Rohit Gandhi Vs ITO (Delhi High Court)
Delhi High Court held that the Income Tax Assessments must be based on cogent evidence rather than assumptions.
Overview of the case: The Delhi High Court set aside the addition of ₹58,00,100 to the assessee’s income, which was made on account of alleged undisclosed investment in artworks. The Court held that the assessee had duly discharged the burden of proof by establishing the identity and creditworthiness of the donors, as well as the genuineness of the gifts received.
It was observed that the addition was based on arbitrary valuation and unsupported assumptions, without any independent or expert evidence. The Court reiterated that income tax assessments must be based on credible material and not on mere suspicion or conjecture.
Accordingly, the appeal was allowed in favour of the assessee.
Background of the case: Mr. Rohit Gandhi, an individual assessee, is the director of M/s Cue Apperal pvt. Ltd. and partner in R&R Arts. A search under sec 132 of the Income Tax Act ,1961 was conducted at the Assessee’s premises. who declared an income of Rs. 18,40,524 in his return of income filed under Section 139 of the Act. The Assessing Officer (AO) assessed his income under sec 143(3), determining the total income of Rs. 1,44,62,994, and adding Rs. 1 crore as undisclosed investment in artwork found during the search. Assessee claimed that he had received all these artwork by way of gifts and he also produced letter of confirmation from the respective artists.
