Loose papers cannot be considered as admissible evidence for making an addition unless backed by independent corroborative material.
Recently, ITAT DELHI:-SHYAM SUNDER BANG VERSUS ACIT CENTRAL CIRCLE 8 ARA CENTRE, NEW DELHI [ITA No. 1887/DEL/2023, Dated.- April 17, 2025] has held that unsigned, unverified papers cannot form the basis for addition u/s 69B. Loose papers cannot be considered as admissible evidence for making an addition unless backed by independent corroborative material.
Let us have a Short Overview of the case:
The Search and seizure action u/s 132 of the Income Tax Act, 1961 was conducted in the case of NavneetDawar& others Group on 03.01.2018, whereby residences and business premises of various persons including Sh. NavneetDawar, Sh. Anil Narang, and Sh. Gurvinder Singh Duggal were covered. A Search warrant of authorization, u/s 132 of the Act was issued in the name of Sh. Gurvinder Singh Duggal.
Observation and Decision :-
The Ld. A.O. while making the addition of Rs. 30,00,000/-, observed that the Assessee had made an unexplained investment of Rs. 30,00,000/-in a property transaction which was not reflected in the books of accounts and while doing so, the Ld. A.O. has relied on the loose unsigned hand written paper found at the premises of third party. It is a matter of fact that the said document has been seized in the premises of the searched person Mr. Gurvinder Singh Duggal. It is also on record that the said Gurvinder Singh Duggal has denied receiving any cash payment. It was the specific case of the Assessee that all the payments related to the property transaction were made via banking channels and no cash transaction took place in the said transaction. The seized document does not contain the signature of the Assessee and the same is not in the hand writing of the Assessee or the seized person
The Co-ordinate Bench of the Tribunal in the case of ACIT Vs. LataMangeshkar 97 ITD 53 held that unsigned, unverified papers cannot form the basis for addition u/s 69B of the Act. Further, the Hon’ble Supreme Court in the case of Common Cause Vs. Union of India (2017) 394 ITR 220(S.C) also held that loose papers cannot be considered as admissible evidence for making an addition unless backed by independent corroborative material.
In the present case, the loose sheet has been recovered from the searched person i.e. Gurvinder Singh Duggal who is a third party, which bears no signature of either the Assessee or searched person and the same is not in the hand writing of either searched person or the Assessee. Further, the Gurvinder Singh Duggal has specifically denied receiving any cash payment. In the absence of any corroborative material brought on record during the assessment proceedings, the Assessing Officer has committed error in making the addition based on the said loose sheet. Therefore, in our opinion, the Ld. CIT(A) has erred in upholding the addition made by the A.O. Finding merits in the Grounds of Appeal of the Assessee, the addition of Rs. 30,00,000/- made u/s 69B of the Act, which has been sustained by the Ld. CIT(A) is hereby deleted.
The copy of the order is as under:
