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Facts
During a search operation, two diaries (Annexure A-5 and A-1) were seized. The assessee claimed Annexure A-5 belonged to his deceased father and Annexure A-1 contained entries unrelated to him. The AO made additions based on these documents, treating them as undisclosed income and investment.
Held
The Tribunal held that the documents seized were 'dumb documents' as they were not in the assessee's handwriting, lacked clear ownership, and contained uncontextual entries. The Revenue failed to conclusively prove the connection between the assessee and the contents of the documents.
Key Issues
Whether additions can be made on the basis of 'dumb documents' where the Revenue cannot conclusively prove the assessee's connection to the contents, and whether proceedings under Section 153A are valid without incriminating material found during search.
Sections Cited
153A, 143(3), 132, 69, 292C
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Income Tax Appellate Tribunal, DELHI BENCH, ‘A’: NEW DELHI
Before: MS. MADHUMITA ROY
ORDER
PER AMITABH SHUKLA, AM,
This bunch of three appeals are filed by the assessee against the separate orders dated 02.09.2025 and 02.08.2025 of the ld. Commissioner of Income Tax (Appeals)-3, Noida, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order all dated 28.12.2018 passed under section 153A r.w.s. 143(3) of the Income Tax Act, 1961, for the Assessment Years 2014-15, 2015-16 and 2016-17, respectively. The word ‘Act’ herein this order would mean Income Tax Act, 1961. to 6485/Del/2023 2. The assessee has raised following grounds of appeals for Assessment Years 2014-15, 2015-16 and 2016-17:-
1. That the ld. CIT(A) has erred in law and facts of the case by confirming the assessment under appeal as no incrementing material belonging to the appellant was found and seized during the course of the search, thereby rending the whole proceedings u/s 153A of the Act, as illegal and void ab initio.
2. That the ld. CIT(A) has erred in law and the facts of the case by confirming the addition of Rs.19,25,300/- as made by the Id. A.O. as the income from alleged business noted in seized annexure A-5 (diary), without considering the submissions of the appellant in the right perspective and the various findings and observations made are unjust, illegal and unwarranted.
3. That without prejudice to the above the ld. CIT(A) has erred in law and the facts of the case by confirming the total addition of Rs.19,25,300/- instead of restricting the same to Rs. 1,55,200/-, and not considering the transcription and arithmetical errors in the summary of Annexure A-5 (Diary) as prepared by the Ld. A.O. and pointed out by the appellant during the course of appeal proceedings. Assessment Year 2015-16
1. That the ld. CIT(A) has erred in law and facts of the case by confirming the assessment under appeal as no incrementing material belonging to the appellant was found and Seized during the course of the search, thereby rending the whole proceedings u/s 153A of the Act, as illegal and void ab initio.
2. That the ld. CIT(A) has erred in law and the facts of the case by confirming the addition of Rs.42,12,800/- as made by the Id. A.O. as the income from alleged business noted in seized annexure A-5 (diary), without considering the submissions of the appellant in the right perspective and the various findings and observations made are unjust, illegal 3. That without prejudice to the above the ld. CIT(A) has erred in law and the facts of the case by confirming the total addition of Rs.42,12,800/- instead of restricting the same to Rs.3,40,200/-, and not considering the transcription and arithmetical errors in the summary of Annexure A-5 (Diary) as prepared by the Ld. A.O. and pointed out by the appellant during the course of appeal proceedings.
Page 2 of to 6485/Del/2023 Assessment Year 2016-17
1. That the ld. CIT(A) has erred in law and facts of the case by confirming the assessment under appeal as no incrementing material belonging to the appellant was found and seized during the course of the search, thereby rending the whole proceedings u/s 153A of the Act, as illegal and void ab initio.
That the ld. CIT(A) has erred in law and the facts of the case by confirming the addition of Rs.46,05,100/- as made by the Id. A.O. as the income from alleged business noted in seized annexure A-5 (diary), without considering the submissions of the appellant in the right perspective and the various findings and observations made are unjust, illegal and unwarranted.
That without prejudice to the above the ld. CIT(A) has erred in law and the facts of the case by confirming the total addition of Rs.46,05,100/- instead of restricting the same to Rs.3,71,800/-, and not considering the transcription and arithmetical errors in the summary of Annexure A-5 (Diary) as prepared by the Ld. A.O. and pointed out by the appellant during the course of appeal proceedings.
