HAPPY HOME CLUB AND FUN LIMITED,SURAT vs. DCIT, CIRCLE 1(1)(1), SURAT, SURAT

The brief facts of the case are that the assessee is engaged in the real estate business and also runs a club, namely, Autograph Club. A search and seizure action was carried out in the case of one Shrti Mahendrakumar Champaklal Mehta, wherein a loose-slip was found, wherein, a sum of Rs.1,000/- was mentioned against Autograph Club. The Assessing Officer presumed that the amount of Rs.1,000/- represents Rs.1,00,000/- which was paid by Shri Mahendrakumar C.Mehta to Autograph Club, which belonged to the assessee. He, therefore, made the impugned addition of Rs.1 lakh into the income of the assessee as unaccounted receipts.

The Ld. CIT(A) confirmed the addition, so made by the AO.

Having heard the rival submissions and going through the record, it is noted that the assessee has totally denied of having received any amount of Rs.1 lakh from Mahendrakumar C. Mehta. There is no statement recorded of Mahendrakumar C.Mehta, confirming the aforesaid payment to the assessee. The impugned addition has been made solely on the basis of uncorroborated loose-sheet found from a third party, namely, Mahendrakumar C.Mehta and does not bear any signature from any key person of the assessee. It has been held, time and again, that the addition cannot be made in the hands of the assessee solely on the basis of uncorroborated loose-sheet, especially when there is no mention in the assessment order that Shri Mahendrakumar C. Mehta has ever admitted such payment to the assessee. In view of the above, the impugned addition is not sustainable and the same is ordered to be deleted. Asst. Year : 2019-20

In the result, the appeal of the assessee stands allowed.