2021 (7) TMI 767 - AT - Income Tax

Tribunal deletes investment & commission additions, stresses evidence rules

The tribunal allowed the appeals, deleting the unexplained investment additions under Section 69B, the addition towards unaccounted commission under ... Addition u/s 69B - un-explained investment addition(s) in the nature of on-money payments involving varying sums of money, stated to be based on the alleged incriminating material found/seized during the course thereof - HELD THAT:- This tribunal’s co-ordinate bench’s order in the assessee’s group concern’s appeal [2021 (7) TMI 718 - ITAT HYDERABAD] has already decided the very unexplained investment addition issue in assessee’s favour. Issues Involved:1. Delay in filing appeals.2. Unexplained investment additions under Section 69B.3. Addition towards unaccounted commission under Section 69C.4. Validity and evidentiary value of digital evidence.Detailed Analysis:1. Delay in Filing Appeals:The appeals involved delays of 3 days (ITA No.782/H/20) and 6 days (ITA Nos.784 & 785/H/20). The delays were attributed to reasons beyond the control of the assessees as per their respective condonation petitions/affidavits. Since there was no rebuttal from the departmental side, the tribunal condoned the delays.2. Unexplained Investment Additions under Section 69B:The appeals arose from a departmental search action on 04-07-2017, leading to Section 69B unexplained investment additions based on alleged incriminating material found/seized during the search. The tribunal noted that a co-ordinate bench had already decided a similar issue in favor of the assessee in ITA No.783/Hyd/2020, involving a related entity, M/s. Zainab Investments Private Limited. The tribunal adopted the same reasoning to delete the Section 69B unexplained investment additions in the current appeals.3. Addition Towards Unaccounted Commission under Section 69C:The tribunal addressed the addition of Rs. 95 lakhs towards unaccounted commission under Section 69C. The Ld. AR argued that since the addition of Rs. 18,60,00,000/- towards accommodation entries was deleted by the CIT(A), the related commission addition should also be deleted. The tribunal agreed, stating that without the primary addition, the commission addition could not stand. Consequently, the addition of Rs. 95 lakhs was deleted.4. Validity and Evidentiary Value of Digital Evidence:The tribunal scrutinized the evidentiary value of digital data retrieved from a pen-drive seized during the search. The Ld. AR argued that digital evidence should be corroborated with physical evidence and comply with Section 65B(4) of the Evidence Act. The tribunal found that the digital data lacked signatures and a certificate under Section 65B(4), making it inadmissible. Additionally, the tribunal noted that the data was maintained by an employee and not linked to any document found with the assessee or its directors. The tribunal also highlighted that confessions obtained from the employee were retracted and that forced confessions during search operations were condemned by the CBDT. The tribunal concluded that the digital data and related statements were insufficient to substantiate the additions and directed the deletion of the Rs. 14,09,25,000/- addition towards on-money paid for property purchase.Conclusion:The tribunal allowed the appeals, deleting the unexplained investment additions under Section 69B, the addition towards unaccounted commission under Section 69C, and the addition based on inadmissible digital evidence. The tribunal emphasized the need for corroborative evidence and adherence to legal standards for digital evidence.