4. That the ld. CIT(A) has erred in law and facts of the case in confirming the addition of Rs.22,50,000/- made u/s 69 of the act, by the Ld. A.O. as the same was based on a dumb document and various findings and observations made are unjust, illegal and unwarranted. 3. The first issue arising in assessee’s appeal for AY 2014-15, 2015-16 and 2016-17 is regarding addition of Rs.19,25,300/-, Rs.42,12,800/- and Rs.46,05,100/- on account of undisclosed interest income. As per brief factual matrix of the case, the assessee is living in joint family and a search under section 132 was conducted on 05.02.2017 leading to seizure of two diaries as annexure-5 and annexure A-1. The Revenue had queried the assessee qua entries made in the impugned annexure A-5 and A-1. During the course of search proceedings, the appellant assessee had given a sworn statement that the annexure-A5 belong to his father Shri Ram Avtar Gupta, who died on 13.07.2015. As regards annexure-A1, it was submitted that assessee has no Page 3 of to 6485/Del/2023 knowledge about the ownership and connection and transactions indicated therein. The ld. AO worked on the premise that the transactions appearing in annexure-A5 are of undisclosed interest income and proceeded to at the same in assessee’s hand as per details given hereinabove. It was concluded that the assessee was accountable for documents found from its possession. Before the AO, the assessee had inter alia contested that the impugned document is dumb document and that it contained entries even after death of the father. It was vehemently argued that the said document was not in the handwriting of the appellant. The assessee had also argued that assessee is not the only legal heir of his father and that he had an elder brother also and therefore income of the father should have been evenly distributed. It was also argued that the ld. AO in his remand report dated 20.02.2024 has not made any adverse comment qua correct summary of annexure A-5. The ld. CIT(A) confirmed the findings of the ld. AO in totality. The ld. DR placed reliance upon the orders of the lower authorities.
We have heard the rival submissions in the light of material available on records. We have noted that the assessee is only a joint family member living with his elder brother and other family member. A document found in search cannot therefore be solely attributable to the appellant alone. We have also noted the argument of the assessee that the document is not in his handwriting and that it has no knowledge of its correct ownership. The document therefore squarely falls into the category of a dumb document. It is trite law that no Page 4 of to 6485/Del/2023 addition can be made on the basis of a dumb document. The said ratio has been laid down in a catena of judgments inter alia including in the case of Virender Kumar Bhatia by Hon’ble High Court of Delhi as at 112 taxmann.com 379 (Delhi). The Revenue apart from harping on the statutory provisions that the assessee is accountable for contents of a document found during search has not been able to conclusively prove the connection between the appellant assessee and contents of annexure-A5. We have noted that the Revenue has placed whole reliance upon the provisions of section 292C concerning presumption of ownership of a document found during the course of search proceedings. The presumption of law has to be supported by some enquiries by the Revenue authorities so as to fasten the ownership of the document with the assessee in whose case undisclosed income is to be assessed. In the present case, the same were missing. Accordingly, we are of the considered opinion that no case of any addition on account of undisclosed interest income for AY 2014-15, 2015-16 and 2016-17 is made out against the assessee. Accordingly, we set-aside the order of the lower authorities and direct the ld. AO to delete the addition made in AY 2014-15, 2015-16 and 2016-17 of Rs.19,25,300/-, Rs.42,12,800/- and Rs.46,05,100/- on account of undisclosed interest income. The grounds of appeal raised by the assessee on the issue of undisclosed interest income is therefore allowed.
Page 5 of to 6485/Del/2023 5. The next issue raised by the assessee is regarding the addition of Rs.22,50,000/- for AY 2016-17 made by the ld. AO on account unexplained investment by relying upon annexure-A1.
We have heard rival submissions in the light of material available on records. The ld. Counsel for the assessee vehemently argued that the impugned annexure-A1 also fall into the category of a dumb document when its contents are examined. It was stated that the impugned document is written in handwriting of unknown person having no connection with the assessee. It was stated that the document also contains inscriptions of some child study in class- 2A, few unknown phone numbers, details of makeup kit, menu of some party functions, etc. The ld. Counsel for the assessee argued that no connection between the said documents and the assessee has been established by the Revenue except for the fact that it was found from assessee’s possession. The ld. DR placed reliance upon the orders of the lower authorities.
We have noted that the assessee is only a joint family member living with his elder brother and other family member. A document found in search cannot therefore be solely attributable to the appellant alone. We have also noted the argument of the assessee that the document is not in his handwriting and that it has no knowledge of its correct ownership. We also find force in the argument of the assessee regarding various un-contextual entries made in the said annexure A-1. The document therefore squarely falls into the category of a dumb document. It is trite law that no addition can be made on the basis of a Page 6 of to 6485/Del/2023 dumb document. The Revenue apart from harping on the statutory provisions that the assessee is accountable for contents of a document found during search has not been able to conclusively prove the connection between the appellant assessee and contents of annexure-A1. Further, the reliance of the Revenue upon applicability of section 292C has been discussed (supra) and for the purposes of brevity is not repeated. Accordingly, we are of the considered opinion that no case of any addition on account of undisclosed investment for AY 2016-17 is made out against the assessee. Accordingly, we set-aside the order of the lower authorities and direct the ld. AO to delete the addition made in AY 2016-17 of Rs.22,50,000/- on account of undisclosed investment. The grounds of appeal raised by the assessee on the issue of undisclosed investment is therefore allowed.
In the result, all the appeals of the assessee are allowed.