ASSTT. COMMISSIONER OF INCOME TAX, LUCKNOW V. SHRI BHUPINDER SINGH TALWAR, LUCKNOW

ITA 130/LKW/2015

AI Insights

The case involves an appeal by the assessee, Shri Bhupender Singh Talwar, against the appellate order of the CIT(A) which had deleted certain additions made by the Assessing Officer (AO) in the assessee's income for the assessment year 2009-10. The AO had made additions of Rs. 2,00,000 for undisclosed investment in LIC premium and Rs. 3,53,00,000 for unexplained cash payments, based on documents seized during a search operation under section 132 of the Income Tax Act, 1961. The CIT(A) deleted these additions, which the AO contested, leading to the present appeal before the Tribunal. The Tribunal found the CIT(A)'s reasoning for deleting the addition of Rs. 3,53,00,000 insufficient and reinstated the AO's assessment, while agreeing with the CIT(A) on the LIC premium issue.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46974 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Other Referred Cases: CIT(Central) Kanpur Vs Raj Kumar Arora, Pradeep Amrutlal Runwal Pune vs TRO, Thakkar Developers Ltd. [IT A No. 581/PN/08]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMRAT CHANDRA
• Assessee Lawyers: MANU CHAURASIA
• Keywords: Opportunity of being heard; Corroborative evidences; Salary income; Income from undisclosed sources; Document seized; Documents seized; Search and seizure; Block assessment; Source of fund; Loose papers
• Section: 143(2); 271(1)(c); 132; 69; 69A; 153C; 158BC

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER IT(SS) A No.130/LKW/2015 Assessment Year: 2009-10 ACIT, Central Circle-1 27/2, P.K. Complex, Raja Ram Mohan Rai Marg, Lucknow- 226001. v. Shri Bhupender Singh Talwar B-1/204, Nirala Nagar, Lucknow-226020. PAN:ACHPT1790M (Appellant) (Respondent) Appellant by: Shri Samrat Chandra, C.A. Respondent by: Shri Manu Chaurasia, CIT(DR) O R D E R PER ANADEE NATH MISSHRA, A.M.: (1). The present appeal has been filed by the assessee against the impugned appellate order dated 17.11.2014 passed by the Ld. Commissioner of Income Tax (Appeals)-III, Lucknow, for the assessment year 2009-10. The grounds of appeal of the assessee are as under: - “1. That Ld. CIT(A) has erred in law and on the facts in deleting the addition of Rs 2,00,000/- on account of undisclosed investment in LIC premium without appreciation of the fact that assessee failed to furnish any proof regarding the claim during the assessment proceedings. 2. That Ld. CIT(A) is not justified in law and on facts in deleting the addition of Rs. 2,00,000/- on account of undisclosed investment in LIC premium as it was a case of expenditure not recorded in books of account. In term of explanation to section 69 C it could not have been allowed as a deduction. 3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,53,00,000/- on account of unexplained cash payment which was made on the basis of documents seized during the course of search and seizure operation after giving proper opportunity of being heard to the assessee. 4. That Ld. CIT(A) is not justified in law and on facts in deleting the addition of Rs 3,53,00,000/- on account of undisclosed income determined on the basis of documents which was seized during the course of search and accordingly constructed on evidence in term of section 292C of the I.T. Act which has been introduced by Finance Act, 2007 and was accordingly not considered in the case relied up by CIT(A). ITA No. 130/LKW/2015 Page 2 of 9 5. That Ld. CIT(A) has erred in deriving analogy from section 158BC of the Act in the present case which is an amount u/s 153C of the 1.T. Act. The CIT(A) has ignored the ratio of decision of R.K. Arora in Appeal no. 56 of 2011 in the case of CIT(Central) Kanpur Vs Raj Kumar Arora. 6. That the order of the Ld. CIT(A) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored. 7. That the appellant craves leave to amend any one or more of the ground of appeal stated above as and when need for doing so may arise.” (2) In this case, the assessment order dated 31.03.2013 under section 143(3)/153A of the Income Tax Act, 1961 (“Act”, for short) was passed wherein assessee’s total income was determined at Rs.3,62,39,693/- (plus Agricultural income of Rs.99,500/-). In the aforesaid assessment order an addition of Rs.2,00,000/- was made towards income from undisclosed sources invested in insurance premium. A further addition of Rs.3,53,00,000/- was made towards cash payments out of undisclosed income. The relevant portion of the assessment order is reproduced as under:- “4. During