ABHISHEK SHARAN,BANGALORE vs. THE ITO, WARD-4(1)(7), VADODARA

The assessee has raised the following grounds of appeal:

The brief facts of the case are that the assessee is a salaried individual who filed his return of income for AY 2012-13 declaring total income of Rs.5,63,360/-, comprising income under the head ‘Salaries’. The assessee had purchased Flat No. B-402 in the project “Grihpravesh” from M/s Grihpravesh Builtech Pvt. Ltd. The payments towards purchase of the said flat were made during the period from 2011 to 2016. On the basis of information received from the ADIT(Inv.)-7(3), Delhi, the Assessing Officer issued notice under section 142(1) dated 04.12.2019 - 3– requiring the assessee to explain the source of cash payment of Rs.24,00,000/- allegedly made towards purchase of the flat. The explanation furnished by the assessee was not accepted by the Assessing Officer and an addition of Rs.24,00,000/- was made under section 69A of the Act.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions, confirmed the addition of Rs.24,00,000/- by observing, inter alia, that the assessee had not furnished sufficient documentary evidence to establish the nature and source of the alleged payment. The Ld. CIT(A) ultimately upheld the addition, treating the same as unexplained investment under section 69B of the Act.

During the course of appellate proceedings before us, the Ld. Counsel for the assessee submitted various documents in support of the explanation furnished by the assessee. The documents furnished include:

The Ld. Counsel submitted that the alleged addition of Rs.24,00,000/- was made mainly on the basis of an entry allegedly found in the records/computer of the builder and that the same was not corroborated by any independent evidence. It was further submitted that the assessee had specifically requested an opportunity to cross- examine the person/material relied upon by the Department, but no such effective opportunity was provided. It was also submitted that the documentary evidence now placed on record establishes the actual payment trail and the sources of investment.

We have carefully considered the assessment order, the order of the Ld. CIT(A), the submissions of the assessee and the documents placed on record. The issue for consideration is whether the addition of Rs.24,00,000/- made on account of alleged cash payment towards purchase of the flat is sustainable on the facts and circumstances of the case.

1 We find that the addition has primarily been made on the basis of an alleged entry found in the records/computer of the builder. The assessee has consistently disputed having made any such cash payment and has specifically submitted that there was no corresponding cash withdrawal or other evidence establishing payment of Rs.24,00,000/-. The said entry, by itself, has not been shown to have been corroborated by any independent or tangible evidence.

2 It is further observed that the assessee has furnished various documents, including the purchase agreement, purchase deed, ledger account maintained by the builder, bank statements, home-loan sanction letter and the bank statement of the assessee's wife. These documents are directly relevant for determining the actual consideration paid for the flat and the source of the investment. However, the same have not been properly examined and reconciled by the Assessing Officer or the Ld. CIT(A) with the alleged cash payment of Rs.24,00,000/-.

3 The Ld. CIT(A) has primarily confirmed the addition on the ground that the assessee failed to establish the nature and source of the alleged payment. However, in the present case, the very factum of payment of Rs.24,00,000/- in cash has been disputed by the assessee. Therefore, before requiring the assessee to explain the source of such payment, the Department was required to establish, on the basis of cogent and corroborative evidence, that the assessee had in fact made the alleged payment over and above the disclosed consideration.

4 We further note that the assessee had specifically requested an opportunity to cross-examine the person or source of the third-party material relied upon by the Assessing Officer. No effective opportunity of cross-examination appears to have been provided. Where an addition is founded substantially upon third-party material which is disputed by the assessee, such material cannot be relied upon against the assessee without affording a reasonable opportunity to rebut the same, particularly when the assessee has specifically sought cross- examination.

5 In view of the above, we are of the considered opinion that the order of the Ld. CIT(A) confirming the addition of Rs.24,00,000/- is not sustainable. The material available on record does not establish, with sufficient corroboration, that the assessee had actually made the alleged cash payment of Rs.24,00,000/-. The documentary evidence furnished by the assessee has also not been properly examined in the context of the alleged payment.

6 In the light of the foregoing discussion, we hold that the addition of Rs.24,00,000/- cannot be sustained merely on the basis of an uncorroborated entry allegedly found in the records of a third party, particularly when the assessee has disputed the very factum of such cash payment and the Revenue has not brought on record any cogent and independent evidence to establish the same. The documentary evidence furnished by the assessee, which is relevant to the determination of the actual consideration paid for the flat and the sources thereof, has also not been properly examined by the authorities below. In these circumstances, the burden cannot be shifted upon the assessee to explain the source of a payment which has not been established to have been made in the first place. We, therefore, find no justification for sustaining the addition of Rs.24,00,000/- under section 69A/69B of the Act. Accordingly, the addition of Rs.24,00,000/- made under section 69A/69B of the Act is deleted and the corresponding grounds of appeal are allowed.

7 Since the appeal is being allowed on merits by deleting the impugned addition, the other grounds challenging the reopening under - 7– section 148 of the Act and the procedural aspects become academic in nature and, therefore, are not adjudicated upon.

In the result, the appeal of the assessee is allowed.

""थ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT 4. आयकरआयु"(अपील) /The CIT(A)- 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड"फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायकपंजीकार (Dy./Asstt.