ASSISTANT COMMISSIONER OF INCOME TAX -CIRCLE 6(1)(2), MUMBAI, MUMBAI vs. ARVIND PODDAR, MUMBAI

PDF · subscribers
ITA 3479/MUM/2023Status: DisposedITAT Mumbai15 May 2024AY 2011-12Bench: SHRI NARENDRA KUMAR BILLAIYA, HON'BLE (Accountant Member), SHRI SANDEEP SINGH KARHAIL, HON'BLE (Judicial Member)1 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that the basis of the addition was a pen drive recovered from an employee, and the information therein was not independently verified or corroborated. The Tribunal also referred to a previous decision concerning the same pen drive where it was found that the data was prepared on the employee's imagination and not related to the assessee.

What were the facts?

The revenue preferred an appeal against the order of the Ld. CIT(A) which directed the deletion of an addition of ₹.7 crores. This addition was made based on information from a pen drive seized during a search action, which indicated the assessee made a cash payment of ₹.7.00 Crore towards the purchase of a flat.

What were the issues?

Whether the addition made under section 69A based on a pen drive, without independent verification and potentially based on unreliable information, is valid?

Which sections of the Income-tax Act were involved?

Section 69A,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLEShri Haridas Bhat Shri Manoj Kumar Sinha

For Appellant: Shri Haridas Bhat
For Respondent: Shri Manoj Kumar Sinha
Pronounced: 15.05.2024

O R D E R PER NARENDRA KUMAR BILLAIYA (AM)

1.

This appeal by the revenue is preferred against the order dated 03.08.2023 by National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] pertaining to A.Y.2011-12.

2.

The solitary grievance of the revenue is that the Ld. CIT(A) erred in directing the Assessing Officer to delete the addition of ₹.7 crores made under section 69A of Income-tax Act, 1961 (in short “Act”).

(A.Y: 2011-12) Arvind Poddar 3. Briefly stated the facts of the case are that, on the basis of the information received from the office of DGIT (Investigation), Mumbai that from a search and seizure action in the case of M/s Nish Developers & Group of Cases a pen drive and loose papers were seized. In the seized documents found from the residence of Shri Pravin Mishra, one of the trusted employees of Shri Kailash Agarwal, the name of the assessee appearing in the pen drive and it came to notice that the assessee has made the cash payment of ₹.7.00 Crore towards purchase of flat. Accordingly, Assessing Officer issued notice under section 148 of the Act.

4.

Assessee objected to the reopening of the assessment stating that he does not have any flat in his own name in the project "One Avighna Park" of Nish Developers Pvt. Ltd., and has not entered into any transaction of whatsoever in nature with Nish Developers Pvt. Ltd. The Assessing Officer completed the assessment proceedings by making the addition of ₹.7 crores under section 69A of the Act.

5.

Before Ld. CIT(A) the assessee challenged the validity of the notice under section 148 of the Act claiming that the same was issued on borrowed satisfaction and there was no independent application of mind before initiating the re-assessment proceedings. The Ld. CIT(A) Page No. 2

(A.Y: 2011-12) Arvind Poddar was convinced that the Assessing Officer was in possession of a tangible information and was of the opinion that when issuing notice for reopening of assessment the Assessing Officer is only require to show reasonable belief that income escaped assessment and upheld the reopening.

6.

On merits of the case, the Ld. CIT(A) found that the Assessing Officer has simply relied upon the statement of Shri Pravin Mishra who is the employee of Shri Kailash Agarwal and has later on retracted from his statement. It was also strongly contended that the very basis of the addition is the details found in the pen-drive and the said pen-drive is not been accepted as a valid piece of evidences by the Tribunal in the case of Nish Developers Pvt. Ltd., the Ld. CIT(A) was convinced and directed the Assessing Officer to delete the addition.

7.

We find that this Tribunal in a batch of appeal in the case of M/s.Nish Developers Pvt. Ltd. in and others, for the A.Ys. 2011-12 to 2015-16, had the occasion to consider the said pen-drive. The relevant findings read as under: -

“28. In the present case also during cross examination before AO during assessment proceeding, Mr Pravin Mishra admitted that he has prepared all this data on his own imagination which is not related to the assessee. The cross examination being conducted in the presence of the AO, the AO has also not Page No. 3

(A.Y: 2011-12) Arvind Poddar reexamined Mr Pravin Mishra, thus acceding to the same. In case the AO was not convinced of the said statement, he ought to have re-examined or carried out further investigation to gather further evidences for substantiating his stand. Therefore, considering the facts of the case and judicial pronouncements in this regard, the order of CIT(A) on the issue of pen drive cannot be accepted. Considering all these facts of the assessee, we are of the view that the order of Ld. CIT(A) applying a blanket rate of 20% on the on-money calculated on the basis of data in the pen drive wherein the name of the customers were not even matching with the data in the pen drive and also the fact the amounts mentioned against the various flats purchasers having glaring and huge variations and that the pen drive was recovered from the premises of the employee of the assessee, the onus is on the Revenue to prove that data in pen drive are related to affairs of the assessee. Though the AO has not done his duty to determine correct income of the assessee by carrying out proper investigation of the case, yet the Tribunal being highest fact finding body is equally duty bound to determine correct income of the assessee based on the facts available on record….”

8.

The above observations of the Coordinate Bench show that the very basis of the assessment has been removed. Therefore, the impugned additions do not have any legs to stand. Therefore, we are declined to interfere with the findings of the Ld. CIT(A).

9.

In the result, appeal filed by the revenue is dismissed.

Order pronounced in the open court on 15th May, 2024.

More judgments on Section 69A

All 15,297 judgments and leading authorities on Section 69A →

Recent GST High Court judgments

Search GST case law →