KIRAN PAL SINGH,FARIDABAD vs. DCIT CENTRAL CIRCLE, FARIDABAD

PER BENCH: The above mentioned nine Appeals are filed by the assessee

and five captioned Appeals are filed by the Department against the

order of commissioner of Income Tax (Appeals)-24, (‘Ld. CIT(A)’ for

short) pertaining to Assessment Years 2012-13 to 2017-18 dated

28/04/2023, Assessment Year 2018-19 dated 14/07/2023

Assessment Year 2019-20 dated 31/07/2023 and Assessment Year

2020-21 dated 21/08/2023.

involving identical issues, the Appeals are heard together and

disposed off in this common order.

3 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 3. Brief facts of the case for the Assessment Year 2012-13 has

been considered for the sake of convenience. A search and seizure

operation u/s 132 of the Income Tax Act, 1961 (‘Act’ for short) was

conducted on 16/10/2019 at the residential as well as office

premises of various persons including the Assessee. A notice dated

23/03/2021 u/s 153A of the Act was issued after recording the

satisfaction note for reopening of case u/s 153A of the Act beyond

six years and served upon the assessee require him to file his

return of income in respect of the assessment year under

consideration. In response, the assessee has not filed the return

u/s 153A of the Act. It is found by the A.O. that the assessee had

filed his return of income u/s 139 of the Act on 30/07/2012

declaring income of Rs. 12,45,980/-, therefore, notice u/s 142(1) of

the Act was issued to the assessee. As the assessee has not

complied with the notice, the income of the assessee was assessed

u/s 153A(1) (b) read with Section 144 of the Act on total income of

Rs. 1,49,85,980/- by making addition of Rs. 1,37,40,000/- u/s 69

of the Act on account of unexplained investment of the assessee.

Various additions have also been made against the Assessee for

Assessment Year 2013-14 to 2018-19 u/s 153A (1)(b) of the Act.

4 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 4. Aggrieved by the assessment orders for Assessment Year

2012-13 to 2018-19, the assessee preferred Appeals before the

CIT(A). The Ld. CIT(A) dismissed the Appeal of the assessee for

Assessment Years 2012-13, 2013-14, 2016-17 and partly allowed

the Appeal for Assessment Year 2014-15, 2015-16, 2017-18 and

2018-19. Aggrieved by sustaining the additions, for A.Y 2012 -13 to

2020-21 as against the deletion of the additions, the Department of

Revenue filed the Appeal for AY 2014-15, 2015-16, 2017-18 &

2018-19.

ITA No. 1860/Del/2023 (A.Y 2012-13) (Assessee)

of Rs. 1,20,00,000/- made by the A.O. by applying peak credit

theory on the basis of diary found at the premises of one Sh.

Ramesh Kumar Goyal. The Ld. A.O. made the aforesaid addition to

the income of the assessee on account of unexplained

investment/receipt on the basis of the diary seized from third

person Sh. Ramesh Kumar Goyal, who was also searched u/s 132

of the Act on 16/10/2019. As per the Ld. Assessing Officer, in the

said diary several entries which were named as ‘KP Sector-9’ and

5 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT when the said documents were confronted to Shri Ramesh Goyal,

he admitted that he had done ‘money lending loan committee

business’ transactions out of the books and ‘KP Sec.9’ denotes

Kiran Pal Khatana, who lives in Sector-9 Faridabad. Ld. AO further

alleged that, when the documents were confronted to Shri. Ramesh

Kumar Goyal, not only did he lucidly and explicitly named the

person involved in the business of money lending in cash, but also

confessed himself being a commission agent. The Ld. AO further

alleged that, during post search enquiries statement on oath was

recorded and the said Ramesh Goyal specifically stated the person

written as ‘KP Sec.9’ as ‘Kiran Pal’ and his phone number. The said

facts narrated by Shri Ramesh Goyal in his post search statement

and relevant seized documents were confronted to Shri Kiran Pal

Khatana at the time of recording his statement on oath u/s 131(1A)

of the Income tax Act, 1961. In response to the same, Shri Kiran Pal

Khatana, admitted that he knows Shri Ramesh Goyal but denied to

have entered into any kind of transaction in cash relating to lending

money or receiving back in cash or in installments.

6 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 6. During the course of search operation, his a statement of Sh.

Ramesh Kumar Goyal was recorded u/s 132(4) of the Act and

during the post search enquiries, the said Sh. Ramesh Kumar

Goyal has given his statement on oath u/s 131(1A) of the Act.

Based on the statement made u/s 131(1A) of the Act coupled with

the diary seized during the search conducted u/s 132 of the Act

from the custody of Sh. Ramesh Kumar Goyal, the above addition

has been made in the hands of the Assessee which has been

confirmed by the Ld. CIT(A).

the Ld. CIT(A) has erred in confirming the addition made on the

basis of a diary found at the premises of Shri Ramesh Kumar Goyal

by applying peak credit theory without appreciating that the seized

diary found from the premises of the ‘third party’ and was not in the

handwriting of the assessee. The assessee has specifically denied

having any transaction with Sh. Ramesh Kumar Goyal while giving

statement u/s 132(4) of the Act. Apart from the same, no such

alleged seized diary as copy was given to the assessee and no

opportunity of cross examining of Sh. Ramesh Kumar Goyal has

7 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT been given to the assessee despite of specific request made by the

assessee. Therefore, submitted that the addition made based on

the diary found at the premises of ‘third party’ cannot be sustained.

that, the assessee has not explained the transaction with Sh.

Ramesh Kumar Goyal and based on the diary seized in the

premises of Sh. Ramesh Kumar Goyal coupled with the statement

on oath u/s 131(1A) of the Act recorded from Sh. Ramesh Kumar

Goyal, the A.O. has rightly made the addition, thus, sought for

dismissal of the above Ground No. 1 & its sub grounds.

available on record. The above additions have been made based on

the diary seized from the possession of the third party i.e. Sh.

Ramesh Kumar Goyal and coupled with his statement recorded

during the course of post each enquiries u/s 131(1A) of the Act.

The only question to be decided as to whether third party statement

or entry recorded in the diary in the absence of any corroborative

evidence can be ground to make addition in the hands of the

assessee?

8 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 10. The legal position relating to presumption under Section

132(4A) of the Act is applicable to the person in whose possession

or control, the incriminating material is found and seized. The

presumption cannot be arrived based on incriminating material

found from the ‘third party’ search but not belongs to the Assessee

unless there is any corroborative evidence against the Assessee. The

presumption u/s 132(4A) of the Act can be drawn against the

person in whose case the search is authorized and from whose

possession or control of diary or documents are found in the course

of search. The said settled position of law has been laid down and

reiterated in following judicial decisions:-

i) Starptex India Pvt. Ltd. v/s DCIT (2003) 84 ITD 320 (Mum bench).

ii) ACIT v/s Kishore Lal Balwani Rai (2007) 17 SOT 380 (Chandigarh). iii) Pradaap Amrutlal Runwal v/s Tax Recovery Officer, Range-3, Pune ITA No.334/PN/2013.

iv) DCIT, Central Circle-12, Delhi v/s Yashpal Narinder Kumar ITA No.5340, 5341, 5342/ Del (2012).

v) Sheth Akshay Pushpavandan v/s Dy. CIT (2010) 130-TTJ-42 (Ahm.).

vi) Jai Kumar Jain v/s ACIT (2006)-99 TTJ(JP) 744.

9 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 11. It is also observed that, during the course search proceedings

statement of the assessee was recorded, wherein the original

documents seized from the premises of Sh. Ramesh Kumar Goyal

was not confronted to the Assessee and the statement of the

assessee was recorded u/s 131(1A) of the Act but not u/s 132 of

the Act. The assessee has denied having any business transaction

either by cash or cheque with said Sh. Ramesh Kumar Goyal.

Though the authorities have heavily relied on the statement of the

third party i.e. Sh. Ramesh Kumar Goyal, no opportunity of cross

examination has been given to the Assessee even though the

Assessee has specifically sought for opportunity to cross examine

the said Sh. Ramesh Kumar Goyal vide letter dated 12/11/2020

which is placed at Page No. 77& 78 of the paper book. Further

while framing the assessment in the case of Sh. Ramesh Kumar

Goyal, it has been held that in view of provision of Section 278D

read with Section 132(4A) of the Act, the onus was one Sh. Ramesh

Kumar Goyal to substantiate the contents of the diary which could

not be proved, therefore, entire addition mentioned in the diary has

been made in the hands of Sh. Ramesh Kumar Goyal including the

amount which is the subject matter of the present addition made in

10 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT the hands of the assessee. It is well settled law that the same

income cannot be taxed twice. As the entire addition has already

been made in the case of Sh. Ramesh Kumar Goyal in whose

possession the incriminating documents were seized, the

authorities are precluded from making the additions in the hands of

the Assessee.

opinion that the A.O. committed error in making addition on the

basis of diary found at the premises of the ‘third party’. Accordingly,

the additions made by the A.O. which were confirmed by the CIT(A)

are here by deleted. Thus, Ground No. 1, 1(a) to 1(d) of Assessee’s

Appeal for Assessment Year 2012-13 are allowed.

1860/Del/2023 is allowed.

ITA No. 1861/Del/2023 (A.Y 2013-14) filed by the assessee

No. 1 and its sub grounds of the present Appeal have been

mentioned due to oversight, therefore, not pressed the Ground No.

11 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 1(a) to 1(d). Accordingly, the Grounds No. 1, 1(a) to 1(d) of the

Assessee are dismissed.

addition of Rs. 45,500/- made on account of unexplained

expenditure u/s 69 of the Act in respect of purchase of mobile in

cash.

The above said addition of Rs. 45,500/- has been

sustained/restricted by the Ld. CIT(A) out of the total addition of

Rs. 10,45,500/- made u/s 69 of the Act as the assessee has failed

to substantiate his submission by furnishing necessary

documentary evidence for the source of payment for purchase of

mobile. During the First Appellate Proceedings, the assessee vide

submission dated 29/04/2022 claimed that the purchase of mobile

from Sky connect has been duly recorded in books of account and

paid through declared source of income and also provided the

ledger accounts of Sky connect which are reproduced at Page No.

28 to 32 and the said payment has been made through declared

12 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT source of income. Considering the smallness of the amount

involved in the addition and also looking into the documents

produced by the assessee to prove the cost of the mobile which has

been shown in the statement of affairs for the year under

consideration and also considering the ledger account of the Sky

connect, we delete the said addition of Rs. 45,500/- by allowing

Ground No. 2 of the Assessee.

is partly allowed.

ITA No. 1862/DEL/2023(Assessee) and ITA No. 2038/Del/2023 (A.Y 2014-15) (Revenue)

Appeal are regarding addition made by the A.O. based on the diary

found at the premises of third party which has been partly

confirmed by the Ld. CIT(A) by applying peak credit theory.

Ld. CIT(A) in restricting the addition made on account of

13 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT unexplained receipts and payment in cash from Sh. Ramesh Goyal

by applying the peak credit theory.

13 that the addition made on the basis of diary found at the

premises of third party cannot be sustained and deleted the

addition made by the A.O. Since there is no change of facts and

circumstances, by applying the very same findings and conclusions,

we allow the Ground No.1 and its sub grounds of the Assessee.

partial addition made by t he A.O. on account of unexplained

receipts and payments in cash from/to Ramesh Goyal by applying

the theory of peak credit.

the diary found at the premises of third party in the Assessee’s

Appeal, the Ground No. 1 to 4 of the Revenue’s Appeal challenging

the partial deletion of the addition by the Ld. CIT(A) has become in-

fructuous, accordingly the ground No. 1 to 4 of the Revenue are

dismissed.

14 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 23. In the result, Assessee’s Appeal in ITA No. 1862/DEL/2023 is

allowed and Revenue’s appeal in ITA No. 2038/Del/2023 (A.Y 2014-

15) is dismissed.

ITA No. 1863/DEL/2023(Assessee) and ITA No. 2039/Del/2023 (Revenue) (A.Y 2015-16 )

Appeal are regarding addition made by the A.O. based on the diary

found at the premises of third party which has been partly

confirmed by the Ld. CIT(A) by applying peak credit theory.

[ 25. The Revenue in its Ground No. 1 to 3 challenged action of the

Ld. CIT(A) in restricting the addition made on account of

unexplained receipts and payment in cash from Sh. Ramesh Goyal

by applying the peak credit theory.

13 that the addition made on the basis of diary found at the

premises of third party cannot be sustained and deleted the

addition made by the A.O. Since there is no change of

circumstances, by applying the very same findings and conclusions,

we allow the Ground No.1 and its sub grounds of the Assessee and

15 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT dismiss the Ground No. 1 to 3 of the Revenue for having become in-

fructuous.

Revenue are regarding the addition of Rs. 15,00,000/- made by the

A.O. which has been restricted by the Ld. CIT(A) to Rs. 1,00,000/-.

seized from the Assessee's residence where it was found that one

Ms. Roma Grover purchased Fortuner car and then transferred the

same to the Assessee on 18.10.2014 for Rs.8,50,000/-. Apart from

the same, an amount of Rs.1,00,000/- was directly transferred by

the Assessee to ‘Thirty Six Automobiles Pvt. Ltd’ for the said vehicle.

Further, it was also found that the Sh. Digvijay Khatana, son of the

Assessee, has purchased a Maruti vehicle for Rs.5,50,000/- as

evident from seized documents. As the Assessee could not offer any

explanation during the course of assessment proceedings, an

addition of Rs.15, 00,000/- was made by the AO on account of

unexplained expenditure u/s 69 of the Act.

16 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 29. During the appellate proceedings the Ld. CIT(A) restricted the

addition to Rs. 1,00,000/- for advance paid for vehicle booking and

deleted the rest of the addition in following manners:-

“The appellant submitted during the appellate proceedings that Innova Car was booked by giving an advance of Rs.1,00,000/- in cash on 11.07.2014 to M/s Thirty Six Toyota dealer and same is recorded in the books of account. The receipt issued by M/s Thirty Six Toyota dealer was also found and seized at Page 11 of A-1. The appellant dropped the idea for purchase of the said Car and accordingly requested to M/s Thirty Six Toyota dealer to transfer the booking in the name of Mrs. Roma Grover w/o Shri Sanjeev Grover R/o House No.1232, Sector-14, Faridabad (family friend) who was also interested in buying the said vehicle in order to avoid the waiting time. Accordingly, the appellant got the refund of Rs.1,00,000/- from M/s Thirty Six Toyota on 17.10.2014 through cheque and the said proceeds have been credited to the bank account of the appellant maintained with HDFC Bank Account No.06191000034512. It was contended that AO presumed on the basis of receipt for advance booking, the appellant has purchased the said vehicle and made the addition. Further, it was submitted that son of Shri Digvijay Singh had purchased the Maruti Gypsy after raising vehicle Joanom HDFC Bank. The EMIs of Rs.16,063/- were also paid regularly by the son of the assessee from his account only.

