SHRI SUSHEEL SABHARWAL, JALANDHAR V. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, JALANDHAR

ITA 682/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6442 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Search and seizure; Loose papers; Question of law; Block assessment; Capital Gains
• Section: 6; 132; 154; 153A; 2(22)(e); 143(1); 64; 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. No. 682/Asr/2019 Assessment Year: 2013-14 Sh. Susheel Sabharwal, 435, New Jawahar Nagar, Jalandhar [PAN: ABRPS 7939N] Vs. ACIT, Central Circle-2, Jalandhar (Appellant) (Respondent) I.T.A. No. 683/Asr/2019 Assessment Year: 2013-14 Sh. Rakesh Sabharwal, 337-338, New Jawahar Nagar, Jalandhar [PAN: ACNPS 6330C] Vs. ACIT, Central Circle-2, Jalandhar (Appellant) (Respondent) Appellant by : Sh. Ashray Sarna, C. A. Respondent by: Smt. Balvinder Kaur, CIT DR Date of Hearing: 10.08.2022 Date of Pronouncement: 16.09.2022 ORDER Per Dr. M. L. Meena, A.M.: These two appeals have been filed by the Appellants against the order even dated 05.09.2019 passed by the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana, in respect of the Assessment Year 2013-14. ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 2 2. The assessee has raised the following grounds of appeal in ITA No. 682/Asr/2019:- “1 . Th a t th e o rd e r p a s se d b y th e Ho n ’b le CIT (A ) d a te d 0 5 .0 9 .2 0 1 9 is a g a in st th e la w a n d fa cts o f th e ca s e . 2. Th a t h a vin g re g a rd to th e fa ct s a n d c i rcu msta n ces o f th e ca se , Ho n ’b le CI T(A ) h a s e rre d in la w a n d o n fa cts in co nfi r min g th e a ctio n o f ld . A s s e ssin g O f fice r in fra min g th e i mp ug n e d a sse ss me n t o rd e r u /s 1 5 3 A /1 4 3 (3 ) o f th e A ct w h ich is b a d in la w a n d a g a in st th e fa cts a n d c ir cu ms t a n ce s o f th e ca se a n d is n o t su sta in a b le o n va rio u s le g a l a n d f a ctu a l g ro u n ds. 3. Th a t h a vin g re g a rd to th e fa ct s a n d c i rcu msta n ces o f th e ca se , Ho n ’b le CI T(A ) h a s e rre d in la w a n d o n fa cts in co nfi r min g th e a ctio n o f L d . A O i n ma k in g a n a d d it i o n o f R s 6 0 ,0 7 ,1 9 4 /- a s lo n g te r m ca p ita l g a in o n a cco u n t o f sa le o f p ro p e rty o n th e b a sis o f ro u g h p a p e r, w ith o u t co n sid e rin g th e su b mis sio n s o f th e a sse sse e . 4. Th a t h a vin g re g a rd to th e fa ct s a n d c i rcu msta n ces o f th e ca se , Ho n 'b le CI T(A ) h a s e r re d in la w a n d o n fa cts in co nfi r min g th e a ctio n o f L d . A O in d isa llo w in g co st o f i mp ro ve me n t a mo u n tin g to Rs.8 ,4 3 ,3 1 8 / - a n d re str ict in g th e sa me to th e e xte n t o f Rs.1 2 ,7 7 ,7 8 6 / - o n a ssu mp t io n a n d p re su mp tio n b a s is a n d w ith o u t a n y lo g ica l re a so n in g . 5. Th a t th e a p p e l la n t cra ve s th e le a ve t o a d d , mo d if y, a me n d o r d e le te a n y o f th e gro u n d s o f a p p e a l a t th e ti me o f h e a rin g a n d a ll th e a b o ve g ro u n d s a re w ith o u t p re j u d ice to e a ch o th e r . ” 3. Grounds of appeal in ITA No. 683/Asr/2019:- “1 . Th a t th e o rd e r p a s se d b y th e Ho n ’b le CIT (A ) d a te d 0 5 .0 9 .2 0 1 9 is a g a in st th e la w a n d fa cts o f th e ca s e . 2. Th a t h a vin g re g a rd to th e fa ct s a n d c i rcu msta n ces o f th e ca se , Ho n ’b le CI T(A ) h a s e rre d in la w a n d o n fa cts in co nfi r min g th e a ctio n o f ld . A s s e ssin g O f fice r in fra min g th e i mp ug n e d a sse ss me n t o rd e r u /s 1 5 3 A /1 4 3 (3 ) o f th e A ct w h ich is b a d in ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 3 la w a n d a g a in st th e fa cts a n d c ir cu ms t a n ce s o f th e ca se a n d is n o t su sta in a b le o n va rio u s le g a l a n d f a ctu a l g ro u n ds. 3. Th a t h a vin g re g a rd to th e fa ct s a n d c i rcu msta n ces o f th e ca se , Ho n ’b le CI T(A ) h a s e rre d in la w a n d o n fa cts in co nfi r min g th e a ctio n o f L d . A O i n ma k in g a n a d d it i o n o f R s 7 4 ,5 7 ,1 9 4 /- a s lo n g te r m ca p ita l g a in o n a cco u n t o f sa le o f p ro p e rty o n th e b a sis o f ro u g h p a p e r, w ith o u t co n sid e rin g th e su b mis sio n s o f th e a sse sse e . 4. Th a t h a vin g re g a rd to th e fa ct s a n d c i rcu msta n ces o f th e ca se , Ho n 'b le CI T(A ) h a s e r re d in la w a n d o n fa cts in co nfi r min g th e a ctio n o f L d . A O in d isa llo w in g co st o f i mp ro ve me n t a mo u n tin g to Rs.1 0 ,6 5 ,2 5 4 /- a n d re str ict in g th e sa me to th e exte n t o f Rs.1 2 ,7 7 ,7 8 6 / - o n a ssu mp t io n a n d p re su mp tio n b a s is a n d w ith o u t a n y lo g ica l re a so n in g . 5. Th a t th e a p p e l la n t cra ve s th e le a ve t o a d d , mo d if y, a me n d o r d e le te a n y o f th e gro u n d s o f a p p e a l a t th e ti me o f h e a rin g a n d a ll th e a b o ve g ro u n d s a re w ith o u t p re j u d ice to e a ch o th e r . ” 4. There are common issues in both the appeals challenging the impugned orders of the Ld CIT (A) in confirming the addition on account of Long Term Capital Gain from sale of property, and restricting cost of improvement based on rough paper without appreciating the facts of the case and submission of the assessee. Therefore, we decided to hear both the appeals together and disposed of by this common order for brevity. We have chosen to take I.T.A. No. 683/Asr/2019, Assessment Year: 2013-14 in Case of Shri Rakesh Sabharwal as a lead case for discussion. 