Rajendrabhai Chandulal Patel, Baroda V. Dy. Commissioner of Income Tax-CC-2, Surat

ITSSA 42/SRT/2022

AI Insights

The case involves three appeals by Rajendrabhai Chandulal Patel against the orders of the Commissioner of Income Tax (Appeals), which arose from separate assessment orders passed by the Assessing Officer under sections 143(3) read with section 153A of the Income Tax Act, 1961. The appeals pertain to the assessment years 2016-17, 2018-19, and 2019-20. The primary issue in these appeals was the addition of undisclosed income amounting to Rs.10,37,000 for 2016-17, Rs.8,00,000 for 2018-19, and Rs.4,50,000 for 2019-20, based on notings found in the assessee's mobile phone during a search operation. The Tribunal found that the additions were made without any corroborative evidence linking the notings to the assessee, leading to the allowance of the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301948 (ITAT-SURAT)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 09-06-2022
• Other Referred Cases: Pradeep Kumar Sharma v. Deputy Commissioner of income-tax, Central Circle, DCIT, Circle-1, Rajkot v. Shri Hitesh Manusukhlal Bagdai, Commissioner of Income-tax vs. Maulikkumar K. Shah
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Unexplained expenditure; Income from undisclosed sources; Loose papers; Corroborative evidences
• Section: 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं/.IT(SS)A No.42/SRT/2022 Assessment Year: (2016-17) (Physical Hearing) Rajendrabhai Chandulal Patel, 409, Kansara Pole, Kansara Bazar, Bajwada, Baroda, Gujarat – 390001. Vs. The DCIT, Central Circle-2, Surat. èथायीलेखासं/.जीआइआरसं/.PAN/GIR No.: AXDPP0206B (Appellant) (Respondent) आयकर अपील सं/.IT(SS)A Nos.43 to 44/SRT/2022 Assessment Years: (2018-19 to 2019-20) Rajendrabhai Chandulal Patel, 409, Kansara Pole, Kansara Bazar, Bajwada, Baroda, Gujarat – 390001. Vs. The DCIT, Central Circle-2, Surat. èथायीलेखासं/.जीआइआरसं/.PAN/GIR No.: AXDPP0206B (Appellant) (Respondent) Appellant by Shri Vartik Choksi, Shri Biren Shah and Shri Nitin Gheewala, CA Respondent by Shri Ashok B. Koli, CIT(DR) Date of Hearing 26/04/2023 Date of Pronouncement 23/05/2023 आदेश /O R D E R PER DR. A. L. SAINI, AM: Captioned three appeals filed by the assessee, pertaining to assessment years (AYs) 2016-17, 2018-19 and 2019-20 respectively, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals), [in short ‘the Ld. CIT(A)’], which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as the “Act”). Page | 2 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel 2. First, we shall take assessee`s appeal in IT(SS)A No. 42/SRT/2022 for assessment year 2016-17, wherein the grounds of appeal raised by the assessee, are as follows: “1. In the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) should have held the assessment as time barred and assessment order should have been held as illegal, void and non-est. The Ld. Commissioner of Income tax should have annulled, quashed the assessment. 2. In facts and circumstances of the assessee's case, the Ld. CIT (Appeals) erred in confirming addition of Rs.10,37,000/- for undisclosed income on the basis of image extracted from mobile ignoring the fact that (i) said noting are not related to assessee (ii) said noting does not contain name of any persons of whom these transactions are belonged to (iii) there is no corroborated material or any independent evidence on record to show that alleged unexplained expenditure/ investment were incurred/made and uncounted income was received by the assessee. 3. The assessee craves leave to add, alter and/or amend the above ground/grounds of appeal either before or at the time hearing of the appeal.” 3. Succinct facts qua the issue are that during the assessment proceedings, the assessing officer observed that assessee has earned an amount of Rs.13,52,000/- as undisclosed income. According to the assessing officer, the assessee has made certain investments in money lending and received interest thereon. The details of the same are available on page 8 of the assessment order. The assessee submitted written submission before the assessing officer. However, assessing officer observed that the assessee has not been able to explain the details of the money lending and interest received thereon pertain to any other person if not pertaining to himself. Therefore, the assessing officer as per the provisions of section 132(4A) of the Act, held that the details belonged to the assessee and accordingly made addition to the tune of Rs.13,52,000/-. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has partly deleted the addition made by the Assessing Officer, observing as follows: “8.3 I have gone through the assessment order and the submission made by the AR of the assessee. The image relating to the money lending activity has been found in the mobile phone of the assessee. The employer firm of the assessee has not owned up the data in the personal mobile phone of the assessee. In these circumstances, the onus lies upon the assessee to give the details as to whom the data found in his mobile pertain to. In case, the assessee fails to do that, as per Page | 3 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel the provisions of section 132 (4A) of the Act it shall be presumed that the data belonged to the assessee and accordingly, the assessing officer has brought it to tax as undisclosed income of the assessee The assessing officer has not taxed the original balance of amount lent. What assessing officer has taxed is the amount received as repayment of loan given and interest thereon. In my opinion, what assessing officer has done is not correct. As per the image, there is opening balance is Rs.18,70,000/- as on 03.01.2016. Whether the amount mentioned in opening balance was invested in F.Y. 2015-16 or earlier year(s) is not known. Therefore, it can reasonably be presumed that 50% of such opening balance amounting to Rs.9,35,000/- was invested in money lending during the F.Y. 2015- 16 relevant to the impugned assessment year. The image also contain the details of interest earned on the said money lend amounting to Rs.1,02,000/-. Thus, the total addition to the tune of Rs.10,37,000/- (Rs.9,35,000/- + Rs.1,02,000/-) stands confirmed. The assessee gets relief of Rs.3,15,000/-. Ground no.4 is partly allowed.” 5. Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before us. 6. Learned Counsel for the assessee submitted that Ld. CIT (Appeals) has grossly erred in confirming addition of Rs.10,37,000/- for undisclosed income on the basis of image extracted from mobile. The ld Counsel stated that said notings are not related to assessee. The ld Counsel further stated that said noting does not contain name of any persons of whom these transactions are belonged to and there is no corroborated material or any independent evidence on record to show that alleged unexplained expenditure/ investment were incurred. The ld Counsel also relied on the following decisions viz: (i) [2021] 132 taxmann.com 41 (Delhi – Trib.) Pradeep Kumar Sharma v. Deputy Commissioner of income-tax, Central Circle and (ii) DCIT, Circle-1, Rajkot v. Shri Hitesh Manusukhlal Bagdai, having ITA(SS) 03/Rjt/2013.Therefore, ld Counsel contended that entire addition was made based on surmise and conjecture, hence addition so made by the assessing officer may be deleted. 7. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 8. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of Page | 4 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel the ld. CIT(A) and other material brought on record. We note that during the course of search, image in the mobile of assessee was found, the description of image is at page no. 9 of Assessment order. The Assessing Officer has made addition on the ground that assessee could not explain the transaction showing in image therefore made addition of Rs.13,52,000/-. The working of the addition made by the assessing officer is at page no.10 of assessment order vide para 9.3 of assessment order. The Assessing Officer has merely based upon notings in loose material made addition without bringing corroborative evidences. We note that such loose material and notings are not related to assessee, besides said noting does not contain name of any persons. Hence addition made by the assessing officer is not sustainable in the eye of law. For that, we rely upon direct decision of Hon`ble Gujarat High Court in case of Commissioner of Income-tax vs. Maulikkumar K. Shah [2008] 307 ITR 137 (GUJARAT), wherein it was held that mere entries in seized material are not sufficient to prove that assessee has indulged in such a transaction in which 'on money' has been received. The findings of the Hon`ble Court are reproduced below: “4. We also found that in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 , the hon'ble Supreme Court has observed (page 545) : "It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of the recitals, otherwise it will be very easy to make self-serving statement in document either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recital made in document either executed by him or executed in his favour then the door will be left wide open the evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." 5. Considering the facts and circumstances of the case in its entirety, we are of the considered view that the addition as made by the Assessing Officer being based on mere presumptions and assumptions and without any corroborative evidence, cannot be sustained and the said additions have rightly been deleted by the Commissioner of Income-tax (Appeals) in all the years under consideration. The Revenue's appeals, therefore, fail. 6. The amount mentioned along with rates per sq.ft. of different floors on the loose papers is in respect of an estimate asking for the loan from the bank. No other evidence has been shown to justify that these amounts were received from purchasers. The Commissioner of Income-tax (Appeals) and the Tribunal both Page | 5 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel found that on the basis of these loose papers, no addition is justified. No interference is, therefore, called for in the order of the Tribunal.” 9. Therefore, respectfully following the binding judgment of Hon`ble Gujarat High Court in the case of Maulikkumar K. Shah (supra), we deleted the addition of Rs.10,37,000/-. Since we have deleted the addition sustained by ld CIT(A), therefore we do not adjudicate the ground No.1 raised by the assessee, being rendered academic and infructuous. 10. In the result, appeal filed by the assessee, [in IT(SS) No.42/SRT/2022] is allowed. 11. Coming to the assessee’s appeal in IT(SS)A No.43/SRT/2022 for assessment year 2018-19, wherein the grounds of appeal raised by assessee, are as follows: “1. In the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) should have held the assessment as time barred and assessment order should have been held as illegal, void and non-est. The Ld. Commissioner of Income tax should have annulled, quashed the assessment. 