Rucha Consultancy LLP Vs DCIT (ITAT Mumbai)
Addition u/s. 69A based on third party statement without corroborative material liable to be deleted
ITAT Mumbai held that addition under section 69A of the Income Tax Act on the basis of a third party statement without bringing any corroborative material is liable to be deleted. Accordingly, addition deleted and appeal of assessee allowed.
Facts- The assessee is a limited liability partnership and it is engaged in the business of providing management consultancy services. A search and seizure action u/s. 132 of the Act was undertaken in the hands of the assessee and its group concerns on 23-09-2021. During the course of search operations, certain incriminating materials were found and statements were also recorded from the partner Shri Prashant Nilawar, its employees and other persons. However, the statements were retracted later and the said retractions were not accepted by the AO. Based on the materials and statements, the AO completed the assessment of the assessee for the year under consideration determining total income at Rs.47,75,54,040/-. The Ld CIT(A) granted partial relief and hence both the parties have filed these appeals.
Conclusion- Held that the AO has made this addition on the basis of whatsapp chat and also on the basis of statement given by Shri Shailendra Rathi. The Ld CIT(A) has noticed that the presumption of the assessing officer that Shri Shailendra Rathi is the consultant (employee) of the assessee is not correct. He has stated that Shri Shailendra Rathi is an independent consultant and not an employee. Hence the basis foundation on which the addition has been made by the AO fails here. Further, the Ld CIT(A) has stated that the whatsapp chat did not contain any reference to the assessee. The Ld CIT(A) has also stated that the Shri Shailendra Rathi also did not refer to the name of the assessee. Accordingly, he held that the whatsapp chat did not have any bearing in the hands of the assessee and hence no addition could be made. Thus, we notice that the AO has made the impugned addition on the basis of a third party statement without bringing any corroborative material to support of his view that the impugned amount of Rs.80 lakhs was received on behalf of the assessee. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the addition of Rs.80.00 lakhs. In the result, the appeal filed by the assessee is allowed and the appeal of the Revenue is dismissed.
