Jayantilal Jesaram Purohit Vs DCIT (ITAT Mumbai)
153C Additions Based Only on Third-Party Pen-Drive and Statements Deleted for Want of Corroboration and Cross-Examination
In search-related assessments for AYs 2017-18 to 2019-20, additions under section 69 were made in the assessee’s hands based solely on an Excel file found in a pen drive seized from an employee of the Rubberwala group and statements of third-party persons alleging receipt of cash “on-money” for shop purchases. The assessee consistently denied paying any cash over and above the registered agreement value and pointed out that no incriminating document mentioning his name was ever found from his possession.
The Tribunal noted that the alleged electronic data was neither recovered from the assessee nor corroborated by any independent evidence linking the assessee to cash payments. Crucially, none of the seized material or full statements relied upon were confronted to the assessee, and no opportunity of cross-examination of the deponents was granted despite specific requests. This was held to be a fundamental breach of principles of natural justice.
Relying on a series of coordinate bench decisions on identical Rubberwala group facts, and Supreme Court rulings such as Andaman Timber Industries, the Tribunal held that third-party statements and unverified electronic data, without corroboration and without allowing cross-examination, cannot sustain an addition. Electronic evidence was also found inadmissible in the absence of compliance with section 65B of the Evidence Act.
Since the Assessing Officer failed to produce any credible, assessee-specific incriminating material and based the addition only on untested third-party evidence, the entire additions were directed to be deleted for all three years.
Accordingly, the assessee’s appeals for AYs 2017-18, 2018-19 and 2019-20 were allowed in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
