New Delhi, July 15 -- The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the Income Tax Department cannot make additions for alleged undisclosed income merely on the basis of a loose sheet recovered during a search on another person unless it has independent evidence proving that the transaction actually took place.

The ruling came in the case of Dolly Sabharwal vs Deputy Commissioner of Income Tax, where the department sought to tax alleged interest income running into crores after relying on a handwritten calculation sheet recovered during a search on a third party. The Tribunal upheld the order of the Commissioner of Income Tax (Appeals), which had deleted the additions after finding no corroborative evidence t...