Chennamaneni Mithun Chand Vs ACIT (ITAT Hyderabad)
Hyderabad ITAT Quashes ₹287 Crore Addition u/s 56(2)(x) & Holds Assessment Time-Barred – Third Party Excel Sheets Alone Not Enough
In a significant ruling, the Hyderabad ITAT quashed the assessment itself as barred by limitation u/s 153, holding that the exclusion under Explanation-1 to section 153 is only for the actual period lost during the limitation period and cannot automatically extend the assessment by the full 180 days. Since the seized material was handed over on 11.05.2023, only 41 days falling within the limitation period could be excluded, making the assessment order dated 27.09.2024 invalid.
The Tribunal also made important observations on additions based on third-party seized digital material. The Revenue alleged that the assessee received ₹405 crore cash linked to a 60-acre Moosapet land deal based on entries found in an excel sheet recovered from Phoenix/Sreenidhi Group. However, the ITAT noted that the assessee was neither buyer nor seller in the land transaction and no independent corroborative evidence, unaccounted cash, asset, agreement or acknowledgment was found during the assessee’s own search.
The Tribunal further observed that the key witness, whose statement was relied upon by the department, had subsequently retracted the statement and, during cross-examination, denied making any cash payments to the assessee. It reiterated that presumptions u/s 132(4A) and 292C apply primarily against the person from whose possession documents are seized and that unilateral third-party entries without corroboration have weak evidentiary value.
The case is also notable for its discussion on electronic evidence, with the assessee arguing absence of proper certification u/s 65B of the Evidence Act for the excel sheet extracted from the pen drive.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
