2023 (4) TMI 845 - AT - Income Tax

Unexplained cash Payment - search action u/s. 132 - name of assessee appeared in some document found during the search action in the case of third party Ameya Group - HELD THAT - It is not clear from the documents on record that as to whether the name of Smt. Neelam Sankhe mentioned in the documents seized from Ameya Group is that of the assessee or any other person with a similar name. The assessee has throughout denied having any transaction with Ameya Group. Assessee emphatically denied to have received any amount from Ameya Group. Except for the name there is nothing on record to link the assessee with the documents found during the course of search. There is no reference to any statement, if any, recorded during the search explaining the reason of assessee s name in the documents seized during the course of search. The purpose for making cash payment to assessee is also not comprehensible. Addition cannot be made in the hands of assessee only for the reason that the name of the assessee appears in the documents found during the search in case of third party. The identity of the person has to be established and the reason for making such payment has to be linked. In the instant case live reason for the cash payment to the assessee by Ameya Group is absent. No reason to sustain the addition. Ergo, impugned orders are set-aside and appeal of the assessee are allowed.

Summary

Issues involved:
The judgment involves appeals against the orders of the Commissioner of Income Tax for the assessment years 2013-14 and 2014-15. The main issue revolves around the addition of cash amounts in the assessments due to the name of the assessee appearing in documents seized during a search action in the case of a third party.

Summary:

Issue 1: Notice and Non-Appearance of Assessee
The notice of hearing was duly served on the assessee, who initially sought an adjournment but then failed to appear for the hearing. As the assessee did not contest the appeal, the hearing proceeded with the Departmental Representative and examination of the available material on record.

Issue 2: Addition of Cash Amounts
The assessment for the assessee, a salaried employee, was reopened after a search in the case of a different group. Documents seized during this search indicated cash payments to a person with a similar name to the assessee. The Assessing Officer made additions to the assessee's income for both relevant years based solely on the appearance of the name in the seized documents.

Issue 3: Appeal and Denial of Transactions
The assessee denied any transactions with the group in question, suggesting potential fraudulent use of their PAN. Despite the assessee's denial and lack of concrete evidence linking the cash payments to the assessee, the CIT(A) upheld the additions to the income for both assessment years.

Judgment:
After considering the submissions and examining the orders below, the Tribunal found that the mere appearance of the assessee's name in the documents was insufficient to justify the additions. The lack of further corroboration, unclear identity matching, and absence of a clear reason for the cash payments led the Tribunal to set aside the impugned orders and allow the appeals for both assessment years.

Conclusion:
The Tribunal allowed the appeals by the assessee, emphasizing the necessity of establishing the identity of the person and the reason for cash payments before making additions to income based on document references alone.