Dhaval Patel Vs ACIT (ITAT Ahmedabad)
ITAT Deletes Search-Based Additions Because Mobile Images Lacked Corroborative Evidence; Brokerage Income Restricted to 2% Because Entire Real Estate Transactions Could Not Be Taxed Again; Proposed Land Deal Cannot Trigger Tax Addition Because Transaction Never Materialised; Uncorroborated WhatsApp Messages on Cash Payments Insufficient for Search Assessment Additions: ITAT.
The ITAT Ahmedabad decided cross appeals filed by the assessee and the Revenue against a common appellate order relating to Assessment Years 2018-19 and 2019-20. The proceedings arose from a search conducted on the Riddhi Siddhi Group on 01.02.2019, during which the assessee was found to be closely associated with the group. The Revenue alleged that the assessee handled unaccounted cash transactions of the group and relied on material recovered from his mobile phone.
For Assessment Year 2018-19, the Tribunal upheld the deletion of an addition of Rs.48 lakh made under Section 68 based on images of promissory notes. It observed that the documents were incomplete, did not identify lenders, lacked execution details, and were unsupported by evidence of actual receipt of funds. The Tribunal held that additions cannot rest merely on suspicion, assumptions, or incomplete documents.
With regard to the alleged investment of Rs.1 crore in a land transaction, the Tribunal noted that the assessee was neither the purchaser nor seller of the property. Government records showed that the land remained under litigation and the proposed transaction had never materialised. Since there was no evidence that the assessee had made the alleged investment, the addition of Rs.1 crore was deleted. The Tribunal also deleted the brokerage addition of Rs.5 lakh sustained by the CIT(A), holding that when the underlying transaction itself had not materialised, brokerage income could not be presumed.
