2020 (10) TMI 361 - AT - Income Tax

Cash payment for purchase of shop - material retrieved from the hard disk found at the time of search in the case of AEZ group - HELD THAT - No distinguishing feature in the facts of the present case and that of Subhash Khattar/Deepak Gupta 2017 (7) TMI 1091 - DELHI HIGH COURT has been pointed out by the Revenue. Further it has also not brought on record any material to show that the decisions of the co-ordinate bench of the Tribunal in the case of Subhash Khattar/Deepak Gupta 2017 (7) TMI 1091 - DELHI HIGH COURT has been set-aside/stayed or over ruled by higher judicial forum. We therefore following the order of the co-ordinate bench in the case of Deepak Gupta 2019 (1) TMI 1812 - ITAT DELHI and for similar reasons hold that the Revenue was not justified in making the addition. - Appeal of assessee is allowed.

Issues Involved:
1. Validity of reassessment proceedings under Section 147 of the Income Tax Act.
2. Justification for addition of ?56,27,160/- based on a document seized from a third party.
3. Independent inquiry or verification by the Assessing Officer before issuing notice under Section 148.
4. Corroboration of the contents of a hard disk seized from a third party.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings under Section 147:
The assessee argued that the reassessment proceedings initiated under Section 147 were unjustified as they were based on a document seized from a third party. The assessee contended that the provisions of Section 153C were applicable instead of Section 147. The Tribunal agreed with the assessee, referencing similar cases where reassessment proceedings were deemed invalid in the absence of incriminating material found at the assessee's premises.

2. Justification for Addition of ?56,27,160/-:
The core issue was the addition of ?56,27,160/- based on a hard disk seized during a search at the premises of AEZ (AERENS GROUP). The Assessing Officer had concluded that the assessee made cash payments for the purchase of a property, which were not disclosed in the return of income. The Tribunal found that similar additions in other cases, such as Subhash Khattar and Deepak Gupta, were deleted due to lack of corroborative evidence. The Tribunal emphasized that a significant addition cannot be made based on unauthenticated documents without supporting evidence.

3. Independent Inquiry or Verification by the Assessing Officer:
The assessee contended that the Assessing Officer issued the notice under Section 148 based solely on information received from the Investigation Department without conducting an independent inquiry or verification. The Tribunal noted that the Assessing Officer failed to substantiate the contents of the hard disk with independent evidence, thus making the addition unjustified.

4. Corroboration of Contents of Hard Disk Seized from Third Party:
The Tribunal highlighted that the Assessing Officer relied on an unauthenticated hard disk found during a search at AEZ Group's premises. The Tribunal referenced the case of Subhash Khattar, where it was held that additions could not be made based on documents found at a third party's premises without corroborative evidence. The Tribunal reiterated that the absence of independent material supporting the addition rendered it invalid.

Conclusion:
The Tribunal, following the decisions in similar cases, concluded that the addition of ?56,27,160/- was unjustified due to the lack of corroborative evidence and the improper assumption of jurisdiction under Section 147. The appeal of the assessee was allowed, and the addition was deleted. The Tribunal emphasized the necessity of independent verification and corroborative evidence for such significant additions.

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