Case Law Details
ACIT Vs Swapna Mohan (ITAT Delhi)
ITAT Delhi held that addition towards undisclosed income merely on the basis of conjectures cannot be sustained in the eye of law. Further, also held that addition purely based on post-dated cheques cannot be sustained.
Facts- A search action was carried out by the Economic Offence Wing CID, Bangalore on 05.08.2015 on M/s PSIK Finance Solutions Pvt. Ltd. group. Based upon that, search u/s 132A of the Income-tax Act, 1961 was also carried out on the residential premises of the assessee on 08.08.2015. As per AO, various material/documents were found and seized and statements of various persons were also recorded. AO further noticed that the assessee filed original return of her income u/s 139(1) of the Act on 26.09.2016 declaring total income at Rs. 5,93,910/- which was processed u/s 143(1) of the Act. Thereafter, AO proceeded to frame assessment u/s 143(3) of the Act. Thereby he made addition on account of unexplained investment of Rs. 2,45,00,000/- and assessed income at Rs. 2,50,93,910/-.
CIT(A) deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the law is well settled that the addition made on the basis of conjectures cannot be sustained in the eye of law. CIT(Appeals) has rightly followed the decision of the co-ordinate Bench [ITA nos. 374-375/Ahmd/2002] that no addition can be made purely on the basis of post-dated cheques. In the case in hand impugned addition has been made on the basis of the post dated cheques recovered from the possession of the assessee. The explanation offered by the assessee is not controverted by the AO. Moreover, the AO has failed to establish any link of post dated cheques with undisclosed income of the assessee. In the absence of such nexus or link it cannot be construed that such cheques related to some unexplained income of the assessee. Therefore, we do not see any infirmity into the finding on fact recorded by the learned CIT(Appeals). The same is hereby upheld. The grievance raised by the Revenue lacks merit, hence dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-29, New Delhi, dated 02.11.2018, pertaining to the assessment year 2008-09. The assessee has raised following grounds of appeal:
“1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,45,00,000/- u/s 69 of the IT Act.”
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate the facts that:-
(i). During the course of search proceedings three PDCs (post dated cheques) bearing cheque No. 033623 dated 04.12.2015, 056675 dated 08.2015 and 056673 dated 25.08.2015 amounting to Rs. 2,00,00,000/-, Rs. 50,00,000/- and Rs. 5,00,000/- respectively in favour of the assessee issued by M/s Amrapali Sapphire Developers Pvt. Ltd. and Ultra Home Construction Pvt. Ltd. were found. The above three PDCs are issued against the cash payment made by the assessee for acquiring different properties/spaces in the projects of M/s Amrapali Group. The sources of the investment are unexplained on the part of the assessee.
(ii). It is established that the assessee had made payment to Amrapali Sapphire Pvt. Ltd., since the assessee had made payment of Rs. 10.00 lacs through cheques (bearing no. 185206 & 185205 dated 05.08.2014 of Rs. 5,00,000/- each) which are verifiable from the bank account of the assessee.
(iii). The assessee has first paid towards her investment with M/s Amrapali Group which has not been disclosed to the extent of Rs. 2,45,00,000/-. The returns of investment of Rs. 2,55,00,000/- was received as PDCs state above.
3. That the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law.
4. That the grounds of appeal are without prejudice to each other.
5. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time hearing of the appeal.”
2. Facts, in brief, are that in this case a search action was carried out by the Economic Offence Wing CID, Bangalore on 05.08.2015 on M/s PSIK Finance Solutions Pvt. Ltd. group. Based upon that, search u/s 132A of the Income-tax Act, 1961, hereinafter referred to as the “Act”, was also carried out on the residential premises of the assessee on 08.08.2015. As per the Assessing Officer various material/documents were found and seized and statements of various persons were also recorded. The Assessing Officer further noticed that the assessee filed original return of her income u/s 139(1) of the Act on 26.09.20 16 declaring total income at Rs. 5,93,910/- which was processed u/s 143(1) of the Act. Thereafter, the Assessing Officer proceeded to frame assessment u/s 143(3) of the Act. Thereby he made addition on account of unexplained investment of Rs. 2,45,00,000/- and assessed income at Rs. 2,50,93,910/-. Aggrieved against this assessee preferred appeal before learned CIT(Appeals), who after considering the submissions deleted the impugned addition. Now the Revenue is in appeal before this Tribunal.
3. Apropos to the grounds of appeal learned CIT(DR) submitted that the learned CIT(Appeals) was not justified in deleting the addition. She submitted that during the course of search proceedings certain post dated cheques were recovered from the possession of the assessee.
4. On the other hand, learned counsel for the assessee opposed the submissions and supported the order of learned CIT(Appeals). He further placed reliance on the judgment of Hon’ble Delhi High Court rendered in the case of CIT v. Girish Chaudhary (2008) 296 ITR 619 (Del.) to buttress the contention that the post dated cheque being dumb document cannot be relied upon. He submitted that the impugned addition made by the Assessing Officer on the basis of presumption is not justified in law. He further submitted that Assessing Officer has not brought any corroborative evidence whatsoever to support the presumption drawn by him. He further submitted that post dated cheque of Rs. 2,00,00,000/- was issued by Amrapali Group as security to the assessee group against the amount of Rs. 2 crores advanced by PSK to the Amrapali Group vide cheque dated 01.07.2014.
5. Heard the rival submissions and perused the material available on record. We find that learned CIT(Appeals) has given a detailed finding on the issue in question by observing as under:
“8.4 I have considered the facts and circumstances of the case, submission of the appellant and perused the AO’s order. The A. O. has made the addition of Rs.2,45,00,000/- solely on the basis of the three seized PDCs issued in the name of the appellant by two companies of the Amrapali Group. The addition has been made by the A. O. by rejecting the explanation furnished by the assessee and by drawing a presumption that the appellant must have made unaccounted investments with the Amrapali Group against which the three PDCs would have been issued by the two companies of the Amrapali Group in the name of the appellant. On the other hand, the appellant has furnished detailed explanation in respect of the three seized PDCs to explain how three seized PDCs do not relate to any unaccounted income/ investments made by her. The appellant has contended that the said explanation is substantiated by documentary evidences mainly in the form of MOU dated 08/07/2014 entered between PSK and UHCPL which was seized during the course of search action and payments made by PSK to UHCPL through banking channel in terms of the seized MOU and hence, the A.O. is not justified in rejecting the explanation furnished by the appellant. The appellant has further contended that the presumption drawn by the A. O. is not supported by any corroborative evidence and in the absence of an iota of evidence found during search to show that the appellant has made any unaccounted payment to Amrapali Group, such presumption drawn by the A. Ο. solely on the basis of the three PDCs is not warranted. It has been contended that the appellant is deriving nominal income from tuition fees and hence, even applying the principles of human probability, it is not possible that the appellant could have made huge unaccounted investments of Rs.2.45 Crores with the Amrapali Group. The appellant has claimed that before rejecting the explanation furnished by the appellant, the A. O. has not demonstrated as to how the appellant, who is earning nominal income from tuition fees, could have generated huge unaccounted funds of Rs.2.45 Crores and hence, the presumption drawn by the A. O. is baseless. It has been reiterated that if the appellant would have paid such huge unaccounted amount of Rs.2.45 Crores to the Amrapali Group, then at atleast some evidence, jotting, notings etc. would have found in the course of the extensive search action conducted by the Dept. on all the various premises of the assessee and her family members. However, the A. O. has not brought an iota of corroborative evidence on record to support the presumption drawn by her and therefore the appellant has contended that the addition made by the A.O. on the basis of presumption and surmises is not justified in law. The appellant has also stated that the minor discrepancies pointed out by the A. O. for rejecting the explanation furnished by the appellant are not justified on facts of the case. The appellant has relied upon various judicial decisions in support of her case. Accordingly, it has been contended that the addition of Rs.2.45 crores made by the A.O. purely on the basis of presumption and surmises without bringing any corroborative evidence on record and rejecting the explanation furnished by the appellant which is supported by documentary evidences in not justified in law and on facts of the case.
8.5 It is a fact on record that the appellant has discharged the initial onus cast upon her to furnish explanation as to how the seized PDCs do not represent any unaccounted transactions entered into by her. The appellant has also substantiated the said explanation by way of documentary evidences in the form of MOU which was seized during search action and bank payments made by PSK as per the terms of the said MOU. The A.O. has rejected the said explanation furnished by the appellant and thereafter, she has drawn a presumption on the basis of the three seized PDCs without bringing any corroborative evidence on record in support of the presumption drawn by her. Now, the first issue which needs to be addressed is whether on the facts of the instant case, the A. O. was justified in rejecting the explanation furnished by the appellant in respect of the three seized PDCs even though the same was substantiated by documentary evidences. The second issue which needs to be addressed is that if it is found that the explanation furnished by the appellant is not acceptable, then is the A. O. justified in drawing the above presumption against the appellant solely on the basis of the three PDCs when the presumption drawn by the A. O. is not supported by any corroborative evidence.
8.6 The explanation offered by the appellant in respect of the PDC of Rs.2 Crores issued by ASDPL marked as page no. 100 was that the husband of the appellant was looking after the operations of the company, M/s. PSK which was owned by the family members of the appellant. During the relevant period, the company, M/s. UHCPL belonging to Amrapali Realty Group had received a contract from Greater Noida Industrial Development Authority for development of a ‘Recreational Entertainment Park’ project at Royal Golf Link City, Greater Noida. The Amrapali Group was in need of funds for development of the said project and hence, it had approached PSK for arranging the funds. PSK had agreed to arrange funds of Rs.20 Crores for the said project to be undertaken by the Amrapali Group and an MOU dated 08.0 7.2014 was also entered between UHCPL and PSK in this respect. The said MOU was also seized during search action conducted at the residential premises of the appellant joint family. In that very MOU, it was agreed between PSK and UHCPL/ Amrapali Group that as a security against the funds of Rs.20 Crs. to be advanced/ arranged by PSK, the Amrapali Group shall give post-dated cheques to the extent of the amount advanced by PSK. The appellant has stated that out of the total funds of Rs.20 Crs. promised to be raised as per the MOU, PSK had advanced funds of Rs.2 Crs. to UHCPL by way of four cheque nos.010315, 010316, 010317 & 010318, all dated 03.0 7.2014 of Rs.50 lacs each. The appellant has explained that the seized PDC of Rs.2 Crores at page no. 100 was issued by the Amrapali Group as a security to the assessee group against the amount of Rs.2 Crs. advanced by PSK to the Amrapali Group/ UHCPL vide cheques dated 01.0 7.2014. The appellant has stated that the said amount was advanced by PSK to the Amrapali Group/ UHCPL in terms of the MOU dated 08/07/2014 and in this very MOU, it was specifically stated that as against the amount advanced by PSK/ assessee group, the Amrapali Group shall issue Post Dated Cheques as a security to the extent of the amount advanced by PSK/ assessee group. Thus, the appellant has explained that the fact that the above PDC of Rs.2 Crores was issued as a security against the amount of Rs.2 Crores advanced by PSK to Amrapali Group was evident from the documentary evidence in the form of seized MOU and payment of Rs.2 Crores made by PSK to the Amrapali Group through banking channel.
8.6.1 With regards to the objection raised by the A. O. that the PDC has been issued by ASDPL, even though the amount of Rs.2 Crores was advanced by PSK to UHCPL in terms of the MOU, the appellant has explained that both the companies, i.e. UHCPL and ASDPL were belonging to the same ‘Amrapali’ Realty Group and this fact has also been stated in the MOU. The appellant has also furnished documentary evidences in the form of records downloaded from MCA portal to demonstrate that both these companies were established and run under the common leadership of the founder director of the Amrapali Group, Mr. Anil Kumar Sharma. The appellant has explained that at the relevant point of time, the Amrapali Group was facing liquidity issues and hence, they may have issued the PDC from ASDPL instead of UHCPL as part of their internal fund management. It has been explained that the assessee group was only concerned with getting into its custody a PDC of Rs.2 Cr. from the Amrapali Group which would safeguard its interests. Thus, the fact that the PDC was issued from account of ASDPL instead of the account of UHCPL was not material to the assessee group since it had received the security as promised by the Amrapali Group! UHCPL in the MOU. Similarly, with regards to the objection raised by the A. O. that although the amount was advanced by PSK to the Amrapali Group, the PDC was issued in the name of the appellant, the appellant has explained that the PSK company was entirely owned by the family members of the appellant and the operations of the said company were looked after by the husband of the appellant, Shri Atul Mohan. The appellant has explained that the Amrapali Group had issued the PDC in the name of the appellant as per the instructions of the husband of the appellant who was running the company. I find that the above explanation offered by the appellant is certainly a plausible one and it appears to be reasonable on the facts of the case.
8.6.2 The most important fact that has been pointed out by the A.R. is that it is not disputed that PSK group had advanced an amount of Rs.2 Crores to the Amrapali Group i.e. UHCPL vide four cheques dated 03!07!2014 and this fact has also been stated in the seized MOU dated 08!07!2014. It is also not in dispute that as per the terms specifically mentioned in the seized MOU, the Amrapali Group! UHCPL was to return the amount within a period of 18 months and as a security against the said repayment, Amrapali Group! UHCPL was to issue Post Dated Cheques to PSK Group to the extent of amount advanced by PSK. The appellant has claimed that the seized PDC of Rs.2 Crores dated 04!12!2015 issued by ASDPL in the name of the appellant is the PDC issued by Amrapali Group as a security against amount advanced by PSK to UHCPL in terms of the above seized MOU. The A.R. for the appellant has contended that for the time being, even if go by the presumption of the A. O. that this seized PDC is not the PDC issued by Amrapali Group as a security against the amount advanced by PSK, then as per the undisputed facts stated in the MOU, a different PDC amounting to Rs.2 Crs. issued by UHCPL to PSK would certainly have been found in the course of extensive search proceedings conducted by the Dept. on the various commercial as well as residential premises of the appellant group at New Delhi and Ben galuru. However, no such PDC issued by UHCPL in the name of PSK has been found by the Dept. from any of the searched premises. Accordingly, the appellant has contended that the presumption drawn by the A. O. fails to hold ground on the facts of the case and hence, the same is not justified. I find considerable force in the above argument advanced by the Id. A.R. for the appellant. It is further observed that the period of repayment stated in the seized MOU also matches with the dates of amount advanced by PSK and date of the seized PDC. In my considered opinion, all the above facts lead to an inevitable conclusion that the explanation furnished by the appellant is substantiated by documentary evidences in the form of seized MOU and bank payments made by PSK and hence, the same cannot be rejected solely on the basis of presumptions and surmises.
8.6.3 With regards to the objection raised by the A.O. that the appellant has failed to furnish confirmation from the Amrapali Group in support of the above explanation, it is noticed that in the course of the asstt. proceedings, the appellant had requested the A.O. to verify the said facts from the records of Amrapali Group. The A. O. had issued notices u/s 133(6) and summons u/s 131 to ASDPL and UHCPL. However, there was no response from any of the two companies of the Amrapali Group against the same. Further, the appellant was also not able to furnish confirmation from the Amrapali Group in the course of the asstt. proceedings. In this regard, the appellant has submitted that the Amrapali Group is on the verge of bankruptcy and various legal suits filed by the customers/ investors against the said group are under progress before NCLT, Supreme Court and other forums. In support of this contention, the appellant has also filed copy of public notice issued in newspaper in respect of insolvency process initiated in case of Ultra Homes Construction Pvt. Ltd. [UHCPL] and copy of directions recently issued by Hon’ble Supreme Court in respect of suits filed against Amrapali Group by customers. On perusal of the said details, the contention of the appellant is found to be true. The details of the sinking state of affairs of the Amrapali Group have also been constantly reported on various news/ media channels and it is also noticed that the founder directors of the said group were also taken into judicial custody. In view of the above facts, I find that it is very difficult to obtain confirmation from the Amrapali Group. On enquiry made by the undersigned regarding the status of recovery of the above amount of Rs.2 crores which has been advanced by PSK to UHCPL, the Id. A.R. has stated that PSK is still making efforts to recover the said amount from the Amrapali Group by getting FSI etc. in consideration of the amount paid to them, however, in view of the above facts, the recovery of the impugned amount looks very uncertain and even locating the Directors of the Amrapali Group has become very difficult. Further, it is noticed that the notice u/s 133(6) and 131 have been served on UHCPL and ASDPL, however, the said companies have not responded to the Income Tax Dept. Nevertheless, I am of the considered view that mere non furnishing of confirmation from the Amrapali Group under the peculiar circumstances, cannot be a ground to reject the explanation furnished by the appellant since the same is supported by other documentary evidences.
8.6.4 In view of the above discussion, I am of the considered opinion that the explanation offered by the appellant in respect of the seized Post Dated Cheque of Rs.2 Crores marked at S.No.100 of Annex. A-3 is reasonable and substantiated by documentary evidences. I find that the said explanation has not been found to be false by the A. O. by bringing any contrary corroborative evidences on record and hence, in my considered view, the said explanation merits to be accepted.
8.6.5 In the above paragraph, I have already held that the A.O. is not justified in rejecting the explanation furnished by the appellant with regards to the seized PDC of Rs.2 Crores. I further find that even otherwise, the presumption drawn by the A. O. on the basis of the above seized PDC is not supported by any corroborative evidence and it looks unwarranted and unrealistic on the facts of the case. The A.O. has presumed that the appellant must have made unaccounted investment of Rs.2 Crores with the Amrapali Group i.e. ASDPL against which the said PDC may have been issued by ASDPL. I find force in the contention of the A.R. for the appellant that if the appellant would have made such huge unaccounted investment of Rs.2 Crs. with ASDPL, then at least some evidence in the form of notings, jottings etc. would have been found in the course of extensive search proceedings conducted by the Dept. which covered the various residential as well as commercial premises of the appellant group in New Delhi as well as Ben galuru. However, it is noticed that not an iota of evidence has been found in the course of search to indicate that the appellant has made any unaccounted payments to ASDPL. It is also noticed that the appellant has been declaring nominal income on account of tuition fees for all the earlier six years and the A. O. has also not brought any evidence on record to show as to how the appellant could earn such huge unaccounted income of Rs.2 Crs. and therefore, the presumption drawn by the A. O. also fails on this ground of probability. In view of the above facts, I am of the considered view that the presumption drawn by the A. O. by rejecting the explanation furnished by the appellant in respect of the seized PDC of Rs.2 Crores marked as S. No. 100 of Annex. A-3 is not supported by any corroborative material and such inference looks unreasonable on the facts of the case.
8.6.6 At this juncture, it may be important to take note of the ratio laid down by Hon ‘ble Delhi High Court in the case of CIT v. Girish Chaudhary [296 ITR 619]. In the said case, it has been held that where the Revenue uses its longest arm of search available to the Revenue to unearth unaccounted money or evidence thereof, then it has to be proved strictly that undisclosed income assessed in the hands of the assessee is undisclosed income belonging to such assessee beyond a reasonable doubt. It has been held that no addition can be made in the hands of the assessee merely on the basis of the notings made on a loose paper seized during search action in the absence of any corroborative evidence brought on record to prove that the notings thereon represent undisclosed income of the assessee. In that case, it has been categorically held that a seized loose paper cannot by itself lead to addition in the hands of the assessee and it is for the A. O. to put life into the seized loose paper by collecting other relevant and connected material to prove that the notings on the loose paper actually represent undisclosed income earned by the assessee. In my considered view, the ratio laid down by Hon ‘ble Delhi High Court in the above case clearly supports the case of the appellant in the present case.
8.6.7 In view of the above discussion, I am of the considered opinion that no addition could have been made in the hands of the appellant on the basis of the Post Dated Cheque of Rs.2,00,00,000/- dated 04/12/2015 seized from the residential premises of the appellant at C-69, Sector 30, Noida marked as Sr. No. 100 of Annex. A-3, therefore, the A.O. is directed to delete the said addition.
9. With regards to the other limb of addition made on the basis of the two seized PDCs of Rs.50 lacs dated 25/08/2015 and Rs.5 lacs dated 23/08/2015 issued by UHCPL in the name of the assessee marked as seized page nos.101 & 102 of Annexure A3, the appellant has explained that these two PDCs totalling to Rs.55 lacs were issued by UHCPL to the assessee group as a security against the proposed service charge of Rs.55 lacs agreed to be paid by Amrapali Group to PSK Group against the arrangement of funds of Rs.20 Crores to be made by PSK in pursuance of the seized MOU. In this regard, the appellant has explained that as per the seized MOU dated 08/07/2014 entered between PSK and UHCPL, it was agreed that PSK would arrange funds to the extent of Rs.20 Crores for UHCPL. It has been submitted that out of the total funds of Rs.20 Crs. promised to be raised as per the MOU, PSK had advanced total funds of Rs.2 Crs. to UHCPL by way of four cheque nos.010315, 010316, 010317 & 010318, all dated 01.0 7.2014 of Rs.50 lacs each. Thereafter the MOU dated 08.0 7.2014 was entered between the parties. In the said MOU, it was agreed that the final agreement including all the negotiated terms and conditions shall be entered into only after the balance payment of Rs.18 Crs. is made by PSK to the Amrapali Group. It has been explained that thereafter, the Amrapali Group started facing huge liquidity crunch and the customers of the said group started lodging cases against the said Group. The appellant has further explained that in view of these circumstances, the PSK Group demanded that against the risk of arranging the funds to be undertaken by PSK, Amrapali Group shall also pay a service charge @ 2.75% on the funds of Rs.20 Crs. to be arranged by PSK. The said amount of service charge agreed between the parties @ 2.75% on Rs.20 Crs. worked out to Rs.55 lacs. The appellant has stated that as a security against the payment of service charge, UHCPL had agreed to hand over PDCs of Rs.55 lacs to the assessee group/ PSK. It has been further stated that thereafter, the Amrapali Group went into huge financial troubles and it went on the verge of insolvency and hence, the assessee group/ PSK did not arrange the balance funds of Rs.18 Crs. as decided in the MOU.
9.1 The appellant has explained that since the Final MOU incorporating the condition of payment of additional service charge @2.75% to be paid by UHCPL to PSK was never entered between the two parties since PSK could not arrange for the balance funds of Rs.18 Crores as agreed in the preliminary MOU dated 08/07/2014. The appellant has further explained that the service charge never became due to the appellant group/ PSK and the same was also never received since PSK could not arrange for the balance funds of Rs.18 Crores. The A.O. has rejected the explanation furnished by the appellant and on the basis of the above seized PDCs, the A. O. has drawn a presumption that the appellant must have made unaccounted investment of Rs.55 lakhs with UHCPL. Here again, the first issue that arises for consideration is whether the A. O. was justified in rejecting the explanation furnished by the appellant and the second issue that needs to be decided is that if the explanation offered by the appellant is not found to be acceptable, whether the presumption drawn by the A. O. solely on the basis of the seized PDCs without bringing any corroborative evidence on record is sustainable in law.
9.2 I find that the explanation furnished by the appellant regarding proposed payment of service charge is not supported by any documentary evidence. In this respect, it is noticed that the seized MOU dated 08/07/2014 does not mention about any such service charge payable by UHCPL to PSK @ 2.75% on the total funds of Rs.20 crores to be arranged by PSK. However, it is equally true that the said MOU dated 08/07/2014 appears to be a preliminary MOU entered at the time when only the amount of Rs.2 crores out of the total amount of Rs.20 crores was paid by PSK to UHCPL and in the seized MOU itself, it has been stated that the final agreement/ MOU would be entered only after the entire funds of Rs.20 crores as agreed between the parties, would be arranged and advanced by PSK to UHCPL. Further, it is also a fact on record that huge financial crises was faced by UHCPL/ Amrapali Group in the subsequent period and thereafter, UHCPL has also been subjected to public insolvency process. It is also truism of fact that UHCPL has not responded to the notices u/s 133(6) and 131 issued by the A. O. although these notices were served on the said company. Further, considering the turmoil of Amrapali Group and the fact that the promoter directors of the said Group were also taken under judicial custody in view of the directions of the Supreme Court given in pursuance to complaints filed by various customers/ investors, the appellant cannot be expected to get a confirmation from UHCPL in support of her claim. The reasons mentioned by the A. O. for rejecting the explanation furnished by the appellant have been duly rebutted by the appellant in its written submissions which have been reproduced hereinabove. Considering the totality of facts, I am of the view that the explanation offered by the appellant has not been proved to the hilt by the appellant by way of documentary evidences but even so, at the same time, the explanation furnished by the appellant is certainly a plausible one and the same has not been proved to be false by the A. O. by bringing any contrary evidences on record. Therefore, in my considered opinion, the above explanation offered by the appellant in respect of the two seized PDCs at page nos. 101 & 102 needs consideration and the same cannot be rejected on an outright basis.
9.3 Having said so, at this juncture, it is important to verify the legal validity of the presumption drawn by the A. O. on the basis of the above two seized PDCs. The A.O. has presumed that the appellant must have made unaccounted investment of Rs.55 lakhs with UHCPL against which UHCPL would have given the above PDCs totalling to Rs.55 lakhs. It is noticed that the A. O. has not brought any corroborative evidence on record to demonstrate that the appellant has made any unaccounted payments to UHCPL. I find force in the contention of the appellant that if the appellant would have made such substantial unaccounted investment of Rs.55 lakhs with UHCPL, then at least some evidence in the form of notings, jottings etc. would have been found in the course of extensive search proceedings conducted by the Dept. which covered the various residential as well as commercial premises of the appellant group in New Delhi as well as Ben galuru. However, it is noticed that not an iota of evidence has been found in the course of search to indicate that the appellant has made any unaccounted payments to UHCPL. It is also noticed that the appellant has been declaring nominal income on account of tuition fees for all the earlier six years and the A. O. has also not brought any evidence on record to show as to how the appellant could earn such substantial unaccounted income of Rs.55 lakhs and therefore, the presumption drawn by the A. O. also fails on this ground of probability. In view of the above facts, I am of the considered view that the presumption drawn by the A. O. by rejecting the explanation furnished by the appellant in respect of the seized PDCS of Rs.50 lakhs and Rs.5 lakhs marked as S.No.101 & 102 of Annex. A-3 is not supported by any corroborative material and hence, no addition can be made on the basis of surmises and conjectures on the basis of the above PDCs.
9.4 Further, it may be important to take note of the ratio laid down by Hon ‘ble Delhi High Court in the case of CIT v. Girish Chaudhary [296 ITR 619]. In the said case, it has been held that where the Revenue uses its longest arm of search available to the Revenue to unearth unaccounted money or evidence thereof, then it has to be proved strictly that undisclosed income assessed in the hands of the assessee is undisclosed income belonging to such assessee beyond a reasonable doubt. It has been held that no addition can be made in the hands of the assessee merely on the basis of the notings made on a loose paper seized during search action in the absence of any corroborative evidence brought on record to prove that the notings thereon represent undisclosed income of the assessee. In that case, it has been categorically held that a seized loose paper cannot by itself lead to addition in the hands of the assessee and it is for the A. O. to put life into the seized loose paper by collecting other relevant and connected material to prove that the notings on the loose paper actually represent undisclosed income earned by the assessee. In my considered view, the ratio laid down by Hon’ble Delhi High Court in the above case clearly supports the case of the appellant in the present case.
9.5 In this regard, I further find support from the decision of Hon’ble ITAT Ahmedabad in the case of DCIT v. Kawarjeetsingh P. Chhabda (37 CCH 368 (Ahd); ITA No.374-375/Ahd/2002] dated 24.09.2013. In the said case, it has been held that no addition can be made solely on the basis of Post Dated Cheques found with the assessee in the course of search when there is no evidence to indicate that the assessee has directly or indirectly received the equivalent amount in cash.
9.6 In view of the above discussion and considering the totality of facts, I am of the considered opinion that no addition could have been made in the hands of the appellant on the basis of the Post Dated Cheques of Rs.50,00,000/- and Rs.5,00,000/-seized from the residential premises of the appellant at C-69, Sector 30, Noida marked as Sr. No. 101 & 102 of Annex. A-3, therefore, the A. O. is directed to delete the said addition. Further, in preceding paragraphs, I have already held that no addition can be made on the basis of seized Post Dated Cheque dated 04/12/2015 of Rs.2,00,00,000/- marked as Sr.No.100 of Annex. A-3. Thus, the entire addition of Rs.2,45,00,000/- made by the A.O. on account of unexplained investment is directed to be deleted. Therefore, Grounds Nos. 3 & 4 raised by the appellant are allowed.”
6. The above finding on fact, as recorded by the learned CIT(Appeals), is not rebutted by the Revenue by bringing any contrary material on record. The law is well settled that the addition made on the basis of conjectures cannot be sustained in the eye of law. The learned CIT(Appeals) has rightly followed the decision of the co-ordinate Bench [ITA nos. 374-375/Ahmd/2002] that no addition can be made purely on the basis of post-dated cheques. In the case in hand impugned addition has been made on the basis of the post dated cheques recovered from the possession of the assessee. The explanation offered by the assessee is not controverted by the AO. Moreover, the AO has failed to establish any link of post dated cheques with undisclosed income of the assessee. In the absence of such nexus or link it cannot be construed that such cheques related to some unexplained income of the assessee. Therefore, we do not see any infirmity into the finding on fact recorded by the learned CIT(Appeals). The same is hereby upheld. The grievance raised by the Revenue lacks merit, hence dismissed.
7. Appeal of the Revenue is dismissed.
Order pronounced in open court on 24th September, 2024.
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