the course of search u/s 132 at the residence of the assesses i.e. B-1/204, Nirala Nagar, Lucknow on 14.09.2010, documents were found showing payment of insurance premium on the assessee’s life of Rs. 2,00,000/- in cash. Vide questionnaire dated 04.03.2013 and 15.03.2013, the assesses was required to explain the source of such investment. In explanation it is stated that the same was made out of income of the your and previous years’ savings and furnished a cash flow statement in this support. Assessee’s contention is not correct inasmuch as he was not able to substantiate the availability of cash on the date of payment of the said premium. Accordingly, Rs. 2,00,000/- is treated as income from undisclosed sources invested in insurance premium and added to his total income. As the assessee has concealed particulars of her income on this account and furnished inaccurate particulars thereof, she is liable for penalty u/s 271(1)(c) the I T Act, 1961 and, therefore, proceedings for the same are being initiated hereby separately. 5. During the course of search u/s 132 of the 1.T. Act at the residential premises of the assessee i.e. B-1/204, Nirala Nagar, Lucknow incriminating documents relating to huge financial transactions by the assessee were found and seized vide page no. 52 to 56 of annexure LP-8. These pages contain details of payments made by the assessee to some concern. The payments made through this document include cash payment of Rs. 3,53,00,000/- out of total payment of Rs. 6,35,28,400/- as entered m the name of ‘Mr.Talwar Ji’ on page no. 52 of the same annexure. The assessee was confronted with the entries on this document and asked to explain the nature and detail of such entries. In compliance the assessee stated, inter-alia, that ‘the entries are only numbers and cannot be related to rupees therefore it is not correct to say that any transaction has taken place through this document.’ The reply furnished by the assessee is vague and not acceptable. The cash deposit of Rs. 526/- (page. 56 of LP-8) can be correlated with the seized paper (page no. 52 of LP-8) where i is written that the funds received from S Govil (another name mentioned on the said document) was Rs. 5,26,00,000/-. Definitely the figures ITA No. 130/LKW/2015 Page 3 of 9 appearing on page 56 can be read with page no. 52 and 56 of the seized document (LP-8). Copies of the impugned pages numbering 5 & 56 of Annexure LP-8 are being enclosed with this order for convenience of reference as pages numbers 4 to 8 of this order. At page number 55 of the said Annexure debit side contains details in balance sheet form and mentions, inter-alia, investment of Rs. 3,00,20,000/- in a concern namely ‘MMPL’ which is acronym for M/S Mumal Mining Pvt. Ltd., wherein the assessee has made investment of Rs. 7,00,000/- and disclosed the same in A Y 2008-09. In view of these facts, the obvious inference to be drawn from the impugned documents is that the assessee has made cash payment of Rs. 3,53,00,000/- to some entity out of his undisclosed income. Accordingly, Rs, 3,53,00,000/- is treated as income from undisclosed sources and added to the assessee’s total income. As the assessee has concealed particulars of his income on this account and furnished inaccurate particulars thereof, penalty proceeding u/s 271(1)(c) is also being initiated separately. (2.1) The assessee filed appeal against the aforesaid assessment order vide impugned appellate order dated 17.11.2014, the Ld. CIT(A) deleted both the aforesaid additions. The relevant portion of the impugned appellate order dated 17.11.2014 of the Ld. CIT(A) is reproduced as under: - “FINDING for ground No.3 I have perused the facts stated above in the assessee’s submission as well as facts stated in the assessment order passed by the Assessing Officer. The Assessing Officer has made an addition of Rs. 2,00,000/- on account of undisclosed investment in LIC. The Assessing Officer observed that vide questionnaire dated 04-03-2013 and 15-03-2013 the assessee was required to explain the source such investment In explanation it is stated that the same was made out of income of the year and pervious years’ savings and furnished a cash flow statement in this support. Assessee’s contentions not correct in as much as he was not able to substantiate the availability, on the date of payment of the said premium. Accordingly, Rs. 2,00,000/- is treated as income from undisclosed sources invested in insurance premium and added to his total income. According to the assessee. The said payments for insurance policy was made directly on behalf of the assessee by M/s A. Automovers Pvt. Ltd. in lieu of salary payable. M/s A. Automovers Private Limited is having PAN AABCA7615F and was incorporated in the year 1994-1995 and has been regularly filing its return of income. The Appellant is founder director in such company and is enjoying salary income from the Company. This is evident from the copy of ledger of salary payable and salary certificate of the appellant for the relevant assessment year clearly showing the investment made. Looking, into the above stated facts the addition of Rs. 200000/- is hereby deleted. 3 This ground of appeal is allowed. FINDING for Ground No.4 I have perused the facts stated above in the assessee’s submission as well as facts stated in the assessment order passed by the Assessing Officer. The Assessing Officer has made the addition of Rs. 3,53,00,000/- considering it to be undisclosed income. The assessee is a director/partner of various company and partnership firms and his sources of income are from salary, profit from various partnership firms, during the year under consideration. During the search and seizure operation, certain loose ITA No. 130/LKW/2015 Page 4 of 9 papers and documents were found and seized from the residential premises of the assessee. The assessee appellant submitted that the said loose papers of Page 52to 56 contains certain rough notings in respect of proposal to invest in Gagan Resource Pvt. Ltd. which were never executed/materialized by the assessee and the appellant has not made any investment in it. The Assessing Officer rejected the submissions of the assessee by observing as under ‘“..During the course of search u/s 132 of the IT. Act at residential premises’ of the assessee i.e. B-1/204, Nirala Nagar, Lucknow incriminating documents relating to huge financial transactions by the assessee were found and seized vide page No. S2to 56 of annexure LP-8. These pages contain details of certified payments made by the two some concern. The payments made through this documents include cash payment of Rs. 3,53,00,000/- out of total payment of Rs. (35,28,440/- as entered in the name of Mr. Talwar ji on page no. 52 of the same annexure. The assessee was confronted with the entries on this documents and asked to explain the nature and detail of such entries. In compliance the assessee stated, inter-alia, that ‘the entries are any numbers and cannot be related to rupees therefore it is not correct to say that any transaction has taken place through this document.’ The reply furnished by the assessee is vague and not able. The cash deposit of Rs. 526/- (page 56 to LP-8) can be correlated with the seized paper (page no. 52 of LP-8) where is written that the funds received from S.Govil( another name-mentioned on the said document) was Rs. 5,26,00,000/-. Definitely the figures appearing on page 56 can be read with page no. 52 and 56 of the seized document (LP-8). Copies of the impugned pages numbering 52 to 56 of Annexure LP-8 area being enclose with this order for convenience of reference as pages numbers 4 to 8 of this order. At page number J55 of this said annexure the debit side contains details in balance sheet from and mentions inter-alia. Investment of Rs. 3,00,20,000/- in a concern namely ‘MMPL’ which is acronym for M/s Mumal Mining Pvt.Ltd, wherein the assessee has made investment of Rs. 7,00,000/and disclosed the same in A.Y. 2008-09. In view of these facts, the obvious inference to be drawn from the impugned documents is that the assessee has made ash payment of Rs.3,53,00,000/- to some entity out of his undisclosed income. Accordingly, Rs. 3,53,00,000/- is treated as income from undisclosed sources and added to the assessee’s total income... According to the assessee the said paper relates to some rough working and is not related to any of the businesses of the assessee which is evident from the documents and financial statements found at the time of search and submitted during the assessment proceeding. In view of the above it is clear that the document is just a dumb document and is not related to the assessee or any of his family members or their business concerns, moreover no financial transaction has taken place through such document as contented by the assessee during the assessment proceedings. The Assessing Officer did not raise any specific query regarding the same in the notice issued u/s 143(2) of the Income Tax Act 1961 for the relevant assessment year. During the course of assessment proceedings, the Assessing Officer had asked for the explanation from the assessee and the assessee replied that these documents appear to be some rough working papers and there is no payment, much less of Rs.3,53,00,000/, made by the appellant nor is there any reference of any payment made by the assessee. The said document was just a working sheet as the assessee was planning to invest in the company named Gagan Resources Pvt. Ltd. and was making some rough estimates The said document does not bear any name or any signature of the assessee or any representative of the assessee. It does not mention any date or year due to which it relates as such there is no justification of making addition in the year under appeal, more so when search taken place on 14-09- 2010. ITA No. 130/LKW/2015 Page 5 of 9 The crux of the matter is that a document found during the course of search must be a speaking one and not open to any second interpretation and must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in it, must be filled up by the Assessing Officer through investigations and correlations with the other material found and Seized either during the course of the search or on further investigation based on the facts mentioned in the document. Agreed that the undisclosed income of the assessee has to be computed by the Assessing Officer on the basis of material available on record. It is very important to have direct evidence or conclusive evidence to determine the undisclosed income. When the assessee gives an evasive reply to the Assessing Officer, the Assessing Officer has no choice but to make an estimation of the income. The only thing is that it should be reasonable on the basis of material available on record. It should not be based on conjunctures and surmises. As of now material considered by \" the Assessing Officer for making the addition is only the seized material marked as page 52 to 56 which is a loose document containing the rough notings which has not been corroborated by other seized material and books of account, whereas assessee has denied as on page 4 to 8 of this appeal order that none of the names of the person or bank account is related to him or his family member or their concern. For example some entries in pages 52 to 56 shows that .....Page 52. This paper is dated 31- 03-2009, bearing entries JCB Loader Rs. 1,800,000/-, MMPL Rs. 3566537/- stands Mineral and Mining Pvt. Ltd., which is presumed by the Assessing Officer as Mumal Mining Pvt. Ltd, NMDC Rs. 1430801/NMDC stands for National Mineral Development Corporation. These all are Public Sector Undertaking. The Assessing Officer should have enquired from them and also verified from the statement of affairs of the assessee or his family concerns. Regarding JCB Loader, it has no role in assesseés business or his family concerns his business is spare parts or dealer of four wheeler. The Closing Stock of Rs. 13977636/-. The Assessing Officer should have matched this entry with the books of account but he did not made such verification. Page 53 MMPL Rs. 915742/-, Cash in hand Rs. 8149010/-, Stock Closing Rs. 15121152/-, The Assessing Officer should have matched this entry from the books of accounts of the assessee or books of accounts of assesseés business concerns but he did not verify. Service Tax Paid Rs. 1,143,046/- the Assessing Officer should have verified this entry from the Service Tax Department or from the assessees books of accounts or books of accounts of his business concerns which has not been done. All these entries are dated 28-04-2009 which relates to A.Y. 2010-11 not related to A.Y. 2009-10. This paper is dated 28-04-2009 i.e. A. Yr.2010-11 and not A. Yr. 2009-10. For UCO Bank Rs. 827000/-, Banks-Rs. 8149010/- these entries from the Banks the Assessing Officer should matched these entries with banks of the assessee or his business concerns but he did not verify these. Debtors mentioned are Super Iron & Steel Rs. 399897/-, Prem Polymers Rs. 792614/-, Balajee Minerals Rs. 122907/-, Land Mark Rs. 395398/-, Rs. Pankaj Ispat Rs. 937952/-, Shiv Real Ispat Rs. 127201/-, SR INGOT Rs. 54371/-. The assessee business is not related to Ispat and Polymers neither they are appearing in his family concerns or their books of accounts. The Assessing Officer also did not enquire about them. NMDC RS. 1,439801/- NMDC stands for National Mineral Development Corporation. These are public sector undertaking. The Assessing Officer should have verified these from public Sector undertaking and from the business concerns of the assessee. Interest on CC A/c ITA No. 130/LKW/2015 Page 6 of 9 Interest on TL A/c The Assessing Officer could have matched these entries with public sector undertaking and Books of accounts but he did not conduct any verification. Deposit with Excise Rs. 376,515/- UCO Bank Rs. 827000/- Cash in hand Rs.1411733/- Banks Rs.8,149,010/- The Assessing Officer could have enquired about these entries with the Books of accounts of the assessee or public sector undertaking and from the Excise Department but he could not verify them. Page 56 This page has no date. 37 VAT 140 Plant refund 5 MMDC. The Assessing Officer could have enquired about these entries from the assessees books of accounts or books of account of the family concern of the assessee or enquired from public sector undertaking MMDC and also from the VAT Department but he did not verified/enquired them. From the above facts it is seen that the Assessing Officer simply presumed without any corroborative evidence found in books of accounts or other seized material. For A.Y. 2008-09 the assessee had invested Rs. 7 lakh in shares of MMPL (Mumal Mining Pvt.Ltd.) but by no stretch of imagination it can be related to Rs. 30020000/and this page has no date and no evidence has been found relating to it. The inference which was derived by the Assessing Officer\" from the contents of these rough notings written on the document should have been in conjunction with other corroborative material. Section 292C of the Act does raise a presumption against the assessee who has been searched upon that the contents of books of accounts and other documents found from his possession or control are true. However, in my view, the word contents used in this section presupposes that the contents should be or are intelligible, comprehensible and speaking either by itself or in correlation with other material or upon further investigation. Unless such is the case, mere jottings recorded on seized documents which are capable of several/various interpretations and lacks evidentiary value are not sufficient enough for making additions. This is a block assessment case and the additions if any should be based only material an evidence detected as a result of search. Assessee case is also supported by ITAT Pune Appellate Bench case of Pradeep Amrutlal Runwal Pune vs TRO in ITA No. 334 date of order 30-05- 2014 According to us, the additions made by the Assessing Officer were not justified in the facts and circumstances vis-a-vis of the assessee. As discussed earlier, during the course of search in the case of Dhariwal Group, the only documents found on the basis of which the addition u/s 69A has been made in the case of the assessee are in the form of two loose papers wherein amounts of Rs. 4.80 Crores and Rs. 30 lacs were noted against the name \"Mr. Pradeep Runwal\". Apart from this, no ITA No. 130/LKW/2015 Page 7 of 9 evidence has been found to suggest that the assessee had actually received the said amount or that the assessee had entered into any transaction with Dhariwal Group. There is no evidence on record to suggest that the assessee has previous business relations with the Dhariwal Group. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the loose papers were the income of the assessee received from Dhariwal Group. It has been the consistent stand of the assessee that there may be many persons of the name Pradeep Runwal in Pune and there was no specific evidence to suggest that the said notings pertained to the assessee. Hence, it was not justified as to how, in the absence of any other corroborative details, the Assessing Officer has assumed that the amounts reflected the income of the assessee himself, while the assessee has no business dealings of his with Dhariwal Group. The Assessing Officer has not brought on record any evidence to suggest that Dhariwal Group has admitted that the amounts were paid to the assessee. Hence, simply because the name of the assessee is noted on the seized papers does not mean that the addition could be made in the hands of the assessee. Since no evidence was found relating to the existence of any transaction between the assessee and Dhariwal Group and in the absence of any corroborative evidence to suggest that the assessee had actually received the said amount, no addition could be made merely on the basis of noting in loose papers found during the search proceedings in the case of Dhariwal Group against the name of the assessee.... There is no corroborative evidence in this regard against the assessee. In such circumstances, where the assessee has not entered into any transaction with the Dhariwal Group, one certainly could not expect the assessee to be in possession of any evidence to suggest that it has not entered into any such transaction except for his books of account which have already been verified by the concerned Assessing Officer. Hence, the Assessing Officer was not justified in placing reliance on the provision of section 114 of the Indian Evidence Act... Reliance is also place in the case of Thakkar Developers Ltd. [IT A No. 581/PN/08], ITAT in paras 3 and 4 held as under: \"The above said Shri Kolhe was examined, cross examined and re- examined and no evidence was gathered from him to establish that the contents of the seized documents were correct and true. Thus, in the absence of any corroborative net evidence in the present case, the said seized document has to be treated as a dumb document as rightly observed by the CIT(A). The Assessing Officer has not brought on record any material or corroborative evidences to come to these conclusions. The reasons given by the A.O. in this regard are without any basis and support. Nothing was shown by the Assessing Officer that there was any other material co related to the seized documents. The Assessing Officer has drawn inferences and presupposes relying on surmises and conjectures. ..” As these transaction itself never took place, there would be no question of investment and, hence no question of any unexplained income. Therefore, the addition of Rs. 3,53,00,000/- based on this dumb document is hereby deleted. This ground of appeal is allowed. FINDING for Ground No.5 Sufficient opportunity was given by the Assessing Officer during the assessment proceeding on dated 04-03-2013 and 15-03-2013 and also by me during appellate proceeding, hence, assessee should have no grievance.” ITA No. 130/LKW/2015 Page 8 of 9 (3) At the time of hearing before us, the Ld. Authorized Representative for the assessee placed reliance on the impugned order of the Ld. CIT(A). The Ld. Departmental Representative for Revenue placed reliance on the aforesaid assessment order dated 31.03.2013. (4) We have heard both sides. We have perused the materials available on record. (4.1) There are two issues in disputes. The first issue in dispute is regarding the aforesaid addition of Rs.2,00,000/-. The Ld. CIT(A) deleted this addition, accepting the assessee’s explanation that this investment was made out of current year’s income and savings from earlier years. The Ld. CIT(A) gave due consideration to cash flow statement of the assessee. The order of the Ld. CIT(A) on this issue is found to be just and fair, reasonable and in accordance with law having regard to specific facts and circumstances of the present case before us. Therefore, the order of the Ld. CIT(A) on this issue is upheld. (4.2) The second issue is regarding the aforesaid addition of Rs.3,53,00,000/-. On perusal of the assessment order, it is found that the addition has been made on the basis of incriminating documents relating to huge financial transaction by the assessee, which were found and seized in the case of search under section 132 of the Act. In the paragraph no. 5 of the assessment order [relevant portion of which has been already reproduced in foregoing paragraph (5) of this order]. The Assessing Officer has discussed the contents of the incriminating documents in detailed. The Assessing Officer has also successfully controverted the submissions made by the assessee in the case of assessment proceedings. In the impugned appellate order dated 17.11.2014 of the Ld.CIT(A), the addition has been deleted on the ground that dumb documents. The documents seized at the time of ITA No. 130/LKW/2015 Page 9 of 9 search action u/s 132 of the Act were dumb documents. The Ld. CIT(A) has not given any valid reason for this observation. On the contrary, the Assessing Officer has fully discussed the contents of the seized documents and has also reverted these submissions made by the assessee in this regard, in a conclusive manner. The contents of the seized documents are found to be quite speaking. It is quite logical to draw the inference that has been drawn by Assessing Officer where on the seized documents. Therefore, the aforesaid addition of Rs.3,53,00,000/- is upheld and the order of the Ld. CIT(A) on this issue is over-turn. All grounds of appeal are treated as disposed of in accordance with the aforesaid directions. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 08/04/2025. Sd/- Sd/- [KUL BHARAT] [ANADEE NATH MISSHRA] VICE PRESIDENT ACCOUNTANT MEMBER DATED: 08/04/2025 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order // True Copy// Assistant Registrar "