5. Briefly the facts as per record are that the assessee is an individual, who filed his original return declaring an income of Rs. 31,21,770/- on 15.03.2014; that a Search and seizure was conducted u/s 132 at the ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 4 premises of the assessee on 08.09.2016 and notice u/s 153A of the Income Tax Act was issued, in response to which assessee filed return of income declaring same amount of income as that of original return i.e. Rs.31,21,770/- on 07.05.2018 and filed all the documents called for during the assessment proceedings. The AO being not satishfied and not appreciating the submission of assessee made an addition of Rs.74,57,194/-, restricting cost of improvement at Rs. 12,77,776/-. 6. In appeal, the Ld. CIT(A) has confirmed the addition by observing as under: “To decide the issue and to see whether the figures written in the diary were in coded form or not and whether any coding was involved in writing the figures in the diary, the seized document was called from the AO and examined. After examination of the seized document 'Annexure-2', the arguments of the AR are not found acceptable, firstly because the evidence relied upon by the AO are not just jotting on loose papers, in fact, these are part of a diary found & seized during the course, of search. To look at the fact whether any coding was involved in writing the figures in the diary referred by the AO, all the pages of the seized diary Annexure-2 were perused. It is observed that apart from the figures referred by the AO, there are other entries on this other pages i.e. 'page no. 8 (backside)’ and also on ‘page no. 9’ of this seized diary ‘Annexure-2’ which indicates that coding was used in writing figures in this diary seized as ‘Annexure-2’. For reference, the two pages are reproduced below:- ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 5 ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 6 ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 7 The figures on this page is in fact the record of payments in which the amount to SK (i.e. Sh. Susheel Sabharwal), to RK (i.e. Sh. Rakesh Sabharwal) and Sh. Nitin Sabharwal have been mentioned as'115=50/115=50 and 10=00 respectively out of total 241=00. On the right side, the figures represent payments on different occasions written vertically with sum at the bottom. In the middle of the page, the distribution of the amount received on different occasion (as mentioned vertically on the right side) amongst the three persons is indicated. 1 represents 34 each to SK & RK. 50 represent 25 each to SK & RK. 35 represent 15 each to SK & RK and 5 to Nitin. 95 represents, 45 each to SK & RK and 5 to Nitin. 60 represents, 30 each to SK & RK. These payments are partly through cheque for which 'CH' is written above the figures and the other figures represent the amount received in cash. In fact, the figures of 25 & 30 above which 'CH' is written, represents the amount of Rupees Twenty Five Lacs (Rs. 25,00,000/-) and Rupees Thirty Lacs (Rs. 30,00,000) each received by Sh. Susheel Sabharwal & Sh. Rakesh Sabharwal through cheques. The cheques amounts are duly mentioned in the Registration Deed as per the table below:- Cheque No. Amount Name 093989 dt. 03.05.2012 Rs. 25,00,000/- Sh. Susheel 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. Susheel Sabharwal Since, the payments made through cheque are verifiable from the records in the shape of Registration Deed and the bank accounts, it cannot be denied that the writings of above figures are in coded form and the figure of 241 represents the amount of Rs. 2,41,00,000/- which was the actual sale consideration. On the verification of the cheque amounts from the bank accounts of Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal, it cannot be said that these figures of 25 does not represent the amount of Rs. 25 lacs received through cheque as part of the total sale consideration of Rs. 241 lacs. From the discussion, it is clear that coding was used in writing the figures in the diary seized as Annexure-2 referred by the AO in making the additions. Therefore, on the test of preponderance of probability which is applicable to the Income Tax assessments, the AO was right in concluding that the figures on the 'backside of Page no. 8' of the seized diary Annexure-2 represents the actual sale consideration of House No. 434, New Jawahar Nagar, Jalandhar written in coded form and the figures written vertically on the ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 8 right hand side of the page whose total is 241 are in fact the amounts in lacs i.e. 1,50,35,95,60 & 241 are to be read as representing 1 lac, 50 lacs, 35 lacs, 60 lacs & 241 lacs. This matches with the figures written vertically on the left and side, whose total also is the same (as the total of the figure on the right hand