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2022 (10) TMI 156 - AT - Income TaxUnexplained investment on the basis of search report in the case of AEZ group - Reliance on loose sheets - HELD THAT - Department could not produce any corroborative evidence to show that the assessee had in fact made investment in the concerns of AEZ group. The evidences furnished by the assessee in the form of confirmation from the concerns of AEZ group that the assessee nor his family members never made any investment by paying cash or cheque were not at all examined by the Assessing Officer in spite of the assessee stating that no such investment had been made by the assessee. The only basis for making addition under section 69 of the Act in the hands of the assessee is the loose sheets said to have been seized in AEZ group. This alone cannot be the basis for treating such alleged investment as un-explained by the assessee especially when the assessee furnished evidences to show that he has never made such investment in group concerns of AEZ group. Thus we hold that the Assessing Officer erred in treating sum as un-explained investment in the hands of the assessee. The ground raised by the assessee is allowed.
Issues Involved:
1. Validity of re-opening of assessment under section 148 of the Income Tax Act, 1961. 2. Addition of Rs.20,00,000/- as unexplained investment under section 69 of the Act. 3. Reliance on the Investigation Wing's report without independent verification. 4. Treatment of loose sheets as evidence of investment. Issue-wise Detailed Analysis: 1. Validity of Re-opening of Assessment under Section 148 of the Income Tax Act, 1961: The assessment was re-opened based on information from the Investigation Wing that the assessee had invested Rs.40,00,000/- in commercial property, with Rs.20,00,000/- paid in cash. The assessee filed a return in response to the notice under section 148. The re-opening was challenged on the grounds that the assessee did not purchase any property, and there was no corroborative evidence to support the claim. 2. Addition of Rs.20,00,000/- as Unexplained Investment under Section 69 of the Act: The Assessing Officer (AO) treated Rs.20,00,000/- as unexplained investment based on loose papers seized from AEZ group, reflecting the assessee's name as an investor. The AO concluded the investment was made in cash, despite the assessee's denial and lack of documentary evidence. The CIT (Appeals) upheld this addition, noting that other investors had accepted similar investments. 3. Reliance on the Investigation Wing's Report without Independent Verification: The assessee argued that the AO relied solely on the Investigation Wing's report without conducting any independent enquiry. The AO did not verify the submissions, bank statements, or confirmations provided by the assessee, which showed no such investment. The CIT (Appeals) also relied on the Investigation Wing's material without further verification. 4. Treatment of Loose Sheets as Evidence of Investment: The loose sheets seized from AEZ group's premises were the primary basis for the addition. The assessee contended that these sheets were not sufficient evidence, especially when the alleged recipient of the cash (M/s. Celebration City Projects Pvt. Ltd.) confirmed no such transaction occurred. The Tribunal noted that the AO did not have the seized material during the assessment and relied on assumptions without corroborative evidence. Judgment: The Tribunal found that the AO erred in making the addition solely based on the Investigation Wing's report and loose sheets without independent verification or corroborative evidence. The Tribunal referenced the case of Subhash Sushila Lakhotia Trust vs. ACIT, where similar additions were deleted due to lack of corroborative evidence. The Tribunal held that the assessee's confirmations and bank statements, which were not rebutted by the Revenue, should have been considered. Consequently, the addition of Rs.20,00,000/- as unexplained investment was deleted, and the appeal was allowed. Conclusion: The Tribunal allowed the appeal, emphasizing the need for corroborative evidence and independent verification by the AO. The reliance on the Investigation Wing's report and loose sheets without further enquiry was deemed insufficient to sustain the addition under section 69 of the Act.
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