Case Law Details
PCIT Vs Pukhraj Soni (Madhya Pradesh High Court)
The case of PCIT vs Pukhraj Soni, heard in the Madhya Pradesh High Court, revolves around the appeal filed by the Principal Commissioner of Income Tax-I, Indore. The appeal challenges the order dated 21.9.2016 passed in Income Tax Appellate Tribunal in I.T.A. No.585/Ind/2015 for the assessment year 2009-10.
Background: The respondent-assessee, Mr. Pukhraj Soni, filed his return of income for the assessment year 2009-10 on 29.9.2009, declaring a total income of Rs.2,05,230/-. Subsequently, a search operation was conducted by the Investigation Wing, Indore of the Income Tax Department on the Satellite Group of companies, leading to the recovery of incriminating documents from M/s. Phoenix Devcons Pvt. Ltd. Among these documents was a diary containing an entry regarding an amount given to Mr. Pukhraj Soni. This prompted the issuance of a notice under Section 148, reopening the case on the grounds of income escapement amounting to Rs.2,50,00,000.00 and interest thereon totaling Rs.9,37,500/-. The Assessing Officer concluded the assessment, leading to an appeal before the Commissioner of Income Tax (Appeal). The appeal, challenging the assessment under Section 148, was allowed by an order dated 27.4.2015.
Appeal to Income Tax Appellate Tribunal: The department, dissatisfied with the Commissioner’s decision, appealed to the Income Tax Appellate Tribunal, Indore Bench. The Tribunal, in its order, emphasized the lack of evidence linking Mr. Pukhraj Soni to the alleged transactions, stating that no search was conducted at his premises, and no incriminating loose papers or documents were found or seized. The Tribunal, drawing support from legal precedents, highlighted the absence of concrete evidence supporting the AO’s conclusion that Mr. Pukhraj Soni had advanced money. It emphasized the need for more than mere suspicion to support an assessment, citing relevant cases such as Dhakeshwari Cotton Mill Pvt. Ltd. Vs. CIT, K. P. Varghese Vs. ITO, and ACIT Vs. Lata Mangeshkar.
Judgment of the Tribunal: The Tribunal, echoing the Commissioner’s decision, found that the AO’s addition to the income based on notings found in the books of a third party was unjustified. The judgment referred to the principles laid down in Central Bureau of Investigation Versus V. C. Shukla and others, emphasizing the importance of admissibility of entries in books of account and the need for independent evidence to support them. The Tribunal concluded that the AO’s reliance on loose papers and notings from a third party lacked the necessary corroboration and concrete evidence.
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