Loading judgment…
Facts
A search operation on the Brahmputra Group led to the seizure of loose sheets from the assessee, Seema Singh, indicating an undisclosed cash payment of Rs. 10,72,340/- in a property transaction. The Assessing Officer added this amount as unexplained investment, and the CIT(A) upheld the addition. The assessee denied the handwriting on the loose sheets and the existence of such a payment, failing to produce the seller, Mr. Ravee Jain, for verification.
Held
The Tribunal noted the assessee's failure to rebut the presumption under section 132(4A) regarding seized documents and to produce the seller for verification. However, it also stated that mere writing on a sheet does not automatically create tax liability. The case was remanded back to the AO with directions for the assessee to identify the author of the loose sheet and produce Mr. Ravee Jain for verification or provide his correct address for summons.
Key Issues
Whether the addition of unexplained investment based on loose sheets found during a search operation is justified without corroborating evidence and proper verification; and the applicability of presumption under Section 132(4A) of the Income Tax Act.
Sections Cited
Section 250, Section 153C, Section 56(2)(x), Section 234A, Section 234B, Section 234C, Section 132(4A)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
Appearances by: Assessee represented by : Vivek Malhotra, FCA Department represented by : Kausik Ray, JCIT Date of concluding the hearing : 08.10.2025 Date of pronouncing the order : 16.10.2025
ORDER
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal arises from the order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), dated 23.06.2023, passed by the Ld. Commissioner of Income Tax (Appeals), Central, NER, Guwahati [hereafter “the Ld. CIT(A)].
1.1 The facts in brief are that a search operation was carried out on the Brahmputra Group on 29.01.2021. The present assessee was part of that action, mainly on account of documents (A-2 and A-1) seized from her Seema Singh which indicated a property transaction in which, allegedly, some cash payment was involved which was not reflected in the account. The Ld. AO added an amount of Rs. 10,72,340/- with the following finding:
“On close examination of the page no. 8 of A-1 contained a calculation wherein the rate of the plot measuring 266.02 was mentioned. As per the noting in the page-8 of A-1, rate of the plot was stated @ Rs.17,000/- per Sq. Yard thus calculating the same comes to be Rs.45,22,340/-. From the calculation, it is clear that there is understatement of sale consideration in the Agreement to Sell dated 05.08.2020, the actual rate of the plot was Rs.45,22,340/- out of which the Rs.34,50,000/- was brought on record and the transaction of remaining Rs. 10,72,340/- was not disclosed in regular books of accounts. In the same page details of payments were also mentioned from which it appears that a payment of Rs.8,50,000/- has been made from regular sources and an amount of 10,50,000/- is made from undisclosed sources. Since the ownership of the property has already been transferred as per Transfer Agreement dated 06.08.2020 (Page no. 40 to 50 of A-2). Hence, the assessee was asked to produce Mr Ravee Jain to establish the genuineness of transaction carried out by the assessee during the A.Y. 2021-22 vide show cause notice dated 28/02/2023. In response to the show cause notice, the assessee has neither filed reply nor produce the party namely Ravee Jain. In the absence of the assessee's reply, it is ample clear that the assessee has nothing to say anything in this regard. It is well settled that the onus is on the assessee to establish the genuineness of the figures quoted in the purchase transaction. The assessee was asked the assessee to produce the party to quantify the amount against which the assessee purchased a property from Ravee Jain. The assessee did not care to produce the parties nor submitted any corroborative evidence in support of genuineness of their claim.” 1.2 Aggrieved, the assessee approached the Ld. CIT(A), where also could not succeed. The main findings in this regard are as under:
