DCIT Vs Bhola Nath Radha Krishan (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has dismissed an appeal filed by the Deputy Commissioner of Income Tax (DCIT) against M/s. Bhola Nath Radha Krishan for the assessment year 2008-09. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)], which had deleted a significant addition of Rs. 1,35,00,000/- made by the Assessing Officer (AO). This addition comprised Rs. 27,00,000/- as unaccounted profit and Rs. 1,08,00,000/- as unaccounted investment, allegedly discovered during a search and seizure operation. The ITAT’s ruling underscored the critical importance of corroborative evidence and adherence to principles of natural justice when relying on third-party seized documents.
Case Background: Search on Third Party and Alleged Unaccounted Payments
The genesis of the dispute lies in a search operation conducted at the premises of Shri Sohan Raj Mehta, who acted as a carry and forward (C&F) agent for the RMD Group of Pan Masala and Gutkha products. During this search, certain chits were recovered. The revenue interpreted these chits to indicate that Shri Sohan Raj Mehta had made cash payments totaling Rs. 9 crores to the assessee firm, M/s. Bhola Nath Radha Krishan, on behalf of the RMD Group.
