Failure of AO to provide Sufficient Time for required details Prevents Verification at the Time of Assessment: ITAT directs Readjudication [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) restored the file of the Assessing Officer (AO) for deciding afresh after examination of the relevant supporting details filed by the assesse.

A search and seizure action under section 132 of the Act was carried out on 26.11.2019 at the branch offices, site offices, residences of the partners and employee of M/s Narendrakumar & Company (Everest Masala Group) along with related parties. The assessee Shri Anil Kantilal Shah was the proprietor of M/s Om Kesar and was covered under section 132 of the Income Tax Act 1961.

During the course of search action, some excel files were found in the laptop and whatsapp messages were found on the mobile phone of the assesse which related to the transactions pertaining to purchases of flat at C-805, Suparshwa Urvana Old Nagardas Road, Andheri East, Mumbai. As per the information contained in the aforesaid excel sheet the assesse has made cash payment of Rs.42.69 lac to the builder suparshwa state over and above the agreement value of the flat of Rs.1.1 crores.

Further, the assessee has also accepted these fact in his statement recorded under Section 132(4) of the Income Tax Act that an amount of Rs. 42.69 lacs was paid in cash for purchasing of the aforesaid premises.

However, during the course of assessment the assessing officer found that assesse has not declared the aforesaid amount of Rs. 42.69 lac in the return of income.

Therefore, the assessing officer has issued show cause notice dated 15.09.2021 asking the assesse why an amount of Rs. 42.69 lacs should not be added to the total income as unexplained investment under section 69B of the Act. In response the assesse submitted that he had retracted the statement recorded during the search by way of filing affidavit and submitted that there was no cash transaction happened with the builder.

However, the AO has not agreed with the submission of the assessee and added the amount of Rs. 42.69 lacs as unexplained investment on the basis of such transaction noted on the excel sheet found in the laptop seized from the premises of the assessee which was also corroborated with the whatsapp communication.

Aggrieved, the assessee filed the appeal before the  Commissioner of Income Tax (Appeals) [CIT(A)]. The  CIT(A) has dismissed the appeal of the assessee. Aggrieved the assessee appealed before the tribunal.

After hearing both the parties, the tribunal noted that during the course of search the assesse has explained that the amount of Rs. 9,25,000/- pertaining to interior expenditure was made by way of cash withdrawn from saving bank accounts of both the assessee and his wife and some part of the expenses were also made by cheques to the Interior Decorator as highlighted in the copy of bank statement placed in the paper book.

The two member bench consisting of Kavitha Rajagopal (Judicial member) and Amarjit Singh (Accountant member) held that the AO has also not provided sufficient time to the assessee therefore the required details could not be verified at the time of assessment.

Considering the above facts and circumstances the tribunal restored this issue to the file of the AO for deciding afresh after examination of the relevant supporting details filed by the assesse. Thus the appeal was allowed.

To Read the full text of the Order CLICK HERE

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