Kempareddy Govindraj Vs ACIT (ITAT Bangalore)
Planted Diary Can’t Speak: Bangalore ITAT Deletes Massive 153A Additions-
Loose Notings ≠ Income: Search Additions Fall for Want of Corroboration- Dumb Documents Don’t Create Tax Liability: 153A Additions Based on Diary Entries Quashed for Lack of Evidence
Bangalore ITAT “B” Bench, in Kempareddy Govindraj Vs ACIT (ITA Nos. 1021–1024/Bang/2024 for AYs 2013-14 to 2016-17 & ITA Nos. 1290–1292/Bang/2024 for AYs 2014-15 to 2016-17; order dated 31.01.2025), examined wide-ranging challenges to search assessments framed u/s 143(3) r.w.s. 153A. The core dispute related to huge additions made solely on the basis of entries in a seized diary and allied loose papers, alleged to be “planted”, unsupported by books, assets or independent evidence.
Tribunal held that entries in an unowned diary/loose papers, without establishing authorship, nexus with Assessee’s transactions or corroboration, are “dumb documents” and cannot by themselves justify additions. It was emphasized that mere possession or markings by search officials do not prove contents, presumption u/s 292C does not extend to presuming “income”, and no corroborative assets or materialised transactions were found despite the scale of additions. Reliance on precedents confirming additions on admitted diaries was distinguished on facts, as Assessee neither authored nor admitted the diary entries. Applying settled law that suspicion cannot replace proof, Tribunal deleted the diary-based additions (including substantive/protective additions across years) and granted relief to Assessee on the merits of additions, rendering other contentions largely academic.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The assessee has filed appeal for Assessment Years 2013-14 to 2016-17 against the separate Orders passed by the learned CIT(A)-15, Bangalore, Order dated 15.04.2024 and the Revenue has filed appeals against the Order passed by the learned CIT(A)-15, Bangalore, for the Assessment Years 2014-15 to 2016-17. The grounds raised by both the parties are as under:
