DCIT-CC-3(4), MUMBAI, MUMBAI vs. DINESH LAKHMICHAND ROHIRA, MUMBAI

The assessee feeling aggrieved challenged the same before the CIT(A). The learned CIT(A) by a detailed order dated 20.08.2024 has allowed the appeal and deleted the addition, which is the subject matter of challenge in the present appeal. The CIT(A) has upheld the re-opening. However, the addition made by the Assessing Officer has been deleted on merits.

The assessee has filed cross-objection challenging the notice issued u/s. 148 and the reopening of the assessment u/s. 147 as being contrary to the provisions of the Act.

We have heard the learned DR for the appellant and the learned AR for the respondent assessee. With their assistance, we have gone through the record.

It is submitted by the learned DR that the CIT(A) was in error in deleting the addition ignoring the evidentiary value of the statement of Shri Arun Nagar recorded u/s. 132(4) of the Act. It is submitted that there was corroborative evidence in the form of the digital evidence viz. data found in the cloud-based software recovered from the office of Wadhwa Group, which clearly establishes that the assessee advanced cash loan and received interest in cash. It is submitted that the appeal deserves to be allowed.

The learned AR on instructions has not pressed the cross-objection.

In so far as merits of the impugned additions are concerned, it is submitted that the assessee is a person other than the searched person/entity and the statement of Shri Arun Nagar, which was taken behind the back of the assessee cannot be relied upon. It is submitted that even the statements/submissions made on behalf of Wadhwa Group before the Income Tax Settlement Commission (ITSC), allegedly owning the entire cash transaction cannot bind the assessee.

We have considered the submissions made. The record discloses that there was a search u/s. 132 of the Act in the case of Wadhwa Group of Companies and certain incriminating digital data contained in a cloud-based software evidencing certain cash transactions entered into by Wadhwa Group were found and seized, which were pertaining to the period from 01.07.2014 to 02.12.2015. The digital data was decoded by the key person Shri Arun Nagar, whose statement was recorded during the course of the search. Subsequently, statement was filed by the Wadhwa Group before ITSC, owning the entire cash transaction and furnished name, address, PAN of the parties, who had provided cash loans. The said statement included the name of the present assessee. It is on the basis of the statement before ITSC, that the Assessing Officer claimed that the assessee had given ₹1.75 crore to the Wadhwa Group and had received interest of ₹ 21 lacs for the year under consideration in cash, which has led to the Assessing Officer re- opening the assessment u/s. 147/148 of the Act and making the impugned addition.

As noticed earlier, as the cross-objection has not been pressed, we are not required to examine the merits of the challenge to re-opening.

This takes us to the merits of the impugned addition made. The learned CIT(A) has dealt with the impugned addition made u/s. 69A of the Act from para 6.2 onwards. After referring to certain decisions, the learned CIT(A) in para 6.18 has found that the document/material found from the premises of a third party or a statement of a third party [the one made to the ITSC in this case] cannot be relied upon to make addition in the hands of the assessee, unless such material/statement is corroborated by independent evidence linking to the assessee.

It can be seen that during the search on the Wadhwa Group certain digital evidence maintained in a cloud-based software was recovered, indicating the cash loan advanced by the assessee. The said information was decoded by Shri Arun Nagar, the key person of Wadhwa Group. This was followed by statement/submissions made on behalf of the Wadhwa Group before the ITSC, owning the cash loans taken and interest paid in cash. The information about the name, address and the PAN of the present assessee was part of the disclosure made by Wadhwa Group before the ITSC. In our considered view, such a material could not have been relied upon to make the impugned addition in the absence of any corroborative evidence as has rightly been held by the learned CIT(A). The learned CIT(A) has found and in our opinion rightly so that such material could have been used by the Assessing Officer for starting investigation and making inquiry so as to collect material against the assessee and the Assessing Officer was not justified in merely placing reliance on the statement/submissions made on behalf of the Wadhwa Group before the ITSC. It is trite that the assessee had no control over the statements/submissions made by Wadhwa Group before the ITSC and implicit reliance could not have been placed on such submissions to make the impugned addition in the hands of the assessee in the absence of any corroborative evidence.

We have carefully gone through the impugned order. It does not suffer from any infirmity so as to require interference. The appeal as well as the cross- objections are hereby dismissed.