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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
(निर्धारण वर्ा/Assessment Year:2017-18) Shri Sunil Narang, Dy. Commissioner of Income Tax, Vs. Central Circle-2(1), Hyderabad. Secunderabad. PAN:ABFPN3762L (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee by: Shri P. Murali Mohan Rao,C.A. रधजस् व द्वधरध/Revenue by:: Ms.M. Narmada, CIT-DR सुिवधई की तधरीख/Date of hearing: 23/12/2024 घोर्णध की तधरीख/Pronouncement: 12/02/2025 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Shri Sunil Narang (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad (“Ld. CIT(A)”), dated 11.09.2020 for the A.Y. 2017-18.
The assessee has raised the following grounds :
3. The brief facts of the case are that the assessee is an individual, filed its Return of Income (“ROI”) for the A.Y. 2017-18 on 26.10.2017 admitting the total income of Rs.2,89,43,250/-. In lieu of search and seizure operation, notice u/s. 153A of the Income Tax Act, 1961 (“the Act”) were issued to the assessee on 27.07.2018 followed by notice u/s.143(2) on 17.09.2018. The Learned Assessing Officer (“Ld. AO”) completed the assessment u/s.143(3) of the Act on 31.12.2018 making addition of Rs.1,30,88,750/- on the basis of transactions as per Whatsapp messages and Rs.75 lakhs on account of unexplained expenditure.
4. Aggrieved with the decision of Ld. AO, the assessee filed appeal before the Ld. CIT(A), who partly allowed the appeal of the assessee. The Ld. CIT(A) deleted the addition of Rs.95 lakhs out of Rs.1,30,88,750/-, which was on account of whatsapp messages and Rs.75 lakhs, which was on account of unexplained expenditure.
Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. The Ld. AR submitted that, their main grievance is against the addition made by Ld. AO, which has been sustained by the Ld. CIT(A), which are discussed by Ld. AO at para nos.7.9 to 7.38, as under :
5.1 Out of the aforesaid addition made by the Ld. AO, the Ld. CIT(A) deleted Rs.95 lakhs out of addition of Rs.96,06,250/- and sustained the remaining addition made by the Ld. AO. The Ld. AR also invited our attention to para no.5.2.3 of order of Ld. CIT(A) sustaining the addition made by the Ld. AO, which is to the following effect : “ 5.2.3 For the other transactions, the appellant simply disowned the transaction saying the same are personal transactions of Mr. Ravi Chandra whereas Mr. Ravi Chandra has given a clear and categorial statement regarding the details of the transactions. The statement of Mr. Ravi Chandra was confronted to the appellant and the appellant has not asked for cross examination. It is also a fact that Mr. Ravi Chandra continued as employee of the group and has not retracted the statement shows that the appellant’s statement cannot be relied upon. In view of the above, the other additions made are confirmed. The grounds raised above are partly allowed.” 5.2 The Ld. AR further submitted that, during the search and seizure proceedings, the transcript of whatsapp conversation between the assessee and Sri Sunkara Ravi Chandra were seized and the statement of Sri Sunkara Ravi Chandra was recorded on 11.11.2016 regarding the details of whatsapp conversation. On the basis of the sole statement of Sri Sunkara Ravi Chandra, the impugned additions have been made by the Ld. AO in the hands of the assessee. However, the assessee in his statement dated 20.10.2017 recorded by the DDIT, had denied all the impugned transactions and also reiterated the same during the assessment proceedings before the Ld. AO. In spite of the denial of the impugned transactions qua the whatsapp conversation, the Ld. AO failed to bring any corroborative evidence qua the impugned additions. Further, the Ld. AO also failed to confront Sri Sunkara Ravi Chandra to the assessee. Therefore, the basis of addition by the Ld. AO is only the statement of a third party. The Ld. CIT(A) also simply relying on the order of Ld. AO, sustained the addition. Finally, the Ld. AR submitted that, the addition made by the Ld. AO merely on the basis of third party statement is not sustainable under law and is liable to be quashed.
Per contra, the Ld. DR relied on the order of revenue authorities.
We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the relevant portion of order of Ld. AO as well as Ld. CIT(A) as reproduced hereinabove. We found that the impugned additions have been made in the hands of the assessee merely on the basis of statement of a third party. In spite of the denial by the assessee to the statement of Sri Sunkara Ravi Chandra, the Ld. AO neither confronted Sri Sunkara Ravi Chandra to the assessee nor brought any corroborative evidence on record to substantiate the additions made by him. Under the factual matrix, we are of the considered opinion that, the addition made by the Ld. AO merely on the basis of a statement of third party and without any corroborative evidence, is liable to be deleted. Accordingly, we delete the impugned additions made by the Ld. AO.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 12th Feb., 2025. Sd/- Sd/- (VIJAY PAL RAO) (MADHUSUDAN SAWDIA) VICE PRESIDENT ACCOUNTANT MEMBER Hyderabad. Dated: 12.02.2025. * Reddy gp Copy of the Order forwarded to : 1. Shri Sunil Narang, C/o P. Murali & Co., C.As, 6-3-655/2/3, Somajiguda, Hyderabad-500082