Loose Documents Found During Search Cannot Lead to Initiation of Proceedings Under Section 153C [ITAT]:

Loose Documents Found During Search Cannot Lead to Initiation of Proceedings Under Section 153C [ITAT] On January 3, 2018, an income tax search operation was carried out on the taxpayer in accordance with Section 132 of the Income Tax Act. A loose document was found on the property of a third party, Mr. Gurvinder Singh Duggal. According to the document, the appellant, Shyam Sunder Bang, made an unexplained investment of Rs. 30,00,000. In his initial return, which was filed under Section 139(1), the assessee reported Rs. 3,72,30,940 in income. Proceedings under Section 153C were started based only on the seized document, and the assessment order dated December 31, 2022, included an additional Rs. 30,00,000 under Section 69B (unexplained investment). The assessee's appeal was denied by the CIT(A). The current appeal before the Tribunal is the result of this. Issues Framed

• Can the addition under Section 69B of the Income Tax Act be sustained based solely on a loose, unsigned handwritten paper seized from a third party’s premises during search?
• Whether the document can be considered belonging to the assessee for initiating valid proceedings under Section 153C?

Arguments: Petitioner argued that the document did not bear the name or signature of the assessee. Also, it was not in the handwriting of the assessee or that of the searched person (Mr. Duggal), who also denied receipt of any cash. Petitioner added that all transactions were conducted by Petitioner via banking channels. Revenue relied on the assessment order and CIT(A)’s findings. Revenue further asserted that the seized document was sufficient to initiate action under Section 153C and justify the addition. Court’s Decision & Rationale

• The Tribunal noted that no signature or handwriting of the assessee was on the document. Thus, the document lacked any direct connection to the assessee. Further, no corroborative evidence proves an actual cash transaction.
• ITAT reaffirmed the principle that loose, unsigned, and unauthenticated documents seized from third parties cannot constitute admissible evidence without further corroboration.

Consequently, it was held that both the initiation of proceedings under Section 153C and the resultant addition were legally unsustainable.