No Additions Based On Unsigned and Undated Documents | ITAT

Case Details: Assistant Commissioner of Income-tax (Central) v. Chhattisgarh Distilleries Ltd - [2025] 177 taxmann.com 257 (Raipur - Trib.)

Judiciary and Counsel Details

• Partha Sarathi Chaudhury, Judicial Member
• Arun Khodpia, Accountant Member
• S.L. Anuragi, Ld. CIT-DR for the Appellant
• S.R. Rao, Adv. for the Respondent

Facts of the Case

The assessee, Chhattisgarh Distilleries Ltd., a flagship company of the ‘K’ Group, was engaged in the business of distillery. A search and seizure operation under section 132 was carried out at the residential/business premises of the assessee. Consequently, notice under section 153A was issued. The Assessing Officer (AO) made the addition on account of 2 per cent of the total revenue and on account of capital investment for obtaining 35 group shops under section 69C and to be charged under section 115BBE.

The AO based these additions on certain loose papers seized during the search. These papers contained details of liquor shops in different districts of Chhattisgarh. The AO presumed that the entries represented unaccounted sales and investment by the assessee. Statements of two directors were also recorded under section 132(4), which the AO claimed supported the additions.
On appeal, the CIT(A) deleted the additions made by the AO. Aggrieved by the order, the AO filed the instant appeal before the Tribunal. The matter reached the Tribunal.

The Tribunal noted that the additions made by the AO were solely on the basis of certain loose papers seized during the search. These papers were undated, unsigned, and unsealed. Upon verification, it was found that the figures mentioned therein exactly tallied with the data published by the State Excise Department in its official notification dated 10.02.2016.

The Tribunal observed that such papers could not be considered as incriminating material, since they neither bore the name of the assessee nor contained any evidence suggesting unaccounted sales or capital investment by it. It was further noted that, being a liquor manufacturer, the assessee was legally barred from obtaining liquor shop licenses, making the allegation of investment in 35 group shops untenable. The statements of directors recorded under section 132(4) were also found unreliable, as one of them had retracted his statement within four days, and the same was never supported by any corroborative evidence.

ITAT Held

The Tribunal held that in the absence of any independent evidence establishing a nexus between the assessee and the seized documents, the papers were nothing but “dumb documents” and could not form the basis of additions under section 69C read with section 153A.

The ITAT therefore upheld the order of the Commissioner (Appeals) and dismissed the Revenue’s appeal, holding that the Assessing Officer was not justified in making additions merely on guesswork and presumption.

List of Cases Reviewed

• Dy. CIT (Central-2) v. Sanjay Agrawal [2025] 174 taxmann.com 108 (Raipur – Trib.) (para 12) Followed.

List of Cases Referred To

• Dy. CIT (Central-2) v. Sanjay Agrawal [2025] 174 taxmann.com 108 (Raipur – Trib.) (para 12).