Tara Health Foods Ltd Vs DCIT (ITAT Chandigarh)
ITAT Chandigarh held that addition on the basis of loose paper without any corroborative material is not sustainable in law. Accordingly, addition is directed to be deleted and appeal is allowed.
Facts- A search u/s 132 of the Income Tax Act was conducted at the business premises of M/s Tara Health Foods Ltd. On 12.10.2010. Accordingly, a notice u/s 153A was issued and served upon the assessee. Based on loose paper, AO made an addition of Rs.7 Crore to the total income of the assessee. CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that company has categorically denied any such transaction with it. It is not discernable whether it was a loan or it was some payment in connection with some transaction. The Department has carried out a search & seizure operation upon the assessee, therefore, it could easily discover the connection of this loose paper with any transaction, either unexplained investment in the machinery or anything else, but it could not collect any corroborative material from the assessee. The DDIT (Investigation) has called for the information from M/s Muez Hest Process Tech (P) Ltd. But that concern has specifically denied of any such transaction with it. It is also pertinent to note that Department presume existence of loan and repayment of loan in cash in the hands of M/s Muez Hest Process Tech (P) Ltd. but CIT (Appeals) has deleted levy of penalty u/s 271D and 271E of the Income Tax Act. The orders of the CIT (Appeals) have been upheld by the ITAT Mumbai Bench, whose copies are available on page No. 50 of the case-law Paper Book. Therefore, we are of the view that in the absence of any corroborative material, it is difficult to draw an inference that any cash was transmitted by the assessee to alleged M/s Muez Hest Process Tech (P) Ltd. and it has received back the cash. Therefore, we are of the view that this addition is not sustainable. Accordingly, we delete the addition.
