TaxTMI 
TaxTMI 
2024 (12) TMI 1604
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....1. The assessee was also subjected to search. Consequent to the information obtained from the search conducted from certain other people, the assessment of all the three years under consideration were reopened by the AO u/s 147 of the Act. 4. The assessee herein is an individual and is running a proprietary business in real estate & construction activities. Besides the above, he is also a Partner/Director in certain other firms/companies. The assessee is a non-executive director in M/s City Corporation Ltd. 5. The additions made in AYs. 2018-19 and 2019-20 are based upon same set of facts. Hence, appeals of both the years are first disposed of together. 6. The background of additions made in AYs. 2018-19 and 2019-20 is discussed in brief. During the course of search conducted in the case of M/s City Corporation Ltd, Pune, (CCL) a hard disk was recovered from an employee named Shri Chetan Borawake, who was working as Office boy of CCL, wherein Excel sheets were found. One of the sheets contained details of cash receipts and payments and the same is extracted below:- A sworn statement was taken from Shri Vijay Yewale, Accounts Manager of CCL u/s 132(4) of the Act, wherein....
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....whose possession the documents were seized. Accordingly, the assessee contended that he cannot be subjected to tax on the basis of uncorroborated entries found in the documents of third parties. He further submitted that the Excel sheet, being electronic evidence, the AO should comply with the requirements of sec. 65-B of Indian Evidence Act. Referring to the statements given by the above said parties, the assessee submitted that they have, nowhere, stated that the cash was received from the assessee. It was also submitted that Shri Vijay Yewale has retracted his statement made during the course of search and hence his statement should not be relied upon. The assessee accordingly reiterated that he has not entered into any cash transaction as mentioned in the Excel sheet. The assessee also requested the AO to provide an opportunity of cross examining the above said persons, on whose statements, the AO had intended to place reliance. However, the AO did not provide opportunity of cross examination. The assessee further submitted that the above said Excel sheet is a non-speaking dumb document and hence it cannot be relied upon for making addition in the hands of the assessee. In supp....
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....her, the balance struck down shows negative balances also. Hence the reliability of this Excel sheet becomes doubtful. Further, the Excel sheet only mentions as "receipts", but does not mention exact nature of the alleged transactions. (f) Ultimately, the addition has been made by the AO on the basis of statement given by Shri Vijay Yewale only, which has been retracted later and also on the basis of material found during the course of search of a third party named Shri Chetan Borawake. (g) The addition cannot be made on the basis of documents/material found from the premises of a third party unless such material or statement is corroborated by the independent evidence linking such material to the assessee. Following case laws were relied upon in this regard:- (i) Naren Premchand Nagda vs. ITO (ITA No. 3265 (Mum) of 2015 dated 8.7.2016. (ii) CIT vs, Santlal (2020)(118 taxmann.com 432)(Delhi) (iii) Jawaharbhai Atmaram Hathiwala vs. ITO (2010)(128 TTJ 36 (Ahd) (iv) Asst CIT vs. Prabhat Oil Mills (1995)(52 TTJ 533)(Ahd) (v) ACIT vs. Anand Kumar Jain (2023)( (147 taxmann.com 124)(Mum - Trib) (h) The presumptio....
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.... relied on third party statement to make the addition without corroborating it with any kind of independent evidence linking such material with the assessee. As per the plethora of Court judgments discussed above, such an act is not permitted under the law. The Hon'ble Supreme Court in the case of Umacharan Shaw and Bros v CIT (1959) 37 ITR 271 held that suspicion, however strong, cannot take the place of evidence. Similarly, raising presumption itself does not amount to proof. Presumption, however strong, cannot take the place of evidence as held in the case of Pooja Bhatt 66 TTJ (Mum) 817 and in the case of D.M Kamani HUF 65 TTJ (Pat) 504. Thus, in the absence of any independent evidence linking the assessee with the material found from a third party or a third party statement, the addition made by the AO on the basis of such third party statement or material found from the third party cannot be sustained and is hereby deleted. The grounds of appeal are accordingly allowed." The Revenue is aggrieved. 11. We heard rival contentions and perused the record. We noticed that the assessing officer has placed reliance on the statement given by Shri Vijay Yewale and it is stated th....
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....ating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of t....
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....ilendra Rathi stated that the above said amount was received from the assessee herein. Further another whatsapp chat between Shri Shailendra Rathi and Shri Nilesh Toshniwal was seen in the phone of Shri Shailendra Rathi, wherein Shri Rathi had send a text message to Shri Nilesh Toshniwal that "Bhaiya Vinod Bhai will call you for 100". In the statement, shri Rathi explained that Shri Nilesh Toshniwal was requested to pay 1.00 crore and in that connection, he had shared the phone number of angadia Vinod in order to co-ordinate with the transaction. When confronted with these information, the assessee denied both the above said transactions before the AO. However, the AO observed that there were regular communications between Shri Nilesh Toshniwal and Shri Shailendra Rathi and they were also regularly exchanging the documents which were in the nature of various cash transactions. Accordingly, the AO assessed both the amounts of Rs. 1.05 crores and Rs. 1.00 crore aggregating to Rs. 2.05 crores as the unexplained expenditure of the assessee u/s 69C of the Act. 16. The Ld CIT (A) deleted both the additions, following the various case laws mentioned above (in AY 2018-19 ....
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....aterial found from the third party cannot be sustained. The addition of Rs. 1,05,00,000/- and Rs. 1,00,00,000/- totaling to Rs. 2,05,00,000/- made by the AO in the case of the assessee is accordingly deleted and the grounds of appeal are allowed." 17. We heard the parties and perused the record. We notice that the AO has made addition on the basis of whatsapp chat between Shri Shailendra Rathi and Shri Nilesh Toshniwal. However, the assessee has denied those transactions. The AO, however, proceeded to make the additions of Rs. 1.05 crores and Rs. 1.00 crore based on the third party evidences. We notice that the assessee has claimed that the date of whatsapp chat relating to Rs. 1.05 crores was 11.03.2021, while the AO has taken the date as 11.3.2020. Hence, there is confusion about the date of the alleged transaction relating to Rs. 1.05 crores. With regard to the amount of Rs. 1.00 crore, the whatsapp chat shows that Shri Shailendra Rathi has only requested Shri Nilesh Toshniwal to pay Rs. 1.00 crore to the angadia Shri Vinod, meaning thereby, there is no proof that the said transaction was completed. In that case, no addition of Rs.....