ACIT Vs Satyanarayan Jagannath Kabra (ITAT Ahmedabad)
Additions Based on Third-Party Ledger Deleted – Identity Not Proved & No Independent Enquiry – Revenue Appeal Dismissed; Reopening Upheld – ITAT Ahmedabad
The AO made additions of ₹8.05 Cr as alleged unaccounted cash receipts and ₹2.50 lakh as commission income based on a ledger found during survey in the case of M/s HJM Group, assuming that “Satubhai Kabra” mentioned therein referred to the assessee. CIT(A) deleted the additions holding that the AO failed to correlate the seized material with the assessee or establish any banking link or confirmation from the concerned parties.
ITAT upheld CIT(A)’s findings, observing that the additions were made merely on presumption without independent verification or evidence that the transactions belonged to the assessee. Since the AO could not prove that the coded name in the ledger referred to the assessee or that any such transactions existed in his bank accounts, deletion of additions was justified.
However, on the assessee’s cross-objection, ITAT held that reopening u/s 147 was valid because the AO had prima facie material leading to a bona fide belief of escapement of income. Accordingly, both Revenue’s appeal and assessee’s cross-objection were dismissed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