2. In the facts and circumstances of the case, the Ld. CIT (Appeals) erred in confirming addition of Rs 8,00,000/- made by assessing officer (i) overlooking & ignoring the fact that said noting does not belong to or relate to assessee, (ii) Simply by adding the figures reflected in image extracted from the mobile of assessee without bringing any evidences on record that said images are related to any transactions of assessee. 3. The assessee craves leave to add, alter and/or amend the above ground/grounds of appeal either before or at the time hearing of the appeal.” 12. Brief facts qua the issue are that grievances raised by the assessee relates to addition of Rs.8,00,000/- on account of unaccounted-income. According to the assessing officer, the data from the mobile phone of the assessee was taken for verification and it was observed by the assessing officer that there was an image showing noting of transactions of Rs.12.5 Lakhs from 26.06.2018 to 14.09.2018 giving details of amount received and transferred to the assessee`s native place in Mehsana (Gujarat). Out of the said amount of Rs.12,50,000/-, Rs.8,00,000/- pertains to the impugned assessment year and the balance of Rs.4,50,000/- pertains to A.Y. 2019-20. The assessing officer tried to get the details of the Page | 6 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel transactions from the assessee but the assessee submitted that it was relating to proposed transaction between Mr. Ashish and Mr. Manilal Maganlal, who are his relatives. But the transactions did not materialize. However, the assessing officer did not accept the contention of the assessee and treated the amount of Rs.8,00,000/-, as undisclosed income and made addition. 13. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of Assessing Officer. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us. 14. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. The ld Counsel submitted that Ld. CIT (Appeals) has grossly erred in confirming addition of Rs 8,00,000/- made by assessing officer by overlooking and ignoring the fact that said noting does not belong to or relate to assessee. The ld Counsel further pointed out that assessing officer added the figures reflected in image extracted from the mobile of assessee without bringing any evidences on record. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. We note that facts and grounds of appeal raised by the assessee in this appeal are identical and similar to those mentioned in IT(ss) No.42/SRT/2022 therefore our above decision in IT(ss) No.42/SRT/2022 shall apply mutatis mutandis to the appeal of the assessee in IT(SS)A No.43/SRT/2022 for assessment year 2018-19 also. Hence, we allow the appeal of the assessee. 15. In the result, appeal filed by the assessee (in IT(SS)A No.43/SRT/2022) is allowed. Page | 7 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel 16. Now, we shall take assessee’s appeal in IT(SS)A No.44/SRT/2022 for AY.2019-20, wherein the grounds of appeal raised by the assessee, are as follows: “1. In the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) should have held the assessment as time barred and assessment order should have been held as illegal, void and non-est. The Ld. Commissioner of Income tax should have annulled, quashed the assessment. 2. In the facts and circumstances of the case, the Ld. CIT (Appeals) erred in confirming addition of Rs 4,50,000/- made by assessing officer (i) overlooking & ignoring the fact that said noting does not belong to or relate to assessee, (ii) Simply by adding the figures reflected in image extracted from the mobile of assessee without bringing any evidences on record that said images are related to any transactions of assessee. 3. The assessee craves leave to add, alter and/or amend the above ground/grounds of appeal either before or at the time hearing of the appeal.” 17. We have heard both the parties and noted that Ground raised by the assessee relates to addition of Rs.4,50,000/- on account of unaccounted income. According to the assessing officer, the data from the mobile phone of the assessee was taken for verification and it was found that there was an image showing noting of transactions of Rs.12.5 Lakhs from 26.06.2018 to 14.09.2018 giving details of amount received and transferred to the assessee native place in Mehsana (Gujarat). Out of the said amount of Rs.12.5 Lakhs, Rs.8,00,000/- pertain to the preceding year and the balance of Rs.4.5 Lakhs pertain to impugned assessment year. The assessing officer tried to get the details of the transactions from the assessee but the assessee submitted that it was relating to proposed transaction between Mr. Ashish and Mr. Manilal Maganial, who are his relatives. But the transactions did not materialize. However, the assessing officer did not accept the contention of the assessee and treated the amount of Rs.4.5 Lakhs as undisclosed income. We note that facts and grounds of appeal raised by the assessee in this appeal are identical and similar to those mentioned in IT(ss) No.42/SRT/2022 therefore our above decision in IT(ss) No.42/SRT/2022 shall apply mutatis mutandis to the appeal of the assessee in IT(SS)A No.44/SRT/2022 for assessment year 2019-20 also. Hence, we allow the appeal of the assessee. Page | 8 IT(SS)A Nos.42 to 44/SRT/2022 Rajendra Chandulal Patel 18. In the result, appeal filed by the assessee (in IT(SS)A No.44/SRT/2022) is allowed. 19. In the combined result, these three appeals filed by the assessee are allowed Registry is directed to place one copy of this order in all appeals folder / case files. Order is pronounced on 23/05/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 23/05/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat