PARMJEET SINGH MOGLA,MOHALI V. INCOME TAX OFFICER, WARD 6(1), MOHALI

ITA 853/CHANDI/2024

AI Insights

The case revolves around an appeal by Shri Paramjeet Singh Mogla against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 30 lacs to his income for the assessment year 2016-17. The addition was based on alleged undisclosed payments made by the assessee during the purchase of a flat, inferred from documents recovered from a laptop of a former employee of the developer. The Tribunal criticized the lack of direct evidence linking the assessee to any undisclosed payments and highlighted the failure to provide the assessee an opportunity for cross-examination, which is a fundamental aspect of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469855 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Other Referred Cases: Andaman Timber Industries Vs Commissioner of Central Excise
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJEET KAUR
• Assessee Lawyers: KAMAL SEHGAL
• Keywords: Principle of natural justice; Rule 8D
• Section: 148

Judgement Text

"आयकर अपील य अ धकरण,च\u0010डीगढ़ \u0014यायपीठ, च\u0010डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 853/CHD/2024 नधा\u0011रण वष\u0011 / Assessment Year: 2016-17 Shri Paramjeet Singh Mogla, H.No. 378, Phase-II, SAS Nagar, Mohali. Vs The ITO, Ward 6(1), SAS Nagar,Mohali. \u0016थायी लेखा सं./PAN NO: AMCPS8990H अपीलाथ\u001a/Appellant \u001b यथ\u001a/Respondent Assessee by : Shri Kamal Sehgal, Advocate Revenue by : Dr. Ranjeet Kaur, Sr.DR Date of Hearing : 04.03.2025 Date of Pronouncement : 25.03.2025 PHYSICAL HEARING O R D E R PER RAJ PAL YADAV, VP The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 15.06.2024 passed for assessment year 2016-17. 2. The grounds of appeal taken by the assessee are not in consonance with Rule 8 of ITAT Rules. They are descriptive ITA No.853/CHD/2024 A.Y.2016-17 2 and argumentative in nature. The assessee has taken 10 grounds of appeal, however his grievance revolves around a single issue namely, the ld. CIT(A) has erred in confirming addition of Rs.30 lacs to the total income of the assessee. 3. The brief facts of the case are that assessee has filed his return of income on 27.02.2017 declaring total income of Rs.13,45,430/-. The AO has reopened the assessment on the ground that assessee alongwith his wife had purchased Flat No. 133, Tower No. 2, 13th Floor, Homeland Heights Apartment, Sector 70, SAS Nagar, Mohali (Punjab). A search was conducted at the premises of Homeland Buildwell Pvt. Ltd. wherein two laptops of two employees were recovered. The first laptop was of one Shri Monu who was working as a Customer Relationship Manager of M/s A.B Alcobev Pvt. Ltd. and the other laptop was of Shri Sanjiv Garg. Shri Monu was earlier working with developer from whom assessee has purchased the flats. According to the Revenue, certain pages were deleted in the laptop of Shri Monu which was retrieved by the Revenue wherein the Revenue could lay hand on certain details wherein it was noted by Shri Monu that how ITA No.853/CHD/2024 A.Y.2016-17 3 cost of construction of these flats have been recouped from the alleged buyers. In other words, case of the Revenue is that assessee has paid over and above the amounts stated in the Sale Deed. With the help of that evidence, the addition of Rs.30 lacs has been made in the hands of the assessee. 4. Appeal to the ld. CIT(A) did not bring any relief to the assessee. 5. This appeal was listed for hearing on 13.01.2025 and the Bench has passed the following order : “The assessee is in appeal before the Tribunal against the order of the ld. CIT(A) dated 15.06.2024 passed for assessment year 2016-17. The grounds of appeal taken by the assessee are not in consonance with Rule 8D of ITAT Rules rather they are descriptive and argumentative in nature. 2. In brief, grievance of the assessee is that ld. CIT(A) has erred in confirming the addition of Rs.30 lacs. 3. The brief facts of the case are that assessee has filed his return of income on 27.02.2017 declaring total income of Rs.13,45,430/-. The ld. AO has reopened the assessment by issuance of a notice under Section 148 on 30.03.2021. According to the AO, assessee has purchased a flat No.133 Tower No.2, 13th Floor from Homeland Heights Apartments. A search & seizure ITA No.853/CHD/2024 A.Y.2016-17 4 operation was conducted at the premises of the developer of this project wherein statement of one Shri Monu who was working as a Customer Relationship Manager (CRM) of M/s AB Alcobev Pvt. Ltd. was recorded. He was earlier working at the Homeland Heights, Sector 70. A laptop was seized in which it revealed that certain files