After looking into facts and circumstances of the case, it is observed that the payment of Rs.1,00,000/- has been made by the appellant in cash to book a car from M/s Thirty Six Toyota. The said booking was transferred in the name of Smt. Roma Grover accepting a cheque from her of Rs.1,00,000/- on 17.10.2014. The said car was registered in her name as evident from the RC registration certificate and she has taken vehicle loan from the Canera Bank. There is nothing on record to show that the said vehicle was transferred back to the appellant. However, the appellant has failed to explain the source of cash

17 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT payment of Rs.1,00,000/- made by him for the booking of the above car. Accordingly, the addition made by the AO is restricted to Rs.1,00,000/ Further, it is observed that the transactions of Rs.5,50,000/- on account of purchase of Maruti car pertains to Sh. Digvijay Singh, son of the appellant who is a separate assessee (PAN FYZPS3658Q). Separate proceedings u/s 153C of the Act in the case of Sh. Digvijay Khatana have been initiated by the same AO .It is not the case of the AO that payment for the above transaction pertaining to Sh. Digvijay Khatana has been made by the appellant. In the circumstances, the AO is directed to consider above transaction while making assessment in his case u/s 153C of the Act Therefore, in view of the above discussion, the addition of Rs.5,50,000/- made by the AO is hereby deleted in the case of the appellant. Accordingly ground of appeal no.5 is hereby partly allowed.

has given detailed findings and allowed the relief of Rs. 14,00,000/-

to the Assessee which requires no interference at the hands of the

Tribunal. Further submitted that, assessee has clarified that the

assessee has paid the said advance booking of Rs. 1,00,000/- to

Thirty Six Toyota Dealer and the same is recorded in the books of

account. It was also informed to the Department that the assessee

has dropped the idea of purchase of the said vehicle and requested

the dealer to transfer the booking in the name of M/s Roma Grover

wife of Sanjeev Kumar who was also interested to buy the said

vehicle which has been done in order to avoid the waiting time. It is

18 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT found that the assessee has also got the refund of Rs. 1, 00,000/-

through cheque which has been credited to the HDFC Bank

account of the Assessee which can be corroborated from the seized

document marked as Page A-1/12 where the application of such

transfer of booking of car was made by the assessee and also from

the ledger account where the advance of purchase of car have been

recorded which is placed at Page No. 27 of the Paper Book.

Considering the above facts and circumstances we delete the

addition of Rs. 1,00,000/- sustained by the CIT(A) on account of

advance booking.

concerned, it is seen from the record that the Ld. CIT(A) while

deleting the addition observed that the transaction of Rs.

5,50,000/- on account of purchase of Maruti Car pertaining to Sh.

Digvijay Singh son of the Assessee who is a separate assessee and

separate proceedings u/s 153C of the Act has been initiated by the

A.O. It is not the case of the A.O. that payment of the above

transaction pertaining to Sh. Digvijay Khatana has been made by

the Assessee, therefore, in our considered opinion, the Ld. CIT(A)

19 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT rightly directed to consider the said transaction while making

assessment in the case of sh. Digvijay Khatana u/s 153C of the Act

and deleted the addition of Rs. 5,50,000/- which requires no

interference.

the said amount has been paid by Ms. Roma Grover who has

purchased the car on 10/07/2014, therefore, the Ld. CIT(A) has not

sustained the said addition in the hands of the Assessee. It is the

Ground of the Department that the additional evidence has been

field by the Assessee but the Ld. CIT(A) has not called for the

Remand Report. On going through the order of the Ld. CIT(A) no

such mentioning of additional evidence is forth coming and the

same has not been argued before us. Therefore, we find no merit in

the said ground of the Department. Thus, in our considered

opinion, the Ld. CIT(A) has committed no error in deleting the

addition of Rs. 14,00,000/-, accordingly, the Ground No. 2 of the

Assessee is allowed and Ground No. 4 of the Revenue is dismissed.

20 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 33. The Ground No. 5 of the Revenue is against deleting the

addition of Rs. 20,00,000/- made on account of interest income

under the head of income from other sources.

containing details of loans given by the Assessee were found and

seized from the Assessee’s residence. During the course of

assessment proceedings, it was noted that the Assessee has

advanced amount of Rs. 50,00,000/- to M/s Supra Finance during

the year under consideration form his bank account. The Assessee

was asked to explain the same. In response, the Assessee

submitted before the A.O. that he extended interest free loan of Rs.

50, 00,000/- through banking channel. It was observed by the A.O.

that the Assessee had been earning interest @2% on cash loans;

therefore, Assessee was likely to earn interest on bank loans also.

Thus, the amount of Rs. 20, 00,000/- on account of interest was

added by the A.O. to the income of the Assessee under the head

‘Income from other sources’ on presumption basis.

21 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 35. The Ld. CIT(A) deleted the said addition in following manners:-

“The appellant submitted during the appellate proceedings that he advanced Rs.50,00,000/- to M/s Supra Finance mentioned on Annexure A-3/ Page 2 was given through RTGS from SBI, Faridabad Saving Account No.55005678494. The said advance was accounted for in the regular books of account and out of declared bank account of the appellant. The appellant in the assessment proceedings filed the statement of affairs and bank statements on which the said transaction was reflected. The appellant further explained that the appellant has charged interest amounting to Rs.3,64,380/-in the assessment year 2014-15 and Rs.4,74,660/- received interest in the financial year 2014- 15 relevant to assessment year 2015-16 which is duly shown in the computation of income and paid the taxes due thereon. It was submitted that interest rate of 2% was nowhere mentioned in any of the seized document and the AO has made addition of Rs.20,00,000/- purely based upon presumption and without any basis.

After looking into facts and circumstances of the case, it is observed that the appellant had given loan of Rs.50,00,000/- to M/s Supra Finance through his bank account received the same back in his bank account. It was explained during the appellate proceedigns that the appellant has charged interest amounting to R364,380 for the A.Y. 2014-15 and Rs.4,74,660/- for the A.Y. 2015-16 which is-duly shown in the computation of income. Moreover, The AO has made the addition of Rs.20,00,000/- on account of interest income earned @2% on such loan on presumptive basis. There is no material available on record to support the rate of interest applied. In the absence of supporting evidence, such addition made on presumptive basis can not be sustained. Therefore, addition of Rs.20,00,000/- is hereby deleted. Accordingly, ground of appeal no. 6 is hereby allowed.

22 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 36. Considering the fact that the said loan given by the Assessee

to Supra Finance has been received the same back in his bank

account and the Assessee has charged the interest of in the AY

2014-15 and 2015-16 which was duly shown in the computation of

income and as the A.O. made the addition of 20,00,000/- on

account of interest income earned @2% on presumptive basis

without there being any material available on record to support the

said rate of interest, we find no reasons to interfere with the finding

of the Ld. CIT(A) in deleting the addition. Accordingly, the Ground

No. 5 of the Revenue is dismissed.

1863/Del/2023 is allowed and Appeal of the Revenue in ITA No.

2039/Del/2023 is dismissed.

ITA No. 1864/DEL/2023(Assessee) (A.Y 2016-17 )

Appeal are regarding addition made by the A.O. based on the diary

found at the premises of third party which has been partly

confirmed by the Ld. CIT(A) by applying peak credit theory.

23 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 39. We have already held in the case of the Assessee for AY 2012-

13 that the addition made on the basis of diary found at the

premises of third party cannot be sustained and deleted the

addition made by the A.O. Since there is no change of facts and

circumstances, by applying the very same findings and conclusions,

we allow the Ground No.1 and its sub grounds of the Assessee.

addition of Rs. 22,00,000/- on account of unexplained investment

made u/s 69 of the Act by treating the same as unexplained

investment of the Assessee and Rs. 2,25,000/- on account of

interest on unexplained investment.

seized documents Annexure-A1/ 73, it was observed by the A.O.

that the Assessee had advanced a loan of Rs. 22,00,000/- to Sh.

Beju Thakur during the year under consideration. The Assessee

could not furnish any satisfactory explanation in respect of such

loan before the A.O. Therefore, the addition of Rs. 22,00,000/- was

made by the A.O. on account of unexplained loan u/s 69 of the Act

24 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT and also added Rs. 2,25,000/- on account of interest income, which

has been confirmed by the Ld. CIT(A).

the addition of Rs. 22,00,000/- made on account of unexplained

investment based on the loose paper found during the course of

search from the Assessee and Rs. 2.25 lacs made on account of

interest on presumption basis on the said investment. The addition

has been made purely on surmise and conjunction based on the

loose sheets, wherein certain amounts have been jotted and there is

no corroborative material/evidence on record to conclude that such

document has materialize into transaction giving rise to income of

the Assessee which had not been disclosed in the regular books of

accounts of the Assessee. The ld. Counsel relying on the several

judicial precedents, submitted that the additions made based on

the dumb document requires to be deleted.

Lower Authorities sought for dismissal of the Ground No. 2 of the

Assessee’s Appeal.

25 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 44. We have heard the parties perused the material available on

record. During the course of the search, a loose sheet has been

found and seized which was marked as A-1/73 wherein certain

amounts have been jotted. The said loose sheet is reproduced for

the sake of convenience as under:-

that the Assessee had advanced the loan of Rs. 22,00,000/- to Sh.

Beju Thakur during the year under consideration and earned

interest/commission of Rs. 2,25,000/-. It was the case of the

26 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Assessee that Assessee’s father is a social worker and several

persons of nearby area use to visit their house for social work and

the document above referred might have been left by some persons.

transaction whether the same is receipt or payment cannot be

decided, no address of any person have been mentioned, document

is unsigned, no name of the Assessee as well as his family members

have been mentioned, the document claimed to be not in the hand

writing of the Assessee or his family members. The said loose

documents does not indicate that whether it is an asset, liability,

loan or advance or any other detail. When the dumb document like

the above loose sheet of paper are recovered and if the Department

wants to rely on the same, the onus lies on the Department to

collect cogent evidence to corroborate the notings in the said loose

sheet. In the present case, the A.O. has not corroborated the noting

of the loose sheet with any documentary evidence and brought any

material on record to prove conclusively that noting on the seized

papers reveal the unaccounted investment in loan made by the

Assessee. Further there is no circumstantial evidence in the farm

27 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

of unaccounted cash loan outside the books of accounts was found

during the search, as such, the department cannot infer against the

Assessee and make the addition.

ITO (1981) 131 ITR 597 (S.C) held that fictional receipt cannot be

deemed to be a receipt in the absence of any cogent material to

support the factum of actual receipt.

Delhi Central-II Vs. D. K. Gupta 174 Taxman 476 upheld the order

of the Tribunal wherein it was held that ad-hoc/dumb documents

without any corroborative evidence/finding that the alleged

documents have materialized into transaction cannot be deemed to

be the income of the Assessee. The relevant part of the judgment is

reproduced herein under:-

“The tribunal returned a finding of fact that there is no corroborative or direct evidence to presume that the notings / jottings had materialized into transactions giving rise to income not disclosed in the regular books of accounts. 4. Consequently, the tribunal upheld the findings of the Commissioner of Income-tax (Appeals) and agreed with the view taken by the latter that the assessee was liable to tax only on those receipts which had been proved to be income in the hands of the

28 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

recipient. As a result thereof, the tribunal found no reason to interfere with the findings recorded by the Commissioner of Income- tax (Appeals) on the ground that the same were based on valid and cogent materials placed on record and also produced before the Assessing officer during the course of assessment proceedings. The tribunal also noted that all the evidence, materials, explanations were furnished before the Assessing Officer and it is on the basis of such material that the Commissioner of Income-tax (Appeals) had arrived at the conclusion that no addition was warranted on the basis of the seized diaries. 5. We have examined the impugned order in detail and have also heard the counsel for the parties and we find that the issues sought to be raised before us are purely issues of fact. The tribunal, being the final fact finding authority, has returned a certain set of facts. We find no perversity in such findings and, consequently, no question of law, what to speak of a substantial question of law, arises for our consideration. The appeal is dismissed.”

Cause v. Union of India (2017) 77 taxmann.com 245 (394 ITR-220

laid down the following principles:-

(i) Entries in loose papers/ sheets are irrelevant and not

admissible under section 34 of the Evidence Act. It is only

where the entries are in the books of account regularly kept,

depending on the nature of occupation, that those are

admissible;

(ii) As to the value of entries in the books of account, such

statement shall not alone be sufficient evidence to charge any

29 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT person with liability, even if they are relevant and admissible,

and that they are only corroborative evidence. Even then

independent evidence is necessary as to trustworthiness of

those entries which is a requirement to fasten the liability;

(iii) The meaning of account book would be spiral note book/

pad but not loose sheets;

(iv) 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 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,

v) Even if books of account are regularly kept in the ordinary

course of business, the entries therein shall not alone be

sufficient evidence to charge any person with liability. It is not

enough merely to prove that the books have been regularly

kept in the course of business and the entries therein are

30 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT correct. It is further incumbent upon the person relying upon

those entries to prove that they were in accordance with facts;

(vi) The court has to be on guard while ordering investigation

against any important Constitutional functionary, officers or

any person in the absence of some cogent legally cognizable

material. When the material on the basis of which

investigation is sought is itself irrelevant to constitute evidence

it is not admissible in evidence.

judicial precedents (supra), in the absence of any corroborative

evidence, the loose sheet seized during the course of search from

the premises of the Assessee which is nothing but a dumb

document which did not contain full details about the dates, parties

name, absence of signature and in the absence of any corroborative

material, could not have been relied by the authorities below.

Accordingly, finding merit in Ground No. 2 of the Assessee, we

delete the addition of Rs. 22,00,000/- made on account of

unaccounted investment and also delete Rs. 2,25,000/- made on

31 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT account of interest income. Accordingly, Ground No. 2 of the

Assessee is allowed.

86,000/- made on account of purchase of spectacle and mobile

phone as unexplained expenditure u/s 69 of the Act.

Page No. 10 & 11 of the Paper Book, the Ld. A.O. made addition of

Rs. 50,000/- and 36,000/- on account of unexplained expenditure

u/s 69 of the Act holding that the Assessee has not offered any

explanation during the course of assessment proceedings to prove

the source of the same. During the course of the appellate

proceedings, the Assessee contended that payment of purchase of

the said items have been made from the cash in hand shown in the

books of the Assessee and recorded in the statements of assets.

The Assessee has also produced the copy of the ledger account of

mobile phone and Drishti Eye Care in respect of spectacles which

are produced at page No. 8 & 9 of the Paper book and the statement

are produced in the Paper Book at Page No. 14 & 15 of the Paper

32 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Book. Though the above documents were well within record of the

Ld. CIT(A), the Ld. CIT(A), has not made any comment on those

documents. Considering the fact that the above cash in hand was

very well recorded in statement of affairs and the ledger accounts of

the vendors have been provided to the Lower Authorities, the

addition of Rs. 86,000/- made u/s 69 of the Act is hereby deleted.

Accordingly, the Ground No. 3 of the Assessee is allowed.

ITA No. 1865/Del/2023 (Assessee) ITA No. 2040/Del/2023 (Revenue) (A.Y 2017-18)

Appeal are regarding addition made by the A.O. based on the diary

found at the premises of third party which has been partly

confirmed by the Ld. CIT(A) by applying peak credit theory. We

have already held in the case of the Assessee for AY 2012-13 that

the addition made on the basis of diary found at the premises of

third party cannot be sustained and deleted the addition made by

the A.O. Since there is no change of facts and circumstances, by

33 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT applying the very same findings and conclusions, we allow the

Ground No.1 and its sub grounds of the Assessee.

Rs. 5, 72,000/- made on account of interest income on the basis of

loose sheets pertaining to one Sh. Dharam Chand and Sh. Beju

Thakur during the assessment year 2016-17.

addition has been made for AY 2016-17 and the issue has been

dealt in detail while deciding Ground No. 2 of Assessee’s appeal in

ITA No. 1864/Del/2023 and held that in the absence of any

corroborative evidence, the loose sheet found during the course of

search from the premises of the Assessee which is nothing but a

dumb document, which did not contain full details about the dates,

parties name, absence of signature and in the absence of any

corroborative material, could not have been relied by the authorities

below and deleted the addition. Since, there is no change in facts

and circumstances by applying the very same finding and the

conclusion, we delete the addition of Rs. 2,25,000/- and Rs.

5,72,000/- by allowing Ground No. 2 of the Assessee’s Appeal.

