AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 2118
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....e scope of the powers of the Assessing Officer. 3. Without prejudice to ground no. 1 and 2, the Assessing Officer erred in making an addition of Rs. 5,50,00,000 (Rs. Five Crores Fifty Lakhs) to the income under the provisions of section 69 of the Act." Facts of the Assessee's case: 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual. The assessee is NRI (non- resident) and residing at UAE, outside India. The assessee has not filed return of income for the assessment year ( AY) 2013-14. Information was flagged on Insight Portal, in accordance with the Risk Management Strategy, formulated by CBDT relevant to assessment year (AY) 2013-14, whereupon a search & seizure of operation on Rajiv Saxena Group of companies and others was conducted on 30/09/2021. During the search and seizure action, certain incriminating data, in the form of digital data, containing details of unaccounted cash transaction between Mansur Mehta & others were found and seized from the residential premise of Shri Mansur Mehta, (who was also covered u/s 132 at premise C wing 3003. Raneja Viviera, Sane Guruji Road, Mumbai Central, Mumbai). Digital Data Backup of....
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.... transaction of Rs. 5,50,00,000/-, with Shri Mansur Mehta, for the financial year (FY) 2012-13, relevant to assessment year (AY) 2013-14. Accordingly, vide SCN dated 07/03/2024, the assessee was required to show -cause, as to why the amount of Rs. 5,50,00,000/- should not be treated, as undisclosed income from undisclosed sources and addition on account of unexplained cash transaction should not be made. 6. In response to the above show-cause notice, the assessee, vide letter dated 11/03/2024, submitted, written submission, before the assessing officer, along with documentary evidence. The assessee submitted before the assessing officer that he was not aware of any cash transactions amounting to Rs 5,50,00,000/- with Mr. Mansur Mehta, and he has never paid any such cash amount to Mr. Mehta. The assessee has been provided with certain material, which is claimed to be seized by the Department, from the premises of Mr. Mehta, the said document just contains, assessee's name and against name a figure 550/-, is stated. The assessee stated that he did not know, who has created said document. The assessee further stated that such document is merely a loose sheet of paper, containing ha....
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....ly concluded that when the seized document, clearly shows that the cash receipt of Rs. 5,50,00,000/- from the assessee, then it can be safely be concluded that the assessee has paid an amount of Rs. 5,50,00,000/- for investment purpose at Dubai and such investment was managed by Mr. Mansur Mehta. As per assessing officer, the assessee failed to prove source of such cash payment of Rs. 5,50,00,000/-, the same was, therefore, treated as unexplained investment, in the hands of the assessee, u/s. 69 of the Income-tax Act. Findings of the Hon'ble DRP: 8. Aggrieved by the draft assessment order, of the Assessing Officer, framed under Section 144C(1) of the Income Tax Act, 1961, dated 11.03.2024, the assessee filed its objections, before the Dispute Resolution Panel( in brief "DRP"). Before the learned DRP, in respect of the legal issue, of challenging the reopening of the assessment, under section 147 of the Act, the assessee submitted that reopening of assessment is not justified, as the reopening of assessment, was barred by limitation of time, therefore, reassessment proceedings, may be quashed. However, the learned DRP noticed that assessee has challenged the validity of the dr....
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....icer of Rs. 5,50,00,000/-. 11. Aggrieved by the order of the Ld. DRP/AO, the assessee is in further appeal before us. Arguments of Learned Counsel for the assessee, on merit.: 12. On merit, Learned Counsel for the assessee, argued that Assessing Officer, in the first para of the draft assessment order, mentioned that assessee has not filed the return of income for the assessment year (A.Y.) 2013-14. However, the real fact is that assessee has filed the return of income for A.Y. 2013-14, which is submitted by the assessee in the Paper Book Page No. 1, therefore, allegation of the Assessing Officer that assessee has not filed the return of income, is not correct. The Ld. Counsel further submitted that WhatsApp chat is not an electronic record because the said WhatsApp chat, was found by the Department, from other person`s I-phone, and it is not corroborated by any evidence. Therefore, it is a dump document, and based on such dump document, no addition should be made. The Ld. Counsel also submitted that in WhatsApp chat a figure 550/- is written, however, the assessing officer, as well as ld DRP have added five zeros and made it as Rs. 5,50,00,000/-, without any basis. The ld....
