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Facts
A search and seizure operation under sections 132/133A of the Income Tax Act, 1961, was conducted on the assessee's premises. The Assessing Officer (AO) made a significant addition of Rs. 14,94,27,518/- under section 69A read with section 115BBE for unexplained money based on transactions found from the assessee's mobile phones. The Ld. CIT(A) subsequently partly allowed the appeal, restricting the addition to Rs. 4,75,878/-, primarily by holding that many transactions pertained to previous years (FY 2004-05 or 2005-06) or were otherwise explained by the assessee.
Held
The Income Tax Appellate Tribunal upheld the decision of the Ld. CIT(A), finding that the CIT(A) had properly verified each image found on the assessee's I-phones and correctly deleted or restricted additions where warranted. The Tribunal found no merit in the grounds of appeal raised by the Revenue, as no contradictory documents were brought on record by the Department to challenge the CIT(A)'s findings.
Key Issues
Whether the Ld. CIT(A) erred in restricting the addition of unexplained money under section 69A of the Act by considering transactions found on mobile phones to pertain to previous assessment years without sufficient supporting documents.
Sections Cited
69, 69A, 115BBE, 132, 132(1), 133A, 143(3), 153A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI
ORDER
PER YOGESH KUMAR U.S., JM:
This appeal filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeals)-27, New Delhi, [“Ld. CIT(A)”, for short], dated 22/03/2022 for Assessment Year 2018-19. The following grounds of appeal taken by the assessee:
“1. The Ld. CIT(A) has erred on facts and in law in restricting the addition of Rs.14,83,18,788 to Rs.4,75,878/- on account of unexplained money u/s 69 of the Act without considering the fact that the same remained unexplained in absence of any supporting documents.
2. The Ld. CIT(A) has erred on facts and in law in holding that transactions found from the mobile phones of the assessee pertain to previous years i.e. FY 2004-05 or FY 2005-06, without appreciating the fact that the assessee had not filed any documentary evidence regarding the same. 3. (a) The Order of the Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
The brief facts of the case are that a search & seizure and survey operation u/s 132/133A of the Income Tax Act, 1961 was conducted on 19/12/2017 in the case of M/s PAN Group of cases.
The Assessee’s residential premises were also covered u/s 132(1) of the Income Tax Act. An assessment came to be passed u/s 143(3) r.w.s 153A of the Act on 30/12/2019 by making addition of Rs.14,94,27,518/- u/s 69A r.w.s 115BBE of the Act.
Aggrieved by the assessment order dated 30/12/2019, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 22/03/2022 partly allowed the appeal by restricting the addition of Rs.14,83,80,778 to Rs.4,75,878/- made on account of unexplained money u/s 69A of the Act.
Aggrieved by the order of the Ld. CIT(A) dated 22/03/2022, the Department of Revenue preferred the preferred the present appeal on the grounds mentioned above.
The Ld. DR submitted that the Ld. CIT(A) has committed error in restricting the addition of Rs.14,83,18,788 to Rs.4,75,878/- which was made on account of unexplained money u/s 69A of the Act without considering the fact that the same was remained unexplained in the absence of any supporting documents. Further submitted that the Ld. CIT(A) committed error in holding that the transaction found from the mobile phones of the assessee are pertaining to previous years i.e. FY 2004-05 or FY 2005-06, without appreciating the fact that the assessee had not filed any documentary evidence regarding the same. Thus, sought for intervention by the Tribunal.
Per contra, the Ld. AR submitted that all the images found in the I-phones of the assessee have been verified and the transactions pertaining to FY 2004-05 or 2005-06 have rightly been deleted by the Ld. CIT(A), which requires no interference at the hands of the Tribunal.
We have heard the parties and perused the materials available on record. During the course of search proceedings, the images from I-phone of the assessee were imaged, which demonstrated the transactions of the assessee with various parties totaling to Rs.15,13,63,104/-. The assessee was asked to explain the each and every images with documentary evidence. The assessee claimed to have provided the details only 3 days prior to the date on which the matter would become barred by limitation. The details given by the assessee was perused and on perusal of the reconciliation provided by the assessee, the AO found that an amount of Rs.14,83,18,788/- was remained unexplained. During the appellate proceedings, the assessee contended that most of the images pertaining to FY 2004- 05 and 2005-06, some of them are calculation of customs duty on import, to expenses incurred on foreign tour by family of the Assessee etc and sought for deletion of the addition. The each and every image explained by the assessee has been examined by the Ld. CIT(A) and the Ld. CIT(A) made remarks which reproduced as under:-
Image Amount Explanation given by Appellant Remarks No. 11 18,99,031 In this regard it is submitted that the Contention of the appellant Image No. 11 contains calculation of is found to be correct. This custom duty on import of Maize Corn image is a calculation of Yellow popcorn. Import duty on import of The present image was called upon from Maize Corn Yellow popcorn. clearing house agent for understanding At the bottom of the image it the total duty payable on import of goods. is clearly mentioned that This extract of bill of entry do not pertain duty payable is Rs. to the appellant group and no additions 9,78,001/-. Therefore should have been made by Ld AO on the addition on this account is basis of the same. deleted.
The appellant duly furnished copies of bill of entry and invoices for import made by M/s Parmanand & Sons Food Products Pvt. Ltd. (Pg. 89-112. PB). 12 4,60,400 That the image no. 12, 16 & 74 relates to Contention of the appellent 16 10,97,600 expenses incurred on a foreign tour by the is found to be correct. family of appellant and some of his Expenses 74 3,70,278 friends. attributable to the appellant Image No. 12 contain details of car and comes to Rs. 3,70,278/- hotel expenses whereas image no. 16 only for which appellant has contains details of these expenses as well not provided source of these as other expenses incurred on the trip. As expenses. His reply that evident from the perusal of Image No. 16 these expenses were there were 3 families in the trip which incurred out of regular comprised of 11 persons. The total income of the family expenses incurred on the trip aggregated members of appellant is to Rs. 10,97,400/-. very general in nature and The expenses were further sub divided can not be accepted. amongst three families and the division of Therefore, addition on expenses is appearing on Image No. 74. account of image number Thus, as evident the expenses 12, 16 & 74 is restricted to attributable to the appellant were only Rs. Rs 3,70,278/-. 3,70,278/-; however, the Ld. AO in ignorance of these facts has made additions of all amounts appearing on these images which are not tenable under the law. These expenses were incurred out of regular income of the family members of appellant which was duly declared in the income tax returns filed. 23 41,26,166 At the very outset it is explained that Contention of the appellant 24 50,41,985 these details were written by Late Sh. K. is found to be correct. These K. Mittal; father of the appellant and the images pertain ta FY 2005- 26 14,16,267 appellant is unaware about the facts 06. Date mentioned on the figures appearing in these images. image is 31.03.2006 . However, as evident from the perusal of Therefore addition on this dates appearing on these images these account is deleted. documents and figures pertains to FY. 2005-06 and are not at all related to the year under consideration or the block period covered under search action. Thus, no additions could have been made by Id. AO on the basis of these additions. 25 18,10,800 That these images contain similar details Contention of the appellant and are thus, being explained together. in found to be correct. These 27 47,00,000 These details were also written by Late images are in some hand 35 2,00,000 Sh. K.K. Mittal. writing as of image number These images contain names of Sh. Ritesh 23, 24 & 26 and pertain to Mittal Sh. Devesh Mittal, Smt. Kamlesh FY 2005-06 Therefore Mittal, Smt. Shikha Mittal, Khushi and addition on this account is deleted. Isaan and certain transactions entered into by them. These images also didn't pertain to the block period and thus, no additions could have been made by Ld. AO on the basis of these additions.
As evident from perusal of Image No. 27 & 35 that in front of transactions there is mention of name "Gupta me (Hindi word)". M/s Gupto Industries was a partnership firm which existed till 30/06/2006 only and was taken over as a going concern by M/s Parmanand and Sons Food Products Pvt. Ltd. A copy of dissolution deed is enclosed. Thus, as evident the transactions appearing on these images were executed before 30/06/2006 and are not executed during the year under consideration.
