TaxTMI 
TaxTMI 
2026 (8) TMI 1827
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.... reopened by issue of notice u/s 148 of the Act after obtaining the prior approval of the competent authority. The assessee in response to the notice issued u/s 148 filed his return of income declaring total income at Rs. 36,62,110/-. 3. During the course of assessment proceedings the Assessing Officer confronted the assessee regarding the various payments made by him towards Bhisi account amounting to Rs. 10,52,450/- during the financial year 2019-20 which was found from the mobile data of Shri Prakash Motwani. The assessee in response to the same submitted that the said Whats App message do not belong to him. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs. 10,52,450/- to the total income of the assessee by observing as under: 6.1 In reply to this office notice u/s 142(1), the assessee did not furnish any reply. No explanation/reply has been produced by the assessee. The case of the assessee was reopened on the basis of the information collected during the Search action in the Manjeet Pride Group, Gadiya Group and their associated entities. The information was regarding involvement in unaccounted bhi....
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....rebut the presumption by offering plausible explanation. It cannot be the AO who will bring evidence to show that the assessee had passed some money outside the account books with regard to the purchase of property in question. If there is evidence indicating that an assessee has paid more than the disclosed consideration for a property, the onus shifts to the assessee to rebut the presumption. If the assessee fails to prove otherwise, the Department can make an addition. 6.3 The principle of "preponderance of probabilities" applies in tax cases. It has been underlined by the Hon. Supreme Court in the case of Sumati Dayal Vs. CIT, Bangalore (1995 AIR 2109). Even if direct evidence is unavailable, surrounding circumstances, documents found during the Search action, sworn- in statements of the key persons of the builder group can be relied upon to determine the actual transaction value. The assessee has not furnished any reply in this regard. However, it is pertinent to note that - i) Documents indicating the name of the assessee were found during the Search. Further, the Searched person has made the statement on oath, in all his sanity and without any fear, force o....
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....t of Bhisi amount in cash of Rs. 10,52,450/- is liable to be treated as unexplained investment of the assessee u/s 69 of the Act. 5. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds: 1) The Ld. CIT(A) failed to appreciate that the reassessment proceedings were initiated solely on the basis of third-party information obtained during a search in the case of Manjeet Pride Group, without any independent application of mind by the Assessing Officer. 2) The Ld. CIT(A) erred in upholding the addition despite the fact that crucial electronic evidence, namely the Toshiba Hard Disk, full WhatsApp chat records etc were never provided to the appellant in complete and verifiable form. 3) The Ld. CIT(A) failed to appreciate that denial of copies of relied-upon material and denial of opportunity to cross-examine Shri Prakash Motwani renders the entire addition illegal and void in law. 4) The Ld. CIT(A) failed to appreciate that no statement of Shri Prakash Motwani specifically names or implicates the appellant in any unexplained "bhisi" transaction. 5) Incorrect and Unl....
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....ficer's own application of mind which is a mandatory requirement as per the provisions of section 147. 8. In his next plank of argument, he submitted that when the assessee has appeared and participated in the assessment proceedings the Assessing Officer should not have invoked the provisions of section 144. 9. In his third plank of argument, he submitted that the Assessing Officer has violated the principles of natural justice. He submitted that in the instant case the Assessing Officer has selectively reproduced only one reply of the assessee deliberately omitting elaborate written submissions filed in response to multiple notices. He submitted that non-consideration of material before the Assessing Officer is a jurisdictional error going to the root of the matter. 10. The Ld. Counsel for the assessee in his another plank of argument submitted that the Assessing Officer has not supplied the documents which were relied upon by him for the reopening of the assessment. Therefore, the re-opening proceedings are invalid and liable to be quashed. 11. Referring to the decision of the Hon'ble Supreme Court in the case of Kishanchand Chellaram vs. CIT reported in (1980) 12....
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....IT reported in (2001) 118 Taxman 112, he submitted that the Tribunal in the said decision has held that loose papers and documents seized from the premises of third parties and statements recorded at the back of the assessee without an opportunity to interrogate those documents without bringing on record any supporting evidence cannot be the basis for adding undisclosed income. 16. The Ld. Counsel for the assessee next submitted that the WhatsApp messages are not admissible evidence without section 65B Certificate of the Indian Evidence Act, 1872. He submitted that electronic records are admissible as evidence only if they satisfy the requirements of section 65B of the Indian Evidence Act, 1872. He submitted that a certificate u/s 65B is mandatory for the admissibility of electronic evidence. For the above proposition, he relied on the decision of the Hon'ble Supreme Court in the case of Arjun Panditrao Khotkar vs. Kailash Kushanrao Goratyal reported in (2020) 7 SCC 1. He submitted that the Revenue in the instant case has not produced any such certificate in relation to the WhatsApp data extracted from the Toshiba Hard Disk. He also relied on the following decisions: a.....
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....aking order as he has disposed of all the grounds of appeal in a perfunctory manner with a near verbatim reproduction of the Assessing Officer's order and the bare observation that the Assessing Officer has properly confronted the findings of search relating to the assessee for which the assessee has not furnished any plausible reply. He submitted that no independent reasoning has been given for rejecting the detailed legal arguments and case law placed before the Ld. CIT(A) / NFAC. He submitted that the non-speaking, cryptic appellate order which does not engage with the submissions of the assessee and the case law cited is liable to be set aside. For the above proposition, he relied on the decision of the Hon'ble Supreme Court in the case of Kranti Associates Pvt. Ltd. v. Masood Ahme Khan reported in (2010) 9 SCC 496 where it has been held that all quasi-judicial authorities including Income-tax Appellate Authorities must give reasons for the decisions. He submitted that the impugned order of the Ld. CIT(A) / NFAC fails this test. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be set aside and the addition made by the Assessing Officer be deleted. 21. The....
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....l to the assessee to meet the case against him and there is no actionable violation of natural justice. 24. So far as the argument of the Ld. Counsel for the assessee that the examination of Shri Motwani was not provided is concerned, he submitted that the statement of Shri Motwani was recorded on oath under section 132(4) during the search which is a solemn statutory proceeding. He submitted that the cross-examination is a right available in court/tribunal proceedings. However, there is no absolute unqualified right to cross-examine a person whose statement is recorded during a search. 25. Referring to his synopsis, the Ld. DR drew the attention of the Bench to the following propositions: "The right to cross-examination in tax proceedings is a rule of fairness, not a rigid rule of law. The absence of cross-examination does not automatically vitiate the order what matters is whether the assessee had a real and effective opportunity to meet the material. The assessee was confronted with the WhatsApp material and given adequate opportunity to respond. His response was a bare denial. The mere denial without any documentation, corroboration or affirmative explan....
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....9;s own statement, constitute admissible and reliable evidence of undisclosed transactions by the persons named therein. 29. So far as the argument of the Ld. Counsel for the assessee that alleged non-satisfaction of section 69 requirements are concerned, he submitted that section 69 does not require the Assessing Officer to produce a bank statement or cash book entry evidencing an outflow before an addition can be made. By its very nature, unrecorded cash investments do not appear in the assessee's own books. If they did, they would not be 'unrecorded investments'. He submitted that the Assessing Officer is entitled to infer the fact of investment from surrounding circumstances, and the WhatsApp records showing the assessee's number against bhisi entries confirmed by Motwani's sworn statement constitute exactly such surrounding circumstances. 30. So far as section 65B certificate is concerned, he submitted that this issue was raised by the assessee for the first time before the Tribunal which is a purely technical and procedural objection, which in the context of income-tax assessments, must be assessed in terms of its actual prejudice to the assessee. He sub....
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..... The order records the fact that the Assessing Officer properly confronted the adverse material and that the assessee failed to provide a plausible reply. He submitted that the requirement of a speaking order does not mandate a paragraph-by-paragraph response to every case law citation, it requires that the authority demonstrate awareness of the issue and give a reason for its conclusion which the Ld. CIT(A) / NFAC has done. 33. So far as the argument of the Ld. Counsel for the assessee that the reasons should have been given, he submitted that the department does not dispute this. It is the position of the department that the reasons have been given namely that the adverse material was properly confronted, the assessee's response was not substantive and the addition is therefore upheld. This is a reason. It may be a reason that the assessee disagrees with but it is not no reason. The appropriate remedy for an inadequate reason is a remand not deletion of the addition. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be upheld and the grounds raised by the assessee be dismissed. 34. We have heard the rival arguments made by both the sides, perused the ord....
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....nformation collected during the search action in Manjeet Pride Group, Gadiya Group and their associated entities, however, nothing has been brought on record by the Assessing Officer as to the finality of the additions in any of the cases. The relevant observations of the Assessing Officer at clause VIII of para 6 read as under: "VIII. Various cases, including the one pertaining to the assessee, were reopened on the basis of the information collected during the Search action in the Manjeet Pride Group, Gadiya Group and their associated entities. The type of information was the same involved in unaccounted bhisi transactions." 37. Further, the presumption u/s 132(4A) is binding on the person who has made the statement u/s 132(4A) but it cannot bind a third party. Moreover, the authenticity of WhatsApp chat is not established by fulfilling the mandatory requirement of certificate u/s 65B of the Indian Evidence Act, 1872. No other independent evidence is available with the department other than the WhatsApp chat in the mobile number of Mr. Motwani. 38. The Hon'ble Supreme Court in the case of Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal order dated 14.07.2020....