Bhavya Bishnoi Vs DCIT (ITAT Delhi)
Summary: ITAT Delhi allowed Bhavya Bishnoi’s appeal for Assessment Year 2019-20 and deleted an addition of ₹7,64,90,689 made under Section 69C as alleged unexplained expenditure incurred during the 2019 Lok Sabha election. The addition arose from a notebook marked Annexure A-4 seized during a search conducted on 23.07.2019 in the Kuldeep Bishnoi Group. The notebook was found at Shop Nos. 106-107, Anaj Mandi, Adampur, Hisar. The Assessing Officer treated pages 1-41 as recording village-wise election expenditure allegedly incurred by the assessee while contesting the Hisar Parliamentary Constituency election and invoked Section 69C. The CIT(A), relying particularly on Sections 132(4A) and 292C, upheld the addition.
The assessee contended that the notebook was not found from his premises and did not belong to him. The shop from which it was recovered was used for the commission agency business carried on by Shri Kuldeep Bishnoi in the name of M/s Bhajan Lal Kuldeep Singh, and the licence of the shop stood in that concern’s name. It was further argued that the notebook did not mention the assessee’s name, did not describe the amounts as election expenditure and contained no date, signature or endorsement linking the entries with him. Neither the assessee nor Shri Kuldeep Bishnoi had been questioned about the notebook in their statements recorded during the search.
The Tribunal examined the seized pages and found no indication as to whether the entries represented payments made to or by the assessee. It observed that the statutory presumption under Sections 292C read with 132(4A), rather than supporting the Revenue’s case, strengthened the assessee’s case because the notebook had been found and seized from premises associated with Shri Kuldeep Bishnoi. No independent inquiry was made from the named villagers or alleged recipients, and no cogent or admissible evidence was brought on record establishing the source, possession, transaction, use or application of the alleged cash. The Assessing Officer therefore failed to establish a nexus between the entries and the assessee.
The Tribunal relied on Common Cause (A Registered Society) vs. Union of India, (2017) 77 taxmann.com 245 (SC), for the principle that entries by themselves are insufficient to fasten liability without independent corroborative evidence. It also considered CIT vs. Girish Chaudhary, [2007] 163 Taxman 608 (Delhi), concerning additions based on material discovered in search proceedings. The Tribunal further relied upon CIT vs. Sant Lal, [2020] 118 taxmann.com 42 (Delhi), where third-party diary material without a corroborated link with the assessee was held insufficient to sustain an addition.
On the facts, the Tribunal held that the Assessing Officer had made the addition without correlating the entries in the seized notebook with the assessee and without carrying out the necessary independent investigation. The alleged election expenditure of ₹7.64 crore therefore could not be sustained and was deleted on merits.
The Tribunal additionally accepted the assessee’s alternative contention regarding the year of taxability. The Lok Sabha polling in Haryana took place on 12.05.2019 and the search was conducted on 23.07.2019, both falling in Financial Year 2019-20 relevant to Assessment Year 2020-21. Pages 3-41 of the notebook recording the alleged receipts/payments contained no dates. Therefore, even assuming that an addition could otherwise be made, the Tribunal held that it would pertain to Assessment Year 2020-21 and not Assessment Year 2019-20. The ₹7,64,90,689 addition was thus liable to deletion on this ground also. The assessee’s appeal was allowed.
Cases Discussed
- Common Cause (A Registered Society) vs. Union of India, (2017) 77 taxmann.com 245 (SC) — relied upon for the principle that entries, even where relevant or admissible, cannot by themselves fasten liability and require independent corroborative evidence establishing their credibility.
- CIT vs. Girish Chaudhary, [2007] 163 Taxman 608 (Delhi High Court) — considered regarding the evidentiary requirements for treating material discovered during search as undisclosed income.
- CIT vs. Sant Lal, [2020] 118 taxmann.com 42 (Delhi High Court) — relied upon for the proposition that third-party diary entries cannot fasten liability upon an assessee when the Revenue fails to establish the necessary link through cogent corroborative material.
- Commissioner of Income Tax v. Mahabir Prasad Gupta (Delhi High Court) — referred to within CIT vs. Sant Lal regarding insufficiency of material recovered from a third party to link the assessee with entries appearing in seized documents.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for Assessment Year 2019-20, arises against the Ld. Commissioner of Income Tax (Appeals-30), New Delhi’s Order dated 05.12.2024 in appeal No. 30/10467/2018-19. Assessment was framed by the DCIT, Central Circle-32, New Delhi u/s. 153A of the Income Tax Act, 1961 (in short “the Act”) vide his order dated 30.9.2021 for the assessment year 2019-20.