side i.e. 241 lacs) and the figures written as 115=50 SK, 115=50 RK, 10=00 Nitin and 241=00 are to be read as Rs. 115.50 lacs to Sh. Susheel Sabharwal, Rs. 115.50 to Sh. Rakesh Sabharwal, Rs. 10.00 lacs to Sh. Nitin and Rs. 241.00 lacs (as total sale consideration of the property) respectively. As already mentioned, in the middle, the distribution of amounts received on different occasion as mentioned vertically on the right hand side is given and the amounts received through cheque have been marked by writing CH above the figures of 25 & 30. In fact., the total of ½ + 25 (CH) + 15 + 45 + 30(CH) comes to 115=50 which are to be read as representing Rs. 0.5 lacs + Rs. 25 lacs cheque + Rs. 15 lacs + Rs. 45 lacs + 30 lacs cheque giving a total of Rs. 115.50 lacs as share of Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal which matches with the figures written vertically on the left hand side of this page as 115=50 (which is to be read as Rs. 115.50 lacs). The figures written in the middle without CH over them are in fact the amounts received in cash. The first line in the middle (written as ½ + 25 + 15 + 45 + 30) represents the equal shares of Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal, whose total comes to 115.50 lacs, out of which the amounts received through cheque was Rs. 55 lacs by each which is represented by the figures of 25 and 30 above which CH is written and the balance amount of Rs 60.5 lacs was received in cash represented by the figures ½, 15 & 45. The sum of these figures is given on the left hand side as 115.50 lacs (i.e. ½ + 25 + 15 + 45 + 30 = 115=50). Below the first row in the middle, the amount given to Nitin on two occasions as Rs. 5 lacs each (with total at Rs. 10.00 lacs) is written in coded form as 5, 5 & 10 respectively. This matches with the figure '10=00 Nitin' written vertically on the left hand side below the figures 115=50 SK & 115=50 RK (representing the shares of Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal) which is to be read as the amount received by Sh. Nitin. The sum of the three figures is also written as 241=00 (which is to be read as Rs. 241 lacs equal to the total sale consideration of the property sold and matches with the figure of 241 written as sum of the figures on the right hand side). In fact, the amounts received on different occasions as written vertically on the right hand side were distributed amongst the three persons as per the figures mentioned in the middle. The first installment of Rs. 1 lac in cash (written as 1 on the right hand side) was distributed equally between Sh. Susheel Sabharwal and Sh. Rakesh Sabharwal and ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 9 mentioned as ½ in the middle (which is to be read as ½ lac in cash). The second installment of Rs. 50 lacs received through cheque (written as 50 on the right hand side) was also distributed equally and written as 25 CH in the middle (to be read as Rs. 25 lacs received in cheque). Then Rs. 35 lacs received in cash (written as 35 on the right hand side) was distributed as Rs. as Rs. 15 lacs each to Sh. Susheel Sabharwal & Sh. Rakesh Sabharwal and Rs. 5 lacs to Sh. Nitin. The subsequent installment of Rs. 95 lacs received in cash (written as 95 on the right hand side) was also distributed among the three with Rs. 45 lacs each to Sh. Susheel Sabharwal & Sh. Rakesh Sabharwal, and Rs. 5 lacs to Sh. Nitin Sabharwal. The last installment of Rs. 60 lacs received through cheque (written on the right hand side as 60) was also distributed equally between Sh. Susheei Sabharwal and Sh. Rakesh Sabharwal and written as 30 CH in the middle (to be read as Rs. 30 lacs received in cheque by each). To sum-up, the figures on the right side, written vertically, represents the amount received on different occasions whose total is 241 (to be read as Rs. 241 lacs). In the middle, the distribution of the amounts received on different occasion (as written on the right side), among different persons is mentioned along with the mode of receipt for which CH is written for the amounts received through cheque and the amounts without anything written over them representing the cash. On the left hand side the total shares of the three persons is mentioned and the sum of the figures written vertically on the left side also comes to 241=00 (to be read as Rs. 241 lacs). Thus, the figures on the right hand side, in the middle and on the left hand side corroborate with the other and explain each other. It is also clear that the AO has duly confronted the seized documents on the basis of which the addition was made. The entries in the diary relate to both cash transactions and transactions through cheques. The cheques amounts have been validated from the bank account statements and the confirmation of these cheque payments support the fact that all other figures also relate to sale of the house. Hence, the argument of the AR that the addition has been made without any basis and on the basis of surmises and conjectures, are not found tenable. The fact about the use of coding in the diary has also been adjudicated in other cases where the additions on the basis of noting in the diary were confirmed. Thus, it is concluded that the AO was right