The DCIT, Central Circle-1(1), Ahmedabad V. Shri Kaushikbhai Nanubhai Majithia, Ahmedabad

ITSSA 21/AHD/2021

AI Insights

The case revolves around an appeal by the Revenue against the decision of the CIT-A, which had deleted an addition of \\u20b9 9.95 crores made by the AO on the grounds of undisclosed investments by the assessee, Shri Kaushik Nanubhai Majithia, for the Assessment Year 2015-16. The addition was based on an excel sheet found during a search operation at the premises of Navratna Group, which allegedly recorded transactions involving the assessee and NODPL (Navratna Organisers & Developers Pvt. Ltd.). The AO argued that the excel sheet was a systematic record of transactions and that the assessee had a financial relationship with NODPL. However, the CIT-A found that the Revenue failed to provide sufficient evidence to substantiate these claims, leading to the deletion of the addition. The Tribunal upheld the CIT-A's decision, emphasizing the lack of concrete evidence linking the assessee to the alleged transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135643 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 04-03-2021
• Other Referred Cases: Moosa S. Madha& Azam S. Madha (1973) 89 ITR 65 (SC)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Document seized; Competent authority; Documents seized; Set aside; Capital Gains
• Section: 69; 148; 132; 142(1); 153C

Judgement Text

आयकर आयकरआयकर आयकर अपी अपीअपी अपीलीय लीयलीय लीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद यायपीठ यायपीठ यायपीठ यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’A’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And MS. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./IT(SS)A No. 21/AHD/2021 िनधा रणवष िनधा रणवष िनधा रणवष िनधा रणवष /Asstt. Year: 2015-16 DCIT Central Circle-1(1), Ahmedabad Vs. Shri Kaushik Nanubhai Majithia, Urmi Kunj, Opp. Satatya Green Banglow, B/H Rajpath Club, Bodakdev, Ahmedabad PAN: ACFPM3423L (Applicant) (Respondent) Revenue by : Shri Vijay Kumar Jaiswal, CIT D.R. Assessee by : Shri Assem L Thakkar, A.R. सुनवाईक तारीख/Date of Hearing : 31/01/2023 घोषणाक तारीख/Date of Pronouncement: 15/03/2023 आदेश आदेशआदेश आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, dated 31/12/2020 arising in the matter of assessment order passed under s. 143(3) r.w.s. 153C of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2015-16. 2. The Revenue has raised the following grounds of appeal: “1. Whether the Ld. CIT(A) has failed to appreciate the fact that the excel file namely, x10000106.xls, clearly shows that during the F.Y. 2014-15, the assessee made payment of Rs.9,95,00,000/- to NODPL. The excel file seized is a systematic record of transaction of NODPL, this fact had been accepted by NODPL in its application u/s 245D before Hon’ble Settlement Commission. 2. Whether the Ld.CIT(A) has failed to appreciate that the assessee had books/purchased a villa in KBG Scheme in option 8-622 Sq. Yd unit No.774 and had business/financial relationship with NODPL. IT(SS)A No.21/AHD/2021 A.Y. 2015-16 2 3. Whether the Ld.CIT(A) has failed to appreciate that NODPL has accepted on money receipts recorded in the seized excel sheet and has offered income on the same in its application filed before ITSC. Also the submission filed by NODPL shows that the transaction was done between NODPL and the assessee. Thus the case is squarely covered u/s 132(4A) and section 292C of the I T Act, 1961. 4. Whether the Ld.CIT(A) has failed to appreciate that the seized excel sheet was duly reproduced in notice u/s 142(1) of the Act dated 30/10/2019 and satisfaction note was also provided to the assessee which was completed ignored by the Ld.CIT(A). Moreover, the soft copy of the same was also sent to the assessee through e-proceedings facility, however the assessee has intentionally ignored the onus to explain the purpose of payment made to NODPL along with the source of funds for making payment of Rs.9,95,00,000/-. Thus the assessment was framed in accordance with the principles of natural justice and equity. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 6. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. The solitary issue raised by the Revenue is that the learned CIT-A erred in deleting the addition made by the AO for ₹ 9.95 crores on account of undisclosed investments. 4. The facts in brief are that the assessee in the present case is an individual and filed his return of income declaring income under the head house property, business and profession, capital gains and other sources. 