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Facts
A search and seizure action led to the discovery of a ledger account image on an iPhone, indicating cash payments of Rs. 6,00,000/- by the assessee to M/s Sethi Coal Traders. The AO added this amount as unexplained expenditure. The CIT(A) confirmed the addition.
Held
The Tribunal held that while the assessee denied knowledge, his admission of helping M/s Sethi Coal Traders and the business relationship of his wife's firm (M/s Meenu Enterprises) with Sethi Coal Traders, where the assessee looked after the business, indicated the cash payments related to business transactions. However, the addition was made in the hands of the assessee instead of his wife, the proprietor of M/s Meenu Enterprises.
Key Issues
Whether cash payments found in a seized ledger image, related to business transactions of the assessee's wife's firm, can be added as unexplained expenditure in the hands of the assessee.
Sections Cited
132, 69C, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
(ASSESSMENT YEAR 2021-22) Shashi Bhushan Gupta Asst. CIT, 214, Madhuban Colony, Central Circle, Baghpat Road, Vs. Meerut. Meerut-250002. (Uttar Pradesh) PAN-AATPG1679A (Appellant) (Respondent) Assessee by None Department by Shri Sujit Kumar, CIT-DR Date of Hearing 28/04/2025 Date of Pronouncement 28/04/2025 O R D E R
PER MANISH AGARWAL, AM:
This is an appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), -3, Noida [Ld. CIT(A), in short], dated 07.05.2024 in appeal No. CIT (A), Kanpur-4/10149/2020-21, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’, in short) for Assessment Year 2021-22.
An application was filed by the revenue requesting for an adjournment which is rejected. None appeared on behalf of the assessee and ld. CIT DR was heard and appeal is decided on the basis of material available on record including the orders of lower authorities.
Brief facts of the case are that the assessee is an individual and filed his return of income on 12.12.2021 declaring total income at Rs 5,96,430/-. A search and seizure action u/s 132 of the Act was carried out on 08.03.2022 at Shashi Bhushan Gupta vs. ACIT the business and residential premises of Sharda Group and Agarwal family and search warrant was issued in the name of assessee. Accordingly, the case of the assessee was also centralized. During the search, from the iPhone of Shri Rachit Gupta, son of the assessee, one image of the ledger account was found. The said ledger account image is in the name of the assessee in the books of M/s Sethi Coal Traders for the period from 01.12.2020 to 21.01.2021 and total cash payment of Rs. 6,00,000/- made on various dates by the assessee is recorded in the said account. Besides this, certain loose papers having unrecorded transactions of cash expenditure of Rs. 5,00,000/- were also seized. Based on these papers/image, the AO has made total additions of Rs. 11,00,000/- u/s 69C of the Act as unexplained expenditure in the hands of the assessee.
Against such order, assessee preferred first appeal before the ld. CIT(A) who vide impugned order dt. 07.05.2024 confirmed the addition of Rs. 6.00 lacs and deleted the addition of Rs. 5.00 lacs. Aggrieved by such order of ld. CIT(A), assessee is in appeal before the Tribunal.
The assessee has taken following grounds of appeal: “1. The Ld. CIT(A) has erred in partly confirming the assessment order passed by the Ld. AO.
2. The Ld. CIT (A) has erred in confirming the addition of Rs 6,00,000/- on basis of copy of seized digital document under section 69C of the IT Act 1961 to total income of the Appellant without any corroborative evidence on record and not considering the submissions.
3. The order of Ld. CIT is against law, facts and circumstances of the case.
4. The appellant craves leave to add, alter, amend, modify or delete all or any of the Grounds of appeal on or before the date of hearing of appeal.”
6. Before us, ld. CIT DR submitted that the addition is based on the image found in the mobile phone of the son of the assessee. The seized document i.e. the image of ledger account contained name of the assessee and assessee had not denied having business relation with M/s Sethi Coal Traders. The payment of Rs. 6.00 lacs in cash on various dates by the assessee is not recorded in the books of account of M/s Meenu Enterprises, a proprietary firm of the wife of the assessee who is having business dealings with M/s Sethi Coal Traders. He Shashi Bhushan Gupta vs. ACIT further submits that in the affidavit from M/s. Sethi Coal Traders was acknowledged that the said concern has friendly relations with the assessee who helped M/s. Sethi Coal Traders by arranging sales through various factories through his contacts without any monetary consideration. The other entries in the said ledger account were in relation to the purchases and freight charges thus the payment of Rs.6.00 lacs in cash is nothing but the business transaction carried out by the assessee which was not disclosed. Ld. CIT DR thus prayed for the confirmation of the order of lower authorities.
7. After considering the arguments of ld. Sr. DR and on perusal of the orders of the lower authorities, we find that the assessee since beginning of the proceedings, claimed that the image found from the iphone of the son of the assessee does not relate to the assessee and is a dumb document. However, it is seen that assessee himself admitted that he was helping M/s Sethi Coal Traders in selling their coal which fact was also admitted by M/s Sethi Coal Traders in its affidavit. Ld. CIT(A) while confirming the transactions as related to the assessee has observed that “though the appellant is denying knowledge of the transactions to evade clutches of law, in no circumstances, the weight of evidences available with the AO during the assessment proceedings can be taken lightly. In proceedings of civil law, it is not essential to prove an offense beyond doubt, a preponderance of probability along with the circumstantial evidences is enough to reach the conclusion.” The said image of ledger account containing date wise chronological transactions of purchases, freight and receipts of payment and certainly indicating of that some transactions which may or may not be disclosed but cannot be the dumb document.
8. Now moot question is whether any addition could be made based on this document in the hands of the assessee. It is an admitted position that the said ledger account was an image of ledger account which was found from the iPhone of the son of the assessee. Further proprietary firm of wife of the assessee M/s Meenu Enterprises is having business transactions with M/s Sethi Coal Traders