TaxTMI 
TaxTMI 
2026 (6) TMI 32
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.... For the sake of convenience, Assessment Year 2016-17 is taken as the lead year. Common Facts 2. The assessee is an individual. The assessments for the impugned years have been framed under section 147 of the Act pursuant to reopening proceedings initiated on the basis of information received from the Investigation Wing. 3. The search and seizure action under section 132 of the Act was carried out in the case of Nirmal Kumar Bardiya Group on 23.11.2021, wherein one Shri Radha Mohan Maheshwari, also known as Radha Mohan Totala, was found to be indulging in large scale cash transactions. During the course of search proceedings, "voluminous electronic data comprising of excel sheets in 7 pen drives were seized from the residence of Shri Arun Snehi, who was a close friend, associate and confidant of Shri Radha Mohan Maheshwari". Shri Radha Mohan Maheshwari admitted the ownership of the said pen drives and the data contained therein. The Assessing Officer observed that the seized materials contained ledger accounts maintained in excel sheets reflecting unaccounted cash transactions. In particular, a folder named "School Home Work" contained a sheet titled "UCHANT-II" wherein le....
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....and that non-availment was attributable to the assessee. 7. Further, during assessment proceedings, the assessee furnished certain replies along with documents such as bank book, pass book and return of income. The authorised representative also appeared through video conference in certain years and reiterated earlier submissions. The Assessing Officer recorded that the submissions of the assessee were considered but found to be not acceptable in view of the material available on record. The Assessing Officer ultimately concluded that the assessee had entered into unaccounted cash transactions in the nature of loans and advances, both taken and given, which were not disclosed in the books of account, and accordingly treated the same as unexplained investment or unexplained money under section 69/69A read with section 115BBE of the Act. It is also recorded that such cash transactions were in violation of sections 269SS and 269T, thereby attracting penalty proceedings under sections 271D and 271E, apart from initiation of penalty under section 271(1)(c) or section 271AAC, as the case may be. 8. Year-wise details of assessment are tabulated below for the sake of ready reference:....
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....of statements, emails, excel sheets and other evidences forming the basis of reopening. The CIT(A) took note of the fact that the assessee could not attend the cross-examination at Jaipur due to ill health and had informed the authorities by way of letters along with supporting medical documents, stating that he was suffering from heart-related ailments and was advised to avoid travel. 11. The learned CIT(A) considered the contention of the assessee that the notice issued under section 148 was barred by limitation, particularly on the ground that the alleged escaped income was below Rs. 50,00,000/- and that the proceedings were initiated beyond three years. The CIT(A), however, did not accept the contention of the assessee. It was observed that the information available with the Assessing Officer, as per the Insight Portal and investigation material, reflected alleged unaccounted transactions aggregating to Rs. 5,35,40,000/-, and therefore, the case fell within the extended time limit prescribed under section 149. The CIT(A) further held that the Assessing Officer had valid "information which suggests that income chargeable to tax has escaped assessment" within the meaning of Ex....
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....emanating from search proceedings, coupled with statements recorded and corroborative material, constituted valid evidence. The CIT(A) observed that the Assessing Officer was justified in relying upon the seized digital data and the same could not be disregarded merely on technical objections. 17. The assessee had contended that the Assessing Officer failed to provide complete material and did not grant effective opportunity of cross-examination. The learned CIT(A) held that the Assessing Officer had provided relevant extracts of statements and documents and had also afforded opportunity for cross-examination. It was observed that the assessee did not effectively avail such opportunity. Therefore, the CIT(A) concluded that there was no violation of principles of natural justice. 18. On merits, the learned CIT(A) examined the addition, in respective years, made by the Assessing Officer on account of alleged cash loan transactions. The CIT(A) accepted that the seized material indicated existence of transactions outside the books and that the assessee failed to satisfactorily explain the same. Accordingly, the addition under section 69A was upheld in principle. 19. The learne....
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.... Act. Under the circumstance, the Assessment Order passed u/s. 147 r.w.s. 144B of the Act is illegal, void, bad-in-law and liable to be quashed; 3 The Ld. CIT(A) failed to appreciate that the AO failed to provide alleged incriminating material and the data. The data provided does not contain PAN or any reference of the appellant. Further, the AO failed to provide a certificate under the Information Technology Act in respect of the digital evidence furnished as per the Evidence Act; 4 The Ld. CIT(A) erred in confirming the assessment order without appreciating that the AO failed to provide the opportunity of cross examination. Under the circumstances and in law, the Assessment Order passed u/s.147 is against the principal of natural justice and thus bad-in-law; 5 The Ld. CIT(A) erred in law and on facts in confirming the addition to the tune of Rs. 2,67,70,000/- made by invoking section 69A r.w.s. 115BBE of the Act as unexplained money on account of alleged cash loan given. The addition confirmed is based on conjectures, surmises and assumptions, arbitrary, unsustainable and liable to be deleted; 6 The Ld. CIT(A) erred in facts and circumstances o....
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....was based on the discreet report of Investigation Wing, Jaipur, that search & seizure action u/s 132 of the IT Act, 1961 conducted on Nirmal Kumar Bardiya Group, wherein it was established that all these paper companies with no real business activities, operating solely with purpose of facilitation of fraudulent financial transactions which includes providing accommodation entries in the form of unsecured loans, issuing of bogus sales bills etc. and the assessee one of such entities, who has availed such accommodation entries of loans. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to restrict the addition to Rs. 2,67,70,000/- from Rs. 5,35,40,000/- made u/s 69A of the Income-Tax Act, on account of unexplained loans transactions from Nirmal Kumar Bardiya Group, without considering the detailed finding given by the AO in the Assessment Order. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that as a consequence of Search findings, Nirmal Kumar Bardiya Group syndicates/paper entities were established the pattern of transactions ....
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....t downloaded by the Assessing Officer on 24.03.2023, the status of the information was reflected as "Verification Pending". It was thus contended that even as on the date of issuance of notice under section 148A(b), the information itself had not attained finality and was still under verification. 25. With reference to the reply filed to the notice issued under section 148A(b) of the Act dated 10.04.2023, the learned AR, submitted that the assessee had specifically raised pertinent objections and sought necessary clarifications from the Assessing Officer, which, according to him, go to the root of the assumption of jurisdiction. It was submitted that the assessee, in the said reply, categorically disputed the very basis of reopening by stating that the alleged excel sheet referred to by the Assessing Officer, namely "uchant-MAFAT", could not be linked to the assessee merely on the basis of name similarity. The assessee had specifically contended that he was "unable to understand how it is concluded that „uchant-MAFAT‟ relates to me i.e. Mafatlal Mangilal Kothari" and that the reopening cannot be sustained merely on the basis of excel sheets recovered from third parti....
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....ntended that such correlation, in the absence of any independent corroborative evidence, cannot conclusively establish that the transactions recorded in the excel sheet pertain to the assessee. 30. The learned AR also specifically invited our attention to the concluding portion of the said email, wherein it is stated that since certain other parties (For instance - S CHOUDHARY AVISHNU) had accepted the transactions recorded in the excel sheets, the veracity of the entire excel data is presumed to be correct and, therefore, transactions relating to other persons who have not accepted the same are also treated as true. It was submitted that such reasoning proceeds on general presumption and not on any direct evidence against the assessee. 31. The learned AR further invited our attention to the contents of the excel sheet relied upon by the Assessing Officer and the statements recorded of Shri Radha Mohan Maheshwari. It was submitted that a perusal of the excel sheet clearly reveals that the entries therein pertain to various persons such as "S. Choudhary", "Prakash", "Naru Bunti", "NB", etc., and the description of transactions indicates dealings with multiple parties. The lear....
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....ove judicial precedents. 35. On the other hand, the learned Departmental Representative (DR), strongly relying upon the information received from the Investigation Wing and the explanatory email issued by the DCIT, Central Circle-4, Jaipur, supported the action of the Assessing Officer as well as the findings recorded by the learned CIT(A).The learned DR submitted that the identity of the assessee was duly established on the basis of the statement of Shri Radha Mohan Maheshwari recorded during the course of search and post-search proceedings. It was pointed out that Shri Radha Mohan Maheshwari had categorically stated that the excel sheet titled "UCHANT-MAFAT" contains transactions entered into by him with a person referred to as "MAFAT BHAI". The learned DR further invited our attention to the details furnished during post-search proceedings, wherein at Sr. No. 175 of the list provided by Shri Radha Mohan Maheshwari, the file name "UCHANT-MAFAT.xls" is mentioned along with the name of the person as "MAFAT BHAI" and the contact number as 9820054999. It was submitted that the said mobile number was subsequently verified by the Assessing Officer using the "i-search" functionality ....
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...." do not establish the identity of the assessee, and there is no material on record to demonstrate that these references pertain to the assessee herein. It was contended that mere similarity of name, without any corroborative evidence, is insufficient to fasten tax liability upon the assessee. The learned AR also emphasized that despite specific request made by the assessee vide letter dated 10.04.2023 (not at the fag end of the assessment), no effective opportunity of cross-examination of Shri Radha Mohan Maheshwari or any other person whose statements were relied upon by the Assessing Officer was granted. It was submitted that such denial of cross-examination strikes at the root of the matter and vitiates the entire proceedings inasmuch as the addition is primarily based on third-party statements. 40. On the strength of the above, the learned AR reiterated that the reopening as well as the addition made are unsustainable in law, being based on unverified third-party material, presumptions and without affording proper opportunity to the assessee in violation of principles of natural justice. 41. We have carefully considered the rival submissions, perused the orders of the lo....
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....ade either by the Assessing Officer or by the learned CIT(A) to properly decode, interpret or quantify the transactions in the correct perspective having regard to such classification. The figures have been adopted mechanically without examining whether the amounts are denominated in different currencies, without applying any conversion, and without bringing any material on record to justify the manner in which the final amounts have been computed. In the absence of any such exercise, the quantification of alleged transactions remains arbitrary and unsupported by cogent analysis. This further reinforces the conclusion that the entries in the excel sheet, in their present form, do not constitute reliable evidence to fasten tax liability upon the assessee. 46. We also find merit in the contention of the learned AR that mere similarity of name such as "MAFAT" or "MAFAT BHAI" cannot, in the absence of corroborative evidence, be treated as sufficient to fasten tax liability upon the assessee. No independent inquiry has been conducted by the Assessing Officer to establish that the entries in question pertain to the assessee, nor has any corroborative evidence such as bank transactions....
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....om the said order, observed as under: "The assessee has relied upon the decision of Andaman Timber Industry v. CCE... where the Hon'ble Apex Court has held that failure to give the assessee the right to cross examine the witness whose statements were relied upon results in breach of principles of natural justice which results in serious flaw thereby rendering the order a nullity... It is observed that the Assessing Officer has failed to provide the opportunity of cross examination despite the assessee's request... We... deem it fit to quash the assessment order on the basis of violation of principles of natural justice." (para 8) 52. Thus, the Co-ordinate Bench clearly held that where the addition is founded on third-party statements and material, failure to grant cross-examination renders the entire assessment unsustainable. Similarly, in the case of ACIT vs. Jayesh Umakant Manania (ITA No.6588/Mum/2025), the Coordinate Bench upheld the deletion of addition made under section 69A based on electronic data retrieved from a third party. The Tribunal, while affirming the findings of the CIT(A), held as under: "The entire addition under section 69 was made s....