Bharat Surendra Pandya Vs DCIT (ITAT Mumbai)
Mumbai ITAT Deletes ₹1.62 Crore Addition U/s 69A as AO Relied Solely on Investigation Report Without Independent Inquiry
The Mumbai ITAT partly allowed the assessee’s appeal and directed deletion of the addition of ₹1,62,30,000 made under Section 69A of the Income-tax Act. The reassessment was reopened under Section 148 based on information from the Investigation Wing alleging commodity transactions resulting in escapement of income. The assessee consistently denied receiving ₹1,62,30,000, submitted bank statements showing only ₹10,95,619 as profit from commodity trading, and furnished affidavits before both the Assessing Officer and the CIT(A). The Tribunal observed that the Assessing Officer made the addition solely on the basis of the Investigation Wing’s report and the non-response to notices issued under Section 133(6), without conducting any independent inquiry despite the assessee’s denial and supporting bank records. It held that the assessee’s contentions were brushed aside without inquiry and, in the facts and circumstances of the case, the addition could not be sustained. Accordingly, the Tribunal directed deletion of the ₹1,62,30,000 addition under Section 69A, allowed Ground No. 1, left the remaining grounds open, and partly allowed the appeal.
The Mumbai ITAT partly allowed the assessee’s appeal by deleting an addition of ₹1.62 crore made u/s 69A, holding that the AO had merely relied on information received from the Investigation Wing without conducting any independent verification. The reassessment had been initiated on the allegation that the assessee had undertaken commodity transactions through a broker resulting in sale proceeds of ₹1.62 crore. However, the assessee consistently maintained that he had earned only ₹10.95 lakh from commodity trading, filed affidavits denying receipt of the alleged amount, and produced bank statements demonstrating that no such credits had ever been received.
The Tribunal observed that despite the assessee’s repeated denial and documentary evidence, the AO proceeded to tax the entire alleged sale consideration of ₹1.62 crore solely on the basis of the Investigation Wing’s report. The non-response to notices issued u/s 133(6) by the broker and the commodity exchange could not substitute an independent inquiry by the AO, particularly when the assessee had produced evidence contradicting the information relied upon by the Department. The Tribunal held that the assessee’s contentions and supporting bank statements were brushed aside without any meaningful investigation.
Holding that such an addition could not be sustained in the absence of any independent verification or evidence establishing that the assessee was the owner of the alleged money, the ITAT directed the AO to delete the addition of ₹1.62 crore made u/s 69A. Since the appeal was allowed on merits, the Tribunal left the other grounds, including the challenge to the validity of the reassessment, open without adjudication.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