2. The first issue on merits is as regards to the order of the Ld. CIT(A), confirming the action of the AO in making addition of Rs. 7,64,90,689/- u/s. 69C of the Act being expenditure incurred during the Lok Sabha Election as unexplained.
3. The brief facts of the case are that a search and seizure operation u/s. 132 of the Act was carried out by the Income Tax Department at the various premises of Kuldeep Bishnoi Group of cases and its associates including the assessee on 23.07.2019. During the course of search at Shop No. 106-107, Anazmandi, Adampur, Hisar, Haryana a note book was found and seized as Annexure A-4. According to Assessing Officer the note book appears to be records of expenses made by the assessee during Lok Sabha Election 2019 contested from Hisar Parliamentary Constituency. Accordingly, a notice u/s. 142(1) of the Act was issued to the assessee on 13.09.2021 wherein the assessee was requested to explain the details mentioned in Annexure A-4 which contains the total expenditure of Rs. 7,64,90,689/- made by the assessee during election campaign in various villages of his constituency i.e. Hisar, Haryana in Lok Sabha Election 2019. The assessee was asked to explain the details of expenditure carried out, name and addresses of the parties to whom these payments have been made, mode and source of payment made and bills and vouchers of these expenditure. The Assessing Officer noted from the seized documents AnnexureA-4 i.e. note book consisting of 90 pages that sheets no. 1-41 of the seized note book represented estimate of expenditure of village-wise payment made to the assessee during the election campaign of Lok Sabha 2019 from Hisar constituency. The assessee before the Assessing Officer explained that these documents do not pertain to him but it is noticed from sheet no. 1-41 which represents the estimate for expenditure of development in various villages in the Hisar Constituency and actual expenditure was not made by him. According to Assessing Officer these entries of payments are found throughout the note book and it is reiterated that the payments has already been made and hence, this contradictory explanation was submitted by the assessee that the note book was an estimate for the development of villages of Adampur and not actual expenses had been incurred. According to Assessing Officer, it appears that page 1-41 consisting of expenses made by the assessee in Adampur during Lok Sabha Election 2019 and the assessee himself stated that page no. 42-90 consists of name of the party works and the details of rally and meeting held at different time in different villages with party workers. In view of this submission made by the assessee and in view of the facts from seized note book he noted that facts recorded at page no. 3-41 consisting of village wise payments made by the assessee to various persons during election campaign for the Lok Sabha 2019 from Hisar Constituency. The Assessing Officer further noted that these villages, whose names have been mentioned in the note book, have been located on map and these exist. The Assessing Officer has narrated all 39 villages, namely where assessee, according to Assessing Officer, has incurred total expenditure of Rs. 7,64,90,689/- during his election campaign in various villages of Lok Sabha Constituency of Hisar during election in 2019. Assessing Officer has considered the submissions and found not acceptable. Based on this, the AO invoked Section 69C of the Act and observed that assessee incurred unaccounted expenditure. Aggrieved, assessee preferred the appeal before the Ld. CIT(A).
4. The Ld. CIT(A) also confirmed the action of the AO. The Ld. CIT(A) significantly relied on the provisions of section 132(4A) and 292C of the Act in regard to statutory presumption that documents found in possession of a person and that the contents are true unless rebutted with evidence. The Ld. CIT(A) finally confirmed the action of the AO vide para nos. 13.3 and 13.4 which read as under:-
“13.3 As per AO, the seized document was found at the appellant’s residence and pertained directly to him. Under Sections 132(4A) and 292C of the Income Tax Act, there is a statutory presumption that documents found in possession of a person belong to them, and the contents are true unless rebutted with evidence. The statement of Mr. Sukumar, who prepared the document, holds significant evidentiary value. He explained the entries in detail, including the division of amounts received in cash and cheque, which were corroborated by circumstantial evidence, such as the appellant’s role in election management. The appellant admitted that the document related to payment received for election purposes. This admission, combined with the corroborative statement of Mr. Sukumar, substantiates the claim that the appellant had custody of the funds. The claim that the seized document was a “dumb document” is untenable. The entries are specific, detailed, and supported by corroborative statements and evidence. The seized document is not vague or uncorroborated, unlike cases cited by the appellant.
