Jiten Basantilal Jain Vs ITO (ITAT Ahmedabad)
Third-Party ERP Entries Alone Cannot Justify Section 69 Addition: ITAT Deletes Jewellery Purchase Addition
The Ahmedabad ITAT deleted addition of ₹16.05 lakh made under Section 69 against a jewellery trader, holding that uncorroborated entries found in third-party ERP software during search on another group cannot, by themselves, establish unexplained investments or purchases.
The assessee, proprietor of M/s Mahalaxmi Jewellers, had filed return under presumptive taxation scheme of Section 44AD. During search proceedings on the Tirth Gold group, certain alleged unaccounted transactions were found recorded in AUG-ERP software maintained by the searched entities. Based solely on such third-party digital data and statements recorded during search, the Assessing Officer alleged that the assessee had made unaccounted purchases from Tirth Gold and its sister concerns and accordingly made addition under Section 69 read with Section 115BBE.
Before the Tribunal, the assessee consistently denied having any transactions with Tirth Gold and produced declaration from Tirth Gold itself confirming absence of any sales to the assessee during the relevant year. GST registration details, ledger accounts and bank statements were also furnished. The assessee further argued that being covered under Section 44AD, maintenance of detailed books under Section 44AA was not mandatory.
The ITAT observed that the Revenue failed to bring any corroborative evidence such as invoices, payment proofs, independent enquiry results or bank trail linking the assessee with the alleged transactions. The Tribunal also noted that statements relied upon by the AO did not specifically implicate the assessee and effective cross-examination opportunity was not provided.
Holding that the authorities had mechanically relied upon third-party software data while overlooking documentary evidence produced by the assessee, the Tribunal concluded that suspicion and borrowed information alone cannot sustain addition under Section 69. Accordingly, the entire addition was deleted.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
