Do loose papers found and seized have any evidentiary value in absence of any cogent, incriminating or positive corroborative material?

This Income Tax Appellate Tribunal ruling addresses whether loose papers found during a search and seizure operation hold evidentiary value if there's no other supporting material. The Tribunal found that the Assessing Officer made additions based solely on seized loose papers, which lacked any direct or indirect connection to the assessee. Citing a previous similar case, the Tribunal concluded that such papers, without corroboration, cannot form the basis for tax additions.

IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE HON’BLE MANISH BORAD,
ACCOUNTANT MEMBER AND
HON’BLE MADHUMITA ROY, JUDICIAL MEMBER
ITA No.680/Ind/2018
Assessment Year 2009-10

DCIT-1(1)  
Bhopal

PAN ADRPM0776H
V/s
Shri Neeraj Mandloi,
7/7 Bhagwandas Road,
Mandi Road,
New Delhi

PAN ADRPM0776H

Respondent

C.O.No.04/Ind/2020
Arising out of ITA No.680/Ind/2018
Assessment Year 2009-10

Shri Neeraj Mandloi,
7/7 Bhagwandas Road,
Mandi Road,
New Delhi

PAN ADRPM0776H

 Appellant

vs

DCIT-1(1)Respondent

Revenue by Shri S.S. Mantri, CIT-DR
Assessee by S/Shri Sumit Neema, Sr. Adv
with Gagan Tiwary & Piyush
Parashar, Advocates
Date of Hearing 24.06.2021
Date of Pronouncement 28.07.2021
O R D E R

The above captioned appeal & Cross Appeal for Assessment Year 2009-10 are directed against the orders of Ld. Commissioner of Income Tax(Appeals)-I (in short ‘Ld. CIT], Bhopal dated 24.05.2018 which is arising out of the order u/s 143(3) r.w.s. 147 of the Income Tax Act 1961(In short the ‘Act’) dated 31.12.2016 framed by ACIT-1(1), Bhopal.

2.Facts, in brief, are that the assessee filed original return of income on 01.5.2009 declaring total income at Rs.7,06,164/-. A search and seizure operation u/s 132 of the Act was conducted at the business and residential premises of Shri Mukesh Sharma on 21.7.2008 wherein some documents were seized.

3. We have heard rival contentions of both the parties and perused material available on record. From the perusal of the seized documents in question, it is clear that despite the “C” alphabet is not there in the seized documents, the Assessing Officer simply presumed that the missing “C” is nothing but its Commissioner, Indore Nagar Nigam (Assessee) and also presumed that the assessee received the money.

4. Further, we find that the same issue has been dealt with by ITAT, Indore in the case of ACIT vs. Narottam Mishra (2018) 32 ITJ 510 (Trib. – Indore) wherein on the identical facts and circumstances, the Tribunal deleted the addition made on account of money allegedly received from two companies.

5. In view of the facts/circumstances as narrated above and also in the light of the aforesaid judicial pronouncements, we are of the view that in the present case, the Assessing Officer proceeded to make addition on the basis of primary and other evidence which was in the form of loose papers found and seized from the premises of Shri Mukesh Sharma and was written by Shri Sharma and there was no evidence or material which could show any direct or indirect nexus with these lose papers with the assessee.

6. So far as the grounds raised in the Cross-objection are concerned, we are of the view that as the deletion of addition has been confirmed on merits, we do not find it necessary to adjudicate the same being infructuous and now academic in nature. Thus, the Cross-objection filed by the assessee is also dismissed as infructuous.

7. In result, appeal filed by Revenue and Cross-objection filed by the assessee are dismissed.
This order has been pronounced as per Rule 34 of ITAT Rules, 1963 on 28.07.2021.

Please find attached the enclosed file for the full judgement