in his inference that the amounts recorded in seized Annexure-2 are written in coded form and the figures of 241 is to be considered as Rs. 241 lacs representing the total sale consideration of House No. 434, New Jawahar ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 10 Nagar, Jalandhar sold by the assessee jointly. Hence, the inference drawn by the AO is found acceptable and hence upheld. Regarding the cost of improvement, the AR has not submitted documentary evidence in the shape of bill etc. to substantiate the claim of cost of improvement in different years as claimed in the computation of Long Term Capital Gain. The source of making these expenses in the respective years -has also not been explained by the AR during the appellate proceedings. Therefore, in the absence of documents being produced during the assessment proceedings as mentioned by the AO in the assessment order and failure to produce the same during the appellate proceedings, the claim regarding the cost of improvement is not found acceptable. The AO has very generically allowed the benefit on the basis of lower of the figures claimed by the two co-owners and hence the arguments on this issue are found without merits. The calculation of the Long Term Capital Gain by the AO is thus found sustainable and hence upheld.” 7. 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; that the appellant has correctly declared the capital gains in its return of income filed 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. 434, 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 assessee has received any 'on-money' and that as per the registered deed, done with the Sub-Registrar, Jalandhar, it is clearly mentioned that the property was sold for Rs. 1,10,00,000/-. Thus the Ld. AR contended that the jotting in the diary by no stretch of imagination ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 11 can be treated as conclusive proof of 'on-money' transactions by the assessee and hence presumption u/s 292C cannot be taken against the assessee. Similarly, for the disallowance of cost of improvement and restricting the same to the extent of Rs. 12,77,786/-, the AR submitted that the AO has drawn a wrong conclusion without any logical reasoning for the same. The AR argued that the expense cannot be restricted to an extent incurred by some other persons, on the basis of presumptions, conjectures & surmises only. In support, he filed a written brief note which reads as under: Brief Note: During the year under consideration assessee along with his brother Sh. Susheel Sabharwal sold property vide registered sale deed situated at 434-New Jawahar Nagar, Jalandhar for the total consideration of Rs.1,10,00,000/- on 09.08.2012 as under: Sr. No Particulars Share 1. Smt. Susheel Sabharwal 1/2 nd 2. Sh. Rakesh Sabharwal (assessee) 1/2 nd The aforesaid property was inherited by the assessee along with brother from his father wherein the share of assessee and his brother stood computed at Rs.55,00,000/- each. The assessee therein going as per the aforesaid facts and figures duly reflected the income with true and correct facts and income including the income under the head ‘Capital Gain’ income in his ‘Return of Income’ for the year under consideration. Addition by Ld. AO During the course search diary was found which contained some rough notings and thereafter during assessment proceedings Ld. Assessing Officer asked to explain diary notings found from the residence during the course of search and seizure which as per Ld. AO is regarding sale of property at 434, New Jawahar Nagar, Jalandhar to which assessee submitted that these relates to some petty expenses written under the head ‘434 Ex’ which clearly means ‘Expense’ during the year October 2009 which was incurred by the assessee during renovation of house no.434, New Jawahar Nagar and these do not pertains to the year under consideration and further submitted that the actual transaction relating to the said property have duly reflected in the ITR’s and consequent ‘Capital Gains’ arising there from, if any, had duly been offered for taxes. ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 12 Sir, Ld. AO ignoring the submission of the assessee made addition of Rs.74,57,194/- on account of Capital Gain on sale of property no.434 New Jawahar Nagar, Jalandhar. Our submission: In this regard it is submitted as follows:- 1. Assessee sold the concerned property for the total consideration of Rs.1,10,00,000/- where assessee’s share being 1/2 nd of the total share amounting to Rs.55,00,000/- which is clearly visible from the registered sale deed dated 09.08.2012 . Thus assessee cannot be called upon to explain the rough calculations of diary when the registered sale deed clearly shows that the same was registered for Rs.1,10,00,000/-. 