SHRIMATI SUMAN SBHARWAL, JALANDHAR V. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, JALANDHAR

ITA 627/ASR/2019

AI Insights

The case involves appeals by Smt. Suman Sabharwal against the orders of the Commissioner of Income Tax (Appeals)-5, Ludhiana, which confirmed the additions made by the Assessing Officer under sections 143(3) and 153A of the Income Tax Act. The additions were made on the basis of alleged unexplained cash expenditures amounting to Rs. 4,50,000, Rs. 31,50,000, and Rs. 21,85,000 for the respective assessment years, purportedly for renovations at her residence. The Tribunal examined the rough notings in a seized diary, which the Assessing Officer and CIT(A) interpreted as coded entries for larger sums. The Tribunal, referencing similar cases and the lack of corroborative evidence, concluded that the additions were unjustified and deleted them.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114516 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 03-10-2019
• Other Referred Cases: CIT v/s Atam Valves Pvt Ltd., Girish Chaudhary v/s CIT, Atul Kumar Jain v/s DCIT, ACIT v/s Satyapal Wassan, ADD. CIT v/s Prashant Ahluwalia, ACIT v/s Sharad Chaudhary, CIT v/s S.M. Agagrwal
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Income from undisclosed sources; Search and seizure; Question of law; Block assessment; Notional interest; Documents seized
• Section: 68; 69; 132; 69C; 11; 15; 143(3); 133A; 153A; 64; 43; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T. A. Nos. 627 to 629/Asr/2019 Assessment Years: 2012-13 to 2014-15 Smt. Suman Sabharwal, 435, New Jawahar Nagar, Jalandhar [PAN: ABQPS 4191K] (Appellant) V. A.C.I.T., Central Circle-2, Jalandhar (Respondent) Appellant by : Sh. Ashray Sarna, CA Respondent by : Sh. Rohit Mehra, CIT-D.R. Date of Hearing : 07.02.2023 Date of Pronouncement : 20.02.2023 ORDER Per Bench: The captioned appeals have been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana even dated 29.07.2019 in respect of Assessment Years 2012-13 to 2014-15. 2. The assessee has raised the following grounds of appeal in ITA No. 627/Asr/2019: ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 2 “1. That the order passed by the Hon’ble CIT(A) u/s 143(3) r.w.s 153A of the Act dated 29.07.2019 is against the law and facts of the case. 2. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 153A/143(3) of the Act which is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 4,50,000/-, on account of unexplained expenditure in cash u/s 69C of the Act, on the renovation of her house no. 435, New Jawahar Nagar on the basis of rough page. (a) That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition without considering the submission of assessee that the total of cash expenses of Rs. 36,000/- was incurred against renovation and not Rs. 36 Lakhs as alleged by the Ld. Assessing officer and had not used any codes i.e Rupee =Paise to mention the cash expenses. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 3. Ground of appeal in ITA No. 628/Asr/2019 “1. That the order passed by the Hon’ble CIT(A) u/s 143(3) r.w.s 153A of the Act dated 29.07.2019 is against the law and facts of the case. 2. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 153A/143(3) of the Act which is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 3 3. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 31,50,000/-, on account of unexplained expenditure in cash u/s 69C of the Act, on the renovation of her house no. 435, New Jawahar Nagar on the basis of rough page. (a) That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition without considering the submission of assessee that the total of cash expenses of Rs. 36,000/- was incurred against renovation and not Rs. 36 Lakhs as alleged by the Ld. Assessing officer and had not used any codes i.e Rupee =Paise to mention the cash expenses. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 4. Ground of appeal in ITA No. 629/Asr/2019 “1. That the order passed by the Hon’ble CIT(A) u/s 143(3) r.w.s 153A of the Act dated 29.07.2019 is against the law and facts of the case. 2. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 153A/143(3) of the Act which is bad in law and against the facts and circumstances of the case and is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 21,85,000/-, on account of unexplained expenditure in cash u/s 69C of the Act, on the renovation of her house no. 435, New Jawahar Nagar on the basis of rough page. (a) That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 4 making addition without considering the submission of assessee that the total of cash expenses of Rs. 21,850/- was incurred against renovation and not Rs. 21,85,000/- Lakhs as alleged by the Ld. Assessing officer and had not used any codes i.e Rupee =Paise to mention the cash expenses. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 5. There are identical grounds involving common issue except variation of figures in these three appeals challenging the impugned orders of the Ld CIT (A) in confirming the addition on account of unexplained expenditure in cash on the renovation of her house no. 435, New Jawahar Nagar. Therefore, we decided to hear these three appeals together and disposed of by this common order for brevity. We have chosen to take ITA No. 627/Asr/2019, Assessment Year: 2012-13 as a lead case for facts and discussion. 