ACIT CC -6(1), MUMBAI, BKC, MUMBAI vs. NILESH RAMESH TOSHNIWAL, PUNE
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: JUSTICE (RETD.) C.V. BHADANG & SHRI B.R. BASKARAN: A.Y. : 2020-21
PER JUSTICE (RETD.) C.V. BHADANG, PRESIDENT :
By this appeal, the Revenue is challenging the order dated 05.8.2024 passed by Commissioner of Income Tax (Appeals)-54, Mumbai (‘CIT(A)’ for short) thereby deleting the addition of Rs. 1 crore made by the Assessing Officer under Section 69C of the Income Tax Act, 1961 (‘Act’ for short) as unexplained expenditure in the hands of the 2
ITA No. 5656/Mum/2024 & CO No. 23/Mum/2025
Nilesh Ramesh Toshniwal respondent-assessee on a protective basis. The appeal relates to assessment year
2020-21. 2. The assessee filed his Return of Income (RoI) for the year under consideration declaring a total income at Rs.28,76,970/-. A search and seizure action under Section 132 of the Act was carried out in the Middleman/Businessman group of cases on 23.09.2021 in which various premises including that of the respondent-assessee was covered. Subsequently, the case of assessee was centralized with the Central Circle,
Mumbai. A notice under Section 148 of the Act was issued to the respondent on 20.01.2023 in response to which the assessee filed a RoI on 28.01.2023 declaring a similar income as disclosed in the initial return filed on 10.01.2021. The Assessing
Officer issued a notice under Section 143(2) of the Act followed by a notice under Section 142(1) of the Act. The assessee is an individual deriving income from salary, income from business/profession, capital gains and income from other sources. During the course of assessment proceedings, a show cause notice was issued to the respondent on 02.06.2023 to which the assessee filed explanation on 12.06.2023. It appears that during the course of search proceedings, a Whatsapp conversion between one Shri Shailendra Rathi and the respondent was recovered in which Shri Shailendra
Rathi had allegedly asked for an amount of Rs.1 crore from the respondent. The said evidence was confronted to Shri Shailendra Rathi during his statement vide question no. 32 wherein he admitted about having received the payment of Rs. 1 crore from the assessee through Angadiya, one Shri Vinod.
On the basis of this evidence, which according to the Assessing Officer is in the nature of corroboration, the Assessing Officer vide order dated 23.06.2023 made the impugned addition.
Before the learned CIT(A), the respondent, inter alia, contended that the Assessing Officer was in error in invoking the provisions of Section 115BBE of the Act.
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ITA No. 5656/Mum/2024 & CO No. 23/Mum/2025
Nilesh Ramesh Toshniwal
It was contended that the Whatsapp conversation allegedly recovered from the mobile handset of Shri Shailendra Rathi and his purported admission during recording of statement cannot be used against the respondent. It is submitted that no incriminating evidence of any nature was recovered from the premises of the respondent.
The learned CIT(A) by the impugned order has deleted the addition. Hence, this appeal. The respondent has filed a Cross Objection seeking deletion of the addition.
We have heard parties. Perused record.
It is submitted by the learned DR that the Whatsapp conversation recovered from Shri Shailendra Rathi, which he admitted during the course of his statement, is in the nature of corroboration, which is sufficient for making the addition. He submitted that the learned CIT(A) was in error in deleting the addition.
The learned AR submitted that the Whatsapp conversation recovered from a third party and the purported admission by Shri Shailendra Rathi cannot be used against the respondent. It is also pointed out that the said conversion has not been established with due compliance with Section 65B of the Indian Evidence Act, 1872. 9. We have considered the submissions made. The respondent-assessee is said to be a key associate of one Shri Jayant Shah while Shri Shailendra Rathi is stated to be a key associate and consultant of Rucha Group. The search and seizure action covered both Rucha Group as well as the assessee. The Assessing Officer on the basis of Whatsapp communication recovered from Shri Shailendra Rathi had made a substantive addition of Rs. 1 crore in the hands of Shri Jayant Shah and protective addition of a similar amount in the hands of the respondent-assessee. Indisputably, although the search action was also carried out in respect of the assessee, no incriminating evidence or material has been recovered. The only reliance placed for 4 ITA No. 5656/Mum/2024 & CO No. 23/Mum/2025 Nilesh Ramesh Toshniwal making the impugned addition is on the Whatsapp communication and the statement of Shri Shailendra Rathi. It is necessary to note that Shri Shailendra Rathi has subsequently retracted his statement. Be that as it may, Shri Shailendra Rathi in his statement recorded on 24.09.2021 under Section 132(4) of the Act has stated thus :-
“One payment was to be made by Shri Nilesh Toshniwal ji. In this regard, I had shared him the detail of the angadiya Shri Vinod (9370511116) to coordinate with him for the payment of Rs.1,00,00,000 in cash on 02.03.2020. Shri Nilesh told me to instruct Shri
Vinod to call him on what’s App only.”
Admittedly, no opportunity of cross examination was granted to the assessee to cross examine Shri Shailendra Rathi. The assessee has in his statement denied having entered into any such transaction. He has even stated that he does not know any person by name Shri Vinod. A bare perusal of the statement as reproduced above would indicate that the payment ‘was to be made’. Thus, even going by the statement, it cannot be said that the payment was actually made by assessee in cash to Shri Shailendra Rathi. As noticed earlier, although the assessee was himself searched, no incriminating or corroborating material has been found. It is trite that suspicion, however strong, cannot take the place of proof. We find that the impugned addition could not have been made in the hands of the assessee placing reliance on the statement of a third party, Shri Shailendra Rathi and recovery of Whatsapp conversation. It is significant to note that no attempt was made to find whether there is a corresponding message received by the assessee. In any event, we find that the learned CIT(A) was justified in deleting the addition and no case for interference is made out. The appeal deserves to be dismissed.
We now come to the Cross Objection. We are unable to see any reason for the assessee to have filed the Cross Objection. He had succeeded before the learned CIT(A). Curiously enough, in ground no. 1, the assessee is seeking deletion of the addition which was already granted by the learned CIT(A) and which order we are inclined to confirm. Before parting with the final order, it is necessary to state that we
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Nilesh Ramesh Toshniwal have come across multiple cases where Cross Objection is filed although the respondent/cross objector is not aggrieved by any part of the order passed by the CIT(A). It is trite that it is only when the respondent is also aggrieved by a part of the order there is an occasion to file the Cross Objection. We have even seen cases where the Cross Objection is filed to support the order which is subject matter of challenge in appeal, which is not the scope of filing of Cross Objection. We state this only to put the record straight.
Be that as it may. In the circumstances, the appeal is dismissed. The Cross Objection is disposed as infructuous.
Order pronounced in the open court on 10/03/2025. (B.R. BASKARAN)
(JUSTICE (RETD.) C.V. BHADANG)
ACCOUNTANT MEMBER
PRESIDENT
Mumbai; Dated : 10/03/2025
SSL
Copy of the Order forwarded to :
The Appellant 2. The Respondent 3. The PCIT/CIT concerned 4. DR, ITAT, Mumbai 5. Guard File.
BY ORDER,
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