2. That from the jottings in the seized diary Ld. AO has inferred that that assessee received Rs.65,50,000/- (being his share) over and above the disclosed consideration but nothing has been brought on record to show that purchaser made any payment over and above the disclosed amount. Also nothing has been brought on record from the witnesses end that assessee received any on money. Addition is purely made on diary notings and no authenticated document/deed/agreement is brought on record to prove that assessee received on money. Moreover the Sale Deed is duly registered with Sub Registrar, Jalandhar-1 and Ld. AO duly accepted the Registered Sale Deed dated 09.08.2012 which clearly mentions that assessee along with other co-owner sold property for Rs.1,10,00,000/- and did not raise any doubt on the sale deed. Also Ld. AO wholly and solely relied on diary noting being reproduced on page 2 of assessment order. 3. That the present case is not the case where circle rate or the value as per stamp registration authorities of the impugned property is more than what has been disclosed. 4. That in the impugned diary notting there is name of Nitin Sabharwal also but he had nothing to do the property as the property belongs to Rakesh Sabharwal and Susheel Sabharwal and Ld. AO, on assumption and presumption basis, on page 3 of the Assessment Order states that Nitin Sabharwal may have been given gift of Rs.10,00,000/- by both Susheel Sabharwal and Rakesh Sabharwal and no evidence have been brought on record in this regard. 5. That it is pertinent to mention that Ld. AO in his initial questionnaire states that “Amount of Rs.2,41,000/- (SK, RK, & Nitin)” and in the subsequent questionnaire sates that “this amount is Rs.2,41,00,000/-.” Thus Ld. AO himself is not clear about the contents of the diary whereas ultimately made addition by relying on said diary noting. Both the questionnaires are enclosed herewith 6. That the figures relates to some expense incurred by the assessee during the period October 2009 (evident from the diary itself where date is OCTOBER 2009) which was incurred when the renovation for the same was going on. These alleged figures are written under the head ‘434 Ex’ which makes it pretty clear that they relates to expense and not to any transaction relating to ‘on money’ receipts. Further assessee incurred expense in the FY 2008-09 and FY 2009-10 and claimed the same as cost of improvement in his return of income. This fact further substantiates the claim of ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 13 assessee as it these expense relates to previous years and not the impugned assessment year. 7. That these noting are written on the Diary page where the date is ’29 October 2009’ and these relates to expense incurred during the same period and point to be noted is that the sale was executed on 09.08.2012, then how it be presumed that the it relates to period of 2012. 8. That the addition made by Ld. AO is purely based on diary notings. Ld. AO on page 3 of Assessment Order states that “.......... the description on the page [1/2 + 25 {CH} + 15 +45 +30 {CH}] clearly shows that the actual consideration was Rs.2,41,00,000/- ...............” 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 on money transaction by the assessee. Hence, in the background, presumption u/s 292C of the Act cannot be taken against the assessee. 9. Ld. AO has made identical addition in the hands of Sh. Susheel Sabharwal wherein on page 3 point 1 of the Assessment Order states that “.....the assessee submitted that the expense written on relevant page of diary relates to period 2008-09 whereas lot of entries in this diary are of later periods also............” , in this regard your attention is drawn to the relevant page where all the entries are of the period 2008-09 and none of the entries relates to the subsequent period. Ld. AO on assumption and presumption basis and on random basis is stating that it contains entries of the later period, but has not specifically stated that which entry is relating to the impugned assessment year. Even if the other pages of the diary contains some transactions of the later period then also this baseless conclusion cannot be drawn that the relevant page might also include transaction of the later period, more so when no dates of the later period are mentioned on the relevant page. Reliance is further placed on the following decisions: 1. The apex Court in Central Bureau of Investigation vs. V. C. Shukla [1998] 3 SCC 410 has laid down that :— "File containing loose sheets of papers are not 'book' and hence entries therein are not admissible under s. 34 of the Evidence Act, 1872." 2. CIT v/s Sh. Praveen Juneja, Delhi High Court in ITA 57/2017 dated 14.07.2017 in which its was held as under: “Search and Seizure—Addition—Search took place in premises of Assessee pursuant to which certain documents were seize—AO based on document made addition of amount in return income of assessee—Document on basis of which addition was made was piece of paper and document was hand written paper purportedly containing details of house construction expenses—Since said document had been seized from residence of Assessee, CIT (A) drew presumption under Section 292C of the Act was that it belonged to assessee—Further, CIT(A) proceeded to hold that amount constituted unexplained income of Assessee since Assessee had not submitted any evidence like confirmation letter or any other document to show that expenditure related to any project of aforementioned company—CIT(A) upheld addition made by AO—ITAT noted ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 