13.4 The document, through unsigned, was prepared by the appellant’s personal assistant, Mr. Sukumar, whose statement validates its authenticity. The absence of a signature does not invalidate the document when corroborated by material evidence and statements. The AO relied on substantial circumstantial evidence, including the document, statements under oath, and the appellant’s admission. Further corroborative investigations were unnecessary when the evidence on records was clear and consistent. The appellant failed to provide any documentary proof, such as bank statements or party records, to support this claim. Moreover, the appellant acknowledged receiving payments, indicating personal custody and responsibility.”
Aggrieved, assessee is in appeal before the Tribunal.
5. Before us, learned counsel for the assessee submitted that the addition of Rs. 7,64,90,069/- being unexplained expenditure added under Section 69C of the Act, on the basis of a notebook found and seized during the search at shop number 106-107, AnajMandi, Adampur Hisar, Haryana, which was marked as Annexure-A4. Learned counsel for the assessee submitted that shop number 106-107, at Adampur, wherein the said notebook was found, is actually a place from where the business of Arhtiya i.e. Commission agent is undertaken by Shri Kuldeep Bishnoi in the name & style of M/s. Bhajan Lal Kuldeep Singh. The license of the said shop is in the name of M/s Bhajan Lal Kuldeep Singh and the income in respect of the said trading business is being declared in the hands of Sh. Kuldeep Bishnoi. It was contended by the assessee in the said notebook that the details of the persons who buys and sells, that is trading in grains in the Anajmandi Adampur, is being recorded and conducted. Therefore no addition in the hands of the present assessee can be made by any stretch of imagination. Learned counsel stated the statutory presumption drawn by the AO that the documents found during the course of search belongs to the assessee in terms of Section 292C read with Section 132(4A) of the Act. It was explained by the learned counsel that despite owing this, the AO has not made any addition in the hands of Sh. Kuldeep Bishnoi, but has chosen to make addition in the hands of the present assessee, that is the assessee to which the said diary does not belong at all. Hence, according to him, both AO as well as Ld. CIT(A) erred in law in not considering the same. In this case, the assessment for making addition is without jurisdiction and bad in law in respect of the said notebook. Learned counsel for the assessee further explained and strengthen his arguments by submitting that the statement recorded of the assessee under Section 132(4) of the Act and from perusal of the same, it shall be clear that there is no reference in regard to the said notebook. In other words, no question in regard to the said notebook has been put to Sh. Bhavya Bishnoi, despite the fact that AO has not confronted or nobody stopped him from confronting the contents of the said diary to the assessee, in case he has any doubt. It was contended by learned counsel that while recording the statement of the Sh. Kuldeep Bishnoi, there is no reference of the notebook found at shop number 106-107, AnajMandi Adampur, i.e. Annexure-A4. From the perusal of the statement of Sh. Kuldeep Bishnoi recorded under Section 132(4) of the Act, it shall be clear that in the same also there is no reference or whisper at all in regard to the said notebook. In other words, no question in regard to this notebook has been put to Sh. Kuldeep Bishnoi and Ld. CIT(A) has incorrectly observed that Sh. KuldeepBishnoi has also not declared the contents of the notebook, which is total contrary to the records.
6. Finally, learned counsel for the assessee stated that Annexure-A4, the seized notebook does not mention assessee’s name, it does not describe the amount returned as election expenses, nor they indicate that the same are actual transaction, no date, no signature, or any endorsement qua the present assessee is there in the images of the notebook. The notebook does not contain any contact details in the form of addresses, email, or phone number, or any reference of the said persons, which allegedly has given the said amount to the assessee, or which has been actually expended by the assessee. The AO never carried out any forensic report of handwritten note book of an expert to prove the point.
