Case Law Details
Principal Commissioner Of Income Tax Central Vs Kaushik Nanubhai Majithia (Gujarat High Court)
In a recent verdict, the Gujarat High Court delivered a significant decision regarding the use of unsigned documents as evidence in Income Tax proceedings under Section 153C of the Income Tax Act, 1961. The case, Principal Commissioner Of Income Tax Central Vs Kaushik Nanubhai Majithia, centered on the reliability of an excel sheet found during a search operation.
The crux of the matter revolved around an excel sheet discovered in the premises of Navratna Organizers and Developers Private Limited, implicating the respondent-assessee, Mr. Kaushik Nanubhai Majithia. The Revenue argued that this document, detailing payments purportedly made by Mr. Majithia to the developer, constituted sufficient grounds for initiating proceedings against him.
However, both the Commissioner of Income Tax (Appeals) (CITA) and the Income Tax Appellate Tribunal (ITAT) found the document lacking in credibility. They highlighted that the excel sheet, crucial to the case, was unsigned and lacked corroboration from any other source. Despite claims that the developer had paid taxes on the amounts listed, there was no definitive proof that these payments were actually made by Mr. Majithia.
The High Court upheld these findings, emphasizing that the absence of corroborative evidence and the unsigned nature of the document rendered it inadequate to support legal action under Section 153C of the Income Tax Act. The court further criticized the Assessing Officer for not providing crucial statements recorded during the search to Mr. Majithia, thereby violating procedural fairness.
In conclusion, the Gujarat High Court’s ruling reinforces the principle that unsubstantiated documents, especially those lacking signatures and corroboration, cannot form the sole basis for initiating tax proceedings against an assessee.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Having noted the findings of the facts returned by the Commissioner of Income Tax (Appeals) (‘CITA’, in brief) and the Income Tax Appellate Tribunal (‘ITAT’, herein after), we may record that, essentially, the proceedings under Section 153C of the Income Tax Act, 1961 (in short, ‘IT Act of 1961’) were initiated against the Respondent- assessee on the basis of an excel sheet found from the computer of a person, associated with the Company, namely Navratna Organizers and Developers Private Limited (in short as ‘the Developer’), in the premises of whom the search was conducted.
2. The excel sheet, according to the learned Counsel for the Revenue, contained the details of payment made by the assessee to the developer, with respect to which tax had been paid by the developer before the Settlement Commissioner. The findings returned by the CITA and ITAT on the issue is sought to be assailed on the ground that the payment of tax by the developer, in whose premises search was conducted, before the Settlement Commissioner, with respect to the amount entered in the excel sheet found from the possession of the assistant working with the developer, is sufficient proof of the transaction between the assessee and the developer.
3. We find inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated.
4. Learned Counsel for the petitioner could not successfully demolish the facts, which are recorded concurrently by the CITA and ITAT.
5. No question of law much less any substantial question of law arises to entertain this appeal. The same is accordingly, dismissed.
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