Adrem India (P) Ltd. Vs DCIT (ITAT Delhi)
Loose Papers Can’t Be Sole Evidence: ITAT Deletes Additions Based on “Approximate” Handwritten Note; Search Assessment Vitiated: Mechanical Approval & Uncorroborated Statement Cannot Justify Additions; ITAT Deletes Estimated Profit Addition: Absence of Corroboration for Unaccounted Sales Alleged in Search; Delhi ITAT Follows High Court: Mechanical Approval for Reopening Vitiates Jurisdiction for Search Additions.
Search u/s 132 at the Assessee’s premises led to seizure of a handwritten note allegedly showing unaccounted cash receipts for several years (FY 2014-15 to 2021-22). Based on this, AO computed unaccounted sales & profit @15% & made additions across four years. CIT(A) upheld the additions.
Before ITAT, the Assessee argued that (i) approval u/s 151 for reopening was mechanically granted through a consolidated order for multiple assessees & years, vitiating jurisdiction, & (ii) the alleged paper was merely a rough projection, not evidence of actual transactions, later retracted by affidavit.
The Tribunal observed that the seized sheet itself contained words like “approximate,” “projection,” & “estimation”, showing it was speculative. There was no corroborative material—no books, vouchers, or bank evidence—linking it to real receipts. A statement u/s 132(4), without independent corroboration, could not form the sole basis for addition.
