The Chennai Bench of the Income Tax Appellate Tribunal ( ITAT ) upheld the deletion of additions made by the Assessing Officer ( AO ), based on a non-editable mobile phone image allegedly showing higher sale consideration for certain properties citing the absence of corroborative evidence.
Chandrasekaran Joseph Vijay, the assessee was subjected to a search operation on February 5, 2020, which led to the seizure of an image extracted from his mobile phone. This image allegedly non-editable contained details of properties and associated investment amounts forming the basis for the AO’s additions as unexplained investments.
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The AO stated that the amounts recorded in the image exceeded those in the registered sale deeds for several properties. The AO added the differences as unexplained investments for assessment years 2014-15 to 2017-18, arguing that the amounts represented actual consideration paid.
The assessee argued that the amounts in the seized image were only offered prices during negotiations and did not reflect actual transaction values. The assessee submitted confirmations from sellers attesting that transactions were conducted at the amounts stated in the registered deeds. The AO dismissed these confirmations as dubious without conducting any further verification.
The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the additions, holding that the seized material was secondary evidence that lacked corroboration and was insufficient to justify the additions.
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On appeal before the ITAT, the two-member bench comprising Aby T. Varkey ( Judicial Member ) and Manoj Kumar Aggarwal ( Accountant Member ) observed that the AO failed to dislodge the assessee’s explanation or rebut the confirmations provided by the sellers. It observed that the additions were based on mere suspicion and lacked substantive evidence.
The tribunal ruled that the initial burden of proof, discharged by the assessee through plausible explanations and seller confirmations was not effectively countered by the AO. The tribunal held that additions under Section 69 of the Income Tax Act, 1961, require concrete evidence of unexplained investments and cannot be sustained on presumptions.
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The tribunal dismissed the Revenue’s appeals and deleted the additions made by the AO. The assessee’s appeal was allowed.
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