Case Law Details
Addition made on the basis of a print out taken from the computer of a third party without there being no other corroborative evidence brought on record to prove the fact that the payment mentioned in the seized material was actually received by the assessee, not sustainable.
Recently, in ACIT vs. Katrina Rosemary Turcotte [ITA Nos. 3092/Mum./2015 to 3097/Mum./2015, decided on 11.10.2017], appeals by the Revenue were directed against separate orders passed by the CIT(Appeals), for the assessment years 2006–07, 2007–08, 2008–09, 2009–10, 2010–11 and 2011–12. In ITA no. 3092/Mum./2015, the Revenue had raised seven grounds. Ground no. 1, was against deletion of addition of Rs. 2,00,000 on account of undisclosed income arising out of appearance fee in ICC Awards function.
Briefly, a search and seizure operation was conducted in assessee’s case on 24.01.2011, under section 132 of the Income-tax Act, 1961 (for short “the Act”). In pursuance to the search and seizure operation, assessment proceedings were initiated by issuance of notice under section 153A of the Act. In response to the notice issued under section 153A of the Act, the assessee filed her return of income on 31.01.2012, declaring total income of Rs. 95,82,109. During the assessment proceedings, the Assessing Officer(AO) found that during the survey / search operation conducted at the premises of assessee’s manager Ms. Sandhya Ramchandra, and assessee’s agent Matrix India Entertainment Pvt. Ltd. (in short “Matrix”) print outs were taken from the computer back–up impounded and seized which were marked as “Annexure–A, B, C, D & E” and were provided to the assessee to reconcile with her books of account. The AO found that as per Annexure–B, there was a letter confirming appearance of the assessee as host of ICC Award in Sidney on 11.10.2005 and the fee collected to be paid to the assessee in cash was Rs.2,50,000 plus service tax. Alleging that the assessee had not submitted any comment in this regard, the AO treated 80% of the said amount worked out to Rs. 2,00,000 as income of the assessee. The assessee challenged the addition before the first appellate authority.
The CIT (A), after considering the submissions of the assessee and going through the materials on record including the comments of the AO in the remand report found that the document / letter on the basis of which addition of Rs. 2,00,000 was made was not found in the course of search on assessee but was found from the computer of Ms. Sandhya Ramchandra, who happened to be employee of Matrix. She also found that the so called document is nothing but a quotation of an assignment at Sidney for assessee as hostess prepared by the ex–employee of Matrix. From the verification of passport of the assessee, it was found that she did not attend the event at Sidney for which she was supposed to receive the appearance fee. Further, the CIT (A) also found that when the facts relating to receipt of fee of Rs.2,00,000 was confronted to the assessee, she flatly denied of having either hosted the event or received the amount in question. She also referred to the Affidavit filed on behalf of Matrix stating that they have not received any cash on behalf of the assessee. On the basis of aforesaid evidences, the CIT (A) deleted the addition.
The Departmental Representative(DR) submitted, documents found / seized during the search operation prima–facie indicate cash payment to assessee. Therefore, CIT (A) was not justified in deleting the addition.
The Authorized Representative(AR) strongly relying upon the observations of CIT (A) submitted that the document on the basis of which addition was made was not seized from the possession of the assessee but was found from a third party. He submitted, the passport of the assessee submitted before the Departmental Authorities clearly indicated that she had not undertaken any journey to Sidney to host the so called event. Further, AR submitted, Affidavit has been filed on behalf of Matrix denying cash payment to assessee. He, therefore submitted, in the absence of any corroborative evidence to indicate that assessee has received cash payment of Rs. 2,00,000 addition cannot be made. In support of such contention, AR relied upon the following decisions:–
i) Mehta Parekh & Co. vs. CIT, 30 ITR 181 (SC);
ii) CIT vs. Devesh Agarwal, 81 taxmann.com 257 (Bom.); and
iii) Common Cause vs. Union of India, 77 taxmann.com 245 (SC).
The ITAT Members heard rival contentions and perused the material available on record. On the basis of a print out taken from the computer back–up of Ms. Sandhya Ramchandra, it was concluded by the AO that the assessee had received an amount of Rs. 2,50,000 in cash for appearing as a host at an ICC event in Sidney. It was very much clear that apart from this document, there was no other evidence before the AO to indicate that the assessee has received cash amount in question. It was a fact that in course of search as well as post search proceedings, the assessee was confronted with seized material and the assessee categorically stated to have neither appeared as a host in the said event nor received any cash from Matrix. In fact, an Affidavit was also filed on behalf of Matrix categorically stating that no such cash payment of Rs.2,50,000 was made to the assessee. The addition was made on the basis of a print out taken from the computer of a third party who happened to be an employee of Matrix and there are no other corroborative evidence brought on record to prove the fact that the payment mentioned in the seized material was actually received by the assessee. On the contrary, the passport submitted by the assessee clearly established the fact that neither she had traveled to Sidney in relevant period nor hosted the ICC event for which she was supposed to receive cash payment. It was further relevant to observe, even Ms. Sandhya Ramchandra, from whose computer such print out was taken had stated before the Departmental Authorities that she was not aware of the fact mentioned in the said Annexure as it was for a period prior to her appointment in Matrix. In these circumstances, simply relying upon a untested / unverified document and without any other corroborative evidence to demonstrate that the assessee has actually received cash payment of Rs. 2,50,000 for hosting an event in Sidney, the addition was unsustainable. The learned Members of the ITAT, Mumbai upheld the order of CIT (A) on this issue by dismissing the ground raised.
