“Kalra Ji” on Loose Papers Not Enough: ITAT Deletes ₹1.2 Cr Addition for Lack of Evidence

Ashish Kalra Vs ACIT (ITAT Delhi)

ITAT DELHI deletes addition of alleged cash receipts – no evidence, contradictions in statements, earlier year accepted- Loose Papers & “Kalra Ji” Not Enough! ITAT Quashes ₹1.20 Cr Cash Receipt Addition & Even Deletes ₹5 Lakh Enhancement

Assessee was a faculty member teaching CA students for Bright Professional Pvt. Ltd. A search took place in Bright Group & loose papers (Annexure A-29 & A-30) allegedly showed cash paid to “Kalra ji”. On this basis, AO reopened u/s 147 & added ₹1.20 crore as undisclosed cash receipts. CIT(A) not only confirmed the addition but also enhanced ₹5 lakh received by cheque.

Assessee’s defence:

• No direct evidence of receiving any cash.
• His name not in seized papers; only “Kalra Ji” is mentioned.
• Statement of Bright Group Director (u/s 132(4)) did not name assessee.
• Director admitted no evidence of cash payments maintained.
• Faculty stopped teaching in Feb/March 2008 – yet additions made even beyond that.
• Bright Group claimed large batches of 500-600 students in auditoriums, but could not give any auditorium name, rent details, attendance registers, or proof of rent.
• Affidavits of students & study material showed actual batches of only 100-110 students at Laxmi Nagar premises, not auditoriums.
• In AY 2007-08, CIT(A) deleted similar addition on same documents, accepted by Revenue.
• In other faculty cases, additions deleted or ITAT also deleted (e.g., Vikas Kapoor case).

Tribunal’s Findings:

• Seized papers only say “Kalra Ji”, no proof it refers to assessee.
• Initial statements of directors do not support Revenue’s case.
• Revenue failed to show where classes were held or how 400-500 students attended.
• Huge contradiction between statements of different directors.
• No corroborative evidence – only loose papers = “dumb document”.
• Past year’s similar addition already deleted & accepted by department.
• Principle of consistency + absence of evidence = addition unsustainable.

Regarding ₹5 lakh cheque:

• Assessee received ₹5 lakh by cheque from Bright Star.
• He returned same amount by cheque after 6 months.
• No TDS deducted – proves it was loan, not income.
• Hence, enhancement also unjustified.

Result:

• Reopening u/s 147 upheld (in view of jurisdictional HC),
• BUT entire addition of ₹1.20 crore deleted,
• Enhancement of ₹5 lakh also deleted.

Key Reason: