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Judgment
Per Sanjay Awasthi, Accountant Member:
The present appeal arises from order dated 31.12.2025, passed u/s 250 of the Income Tax Act,1961 (hereinafter referred to as ‘the Act’), by Ld. CIT(A), Delhi-26.
In this case it is seen that some information had been received by the Ld. AO that during the course of a search action on one Shri Shivaji Bhimaji Gaikwad and related concerns at Nashik on 21.10.2021, certain allegedly incriminating documents were found and seized. During the course of such search action, a loose sheet (annexure A, item no. 2 at page no. 100-102) was found on which some rough noting was there regarding a land transaction of six acres @ 54 lakhs per acre totaling to Rs. 3,24,00,000/-, out of which Rs. 1,57,80,000/- was shown as agreement cost and balance amount of Rs. 1,66,20,000/- was supposed to have been paid in cash. The contents of the said loose papers had apparently been explained by the searched person as pertaining to the sale of land made to Shir Jitendra Lohani (assessee). It is on this basis that the Ld. AO made an addition of Rs. 1,66,20,000/-u/s 69A of the Act.
Aggrieved, the assessee approached the Ld. CIT(A), where also he could not succeed on the basis of detailed findings recorded in the impugned order, where the importance of statement under oath recorded u/s 132(4) of the Act, having evidentiary value has been discussed and, on this basis, the loose sheets of paper have been linked to the assessee under consideration.
Aggrieved, the assessee has approached the ITAT with lengthy grounds challenging the action on merits as also on certain legal grounds. The crux of the challenge by the assessee revolves around the fact that there is no mention of the name of the assessee on the loose sheets of paper at least with respect to the cash allegedly paid by him. It is also a part of the grounds that a bald statement by the searched person, would not itself be sufficient to link up the assessee with any undisclosed transaction.
g) 2. Before us, the Ld. AR took us through the impugned order of the of the Ld. AO to demonstrate that the only factor linking the assessee with the loose sheet of paper was the statement recorded of the searched person u/s 132(4) of the Act. It was stated that the assessee had requested for an opportunity to cross examine the searched person but the same was never provided. In fact, it was pointed out that at page 25 of the AO’s order, the fact of denial of opportunity has been discussed with the help of some case laws to canvass the point that it is not always feasible to provide such opportunities. The Ld. AR submitted that the entire addition was based on third-party loose diary pages and a third-party statement as no incriminating material was found from the appellant, no cash was found from the appellant, no seller had confirmed receipt of cash from the appellant, and no independent enquiry was ever conducted by the AO to establish payment of any amount over and above the registered sale consideration. The Ld. AR also vehemently argued that the assessee had not purchased any land from Shri Shivaji Bhimji Gaikwad and this fact could be verified from copies of sale deed and payments made through banking channels. However, the Ld. AR also stated that certain real estate transactions were undertaken by the assessee but they were not as claimed by the Ld. AO. It was the submission that the Ld. AO did not examine the evidence filed by the assessee and simply went by the statement of the searched person in making the impugned addition. It was the submission that in the present case the assessee’s registered transaction was supported by sale deeds and was done through banking channels. It was argued that the AO did not conduct any independent enquiry and merely relied on third-party search material. It was then stated that the seized diary was only a third-party document and could not be used against the assessee without independent corroboration. The Ld. AR submitted that while it was true that two land parcels were purchased by the assessee in Nashik but the same were registered at values higher than the stamp duty value prevalent in the area. It was emphasized that the loose papers do not contain the name of the assessee on pages 100 and 102 and they do not mention the name of the seller. Also, they do not mention the land, survey number, Gat number, etc. Also, the dates appearing on the diary do not match the alleged transaction period. The Ld. AR relied on the case of Vivek Aggarwal reported 56 taxmann.com 7 (Del) to canvass the point that any addition made on the basis of seized documents, which were undated and unsigned (as in this case) could not be taken on their face value. The Ld. AR placed copies of the loose sheets, which have also been extracted on pages 58-59 of the impugned order, as under:
The Ld. AR concluded his argument by stating that neither any nexus between the assessee and the loose sheets was established nor has the AO conducted any enquiry or verification to show that some money over and above the amount mentioned in the sale deed was paid by the assessee.
The Ld. DR relied on the orders of the authorities below and took up through various findings in the impugned order, as also the order of the Ld. AO. It was argued that the documents found in possession of searched person were corroborated by statement made on oath in which the name of the assessee was correctly mentioned. It was also pointed out that the assessee had purchased land in Nashik District of Maharashtra, and the name of “Lohani” was duly mentioned in the seized material. It was the submission that the assessee could not establish through any evidence that the said transaction was not his.
We have considered the rival submissions and perused the material available on record. We find that the Ld. AO has relied on loose sheets (extract above) which do not visibly depict the transaction as involving the assessee. The only link between the assessee and the loose sheet is on account of a statement u/s 132(4) of the Act. This statement itself has not been confronted to the assessee to the extent that opportunity of cross examination was not provided. Furthermore, a document can be used against an assessee only when it clearly identifies the parties, the property in question, the date of such transaction, and the nature of payment. The present diary pages do not satisfy any of these requirements as they are unsigned, not authored by the assessee, not recovered from him, and not independently corroborated. The decision in the case of Vivek Aggarwal (supra) will apply here, considering the finding in para 13 of this order:
“13.Given the above state of law - and this Court has no hesitation in so concluding, since the document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of the AO, the ITAT's view which endorsed the findings of the CIT(Appeals) were well-founded and do not call for interference. The reliance placed upon Smt. Urmila Gambhir (supra) in this Court's opinion is inapt because in that case there was other corroborative material for the income tax authorities to link the description of the transactions found in the said innocuous document seized with respect to other material. However, such inference cannot be drawn in this case because there is no other material. On the contrary the AO's acceptance and finalization of the assessment for 2007-08 on the basis of salary income of the assessee, undermines the entire findings with respect to the inferences drawn and the additions made, indicated above. The question of law urged, therefore, is not substantial and is answered against the revenue.”
A bare perusal of the loose sheet does not give any indication that any transaction with the assessee is evident thereon. The Ld. AR had brought to our notice that the diary refers to “6 acres” whereas the assessee had purchased 2.40 hectares of land, which was approximately 5.93 acres. The registered sale deeds mention 2.40 hectares and not 6 acres. The Ld. AR had also pointed out that the amount of Rs. 1,57,80,000/- appearing on one page does not tally with the figure of Rs. 1,56,66,000/- appearing on page 69. We find that these factual objections have not been disproved through any independent enquiry. Also, the assessee had explained that on Page 69, wherever the name “Lohani” appears, there is a record of cheque payment which was duly explained from the bank transactions and registered documents. The word “cash” appeared only against a small amount of Rs.6,000/- on Page 69, and on the other page the expression “Token Cash” appears only once. Therefore, there is no basis to presume that all figures written on loose diary pages represent cash paid by the appellant. Accordingly, it deserves to be held that there is no live nexus between the seized material relied on by the Ld. AO and the assessee. In the absence of any corroborative evidence, and even any clarity of whether or not any transaction actually happened between the assessee and the searched person, we are unable to support the findings of the Ld. AO. The addition is accordingly directed to be deleted.
In the result, appeal of the assessee is allowed.