7. On the other hand, learned CIT(DR) submitted that the CIT(A) has rightly upheld the addition made by the AO after elaborate examination of the seized material and explanation furnished by the assessee. She submitted that during search carried out on 23.07.2019, in the case of Sh. Kuldeep Bishnoi Group, several incriminating materials were found, including this Annexure A4, from the premises at shop number 106, 107, Adampur, Anajmandi, Hisar. This notebook contains detailed handwritten entries relating to expenditure incurred during 2019 Lok Sabha election campaign, village-wise details, names of the persons, campaign activities and expenses incurred under various heads. She argued that the assessee’s explanation primarily at the first stage that notebook merely contains estimated expenditure proposed for future development work and that no such expenditure or actual expenditure is retracted subsequently before the CIT(A) and before the Ld. CIT(A), it was contended that these entries relates to Sh. Kuldeep Bishnoi, who deals with sale and purchase of grains as commission agent under the name and style of M/s Bhajan Lal Kuldeep Singh and the income in respect of the said trading business is being declared in the name of Sh. Kuldeep Bishnoi. It was contended that the said notebook contains the details of the persons from whom the assessee deals in trading of grains as commission agent. Accordingly, she stated that the assessee has changed his stance in regard to explain the entries, and AO has rightly interpreted that the notebook contains several entries carries remarks such as “Payment Ho Chuka Hai”, along with the tick marks against various entries that the expenditure had already been incurred by the assessee. She explained that the explanation furnished by the assessee is inconsistent with the contents of seized document and also changing stand time and again. Accordingly, she contended that the seized document, Annexure A4, as well as explanation furnished by the assessee and surrounding facts and circumstances of the case, after considering, the AO concluded that the notebook represents actual expenditure incurred for the purpose of election of Lok Sabha 2019 and hence, CIT(A) has rightly confirmed the addition made by AO of Rs. 7,64,90,689/- u/s. 69C of the Act.
8. We have heard rival contention on this first facet of argument on merit that the notebook found and seized during the course of search at shop number 106-107, AnajMandi, Adampur, Hisar, Haryana, marked as Annexure A4 relates to assessee in regard to expenditure incurred during Lok Sabha Election 2019, or it is relating to trading business of Kuldeep Bishnoi. The said notebook was found from shop number 106-107, Adampur, Anajmandi, is actually a place where the business of commission agent is undertaken for trading the grains by Sh. Kuldeep Bishnoi in the name and style of M/S Bhajan Lal Kuldeep Singh. The license of the said shop is in the name M/s. Bhajan Lal Kuldeep Singh. Sh. Kuldeep Bishnoi is declaring income from this business regularly. We have gone through the notebook pages and particularly pages referred by the AO in the assessment order, and noted that these sample pages does not indicate the date, any reference to assessee, whether these are payments made to assessee or payments made by assessee. These documents i.e. notebook seized, page numbers 5, 8, 11 and 18. It looks like that these documents are named to the villagers who are living in these villages. The explanation submitted by the assessee is that in the said notebook, the details of the persons who buys and sells grains in Adampur Anaj Mandi is being recorded. It further strengthened the arguments that Sh Kuldeep Bishnoi is the owner of trading concern M/s Bhajan Lal Kuldeep Singh, in whose name the license of the said shop is granted and as argued by the ld. Counsel for the assessee that income in respect of the said trading business is declared in the hands of Sh. Kuldeep Bishnoi and he referred page number 293 to 296, 305 to 307 of Assessee’s Paper Book. Even otherwise, these documents were found, i.e. Annexure A4 the notebook containing the details of payments (however, it is not clear whether these are payments made or received), or that it supports the statutory presumption under Section 292C read with Section 132(4A) of the Act and this notebook belongs to assessee. The statutory presumption under Section 292C rather strengthens the case of the assessee that this notebook belongs to Sh. Kuldeep Bishnoi because from whose premises this notebook was found and seized during search under Section 132 of the Act.
9. We also noted from these pages that despite name of villages and name of persons, no inquiry was conducted by the AO to know the veracity or authenticity of this note book and transactions recorded therein. Even assessee was not provided the copy of this notebook, as contented by the learned counsel of the assessee, which is not rebutted by the department before us. Accordingly, we are of the view that once the AO has not carried out any exercise in any form to corroborate the theory, that it is actually the assessee, who has actually paid or received or spent the amount stated in the assessment order in cash and none of the alleged recipients of the cash towards alleged election expenses, were ever summoned by the department to question over such transaction, and hence the same cannot be attributed to assessee, as the alleged notebook, after denial of assessee, is remained unproved. In our view, no attempt has been made by the AO to provide any cogent explanation and admissible evidence with regard to the source, possession, transaction, use or application of such cash. Hence the departmental authorities failed to correlate the income of the assessee with the amount that has been spent for election expenses as alleged by the AO that have been borne by the assessee for the election, but AO failed to examine the nexus between the entries and that the assessee.
10. The above explanation regarding page number 5, 8, 11 and 18 of the seized notebook, Annexure A4, we have gone through the page numbers 1, 2, 82, 83, 84, 85 and noted that these pages were of some date, like 1.3.2019, 22.1.2019 & 27.1.2019, but these contain only name of villages and timing of election meetings in those villages, but nothing coming out of these pages as indicated in the assessment order. There is no relation between the payments or receipts noted in the above diary at page number 3 to 41vis-a-vis the several pages. Even otherwise, in view of the pages, where meeting or programs are mentioned, some mobiles nos. are also given, but the AO has not made any independent investigation or verification, despite the AO had all the means and machinery to make the necessary and independent inquiry, which is writ large from perusal of the assessment order. We have also gone through the assessment order and noted that AO has simply made additions.
11. In terms of above, now we have to deal with the case law stated by the learned counsel for the assessee of the Hon’ble Supreme Court in the case of Common Cause (A Registered Society) vs. UOI 92017) 77 taxmann.com 245 (SC) wherein it is already held that the value of entries in the books of accounts, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant or admissible, and that they are no corroborative evidence. Finally, it was held that even then independent evidence is necessary as to credibility of those entries, which is a requirement to fasten the liability. Further, the Hon’ble Supreme Court has laid down the principle and under:-
We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence,w e have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of account but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily.”
12. Similarly, in the Hon’ble Delhi High Court in the case of CIT vs. Girish Chaudhary [2007] 163 Taxman 608 (Delhi), has held as under:-
8. Section 158B of the Act is a part of Chapter XIVB dealing with special procedure for assessment of search cases. The Chapter contains section 158B to section 158H. “Block period” and “undisclosed income” have been defined in clauses (a) and (b) to section 158B, for the purpose of the Chapter. We are concerned with the definition of “undisclosed income”. The provision in its entirely reads as follow:
“(b) ‘undisclosed income’ includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of the Act.”
9. It is clear from the above definition that the income or the property, which has been disclosed or would have been disclosed for the purposes of this Act, does not form part of the undisclosed income for purpose of block assessment. Under the provisions of Chapter XIV-B only such of the aforesaid categories of income, which has been found as a result of search can alone be the subject-matter of an assessment under this Chapter. The definition specifies that where an assessee has claimed any expenses or addition, which is found to be false, the same can only be regarded as an undisclosed income for the purpose of this Chapter.
10. Under Chapter XIV-B of the Act, before an addition of an “undisclosed income” can be made, the AO has to bring on record the material to show that on evidence found as a result of search there is an undisclosed income represented by credits appearing in the books of account.
13. The second facet of the argument raised is that the election of the Lok Sabha was held in Hisar Parliamentary constituency on 12th May 2019 which is the date for polling in Haryana, and search has been conducted on 23rd July 2019, and particularly there is no date on the pages where payments received or paid is mentioned. Hence this can be assessed only in Assessment Year 2020-21 and not in Assessment Year 2019-20. The assessee has raised the question of year of assessability without prejudice to the above facet of the argument. Learned counsel for the assessee before us submitted that even if it is assumed without admission and prejudice that notebook contains the details of election expenses, even then the addition in the relevant Assessment Year 2019-20 cannot be made as those entries belong to Assessment Year 2020-21 for the reason that the search happened in the assessee’s case only on 23rd July 2019, when this notebook, i.e. Annexure A4, was found during the course of search, as noted in regard to receipts or payments. Secondly, the election in Haryana i.e. in Hisar constituency for Lok Sabha polling date was 12th May 2019, that is corresponding to Financial Year 2019-20, relevant to Assessment Year 2020-21. The assessee has filed affidavit before the Election Commission of India for expenses in the month of May 2019. When these facts were confronted to the learned CIT-DR, she argued that the dates of election campaign are available, referred by the AO in regard to election schedule, i.e. 1st March 2019, 27th March 2019, 22nd March 2019. In terms of this learned CIT(DR), stated that assessee’s case falls under Assessment Year 2019-20 and not in Assessment Year 2020-21, as contended by the assessee.
14. We have heard the rival contention, gone through the facts and circumstances of the case. We noted from the seized documents, which is part of assessment records, that the AO has segregated the seized notebook containing 90 pages into two parts. The first part contains page 1-41, that is page 1-2, is recording the name of villages written, and pages 3-41 are payments received or paid relating to particular village or city mentioned in each page. He has drawn only assumption and not sure that these expenses may be according to him are in the nature of election expenses. He has given this opinion at para 3-4, mentioned at page no. 13 of the appellate order which read as under:-
“3-41 Expenses related to particular village/ city mentioned on each page. May be all the expenses are election expenses.
15. Learned counsel for the assessee pointed out that the election relating pages are only from pages 73 to 90, and the relevant pages are reproduced in the assessment order, that is page 82-83, 84, 85, and etc., which has no connection with the receipts or payments, as noted in earlier page 1-41, since there is no date, and election to the Hisar Lok Sabha constituency was happened on 12th May 2019, and search in the case of the assessee group of cases, Sh. Kuldeep Bishnoi was conducted on 23rd July 2019, and both these dates do not fall in this assessment year, i.e. Assessment Year 2019-20. Furthermore, there is apparent contradiction in the assessment order, particularly at para number 7, page 20 of the assessment order, wherein the AO has not considered the amounts recorded in the notebook whether they are cash expenses or cash receipts during election time and relates it to whom, whether it is relating to Sh. Bhavya Bishnoi or Sh. Kuldeep Bishnoi. The relevant para 7 of the assessment order reads as under:
7. The information related with the cash expenses/cash receipts during the election time mention the name of the villages of the constituency related with Shri Bhavya Bishnoi and Shri Kuldeep Bishnoi, name the persons and mobile number in few cases, which substantiates the cash expenses/cash receipts has been made by the assessee during election time.
16. Admittedly, the said notebook was seized from shop number 106-107, Anaj Mandi, Adampur, Hisar, Haryana, and it looked like that the said notebook contains the details of persons who sales their grain in Adampur Anaj Mandi, is being recorded and conducted, and this shop is licensed in the name of M/s Bhajan Lal Kuldeep Singh, and income in respect of the said trading business is being declared in the hands of Sh. Kuldeep Bishnoi. The first presumption under Section 292C read with Section 132 (4A) of the Act cannot be drawn in favor of the assessee that this notebook belongs to assessee, and particularly this notebook has been owned by Sh. Kuldeep Bishnoi despite the fact that the AO has not made any addition in the hands of Sh. Kuldeep Bishnoi and instead have chosen to make the addition in the hands of Sh. Bhavya Bishnoi, the assessee to which the notebook does not belong. Even there is no reference of the said notebook in the statement recorded of Sh. Bhavya Bishnoi and Shri Kuldeep Bishnoi under Section 132(4A) of the Act that this notebook belongs to Sh. Bhavya Bishnoi, the assessee. Admittedly, assessee contested the Lok Sabha election of 2019 from Hisar constituency and candidate was permitted to spend up to Rs. 50 lakhs for commercial expenses as per the Code of Conduct declared by the Election Commission of India. Election-related expenses by the assessee were funded by the Indian National Congress in terms of Model Code of Conduct issued by the Election Commission of India, and assessee received this money for election expenses from Indian National Congress in his bank account by way of RTGS on 01.05.2019. Further, there is no complaint of violation of Model Code of Conduct regarding the expenses for the limit set out by the Election Commission of India whatsoever against the assessee. Admittedly, the seized notebook does not mention assessee’s name, it does not carry any date, signature, and/or any endorsement of the present assessee, addresses or email, mobile number, or any reference of the said persons/entities who have given the said amount to the assessee, or assessee actually has spent or expended this amount. Despite the name and mobile number in few of the pages where description or the details of election meetings held by the assessee in respect of the receipts, villages are mentioned, but no independent inquiry or verification was conducted by the AO. None of the alleged recipients of the cash towards election expenses were summoned by the AO for explaining over such alleged cash transaction, which the AO has to do. In terms of the above, we are of the view that the AO has made this addition without bringing on record the material to show that the notebook found as a result of search contains undisclosed income represented by entries recorded in this notebook. In view of above, the authorities below have clearly erred in making the addition without co-relating the entities recorded in the seized notebook, particularly the amounts recorded at page number 3 to 41.
