The Cuttack Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Rs. 58 Lakh capital investment addition made by the assessing officer (AO) due to a discrepancy in the taxpayer’s name in records.
Sanjeev Kumar Daitapati, the assessee is a Sevayat at Lord Jagannath Mandir in Puri. He had filed his income tax return for the assessment year 2013-14 declaring a total income of Rs. 3,40,200.
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The Income Tax Officer (ITO) received information from Mumbai Income Tax that the assessee had invested Rs. 58,00,000 in Jai Bhavani Enterprises (a partnership firm) towards capital contribution. The assessment was based on this information.
However, the assessee denied being a partner in Jai Bhavani Enterprises claiming that although there were discussions about forming a partnership, the firm was never constituted. He further clarified that the land was purchased under a Power of Attorney by Jignesh R. Mehta, the proprietor of Jai Bhavani Enterprises.
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The assessee filed an affidavit confirming that he was not a partner in Jai Bhavani Enterprises. Despite this, the assessing officer treated the Rs. 58,00,000 as unexplained income and made additions.
Aggrieved by the AO’s order, the assessee challenged the order before the Cuttack Bench of ITAT arguing that he never contributed ₹58,00,000 to Jai Bhavani Enterprises.
The revenue counsel claimed that it faced challenges in gathering information due to non-cooperation from the ITO in Mumbai, who had records related to the case. The revenue counsel suggested the case could be remanded to the Assessing Officer for further investigation.
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The two-member bench comprising George Mathan (Judicial Member) and Manish Agarwal (Accountant Member) noted that despite multiple attempts by the Income Tax Officer (Puri) to gather information from the ITO in Mumbai, there was a failure of communication and cooperation, obstructing the proper assessment of facts.
The tribunal noted that the balance sheet and Profit & Loss account which were used to justify the addition of Rs. 58,00,000 were neither signed nor audited, casting doubt on their credibility. The tribunal noted discrepancies in the names mentioned in the documents, where the name Sanjeev Jagannath Daitapati appeared, while the assessee’s name was Sanjeev Kumar Daitapati, further weakening the Revenue’s case.
The Tribunal found no substantial evidence to prove the assessee’s capital contribution to Jai Bhavani Enterprises. Therefore, the tribunal deleted the addition of Rs. 58,00,000 made by the assessing officer, and the appeal of the assessee was allowed.
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