“The Appellant has not disputed the veracity or truthfulness of the sale consideration of Rs. 45,22,340/-. Thus implicitly, the Appellant has accepted that the actual consideration paid was Rs. 45,22,340/-. The sum and substance as well as the soul of the submissions adduced by the Appellant pertained to the elbow room [as per Section 56(2)(x) of the Act] which are not applicable. In the case of K.P Verghese vs. ITO [131 ITR 574 (SC)], the Hon'ble Supreme Court held that the assessee must be shown to have received more than what is disclosed by him. Clearly, in the incriminating evidence referred by the AO, the Appellant has incurred more (i.e. Rs. 45,22,340/-) than what has been shown/claimed by the her (i.e. Rs. 34,50,000/-). The Appellant has failed to provide the source of Rs. 10,72,340/- (Rs. 45,22,340/- minus Rs. 34,50,000/-) paid by her for purchases of aforesaid residential plot (Situated at Raheja Saranaya City in Sector-11, and 14, Sohna, Gurgaon). Further, the Appellant had failed to furnish confirmation from the seller (i.e. Sh. Ravee Jain) of the aforesaid residential plot (Situated at Raheja Saranaya City in Seema Singh Sector-11, and 14, Sohna, Gurgaon) that the payments as appearing on the seized page 8 of the Annexure A-2 has not been received by him. Yet further, the Appellant has failed to furnish any evidence or explanation which would remotely prove that the details appearing on the Seized page 8 of the Annexure A-2 does not pertains to the Appellant or does not contain the detail of the aforesaid residential plot (Situated at Raheja Saranaya City in Sector-11, and 14, Sohna, Gurgaon) purchased by the Appellant. In view of the aforesaid facts, it is held that the Appellant has made a payment of Rs. 45,72,340/- for purchase of residential plot (Situated at Raheja Saranaya City in Sector-11, and 14, Sohna, Gurgaon). However, instead of recording the actual payment, the Appellant has claimed the purchase consideration at Rs. 34,50,000/-. Thus, the differential amount of Rs. 10,72,340/- (i.e. Rs. 45,22,340/- minus Rs. 34,50,000/-) has bene rightly brought to tax by the AO as unexplained investment of the Appellant. Accordingly, the aforesaid addition of Rs. 10,72,340/- made by the Assessing Officer is sustained and the instant Grounds of Appeal raised by the Appellant is hereby, dismissed.”
2. Aggrieved further, the assessee has approached the ITAT with the following grounds:
“1. That the appellant denies regarding the addition made by the AO of an total amount Rs. 10,72,340/- and confirm by CIT (a) in case of Seema Singh for the AY 2021-22.
That having regard to the facts and circumstances of the case, Ld. A.O. has erred in law and on facts in framing the impugned Assessment order u/s 153 C of the Income tax Act, 1961 and confirm by CIT (A) without assuming jurisdiction as per law and without recording requisite satisfaction as per law without complying with the other mandatory condition envisaged under the Income Tax Act, 1961.
3. That the learned Deputy Commissioner of Income Tax and CIT (A) has failed to appreciate that there was no tangible material on record during the search operation to form a "reason to believe" or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.
That having regard to the facts and circumstances of the case. Ld. AO has erred in law and on facts while made an addition of an total amount Rs. 10,72,340/- and confirm by CIT (A) As per details given in Assessment order and appeal order and that too by recording incorrect facts and findings and without bringing any adverse material on record and without consider the submission made by the appellant ASSESSEE.
5. That in any case and in any view of the matter, action of Ld. AO while made an addition of an total amount Rs. 10,72,340 /- and confirm by CIT (a) Concern Judgment is bad in law and against the facts and circumstance of case.
That various adverse findings recorded while making the impugned addition and appeal order in the order are based on fundamentally misconceived, Seema Singh misplaced misconception of facts and law apart from being arbitrary unjustified and wholly untenable.
That in any case and in any view of the matter, imposed Assessment order and appeal order are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, in violation of principles of natural justice and the same deserves to be quashed.
AO imposed an addition of an total amount Rs. 10.72,340/-in case and in view of the matter action of Ld. A.O in framing the impugned Assessment order and appeal order is contrary to law and facts, void ab initio, beyond jurisdiction and the same is not sustainable on various legal and factual grounds.
That the leamed Deputy Commissioner of Income Tax and CIT (a) has erred both in law and on facts in levying interest under section 234A of the Act. u/s 2348 of the Act, and 234 C of act. 1961 which are not leviable on the facts of the appellant.
