D.S. Suresh vs ACIT (ITAT Bangalore)
In the present case, the addition is based on the diary jottings found during the course of search action in the case of RNSIL on 16.02.2012. We have carefully gone through the diary jottings recorded earlier part of this order. It contains the entry No.5 – MLA Tarikere Rs.27 lakhs upto 31.07.2010. However, it does not specify date on which it was paid or who has paid. It is not possible to any person to say conclusively that it is relating to these assessment years being the absence of date of payment. Further it is only diary jottings not supported by corroborated material or any independent evidence. In other words, there should be a material on record to show that there is an undisclosed income on the basis of material on hand with the Assessing Officer and guess work is not possible. The Assessing Officer shall have the basis for assuming that there was a payment by RNSIL to the assessee which was not disclosed to the Department. The unsubstantiated diary jottings cannot be considered as a conclusive evidence to make any evidence towards undisclosed escaped income. It was held by the Hon’ble Supreme Court in the case of CBI Vs. V.C. Shukla 3 SCC 410 that “file containing loose sheets or papers are not books” and hence entry therein are not admissible u/s. 34 of the Evidence Act, 1872. In the present case, the seized material having certain entries are found, regarding amount which was presumed thus are illegal payments to the persons mentioned therein. These entries are unsubstantiated. On that basis one cannot reach to the conclusion that figures mentioned therein are the undisclosed payments in these assessment years under consideration to the present assessee. In our opinion, the documents relied on by the Assessing Officer for making addition in these assessment years was dumb document and lead nowhere since these diary jottings are not supported by any corroborative material or evidence to show that the information made by lower authorities is correct. Further unsigned document in the form of diary jottings cannot be relied upon for making or sustaining the addition.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals by the assessee are directed against separate orders of Commissioner of Income Tax (Appeals)-1, Bangalore for the Assessment Years 2009-10 & 2011-12. The grounds in these appeals are common in nature, only change in figures, hence these appeals are heard together for the sake of convenience and common order is passed.
2. The first ground in this appeal is with regard to reopening of the assessment on the reason that the conditions precedent for reopening of the assessment u/s. 147 does not exist. Thus the assessment to be quashed.
3. The next ground in this appeal is with regard to addition made on account of receipt of money from RNS Infrastructure Limited is bad in law since the Assessing Officer has not provided an opportunity to rebut the alleged retrieved data which has used against the assessee.
4. The third ground is that the CIT (Appeals) ought to have deleted the addition on the reason that the assessee has not received any money during the Assessment Year 2009-10 at Rs.10 lakhs and Rs.49 lakhs during the Assessment Year 2011-
5. The last ground is with regard to levy of interest u/s.234A, 234B and 234C of the Act.
6. The facts of the case are that the assessee is an individual having income from partnership firm and other sources. In the Assessment Year 2009-1 0the assessee filed Return of Income on 22.3.2010 declaring an income of Rs. 1,80,139 and for the Assessment Year 2011-12, the assessee declared income at Rs.2,87,140 on 20.01 .2016 in response to Notice u/s. 148 of the Act. In A.Y. 2011-12, there was no Return of Income filed by the assessee u/s. 139(1) of the Act. Actually there was search action in the case of M/s. RNS Infrastructure Ltd. at Naveen Complex, 7th Floor, MG Road, Bangalore and at Murdeshwar Bhawan, 604-B, Gokul Road, Hubli, evidence was gathered which pointed to receipt of certain amounts by the assessee from the above company. These payments were made in cash and were not disclosed in the regular books of accounts of the above company. Information relating to such payments were gathered from the diary notings of several key personnel of the company as also from the deleted accounts named and styled “Sundry Payments” which were retrieved from the hard disks of the searched company. Consequent to this, the Assessing Officer issued Notice u/s. 148 for the Assessment Year 2009-10 on 13.3.2015. In response to the same, the assessee filed Return of Income on 20.01.2016 disclosing income of Rs.2,07,170 for the Assessment Year 2009-10. Similarly, Notice u/s. 148 was issued for the Assessment Year 2011-12 on 13.3.2015 as narrated earlier, the assessee filed return in response to Notice u/s. 148 of the Act on 20.03.2016, the assessee filed Return of Income declaring an income of Rs.2,87,140. The Assessing Officer while completing the assessment u/s. 143(3) r.w.s. 147 of the Act in these assessment years considered the material seized from the RNS Infrastructure Limited (RNSIL). M/s. RNS Infrastructure Limited is a leading contractor which has executed various Government contracts for roads and projects, canals in Karnataka including Upper Badra Irrigation Canal works costing Rs1,100 Crores. There was seized material in the form of daily jottings and recordings in the computer relating to the various payments made by RNSIL to public servants, Bureaucrats and politicians. Jottings are in the hand writing of the Vice President (Finance) of RNSIL. The digital evidence has been retrieved in a foolproof manner using the specialized forensic software “ENCASE” with MD5 hash value. Relating to the assessee, there was a payment entry of an amount of Rs.10 lakhs in the Assessment Year 2009-10 and Rs.49 lakhs in the Assessment Year 2011-12. The Assessing Officer on this issue, made respective additions in these assessment years under the head ‘income from other sources. Against the reopening of assessment and also on making addition by the Assessing Officer, the assessee challenged before the CIT (Appeals). The CIT (Appeals), both on reopening of assessment and addition made on merit sustained the findings of the Assessing Officer. Aggrieved by the order of CIT (Appeals), the assessee is in appeal before us.
7. The first issue for our consideration is with regard to reopening of assessment. The learned Authorised Representative submitted that the reasons recorded does not show that income has escaped from assessment in the assessment years under consideration. The seized material relied on by the ld. AR for reopening of assessment does not show that any chargeable income to tax had escaped assessment and there is no nexus with the conclusion reached by the Assessing Officer. He drew our attention to the reasons recorded for reopening of assessment which show that there was a payment of Rs. 10 lakhs and Rs.49 lakhs to the present assessee in the Assessment Year 2009-10 and 2010-11 respectively. However, there was no mention of these amounts relating to these assessment years under consideration. He submitted that as per the details furnished by the CIT(Appeals) in his order in para 5.4 does not contain the name of the assessee or date of payment of Rs.27 lakhs to the assessee. On the other hand, it contains only details as follows :
