Sanjay Taneja Vs ACIT (ITAT Delhi)
Delhi ITAT deletes income tax additions based on loose papers, citing lack of corroborative evidence
Assessee, appealed against the CIT(A)’s order confirming additions of over ₹6.81 crore u/s 69A & ₹16.25 lakh as interest income, based on loose papers found during a search at his residence. During the search, a diary with two handwritten pages listing names & figures was seized. Assessee explained these were rough estimates of possible loans he was considering taking to purchase property. However, the plan was dropped due to high interest costs. AO, without corroborative evidence or issuing summons to parties named, treated the figures as cash loans advanced by Assessee from unexplained sources & taxed the alleged interest income as well.
Tribunal noted that Assessee was stating that these are rough papers thus the entries contained therein deserves to be ignored. Assessee in his statements u/s 131 before the ADIT clearly stated that these are rough noting recorded for the purpose of obtaining loans from the persons whose names are written therein. However, due to higher interest burden, assessee dropped the idea. Since no amount was borrowed nor any corroborative evidence was found as a result of search or brought on record during post search / assessment proceedings nor any cash to this extent was found thus, these entries cannot be made sole basis for making such a huge addition. Before CIT(A), Assessee had explained the nature of the entries noted in these seized papers & a remand report was also obtained by CIT(A) & after considering the explanation given by Assessee & the facts stated in the remand report, deleted the addition. ITAT had set aside the matter to the file of AO for making verification of the entries.
