ACIT Vs Shanker Nebhumal Uttamchandani (ITAT Surat)
The case of ACIT Vs Shanker Nebhumal Uttamchandani, as decided by ITAT Surat, highlights the significance of concrete evidence in tax assessments, particularly regarding additions made based on digital device data. The Assessing Officer (AO) had made additions to the income of the assessee based on details found in the digital device during a search operation. However, the Tribunal observed that the AO solely relied on WhatsApp images without verifying the authenticity of the transactions depicted therein. In one instance, the AO added Rs. 5.31 lakhs as unexplained expenditure on furniture, solely based on a WhatsApp image, without confirming whether the furniture was actually purchased. Similarly, another addition of Rs. 3.00 lakhs under Section 69A of the Act, labeled as unexplained money, was made based on a digital image containing coded figures. However, the Tribunal noted that the AO failed to summon or record the statement of the sender mentioned in the image, Vijay Jain. The Tribunal concluded that such additions lacked substantiation and were made solely on presumption, without corroborative evidence.
Moreover, the Tribunal addressed an addition of Rs. 34.56 crores on account of unexplained money, based on a page found during the search. Despite the AO’s presumption regarding land transactions, the Tribunal found no concrete evidence linking the assessee to the transactions mentioned in the document. The Tribunal highlighted the absence of crucial details such as the location of the land or the parties involved in the transactions. Additionally, the document was not in the handwriting of the assessee or his family members, further weakening the basis for the addition. The Tribunal emphasized the need for corroborative evidence and dismissed the addition, considering the document as a “dump document” without substantial evidentiary value.
This case underscores the importance of thorough investigation and substantiated evidence in tax assessments, cautioning against additions solely based on digital device data or documents lacking verifiable details. It reaffirms the principle that assessments must be grounded in concrete evidence to uphold fairness and prevent arbitrary additions to the taxpayer’s income.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by the revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat (in short, the ld. CIT(A)] dated 23/08/2022 for the Assessment year (AY) 2020-21. In this appeal, the revenue has raised following grounds of appeal:
“(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.24,70,787/- (unexplained income of Rs.20,43,500/- + undisclosed interest – Rs.4,27,287/-) made by the Assessing Officer on account of unexplained money u/s. 69A of the I.T. Act, without appreciating the fact that the additions were made on the basis of incriminating documents extracted from the mobile phone of the assessee during the course of search proceedings and the assessee has failed to furnish any credible evidences or explanation in respect of the entries found therein.
(ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 17,02,40,000/- (Rs. 13,30,00,000/- unexplained money and Rs.3,72,40,000/- unexplained interest) made by the Assessing Officer u/s. 69A of the I. T. Act without appreciating the fact that the incriminating documents extracted from the mobile phone of Shri Naresh Agarwal during the course of search proceedings which clearly mentioned the name of the assessee in short S.N. and N for Shri Naresh Agarwal which showed that the assessee has advanced the loan and earned interest thereon.
(iii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,04,39,999/- made on account of unexplained investment u/s. 69B of the I. T. Act without appreciating the fact that the assessee failed to furnish the requisite documentary evidences before the AO and the ld. CIT(A) has not remanded the issue to the AO either u/s. 250(4) of the Act or as per the provisions of Rule 46A of the Income Tax Rules, 1962.
(iv) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.5,30,000/- made by the Assessing Officer u/s. 69C of the I. T. Act without appreciating the fact that the incriminating documents extracted from the mobile phone of the assessee during the course of search proceedings in the case of the assessee clearly show that the assessee has purchased furniture in cash.
(v) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.3,00,000/- u/s. 69A of the Act on account of unexplained money based on the image retrieved from the mobile of the assessee which was found & seized during the search proceedings, without appreciating the fact that the image pertained to closed packet which was from Raviraj Diamond, C/o Vijay Jain and the figures were mentioned on the packet.
(vi) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.34,56,00,000/- made on account of unexplained money u/s. 69A of the I.T. Act, without appreciating the fact that the incriminating documents found and seized from the office premises of Kuberji Corporate House, Begumpura, Surat clearly show that the land measuring and rate of land and total consideration of the land was mentioned on the seized document and that the assessee failed to furnish explanation to the same.
(vii) In addition and in alternate to grounds No. 1 to 6, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting all the additions made by the Assessing Officer, without appreciating the fact that the incriminating documents based on which additions were made, were found and seized from the mobile phone of the assessee during the course of search proceedings at his residence and the assessee has failed to furnish details/evidences to explain the entries found therein, and hence the AO was empowered to make presumption that the documents belongs to the assessee and contents therein are true and correct as per the provisions of Section 292C of the I.T. Act.
(viii) In addition and in alternate to grounds No. 1 to 7, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the additions made by the Assessing Officer ignoring the principles of “Human Probability Test” i.e. preponderance of probabilities which is applicable for Income Tax proceedings.
(ix) It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.
(x) The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.”
2. Brief facts leading to making of various additions are that in the search action, various incriminating material was found from the residence of assessee. The assessee filed his return of income for the A.Y. 2020-21 on 30/03/2021 declaring Nil income. The case of assessee was selected for scrutiny. A search action under Section 132 was carried out on Kuberji Group, Surat on 06/02/2020. The assessee is one of the partner in Kuberji Group, thus, the assessee was also covered in the search action. During the search action, various documents of incriminating nature was found and seized. Incriminating documents were also found in the form of digital images in the I-phone of assessee. The case of assessee was centralized under Section 127 of the Act. Assessment was completed under Section 143(3) of the Act on 30/03/2022. The Assessing Officer made total seven additions which includes five additions under Section 69A and one addition under Section 69B and other 69C of the Act on account of either unexplained income or investment or expenditure. On the basis of various images recovered from digital devices/images downloaded from I-phone or digital device. The Assessing Officer made following total addition of Rs. 52.95 crores;
