Undated, unsigned and typed loose sheet of paper are dumb document, could not be taken as the sole basis for determination of undisclosed income
In a recent judgment, ITAT Amritsar has held that undated, unsigned and typed loose sheet of paper without witness, without any acceptable narration are in the nature of dumb document, having no evidentiary value and could not be taken as the sole basis for determination of undisclosed income of the assessee.
ABCAUS Case Law Citation:
4614 (2025) (06) abcaus.in ITAT
In the instant case, the Income Tax Department had challenged the order passed by the CIT(A) in n deleting the addition u/s 69 of the Income Tax Act, 1961 (the Act) made by the assessing officer on the basis of document seized during the course of search and seizure action u/s 132 of the Act.
The respondent assessee was an individual and is associated with a Business Group of cases in which search and seizure action u/s 132 of the Act was conducted. The assessee was engaged in construction business and is stated to be one of the directors and shareholder of two companies.
The assessee’s husband and her two sons were partners in a partnership firm at which in course of survey u/s 133A, documents were impounded, which has formed the basis of the impugned addition in the hand of the assessee.
The impounded document was plane, unsigned, piece of white typed paper (not hand written) containing the name of one seller and the name of the assessee as buyer containing details of plot and cash paid by the assessee.
During the assessment proceedings, the assessee submitted that she had made payment for purchase of plot of land through bank channel and reflected in bank accounts. However, the assessee denied having any knowledge of the contents of the impounded white sheet containing particulars of agreed rates and circle rates.
On the other hand, the AO alleged that the difference amount in agreed rates minus circle rates must have been paid in cash by the assessee to the seller out of her unaccounted money.
The seller in his deposition categorically denied having received any payment in cash, from the assessee over and above, the sale consideration which has been received by cheque through bank channel. He also denied any knowledge of the very existence of the said piece of impounded document.
Similarly, the statement of the assessee was also recorded by the AO, where she also denied having paid any amount in cash in respect of the purchase of the said property. It was further submitted by her that the fair market value of the land on the date of registration has been rightly adopted by the Registration Officer and registration had been done at circle rate applicable, and there was neither any material on record nor any inquiry conducted by the AO to disbelieve the circle rate or the FMV, at which the property had been registered.
The CIT(A) placing reliance on judgment of Hon’ble Supreme Court deleted the addition observing that it was an addition based on suspicion and however strong it may be, suspicion cannot take the shape of evidence and as such he held that the addition had been made by the AO simply on the basis of presumption.
Before the Tribunal the assessee submitted that as per the guidelines contained in search and seizure manual issued vide paragraph (i) and (2) of F No 286/ 77/2007-IT(Inv. II) , issued by the Government of India , Ministry of Finance , Department of Revenue, Central Board of Direct Taxes dated 13/09/2007, the loose single sheet of paper on the basis of which this addition has been made was never properly numbered and sealed and neither contains the signature of authorized persons, nor the signature of the witnesses and not even the signature of the assessee, as mandated by the CBDT seizure manual.
It was further contended that during the course of search no marking was made on the said loose sheet and it contained signatures of office staffs only, (instead of signatures of the authorized persons, witnesses and the assessee) and as such the said loose sheet is not a reliable document on the basis of which any addition could be made or sustained.
Further, the assessee referred to the decision of the Hon’ble Apex Court to submit that in the instant case there is no evidence to show that the assessee had paid on money for purchase of land. There was nothing to show that the contents on the loose sheet had been acted upon as per the terms stipulated therein. There was no trace of any cash payments neither in the registered deed sale, nor with the seller or in any other documents found in course of search / survey. It was also not a case that the market value of the landed property bought by the assessee (buyer), was actually more than the amount stipulated in the deed of conveyance and registration had been done on circle rates applicable which are always determined on the basis of the FMV of the area and locality.
The Tribunal observed that the addition of the AO was based assumption of on money payments, which in turn was based on information contained in the second part of the impounded sheet which contains figures pertaining to agreed rate and circle rate in respect of the aforesaid sales transaction, though the same is undated and unsigned and naturally devoid of any so called witness, and cannot be termed as an agreement by any stretch of imagination.
The Tribunal also observed that both buyer and seller had recorded their statements and totally denied of entering into any cash transaction in between themselves other than the transaction of payments effected through bank channel, and also pleaded ignorance of the very existence of the said TYPED document and naturally on the face of such denial the allegation of on money either paid / payable , becomes infructuous and the impounded typed sheet of paper is reduced to the status of a ‘dumb document”.
The Tribunal stated that in absence of any corroborative material and evidence on record and finding that such material particulars contained in impounded document (unsigned and undated) had indeed materialized into transactions of identical value as recorded in the typed sheet giving rise to income of the assessee which had not been disclosed in regular books of account, is to be disregarded for the purposes of assessments.
The Tribunal referred to the decision of the Hon’ble Apex court in popularly known as Jain Hawala Case to understand the legal position of the matter wherein it was held that any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational and hence legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction.
The Tribunal pointed out that in this case it was held that entries in Jain Notebooks held on facts admissible u/s 34 of Indian Evidence Act, 1872, but file containing loose sheets of papers are not ”book” and hence entries therein not admissible u/s 34 of the Act, 1872.
Further it was also held in this case that entries in books of account shall not alone be sufficient evidence to charge any person with liability. Entries even if relevant are only corroborative evidence. Independent evidence as to trustworthiness of those entries is necessary to fasten the liability.
It was held by the Honourable Supreme Court that entries made in the Jain Hawala diaries were under Section 34, but truthfulness thereof not proved by any independent evidence. It was also held in this case that “books” ordinarily mean a collection of sheets of paper or other material, blank, written, printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as “book” for they can be easily detached and replaced. The Supreme Court further went on to state that even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness fix a liability upon a person.
The Tribunal further observed that Hon’ble Supreme Court in case popularly known as Sahara dairies and Aditya Birla diaries case, laid down the following principles:-
(i) Entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act. It is only where the entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible;
(ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability;
(iii) The meaning of account book would be spiral note book/pad but not loose sheets;
(iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another;
(v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts;
(vi) The Court has to be on guard while ordering investigation against any important Constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence it is not admissible in evidence.
The Tribunal in the light of the above guidelines held that the impounded loose sheet of paper was undated, unsigned, typed (without anybody’s handwriting), naturally without witness, without any acceptable narration and did not bear the signature of the parties or any other party, were in the nature of dumb document, having no evidentiary value and could not be taken as the sole basis for determination of undisclosed income of the assessee.
The Tribunal held that no addition can be made by AO on grossly inadequate material or rather no material at all and as such the addition made by the AO on the basis of such loose sheets, cannot be sustained and as a result the order of the CIT(A ) deleting the addition was upheld.
In the result, the appeal of the revenue was dismissed.
Download Full Judgment Click Here >>
- ICAI extends last date to submit MEF for FY 2025-26 to 10th October, 2025
- ICAI defers Guidance Note on Financial Statements of Non-Corporate entities/LLPs
- Delhi Govt. to help persons with benchmark disabilities with high support need
- Placing Genset in steel container fitted with additional parts amounts to manufacture
- FAQs on GST Rate Rationalization as per recommendations of 56th GST Council
