ITAT: Loose Excel Sheets Found at Third-Party Premises Cannot Justify Additions Without Corroborative Evidence:

ITAT: Loose Excel Sheets Found at Third-Party Premises Cannot Justify Additions Without Corroborative Evidence A search under Section 132 was conducted on 18.11.2021 in the case of the Polisol–Apurva/Hemani/LNG Group. During the search, certain Excel sheets were found from an employee, Shri Shailesh Desai, allegedly recording cash loan and interest transactions. Relying on these Excel sheets and statements of Shri Desai, the Assessing Officer made additions in the hands of the assessee, Jugalkishore Banarasilal Saraf, for AYs 2019-20, 2020-21, and 2022-23 under Section 69A read with Section 115BBE, along with an ad hoc disallowance of indexed cost of improvement. The CIT(A) deleted the additions relating to cash loan and interest and restricted the disallowance of cost of improvement to 25%. The Revenue challenged the relief granted, while the assessee appealed for the remaining issues. Central Issue: Whether additions under Section 69A for alleged cash loan and interest can be sustained solely on the basis of unsigned Excel sheets seized from a third party and uncorroborated statements, and whether ad hoc disallowance of cost of improvement at 50% was justified. Tribunal's Decision: The ITAT held that the additions under Section 69A were unsustainable. The Excel sheets relied upon did not mention the assessee’s name, were found at a third party’s premises, and were unsupported by corroborative evidence. Statements relied upon by the Assessing Officer did not establish that any cash loan or interest was received by the assessee, and the alleged recipient categorically denied the transactions through affidavits and sworn statements. The Tribunal also noted that the assessee was denied cross-examination, violating principles of natural justice. Since presumptions under Sections 132(4A) and 292C do not apply in third party cases without linkage, the additions were rightly deleted by the CIT(A). The Tribunal upheld the CIT(A)’s decision to restrict the disallowance to 25%, holding that complete denial was unjustified given the nature and location of the land. Consequently, the Revenue’s appeal was dismissed, and the assessee’s appeals were allowed. To Read Full Judgment, Download PDF Given Below