That in any case and in any view of the matter, imposed Assessment order and appeal order are bad in law, illegal, unjustified, barmed by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, in violation of principles of natural justice and the same deserves to be quashed.
That impugned addition and confirmation in appeal order has been made without granting fair and proper opportunity to the appellant and as such, the same is vitiated for the same has been made in violation of principles of natural justice.
That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. It is therefore, prayed that the assessment proceedings under section 153C of the Act and appeal order may kindly be quashed. Furthermore, the addition made alongwith interest levied may kindly be deleted and appeal of the appellant be allowed.” 2.1 Before us, the Ld. AR argued with the help of a paper book that the loose sheet of paper is not in the handwriting of the assessee and to this extent an affidavit has also been filed with the paper book. It was the submission that the loose sheet (impugned) was merely some rough working done on a plain piece of paper by some family member of the assessee. This working simply indicated the complete costing of the plot of land which includes the construction and foundation cost. It was a further submission that there was no corroborating evidence available with the department to indicate that any amount was paid or received over and above the amount mentioned in the sale deed/transfer agreement Seema Singh dated 06.08.2020 (filed on pages 51 to 61 of the paper book). In conclusion, the Ld. AR relied on a number case laws to canvass the point that loose sheets of paper, in the absence of corroborating material, cannot lead to any addition.
2.2 Per contra, the Ld. DR read from Ld. AO’s order and the Ld. CIT(A)’s order to demonstrate that the incriminating paper was found in the possession of the assessee and merely saying that it was not in her handwriting, as it was written by some other family member, does not help since the transaction did happen and the onus was on the assessee to show that the contents of the loose sheets were actually not what was visible. The Ld. DR, thereafter, supported the action of authorities below.
We have carefully considered the rival submissions and have also perused the records and documents before us. We have also considered the many cases cited by the Ld. AR. A perusal of the seized loose sheet (A- 1) shows clear working of cost of the plot @ Rs. 17,000/- for 266.02 to give a figure of Rs. 45,22,340/-. The subsequent figures (en-boxed at page 18 of the impugned order) appear to be some calculations following the net value of plot (Rs. 45,22,340/-). It is seen that the Ld. AO’s attempts to verify this transaction by interrogating one Shri Ravee Jain could not succeed as the assessee could not produce him. It is also seen that instead of the assessee, her spouse has been deposing before the Ld. AO. This raises questions about the ownership of the loose sheet A-1 as it is being presumed that the same belongs to the assessee, even when she has filed an affidavit stating that it is not in her handwriting. Also, in the written submissions it is mentioned that the said paper could have been written by some other family member. In sum, the assessee denies any knowledge of the contents and it has been very conveniently left to the Ld.AO to find out the factual position surrounding the writing in the said loose sheet. It is evident that as per section 132 (4A) of the Act there is a presumption Seema Singh regarding ownership of material (including documents) seized during the course of a search and seizure operation. This proposition has been explained lucidly in the case of P.R. Metrani Vs. CIT, reported in 287 ITR 209 (SC), to the extent that this presumption is rebuttable by the assessee. In this matter, we find that the assessee has not done much more than deny part of the contents of the loose sheet, to the extent of amount mentioned over and above the sale deed dated 06.08.2020. It is a trite position of law that any document having evidentiary value has to be read as a whole and not in piecemeal, as per convenience. In this case, it is clear that the assessee has not been able to rebut with any conviction, the incriminating contents of the impugned loose sheet. Also, it is equally true that mere writing on a sheet of paper cannot in itself allow the Revenue to visit any assessee with tax liabilities. Accordingly, we set aside the impugned order and remand back this case to the file of Ld. AO with the following directions:
(a) The assessee would determine the author of the loose sheet and inform the Ld. AO so that he/she can be summoned for necessary verification.
(b) Shri Ravee Jain would be produced for questioning and verification and in case the assessee is unable to do so then his correct address would be informed to the Ld. AO for issuing summons.
In result, this appeal is partly allowed for statistical purposes.
Order pronounced on 16.10.2025