Deepak Kakubhai Mehta Vs DCIT (ITAT Mumbai)
Section 153A Additions on Alleged Cash Loans & Notional Interest Quashed—No Incriminating Material, Statements Alone Insufficient
The Mumbai ITAT (D Bench) allowed the appeals of Deepak Kakubhai Mehta for AYs 2012-13 to 2018-19 and deleted massive additions made under sections 69, 56 and 69A, holding that the entire assessments suffered from fundamental jurisdictional and evidentiary defects.
The Tribunal held that:
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For completed/unabated assessment years (AYs 2012-13 to 2017-18), no incriminating material whatsoever was found during the search at the assessee’s premises. Hence, following Supreme Court in PCIT v. Abhisar Buildwell (P) Ltd., no additions could be made under section 153A.
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The AO relied entirely on documents and loose papers seized from third parties (Nilesh Bharani / Evergreen Enterprises) and on statements recorded under section 132(4), without invoking section 153C, which is statutorily mandatory for third-party material.
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Statements under section 132(4), without corroborative incriminating material, do not constitute incriminating material. Admissions, if any, were vague, unquantified, and later validly retracted, and the retractions were never rebutted by the Revenue.
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The alleged cash loans of ₹15.45 crore and notional interest of over ₹10.86 crore were based on presumptions and inferential workings, with no proof of cash flow, capacity, or actual lending by the assessee.
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Even on merits, additions under section 69 failed since no evidence established that the assessee made the alleged investments, and loose papers of third parties lack evidentiary value without corroboration.
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The addition of jewellery under section 69A (AY 2018-19) was also unsustainable, as explanations regarding family ownership, streedhan and gifts were plausible and not disproved.
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The Tribunal followed a series of coordinate bench decisions arising from the same search group, consistently deleting identical additions.
Outcome:
