ACIT Vs Sanjay Gaurishankar Agrawal (ITAT Nagpur)
During a search conducted at the premises of Shri Suresh Bajoria certain loose were found. These papers contained handwritten financial entries & the name “Chhotubhai”. In his statement recorded u/s 132(4), Shri Bajoria initially stated that the papers related to him & his friend “Chhotubhai”, whom the AO assumed to be the assessee, Sanjay Agrawal. The total credit on these pages was ₹5,33,550. AO, without adequate explanation, extrapolated the figure by two decimal places & treated it as ₹5,33,55,000, concluding that it represented the unaccounted income of the assessee. AO relied solely on the seized papers & the initial statement of Shri Bajoria, ignoring his subsequent retraction during cross-examination.
Assessee categorically denied any financial transactions with Shri Bajoria & demanded a cross-examination of Bajoria, which was granted. During the cross-examination, Shri Bajoria retracted his earlier statement, clarified that the loose papers did not belong to the assessee & admitted that the original statement was made under a “perturbed mind”. He also mentioned that the name “Chhotubhai” could refer to anyone & not necessarily the assessee.
Assessee argued that no corroborative evidence was produced linking him to the papers. The mere mention of a common nickname (“Chhotubhai”) could not be the basis for such a huge addition. Extrapolation of ₹5.33 lakh into ₹5.33 crore was arbitrary & without basis. Citing several judicial precedents including Common Cause v. Union of India, CBI v. V.C. Shukla & Pradeep Runwal v. TRO, assessee contended that loose sheets found with a third party & unsupported by other evidence are inadmissible as legal proof.
