Case Law Details
Facts of the case
The assessee is an individual engaged in the business of trading in scrap. Search and seizure operations u/s. 132 of the Act were conducted on 07-11-2007. Subsequently, notice u/s. 153A was issued calling upon the appellant to file the return of income. In response to which, the appellant filed return of income on 25-09-2009 disclosing income of Rs. 4,11,320/-. Against the said return of income, assessment came to be completed u/s. 143(3) r/w 153A of the Act vide order dt. 30-11-2009 at a total income of Rs. 1,17,18,320/-. While doing so, the AO made addition of Rs. 1,12,57,000/- by holding that the appellant had advanced sum of Rs. 1,12,57,000/-as loan. The addition is made based on the blank cheques and promissory notices obtained. The AO had concluded that the appellant is engaged in money lending business and advanced a sum of Rs. 1,12,57,000/- and made addition of amount as unexplained investment.
Question of Law
Whether revenue was justified in making additions due to seizure of blank cheques during search and termed it as unexplained investments?
Contention of the Assessee
The appellant stated that he never advanced any money to the said person therefore, no addition was called for. The documents seized are only dumb documents and therefore, no addition can be made.
Contention of the Revenue
The CIT(A) observed that the appellant was using his own unaccounted money in providing unaccounted loans against security of promissory notice and cheques and therefore, upheld the addition. The seized documents cannot be called dumb documents since the documents are duly signed and filled up. Since the assessee had failed to explain satisfactorily under what circumstances, the blank cheques came into his possession of the appellant, the addition should be upheld.
Held by the Tribunal
The Hon’ble Tribunal held that all the persons questioned have confirmed that cheques have been handed over to the appellant only as a measure of security for supply of scrap or for the purpose of obtaining the loan, but all of them have denied having obtained any loan from the appellant. The statements given by those people remains uncontroverted. Though the AO was justified in entertaining doubt that the appellant is engaged in the business of money lending and the cheques have been obtained, only after the amounts were advanced. But, in the absence of any positive evidence in support of lending money to the persons, the Hon’ble Tribunal was not in a position to confirm the addition. Accordingly, the additions were deleted.
