2023 (4) TMI 845 - AT - Income Tax

Tribunal overturns tax assessments due to lack of evidence, emphasizes need for proof of cash payments

Smt. Neelam Nitin Sankhe Versus Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi.

Smt. Neelam Nitin Sankhe Versus Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi. - TMI Issues involved:The judgment involves appeals against the orders of the Commissioner of Income Tax for the assessment years 2013-14 and 2014-15. The main issue revolves around the addition of cash amounts in the assessments due to the name of the assessee appearing in documents seized during a search action in the case of a third party.Summary:Issue 1: Notice and Non-Appearance of AssesseeThe notice of hearing was duly served on the assessee, who initially sought an adjournment but then failed to appear for the hearing. As the assessee did not contest the appeal, the hearing proceeded with the Departmental Representative and examination of the available material on record.Issue 2: Addition of Cash AmountsThe assessment for the assessee, a salaried employee, was reopened after a search in the case of a different group. Documents seized during this search indicated cash payments to a person with a similar name to the assessee. The Assessing Officer made additions to the assessee's income for both relevant years based solely on the appearance of the name in the seized documents.Issue 3: Appeal and Denial of TransactionsThe assessee denied any transactions with the group in question, suggesting potential fraudulent use of their PAN. Despite the assessee's denial and lack of concrete evidence linking the cash payments to the assessee, the CIT(A) upheld the additions to the income for both assessment years.Judgment:After considering the submissions and examining the orders below, the Tribunal found that the mere appearance of the assessee's name in the documents was insufficient to justify the additions. The lack of further corroboration, unclear identity matching, and absence of a clear reason for the cash payments led the Tribunal to set aside the impugned orders and allow the appeals for both assessment years.Conclusion:The Tribunal allowed the appeals by the assessee, emphasizing the necessity of establishing the identity of the person and the reason for cash payments before making additions to income based on document references alone.