when there was no material on record to show on what basis the Assessing Officer had reached to the conclusion that the figure ‘48’ was to be read as Rs. 48 Lakh, then the document recovered during the course of search was a dumb document and led nowhere. The relevant observations and conclusion of their Lordship read as under: - “Hence, in the present case there is no material on record to show as to on what basis the Assessing Officer has reached at the conclusion that the figure “48” is to be read as Rs. 48 Lakhs. The apex court in Central Bureau of Investigation Vs. V. C. Shukla (1998) 3 SSC 410 has laid down that: - “File containing loose sheets of papers are not book and hence entries therein are not admissible under section 34 of the Evidence Act, 1872.” Similarly, the document annexure A-37 recovered during the course of search in the present case is a dumb document and lead us nowhere. Thus, the Tribunal rightly deleted the addition of Rs. 48 lakhs made by the Assessing Officer on account of undisclosed income on the basis of seized material.

35. The Ld. Senior Counsel has also placed reliance on the recent decision of Hon’ble Supreme Court in the case of Common Cause Vs Union of India (Supra). In the present case also the Assessing Officer without any basis proceeded to provide meaning to the word “M” and “Netaji” as these words denotes to the assessee but there is no basis for making such inference against the assessee as neither the Assessing Officer nor the Ld. CIT, DR controverter this fact that the assessee is popular within his private and political circle as “DADA” which means elder brother therefore meaning given by the Assessing Officer to above words for making inference against the assessee and for establishing direct or indirect nexus with the loose papers is baseless and without any supportive evidence which cannot be taken as reliable basis for drawing inference against the assessee. Furthermore, loose papers which were found and seized from the premises of other persons i.e. Shri Mukesh Sharma and written by Shri Sharma only then on the basis of such loose papers no valid inference can be taken or drawn against the assessee for making addition and fastening tax liability on the assessee. This conclusion gets strong support from the ratio of the above noted decisions. 36. In view of forgoing discussion we are of the view that in the present case the Assessing Officer proceeded to make addition on the basis of primary and other evidence which was in the form of loose papers found and seized from the premises of Shri Mukesh Sharma and was written by Shri Sharma and there was no evidence or material which could show any direct or indirect nexus with these lose papers with the assessee. The Assessing Officer could not also bring any reliable or substantial evidence against the assessee to established that the persons in whose name land was purchased were benamidars and the assessee was the ultimate beneficiary enjoying the fruits of the purchased lands then the CIT (A) was right in dismissing the action of the Assessing Officer in this regard and we are unable to see 35 Shri Neeraj Mandloi & C.O.No.04/Ind/2020 any valid reason to interfere with the same. We may also point out that the Assessing Officer could not successfully establish that the amount used for making investment by other persons was actually belonging to the assessee and besides the payment shown in the registered purchase deeds there was also un recorded payments which was made by the assessee or on behalf of the assessee therefore no addition could have been made in the hands of assessee on the basis of loose sheets and the CIT(A) was right in allowing relief to the assessee. There is no valid reason before us to interfere with the impugned order on the conclusion drawn by the CIT (A) on the first issue. 6.5 In view of the facts/circumstances as narrated above and also in the light of the aforesaid judicial pronouncements, we are of the view that in the present case, the Assessing Officer proceeded to make addition on the basis of primary and other evidence which was in the form of loose papers found and seized from the premises of Shri Mukesh Sharma and was written by Shri Sharma and there was no evidence or material which could show any direct or indirect nexus with these lose papers with the assessee. It is also clear from the perusal of the seized documents that the “C” alphabet is not there in the seized documents but the Assessing Officer simply presumed that the missing “C” is nothing but its Commissioner, Indore Nagar Nigam (Assessee) and also presumed that the assessee received the money. Therefore, without bringing any corroborative evidence on record, the findings of the Assessing Officer solely based on assumptions and presumptions are not legally admissible Shri Neeraj Mandloi ITA No.680/Ind/2020 & C.O.No.04/Ind/2020 in law in view of the ratio laid down in the aforesaid judicial pronouncements. The Assessing Officer is bound to prove the allegation with the positive and concrete evidence but in this case, there is no positive and concrete evidence with the Assessing Officer to prove the receipt of money from the said two companies by the assessee. Thus, the ld. CIT(A) was right in dismissing the action of the Assessing Officer in this regard and we do not find any reason to interfere with the same. We confirm the findings recorded by the ld. CIT(A).

Shri Neeraj Mandloi & C.O.No.04/Ind/2020 8. In result, appeal filed by Revenue and Cross-objection filed by the assessee are dismissed.

This order has been pronounced as per Rule 34 of ITAT Rules, 1963 on 28.07.2021.