14 that document "did not indicate if it pertained to assessee nor address location of property was mentioned therein nor such property had been located by AO during assessment proceedings—AO had also not brought on record any forensic evidence to prove handwriting of loose paper relied upon by him to make addition, which was exclusively made on basis of suspicion and guesswork—Held, addition to returned income of Assessee was made based on surmises and conjectures and that too on basis of single document without making any further enquiry—No attempt was made by AO to find out if in fact it constituted construction expenses of any project of aforementioned company of which Assessee was director—Order of ITAT suffered from no legal infirmity and did not give rise to any substantial question of law—Assessee’s appeal dismissed.” 3. 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 4. 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 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 Addition on account of Cost of Improvement Sir, it is further submitted that Ld. AO has disallowed the cost of improvement expense claimed by the assessee and restricted the same to the extent of Rs.12,77,786/- being lower of the cost of improvement claimed by assessee or his brother in the FY 2008-09 and 2009-10 respectively. In this regard it is submitted as under: ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 15 1. That in this regard no incriminating material is found during search and the return was already processed u/s 143(1) of the Act on 23.06.2014 and the same is reflected/stated on page 1 of the Assessment Order and date of search is 08.09.2016 . Thus, there was no incriminating material, much less, in respect of the impugned addition and hence impugned addition has been made in the absence of any incriminating material unearthed from the search, which is not permissible in law and is supported by the following judicial decision: - COMMISSIONER OF INCOME TAX vs. KABUL CHAWLA HIGH COURT OF DELHI (2016) 380 ITR 0573 (Delhi) Search and seizure—New scheme of assessment in search cases—Search was carried out u/s 132 on a leading real estate developer operating all over India and some of its group companies—Search was also carried out in the premises of the assessee— Pursuant to the search a notice u/s 153A(1) was issued to assessee and thereafter he filed returns—As on the date of the search, no assessment proceedings were pending for relevant AYs and for said AYs, assessments was already made u/s 143(1), assessee filed an application u/s 154 seeking rectification of the assessments on the ground that the accumulated profits of the companies paying the dividend were less than the amount of loan or advance given by them to the recipient companies—AO declined to rectify the assessments—CIT also held that addition need not be restricted only to the seized material—ITAT on appeal however deleted addition on grounds that the additions made for relevant AY’s u/s 2(22)(e) were not based on any incriminating material found during search operation and same was not sustainable in law—Issue was whether the additions made to the income of the assessee for the said AYs u/s 2(22)(e) was not sustainable because no incriminating material concerning such additions were found during the course of search and further no assessments for such years were pending on the date of search—Held, present appeals concerned AYs, 2002-03, 2005-06 and 2006- 07—On the date of the search the said assessments already stood completed—Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed—Question framed by the Court was answered in favour of the assessee and against the Revenue—Revenue’s appeal dismissed Smt. Sanjana Mittal Vs. DCIT ITA No. 487/Asr/2018, wherein the jurisdictional bench of Hon’ble ITAT, Amritsar held as under: “.......no incriminating material has been found, no assessment proceedings were pending on the date of search proceedings, therefore, it was held by the bench that in a case, where no incriminating material is found during course of search proceedings and the assessment proceedings remain un-abated as on the said date, no addition cane be made validly in the hands of assessee....” 2. That Ld. AO has drawn a baseless conclusion which bring bringing on record any logical reasoning for the same. 3. That expense to be incurred depends upon and also varies from person to person, how can the same be restricted to an extent incurred by some other person. ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 16 4. That assessee has provided the details of expenses incurred on the improvement of the property sold and the same are substantiated by the withdrawals made from the bank account. 5. That Ld. AO states that assessee has not provided the complete details of improvement on the property but he has not appreciated the fact that details of the major portion of the expenses have already been furnished. 6. Further this addition is not based on any incriminating material but on the basis of details furnished by the assessee as per his return of income. Thus no addition is warranted when it is not based on any incriminating material. 