Smt. Jyoti Vs AO (ITAT Chandigarh)
The Chandigarh Bench (SMC) of the ITAT granted substantial relief to the assessee by deleting additions of alleged “on-money” payments made for purchase of a flat, which were based solely on search material found during a third-party search on a real-estate developer (Homeland Group).
The Assessing Officer alleged that the assessee had paid consideration over and above the registered sale deed value, relying on retrieved laptop data and statements of a former employee (CRM) of the builder. The Tribunal held that such material, without independent corroboration, could not justify additions. Crucially, the Revenue failed to:
- supply copies of the alleged incriminating material to the assessee,
- establish any direct nexus between the assessee and the alleged cash payments, and
- allow cross-examination of the concerned third party, in violation of principles of natural justice.
Following its own earlier decision in the case of another similarly placed buyer in the same project, the ITAT held that bald allegations, appraisal reports, or unverified digital entries of a third person cannot substitute legal evidence. Accordingly, the additions of ₹27.50 lakh (AY 2016-17) and ₹28.50 lakh (AY 2020-21) were deleted.
However, on the procedural issue, the Tribunal upheld the validity of reopening under section 147 for AY 2016-17, holding that information from the Investigation Wing was sufficient to form a prima facie belief of escapement of income, even though the additions ultimately failed on merits.
As a result, the appeal for AY 2016-17 was partly allowed (quantum relief granted, reopening upheld), while the appeal for AY 2020-21 was fully allowed.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
