ITO Vs Gagnish Arora (ITAT Delhi)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting an addition of ₹2,71,27,420 made under Section 69 of the Income-tax Act, 1961. The assessment arose from proceedings initiated under Section 147 read with Section 144B for AY 2014-15 following a notice issued under Section 148. The Assessing Officer (AO) reopened the assessment after a search conducted under Section 132 in the Alchemist Group allegedly revealed documents recording cash payments made by the assessee for the purchase of land in Jaipur and Tonk districts of Rajasthan. Based on documents contained in a folder titled “Data from Gagnish,” the AO concluded that the assessee had made cash payments aggregating to ₹2,71,27,420 and treated the amount as unexplained investment under Section 69.
Before the CIT(A), the assessee contended that he was only a salaried employee of Alchemist Infra Realty Limited and had acted solely as a representative of the company in relation to the land transactions. He denied having purchased any property in his individual capacity or having made any personal cash payments. The assessee also pointed out that the broker’s name had been incorrectly recorded by the AO and submitted that the transactions related to the employer company. The CIT(A) observed that the AO had relied only on information received from the Investigation Wing and had neither supplied the relevant documents to the assessee nor identified the properties allegedly purchased. The appellate authority further noted that the assessment order did not establish that the entire amount pertained to the relevant assessment year and held that the AO had failed to produce concrete evidence linking the alleged investments to the assessee. Since the ownership of the alleged properties remained unsubstantiated and the AO had failed to discharge the burden of proving unexplained investment, the addition under Section 69 was deleted.
