9 Section 69 – Unexplained Investment – A. Ys. 1993-94 and 1994-95 Seizure of diaries and files – No cogent evidence to prove assessee booked vehicles in fictitious names or earned premium by sale – No addition for unexplained investment permissible on conjectures or surmises

CIT vs. Classic Motors Ltd.; 396 ITR 1
(Del):

The assessee was a car dealer. Pursuant to a
search action u/s. 132 of the Act, 1961 in the premises of the assessee certain
diaries and files were seized. Based on some abbreviations found in the seized
diaries, but, which did not state any particulars of amounts or addresses, the
Assessing Officer held that there were unexplained investments on account of
booking of vehicles in fictitious names for the A. Ys. 1993-94 and 1994-95, and
also by selling those vehicles at a premium for the A. Y. 1993-94.

Accordingly, he made additions calculated at
25% of peak booking amounts as unexplained investments. The Tribunal held that
without any material or evidence, no additions could have been made and deleted
the additions.

On appeal by the Revenue, the Delhi High
Court upheld the decision of the Tribunal and held as under:

“i)   The Appellate Tribunal
did not err in appreciating the evidence before it and concluding that without
cogent and credible material that the bookings were made by the assessee for
itself, the additions ought not to have been made.

 ii)   The Assessing Officer’s
additions made on account of peak booking amounts, as unexplained investments
from undisclosed income, were based on conjectures and surmises. The questions
are answered in favour of the assessee and against the Revenue.”