Additions Against AAP’s Minister Kailash Gahlot Valid as Affidavit Filed by Person to Whom Diary Belonged Was Vague | HC

Case Details: Shri Kailash Gahlot vs. DCIT - [2024] 164 taxmann.com 118 (Delhi-Trib.)

Judiciary and Counsel Details

• Vimal Kumar, Judicial Member & M. Balaganesh, Accountant Member
• Vinod Kumar Bindal, CA, Ms Rinki Sharma, ITP & Saurabh Sharma, Adv. for the Appellant.
• Sanjay Kumar, CIT-DR for the Respondent.

Facts of the Case

The assessee-Minister of Aam Aadmi Party (AAP) filed the return of income for the relevant assessment year. Under section 132 of the Income-tax Act, a search and seizure operation was conducted on the assessee’s premises. During the search, a diary containing cash payment entries to vendors was found and seized. The assessee was requested to explain the cash expenses during the year under consideration.

In response, the assessee submitted a common reply with an affidavit mentioning that the diary was written by another person and belonged to him. An affidavit of such a person was also filed. However, the Assessing Officer (AO) considered the amount unexplained and made additions to the assessee’s income.

On appeal, the CIT(A) upheld the additions and the matter reached before the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee was requested to explain the cash expenses. The assessee submitted an affidavit claiming that the diary found in his office belonged to a third party. The diary mentioned expenses incurred in the election contested by several candidates of the Aam Aadmi Party.

The affidavit’s contents needed to properly explain the names of the person paying the amount and the expenses paid. The person who submitted the affidavit stated that only a certain amount was incurred to promote the Aam Aadmi Party and many candidates in the West Delhi constituency. No supporting document regarding the averment was submitted. Further, the names of the assessee’s relatives were also mentioned in the diary.

In the absence of specific details and other supporting documents, the diary was rightly considered belonging to the assessee. Thus, the affidavit filed by the assessee was rightly rejected.