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 and confirmed by Worthy CIT(A)-5, Ludhiana without any concrete evidence may kindly be deleted. 8. The Ld. Addl. 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. The Ld. CIT (DR) contended that there were loose rough paper of diary, containing expense entries, recovered consequence of search operation in the case of the assessee, although, in law there is no necessity of any incriminating material while initiating proceedings u/s 153A of the Act as various High Courts held that the addition can be made without any incriminating material qua the years covered by Sec.153A. 9. 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 loose paper of 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 ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 17 assessee made an addition of Rs.74,57,194/- on account of Long-Term Capital Gains on sale of property by restricting cost of improvement at Rs. 12 lacs. The Ld. CIT (A) has confirmed the said addition of Rs 74,57,194/- and Rs 60,07,194/- in the hands Rakesh Sabharwal and Sushil Sabharwal respectively besides cost of improvement of Rs. 12, 86,776/- in each hand by observing and interpreting coding and decoding of rough jotting as ‘RK’ stands for Rakesh Sabharwal and ‘SK’ stands for Sushil Sabharwal and doubted the real transaction as per registered deed as if in Indian style and other figures of rough papers as “On money” transaction in international style. However, no observation has been made as regards to the rough jotted figure mentioned 10 against Mr. Nitin and 115 against each RK and SK, making it to 240 and not 241 figure and thereafter interpreting same figures by the lower authorities in their own way presuming as international style to crores without bringing on record, the required corroborative documentary evidences. Thus, neither the AO nor the CIT(A) could establish the factual nexus of receipt of alleged disputed on money decoded by way of bringing relevant corroborative documentary evidences to establish the veracity of the receipt of “On money” if any and improvement cost qua the loose papers viz -a- viz rough diary allegedly seized, during the search from the assessee’s premises. ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 18 10. From the registered sale deed, it is evident that the subject property situated at 434, New Jawahar Nagar, Jalandhar was sold for the total consideration of Rs.1,10,00,000/- on 09.08.2012. It is admitted fact on record that this property was inherited by the assessee along with brother. Thus, the share of assessee and his brother @ 50% each, stood computed at Rs.55,00,000/-. The Ld. AR contended that the assessee has duly reflected the said income under the head ‘Capital Gain’ income in his ‘Return of Income’ for the year under consideration. 11. It is seen that the rough noting/jotting in the diary, appears to be pertains to some petty expenses, under the head ‘434 Ex’ which stands for ‘Expense’ being incurred on renovation of house no.434, New Jawahar Nagar, by the assessee during the month of October 2009 and these do not pertain to the year under consideration. It is also seen that the actual transaction relating to the said property have duly been reflected by the appellant in the ITR’s along with consequent ‘Capital Gains’ arising there from, being duly been offered for taxes. 12. We understand that the assessee sold the inherited property for the total consideration of Rs.1,10,00,000/- where assessee’s share being 1/2nd of this share, amounting to Rs.55,00,000/- as per the registered sale deed dated 09.08.2012 and thus, assessee cannot be called upon to explain the rough calculations of expenses on renovation made in diary when the ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 19 registered sale deed clearly shows sale consideration that it was registered for Rs.1,10,00,000/-. It is pertinent to mention here that nothing has been brought on record, either by the AO or the Ld. CIT(A) to establish that purchaser has made any payment over and above the disclosed amount by way of corroborative documentary evidence either from the witnesses end or purchaser end that assessee has received any on money. In our view, such an addition being made purely on the basis of inferences drawn from diary rough noting without any nexus or support of the authentic documentary evidences such as registered deed/ or agreement to sale were being brought on record to prove that assessee has received ‘On money’, cannot be sustained. It is evident from the record that the Sale Deed registered with Sub Registrar, Jalandhar-1 has been duly accepted by the AO, that assessee along with other co-owner sold property for sale consideration of Rs.1,10,00,000/- and that the authorities below had not raised any doubt on the sale consideration, viz-a-viz the circle rate or the value as per stamp registration authorities of the impugned property as what has been disclosed in the sale deed, was as per circle rates as on date of registration of the subject property. 