Mukesh Jain Vs ACIT (ITAT Indore)
ITAT Indore Deletes Section 69 Additions in 153C Assessments; Dumb Documents and Denial of Cross-Examination Fatal
The Indore Bench of the ITAT allowed the assessee’s appeals for AYs 2014-15 and 2015-16, deleting additions of ₹2 lakh and ₹1 lakh respectively made under section 69 in proceedings initiated under section 153C pursuant to a search on the MRJ Group. The additions were based on loose papers/hundies seized from the premises of a third party, alleging cash loans advanced by the assessee.
The Tribunal found that the seized documents did not belong to the assessee, were not found from his possession or control, did not bear his full name, PAN, or signature, and merely contained a vague reference to “Mukeshji”. Such “dumb documents”, without corroboration, could not be used to fasten tax liability. Further, the Revenue relied heavily on the statement of the searched person, yet failed to confront the assessee with the statement or provide an opportunity of cross-examination, amounting to a violation of principles of natural justice.
The ITAT also noted that the assessee was a salaried employee, with no evidence of engagement in cash lending or hundi business, and that the seized papers did not satisfy the essential characteristics of a hundi transaction. No independent inquiry was conducted to establish the assessee’s financial capacity or actual flow of funds.
In the absence of specific incriminating material belonging to the assessee, the Tribunal held that the additions were based on presumptions and surmises and were legally unsustainable. Accordingly, the additions under section 69 for both years were deleted, and the appeals were allowed in full
FULL TEXT OF THE ORDER OF ITAT INDORE
