“Dumb documents” have no evidentiary value, incapable of supporting addition; Deletes Section 69B addition

Chennai ITAT dismisses Revenue’s appeal confirming CIT(A)’s order deleting the addition of Rs. 25,78,98,000/-. Under section 69B r.w.s 115BBE, and observing that the seized material is liable to be treated as “dumb document” having no evidentiary value unless there is independent, credible, and corroborative evidence linking the entries in the seized material to the Assessee; Having examined the seized material, Tribunal opines that none of the impugned pages bear the signature or authentication or contain the name or mentions any identifiable particulars of either the Assessee or vendors connecting the noting of the parties to the impugned transaction; Further, Tribunal draws attention that the seized pages do not contain any particulars identifying the immoveable property alleged to have been transacted and also doesn’t specify the nature of the entities whether they represent receipts or payments, therefore the mode of transaction, payer, payee, and the purpose of entry are wholly absent correlating to the sale transaction of the property; Thus, ITAT asserts that the nature of alleged transactions is entirely ambiguous; Tribunal concurs with the CIT(A)’s observation that it is wholly improbable and contrary to the normal course of human conduct that the title in the property would be transferred first and consideration would be paid thereafter, especially in cash; ITAT states that such a proposition is beyond the test of preponderance of probability; Noting the discrepancy in the loose sheets regarding the purchase of land, ITAT observes that this clearly establishes that the seized papers do not pertain to Assessee’s transaction with the vendors; With regard to evidentiary value of the loose sheets, ITAT observes that in absence of any enquiry or verification, the allegation sought to be drawn from the loose sheets that are admittedly prepared by a third party unconnected with Assessee’s transaction, lacks any evidentiary foundation; Tribunal asserts that the seized notes are incomplete, uncorroborated, and constitute “dumb documents” incapable of supporting addition; ITAT opines that the “seized documents relied upon by the Assessing Officer do not contain any complete or cogent information which may which may legitimately form the basis of drawing an inference regarding alleged on-money payments made by the Assessee”; Reiterating on the details contained in the entries and the absence of the other details, ITAT states that in the absence of such primary and essential details, it is not legally permissible to infer that the entries relate to the assessee or represent income in the hands of the Assessee; ITAT articulates that it is a settled proposition that entries appearing in private notings or diaries maintained by third parties, without supporting evidence or linkage to the Assessee, constitute as “dumb documents” and cannot be relied upon to fasten tax liability; Highlights Supreme Court decision in Common Cause (A Registered Society) v. Union of India (2017) 394 ITR 220 (SC), wherein the Hon’ble Apex Court has categorically held that loose papers, diaries, pen drives, computer printouts and similar material recovered during the course of search and seizure, which are not maintained in the regular course of business, have no evidentiary value in the absence of any corroborative material. A similar view has been expressed by the Hon’ble Karnataka High Court in the case of Sunil Kumar Sharma v. DCIT (2022) 448 ITR 485 (Karnataka), which pertains to an income-tax matter. In the said decision, the Hon’ble High Court, placing reliance upon the judgment of the Hon’ble Supreme Court in Common Cause (A Registered Society) v. Union of India (supra), held that loose sheets of paper or diaries found during the course of search, which are not established to form part of the books of account regularly maintained by the assessee, do not constitute material evidence and, therefore, cannot be relied upon or used against the assesse.

We further draw support from the coordinate bench decision of this Tribunal in the case of Riveria Properties (P) Ltd. v. ITO in ITA No.250/MUM/2013, wherein it was held that the Assessing Officer is required to bring further evidence on record to show that the money was actually exchanged between the parties in a case where there is no other evidence on record to prove that on-money was paid except the loose sheet found in the premise of a third party and admission made by the third party. In view of the foregoing discussion, and having regard to the totality of facts and circumstances of the case, we find no infirmity in the well-reasoned order passed by the Ld. CIT(A). The Ld.CIT(A) has, after due appreciation of the material placed on record and in accordance with the applicable legal principles, rightly deleted the addition of Rs. 25,78,98,000/- made by the Assessing Officer under section 69B r.w.s 115BBE of the Act, on account of alleged unexplained investment. We do not find any justification to depart from the findings recorded by the Ld.CIT(A), which remain uncontroverted by the Revenue with cogent evidence. Accordingly, the grounds of appeal raised by the Revenue are dismissed.
[In favour of assessee]
(Related Assessment year : 2020-21) – [DCIT v. Jaya Pradeep [TS-1630-ITAT-2025(CHNY)] – Date of Judgement : 05.12.2025 (ITAT Chennai)]