DCIT Vs. Naresh Harkaram Choudhary (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal, Mumbai Bench, disposed of four appeals concerning Assessment Years 2018-19, 2019-20 and 2021-22 arising from the same coordinated search action. Three appeals were filed by the Revenue and one by the assessee, Naresh Harkaram Choudhary. The Tribunal rejected the assessee’s jurisdictional objection under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, but held that alleged on-money relating to shops standing in the names of other identifiable purchasers could not automatically be assessed in the assessee’s hands.
The assessee was engaged in trading mobile phones and accessories under M/s Gopal Telecom and was associated with the trade name “Bhajwad”. A search under section 153A was conducted as part of a coordinated search involving the Rubberwala group and persons connected with the Bhajwad group. During the search at the residence of Shri Imran Ashfaque Ansari, an Executive Assistant connected with the Rubberwala group and handling sales of Platinum Mall, a pen drive containing an Excel file titled “consolidated 1 2 3 balance” was seized. Its “Master” sheet contained details of 24 shops, including agreement-holders, agreement values and alleged cash components.
The Assessing Officer attributed aggregate alleged cash payments of ₹6,06,34,000 to the assessee and made additions of ₹1.19 crore for A.Y. 2018-19, ₹3.96 crore for A.Y. 2019-20 and ₹31.34 lakh for A.Y. 2021-22 under section 69. The CIT(A), following the coordinate Bench decision in DCIT v. Rajesh Mafatlal Jain, deleted the additions on the reasoning that the shops stood in the names of different identifiable purchasers and there was no sufficient evidence that the assessee had actually funded the purchases made by others.