17. We also note that exactly on identical facts, the Hon’ble Delhi High Court in the case of CIT vs. Sant Lal [2020] 118 taxmann.com 42 (Delhi) has considered the issue of addition made on the basis of seized document from third party as under:-
“11. We have perused the impugned order and notice that the ITAT has given a finding of the fact that the case of the respondent is covered with the decision of the ITAT in the cases of Mahabir Prasad Gupta (supra) and Ashok Prasad (supra). The relevant portion of the impugned order read as under:
“4. In the circumstances and fact of the case, we are of the view that the case is fully covered with the decision of ITAT in the cases of Mahabir Prasad Gupta (Supra) and Ashok Prasad Gupta (supra) and further observed that Revenue could lay its hands on the diary of Sh. Brij Mohan Gupta where names of persons were recorded in quoted words and revenue could not establish the name of the assessee from such quoted words. Though the Revenue has placed on record statement of Sh. Brij Mohan Gupta, Ram Avtar Singal and Rajiv Gupta but still Revenue has failed to establish link between the information noted in abbreviated form and the assessee. The diary was neither found from the promises of the assessee nor in the hand writing of the assessee any third person may write the name of any person at his sweet will, in such circumstances assessee cannot be put to any liability on the action of the third person, the same has to be corroborated by the Revenue which has not been done in the present case. In the circumstances and facts of the case, we do not find any infirmity in the order of the Ld. CIT(A) who has rightly deleted the additions so made by the AO. Accordingly, all the grounds of the Revenue are dismissed.”
12. In case of the Commissioner of Income Tax v. Mahabir Prasad Gupta (supra), this Court has examined the facts and concluded that the concurrent finding of the facts cannot be disturbed as there was no material which could justify the assessment order. The relevant portion of the said order which reads as under:
“13. The above submissions fail to persuade this Court to interfere with the matter. Concurrent findings of fact have been rendered by the CIT (A) as well as by the ITAT. Nothing has been pleaded in the memorandum of appeal to persuade the Court to hold that those findings are perverse or contrary to the facts on record. Secondly, there is not a whisper in the order of the AO about any bag recovered from the premises of the Assessee during the search of the Assessee’s premises on 22nd March 2006. There is no such averment even in the memorandum of appeal filed before this Court. The material referred to in the order of the AO is that which was recovered from the premises of Mr. Brij Mohan Gupta and nothing else. That material has been discussed threadbare in the order of the CIT (A). Detailed reasons have been given as to why that material was insufficient to link the Assessee with “MP Gupta‟ whose name finds mention in the diary and the documents seized from the premises of Mr. Brij Mohan Gupta.
14. Consequently, the Court is not persuaded to permit the Revenue, for the first time, before this Court to set up an entirely different case of there having been a bag seized from the premises of the Assessee which according to the Revenue contained incriminating material against the Assessee.”
13. In view of the aforesaid facts and the concurrent findings given by the CIT (A) and ITAT, it is evident that the Revenue has not been able to produce any cogent material which could fasten the liability on the respondent. The CIT(A) has also examined the assessment record and has observed that the AO did not make any further inquiry/investigation on the information passed on by the DCIT, Central Circle-19, New Delhi. No attempt or effort was made to gather or corroborate evidence in this relation.”
18. In view of the above facts discussed and case laws relied upon, we are of the view that the addition made by the AO and confirmed by the CIT(A) in regard to alleged election expenses is without corroborating with any material and thus cannot be sustained and accordingly the same is deleted on merits.
19. As regards the second facet of argument made by the learned counsel for the assessee regarding year of assessability. Admittedly the assessee contested the Lok Sabha Election in 2019 and assessee carried out the election campaign in the month of April and May 2019, as the polling date in Haryana was 12th May 2019, and this date corresponds the financial year 2019-2020 relating to assessment year 2020-21. Furthermore, in the seized notebook Annexure A4, there is no date mentioned from page 3 to 41, where alleged cash receipts/payments for expenses are noted of various persons. Furthermore, search also took place on 23rd July 2019 during which this notebook Annexure A4 was found during the course of search at shop number 106-107, Adampur Anaj Mandi, Hisar. This date also correspond to financial year 2019-2020 relating to assessment year 2020-21. Since there is no date mentioned in the notebook regarding cash payment/cash receipts received from various persons, and there is no date in the diary except few of the dates of March 2019 relating to the election schedule of the assessee, which clearly establishes that if at all these additions are to be made in assessment year 2020-21 and not in the instant assessment year 2019-20. Hence on this score also this addition is noted sustainable and liable to be deleted from this assessment year. This ground was raised by the assessee without prejudice to the issue of on merits as discussed above.
20. In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 23/09/2026.