Further, as evident from the perusal of Page 5 of the assessment order, the Ld. AO had not mentioned the years in respect of these images. The Ld. AO ignored this vital fact and had made additions to the income of the appellant. 34 60,27,267 That the image No. 34 contain details of Contention of the appellant transaction of Sh. Ritesh Mittal, Sh. is found to be correct. These 28 86,37,336 Devesh Mittal and Smt. Saroj Mittal for images pertain to FY 2004- F.Y. 2004-05 and the image No. 28 05 Date mentioned on the contains similar details for F.Y. 2005-06. image is 01.04.2005. Therefore addition on this account is deleted. It is pertinent to mention here that M/s Parmanand & Sons Food Products Pvt. Ltd was incorporated during F.Y. 2006-07 and all the pre-existing business of the assessee group was merged in this company which now forms the recognition of the group. Late Sh. K. K. Mittal might have made these calculations for his knowledge.
These images also do not pertain to the block period covered by present search action and thus, the additions made by Ld. AO to the income of the appellant on the basis of these images deserves to deleted and may please be deleted.
It is not out of place to mention here that the closing balances appearing on Image No. 34 are carried forward to Image No 28. However, the Ld. AO while making additions have made additions in respect of opening balances as well despite the fact that these balances were also considered on Page No. 34. 33 17471359 That the image No. 33 pertains to F.Y. Contention of the appellant 36 18223182 2004-05 and image No. 36 & 29 is found to be correct. These pertains to F.Y. 2005-06. These images images pertain to FY 2004- 29 9571385 contain transactions in the names of 05 & 2005-06. Period Smt. Kamlesh Mittal, Smt. Shikha Mittel, mentioned on image number Khushi, Isaan, Agrim & Aashi. It is 33 is 04-05 and date pertinent to mention here that M/s mentioned on the image Parmanand & Sons Food Products Pvt. number 29 & 36 is Ltd. was incorporated during F.Y. 2006- 01.04.2006 (balance carried 07 and all the pre-existing business of forward). Therefore addition on this account is deleted. the assessee group was merged in this company which now forms the recognition of the group. Late Sh. K. K. Mittal might have made these calculations for his knowledge. These images also do not pertain to the block period covered by present search action and thus, the additions made by Ld. AO to the income of the appellant on the basis of these images deserves to deleted and may please be deleted. It is not out of place to mention here that the closing balances appearing on Image No. 33 are carried forward to Image No. 36 and 29. However, the Ld. AO while making additions have made additions in respect of opening balances as well despite the fact that these balances were also considered on Page Ne 33. 30 37,00,000 That these pages contain certain Contention of the appellant transactions entered into by Late Sh. K. is found to be correct Image 31 78,43,048 K. Mittal. These transactions also do not number 31 is in continuation pertain to the block period and as of image number 30 as it evident from the perusal of assessment includes the balance of Rs. 37 1,78,20,000 order, the Ld AO has not enumerated 37,00,000/- of image 38 1,28,66,000 the years to which these images pertain number 30. On image in the notices issued as well as in the number 30, it is clearly assessment order. mentioned that this image It was categorically submitted during the pertain to KK. In PAN Group course of assessment proceedings that K.K. is the abbreviation for these transuctions do not relate to the Krishon Kumar (member of block period and no additions shall be the group: Acsessed made on the basis of the same. However, separately) the Ld. AO has ignored the submissions Similarly image number 37 of the appellant. is the continuation of image It is also pertinent to mention here that number 38 and it also the Image No. 31 contains reference of mentions the name KK. Gupta Industries. Further, the image at S. Moreover, these images No. 31 is in continuation of image No. 30, pertain FY 2004-05 as image at S. No. 38 is in continuation of period mentioned is 04-05. image No. 37 and the closing balances Therefore addition on this account is deleted. appearing on Page 30 and 38 are appearing on Page 31 and 37 respectively. However, the Ld. AO has made additions in respect of all Images separately. 32 69,00,000 That these images also contain details of Contention of the appellant certain transactions entered into by Late is found to be correct. Image 39 1,40,87,276 Sh. K. K. Mittal and these transactions number 32 clearly mentions also do not pertain to the block period. that this image pertain to The Ld. AO has not enumerated the years K.K In PAN Group K.K. is the to which these images pertain in the abbreviation for Krishan notices issued as well as in the Kumar (member of the group assessment order. The Image at S. No. 39 Assessed separately.) also contains reference of Gupta Similarly mage number 39 Industries also mentions the name G.I. (abbreviation for Gupta It is also submitted that these images at industries). Mureover, these 5. No. 30, 31, 37, 38, 32 & 39 appears to images appear to pertain to be containing overlapping data and can FY 2004-05/2005-06. only be termed as dumb documents on Therefore addition on this the basis of which no additions deserve to account is deleted. be made.
66 10,77,344 That the appellant purchased Creta car Contention of the appellant 91 2,44,610 during the year under consideration and is found to be correct. Both before purchasing the same sought these images are quotation of Dzire as well. The Dzire Car estimations for purchase of whose quotation is appearing at Image car. One is of Dezire and No. 66 was not purchased by the other is of Creta. Appellant appellant and the creta car whose has already provided the quotation is appearing at Image No. 91 invoice of purchase of Creta was purchased by the appellant. car and that should be taken as the real price It was submitted during the course of Quotations /estimations are assessment proceedings that the collected for comparison and document at S. No. 66 is merely a arranging the finances. quotation and thus, no additions shall be Addition made on the made; however, the submission made by the appellant is not considered by the Ld. basis of Quotations AO /estimations is not sustainable. Therefore In this regard it is clarified that it is the addition on this account is deleted. tendency of all persons to compare several options before purchasing a car and only 1 amongst them is bought by any person. Revenue shall not take the quotations as Investment by a person particularly when the source of car purchased is explained in assessment proceedings. Thus, the addition of Rs. 10,77,344/ made by Ld. AO on the basis of Image No. 55 deserves to be deleted and may please be deleted.
It is clarified that the appellant has purchased Creta car whose quotation of Rs. 17,00,000/-is appearing at Image No. 91.
The appellant during the course of assessment proceedings furnished the copy of Invoice of car for Rs. 14,55,390/- which was considered by Ld AO and addition of Rs 2,44,610/- (17,00,000- 14,55,390) was made.
However, the Ld. AO ignored the fact that along with car, insurance is taken, road tax is paid and some accessories are also purchased. Thus, the contents of Image No. 91 is duly explained and the additions made deserves to be deleted and may please be deleted. (Pg. 113 to 118, PB) 47 14,38,376 This page contains details of expenses to Contention of the appellant be incurred on import of goods. This is found to be correct. quotation was taken before import of Therefore, addition on this goods to understand the ultimate cost to account is deleted. be borne in case any import is made by the assessee group.
However, the L.d. AO has taken the contents of this Image as details of parties and amount.
From the perusal of Image and observation of Ld. AO it is evident that the L.d. AO has not even read the contents of image and has mechanically made additions of the amount appearing on said Image. This image even contains amount of custom duty payable on import and the Ld AO has assessed even the same as unexplained money. It is not out of place to mention here that the appellant is looking after the business of M/s Parmanand & Sons Food Products Pvt. Ltd. and the stated company is making imports. The appellant is not having any IEC code in his individual capacity and thus, no additions deserve to be made to the income of the appellant.
I Phone 6 + Images
1 3,70,278 This image is copy of image no. 74 found Contention of the appellant is from 1-phone 7+ and has been explained found to be correct. Therefore, supra. addition on this account is The Ld. AO has made addition in respect of deleted. Image No. 74 os well as in respect of this image leading to double addition of same amount Thus, the addition deserves to be deleted and may please be deleted. 6 9,18,800 That the Ld. AO has made incorrect total of Contention of the appellant is this Image. It appears that this image found to be partially correct. contains total expense of Rs. 3,18,800 on Expenses attributable to the Shimla Trip by 5 families. appellant comes to Rs. 1,05,600/- only for which It is clarified that the family of the appellant appellant has nto provided did not participate in this tour and this tour source of these expenses. expenses were just being shared in friends Therefore, addition on circle and remained in mobile of the account of image number 6 is appellant. restricted to Rs. 1,05,600/-. It is also pertinent to mention here that this image do not pertain to the year under consideration because this image has details of expenses incurred on New Year party whereas search in the case of the assessee had taken place in December. Thus, new year could not have been celebrated by the appellant during the year under consideration prior to search action. Thus, the addition made by Ld. AO deserves to be deleted and may please be deleted.
Considering the fact that the Ld. CIT(A) has verified each and every images of the I-phones and deleted the additions and on verification of materials available on record, we find that the finding of the fact of the ld. CIT(A) requires no interference at the hands of the Tribunal in the absence of any contradictory and contrary documents brought on record by the Department. Thus, we find no merit in the grounds of the appeal of the Revenue and the same are dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in open Court on 16th February, 2024.