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Facts
The assessee filed an appeal for AY 2008-09 against the CIT(A)'s order confirming an addition of Rs. 63,03,300/-. This addition was made by the Assessing Officer under section 143(3) r.w.s 147, based on alleged deposits in the bank accounts of a 'Hawala operator' (Late Shri Chhotglal V. Doshi), primarily relying on a statement from the operator's son and diary entries, without corroborative evidence linking the funds to the assessee.
Held
The Tribunal found no substantive or corroborative evidence to establish that the money deposited in the Hawala operator's account belonged to the assessee. It followed its own precedent from an assessee's group case (Shri Mukesh Kumar Vrajlal) where similar additions were deleted due to lack of evidence, concluding that the Revenue failed to provide such evidence. Therefore, the Tribunal deleted the addition made by the Assessing Officer.
Key Issues
Whether an addition confirmed by CIT(A) for unexplained deposits in a third-party account can be sustained without corroborative evidence linking the funds to the assessee, and if the reopening of assessment under Section 147 was justified.
Sections Cited
143(3), 147
AI-generated summary — verify with the full judgment below
O R D E R Dr. A. L. SAINI -AM, Captioned appeal filed by assessee, pertaining to Assessment Year 2008-09, is directed against the order passed by Commissioner of Income Tax (Appeal), vide, order dated 26/03/2024, which in turn arises, out of an order passed by the Assessing Officer, under section 143(3) r.w.s 147 of the Income Tax Act, 1961. Vide order dated 05/12/2016.
Grievances raised by the assessee, are as follows: 1. Ld. CIT(A) has erred in law as well as on fact in confirming order passed by AO for reopening assessment u/s. 147 of the Act.
2.Ld. CIT(A) has erred in law as well as on fact in confirming addition of Rs.63,03,300/- only on the basis of allegation of third party without any evidences of any short and without providing cross examination. 3. Ld. CIT(A) has erred in law as well as on fact in confirming addition without considering facts of the case and order of Honourable ITAT in similar case where addition was deleted.
3.When this appeal was called out for hearing, Learned Counsel for the assessee invited our attention to the order dated 21.09.2022, passed by the Division Bench of this Tribunal in assessee’s own group case in & 55/RJT/2021,in the case of Shri Mukesh Kumar Vrajlal, order dated 21.09.2022, wherein it was held that there is no corroborative evidence has been placed on record to show that it was the assessee who had deposited the said amount in the bank accounts operated by Late Shri Chhotglal V. Doshi, who was a Hawala operator. The entire additions were made only on the basis of statement recorded of son of Late Shri Chhotglal V. Doshi, who has stated that he had written the name in the diary so maintained by him, on the basis of instructions of his father. Apart from this, no evidence has been placed on record to substantiate that the money deposited in bank account maintained by Late Shri Chhotglal V. Doshi, belonged to the assessee. The ld. Counsel submitted that facts of the assessee`s case under consideration are similar and identical. Learned Counsel for the assessee submitted that the present appeal is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench.
4.Learned Departmental Representative, relied upon the orders of the authorities below. 5. We see no reasons to take any other view of the matter than the view so taken by the Division Bench of this Tribunal in assessee’s own case vide order dated 21.09.2016. In this order, the Tribunal has inter alia observed as follows:
“We have heard the rival contentions and perused the material on record. We observe that in the instant set of facts, there is no corroborative evidence has been placed on record to show that it was the assessee who had deposited the said amount in the bank accounts operated by Late Shri Chhotglal V. Doshi, who was a Hawala operator. The entire additions were made only on the basis of statement recorded of son of Late Shri Chhotglal V. Doshi, who has stated that he had written the name in the diary so maintained by him, on the basis of instructions of his father. Apart from this, no evidence has been placed on record to substantiate that the money deposited in bank account maintained by Late Shri Chhotglal V. Doshi, belonged to the assessee. We observe that even the Ld. CIT(A) while passing the order has made following observations: "The various claims have been analysed. It is a fact that the said Dharmendra Doshi is a Hawala operator and it is unlikely that he would be knowing all the clients who availed his services. He is also not expected to know the persons who have deposited the cash in their bank accounts except for on whose behalf it is deposited, as the same needs to be withdrawn and be given to the beneficiaries. Therefore, there is a reasonable probability that the said transaction pertains to the appellant based on the entry in the diary and it is also not mandatory under the Income Tax that the evidence should be beyond doubt to assess a transaction. Considering the same, the addition made is upheld and the ground nos. 2 & 3 are dismissed. Therefore, from the above observations of the Ld. CIT(A) while passing the order, it is evident that the additions were made only on the basis of a "reasonable probability" that the money belonged to the assessee, and no substantive corroborative evidence has been adduced to show that the money belonged to the assessee.
6.1 In the case of Abhay Kumar Bharamgouda Patil [2018] 96 taxmann.com 377 (Panaji Trib.), a survey was carried out in case of society carrying on banking business. In course of survey, a diary was impounded which was maintained by one AGM of said society. The Assessing Officer noted that diary contained entries of deposits received from various persons. He thus recorded statement of said AGM, who admitted that said deposits were undisclosed money of depositors and assessee was one of them. On basis of said statement, Assessing Officer made addition of unexplained money to assessee's income. It was noted that said AGM could not even identify persons who brought money to him or denominations in which money was brought. Moreover, survey operations did not bring on record any acknowledgment/receipt in respect of money received from assessee. Further, said AGM could not substantiate his statements by bringing any other credible or corroborative evidence on record. Accordingly, the Tribunal held that in aforesaid circumstances, impugned addition made in hands of assessee deserved to be set aside. 6.2 In the case of Pradeep AmrutlalRunwal v. TRO [2014] 47 taxmann.com 293 (Pune - Trib.), during search proceedings in case of 'D Group', some loose papers were seized wherein certain amounts were written against name of assessee. The Assessing Officer made addition of said amount as undisclosed income in name of assessee. The ITAT held that since no evidence was found relating to existence of any transaction between assessee and 'D Group' and no corroborative evidence was found to suggest that assessee had actually received said amount, no addition could be made merely on basis of noting in loose papers found during search proceedings in case of 'D Group' against name of assessee. 6.3 In the case of Jawaharbhai Atmaram Hathiwala v. ΙΤΟ [2010] 128 TTJ 36 (Ahmedabad) (UO), the Ahmedabad Tribunal held that where assessee was alleged to have paid a sum as 'on money' for purchase of flat but no evidence could be brought on record by Revenue to show that in fact assessee had paid 'on-money' to developers, and no document containing Page | 3 signature of assessee or handwriting of assessee to corroborate above making of payment by assessee was found during course of search, addition on account of such alleged payment was not justified.
In light of the decisions cited above and on appreciation of facts of the case, we are of the considered view that the Revenue has not brought forth any substantive/corroborative evidence to demonstrate that the money deposited in the bank account operated by Late Shri Chotalal V. Doshi, belonged to the assessee. Accordingly, in light of the judgement cited above, we are hereby deleting the additions made by the Department.8. In the result, the appeal of the assessee is allowed.”
6.As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessee`s own group cases in the case of Shri Mukesh Kumar Vrajlal(supra) and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra). We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding judgment of the Coordinate Bench, we delete the addition made by assessing officer. Therefore, appeal of the assessee is allowed.
7.As the appeal of the assessee is allowed on merit, all other issues on technical ground of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.