The Chennai Bench of Income Tax Appellate Tribunal(ITAT) upheld the decision of the Commissioner of Income Tax (Appeals)[CIT(A)],dismissing the additions made for Assessment Year(AY) 2015-16 due to a lack of evidentiary value in an unsigned Excel sheet.
The revenue-appellant filed an appeal for AY 2015-16 against the order of the CIT(A), dated March 5, 2024, concerning an assessment made by the Assessing Officer (AO) under Section 143(3) read with Section 153A of the Act, finalized on February 18, 2021.
V.V. Titanium Pigments Pvt.Ltd ,the respondent-assessee, was established in 1994 and engaged in the manufacturing and sale of anatase grade Titanium dioxide.Following a search action on the assessee group on 25-10-2018, notices under section 153 were issued for AYs 2013-14 to 2018-19 on 16-07-2019. The assessee then filed returns of income, which were scrutinized by the Assessing Officer (AO).
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The case involved cash receipts of Rs. 19.76 Crores, with Rs. 13.65 Crores added for AYs 2014-15 and 2015-16 based on an Excel sheet, and Rs. 6.10 Crores for AYs 2017-18 to 2019-20 based on seized notebooks from Shri S. Raja. The AO relied on these as evidence of unaccounted cash receipts.
The CIT(A) found the Excel sheet unreliable due to insufficient corroborative evidence and missing transaction details, concluding it could not substantiate the additions. He noted that the AO failed to connect the cash transactions to the assessee. As a result, the CIT(A) deleted the additions for AYs 2014-15 and 2015-16. For AYs 2017-18 to 2019-20, the CIT(A) allowed estimations of income using Gross Profit Ratios, resulting in sustained additions of Rs. 31,12,425 for AY 2017-18, Rs. 4,34,100 for AY 2018-19, and Rs. 35,072 for AY 2019-20. Both parties appealed the decision.
The tribunal reviewed the additions for AYs 2014-15 and 2015-16, noting they were based on an unsigned Excel sheet exchanged between Shri Jegatheesan and Smt. Jeyanthi of M/s V.V. Minerals. It observed that the AO failed to conduct inquiries to verify the entries and that the CIT(A) appropriately highlighted the lack of confrontation regarding the sheet.
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The bench pointed out that the Excel sheet lacked details about the quantity of scrap sold or buyers, and any cash receipts should have been recorded in the notebooks seized from Shri J. Thangadurai.
The two member bench comprising Mahavir Singh(Vice President) and Manoj Kumar Aggarwal(Accountant Member) concluded that the sheet was unauthenticated and had no evidentiary value, affirming the CIT(A)’s findings and dismissing the revenue’s grounds for AY 2015-16.
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