Darius Sam Motashaw Vs ACIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, has allowed an appeal by Darius Sam Motashaw, deleting an addition of Rs. 2,85,600 made by the Assessing Officer (AO) as an unexplained cash credit under Section 68 of the Income Tax Act, 1961. The dispute arose for the assessment year 2011-12 after the National Faceless Appeal Centre, Delhi, had upheld the AO’s addition.
The case centered on a transaction where Motashaw received Rs. 2,85,600 from his broker, M/s. Sykes and Ray Equities, through a banking channel on November 24, 2010. The assessee argued that he had regular dealings with the broker and had previously transferred a total of Rs. 21,27,595 to the same entity. To substantiate his claim, Motashaw provided his bank statement and the broker’s ledger, which showed the transaction.
However, the revenue authorities rejected these documents, arguing they were not signed or authenticated. They concluded that the assessee failed to prove the source of the funds and, therefore, the amount was rightly added as an unexplained cash credit. The Income Tax Department’s counsel relied on the lower authorities’ orders, maintaining that the addition was justified.
After reviewing the facts and hearing both sides, the ITAT found the revenue authorities’ approach to be flawed. The tribunal emphasized that the AO’s role is not just to adjudicate but also to investigate. The tribunal criticized the AO for not verifying the documents submitted by the assessee or issuing summons to the broker to confirm the transaction. The court found it strange that the AO made an addition based solely on the documents not being signed without performing any independent verification.
