Sai Om Infravision (P) Ltd. Vs DCIT (ITAT Delhi)

ITAT Delhi held that loose sheets picked u/s 132, falls within definition of ‘document’ mentioned in section 132(4) and therefore, it has got evidentiary value. Thus, addition on the basis of loose sheets found during course of search is sustainable.

Facts- Present appeal is filed by the appellant against orders passed under section 153A of the Income Tax Act. Notably, addition made for all the years is on the basis of notings in a seized diary found from the premises of Kaushalya Residency Girls Hostel, GNHIPL during the course of search u/s. 132 of the Act. AO has made the additions on all the items found during search from the diary, but CIT(A) has restricted the additions to those entries only which were reflected in the books of accounts.

Conclusion- Hon’ble Madras High Court in the case of M. Vivek vs. DCIT has duly held that loose sheets picked u/s 132, falls within definition of ‘document’ mentioned in section 132(4) and therefore, it has got evidentiary value. The decisions referred by the ld. Counsel for the assessee has no bearing on the present facts of the case. Hence, in our considered opinion, Ld. CIT(A) has passed a reasonable order, which does not need any interference on our part. Accordingly, we affirm the same and dismiss the grounds raised by the assessee in all the aforesaid appeals.

FULL TEXT OF THE ORDER OF ITAT DELHI

These are eight (08) appeals filed by the two separate assessees namely Shri Sai Om Infravision (P) Ltd. & Shri Om Sai Infrapromoters Pvt. Ltd. against the two respective common orders dated 11.01.2023 and 13.01.2023 passed by the ld. CIT(A)-23, New Delhi relating to assessment years 2014-15, 2015-16, 2017-18 & 2018-19.

2. In all these cases, assessment order dated 24.5.2021 has been passed u/s. 153A of the Act. The addition made for all the years is on the basis of notings in a seized diary found from the premises of Kaushalya Residency Girls Hostel, GNHIPL during the course of search u/s. 132 of the Act. AO has made the following additions in two group concerns :-

Shri Sai Om Infravision (P) Ltd.

Shri Om Sai Infra Promoters Pvt. Ltd.

3. Against the above additions, assessee appealed before the Ld. CIT(A) and Ld. CIT(A) passed two separate orders in the aforesaid two group companies, wherein Ld. CIT(A) granted relief to a large extent to both the assessees, but sustained some additions.

4. Before going further, we may gainfully refer the relevant findings of the Ld. CIT(A) as under in the case of Om Sai Infravision P Ltd.

“53. After examination of the data it is seen that the following transactions are not reflected in the books of accounts of either the appellant or the co-developer Om Sai Infrapromoters Pvt. Ltd. It is also seen that the amounts are indicated in lakhs. For example 30 indicates Rs. 30 lakhs. This is so because the corresponding entry in the books of accounts is in lakhs. Thus, if there is 100 written in the diary, then in the books of accounts, 1 Crores is appearing if the entry is matching.

54. To sum up, the following notings are neither reflected in the accounts of the appellant or of the Om Sai Infrapromoters Pvt. Ltd.

55. The appellant and M/s Om Sai Infrapromoters Pvt. Ltd. were equal partners in the project being undertaken at Dehradun. Therefore, the unaccounted income is equally distributed between the two companies.

56. The yearwise breakup of the undisclosed business income on the basis of the notings in the diary in the case of two companies is computed as under:-

57. The yearwise unaccounted income u/s. 69A of the appellant company is computed as per the table above.

58. Thus, for the AY 2014-15, addition of Rs. 15,00,000/-is sustained and addition of Rs. 6,29,00,000/- is deleted.

59. Thus, for the AY 2015-16, addition of Rs. 50,00,000/-is sustained and addition of Rs. 80,00,000/- is deleted.

60. Thus, for the AY 2016-17, no addition is sustained and entire addition of Rs. 4,20,00,000/- is deleted.

61. Thus, for the AY 2017-18, addition of Rs. 16,00,000/-is sustained and addition of Rs. 2,22,00,000/- is deleted.

62. Thus, for the AY 2018-19, addition of Rs. 5,00,000/- is sustained and addition of Rs. 27,00,000/- is deleted.

63. During the course of appellate proceedings, the appellant made an argument that the addition cannot be made u/s. 69A as at the most the amounts not reflected in the books of accounts are business receipts. However, as no specific ground of appeal on this issue is taken, therefore, the issue remains academic in nature and requires no separate adjudication.”

4.1 We may also refer here the relevant findings of the Ld. CIT(A) as under in the case of Shri Om Sai Infrapromoters Pvt. Ltd..

“52. After examination of the data it is seen that the following transactions are not reflected in the books of accounts of either the appellant or the co-developer Om Sai Infrapromoters Pvt. Ltd. It is also seen that the amounts are indicated in lakhs. For example 30 indicates Rs. 30 lakhs. This is so because the corresponding entry in the books of accounts is in lakhs. Thus, if there is 100 written in the diary, then in the books of accounts, 1 Crores is appearing if the entry is matching.

54. To sum up, the following notings are neither reflected in the accounts of the appellant or of the Om Sai Infravision Pvt. Ltd.

54. The appellant and M/s Om Sai Infrvision Pvt. Ltd. were equal partners in the project being undertaken at Dehradun. Therefore, the unaccounted income is equally distributed between the two companies.

55. The yearwise breakup of the undisclosed business income on the basis of the notings in the diary in the case of two companies is computed as under:-

57. The yearwise unaccounted income u/s. 69A of the appellant company is computed as per the table above.

58. Thus, for the AY 2014-15, addition of Rs. 15,00,000/-is sustained and addition of Rs. 6,29,00,000/- is deleted.

59. Thus, for the AY 2015-16, addition of Rs. 50,00,000/-is sustained and addition of Rs. 80,00,000/- is deleted.

60. Thus, for the AY 2016-17, no addition is sustained and entire addition of Rs. 4,20,00,000/- is deleted.

Thus, for the AY 2017-18, addition of Rs. 16,00,000/-is sustained and addition of Rs. 2,22,00,000/- is deleted.

61. Thus, for the AY 2018-19, addition of Rs. 5,00,000/- is sustained and addition of Rs. 27,00,000/- is deleted.

62. During the course of appellate proceedings, the appellant made an argument that the addition cannot be made u/s. 69A as at the most the amounts not reflected in the books of accounts are business receipts. However, as no specific ground of appeal on this issue is taken, therefore, the issue remains academic in nature and requires no separate adjudication.”

4.2 Thus, Ld. CIT(A) sustained the following additions in the following two group concerns:-

Shri Sai Om Infravision (P) Ltd.

Shri Om Sai Infra Promoters Pvt. Ltd.

5. Against sustaining the aforesaid additions, assessee has filed the appeals before us by challenging the aforesaid sustained amounts. .

6. We have heard both the parties and perused the records. Ld. Counsel for the assessee submitted that the additions sustained by the Ld. CIT(A) are on the basis of dumb documents found during the course of search, which were crossed and have no evidentiary value. He further submitted that AO has made addition u/s. 69A of the Act which is not correct course of action. In this regard, he referred the judgement of the Hon’ble Supreme Court passed in the case of M/s D.N. Singh vs. CIT, Central, Patna & Anr. Passed in Civil Appeal Nos. 3738-3739 of 2023 dated 16.5.2023. He further referred the decision of the ITAT, Delhi Bench in the case Naresh Balyan vs. ACIT decided in ITA 3448/Del/2023 (AY 2017-18) vide order dated 18.12.2024 for the proposition that on the basis of dumb documents, addition cannot be made.

7. Per contra, Ld. DR relied upon the orders of the authorities below and referred the decision of the Hon’ble Punjab and Haryana High Court in the case of Namdev Arora vs. CIT, Jallandhar dated 20.7.2016 [2016] 72 com 124 (P&H) for the proposition that mentioning of wrong section is not fatal and she also relied upon the decision of the Hon’ble Madras High Court in the case of M. Vivek vs. DCIT decided on 24.11.2020 [2020] 121 taxmann.com 366 (Madras) for the proposition that loose sheets picked u/s 132 was mentioned in section 132(4) and therefore, it has got evidentiary value.

8. We have carefully considered the submissions and perused the records. We find that AO in these cases had made addition of Rs. 14,64,00,000/- in the group companies and divided the same among the group concerns. We find that Ld. CIT(A) has passed a comprehensive order and granted substantial relief to the assessee against which the Revenue is not in appeal. The documents being called dumb documents on the basis of which the CIT(A) disallowed the relief have evidentiary value. Ld. CIT(A) has very exhaustively analysed the documents found and sustained only those additions which were not reflected in the books of accounts. However, AO has made the additions on all the items found during search from the diary, but CIT(A) has restricted the additions to those entries only which were reflected in the books of accounts. In our considered opinion, the ld. Counsel’s submissions that wrong section is mentioned is not fatal over here, as additions have been made on account of unexplained items found during the course of search from the diary. Furthermore, we find that Hon’ble Madras High Court in the case of M. Vivek vs. DCIT decided on 24.11.2020 [2020] 121 taxmann.com 366 (Madras) has duly held that loose sheets picked u/s 132, falls within definition of ‘document’ mentioned in section 132(4) and therefore, it has got evidentiary value. The decisions referred by the ld. Counsel for the assessee has no bearing on the present facts of the case. Hence, in our considered opinion, Ld. CIT(A) has passed a reasonable order, which does not need any interference on our part. Accordingly, we affirm the same and dismiss the grounds raised by the assessee in all the aforesaid appeals.

9. In the result, all the 08 appeals of two separate group of the assesses are dismissed.

Order pronounced on 15/01/2025.