DCIT vs. Studio Aethletic Health & Hospitality Pvt. Ltd (ITAT Mumbai)- 2 December 2017
Some important pointers of the case (for easy reference):
1- No addition can be made on basis of loose papers found or register found which is further not corroborated by evidence. In support of the same I rely on the decision of CIT vs F.V.Kalyanasundaram (2007) 294 ITR 49 (SC), wherein the Hon'ble Supreme Court upheld the findings of the High Court and the Tribunal that loose pieces of paper on the basis of which the initial suspicion with regard to the undervaluation had been raised are vague. Furthermore, in the case of CIT vs A tarn Valves P Ltd ( 2009) "184 Taxman 6 (P&H), it has been held that the A.O. was not justified in estimating sales on the basis of loose slips without substantiating and without having any iota of evidence. A similar view has also been taken by the Mumbai Bench of the Tribunal in the case of S.P.Goyal v DC1T ( 2002) 82 ITD 85 (Mum) (TM), wherein it has been held that in the absence of evidence to show that the assessee invested in any property or any corroborative evidence, addition cannot be sustained on the basis of mere rough noting on loose sheets. Uncorroborated loose sheets or registers found during the search addition is deleted. Therefore the addition is deleted,
2- It is seen that this addition is made on the basis of a single register which is also not further corroborated by evidence by the A.O. Uncorroborated registers or loose papers found during; search cannot be made basis for making addition by the A.O. The A.O. has not brought anything on record to substantiate the addition. Therefore, the appellant's explanation is acceptable in the light of the Honourable Supreme Court decision in CIT vs Kalyanasundaram ( 2007) 294 1TR 49 (SC) and Honourable Mumbai Tribunal decision in SP Goyal vs DCIT ( 2002) 82 ITD 85 ( Mum Tribunal). Therefore, this ground of appeal is allowed,
3- In the above said case laws it was expounded that de hors any corroborating evidence a statement obtained u/s.133A in case of a survey cannot be the sole basis for addition of undisclosed income. In the present case, we find that this is not a mere statement obtained under survey. There are corroborative materials in the form of registers found. Furthermore, there is the statement obtained u/s. 132(4) of the Act making clear admission on oath accepting the earning of undisclosed income.
Accordingly, in the background of the afore-said discussion, we set aside the order of the ld. Commissioner of Income Tax (Appeals) and affirm the addition in the hands of the assessee
For reading full text of the case please refer link - http://itatonline.org/archives/dcit-vs-studio-aethletic-health-hospitality-pvt-ltd-itat-mumbai-undisclosed-income-found-in-search-law-on-whether-statement-obtained-u-s-1324-admitting-earning-of-undisclosed-income-which-is-alleg/studio-aethetic-undisclosed-income/
1- No addition can be made on basis of loose papers found or register found which is further not corroborated by evidence. In support of the same I rely on the decision of CIT vs F.V.Kalyanasundaram (2007) 294 ITR 49 (SC), wherein the Hon'ble Supreme Court upheld the findings of the High Court and the Tribunal that loose pieces of paper on the basis of which the initial suspicion with regard to the undervaluation had been raised are vague. Furthermore, in the case of CIT vs A tarn Valves P Ltd ( 2009) "184 Taxman 6 (P&H), it has been held that the A.O. was not justified in estimating sales on the basis of loose slips without substantiating and without having any iota of evidence. A similar view has also been taken by the Mumbai Bench of the Tribunal in the case of S.P.Goyal v DC1T ( 2002) 82 ITD 85 (Mum) (TM), wherein it has been held that in the absence of evidence to show that the assessee invested in any property or any corroborative evidence, addition cannot be sustained on the basis of mere rough noting on loose sheets. Uncorroborated loose sheets or registers found during the search addition is deleted. Therefore the addition is deleted,
2- It is seen that this addition is made on the basis of a single register which is also not further corroborated by evidence by the A.O. Uncorroborated registers or loose papers found during; search cannot be made basis for making addition by the A.O. The A.O. has not brought anything on record to substantiate the addition. Therefore, the appellant's explanation is acceptable in the light of the Honourable Supreme Court decision in CIT vs Kalyanasundaram ( 2007) 294 1TR 49 (SC) and Honourable Mumbai Tribunal decision in SP Goyal vs DCIT ( 2002) 82 ITD 85 ( Mum Tribunal). Therefore, this ground of appeal is allowed,
3- In the above said case laws it was expounded that de hors any corroborating evidence a statement obtained u/s.133A in case of a survey cannot be the sole basis for addition of undisclosed income. In the present case, we find that this is not a mere statement obtained under survey. There are corroborative materials in the form of registers found. Furthermore, there is the statement obtained u/s. 132(4) of the Act making clear admission on oath accepting the earning of undisclosed income.
Accordingly, in the background of the afore-said discussion, we set aside the order of the ld. Commissioner of Income Tax (Appeals) and affirm the addition in the hands of the assessee
For reading full text of the case please refer link - http://itatonline.org/archives/dcit-vs-studio-aethletic-health-hospitality-pvt-ltd-itat-mumbai-undisclosed-income-found-in-search-law-on-whether-statement-obtained-u-s-1324-admitting-earning-of-undisclosed-income-which-is-alleg/studio-aethetic-undisclosed-income/
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