NITABEN KIRTIKUMAR PAREKH,RAJKOT vs. THE INCOME TAX OFFICER, WARD 2(2)(3), RAJKOT, RAJKOT

When the matter was called for hearing, the Ld. Counsel for the assessee at the outset submitted that the appeal has been filed by the assessee belatedly. The Ld. Counsel therefore adverted my attention to the affidavit filed in this regard citing the reasons for condonation of delay and urged for a benign view and sought condonation of delay of 99 days in filling the appeal before the Tribunal. On the other hand, Ld. DR for the Revenue opposed the prayer of assessee for condonation of delay. A perusal of the affidavit gives me an impression of existence of mitigating circumstances to enable me to exercise my discretion in favour of the assessee. Accordingly, the delay is condoned.

The solitary grievance of the assessee, in this appeal is that Ld. CIT(A) erred in upholding the addition of Rs.6,95,200/- u/s 69 of the Act, on account of “on-money”.

Brief facts qua the issue are that the reassessment proceedings were initiated under section 147 on the basis of credible information emanating from a search and seizure action on R.K. Group, wherein incriminating material in the form of digital data and ledgers maintained in Miracle Software were seized. The data contained coded entries of unaccounted cash receipts against sale of units in the project "The Imperia". The entries were decoded after due forensic analysis, and the decoded ledger clearly reflected three cash payments Rs.4,00,000/- on 22.09.2018, Rs.95,500/- on 25.10.2018, and Rs.2,00,000/- on 15.11.2018 aggregating to Rs.6,95,500/- relating to Office No. 603 in the Imperia project. The Assessing Officer has elaborately narrated the background of the seized data, corroborated, it with statements of the accountant Shri Girish Vanjani and key person, Shri Sarvanand Sonwani of R.K. Group, both of whom admitted that Miracle Software recorded actual unaccounted cash transactions of various buyers with dates backdated by ten years and amounts reduced by a factor of 100. The ledger name "IMP 603" was directly identified as pertaining to the Imperia project. In view of these facts, the Assessing Officer concluded that the assessee had made an unexplained investment of Rs. 6,95,500/-, during F.Y. 2018-19 which was not recorded in her regular books, therefore Assessing Officer made addition in the hands of the assessee of Rs.6,95,500/-, u/s 69 of the Act.

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the Assessing Officer, therefore assessee is in further appeal before this Tribunal.

Shri Brijesh Parekh, Learned Counsel for the assessee submitted that assessing officer denied the opportunity of cross-examination. Learned Counsel for the assessee submitted that payment was made through banking channel and there was no incrementing material against the assessee, therefore addition made by the assessing officer may be deleted.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. The assessee is an individual and he is a government employee and earned as salary, capital gain and other sources for the year under consideration. Mere suspicion, conjecture, market perception, stamp valuation, loose assumptions, or generalized allegations cannot justify an addition on account of alleged “on-money” unless there exists cogent, credible, and corroborative evidence establishing that consideration over and above the documented sale consideration actually passed between the parties.Under the Income-tax Act, 1961, the burden initially lies upon the Revenue to prove that the assessee has received or paid consideration outside the books of account. The doctrine “ei incumbit probatio qui dicit, non qui negat” applies, namely, the burden of proof lies upon the person who asserts, not upon the person who denies. Where the entire consideration is paid through normal banking channels, duly reflected in registered sale deeds, books of account, income-tax returns, and no incriminating material is found indicating circulation of unaccounted cash, courts have consistently held that addition towards alleged “on-money” cannot survive merely on presumptions. However, I note that some of the documents and evidences submitted by the assessee, during the assessment processing, were self- servicing, documents and evidences, and therefore they should not be relied fully.Hence, I find that while the case of the assessee merits some relief, at the same time entire relief cannot be permitted to the assessee. In my view the ends of justice would be met, if a net profit rate of 10% on Rs.6,95,500/- is adopted, which comes to Rs.69,955/-, since the same would take care of the inconsistencies, in the various documents and evidences submitted before the lower authorities. Therefore, in order to plug the leakage of revenue, I direct the assessing officer to make addition of Rs.69,955/-, by applying the normal rate of income tax ( not under section 115BBE of the Act). It is also made clear that instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year.

In the result, the appeal of the assessee is partly allowed in above terms.