TaxTMI 
TaxTMI 
2024 (12) TMI 1761
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....able property and he is also a partner in few partnership firms engaged in real estate business. The Revenue carried out search and seizure action u/s 132 of the Act in the case of middle men/business men group of cases on 23-09-2021. The assessee was also subjected to search on the very same day. Subsequently, the AO made four types of additions u/s 69A of the Act as detailed below:- a. Addition made on the basis of Statement of Shri Shailendra Rathi 46.24 crores b. Addition made on the basis of Statement of Shri Ashish Chhangani 1.00 crore c. Addition made on the basis of Statement of Shri Javed Shaik 0.43 crore d. Addition made on the basis of Whatsapp chat with Shri Jignesh Gopani 1.73 crores The Ld. CIT(A) deleted the additions mentioned in (a) to (c) above and confirmed the addition mentioned in (d) above. Hence, both the parties are in appeal before the Tribunal on the issues decided by the Ld. CIT(A) against each of them. 3. We shall first take up the appeal filed by the Revenue. The facts relating to each of the additions mentioned in (a) to (c) are stated in brief:- a. Addition based on Statement of Shri Shailendra Rathi:....
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....crore as unexplained money (investment) u/s 69A of the Act. c. Addition based on the Statement of Shri Javed Shaikh:- This person also belongs to Rucha group. During the search proceedings of Rucha group at Nariman Point, Mumbai, the phone belonging to the above said person was examined, wherein a document containing money transactions was found. In that connection, Shri Javed Shaik explained that there was deal for sale of land between Mr Manish Kala (buyer) and the assessee (seller), which was mediated by Shri Prashant Nilawar. He further explained that the sale consideration was Rs.2.65 crores, out of which a sum of Rs. 48.00 lakhs was paid in cheque and the remaining amounts were paid in cash. From the above said document, the AO noticed that the assessee has received a sum of Rs. 42.80 lakhs in cash during the year under consideration. Accordingly, the AO made enquiries about these transactions with the assessee. In reply thereto, the assessee submitted that a land belonging to M/s Naresh Chheda HUF has been sold to Shri Manish Kala for a sum of Rs. 48.00 lakhs. However, he denied receipt of any cash from Shri Manish Kala. Accordingly, he requested the AO to ....
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.... Ld. CIT(A) summarized his views as under and accordingly deleted the three additions mentioned above:- "14.6 Thus it is seen that the Hon'ble Courts have clearly held that documents/material found from the premises of a third party or a statement of a third party cannot be relied upon to make additions in the hands of the assessee, unless such material or statement is corroborated by independent evidence linking such material to the assessee. In the present case it is seen that the addition of Rs. 1,00,00,000/- has been made by the AO relying on the statement of a third party i.e Sh. Ashish Chhangani. The addition of Rs. 46,24,00,000/- has been made on the basis of the statement of a third party i.e Sh. Shailendra Rathi, which had in any case been retracted. Similarly, the addition of Rs. 42,80,000/- has been made on the basis of third party statement of Sh. Javed Shaikh. Also, the addition has been made on the basis of material found, being certain images in the mobile phones of these parties, during the course of the search on these third parties i.e Sh. Ashish Changgani, Sh. Shailendra Rathi and Sh. Javed Shaikh. The assessee has denied having any knowledge of the ....
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....en the assessee has denied those transactions. As noticed in the various case laws relied upon by the Ld. CIT(A), the AO could not have placed reliance on those third party statements and uncorroborated documents taken from the mobile phones in order to make the additions in the hands of the assessee. 7. One more important legal aspect is that the assessee has requested the AO to provide an opportunity of cross examining these three persons, on whose statements the AO had placed reliance. However, the AO did not provide the said opportunity, which will make the order a nullity. In this regard, we may refer to the decision rendered by Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise (Civil Appeal No. 4228 of 2006 dated September 02, 2015), wherein it was held that there will be violation of natural justice, if the opportunity of cross examining the person, on whose statement the authorities place reliance, is not given and consequently, the order would be a nullity. The relevant observations made by the Hon'ble Supreme Court in the above said case are extracted below:- "According to us, not allowing the assessee to cross-e....
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....its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 8. One another point we notice in these three additions is that the AO has made the addition u/s 69A of the Act. Section 69A of the Act reads as under:- "69A. Unexplained money, etc. [Inserted by Act 5 of 1964, Section 16 (w.e.f. 1.4.1964).] - Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of t....
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....conducted in the hands of the assessee, his mobile was examined. It was noticed that the assessee had done whatsapp chat with one Shri Jignesh Gopani on 21-12-2020, which appeared to be financial transactions. The message "Shrikant Sharma Mob.9702301515 for 100 Kg" was interpreted as payment of Rs.1.00 crore by the assessee to him. Similarly the message of "JIMIT 8356091254 for 73 Kg 00T 184925 Rs.10" was interpreted as payment of Rs.73 lakhs to him. In the sworn statement taken from the assessee on 24.9.2021, he submitted that the code "kg" refers to "lakhs" and further replied that these are amounts of 1 crore and 73 lakhs, which are accounted cash, which was received from Shri Jignesh Gopani during December, 2020. He further submitted that he was unable to provide any further explanation. During the course of assessment proceedings, the assessee filed an affidavit retracting the statement given by him. The AO rejected the same, since the retraction was made after one year. Since the assessee did not submit anything further, the AO assessed the sum of Rs.1.73 crores as unexplained money (investment) u/s 69A of the Act. 11. Before Ld CIT(A), the assessee refuted that the ter....