34 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 57. Ground No. 1 to 4 of the Revenue are regarding deleting the

partial addition made by the A.O. on account of unexplained

receipts and payments in cash from/to Ramesh Goyal by applying

the theory of peak credit.

the diary found at the premises of third party in the Ground No. 1

of the Assessee’s Appeal, the Ground No. 1 to 4 of the Revenue’s

Appeal challenging the partial deletion of the addition by the Ld.

CIT(A) have became in-fructuous, accordingly the ground No. 1 to 4

of the Revenue are dismissed.

1865/Del/2023 is allowed and Appeal of the Revenue in ITA No.

2040/Del/2023 is dismissed.

ITA No. 2588/Del/2023 (Assessee) & ITA No. 2815/Del/2023 (Revenue) (A.Y 2018-19) 60. The Ground No. 1 and its sub Grounds of the Assessee’s

Appeal are regarding addition of Rs. 41,65,110/- made by the A.O.

based on the diary found at the premises of third party which has

been partly confirmed by the Ld. CIT(A) by applying peak credit

theory.

35 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 61. We have already held in the case of the Assessee for AY 2012-

13 that the addition made on the basis of diary found at the

premises of third party cannot be sustained and deleted the

addition made by the A.O. Since there is no change of facts and

circumstances, by applying the very same findings and conclusions,

we delete the addition and allow the Ground No.1 and its sub

grounds of the Assessee.

on account of interest income on the basis of loose sheets. Based

on the very same loose sheets, the addition has been made for AY

2016-17 and the issue has been dealt in detail while deciding

Ground No. 2 of Assessee’s appeal in ITA No. 1864/Del/2023 and

deleted the addition. Since, there is no change in facts and

circumstances, by applying the very same finding and the

conclusion; we delete the addition by allowing Ground No. 2 of the

Assessee’s Appeal.

partial addition made by the A.O. on account of unexplained

36 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT receipts and payments in cash from/to Ramesh Goyal by applying

the theory of peak credit.

the diary found at the premises of third party in the Assessee’s

Appeal, the Ground No. 1 to 4 of the Revenue’s Appeal challenging

the partial deletion of the addition by the Ld. CIT(A) became in-

fructuous, accordingly ground No. 1 to 4 of Revenue are dismissed.

2588/Del/2023 is allowed and Appeal of the Revenue in ITA No.

2815/Del/2023 is dismissed.

ITA No. 2589/Del/2023 (Assessee) (A.Y 2019-20)

22,10,000/- made on account of the loan extended in cash from

unexplained source of income made on the basis of document

seized during the search marked as A-1/76 and Ground No.2 is

regarding the addition of Rs. 1,78,770/- made on account of

interest/commission earned by the Assessee on the loan extended

from unexplained sources of income

37 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 67. Brief facts of the case are that, a search and seizure operation

u/s 132(1) was carried out in the case of the Assessee on

16/10/2019. The Ld. A.O. observed that the loan of Rs.

22,10,000/- along with interest/commission is recorded in the

documents found and seized during the course of search

proceedings from the Assessee. The Ld. A.O. observed that the onus

lies on the Assessee to give satisfactory explanation of the

transactions recorded in the seized documents as per the provision

of Section 132(4A)/ 292C of the Act, accordingly, the A.O. made the

addition which has been confirmed by the Ld. CIT(A).

sheet has been already discussed in detail and deleted the addition

for A.Y 2016-17 in ITA No. 1864/Del/2023 while dealing with

Ground No. 2 of the Assessee. By relying on the very same

adjudication and the conclusion, we delete the above addition of Rs.

22,10,000/- and Rs. 1,78,770/- made by the A.O. on account of

unexplained loan and on account of interest/commission earned by

the Assessee. Accordingly, the Ground No. 1 & 2 of the Assessee

are allowed.

38 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 69. Ground No. 3 of the Assessee is regarding the addition of Rs.

44,32,000/- made by the A.O. u/s 69 of the Act on the basis of the

loose sheet marked as A-1/76 seized during the search

marked as A-1/76 seized during the search had certain amount

jotted and the A.O. presumed that the Assessee made payment of

Rs. 44,32,000/- for the purchase of Plot No. 9A NIT, Faridabad, in

addition to Rs. 1,32,96,000/- as consideration mentioned in the

sale deed. Further submitted that, nowhere in the seized document

the figure of Rs. 44,32,000/- has been mentioned. The A.O.

erroneously made the presumption which ultimately resulted in the

addition which has been confirmed by the Ld. CIT(A), which

requires to be deleted.

orders of the Lower Authorities.

on the loose slips found and seized during the course of the search

which has been marked as A-1/ produced at page No. 34 of the

39 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Paper Book. For the sake of convenience, the seized document is

reproduced as under:-

certain amounts have been jotted and there is no mention of the

alleged amount of ‘Rs. 44,32,000/-’ further while making the

addition, the A.O. presumed the land area of 1108 sq. ft. has been

paid the amount @ 4000/- per sq. ft. and made the addition based

on the said loose sheet without there being any corroborative

evidences. The identical issue regarding the addition based on the

loose sheet has been already discussed in detail and deleted the

addition for A.Y 2016-17 in ITA No. 1864/Del/2023 while dealing

with Ground No. 2 of the Assessee. By relying on the very same

40 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT adjudication and the conclusion and applying the said ratio, we

delete the above addition of Rs. 44,32,000/- made by the A.O. on

account of unexplained loan by allowing Ground No. 3 of the

Assessee.

made on account of unexplained investment in purchase of

jewellery .

were found and seized from the Assessee. On the perusal of the

same, it was found that the Assessee has purchased various

jewellery items on 27.12.2018 for Rs. 1,07,24,720/-. The Assessee

could not explain source of acquisition of the same. It was claiemd

by the Assessee that Assessee's father has given 1.5 kg of gold as

gift to the Assessee. To substantiate the said claim, an affidavit of

Assessee’s father has been filed, but not produced his father before

the A.O. Thus, the A.O. was of the opinion that the Assessee has

failed to substantiate the contents of the affidavit of father of the

assessee in respect of gift of gold of 1.5 kg. Accordingly, the Ld. A.O.

41 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT made addition of Rs. 1,07,24,720/- on account of unexplained

jewellery u/s 69 of the Act.

the Assessee that the jewellery found at the time of search

proceedings and documents seized was out of the gift of 1.5 kg of

gold by Assessee’s father and remaining jewellery were received by

the Assessee and his family members on various occasion such as

marriage. It was also contended that the old jewellery has been

replaced and exchanged.

held as under:-

“The fact of the case and material on record has been gone through. On-going through the assessment order (page No. 11/12) it is found that various documents were found and seized wherein details of jewellery purchased on 27.10.2018 for Rs. 1,07,24,720/- have been clearly recorded. Such documents give complete details of nature of jewellery item purchased, their weight, rate, labour charges and total amount. On the perusal of the same, it is observed that these documents are not in respect of replacement/exchange of old jewellery against new jewellery items. It is clearly a case of purchase of new jewellery as total amount consists of cost of the value of the metal alongwith labour charges. If it would have been the case of exchange of old jewellery against new jewellery, conversion charges should have been recorded

42 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT in such bills, found and seized at the premises of the appellant. Therefore, the explanation offered in this respect during the assessment proceedings/appellant proceedings has been found without any merit. The appellant could not produce his father before the AO. Therefore, contents of the affidavit have remained verified purchased various jewellery items of Rs. 1,07,24,720/- on 27.10.2018 during the year under consideration. The appellant has failed to explain source of purchase of such jewellery items. The onus was upon the appellant to explain such transactions of purchase of jewellery as found recorded in the seized documents as per provision of section 132(4A)/292C of the Act. The appellant has failed to discharge onus in this respect. In this circumstances, there is merit in the addition made by AO of Rs. 1,07,24,720/-. The same is hereby confirmed u/s 69/69A of the Act. Ground of Appeal No. 8 is hereby dismissed.”

regarding the above addition which is reproduced as under:-

“(iii) it is submitted that the Ld. AO has made the addition and further confirmed by the Ld. CIT(A) on account of jewellery on the basis of slips/ parchis were found during the course of search The Ld. AO in his order vide Para 8.1, has mentioned the page No. and description, weight and applied estimated rate and worked out the cost of jewellery. The Ld. AO has taken the figures twice in some cases, the return items have also been considered and the working is not correct. In Page No.A-1/78, (Page No.35 of PB) the figures have been Rs. 19,08,547/- whereas the Ld. AO incorporated Rs.28,08,547/-. On page No.A-1/77, (Page No.36 of PB) the same amount of Rs.28,09,125/- have taken twice and including in page No.78 also. On page No.A-1/22, (Page No.37 of PB) the return figure have also been incorporated amounting to Rs. 1,08,269/-, Rs. 1,35,478/- and Rs.1,16,929/-. Similarly on page No.A-

43 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

1/68, (Page No.38 of PB) the figure of Rs.53,625/- has been included twice as the same figure is part of the figure of Rs. 66,702/- as reconciled hereunder:-

Page Figures Figures Differ Explanation Nos. shown in the estimated ence seized by Ld. documents A.O. A-1/78 (Page 19,08,547 28,09,125 9,00,578 As per seized No. 35 of PB) document amount mentioned was 19,08,547/- whereas the A.O adopted 28,09,125 a-1/77 (Page 28,09,125 28,09,125 Repetition of - No. 36 of PB) same figure as shown on page No. A-1/78 A-1/22 (Page 34.380 grams 1,08,269 1,08,269 Return items return No. 37 of PB) have been considered while estimating the addition A-1/22 (Page 43.020 grams 1,35,478 1,35,478 Returns items have return 37.130 No. 37 of PB) 1,16,929 1,16,929 been considered grams return while estimating the addition. a-1/68 (Page 53,625 53,625+66,7 53,625 Rs. 53,625/- No. 38 of PB) 02=1,20,327 included in the figure of Rs. 66,702/- of the A.O. estimation order 41,24,004

After considering these differences, the value left is only Rs.66,01,872/-(10724720- (900578+2808547+108269+135478+116929+53625). As per the slips found the value of jewellery was approximately Rs.66,01,872/-. The assessee had replaced and exchanged the jewellery as is evident from the pages mentioned in the assessment order. Further, the list of items mentioned at page 24,23,69 and 68 (Page No.39 to 41 of PB) are noting but the list of jewellery available with

44 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT the family members which was prepared to know what jewellery needs to be replaced with new jewellery since all these sets, jewellery were old fashioned and needed replacement The assessee had only purchased jewellery of Rs.5,00,000/- in 2019 from M.S. Diamonds.

It is humbly submitted that during the course of search at the residential premises, the jewellery found from the possession of the assessee and was got valued of which details are as under:-

Gold weight (gross weight in 1622.51 grams) Gold weight (Net weight in 1522.706 grams) Diamond weight (in carat) 131.82 Gold value 52,14,167/- Diamond value 11,27,272/- Silver 38,859/- Total value 63,80,298/- Jewellery seized 14,19,342/-

It is pertinent to mention here that the total jewellery including diamond were found at Rs.63,80,298/- the Ld. AO made addition of Rs. 1,07,24,720/- in the year under consideration on the basis of seized and Rs.63,80,298/- in the AY 2020-21 on the basis of jewellery actually found at the time of search.

The Ld. CIT(A) has wrongly presumed and assumed that jewellery has been purchased for Rs. 1,07,24,720/- during the year under consideration ignoring the fact that during the course of search only jewellery of the value of Rs.63,80,298/- was found and no purchases were made. The items found have been further valued by the Approved Valuer wherein the valuation report description of

45 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

jewellery has been given and each item are matched with the slips found during the course of search. The seized slips found in respect of jewellery in possession of the assessee on account of list of exchange of jewellery. The Ld. CIT(A) has on wrong facts confirmed the addition without appreciating the fact that jewellery found during search is the same and no fresh purchase have been made. Copy of the valuation report is submitted and is marked as page No. 42 and 43 of PB.”

findings and conclusion of the Lower Authorities sought for

dismissal of Ground No. 4 of the assessee.

record. It is the case of the Assessee that the A.O. has taken the

figures twice in some cases and return items have also been in

cooperated and included twice and not properly made the working.

The Ld. Counsel has reconciled the jewellery in following manners:-

Page Nos. Figures Figure Diff Explanation shown in the s ere seized estima nce documents ted by Ld. A.O. A-1/78 (Page No. 19,08,547 28,09,125 9,00,578 As per seized 35 of PB) document amount mentioned was 19,08,547/- whereas the A.O adopted 28,09,125 a-1/77 (Page No. 28,09,125 28,09,125 Repetition of same - 36 of PB) figure as shown on page No. A-1/78 A-1/22 (Page No. 34.380 grams 1,08,269 1,08,269 Return items have return

46 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

37 of PB) been considered while estimating the addition A-1/22 (Page No. 43.020 grams 1,35,478 1,35,478 Returns items have been return 37.130 37 of PB) 1,16,929 1,16,92 considered while grams return 9 estimating the addition. a-1/68 (Page No. 53,625 53,625+6 53,625 Rs. 53,625/- included 38 of PB) 6,702=1,2 in the figure of Rs. 0,327 66,702/- of the A.O. estimation order 41,24,004

value left is only Rs. 66,01,872/- (10,72,4720-900578+2808547+

135478+116929+53625). Further contended that the Assessee has

replaced and exchanged the jewellery and some of the jewelries are

belongs to family members. The Assessee has made detailed

submissions and contended that the value of total jewllery

including diamond found during the search worth at Rs.

63,80,298/-, but the A.O. made addition of Rs. 1,07,24,720/- in the

year under consideration. Considering the above facts and

circumstances, we are of the opinion that it is just and proper to

remand the matter to the file of the A.O. for considering the

reconciliation made by the Assessee and also to consider the

explanation given by the Assessee and decide the issue afresh.

Accordingly, the issue involved in Ground No. 4 of the Assessee’s

47 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Appeal is remanded to the file of the A.O. for de-novo adjudication

with a direction to consider contentions and reconciliation made by

the Assessee and pass fresh order. Accordingly Ground No. 4 of the

Assessee is partly allowed for statistical purpose.

on account of unexplained marriage expenses. During the course

of search proceedings, certain documents were found and seized at

the premises of the Assessee reflecting various expenses in relation

to marriage of his daughter for Rs. 27,17,000/-. Such documents

contained transaction or advance payments through cash/cheque.

As per the A.O. the assessee has not given any satisfactory

explanation regarding source of such payments, thus the A.O. made

addition of Rs. 27,17,000/-, which has been confirmed by the

Assessee.

submissions:-

“As per seized document A-1/34 (Page No.44 of PB) dated 15.09.2018 amount of Rs.2,34,000/- to photographer (Arjun Color Lab) have been mentioned. It was clarified before the lower authorities that actually the payment of Rs.2,41,000/- was made partly through cheque and partly in cash which has recorded in the

48 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT statement of affairs. The Ledger copy showing the details of the payments to the said person is enclosed and marked as page No.45 of PB. As per seized document A- 1/66 (Page No.46 of PB) amount of Rs.3,00,000/- plus taxes have been mentioned against FNP Wedding & Events India Pvt. Ltd. It was clarified before the lower authorities that actually the payment of Rs.5,22,000/- against the tax invoice received from the said company.

Entire payments have been made through banking channels from his saving bank account maintained with Axis bank. The said payments have been recorded in the statement of affairs. The Ledger copy showing the details of the payments to the said person and copy of the bank account are enclosed and marked as page No.47 to 64 of PB and statement of affairs is marked as Page No. 65 and 66 of PB.”

findings of the Lower Authorities and sought for dismissal of the

Ground No. 5 of the Assessee.

pages related to marriage expenses were found and seized. As per

the A.O., the said pages reveals that the Assessee took the

quotation from management companies for marriage of his

daughter for which advance payments were for cheque and cash as

well. The said documents were marked as A1/34 and A1/66 which

are reproduced as under:-

49 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

50 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

51 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 86. In so far as payment made to photographer i.e. Arjun Colour

Lab of Rs. 2,34,000/-, it was contended by the Assessee that the

actual payment of Rs. 2,41,000/- was made partly through cheque

and partly in cash which has been recorded in the statement of

affairs, which can be corroborated from the ledger copy showing the

details of the payments to such person which is enclosed at Page

No. 45 of the Paper Book. In our opinion, the authorities below

committed error in not considering the above materials and made

addition.

