Jagmohan Singh Bedi Vs ITO (ITAT Delhi)
The Assessing Officer made an addition of ₹59.18 crore under section 69A in the hands of the assessee, alleging that amounts received from hundreds of investors in the name of a real estate group company (M/s IFAMA Builders & Developers Pvt. Ltd.) represented unexplained money of the assessee. The same addition was made protectively for AYs 2015-16 and 2016-17 and substantively for AY 2017-18, effectively taxing the same alleged amount across multiple years.
The assessee contended that he was merely a low-paid employee of the group and was fraudulently shown as a manager/director on record without any control over or benefit from the company’s funds. All alleged receipts were in the company’s business and bank accounts, and no money was ever found in his possession nor any unexplained asset or bank transaction was identified in his personal hands.
The Tribunal held that even if investor monies were received by the company, such receipts could at best be examined in the hands of the company and not in the personal hands of its director/employee. Merely being a director does not make company receipts the individual’s unexplained money under section 69A, which requires the assessee to be found owner or possessor of such money. As there was no material showing that the assessee personally received, held, or owned the alleged funds, the addition was unsustainable.
Accordingly, the substantive addition of ₹59.18 crore for AY 2017-18 was deleted. Consequentially, the protective additions for AYs 2015-16 and 2016-17 also failed and were deleted. The Tribunal thus prevented double/multiple taxation of the same alleged receipts and clarified that company funds cannot be assessed as personal unexplained income of a director in absence of evidence of personal ownership or receipt.
FULL TEXT OF THE ORDER OF ITAT DELHI
