Sole reliance on Report of Investigation Wing: ITAT sets aside Income Tax Addition as Unexplained Investment [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi bench set aside addition as un-explained investment as there was sole reliance on report of Investigation Wing.

The assessment of the assessee, Nischal Sethi was re-opened by issue of notice under section 148 of the Income Tax Act, 1961. In response to notice under section 148 of the Income Tax Act the assessee filed return of income. The assessment was re-opened based on the information received from Investigation Wing that the assessee has invested Rs.40,00,000 towards purchase of commercial property in Nehru Vikas Minar Projects out of which Rs.20,00,000 was paid in cash.

In the course of re-assessment proceedings, the Assessing Officer required the assessee to explain the investment made towards purchase of property with documentary evidences. The assessee submitted that during the year assessee has not purchased any commercial property in Nehru Vikas Minar Projects neither in his own name nor in the name of any family members.

The Counsel for the assessee submitted that assessee has only one savings bank account with Punjab National Bank, and an affidavit was also furnished. However, the Assessing Officer based on the loose papers which were seized in the corporate office of AEZ group wherein the assessee’s name was reflected as one of the investors concluded that the assessee purchased commercial property in Nehru Vikas Minar Projects by paying Rs.20,00,000 in cash as the assessee failed to adduce any evidence to rebut the findings of the Investigating Wing and treated Rs.20,00,000 as unexplained investment made by the assessee under section 69.

A Single Bench consisting of Challa Nagendra Prasad, Judicial Member held that “The Assessing Officer seems to have relied solely on the report of Investigation Wing of the Department without making any further enquiries in treating Rs.20,00,000/- as un-explained investment in the hands of the assessee. In the circumstances, I hold that the Assessing Officer erred in treating Rs.20,00,000/- as un-explained investment in the hands of the assessee.”

To Read the full text of the Order CLICK HERE

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