Pvt. Ltd. amounting to Rs. 3,00,000/-, it was contended by the

Assessee that actually the payment of Rs. 5,22,000/- against the

tax invoice received from the said company and the entire payments

have been paid through banking channels from Assessees bank

account. The said amount has also been recorded in the statement

of affairs. The copy of the ledger showing the details of the payment

made by the Assessee and the copy of the bank account were also

enclosed in the paper book at Page No. 47 to 64 to prove the claim

of the Assessee. Both the A.O. and the Ld. CIT(A) have not

52 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT considered the above documents and erroneously made the

addition.

catering is concerned, the Ld. A.O. based on the rough quotation

calculated 1500 persons @ 2000 per plate and worked out the total

expenditure at Rs. 30,00,000/- and after allowing the credit of Rs.

8,26,000/-, treated Rs. 21,74,000/- as unexplained expenditure.

Admittedly, the Ld. A.O. made the estimation based on the rough

quotation. In the quotation, the 1500 packs were mentioned and

no rates were mentioned. It is the case of the Assessee that they

had invited only 500 guests and the rate settled was Rs. 1,400/-

per plate. The company has issued GST invoice of Rs. 8,26,000/-

including GST and the payment has been a made by the Assessee

through banking channel from his saving bank account with Axis

Bank and SBI and the payments have been recorded in the

statement of affairs and shown as personal drawings. The Ledger

copy of account of the said party along with GST invoice is

submitted and is marked at Page No. 47 to 64 of PB and statement

of affairs is marked as page No. 65 and 66 of PB. Thus, in our

53 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT opinion, the authorities have committed error in not considering the

above documents while making the above addition. Considering

the above facts and circumstances, we are of the opinion that the

Ld. CIT(A) have committed error in confirming the addition of Rs.

27,17,000/- on account of unexplained marriage expenses, thus,

finding the merit in Ground No. 5 of the Assessee the said addition

is hereby deleted.

2589/Del/2023 is partly allowed for statistical purpose.

ITA No. 2970/Del/2023 (Assessee) (A.Y 2020-21)

Appeal are regarding addition made by the A.O. based on the diary

found at the premises of third party which has been partly

confirmed by the Ld. CIT(A) by applying peak credit theory.

13 that the addition made on the basis of diary found at the

premises of third party cannot be sustained and deleted the

addition made by the A.O. Since there is no change of

54 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT circumstances, by applying the very same findings and conclusions,

we allow the Ground No.1 and its sub grounds of the Assessee.

made on account of cash found at the time of search in the

premises of the Assessee as unexplained income.

Assessee, cash of Rs. 29,78,000/- was found. The A.O. made the

audition u/s 69A of the Act on the ground that the Assessee failed

to explain the source and nature of the cash found. The Ld. CIT(A)

while confirming the addition observed that the Assessee claimed

that the above cash was received as ‘Sagan’ from various friends

and relatives at the time of marriage of his daughter of Rs.

22,01,400/- and remaining cash was explained as belonging to his

father and his wife out of their personal savings, but the claim of

the Assessee is not supported by any evidence, accordingly

confirmed the addition made by the A.O.

CIT(A)/A.O have not considered the submissions made by the

Assessee, the Assessee has filed statement of affairs and cash flow

55 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT statement before the authorities below. The Assessee in his

statement of affairs from AY 2013-14 to 2020-21, declared each

year’s assets and liabilities. As per the cash flow statement and the

statement of financial affairs as on 01/04/2018, the Assessee had

cash balance which has been brought forward in AY 2020-21 and

also during the year under consideration, the Assessee had savings.

Both the authorities have not found any defect in cash flow

statement and statement of affairs and the Ld. CIT(A) erroneously

confirmed the addition without any basis.

orders of the Lower Authorities and sought for dismissal of Ground

No. 2 of the assessee.

has only stated that the ‘Assessee has failed to explain the manner

in which the cash of Rs. 29,78,000/- was derived’ and made the

addition. It is found from the record that the Assessee vide reply

dated 24/09/2021, given explanation which are reproduced as

under:-

56 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT “2. Point No. 2 a) a) Search and seizure action w/s 132 of the Income Tax Act, 1961 was undertaken against the assessee on 16/10/2019 During the course of search action conducted at the residential premises situated at House No. 453-454, Sector-9, Faridabad, cash amounting to Rs. 29,79,400/- was found out of which cash amounting to Rs 29,00,000/-

b) During the course of recording of his statement, he had explained the source of cash found and seized. In his reply, he had stated that the cash found from his premises is the accumulation of following:-

(i) Cash amounting to Rs. 22.41.205/- was received as Sagans from relatives on the occasion of his daughter's marriage Charu on 25.06.2018. The entire list of relatives and their sagan amount was also submitted before the DDIT (Inv.), Faridabad on 19.02.2020, a copy of the said letter is also enclosed for your kind perusal.

(ii) Further, at the request of DDIT(Inv.), Faridabad during post search proceedings, the assessee had also given addresses of certain persons for verification. On the date of search, the assessee had accumulated cash balance of Rs. 22.01.700/- and the balance cash is belonged to the savings of his wife, father who is retired and getting his pension from Military and agricultural income received by him and his family members earned from last 10-15 years.

Thus, the source of entire cash found from his possession stands fully explained and therefore, no adverse view may kindly be taken on this count.

57 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

statement which is placed at Page No. 166 which is reproduced as

under:- KIRAN PAL KHATANA

Cash Flow Statement for the year ended on 31-Mar-20 Particulars Amount (Rs.) Opening balance as on 01 April-2019 25,94,401 Add: rental income 3,66,000 Add: Cash withdrawals from bank 2,80,000 Total 32,40,401 Less: Renovation expenses 8,61,668 Closing balance as on 31 March 2020 23,78,733

As per the above cash flow statement and the statement of affairs

as on 01/04/2019, the Assessee had cash balance of Rs.

25,94,400/- which has been brought forward in the AY 2020-21

and during the year the Assessee claimed to have made some

saving as on the date of search. Thus, the Assessee was having

cash balance of Rs. 29,79,400/- which can be corroborated from

the above documents. Neither the A.O. nor the Ld. CIT(A) have

found any defect in the cash flow statement or in the statement of

affairs of each year and not brought any adverse material on record

to prove contrary against the case of the Assessee. Considering the

above facts and circumstances, we delete the addition of Rs.

29,78,000/- made on account of cash found at the time of search

by allowing Ground No. 2 of the Assessee.

58 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 97. Ground No. 3 is regarding addition of Rs. 3,08,67,500/- and

Rs. 6,17,350/- made on the basis of the seized document as

interest received and computed the principal amount as

unexplained cash investment.

of seized documents, the A.O. observed that the Assessee had

advanced loans of Rs. 3,16,18,400/- to various persons during the

year under consideration. The Assessee explained that the said

documents have been left by some other persons and do not belong

to the Assessee. The A.O. was not satisfied with such explanation,

therefore, the addition of Rs. 3,16,18,400/- was made by the A.O.

on account of unexplained loan u/s 69 of the Act. Further,

addition of Rs. 6,17,350/- was made on account of interest earned

from such loans.

the Assessee taken before the Lower Authorities and further

submitted that the additions have been made on presumption basis

applying two percent per month interest rate and the same has

been made based on the dumb document seized during the course

59 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT of search. The additions have been made purely on surmise and

conjectures without there being any corroborative evidence.

the seized document:-

“presumed the figures as interest and applied 15% interest and worked out amount of principal amount of loan/ investment but actually the names mentioned in the above document are the names of tenants from whom the assessee and his wife received rental income through banking channels after deducting TDS and charging of service tax or GST. The entire income received through banking channels from, such tenants have been reflected in the return of income of the assessee and his wife and duly reconciled with Form No.26AS.

It is pertinent to mention here that:-

Shiva" means Shiva Telecom, as per seized documents A- 1/19b, the figure of Rs.45,000/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs.6,750/-

"Napcotation" under the name and style PAC Machine Tools India LLP, as per seized documents A- 1/19b, (Page No.46 of PB) the figure of Rs.77,760/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs. 11,664/-

"Meenakshi" as per seized documents A-1/19b, (Page No.77 of PB) the figure of Rs. 18,150/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs.2,722/- who vacated the premises in 2016-17 SCO 141, 21C, Ist

60 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Floor, Faridabad and presently rented out in favour of Arshveer Incorporation,

Axis" as per seized documents A-1/19b, (Page No.57 of PB) the figure of Rs.1,35,125/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs.20,269/- means Axis bank to whom the assessee has rented out its premises namely SCO 141, 21C, ground Floor, basement Faridabad,

"Rakesh" (658/21) as per seized documents A-1/19b, (Page No.49 of PB) the figure of Rs.85,000/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs.12,750/- represent the name of Rakesh Jain tenant to whom property bearing No.658 Sector-21, Faridabad was let out by Smt. Kachan Khatana, wife of the assessee. The assessee's wife had received the rental income from Mr. Rakesh Jain from 2015 onwards and the same is duly recorded and declared by her in her return of income for the respective assessment years.

Shivalik, as per seized documents A-1/19b, the figure of Rs.18,150/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs.2,722/-

"SP" means Shiv Poojan Proprietor of M/s SP Engineering who is tenant of Mrs. Kanchan Khatana, wife of the assessee as per seized documents A-1/19b, the figure of Rs.201590/- has been mentioned which has been shown as rental income on which service tax @ 15% have been worked at Rs.20,269/- and she has received and declared the rental income in her return of income for the respective Assessment Years

In support of the above arguments, copy of the rental agreements, placed as page No.46 to 80 of PB.

61 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Computation of income, of the assessee Page No 81 to 118 of PB) The computation of income of the wife of the assessee page Nos. 119 to 149 of PB. It would not be out of place to mention here that all these documents along with the explanation was filed before the Ld. AO and Ld. CIT(A) but both the authorities, have not considered and the Ld. AO presumed the figures as interest, grossing up the hypothetical principal figure and made high pitched addition without any basis and same is unlawful and illegal which is further confirmed by the Ld. CIT(A) by mentioning wrong facts in his order.”

findings of the Lower Authorities and sought for dismissal of

Ground No. 3 of the Assessee.

record. The above addition has been made based on the loose slips

found and seized during the course of the search, which are marked

as A-1/2 to A-1/8 and A-1/9b placed that 38 to 45 of the Paper

Book.

amounts have been jotted. The A.O. presumed that the said

amount as monthly interest @2% per month and based on the

entries jotted therein, worked out the principal amount of loan

investment by applying interest @24% per annum. Further

62 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT considering the rental agreements placed at Page No. 46 to 80 of

Paper Book, computation of income at Page No. 81 to 118 of Paper

Book and the computation of income of the wife of the assessee, we

find merit in the argument of the Assessee's Representative and

hold that the authorities below have committed an error in making

the addition. In addition to the same, the identical issue regarding

the addition based on the loose sheet has been already discussed in

detail and deleted the addition for A.Y 2016-17 in ITA No.

1864/Del/2023 while dealing with Ground No. 2 of the Assessee.

By relying on the very same adjudication and the conclusion and

applying the said ratio, we delete the above addition made by the

A.O. by allowing Ground No. 3 of the Assessee.

45,24,810/- made on account of unexplained investment.

were found containing details of construction expenses incurred by

the Assessee during the year under consideration for construction

work for residential house (453-454, Sector 9, Faridabad) of Rs.

45,24,810/-. The A.O. found that though the Assessee accepted

63 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT that construction work was going on, but he failed to give the

source of expenditure incurred, accordingly, the AO made additions

of Rs. 45,24,810/- u/s 69 of the Act.

that the Assessee failed to give a satisfactory explanation in respect

of construction expenditure of Rs. 45 ,24,810/-.

CIT(A) has not considered detailed submission made along with the

documents produced during the appellate proceedings. Further

submitted the payments have been made either through cash or

banking channels which have been duly reflected in the statement

of affairs, the Assessee had also produced cash flow statement and

ledger account of building renovation, bank account from which

payment have been made and explanation has been given to each

seized document, but the lower authorities have out-rightly rejected

the submission of the Assessee. Therefore, submitted that addition

made by the A.O. which has been confirmed by the Ld. CIT(A) is

liable to be deleted.

64 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT 108. Per contra, the Departmental Representative relying on the

findings of the Lower authorities sought for dismissal of the Ground

No. 4 of the Assessee.

record. During the assessment proceedings, the Assessee give a

detailed explanation of each of the seized document marked as

Annexure-A1 in following manners:-

“

65 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

66 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

67 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

68 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT

assessee for renovation of house property; the payments have been

made either through cash or banking channels which are reflected

in the statement of affairs which is produced at Page No. 10 of

69 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Paper Book. The Assessee has gave explanation to each seized

document before the A.O. as well as the Ld. CIT(A) and also

produced the cash flow statement and ledger accounts of building

renovation, bank account from which the payments have been

made. Both the authorities have not looked into the same and gave

any findings.

as A-1/25 produced at Page No. 178 of the PB amounting to Rs.

10,27,405/- pertaining to son of the Assessee Sh. Digvijay Singh

and he was subject to the assessment u/s 153C of the Act and the

said entry/amount has been considered thereon. The copy of the

assessment order is also placed at page No. 179 to 187 of the PB.

Considering the above facts that the payments have been made

through banking channel as well as by way of cash which have

been duly reflected in the statement of affairs and looking into the

cash flow statement and ledger accounts of building renovation,

bank account from which the payment have been made and an

amount of Rs. 10,27,405/- have been considered in the case of Sh.

Digvijay Singh who was subject to the assessment u/s 153C of the

70 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT Act, we are of the opinion that the Ld. CIT(A) has committed error in

sustaining the addition of Rs. 45,24,810/- on account of

unexplained expenditure in the hands of the assessee. Accordingly,

the Ground No. 4 of the Assessee is allowed.

1,46,050/- made on account of unexplained expenditure for

purchase of foreign currency.

Assessee has made payment in cash for purchase of foreign

currency. The Assessee produced the bank accounts wherein the

Assessee made two payments of Rs. 49,270/- and Rs. 96,780/-

from bank for purchase of foreign currency. The said payment has

been made by two separate cheques. With respect to Rs. 49,270/-,

through cheque No. 49901 dated 04.07.2019 drawn on Axis Bank

Savings Bank account No. 91301007049036. An amount of Rs.

96,780/- was withdrawn from the account of the son of the

Assessee Sh. Digvijay Singh vide Cheque No. 784402 dated

06.07.2019 from his bank account No. 65111564991 maintained

with SBI, Faridabad, which can be corroborated from the statement

71 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT of account produced at page No. 182 to 190 of the PB. Further,

both the bank accounts have duly been reflected in the return of

income and statement of affairs of the Assessee and his son and

same has been shown as personal withdrawal from the capital

account. Considering the above facts and circumstances, we delete

the addition of Rs. 1,46,050/- by allowing Ground No. 5 of the

Assessee.

2970/Del/2023 is allowed.

Order pronounced in the open court on 28th June, 2024

Sd/- Sd/- (SHAMIM YAHYA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 28 .06.2024 *R.N, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI

72 ITA Nos. 1860 & ors/Del/2023 Kiran Pal Singh Vs. DCIT