Colourful Estates Pvt. Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi held that addition based on documents seized from third party is liable to be set aside since assessing officer failed to tie contact between seized material and the assessee company. Accordingly, appeal allowed and addition deleted.
Facts- A search and seizure action u/s. 132 together with survey proceedings u/s. 133A were conducted at the residential as well as business/office premises of Antriksh Group including residential premises of Shri Rakesh Kumar Yadav on 05.02.2014. In search operations, various incriminating documents allegedly pertaining to the assessee company i.e Colourful Estates were found and seized from the residential premises of Shri Rakesh Kumar Yadav. Consequent upon search, notices u/s.153A of the Act were issued on the assessee.
Pursuant thereto, the assessment of the assessee was completed u/s. 153A(1)(b) rws 143(3) of the Act vide assessment order dated 29.03.2016 wherein additions of INR 6,14,69,315/- were made by the AO.
CIT(A) granted partial relief. Aggrieved by the additions sustained by the Ld.CIT(A) to the extent of INR 1,05,50,000/- towards undisclosed income which stemmed from loose documents/diary etc. found from the residential premise of Shri Rakesh Kumar Yadav, the assessee preferred appeal before the Tribunal.
Conclusion- Held that that the entries found recorded in the diary seized from the residential premises of RKY is not capable of incriminating the assessee company per se. The additions made qua such entries thus are not justified within sweep of s. 153A of the Act. On merits also, the impugned addition is not justified in the absence of any culpability established against the assessee company by some irrefutable evidence as noted above. The revenue has failed to tie the contents of impugned entries discovered from third person with that of assessee co. The statutory presumption is thus not available in the instant case. The onus thus continues to lie at the doorstep of Revenue that the transactions/ entries were consummated by the assessee indeed. Such onus has not been discharged at all. The allegation leveled against the assessee co. is in the realm of bald. Coupled with this, simultaneous addition based on such entries in the hands of other entity militates against action of the revenue and erodes the very foundation of the impugned additions. Thus, we thus find substantial merit in the plea of the assessee on both counts namely lack of jurisdiction under s. 153A for making impugned additions dehors any incriminating material as well as additions being devoid of any merit in the absence of any credible corroboration that such entries unflinchingly relates to the assessee company in exclusion to other entities.
