Facts of the Case

A search and seizure operation under section 132 of the Income-tax Act, 1961 was conducted on 29.05.2012. Pursuant thereto, assessments for Assessment Years 2007-08, 2009-10 to 2012-13 were completed in the case of the assessee under section 153A read with section 143(3).

In the course of assessment proceedings, the Assessing Officer made multiple additions across various assessment years on account of alleged unexplained advances, unexplained expenditure, undisclosed income, capital gains, and unexplained investments, largely based on seized papers, loose sheets, and entries described as rough notings. The learned CIT(A) partly sustained these additions. Aggrieved, the assessee preferred appeals before the Tribunal.

 Issues Involved

  1. Whether additions can be made under section 153A in the absence of any incriminating material found during the course of search.
  2. Whether loose papers and unsigned notings, described as rough or dumb documents, can form the basis of additions without corroborative evidence.
  3. Whether additions sustained by the CIT(A) were legally sustainable in light of settled judicial precedents.

 Petitioner’s (Assessee’s) Arguments

The assessee submitted that several additions had been made without any incriminating material found during the course of search and were based entirely on records already available prior to the search. It was argued that in view of the settled legal position laid down by the Hon’ble Supreme Court in PCIT vs Abhisar Buildwell (P) Ltd, no addition could be sustained under section 153A for completed assessments in the absence of incriminating material.

It was further contended that the seized papers relied upon by the Assessing Officer were dumb documents, not bearing signatures, dates, or any corroborative evidence, and that some of the transactions were already recorded in the regular books of account. The assessee submitted that additions were made on presumption, surmises, and conjectures without any independent evidence.

 Respondent’s (Revenue’s) Arguments

The Departmental Representative supported the assessment orders and the appellate orders passed by the learned CIT(A), contending that the seized material justified the additions and that the findings of the lower authorities were in accordance with law.

 Court Order / Findings

The Tribunal observed that the additions made by the Assessing Officer and sustained by the learned CIT(A) broadly fell into two categories:
(i) additions made without any incriminating material found during the search, and
(ii) additions based on seized papers which were merely rough and dumb documents without corroboration.

Relying upon the judgment of the Hon’ble Supreme Court in PCIT vs Abhisar Buildwell (P) Ltd and consistent Tribunal decisions, the ITAT held that additions under section 153A cannot be sustained in the absence of incriminating material. The Tribunal further held that dumb documents, without supporting evidence, cannot form the basis of additions. Consequently, all additions sustained by the CIT(A) were deleted and all appeals of the assessee were allowed.

 Important Clarification

The Tribunal clarified that the burden lies on the Revenue to demonstrate the existence of incriminating material found during search and to corroborate seized documents with independent evidence. In the absence of such material, completed assessments cannot be disturbed under section 153A, and additions based merely on conjecture or rough notings are unsustainable in law.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770627574_KAILASHJAISWALGORAKHPURVS.ACITCCALLAHABAD.pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.