were deleted by Shri Monu and later on these files were retrieved by the Department. From this laptop, according to the Revenue, certain incriminating details were recovered which exhibit that some of the flats were sold after accepting part cash as a component of sale consideration. This factum of cash is being narrated under expression ‘Discount’. The Revenue drawn an inference that assessee has also paid cash of Rs.30 lacs while purchasing the flat, hence reopened the assessment. The AO treated the alleged information as a gospel truth and did not substantiate the information by cross verifying the details. He even did not call Monu as a witness in favour of the Revenue. He made an addition of Rs.30 lacs by alleging that assessee has made payment of this amount apart from cheque component mentioned in the Sale Deed. 4. The appeal to the ld. CIT(A) did not bring any relief to the assessee. 5. The ld. Counsel for the assessee while impugning the orders of the Revenue Authorities has emphasized that except a bald allegation in the shape of discovery of some sheet from one Monu, who was not even under employment of developer at the relevant time, was ITA No.853/CHD/2024 A.Y.2016-17 5 made as a basis of this addition. The Department did not supply either the statement of Monu, the alleged incriminating material to the assessee nor allowed any cross-examination of the alleged witness. The AO himself has not cross verified any of the details, he just relied on the information of the alleged Investigation Wing. 6. After hearing the matter for some time, we directed the ld. DR to produce the alleged file from Investigation Wing exhibiting what are the details possessed by the Revenue so that we could verify whether any credible material is being in possession of the Revenue or not. Apart from this, we would like to know the details of other purchasers whether any addition was made in the hands of any other assessee and if made, what is the status of those appeals. Hearing is adjourned to 18.02.2025. Copy of this ordersheet be supplied to both the parties. This appeal be treated as part heard.” 6. On the last date of hearing, nothing was brought on record by the Revenue except an Appraisal Report prepared by Investigation Wing which was transmitted to the concerned Assessing Officers. In other words, it is just an opinion of some officer who has conducted the investigation. The basic evidence or the basic document was never transmitted to the AO. ITA No.853/CHD/2024 A.Y.2016-17 6 7. On due consideration of the facts and circumstances, we find that only evidence alleged to be possessed by the Revenue is some details unearthed from the computer of Shri Monu whose erstwhile employer was the developer from whom assessee has purchased the flat. We observe that the authenticity of such details in laptop of a third person will always remain doubtful without sufficient corroborative evidence. There is no direct evidence possessed by the revenue. The concerned employee has already left the job of the developer. The AO has neither supplied the alleged copies of those documents recovered from the laptop of Shri Monu nor he has put Shri Monu for cross-examination of the assessee. It is not established on the record whether assessee has made any payment to Shri Monu. Only a chart prepared by an employee was recovered but that cannot be the evidence, solely on whose basis addition can be made. At this stage, we deem it appropriate to make reference to the judgement of Hon'ble Supreme Court in the case of Andaman Timber Industries Vs Commissioner of Central Excise 281 CTR 241 (S.C.) wherein the Hon'ble Supreme ITA No.853/CHD/2024 A.Y.2016-17 7 Court has propounded that if a witness was not put for cross-examination, then statement recorded against a person from his back will not be used in evidence. Para 6 of the judgement reads as under : “6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice' because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.” ITA No.853/CHD/2024 A.Y.2016-17 8 8. Thus the Revenue did not possess sufficient evidence in support of its case. The addition made to the total income of the assessee is not sustainable. Accordingly, we allow the appeal and delete the addition. 9. In the result, appeal of the assessee is allowed. Order pronounced on 25 th March,2025. Sd/- Sd/- (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क\u0002 \u0003ितिलिप अ ेिषत/ Copy of the order forwarded to : 1. अपीलाथ\u000f/ The Appellant 2. \u0003\u0010यथ\u000f/ The Respondent 3. आयकर आयु\u0014/ CIT 4. िवभागीय \u0003ितिनिध, आयकर अपीलीय आिधकरण, च\u0018डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "