STEVEN ANGELO PINTO ,MUMBAI V. ITO INT TAX 3(3)(2), MUMBAI

ITA 922/MUM/2025

AI Insights

The case revolves around an appeal by Steven Angelo Pinto against the order of the Income Tax Officer, which added Rs. 50,00,000 to the assessee's income for the Assessment Year 2022-23 under Section 69A read with Section 115BBE of the Income Tax Act. This addition was based on a WhatsApp message allegedly indicating an undisclosed investment. The Tribunal examined the context of the message, the lack of physical evidence of cash transactions, and the responses from the actual parties involved in the property transaction, which denied any cash payments. The Tribunal concluded that the addition was unjustified as there was no concrete evidence linking the assessee to any undisclosed income or cash transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706190 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2022-2023
• Other Referred Cases: Commissioner of Income-Tax vs. Durga Prasad More (214 ITR 801), Sumati Dayal vs. Commissioner of Income-Tax 1995 AIR 2109
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR; J
• Assessee Lawyers: MIHIR NANIWADEKAR
• Keywords: Search and seizure
• Section: 143(3); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “I” BENCH : MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No. 922/Mum/2025 Assessment Year : 2022-23 Steven Angelo Pinto, A-11, Tahnee Heights, Nepean Sea Road, Mumbai-400006. PAN : AIHPP2373C vs. Income Tax Officer, (International Taxation)-3(3)(2) Kautilya Bhavan, Bandra Kurla Complex, Bandra (East), Mumbai-400051. (Appellant) (Respondent) Assessee by : Shri Mihir Naniwadekar (virtually present) Shri Ruturaj Gurjar Revenue by : Shri Krishna Kumar, J.CIT Date of Hearing : 05-06-2025 Date of Pronouncement : 30-06-2025 O R D E R PER VIKRAM SINGH YADAV, A.M : This is an appeal filed by the assessee against the order of the Assessing Officer (AO), dt. 16-12-2024 passed u/s 144C(13), consequent to the directions given by the DRP-2, Mumbai-2, pertaining to Assessment Year (AY) 2022-23, wherein the assessee has taken the following grounds of appeal: “1. On facts & circumstances of the case and in law, both the Assessing Officer as well as Dispute Resolution Panel (DRP) has erred in making an addition amounting to Rs. 50,00,000/- u/s.69A r.w.s.115BBE 2 ITA No. 922/Mum/2025 of the Income Tax Act as the assessee's income (being assessee's undisclosed investment) for AY 2022-23. The addition made u/s.69A r.w.s.115BBE of the Income Tax Act may please be deleted. 2. On facts & circumstances of the case and in law, both the Assessing Officer as well as Dispute Resolution Panel (DRP) has erred in initiating penalty u/s.270A of the Income Tax Act, without recording a proper satisfaction as may be seen from the assessment order passed u/s.144C(13) of the Income Tax Act. 3. The appellant reserves his right to add to, alter, amend, modify or delete any of the grounds taken in this appeal.” 2. Briefly the facts of the case are that the assessee filed his return of income on 29/07/2022 disclosing total income of Rs. 29,31,310/-. The AO basis information uploaded by the DDIT (Inv.)-3(4), New Delhi, pursuant to search and seizure action in the case of Shri Badar Abbas Karimi and Shri Salim Abbas Karimi conducted on 30-09-2021, noted that a whatsapp message in chat of Shri Salim Abbas Karimi in phone seized during search has been found wherein the assessee has been identified informing Shri Salim Abbas Karimi about payment of Rs. 50 lakhs off books in transaction of a property. Basis the said information, a show cause was issued to the assessee on 12-03-2024. In response to the show cause notice, the assessee submitted that the agreement of purchase of the immoveable property was executed 01-07-2011 between the assessee and Shri Zarir Bativala for an agreement value of Rs. 4.75 crores. Thereafter since the project was not doing well, Shri Zarir Bativala agreed to return the money back to the assessee. The assessee further submitted that a person named, Shri Salim Abbas Karimi, a developer at Bangalore was pursuing sale of the property and was forcing the assessee to reduce the price and to put him off, the assessee sent a message via whatsapp that he has paid Rs. 50 lakhs off the books to the builder i.e., Shri Zarir Bativala. The assessee further submitted that the property was acquired in FY. 2011-12 and, therefore, the transaction related to purchase of property 3 ITA No. 922/Mum/2025 does not fall in AY. 2022-23. The AO thereafter issued notice u/s. 133(6) of the Act to Shri Zarir Bativala for confirming receipt of cash of Rs. 50 lakhs during the transaction of purchase of property by the assessee. In response to the notice, Shri Zrir Bativala vide reply dt. 18-03-2024 stated that there is no cash transaction involved in the deal for purchase of flat as per agreement dt. 01-07-2021. The AO thereafter referred to the communication from DCIT, Central Circle-2(2), Mumbai, who had shared the information after appraisal report was forwarded by DDIT (Inv.)-3(4), New Delhi; wherein he was advised to identify the financial year in which the transaction has been taken place. The AO thereafter stated that since the whatsapp message in chat of Salim Abbas Karimi in phone seized during the search was sent on 30-08-2021 i.e., FY. 2021-22 corresponding to A.Y. 2022-23, basis the same, the AO added an amount of Rs. 50,00,000/- to the total income of the assessee u/s. 69A of the Act. 3. Being aggrieved, the assessee filed objections before the DRP, who vide order dt. 25-11-2024 has dismissed the objections so raised by the assessee and thereafter the AO has passed the final assessment order u/s. 143(3) r.w.s. 144C(13) of the Act, dt. 16-12-2024 and against the said order, the assessee is in appeal before us. 4. During the course of hearing, the Ld.AR submitted that the assessee is a super senior individual. He, along with his wife, intended to secure a personal residence for peaceful retirement. Accordingly, entered into an agreement for the purchase of an immovable property (a flat) on 1st July 2011 with Mr. Zarir Bativala. The total consideration was fixed at Rs. 4.75 crores. It is submitted that the assessee has paid Rs. 4.5 crores to Mr. Bativala entirely through banking channels. Due to delays and breaches by the builder, Mr. Bativala, the project has not fructified till date, causing 4 ITA No. 922/Mum/2025 significant financial and emotional strain to the assessee. Mr. Bativala has in fact acknowledged his lapses and has undertaken to return the consideration of Rs. 4.5 crores (and has actually repaid Rs. 20 lakhs till date). It is also submitted that the assessee has always been most diligent in his Income Tax Return filings as well as timely payments of all due taxes (advanced taxes & Self-assessment Tax, as the case may be) by/before the mandated due dates as per the Income Tax Act. 5. It was submitted that while the assessee was desperately trying to recover his dues from the non-performing builder (Mr. Bativala), one Mr. Salim Abbas Karimi, who also appears to be a real estate developer - approached the assessee trying to obtain a distress sale of the assessee's rights in the property. The agreement dated 1st July 2011 had recorded the consideration already paid at Rs. 4.5 crores. Mr. Karimi sought to take advantage of the assessee's distressed circumstances, and sought to pressurise the assessee to sell his rights for only Rs. 4 crores. In order to ward off such an offer and to get a better price, the assessee stated in a whatsapp message to Mr. Karimi that in fact he had paid Rs. 5 crores (as opposed to the Rs. 4.5 crores actually and duly paid). During the search one Mr. Karimi, the said whatsapp message was discovered. 6. It was further submitted that solely on the basis of the whatsapp message, ignoring the circumstances in which the message was sent, the AO has made addition of Rs. 50 lakhs in the assessee's hands. This act of AO clearly shows the misunderstanding of the whatsapp chat. It was further submitted that the whatsapp message dated 30-08-2021 which is the sole basis of the addition is sent to Mr. Karimi. The Ld.AR also submitted that it may be noted that Mr. Karimi is not the party to transaction in question and it is not even the Revenue’s case that any 5 ITA No. 922/Mum/2025 amount is paid to Mr. Karimi. The whatsapp message was merely a negotiation tactic intended to put off Mr. Karimi. The background of the chat has already been explained in the preceding paragraph. The Ld.AR further submitted that the assessee was desperately trying to recover his dues from the non-performing developer. Το achieve a fair exit price and to put off Mr. Karimi, who was forcing a distress sale at a reduced price of 24 crores, the assessee stated that he had paid 25 crores (24.50 crores actual investment plus 250 lakhs for notional holding costs and interest). This was a bargaining and not an admission of any unaccounted transaction or cash payment. The DRP's assertion that this was \"not borne out by facts and seems to just be an afterthought is incorrect, as the context of negotiations and the actual banking transactions support the assessee's explanation. In fact, the assessee's conduct is entirely in keeping with human probabilities and the Ld.DRP and Ld.AO have lost sight of the distress and trauma faced by the assessee in which background this communication was being made. It was also submitted that the actual party to the transaction (Mr. Bativala) has responded to notice u/s. 133(6) of the Act and confirmed the stand of the assessee. 7. It was further submitted that the AO in the present case has issued notice/summons u/s. 133(6) of the Act to Mr. Bativala, the actual party. Mr. Bativala has consistently and unequivocally denied receiving any cash payment. This denial was made both in response to the notice/summons issued u/s. 133(6) of the Act through Mr. Bativala's reply dated 18-03- 2024 and also separately in multiple independent correspondences, including email chats. There is no evidentiary trail, no withdrawal from the assessee's bank accounts, and no matching asset trail to support any such cash outflow. There is no material on record to suggest any adverse action in the hands of Mr. Bativala. It was submitted that the orders of the AO 6 ITA No. 922/Mum/2025 and DRP do not at all deal with or take into account Mr. Bativala's categorical statements, which are thus unchallenged. 8. As far as inapplicability of section 69A of the Act, the Ld.AR submitted that unrelated to the assessee; alleged Search Action was conducted on one, Mr Karimi has neither resulted in any cash, bullion or jewellery related to the assessee nor is the Department's case that there is/has been any recovery qua the assessee. It was submitted that there is no evidence of any cash transaction through books, accounts, or any third-party corroboration to support any cash payment. Section 69A which is relied on by the AO to make the addition is completely inapplicable. The section applies only when \"the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account\". There is no such finding whatsoever in the present case, and no money, bullion, jewellery or other article or this is at all found to be owned by the assessee. 9. Without prejudice to the above submissions, it was submitted by the Ld.AR that the property-in-question was proposed to be acquired in FY. 2011-12, and all payments related to the transaction fall in that financial year. Merely because there is a whatsapp communication in the previous year relevant to AY. 2022-23, that cannot be a reason to make any addition in AY. 2022-23. Even on the Department's own case, no payment or expenditure or investment is made in FY. 2021-22 relevant to AY. 2022- 23; and hence, in any case, there is no basis to make any addition in AY 2022-23. 10. It was further submitted that the AO’s assertion that no response was received from the assessee during the investigation is demonstrably false. 7 ITA No. 922/Mum/2025 It was submitted that a reply dated 22-04-2022 was dispatched by speed post and duly acknowledged on 27-04-2022. This was not considered in the DRP's order, vitiating the entire process. It was submitted that the assessee has always been prompt and diligent in dealing and responding to all matters related to his tax obligations. The Ld.AR finally submitted that in the light of the foregoing submissions, the assessee prays to delete the addition of Rs. 50,00,000/- made by the AO and confirmed by the DRP in its entirety and accordingly the present appeal of the assessee be allowed. 11. Per contra, the Ld.DR is heard, who has relied on the order passed by the AO. Further our reference was drawn to the findings of the DRP which are contained at paragraph No. 5.3.3. to 5.3.6 of its order, which read as under: “5.3.3 The arguments of the applicant assessee have been carefully considered by the Panel. The applicant assessee has accepted that the whatsapp message was sent to Sh. Salim Abbas Karimi by him only where this fact of having paid Rs. 50 lakh off books was stated. It is also a fact that Sh. Salim Abbas Karimi was no stranger to the assessee. Sh. Salim Abbas Karimi was a real estate developer and was in serious talks with the assessee for sale of the assessee's property in Bangalore. Thus, the facts contained in the whatsapp message do get duly corroborated by the circumstantial evidence of sale of property. The argument of the assessee that the whatsapp message was just a story which he created to extract a better price for his property is not borne out by facts and seems to just be an afterthought. 5.3.4 The Hon'ble Supreme Court in the case of Commissioner of Income- Tax vs. Durga Prasad More (214 ITR 801) held that human probability and circumstantial evidence has to be kept in mind to decide the genuineness of the transactions. The Hon'ble court observed that: Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal, Therefore the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law.\" 8 ITA No. 922/Mum/2025 5.3.5 The Hon'ble Supreme Court by placing reliance on its own judgment in the case of Durga Prasad More, observed the following in the case of Sumati Dayal vs. Commissioner of Income-Tax 1995 AIR 2109: \"As laid down by this Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities.\" 5.3.6 The Hon'ble Supreme Court has thus held that taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. Given the facts of the case and applying the test of human probabilities, the reasoning given by the assessee does not hold ground. The assessee has clearly admitted of having sent the whatsapp message. The message has been sent to a person with whom serious business of sale of property was being transacted. Now to say that the message contained just a story, is an afterthought only to come out of the difficult situation. The arguments of the applicant assessee thus cannot be accepted.” 12. We have heard the rival contentions and perused the material available on record. The Assessing officer has invoked the provisions of Section 69A of the Act while bringing to tax a sum of Rs 50,00,000/- in the hands of the assessee. The said provisions provide that where in any financial year, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or other valuable article is not recorded in the books of account, if any maintained by him for any source of income and the assessee offers no explanation about the nature and source of acquisition of money, bullion, jewellery or other valuable article or the explanation offered by him is not in the opinion of the AO satisfactory, then the money and the value of bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. Therefore, for the purposes of invocation of section 69A of the Act in the instant case, what is essential to determine is that during the financial year the assessee is found to be the 9 ITA No. 922/Mum/2025 owner of money and such money is not recorded in the books of Accounts, if any maintained by the assessee and only where the money so owned by the assessee and not recorded in the Books of Account, if any by the assessee, the explanation of the assessee has to be called and, thereafter, the reasonability of the explanation has to be examined and tested by the AO. The initial onus is therefore clearly on the AO to record a finding as to whether the assessee is found to be the owner of the money during the financial year relevant to the impugned assessment year and depending upon whether the assessee is maintaining books of accounts, such money is recorded in the books of accounts or not. 13. In the instant case, we find that there is no physical cash which has been found and the ownership of which, can be attributed to the assessee. There is no transaction related to deposits which has been found in the bank account of the assessee. There is also no documentary evidence which has been found during the course of search in case of Salim Abbas Karimi and others which demonstrates that the assessee is the owner of any money. What has been found during the course of search is a whatsapp message sent by the assessee to Mr. Karimi on 30/08/2021. The assessee has explained the context of sending that message to Mr. Karimi, a real estate developer, who wanted to acquire the property in respect of which the assessee had entered into an agreement dt. 1st July, 2011 with Mr. Zarir Bativala, the original developer/builder. The assessee has categorically stated that he has entered into an agreement for purchase of a flat on 1st July, 2011 with Mr. Zarir Bativala for a consideration of Rs. 4.75 crores and has paid a sum of Rs. 4.5 crores through the banking channels. Subsequently, due to delays and breaches by the builder, the assessee has entered into two MOUs to recover the said amount and even in those two MOUs, there is no mention of any cash 10 ITA No. 922/Mum/2025 payments made by the assessee to Mr. Zarir Bativala, the builder with whom the assessee has entered into an agreement for purchase of a flat. The assessee has further explained the context of sending the message to Mr Karimi stating that as he was trying to pressurize the assessee to sell the flat given the distress circumstances, he quoted a higher figure of Rs 5 crores, being 4.5 crores as per agreement and Rs 50 lacs off books. The assessee has placed on record the copy of the agreement dt. 1st July, 2011 for purchase of a flat at Bengaluru as well as subsequent MOUs dt. 1st December, 2020 and 20th April, 2023 and e-mail communication dt. 17- 04-2023/21-04-2023, wherein Mr. Zarir Bativala has confirmed that there were no cash transactions involved in purchase of the flat as per the agreement dt. 1st July, 2011. In fact, the AO has also issued a notice u/s. 133(6) of the Act to Mr. Zarir Bativala and he has confirmed the same to the AO vide his communication dt. 18-03-2024 that he has not received any cash payment from the assessee. None of these documents placed on record have been rebutted by the AO. 14. Further, we find that the AO has merely referred to the report of the Investigation Wing and has held that since the whatsapp message was sent on 30-08-2021 which falls during the financial year relevant to the impugned assessment year, the amount is liable to tax for the year under consideration. We find that even in the report of the Investigation Wing, there is a reference to the whatsapp message only and no other finding has been recorded either in terms of physical cash, deposits in the bank account or any other documentation which has been found and reported by the Investigation Wing and the AO was advised to identify the financial year in which transaction has taken place and identify the complete details of the immoveable property, the buyers and sellers involved in the deal and take action as per section 69A after necessary verification. The AO on his part thereafter has sought explanation from the assessee and has also 11 ITA No. 922/Mum/2025 sought information u/s 133(6) from the developer/seller and both the buyer and seller have denied any cash transaction involved in the transaction of immoveable property which happened in financial year 2011-12 and not during the financial year relevant to impugned assessment year. Therefore, merely the fact that whatapp message has been found as sent by the assessee on 30/08/2021 wherein there is mention of Rs 50 lacs off books, the same is not sufficient enough to discharge the initial onus cast on the AO to record a finding that the assessee is the owner of Rs 50 lacs and source thereof has remained unexplained and thus, the same can be brought to tax. 15. In our understanding, the findings of the AO are totally bereft of the legal provisions as what is important to determine is firstly, there has to be either physical cash/deposits to be found or material documentation which clearly demonstrate that the assessee is the owner of said money and has paid a sum of Rs. 50 lakhs in cash to Mr. Zarir Bativala. In the present case as we noted earlier, there is no iota of any evidence/documentation which demonstrate the assessee entered into any cash transaction in respect of purchase of immoveable property from Mr. Zarir Bativala. In fact there is a clear denial by Mr. Zarir Bativala and in spite of such denial, the AO without brining any further evidence on record has gone ahead and brought the amount to tax. The AO has not disputed the fact that the transaction happened towards purchase of property on 1st July, 2011. Even on that account, there is no basis for invocation of provisions of section 69A in the impugned assessment year 2022-23. 16. In light of the entirety of the facts and circumstances of the case, we are of the considered opinion that without bringing on record any material evidences to demonstrate that assessee is the owner of the amount of Rs. 50 lakhs, merely basis on whatsapp communication between the assessee 12 ITA No. 922/Mum/2025 and a third party, who is not a party to the original transaction, which was entered into way back in the year 2011, there is no basis to bring the amount to tax in the hands of the assessee. In the result, the addition so made is directed to be deleted. 17. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 30-06-2025 Sd/- Sd/- [SANDEEP SINGH KARHAIL] [VIKRAM SINGH YADAV] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 30-06-2025 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "