ACIT, NEW DELHI vs. MANDEEP SINGH ANAND, DELHI

Since both cross-appeals filed by the assessee and the Revenue have common issues therefore, both the cross-appeals are decided by a common order for the sake of convenience.

Brief facts of the case are that the assessee is an individual and a search action u/s 132 was carried out on ETPPL Group. The residence of the assessee was also covered under the search and in terms of the order passed u/s 127 dated 31.08.2018, the case was centralized with ACIT, Central, Circle-4, Delhi. The assessee filed his return of income on 27.08.2018, declaring total income at INR 15,98,320/-. Based on the documents found and seized as a result of search from the possession of assessee, the AO has made various additions and accordingly, total income of the assessee by making total additions at INR 1,68,16,869/-.

Against the said order, the assessee filed an appeal before the Ld. CIT(A) who vide impugned order dated 24.03.2025, has partly allowed the appeal of the assessee.

Aggrieved by the order of Ld. CIT(A), both the assessee and Revenue are in appeal before the Tribunal by raising various Grounds of appeal mentioned in the appeal memo.

Heard the contentions of both the parties at length and perused the material available on record. The AO has made the addition on the basis of the loose papers titled as “Annexure A-1” found from the possession of the assessee containing certain scribbling which the AO has held as unexplained investment made by the assessee in the Committee jointly managed and controlled with Shri Sahil & Shri Vicky. It was the claim of assessee that said sheets are nothing but dumb documents as they contained certain scribbling having no value. As per the assessee, these scribblings were noted at the time of settling the disputes between Shri Sahil and Shri Vicky where the assessee had acted as mediator. On the other hand, Revenue’s contention is that it is the contribution made by the assessee in the Committee out of the unexplained source of the assessee which was managed and controlled of all the three individuals including the assessee. Ld.CIT(A) while deleting the additions, has held that these documents are dumb documents by placing reliance on the judgment of Hon’ble Delhi High Court in the case of CIT, Central-II, Delhi vs. D. K. Gupta reported in [2018] 174 taxmann.com 476 (Del. HC) and of the Co-ordinate Delhi Bench of the Tribunal in the case of Ashwani Kumar vs ITO reported in [1991] 39 ITD 183. The

Before us, the Revenue has failed to controvert the findings of Ld. CIT(A) who has examined the documents found and seized and made the basis for making the addition in the hands of the assessee. The ld. CIT(A) concluded that since no corroborative material was brought on record to hold that these entries are related to some transaction carried out by the assessee nor any independent inquiry was made by the AO from other two persons namely Shri Sahil & Shri Vicky to bring out true nature of entries noted in the said paper document, no addition could be made. It is further observed that in the said paper only some figure with some narration was stated however, the same does not reflect any transaction of investment nor of nay expenditure nor of any income thus could at best be hold as the dumb document.

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 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 no any addition based on this paper could be made.

The Co-ordinate Jabalpur bench of ITAT on taxability of transaction from the document found and seized during the course of search in the case of ACIT Vs. Satyapal Wassan reported in 295 ITR (AT) 352 has made following observations: “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: Page | 7

We are also of the view that this document does not contain any details about the year and nature of transaction and even did not carry any signatures. The AO had merely presumed that the assessee made undisclosed investment in cash. The AO has not carried out any inquiry during the course of assessment proceedings to find out the nature of transactions and the period in which these transactions were carried out. No summons were issued to the other two persons whose names were stated by the assessee to find out whether any real transaction was carried out and he had simply presumed that the figures were unaccounted investment made by the assessee for the year under consideration, without there being any material on record to support such presumption. Therefore, we are of the considered view that the entries contained in the said paper are merely rough scribbling. Such document was undated and noting did not bear any signature and the name appearing therein are not of assessee. The Assessing Officer had drawn inferences, made presumption, relied on surmises and thus made unsustainable additions. Therefore, in our view the ld. CIT(A) had also after appreciating the facts had rightly concluded that the said document has no relatability with any investment in the name of assessee Page | 9

Ground of appeal No.2 of the Revenue and Ground of appeal Nos. 1 to 8 raised by the assessee are with respect to the confirmation of addition of INR 30,77,600/- as against addition of INR 65,61,000/- made by the AO based on the documents titled as “Annexure A-3” found during the course of search and placed at pages 74 & 75 of the Paper Book.

Heard the contentions of both the parties at length and perused the material available on record. It was the claim of the assessee that these documents relate to the transactions carried out by him on behalf of the companies engaged in the business of ticketing of which the assessee is one of the Director. However, no evidence whatsoever was produced before the AO nor before Ld.CIT(A) to support the contentions raised. Even before us, no document / evidence was filed. It is further observed that before Ld.CIT(A), assessee has made alternate claim of peak credit addition since there were receipts and payments on regular basis from one Shri Karan of which the assessee Page | 10

As observed above, the assessee himself alternatively contended that peak credit could at the most be added and further failed to point out any error in the working done by Ld. CIT(A) in para 16.7 at page 17 to 20 of the order. Therefore, we find no error in the order of Ld. CIT(A) which is hereby uphold. Accordingly, Grounds of appeal Nos. 2 to 2.3 raised by the Revenue and Grounds of appeal Nos. 1 to 8 raised by the assessee are dismissed.

Ground of appeal No.3 raised by the Revenue is with respect to the deletion of addition of INR 16,38,000/- made on account of cash found during the course of search.

Heard the contentions of both the parties at length and perused the material available on record. It is observed that though Ld.CIT(A) has not accepted the contention of assessee on account of source of cash as out of the past savings however, it is accepted the alternate argument of the assessee that the benefit of telescoping and set off should be allowed out of the income determined on the basis of seized documents. While confirming the peak credit balance, it is observed the said peak credit balance was of 10.07.2017 and search was carried out in the case of assessee on 10.08.2017 therefore, the availability of the cash of INR 16,38,000/- out of such peak credit balance cannot be ignored nor could be doubted as the application of the same elsewhere was not found as a result of search. Accordingly, we find no error in the order of Ld. CIT(A) in allowing the benefit of telescoping of the cash found out of the addition so sustained on account of peak credit balance in the hands of the assessee. Therefore, Ground of appeal No.3 raised by the Revenue is dismissed.