Rajeshkumar Rameshchandra Shah Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, has allowed the appeals of Rajeshkumar Rameshchandra Shah, a resident individual, for the assessment years 2013-14 to 2018-19. The consolidated ruling addressed the validity of additions made by the Assessing Officer (AO) for alleged unexplained cash loans and the notional interest derived from them. The court found that the additions were based on insufficient evidence and were therefore unsustainable.
Background of the Case
The case stems from a survey and search action conducted on the “Sunshine Group,” which included M/s. Sabari Developers, LLP, M/s. Evergreen Enterprises, and their associates. As a result of this action, the assessee, Rajeshkumar Shah, was also subjected to a search and seizure operation on October 7, 2017.
During the subsequent assessment proceedings under Section 153A, the AO informed the assessee that incriminating material (Annexure A-1 to A-117) was seized from the premises of Nilesh Shamji Bharani, a partner of M/s. Evergreen Enterprises. These materials were alleged to be related to undisclosed money lending activities.
The AO heavily relied on statements recorded under Section 132(4) from Nilesh Shamji Bharani and his employees, who reportedly admitted that the assessee had advanced cash loans to Bharani, who, in turn, lent it to others. The AO contended that code words in the seized documents, such as “A/76/R,” represented the assessee’s proprietary concern, Asha Consultancy. Based on this, the AO added the alleged cash loan amounts as unexplained investments under Section 69 and calculated notional interest on these loans at an estimated rate of 1.50%.