6. Briefly the facts as per record are that the assessee is an individual, who filed his original return declaring an income of Rs.4,44,040/- on 31.07.2012 that a Search and seizure was conducted u/s 132 at the premises of the assessee on 08.09.2016 and notice u/s 153A of the Income Tax Act was issued. In compliance to which assessee filed return of income declaring same amount of income as that of original return i.e. Rs.4,44,040/- on 29.04.2018 and filed all the documents called for during ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 5 the assessment proceedings. The AO being not satisfied with the submission of assessee made disputed addition on account of unexplained expenditure on renovation of in cash u/s 69C of the Act, on the renovation of her house no. 435, New Jawahar Nagar. 7. In appeal, the Ld. CIT(A) has confirmed the addition by observing as under: “ F r o m t h e a b o v e , i t i s c l e a r t h a t t h e A O d u l y c o n f ro n t e d t h e s e i z e d d o c u m e n t s o n t h e b a s i s o f w h i c h t h e a d d i t i o n w a s m a d e a n d i t c a n n o t b e s a i d t h a t e n q u i r y w a s n o t made by t h e A O a b o u t t h e n a t u r e o f t h e t r a n s a c t i o n s s i n c e b y h e r o w n a d mi s s i o n , the assessee e x p l a i n e d t h a t t h e s e a r e s u m m a r y o f c o n s t ru c t i o n m a t e r i a l a n d o t h e r e x p e n s e s / p a y m e n t s m a d e b y t h e a ss e s s e e o n t h e r e n o v a t i o n / c o n s t r u c t i o n o f t h e H o u s e No. 43 5, N e w J a w a h a r N a g a r , J a l a n d h a r b e l o n g i n g t o S m t . S u m a n S ab h a r w a l . T h e e n t r i e s i n t h e d i a r y r e l a t e s t o b o t h c a s h t r a n sa c t i o n s a n d t r a n s a c t i o n s t h r o u g h ch e q u e . Th e ch e q u e s a mo u n t s h ave b e e n va lid a te d f ro m th e b a n k a cco u n t sta te me n t. Co n f ir matio n o f ch e q u e p a y me n ts su p p o rts th e fa ct th a t th e se re la te s to re n o va tio n / co n st ru ctio n o f th e h o u se . He n ce , th e a rg u me n t o f th e A R th a t 'n e ith e r in d e p e n d e n t o r co rro b o ra ti ve me a n in g o f th e n o tin g fo r e n t rie s th e re in is su p p o rte d ' , i s a l so n o t fo u nd te n a b le . Th e fa ct a b o u t th e u se o f co d in g in th e d ia r y a n d th e p re va le n t p ra ct ice a d o p te d in th i s re g a rd a re d is cu sse d b e lo w :- Fa c ts to s how t h a t c odi ng w a s i nv o lv e d. To e xa min e t h e fa ct th a t w h e th e r a n y co d in g w a s in vo lve d in w ritin g th e f ig ure s in th e d ia r y a s me n tio n e d b y th e A O b u t d e nie d b y th e A R, th e A O w a s re q u e ste d to b rin g th e se i ze d re co rd w h ich w a s p e r use d in th e p re se n ce o f th e A R. It w a s o b se r ve d th a t a p a rt fro m th e p a g e re fe r re d b y th e A O , th e re a re e n tr i e s o n o th e r p a g es a lso o f th is se i ze d d ia r y 'A n n e xu re A -2 ' a n d p a g e n o . 8 (b a ck side ) a n d p a g e n o . ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 6 9 a re re le va n t fo r th e i ssu e in h a n d a n d th e sa me is re p ro d u ce d b e lo w :- ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 7 ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 8 T h i s i s t h e r e c o r d o f p a y m e n t s i n w h i c h t h e a m o u n t t o S K ( i . e . S h . S u s h i l S a b h a r w a l ) , t o R K (i.e. S h . R a k e s h S a b h ar w a l ) a n d S h . N i t i n S a b h a r w a l h a v e b e e n m e n t i o n e d a s 1 1 5 = 5 0 , 1 1 5 = 5 0 a n d 1 0 = 0 0 r e s p e c t i v e l y o u t o f t o t a l 2 4 1 = 0 0 . O n t h e r i g h t s i d e , t h e f i g u r e s r e p r e s e n t p a y m e n t s o n d i f f e r e n t o c c a s i on s . 1 r e p r e s e n t s 3 4 e a c h t o S K & R K . 50 r e p r e s e n t 2 5 e a c h t o S K & R K . 3 5 r e p r e s e n t 1 5 e a c h t o S K & R K a n d 5 t o N i t i n . 9 5 r e p r e s e n t s , 4 5 e a c h t o S K & R K a n d 5 t o N i t i n . 6 0 re p r e s e n t s , 3 0 e a c h t o S K & R K . These p a y m e n t s a r e p a r t l y t h r o ug h c h e q u e f o r w h i c h ' C H ' i s w r i t t e n a b o v e t h e figures. In f a ct , t h e f i g u r e s o f 2 5 & 30 a b o v e w h i c h 'CH' i s w r i t t e n , r e p r e s e n t s t h e a m o u n t o f R u p e e s t w e n t y f i v e l a c s ( R s . 2 5 , 0 0 , 0 0 0 / - ) a n d R u p e es t h i r t y l a c s ( R s . 30,00,000/-) e a c h r e c e i v e d b y S h . S u s h i l S a b h a r w a l & S h . R a k e s h S a b h a r w a l t h r o u g h c h e q u e s a s d e t a i l e d b el o w : - Cheque No. Amount Name 093989 dt. 03.05.2012 Rs. 25,00,000/- Sh. Sushil Sabharwal 093990 dt. 03.05.2012 Rs. 25,00,000/- Sh. Rakesh Sabharwal 093995 dt. 31.07.2012 Rs. 30,00,000/- Sh. Rakesh Sabharwal 093999 dt. 31.07.2012 Rs. 30,00,000/- Sh. Sushil Sabharwal Since, the p a y m e n t s m a d e t h r o u g h c h e q u e a r e v e r i f i ab l e f r o m t h e r e c o r d s , i t cannot be denied t h a t t h e w r i ti n g s o f a b o v e f i g u r e s a r e i n c o d e d f o r m . O n t h e verification of these a m o u n t s f r o m t h e b a n k a c c o u n t s o f S h . S u s h i l S a b h a r w a l a n d Sh. Rakesh S a b h a r w a l , i t c a n n o t b e s a i d t h a t t h e s e f i g u r e s o f 25 r e p r e s e n t s o n l y 25 rupee and 0 0 p a i s a a s c l a i m e d b y t h e A R i n h i s w r i t t e n s u b m i s s i o n t o a r g u e t h a t t h e f i g u r e o f 3 6 0 0 0 0 0 = 0 0 re p r e s e n t s a n a m o u n t o f ' r u p e e s t h i r t y s i x t h o u s a n d o n l y ' ( i . e. Rs. 3 6 0 0 0 / - ) a n d n o t a n a m o u n t o f ' R s . 3 6 l a c s ' . F r o m t h e d i s c u ss i o n , i t i s c l e a r t h a t coding was u s e d i n w r i t i n g t h e f i g u r e s in t h e d i a r y s e i z e d a s A n n e x u r e A - 2 r e f e r r e d by the AO in making t h e a d d i t i o n s . D u r a t i o n o f e x p e n s e : - F r o m t h e e n t r i e s i n t h e s e i z e d d o c u m e n t s , i t i s f o u n d t h a t t h e d i a r i e s c o n t a i n s e n t r i e s / p a y m e n t s f r o m f i n a n c i a l y e a r 2 0 1 1 u p t o f i n an c i a l y e a r 2 0 1 4 , t h u s s t r e t c h i n g f o r m o r e t h a n t h r e e y e a r s . T hi s i n d i c a t e t h a t t h e e x p e n s e d o e s n o t r e l a t e t o m i n o r a l t e r a t i on s o r r e p a i r s ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 9 b u t a r e i n d i c a t i v e o f a m a j o r c o n s t r u c t i o n / r e n o v a t io n w o r k b e i n g c a r r i e d o u t b y t h e a s s e s s e e o v e r a l o n g p e r i od o f t i m e . F o r e n g a g i n g t h e l a b o u r f o r w o r k f o r s u c h a l o n g t im e , t h e a m o u n t o f R s . 3 6 , 0 0 0 / - , a s c l a i m e d b y t h e A R , w i l l b e t o o m e a g e r a n d r a t h e r i n s u f f i c i e n t t o a c c o u n t f o r d a i l y w a g e s p a y m e n t s t o l a b o u r f o r E l e c t r i c w o r k , P l u m b i n g , M a rb l e , F l o u r i n g w o r k e t c . f o r r e n o v a t i o n w o r k c a r r i e d o u t a t F l o u s e N o . 4 3 5 , N e w J a w a h a r N a g a r , J a l a n d h a r . G i v e n t h e s i z e of t h e p r o p e r t y , t h e f i n a n c i a l a n d s o c i a l s t a t u s o f t h e f am i l y o f t h e a s s e s s e e , a n d t h e d u r a t i o n f o r w h i c h t h e r e n o v a t i o n w o r k c o n t i n u e d , d o e s n o t s u p p o r t t h e c o n t e n t i o n o f t h e AR t h a t t h e f i g u r e o f ' 3 6 0 0 0 = 0 0 ' r e p r e s e n t s o n l y Rs.36,000/- a nd r a t h e r t h e s e f a c t s s u p p o r t s t h e c o n c l u s i o n o f t h e A O t h a t t h e f ig u r e 36000=00 i s i n f a c t a c o d e d f i g u r e f o r R s . 3 6 , 0 0 , 0 0 0 / - a n d ha s t o b e r e a d a s s u c h . I m p o r t a n c e o f s u r r o u n d i n g c i r c u m s t a n c e a n d t h e p r e va l e n t p r a c t i c e : For analyzing the entries in the seized documents the surrounding circumstances, probability and r e a l i t y o f l i f e a r e t o b e c o n s i d e r e d . F o r d e c i p h e r i n g t h e f i g u r e s , o n e h a s t o l o o k i n t o a l l t h e s u r r o u n d i n g c i r c u m s t a n c e s a n d c o n s i d e r t h e v e r y c r u c i a l t e s t a s t o w h a t h a p p e n s i n r e a l l i f e r e g a r d i n g s u c h e n t r i e s . I t i s a n o r m a l p r a c t i c e i n t h e b u s i n e s s c i r c l e i n t h i s p ar t o f t h e c o u n t r y t o r e c o r d s u c h t y p e o f u n a c c o u n t e d c a s h t r an s a c t i o n s b y p u t t i n g a ' = ' s i g n a n d o m i t t i n g t h e l a s t t o z e r os i . e . o m i t t i n g ' 0 0 ' f r o m t h e a c t u a l f i g u r e e . g . t h e f i g u r e o f R s . 1 0 0 , 0 0 0 ( o n e l a c s ) w i l l b e w r i t t e n a s 1 0 0 0 = 0 0 a n d t h e f i g u r e o f R s . 1 0 , 0 0 0 ( t e n t h o u s a n d ) w i l l b e w r i t t e n a s 1 0 0 = 0 0 s i m i l a r l y f i g u r e o f R s . 3 6 , 0 0 , 0 0 0 / - ( t h i r t y s i x l a c s ) w i l l b e w r i t t e n a s 3 60 0 0 = 0 0 . T h u s , i t i s c o n c l u d e d t h a t t h e A O w a s r i g h t i n h i s i n f e r e n c e t h a t t h e a m o u n t s r e c o r d e d i n s e i z e d a n n e xu r e A - 2 a r e w r i t t e n i n c o d e d f o r m a n d t h e c o d e t o b e a p p l i ed t o r e a d t h e f i g u r e s a n d t o a r r i v e t h e a c t u a l a m o u n t i s t o be i n f e r r e d , a s p e r t h e o t h e r n o t i n g , b y p u t t i n g ' 0 0 ' a f t e r t h e f i gu r e w r i t t e n i n c o d e d f o r m . H e n c e , t h e f i g u r e s w r i t t e n a s ' 3 6 0 0 0 = 0 0' i s t o b e r e a d a s R s . 3 6 , 0 0 , 0 0 0 / - . T h e a r g u m e n t o f t h e A R t h at t h e a m o u n t r e p r e s e n t s o n l y R s . 3 6 0 0 0 = 0 0 r e l a t i n g t o d a il y w a g e s p a y m e n t s t o L a b o u r f o r r e n o v a t i o n o f h o u s e i s n o t fo u n d ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 10 a c c e p t a b l e b e c a u s e t h e p a t t e r n o f p a y m e n t s a l s o d o es n o t s u p p o r t t h e a b o v e c o n t e n t i o n s i n c e t h e l a b o u r i s t o b e p a i d e i t h e r o n w e e k l y o r m o n t h l y b a s i s w h i c h i s n o t s o in t h i s c a s e . H a d i t b e e n t h e c a s e o f l a b o u r p a y m e n t , t h e n t h e f ig u r e f o r e a c h m o n t h / w e e k s h o u l d h a v e a p p e a r e d o n r e g u l a r b a si s t h a t a l s o w i t h o u t t h e a b n o r m a l v a r i a t i o n s f r o m m o n t h t o m o n t h b a s i s a s i s n o t e d i n t h e p r e s e n t c a s e . I n v i e w o f t h e d i sc u s s i o n a b o v e , i t i s h e l d t h a t t h e f i g u r e m e n t i o n e d i n t h e d i a r y w h i c h a r e a c c e p t e d b y t h e A R a l s o a s r e l a t i n g t o t h e ' s u mm a r y o f c o n s t r u c t i o n m a t e r i a l a n d o t h e r e x p e n s e s / p a y m e n t s ma d e b y t h e a s s e s s e e , a r e i n c o d e d f o r m a n d t h e f i g u r e o f 36 0 0 0 = 0 0 i n f a c t , r e p r e s e n t s R s . 3 6 , 0 0 , 0 0 0 / - . U n d e r t h e f a c t s an d i n t h e c i r c u m s t a n c e s o f t h e c a s e , t h e a d d i t i o n s o f R s . 4 , 50 , 0 0 0 / - , R s . 3 1 , 5 0 , 0 0 0 / - a n d R s . 2 1 , 8 5 , 0 0 0 / - f o r t h e a s s e s s m e n t y e a r 2 0 1 2 - 1 3 , 2 0 1 3 - 1 4 a n d 2 0 1 4 - 1 5 r e s p e c t i v e l y m a d e b y t h e A O a r e f o u n d a c c e p t a b l e a n d u p h e l d . A c c o r d i n g l y , t h i s g r o u n d o f a p p e a l i s d i s m i s s e d . B e f o r e c o n c l u d i n g i t i s r e l e v a n t t o m e n t i o n t h a t i n t h e r e p l y f i l e d d u r i n g t h e a p p e l l a t e p r o c e e d i n g s , t h e A R h a s t a b u l a t e d v a r i o u s c o n t e n t i o n s o f t h e A O a g a i n s t w h i c h t h e r e ma r k s o f t h e a s s e s s e e h a v e b e e n g i v e n . O n e s u c h p o i n t i n a s u n d er : - Co n te n tio n o f L d . A O Re ma rks o f a sse ss e e Th e a sse sse e h a s f a ile d to su b mit th e co mp le te d e ta ils o f e xp e n se s in cu r re d in th e co n stru ctio n o f h o u se lo ca te d in th e p o sh a re a o f Jalandhar w ith its so u rce . If d e tai ls o f e xp e n se h a s n o t b e e n s u b mitte d b y th e a sse s se e , th a t d o e s n o t ju sti fie s th e cla i m o f L d . A O th a t h e u se d co d e la n g u a g e a n d th e a mo u n t o f Rs.3 6 ,0 0 0 /- sh o u ld b e in t e rp re te d a s Rs. 3 6 ,0 0 ,0 0 0 /-. T h e p re se n t ca se is th a t a s p e r L d . A O a sse s se e u se d co d e la n g u a g e a n d a mo u n t o f Rs.3 6 ,0 0 0 /- sh o u ld b e re a d a s Rs.3 6 ,0 0 ,0 0 0 / -. L d . A O is g o in g o ff th e tra c k a n d try in g to lin k th e a d d itio n ma d e to e v e ry p o ss ib l e a sp e ct h e co u ld re l a te . I t i s t h u s c l e a r t h a t t h e d e t a i l s o f e x p e n s e s i n c u rr e d i n t h e c o n s t r u c t i o n o f t h e h o u s e w e r e n o t s u b m i t t e d b y t h e a s s e s s e e ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 11 b e f o r e t h e A O . T h i s o b s e r v a t i o n o f t h e A O h a s n o t be e n c o n t r a d i c t e d b y t h e AR a n d n o s u c h d e t a i l s h a v e b e en f i l e d e v e n d u r i n g t h e a p p e l l a t e p r o c e e d i n g s a l s o . T o k n o w t h e c o s t o f c o n s t r u c t i o n / r e n o v a t i o n o f t h e h o u s e a r e f e r e n c e w a s r e q u i r e d t o b e m a d e t o t h e V a l u a t i o n O f f i c e r s i n c e t h e d e t a i l s o f t h e e x p e n s e s i n t h i s r e g a r d w a s n o t s u b m i t t e d b y t h e a s s e s s e e d u r i n g t h e a s s e s s m e n t p r o c e e d i n g s . T h e AO i s t h e r e f o r e a d v i c e d t o m a k e a r e f e r e n c e i n t h e m a t t e r t o t h e V a l u a t i o n O f f i c e r a n d t a k e n e c e s s a r y a c t i o n a s p e r l a w , i f r e q u i r e d , a f t e r t h e r e p o r t o f t h e V a l u a t i o n O f f i c e r. ” 8. At the time of hearing, the Ld. Counsel for the appellant submitted that the addition has been made on the basis of rough paper without considering the submission of the assessee; and that the noting on the diary found and seized during the search relates to some petty expenses incurred by the assessee for renovation of House No. 435, New Jawahar Nagar, Jalandhar, during the period October, 2009. The AR repeatedly contended that these do not pertain to the year under consideration. The Ld. AR further argued that nothing has been brought on record to show that the amount was not actual but coded as alleged with corroborative evidence to multiply figure with 00. Thus the Ld. AR contended that the jotting in the diary by no stretch of imagination can be treated as conclusive proof of alleged unexplained expenditure by the assessee and hence presumption u/s 292C cannot be taken against the assessee. The AR argued that the expense cannot be restricted to an extent incurred by some ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 12 other persons, on the basis of presumptions, conjectures & surmises only. In support, he filed a written brief note which reads as under: 1. That the addition made by Ld. AO is not based on corroborative evidence which could substantiate the claim of Ld. AO that assessee used any coding. 2. That Ld. AO on his own has deciphered the figures on the paper by adding ‘00’ at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for adding the zeros. 3. That Ld. AO did not carry any enquiry whatsoever to find the nature of transactions. 4. That jottings on loose paper found during search operation was mere estimation of petty expenses incurred and no corroborative evidence is on records that the amounts were actually in lakhs. 5. That neither independent nor collective meaning of notings or entries written therein is supported by conclusion of Ld. AO. 6. The contents thereof are not capable of describing the transactions the way A.O. has deciphered them and the diary jottings have not been corroborated from any other findings. The jottings in the diary by no stretch of imagination can be treated as conclusive proof of expenditure transaction by the assessee as concluded by the Ld. AO. Hence, in the background, presumption u/s 292C of the Act cannot be taken against the assessee. Reliance is placed on the following decisions: 1. CIT v/s Atam Valves Pvt Ltd. , Hon’ble Punjab Haryana High Court (2009) 184 TAXMAN 0006 in which it was held as under: Income from undisclosed sources—Addition under s. 69—Unexplained payment of wages—During survey under s. 133A in the premises of the ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 13 assessee certain incriminating documents were found including a 'slip pad' containing payment of wages to various persons—Stand of the assessee was that the same did not represent payment of wages during the year in question but were for the earlier year—CIT(A) as well as the Tribunal partly set aside the addition holding that even though explanation of the assessee that the loose papers did not relate to payment of wages during the year in question may not be accepted, in absence of any other material, the loose sheets by itself were not enough to make addition as per estimate of the AO—It depends upon facts and circumstances of each case as to what is to be fair estimate of undisclosed income and therefore no interference was called for— Kachwala Gems vs. Jt. CIT (2006) 206 CTR (SC) 585 : (2007) 288 ITR 10 (SC) applied 2. Hon’ble Delhi High Court in the case of Girish Chaudhary 163 Taxman 608 in which it was held as under: Search and seizure—Block assessment—Undisclosed income—Before an addition of an undisclosed income can be made, the AO has to bring on record the material found as a result of search of show that there is an undisclosed income—AO treated Rs. 48 lakhs as assessee’s undisclosed income on the basis of seizure of a document which showed certain unexplained entries totalling ‘48’—Not justified—There is no material on record to show as to an what basis the AO has reached the conclusion that the figure ‘48’ is to be read as Rs. 48 lacs—Said document is a dumb document and leads to now here— Addition rightly deleted by the Tribunal—There is no error in the order of the Tribunal and it does not give rise to a question of law, much less a substantial question of law 3. Atul Kumar Jain V/s DCIT, Hon’ble Delhi ITAT, (1999) 64 TTJ 0786 in which it was held as under: Search and seizure—Block assessment—Computation of undisclosed income—Addition on the basis of uncorroborated chit of paper—AO has deciphered the figures on the paper by adding ‘00’, ‘000’ or ‘0000’ at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for adding the zeros—Not justified— He has not examined the assessee or the author of the said paper—AO has not brought any material on record to show that the figures related to sale or purchase of property—He made no enquiry from the purchaser—Said paper ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 14 does not fall within the definition ‘books of account’ or document—Paper seized had no evidentiary value and it does not prove that consideration was understated—Same cannot form the basis for assessing the undisclosed income 4. ACIT V/s Satyapal Wassan, Hon’ble Jabalpur ITAT, (2008) 5 DTR 0202 in which it was held as under: Income from undisclosed sources—Addition under s. 69—Addition on the basis of dumb document found during search—Document found during search containing the figure ‘22.30’—AO simply presuming that the figure ‘22.30’ stands for Rs. 22.30 lakhs and these were advances given by assessee during the financial year relevant to asst. yr. 1989-90 and making addition as undisclosed income—Not justified—The document was a dumb document containing no signature, no date, no unit like rupee, ton, kilogram, centimeter etc., full names of the parties were also not given, not showing whether it was position of assets or liabilities, receipts or payments, sale or purchase or advances made or loans received—AO did not carry out any enquiry whatsoever to find out the nature and period of transactions—The assessee had explained by way of affidavit that the document belonged to his brother ‘D’—There was also an affidavit filed by widow of ‘D’ according to which the document belonged to her husband—Even if the affidavits are ignored as fresh evidence wrongly admitted by CIT(A), what is left behind is the dumb document bereft of any details without there being any enquiry by the AO to correlate the same with other documents seized, regular books of accounts, records kept by outside agencies or statements of concerned parties—The four essential components of s. 4, viz., the taxable event, the person chargeable, the assessment year in which charge is leviable and the total income are absent in the case—Presumption under s. 132(4A) is not available for purposes of assessment—Further, it being a rebuttable and shifting presumption, in the face of affidavits filed by the assessee and wife of ‘D’ that impugned document belonged to ‘D’, it could not be inferred, without rebutting the said affidavits, that the document and transactions recorded therein belonged to assessee—There being no material on record to indicate in certain terms the period of transactions, it was not possible to infer that they belonged to assessment year in question—It is also not possible to infer the quantum of income from the face of the document without there being any investigation—There is no evidence on record to show that the assessee or his LRs took any steps to recover the amounts or the AO has taxed the amounts as wealth of the assessee—Addition could not be sustained under s. 68 also because on the one hand, the AO had ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 15 made addition under s. 69 and on the other, the document being only a loose paper could not be construed as ‘book’ within the meaning of s. 68—For the same reasons, additions of Rs. 20,000 and Rs. 90,000 on the basis of yet another dumb document were also uncalled for—Consequently, there is no question of charging of tax on notional interest on such amounts—However, in respect of document showing name of assessee, 50 items in different quantities at different rates purchased also showing expenditure quantified at Rs. 1,31,736 bearing date, lower authorities were justified in treating the amount as expenditure/investment and making addition in the absence of any evidence brought by the assessee to show that it was not purchase but only a quotation 5. Hon’ble Cuttak Tribunal in the case of ADD. CIT VS. Prashant Ahluwalia 92 TTJ 464 (CTK) in which it was held as under: Income from undisclosed sources—Addition—Jottings on loose paper found during search operation—Explanation of the assessee that the amount written on said paper was mere estimation of expenditure for forthcoming period was probable—Only round figures were found indicating that the estimated figures were noted for planning purposes—No corroborative evidence on records that the amounts were actually expended—Hence, addition was rightly deleted 6. ACIT V/s Sharad Chaudhary, Hon’ble Delhi ITAT, (2014) 165 TTJ 0145 (Del) in which it was held as under: Income from undisclosed sources—Unexplained income—Deletion of Addition—Search and seizure operation u/s. 132 was carried out at residential premises of Assessee—Consequent upon search and seizure operation, notice u/s 153A was issued to file return—Assessee filed return declaring income—AO completed assessment u/s. 153A and s. 143(3) and made addition on account of undisclosed income u/s. 69 on basis of certain written pages containing rough noting found during course of search and seizure from residence of Assessee—CIT(A) deleted addition made by AO on account of undisclosed income by holding that seized documents were dumb in nature—Held, High Court in case of CIT Jalandhar vs. Atam Valves (P) Ltd. held that when loose papers does not relate to certain payment during relevant period in question, then in absence of any other supportive material or evidence those loose sheets by itself would not be enough to make addition—Impugned document was dumb document as on logical analysis, neither independent nor collective ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 16 meaning of notings or entries written therein supported conclusion of AO— Assessee made no investment in purchase of land out of income earned out of books of accounts from undisclosed sources—AO made addition on basis of documents in question on his own whims, surmises and conjectures—AO also converted and moulded contents of impounded document to gather support for his baseless findings—Document in question alone could not be used as a basis of making impugned addition without the company of any other supportive material and evidence—AO made addition without any basis and justified reason—No ambiguity, perversity or any other valid reason to interfere with conclusion and findings of CIT(A)—Revenue’s Appeal dismissed 7. CIT V/s S.M. Agagrwal, Hon’ble Delhi High Court (2007) 293 ITR 0043 in which it was held as under: Appeal (High Court)—Substantial question of law—Block assessment—Both CIT(A) and Tribunal having deleted addition in block assessment by concurrent findings that document relied on by Revenue was dumb document, such findings were essentially of fact not giving rise to any substantial question of law—Appeal dismissed Sir, it is submitted that Ld. AO made similar addition on the basis of alleged coding in the case of husband of assessee Sh. Susheel Sabharwal and that casehas been decided inn favour of assessee by the Hon’ble ITAT Amritsar vide order dated 16.09.2022 in ITA no.68//ASR/2019, copy of order is enclosed herewith in which it was held as under: 17. In the present case, the addition was being made on the basis of uncorroborated rough noting of paper/diary. The Ld. CIT(A) has deciphered the figures on the paper by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures is not justified. Further, the AO had made no enquiry from the purchaser on the said rough noting of the paper of diary which does not fall within the definition of ‘books of account’ or document. Even if, a rough diary paper seized without being corroborated with relevant documentary evidence to ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 17 the effect of understatement of the sale consideration had no evidentiary value and it would not prove that consideration was understated, According, same cannot form the basis for presumption u/s 292C of the act for the purpose of assessing the undisclosed income of the appellant assessee. The Ld. CIT (DR) has not filed any judgement in rebuttal to the contentions raised by the Ld. Counsel for the assessee. 18. Considering the factual matrix of the case and the judicial pronouncements, we hold that the impugned order passed by the Ld. CIT(A) at his whim and caprice based on presumption and conjectures which suffered from legal infirmity and perversity on facts of the case. Accordingly, the addition of Rs 74,57,194/- on account of on money receipt for computation of long term capital gain is deleted. Sir, since the addition made by the Ld. Assessing Officer is only on the basis of conjecture and surmises and that too on the basis of non convincing diary notings found during search without putting forward any corroborative evidence, so it is requested that addition made by the Ld. Assessing Officer may kindly be deleted.” 9. The Ld. CIT(DR) stands by the impugned orders. However, he has not filed any documentary evidence or citation in rebuttal to the contentions of the Ld. AR. 10. We have heard the rival contentions, perused the material available on record and the case laws cited at bar. Admittedly, in the present case there was rough diary containing scattered jotting of expenses, seized from the premises of the appellant, during the course of search u/s 132(4) of the act. The AO being not satisfied with the submission of the assessee made an addition of Rs. 4,50,000/-, Rs. 31,50,000/- and Rs. 21,85,000/- for the ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 18 assessment year 2012-13, 2013-14 and 2014-15 respectively on account of renovation of house. The Ld. CIT (A) has confirmed the said addition in the hands of assesse by observing and interpreting coding and decoding of rough jotting numeral to be multiplied by 00 by doubting and suspician the real transaction without support of any corroborative evidence on record to in rebuttal to the claim of the appellant assesse. 11. It is seen that the rough noting/jotting in the diary, found during search, appears to be pertains to estimation of expenses regarding house renovation. It is not deciphered that the figures/jotting in the alleged Diary were in multiple of 100 as presumed by the authorities below by way of multiplying with 00 (Double Zero) without support of corroborative evidence on records that the amounts were actually in lakhs as against thousands claimed by the appellant. 12. The Ld. AR argued that neither of the authorities below had drawn independent nor collective meaning of noting/entries written in the rough diary to supported the conclusion/findings. He contended that the contents of the diary thereof are not capable of describing the transactions the way A.O. and the Ld. CIT(A) have deciphered them. He further contended that since the diary jottings have not been corroborated with the any supporting ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 19 material evidence on record from any other findings on alleged renovation of house, hence, the jottings in the diary by no stretch of imagination can be treated as conclusive proof of expenditure transaction by the assessee as observed by the Ld. AO. and endorsed by the Ld. CIT(A). He contended that, in the circumstances, presumption u/s 292C of the Act cannot be taken against the assessee. 13. On similar facts, the coordinate Bench vide order dated 16.09.2022 in ITA no.68//ASR/2019, has deleted the addition by observing as under: “17. In the present case, the addition was being made on the basis of uncorroborated rough noting of paper/diary. The Ld. CIT(A) has deciphered the figures on the paper by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures is not justified. Further, the AO had made no enquiry from the purchaser on the said rough noting of the paper of diary which does not fall within the definition of ‘books of account’ or document. Even if, a rough diary paper seized without being corroborated with relevant documentary evidence to the effect of understatement of the sale consideration had no evidentiary value and it would not prove that consideration was understated, According, same cannot form the basis for presumption u/s 292C of the act for the purpose of assessing the undisclosed income of the appellant assessee. The Ld. CIT (DR) ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 20 has not filed any judgement in rebuttal to the contentions raised by the Ld. Counsel for the assessee. 