TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1040
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....& circumstances of the case and in law, both the Assessing Officer as well as Dispute Resolution Panel (DRP) has erred in initiating penalty u/s. 270A of the Income Tax Act, without recording a proper satisfaction as may be seen from the assessment order passed u/s. 144C(13) of the Income Tax Act. 3. The appellant reserves his right to add to, alter, amend, modify or delete any of the grounds taken in this appeal." 2. Briefly the facts of the case are that the assessee filed his return of income on 29/07/2022 disclosing total income of Rs. 29,31,310/-. The AO basis information uploaded by the DDIT (Inv.)-3(4), New Delhi, pursuant to search and seizure action in the case of Shri Badar Abbas Karimi and Shri Salim Abbas Karimi conducted on 30-09-2021, noted that a whatsapp message in chat of Shri Salim Abbas Karimi in phone seized during search has been found wherein the assessee has been identified informing Shri Salim Abbas Karimi about payment of Rs. 50 lakhs off books in transaction of a property. Basis the said information, a show cause was issued to the assessee on 12-03-2024. In response to the show cause notice, the assessee submitted that the agreement of purchase of the i....
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....ation was fixed at Rs. 4.75 crores. It is submitted that the assessee has paid Rs. 4.5 crores to Mr. Bativala entirely through banking channels. Due to delays and breaches by the builder, Mr. Bativala, the project has not fructified till date, causing significant financial and emotional strain to the assessee. Mr. Bativala has in fact acknowledged his lapses and has undertaken to return the consideration of Rs. 4.5 crores (and has actually repaid Rs. 20 lakhs till date). It is also submitted that the assessee has always been most diligent in his Income Tax Return filings as well as timely payments of all due taxes (advanced taxes & Self-assessment Tax, as the case may be) by/before the mandated due dates as per the Income Tax Act. 5. It was submitted that while the assessee was desperately trying to recover his dues from the non-performing builder (Mr. Bativala), one Mr. Salim Abbas Karimi, who also appears to be a real estate developer - approached the assessee trying to obtain a distress sale of the assessee's rights in the property. The agreement dated 1st July 2011 had recorded the consideration already paid at Rs. 4.5 crores. Mr. Karimi sought to take advantage of the ass....
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....ctual party. Mr. Bativala has consistently and unequivocally denied receiving any cash payment. This denial was made both in response to the notice/summons issued u/s. 133(6) of the Act through Mr. Bativala's reply dated 18-03- 2024 and also separately in multiple independent correspondences, including email chats. There is no evidentiary trail, no withdrawal from the assessee's bank accounts, and no matching asset trail to support any such cash outflow. There is no material on record to suggest any adverse action in the hands of Mr. Bativala. It was submitted that the orders of the AO and DRP do not at all deal with or take into account Mr. Bativala's categorical statements, which are thus unchallenged. 8. As far as inapplicability of section 69A of the Act, the Ld.AR submitted that unrelated to the assessee; alleged Search Action was conducted on one, Mr Karimi has neither resulted in any cash, bullion or jewellery related to the assessee nor is the Department's case that there is/has been any recovery qua the assessee. It was submitted that there is no evidence of any cash transaction through books, accounts, or any third-party corroboration to support any cash ....
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....bas Karimi was a real estate developer and was in serious talks with the assessee for sale of the assessee's property in Bangalore. Thus, the facts contained in the whatsapp message do get duly corroborated by the circumstantial evidence of sale of property. The argument of the assessee that the whatsapp message was just a story which he created to extract a better price for his property is not borne out by facts and seems to just be an afterthought. 5.3.4 The Hon'ble Supreme Court in the case of Commissioner of Income-Tax vs. Durga Prasad More (214 ITR 801) held that human probability and circumstantial evidence has to be kept in mind to decide the genuineness of the transactions. The Hon'ble court observed that: Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal, Therefore the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law." 5.3.5 The Hon'ble Supreme Court by placing reliance....
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.... any maintained by the assessee and only where the money so owned by the assessee and not recorded in the Books of Account, if any by the assessee, the explanation of the assessee has to be called and, thereafter, the reasonability of the explanation has to be examined and tested by the AO. The initial onus is therefore clearly on the AO to record a finding as to whether the assessee is found to be the owner of the money during the financial year relevant to the impugned assessment year and depending upon whether the assessee is maintaining books of accounts, such money is recorded in the books of accounts or not. 13. In the instant case, we find that there is no physical cash which has been found and the ownership of which, can be attributed to the assessee. There is no transaction related to deposits which has been found in the bank account of the assessee. There is also no documentary evidence which has been found during the course of search in case of Salim Abbas Karimi and others which demonstrates that the assessee is the owner of any money. What has been found during the course of search is a whatsapp message sent by the assessee to Mr. Karimi on 30/08/2021. The assessee ha....
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....stigation Wing and the AO was advised to identify the financial year in which transaction has taken place and identify the complete details of the immoveable property, the buyers and sellers involved in the deal and take action as per section 69A after necessary verification. The AO on his part thereafter has sought explanation from the assessee and has also sought information u/s 133(6) from the developer/seller and both the buyer and seller have denied any cash transaction involved in the transaction of immoveable property which happened in financial year 2011-12 and not during the financial year relevant to impugned assessment year. Therefore, merely the fact that whatapp message has been found as sent by the assessee on 30/08/2021 wherein there is mention of Rs 50 lacs off books, the same is not sufficient enough to discharge the initial onus cast on the AO to record a finding that the assessee is the owner of Rs 50 lacs and source thereof has remained unexplained and thus, the same can be brought to tax. 15. In our understanding, the findings of the AO are totally bereft of the legal provisions as what is important to determine is firstly, there has to be either physical cash....