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....ed by the statement of Rajiv Saxena and Mansur Mehta. Normally, the investments are made in crores, therefore, assessing officer by applying his common sense, construed or interpreted the figure of 550/- as if, it is Rs.5,50,00,000/-. Besides, Mansur Mehta in his statement stated that he came in contact of Rajiv Saxena, when he was trying to form his company in Dubai. Further, he stated that he received investment in the year 2011-12 from local investors, based in Dubai, in his company, through Rajiv Saxena. From the above submissions made by the Rajiv Saxena, Reena Jeswani and Mansur Mehta, as a evidence, it was seen that Rajiv Saxena helped Mansur Mehta in setting companies in Dubai and facilitating investment in his Indian companies. The Rajiv Saxena also facilitated Mansur Mehta in management of funds abroad and facilitating fund in India. Therefore, learned, DR stated that above facts, clearly explained that the assessee has made cash transaction of Rs. 5,50,00,000/- with Mr. Mansur Mehta for investment purpose, hence, addition made by the assessing officer may be upheld. 15. The Ld. D.R. for the revenue, also submitted that Assessing Officer has rightly made the addition u....
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....essee's case under consideration and in that circumstances, the re-assessment proceedings can be initiated within 16 years, from the end of the relevant assessment year, where the income in relation to any asset, including the financial interest in an entity located outside India, which is chargeable to tax, has escaped assessment. Therefore, re-assessment proceedings, under section 147/148 of the Act, has rightly been initiated against the assessee. Analysis and Conclusion: 18. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer initiated the reassessment proceedings against the assessee, with the approval of Principal Commissioner that the books of accounts or documents, seized or requisitioned under section 132 of the Act, in case of Shri Mansur Mehta Group, pertains or relates to the assessee under consideration. Therefore, we note that there was no search on the assessee. We find that the figure mentioned in t....
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....o. Thus, addition of 5 zeroes to Rs. 550 is based purely on assumption by the Assessing Officer, which is unjustified, and therefore, needs to be deleted. 20. We also note that ld. DRP mentioned in its order that figure of 550/-, is apparently at Rs.550 lakhs, which is again without any base. The learned DRP did not mention that how the figure of 550/- is apparently at Rs.550 lakhs. By following arbitrary method, the said figure, could be apparently be presumed at Rs.5500 lakhs or Rs.55,000/- lakhs also. Thus, the findings of the Ld DRP, is also based on surmise and conjuncture, so far adding five zeroes are concerned. 21. We also note that the provision of Section 132(4A) and Section 292C of the Act creates deeming fiction on the assessee subjected to search or survey, wherein it may be presumed that any such document found during the course of search / survey from the possession or control of person searched / surveyed belongs to such person and contents of such documents are true. However, in the assessee's case under consideration, it is an undisputed fact that the impugned loose papers- WhatsApp chat, was not found from the possession of assessee, but the same was found ....
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.... rulings laid down by Hon'ble Apex Court, we find that the figure 550/- reflected in the WhatsApp chat, is without any head or tail and such figure does not consist complete breakup of transactions and hence, no adverse inference could have been drawn solely on the basis of such WhatsApp chat. We also place reliance on the decision of Hon'ble Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597 (SC), wherein, it is held that the fictional receipt cannot be deemed to be a receipt in the absence of any cogent material to support the factum of actual receipt. 23. Our view is further fortified by the judgement of the Hon'ble High Court of Delhi in case of CIT v. D.K. Gupta [2008] 174 Taxman 476 (Delhi), wherein, Hon'ble High Court had upheld the order of the lower court (ITAT), wherein, it was held that Ad-Hoc / Dumb Documents without any corroborative evidence/finding that the alleged documents have materialized into transactions cannot be deemed to be the income of the assessee. We also find that Co-ordinate Bench of ITAT Mumbai, in case of Amarjit Singh Bakshi (HUF) v. ACIT [2003] 86 ITD 13 (Delhi) (TM) held that any noting in the loose sheet is no evidence by it....