13. It can be seen that there was a noting on the same paper of diary in name of Nitin Sabharwal who had had nothing to do with the property as the property belongs to Rakesh Sabharwal and Susheel Sabharwal, but the AO, ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 20 states on presumption that Nitin Sabharwal may have been given gift of Rs.10,00,000/- by both Susheel Sabharwal and Rakesh Sabharwal without establishing the facts with support of relevant documentary evidence on record. 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 ‘on money’ transaction by the assessee for the purpose of presumption u/s 292C of the Act against the assessee. 14. In case of “Central Bureau of Investigation vs. V. C. Shukla” (Supra), the Hon’ble Apex Court observed that "File containing loose sheets of papers are not 'book' and hence entries therein are not admissible under s. 34 of the Evidence Act, 1872." 15. The Hon’ble Delhi High Court in the case of “CIT v/s Sh. Praveen Juneja”, (Supra), held as under: “Search and Seizure—Addition—Search took place in premises of Assessee pursuant to which certain documents were seize—AO based on document made addition of amount in return income of assessee—Document on basis of which addition was made was piece of paper and document was hand written paper purportedly containing details of house construction expenses—Since said document had been seized from residence of Assessee, CIT (A) drew presumption under Section 292C of the Act was that it belonged ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 21 to assessee—Further, CIT(A) proceeded to hold that amount constituted unexplained income of Assessee since Assessee had not submitted any evidence like confirmation letter or any other document to show that expenditure related to any project of aforementioned company—CIT(A) upheld addition made by AO—ITAT noted that document "did not indicate if it pertained to assessee nor address location of property was mentioned therein nor such property had been located by AO during assessment proceedings—AO had also not brought on record any forensic evidence to prove handwriting of loose paper relied upon by him to make addition, which was exclusively made on basis of suspicion and guesswork—Held, addition to returned income of Assessee was made based on surmises and conjectures and that too on basis of single document without making any further enquiry—No attempt was made by AO to find out if in fact it constituted construction expenses of any project of aforementioned company of which Assessee was director—Order of ITAT suffered from no legal infirmity and did not give rise to any substantial question of law—Assessee’s appeal dismissed.” 16. In another case, of “Atul Kumar Jain V/s DCIT”, (Supra) Delhi ITAT, (1999) 64 TTJ 0786 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 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.” ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 22 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) 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. ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 23 Accordingly, the addition of Rs 74,57,194/- on account of on money receipt for computation of long term capital gain is deleted. 19. The next issue pertains to disallowance of Rs.12,77,786/- on account of the cost of improvement expense claimed by the assessee. 20. At the time of hearing, the Ld. AR contended that there were no incriminating materials found during the course of search related to cost of improvement during the course of search and that as the return was already processed u/s 143(1) of the Act on 23.06.2014 much before the date of search i.e. 08.09.2016 and hence this is a case of unabated assessment. The Ld. CIT(DR) merely stands by the impugned order without any argument in rebuttal, to contradict the contention of the Ld. AR, In our view, since, there was being no incriminating material, much less, in respect of the impugned addition and hence impugned addition has been made in the absence of any incriminating material unearthed from the search, is not permissible in law. 21. In the case of “Shri Krishna, Mittal, in ITA No. 637/ASR/2018 the jurisdictional bench ITAT, Amritsar vide order dated 23.12.2021 held that in the absence of incriminating material, no addition can be made qua unabated assessment for the year under consideration. 22. Respectfully following Coordinate Amritsar Bench decision on the identical facts in the case of “Krishna Kumar Mittal Vs. DCIT (Supra), we ITA Nos. 682 & 683/Asr/2019 Susheel & Rakesh Sabharwal v. ACIT 24 hold that in the absence of incriminating material, disallowance of Rs.12,77,786/- made on account of the cost of improvement expense is deleted. 23. The facts of the matter in I.T.A. No. 682/Asr/2019, in respect of the Assessment Year: 2013-14 are identical to the facts in I.T.A. No. 683/Asr/2019, in respect of the Assessment Year: 2013-14. Therefore, our observation and finding given in I.T.A. No. 683/Asr/2019, in respect of the Assessment Year: 2013-14 shall be applicable in mutatis mutandis to the matter in I.T.A. No. 682/Asr/2019, in respect of the Assessment Year: 2013-14. 24. In the backdrop of the aforesaid discussion, the subject appeals are disposed of in the terms indicated as above. Order pronounced in the open court on 16.09.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order