18. Considering the factual matrix of the case and the judicial pronouncements, we hold that the impugned order passed by the Ld. CIT(A) at his whim and caprice based on presumption and conjectures which suffered from legal infirmity and perversity on facts of the case. Accordingly, the addition of Rs 74,57,194/- on account of on money receipt for computation of long term capital gain is deleted.” 14. In the present case, the cheques amounts written in the alleged diary have been validated from the bank account statement and such Confirmation of cheque payments supports the fact that these relates to renovation/construction of the house. In our view, the Ld. CIT(A) ought to have brought on record corroborative documentary evidence on record to interpret or decode the alleged notings/jotting as multiple of 100. Meaning thereby, the interpretation of the noting of entries/jotting in the diary by multiple of 100 has no basis therein and such an interpretation made on the basis of assumption, presumption and conjectures in absence of supporting corroborative evidence such application of money for alleged expenditure, renovation/construction material bills, payment of labor or even Department ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 21 Valuation Officer report in order to estimate the expenditure is not tenable and cannot be approved. 15. From the above, it is evident that the addition was being made on the basis of uncorroborated rough noting in a diary. The Ld. CIT(A) has deciphered the figures by decoding in the form of Indian style and international style at his whim and caprice based on presumption and conjectures without bringing any corroborative material evidence in support for such assumption of the decoded figures to multiple of 00 (stands 100) is not justified. Further, the AO had made no enquiry regarding the alleged disputed expenditure based on rough blank figure/jotting in a diary that what are the renovation/construction material bills, payment of labor or even not referred Department Valuation Officer’s report in order to estimate the expenditure on the said rough noting of the paper of diary which does not fall within the definition of ‘books of account’ or document. If, a rough diary paper seized without being corroborated with relevant documentary evidence to the effect to understatement the alleged renovation expenditure on the house, then it had no evidentiary value and it would not disprove the claim of the appellant that the jottings in the diary were actual figure of renovation expenditure on her house, According, same cannot ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 22 form the basis for presumption u/s 292C of the act for the purpose of assessing the undisclosed income of the appellant assessee. 16. Thus, without substantiating the content of the noting in the diary, the value adopted by way of decoding by the authorities below based on assumption, presumption and guess work is illegal and against the law. Since, the diary jottings have not been corroborated from any relevant material documentary evidence and hence, the jottings in the diary by no stretch of imagination can be accepted as an evidence or conclusive proof of ‘renovation expenditure in multiple of 00/100 by the assessee for the purpose of presumption u/s 292C of the Act against the assessee. 17. Considering the factual matrix and following the Coordinate Bench decision on similar fact we hold that the impugned order passed by the Ld. CIT(A) at his whims and caprice based on presumption and conjectures which suffered from legal infirmity and perversity to facts on record. Accordingly, the additions of Rs. 4,50,000/-, for the assessment year 2012- 13, on account of renovation is deleted. 18. The facts in I.T.A. No. 628/Asr/2019 and I.T.A. No. 629/Asr/2019 in respect of the Assessment Year 2013-14 and 2014-15 respectively are identical to the facts in I.T.A. No. 627/Asr/2019, in respect of the ITA Nos. 627 to 629/Asr/2019 Suman Sabharwal v. ACIT 23 Assessment Year: 2012-13. Therefore, our observation and finding given in I.T.A. No. 627/Asr/2019, in respect of the Assessment Year: 2012-13 shall be applicable in mutatis mutandis to the matters in I.T.A. No. 628/Asr/2019 and I.T.A. No. 629/Asr/2019 in respect of the Assessment Year 2013-14 and 2014-15 respectively. Accordingly, the additions made of Rs. 31,50,000/- and Rs. 21,85,000/- for the assessment year 2012-13, 2013-14 and 2014-15 respectively on account of renovation are deleted. 19. In the result, all the captioned three appeals of the assessee are allowed. Order pronounced in the open court on 20.02.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order