Shital Dhorda Vs ITO (ITAT Mumbai)
Conclusion: Addition made under Section 69A based only on statements and a pen drive that were never tested or corroborated was not justified as such evidence could not be treated as credible unless the taxpayer was confronted with it and given an opportunity to respond.
Held: Assessee, had purchased a residential flat along with three family members from Natraj Realtors. The property was registered during the assessment year 2012–13. The case was reopened by AO under Section 148 based on information received from a search conducted on the Kamala Group. It was alleged that Dhorda had paid Rs. 1.29 crore in cash over and above the registered value, as reflected in a pen drive found during the search. AO argued that the pen drive contained records of cash payments and that statements made under Section 132(4) by Kamala Group employees confirmed these transactions. They argued that she was never shown the pen drive, statements, or any related documents, nor was she given the opportunity to cross-examine the individuals whose statements were used against her. They also pointed out that she paid a higher-than-market rate for the flat and that no independent inquiry was conducted by AO. They challenged the reopening itself, arguing there was no valid “reason to believe” and that the proceedings were based entirely on unverified third-party information. It was held that as far as information claimed in pendrive was concerned, the same was not found from the possession of assessee but was found as per order of assessment, during search and seizure conducted in the case of third party therefore, in the absence of corroborative evidence to establish that the contents of pen drive were correct and authenticated to the extent assessee paid ‘on-money’ in cash. No addition could be made and even otherwise during the entire reassessment proceedings the veracity and reliability of the data recorded in the pen drive was not checked or tested. Tribunal held that additions based solely on third-party pen drive data and unverified statements, without confronting the taxpayer, are not legally sustainable.