5. There was a search and seizure operation under section 132 of the Act at the premises of Navratna Group dated 23 September 2019 including the residence of Shri Murlidhar M Trivedi wherefrom an excel sheet from the laptop was found which was containing various transactions relating to NODPL (Navratna Organisers & Developers Pvt. Ltd.). In the affidavit dated 4 December 2019 of Shri Murlidhar M Trivedi, it was admitted that such excel sheet belongs to the NODPL group. The company namely NODPL before the settlement commission has admitted that the transactions recorded in the impugned excel sheet represents the on money received and on money paid upon receipt of cheques. As such, the company NODPL based on such excel sheet has offered income before the settlement commission. IT(SS)A No.21/AHD/2021 A.Y. 2015-16 3 6. The AO further found that the name of the assessee was also reflecting in such excel sheet for making the payment to NODPL amounting to ₹9.95 crores in cash in the year in dispute. Thus, the AO proposed to make the addition of ₹9.95 crores on account of on money paid by the assessee. In response, the assessee has made various submissions including the submission dated 27 December 2019 but the same was not acceptable to the AO for the reasons as detailed below: i. The excel sheet was containing the transactions in a systematic manner and the fact that such transactions belong to NODPL was also accepted. It was also admitted by NODPL that such excel sheet contains the transactions of on money receipts and payments. ii. The transactions recorded in such excel sheet was duly admitted by NODPL before the Settlement Commission and the relevant income based on such excel sheet was also offered to tax. iii. There was no purpose of providing the statements of the concerned person such as Shri Murlidhar M Trivedi or the Company as the addition was not based on the statement but on the incriminating documents found in the course of search. iv. Likewise, no benefit can be extended to the assessee on the reasoning that he has no relation either with the company or Shri Murlidhar M Trivedi. It is for the reason that the excel sheet was showing the payment by the assessee in a systematic manner which is a clinching evidence. Accordingly, the onus is upon the assessee to disprove the contents of the excel sheet based on the documentary evidence. 7. Based on the above and after considering the facts that the assessee has nowhere recorded the cash payment made to the company as discussed above, the AO treated the sum of ₹9.95 crores as an unexplained investment under section 69 of the Act and added to the total income of the assessee. 8. Aggrieved assessee preferred an appeal to the learned CIT-A. IT(SS)A No.21/AHD/2021 A.Y. 2015-16 4 9. The assessee before the learned CIT-A submitted that the AO has made the addition on account of unexplained investments based on the excel sheet found from the premises of Shri Murlidhar M Trivedi. As such, the basis adopted by the AO is grossly misplaced. It is for the reason that the AO has not recorded the statement of the party under whose control, the excel sheet was discovered. It was the duty of the AO to establish the nature and the purpose of the transaction recorded in such excel sheet. There should have been some corroborative materials with respect to the excel sheet found during the course of search. No document or any statement has been brought on record which implicated the assessee for having carried out such unaccounted transactions in cash. The assessee has categorically submitted before the AO that he has not purchased any property in the scheme of NODPL and likewise such fact has also not been brought on record by the AO regarding the purchase of the property by the assessee. Similarly, there was no clarification sought by the investigation wing post search proceedings from the assessee. 10. It was alleged by the AO that NODPL has accepted in its submission that the seized documents belong to it which contain the following transactions: A) Receipts of on-money in respect of units booked. B) Refund of on-money upon receipt of cheque. C) Payment of material D) Payment of labour/liasioning expenses E) Borrowing/Advances given etc. 11. However, the AO has not specified anything about the transaction which was allegedly undertaken by the assessee whether it was for the payment of the booking of the property or it was refund of the on money upon the receipt of cheque or it was against the materials/ Labour/ liasioning fees borrowing/ advances. As such, it was the basic duty of the AO to allege the nature of the transaction recorded in the excel sheet. 12. The learned CIT -A after considering the submissions made by the assessee has deleted the addition made by the AO by observing as under: IT(SS)A No.21/AHD/2021 A.Y. 2015-16 5 “7.3.4 In light of the above discussion and the settled position of law I agree with the arguments extended by the appellant that the addition is not sustainable particularly in light of the fact that the searched party has merely indicated that the documents in question belongs to NODPL. The AO has also not been able to bring any material or other evidence on record in support of the notings made that such amounts have actually been paid by the appellant to NODPL. The AO has also not been able to challenge the contention made by the appellant that he has no transactions or dealing of any nature whatsoever with NODPL. In view of the above facts and circumstances I hold that the addition made by the AO only on the ground of notings having been made in the excel sheet found from the premises of the searched party without any corroborative evidence cannot be sustained. It has been extensively argued by the appellant that in spite of repeated requests the appellant had been provided with the soft copy of the excel sheet. The hard copy duly verified by NODPL had not been made available. It was extensively argued that such extracts/photostat copies/Xerox copies not authenticated or certified or notarized would not have any evidentiary value and as such could not be relied upon while drawing an adverse inference against the appellant. The appellant had also relied in the case of Moosa S. Madha& Azam S. Madha (1973) 89 ITR 65 (SC) in support of the above proposition. 7.3.5 The appellant had also argued that any statement or other deposition made by Shri Murlidhar Trivedi on behalf NODPL would not have any evidentiary value whatsoever, particularly on account of the fact that he was not a Director or an authorised person of the aforesaid company. No adverse inference can be drawn on the basis of any statement made by any person who is a stranger to the company to which the transaction is alleged to pertain. It was also submitted that in view of this fact Shri Murlidhar Trivedi would have no locus standi to make such statement which can implicate the appellant in any manner whatsoever and the fact cannot be ignored also that no such statement has also been made by him. Even Shri Murlidhar Trivedi, the searched party, had by way of an affidavit merely stated that the transactions in question pertained to NODPL and had never stated that the same are unaccounted or unexplained since he would neither be in a position to state that nor have any authority to make such statement. 7.3.6 The appellant has also not been confronted with any evidence or material including any statement of the Directors of NODPL that the transactions in question were actually existent leave alone they be unexplained or unaccounted in nature. I am convinced with the arguments extended that the soft copies of the excel sheet by itself do not have any evidentiary value particularly where the same have not been certified as genuine and reliable by any of the directors of the NODPL to whom it belongs as deposed by Shri Murlidhar Trivedi from whose possession it had been found nor having been notarized by any competent authority. The evidentiary value of the excel sheet becomes questionable also on account of the fact that it has not been found from the possession of the person to whom it pertains. Further, Mr. Murlidhar Trivedi has merely stated that the excel sheet belongs to NODPL. However, nothing has been brought on record to establish beyond doubt that the directors of NODPL have been questioned on the excel sheet and they have identified the appellant as the maker of such payments. What has merely been stated is that NODPL has approached the Hon. Settlement Commission for the settlement of their tax liabilities and have identified the various notings and jottings as being: a. Receipts of on money in respect of units booked, and b. Refund of on money payment upon receipt of cheque However, the appellant has repeatedly informed that he has not booked any unit with any scheme of NODPL. The AO for inexplicable reasons has not been able to refute IT(SS)A No.21/AHD/2021 A.Y. 2015-16 6 this contention made by the appellant. The AO has not identified any unit booked by the appellant and therefore the question of such on money receipts would not arise. Further, the AO has also not been able to identify any cheques payments made by the appellant against which such refund of on money payments could have been made by NODPL. It is the primary duty of the AO to establish that in fact there is some financial / business relationship between NODPL and the appellant and without establishing the same the appellant cannot be merely visited with such tax liabilities only on account of the references of the name of the appellant in the excel Sheet. The AO has not been able to identify either the unit booked or the cheques paid by the appellant. The additions cannot be sustained on mere assumptions, conjectures and surmise and the has to be some concrete evidence or other material which would support the allegation made which has been found during the course of search and substantiated during the course of assessment. Under such circumstance the action of the AO in making such addition is not justified particularly where no corroborative material has been found in support of the transaction alleged to have been undertaken. Accordingly, Ground No. 4, 5, 6, 7 and 11 are allowed and decided in four of the appellant.” 13. Being aggrieved by the order of the learned CIT-A, the Revenue is in appeal before us. 14. The learned DR before us filed WS running into various pages and contended that Shri Murlidhar M Trivedi in his affidavit dated 4 December 2019 furnished during the assessment proceedings has clearly admitted that the impugned excel sheet pertains/ belongs to NODPL and the contents of the same can only be answered by such company i.e. NODPL. 14.1 Likewise, NODPL based on such excel sheet has accepted income from the unaccounted sources before the Settlement Commission. Thus, such excel sheel was containing the incriminating information and the name was very much reflecting therein evidencing financial relationship with NODPL. 15. On the other hand, the learned AR before us filed a paper book running from pages 1 to 83 and contended that the assessee has not purchased any property in the scheme developed by NODPL. Furthermore, the excel sheet that too without any supporting material cannot be used as the basis of the addition in the hands of the assessee without providing the opportunity of cross-examination. Under the provisions of section 132(4A) and 292C of the Act, it is presumed that such excel belongs to the 3 rd party and the onus lies upon the revenue to establish IT(SS)A No.21/AHD/2021 A.Y. 2015-16 7 that the transactions recorded therein belongs to the assessee. However, the revenue has not brought any material on record suggesting that the assessee has made any investment in the property. As per the learned AR the property being Villa in KBG Scheme in option 7-622 Sq. Yard unit No. 774 has been purchased by the party, by way of conveyance deed dated 2 nd February 2015 by M/s Unicorn Packers Private Ltd. and not the assessee. Therefore, the question of making any addition does not arise in the hands of the assessee. 15.1 Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 16. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the addition has been made by the AO based on the excel sheet found from the premises of the third-party wherein the name of the assessee was appearing. However, the learned CIT-A was pleased to delete the addition made by the AO on various counts as detailed above. Now, the controversy arises whether the addition can be made based on the document found from the premises of the 3 rd party. Admittedly, the excel sheet containing the amount was found without any signature. It was found from the premises of the 3 rd party and without any corroborative material. First of all, it is the basic duty of the party from whom possession, such excel sheet was found to explain the nature of such document. However, from the finding of the AO, we note that there was no statement provided by the AO to the assessee despite the fact that the specific request was made by the assesse as extracted below: “1. Before making any submissions it is submitted that we had called for the evidence/material seized from the premises of Navratna Organisors which pertained to the assessee and which triggered the 153C proceedings. We had also asked for the copies of the satisfaction note of the AO of the searched party and of the assessee. We had also asked for the copies of the statements recorded with regards the seized material alleged to be belonging to the assessee. It seems that only the satisfaction note is provided which clearly establishes the fact that there is no seized material belonging to the assessee and neither any statement has been recorded with reference to the alleged seized material which implicates the assessee in any manner whatsoever. Under such circumstances undertaking proceedings u/s 153C is illegal and bad in law which may kindly be noted.” IT(SS)A No.21/AHD/2021 A.Y. 2015-16 8 17. The relevant finding of the AO to the above submission of the assessee is reproduced as under: “The argument of the assessee is without any basis as no reliance has been placed on statements of any person is relation to this proceedings and thus no requirement of providing the statement is there. Hence, it is not relevant in the assessee case that statements is being required to provided by which the assessee had been implicated in any manner whatsoever with regard the transaction allegedly undertaken.” 18. To our understanding, the statement recorded of the search party from whose control the excel sheet was found was necessary to be supplied to the assessee for the rebuttal. It is for the reason that the excel sheet cannot be treated as sacrosanct document to draw any inference against the assessee until and unless it is supported by the corroborative documentary evidence. 19. Furthermore, the assessee has categorically denied to have made any investment in the project of NODPL. The revenue has also not brought anything on record about the details of the investments made by the assessee. However, on reading the grounds of appeal raised by the revenue, we note that it has been alleged by the revenue in the ground of appeal that the assessee has booked a Villa in KBG Scheme in option 7-622 Sq. Yard unit No. 774 and the assessee also had business financial relationships with NODPL. 19.1 However, we find that the assessee has filed the order passed under clause (d) of section 148 of the Act dated 31-3-2022 for the AY 2015-16 in the case of M/s Unicorn Packers Private Ltd wherein the department has accepted that the unit No. 774 in KBG was purchased by way of conveyance deed dated 2 nd February 2015 M/s Unicorn Packers Private Ltd. The relevant copy of the order is available on record. The relevant finding of the order is reproduced as under: “5.9 On perusal and analysis of the excel file named x10000226.x1x, submission filed by the NODPL, contention of the NODPL submitted before the Hon’ble ITSC, it is observed that the assessee UNICORN PACKERS PRIVATE LIMITED had purchased unit No. 774 @ KBG and had made payment as on-money to NODPL amounting to Rs.2,58,26,600/-.” 20. From the above, there is no ambiguity to the fact that the assessee has not purchased any property as alleged by the Revenue in the ground of appeal. IT(SS)A No.21/AHD/2021 A.Y. 2015-16 9 Accordingly, we do not find any reason to interfere in the order of the ld. CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. 21. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the Court on 15/03/2023 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 15/03/2023 Tanmay/Manish, Sr. PS TRUE COPY