Late Shri Ved Prakash Chanana (through L/H Smt. Neelam Chanana) Vs ACIT (ITAT Delhi)
Title 1: Unexplained Cash Addition Deleted: ITAT Voids ₹1.5 Crore Tax on Third-Party Diary Notings; Section 69A Cannot Apply Without Ownership: ITAT Deletes Addition Based on Seized Diary; Not Every Scribble Is Taxable: ITAT Voids Addition for Lack of Corroboration and Ownership; Not every scribble is taxable – ITAT Delhi trashes ₹1.5 crore addition based on third-party diary as mere ‘dumb document’ ,no proof of ownership u/s 69A- Section 69A can’t apply without ownership or possession
A search u/s 132 was conducted in the case of Super Cassettes Industries Pvt. Ltd. (SCIPL) on 28.11.2018, during which a diary belonging to Smt. Sudesh Dua was found. AO inferred from rough jottings in the diary that cash of ₹1.5 crore each was paid to Shri Ved Prakash Chanana, a Director of SCIPL, for AYs 2018-19 & 2019-20, & assessed the same u/s 69A as unexplained income.
CIT(A) restricted the addition to ₹51 lakh, holding it was corroborated by a partial bank match, but treated the rest as unsubstantiated. Both Assessee & Revenue filed appeals.
Before the ITAT, Assessee’s counsel argued that:
- No cash was found during search from Assessee’s premises.
- The seized diary was found at another person’s (SCIPL’s) office.
- The noting was a rough scribble without signature or corroboration—hence a “dumb document.”
- Section 69A applies only where Assessee is “found to be the owner” of unexplained money, which was not the case here.
- Reliance was placed on DCIT v. Yograj Arora (ITA 2440/Del/2022) & Rucha Consultancy LLP v. DCIT (ITA 4996/Mum/2024) where additions based on third-party notings were deleted for lack of ownership evidence.
Department contended that the diary entries indicated cash payments & at least one cheque entry tallied with the Assessee’s bank account, proving the genuineness of the record.
