No Sec. 69C Additions if AO Failed to Identify Purpose, Date of Payment & Payee Identity: ITAT

Case Details: Aurum Platz (P.) Ltd. v. Deputy Commissioner of Income Tax - [2023] 152 taxmann.com 85 (Mumbai-Trib.)

Judiciary and Counsel Details

• • Ms Kavitha Rajagopal, Judicial Member & Prashant Maharishi, Accountant Member
  • Shailja Rai, CIT DR for the Appellant.
  • Sashi Tulsiyan, DR for the Respondent.

Facts of the Case

A search under section 132 was conducted on the premises of the assessee group. A word document was found on the computer of the accountant, which contained a declaration that the administration manager was carrying cash of Rs. 20 lakhs for purposes of payment for purchases. A statement was recorded under section 132(4), wherein the administrator manager stated that the document pertained to cash delivery to an electrical contractor.

Unsatisfied with the explanation, the Assessing Officer (AO) proceeded to make additions to the income of the assessee under section 69C.

Aggrieved by the order, the assessee filed an appeal to CIT(A). The CIT(A) upheld the AO’s order, and the matter reached the Mumbai Tribunal.

ITAT Held

The Tribunal held that it was an undisputed fact that the word document found on the computer during the search proceedings mentioned the payment of Rs. 20 lakhs for purchases.

However, the AO could not identify the purpose of payment, the date of making such payment, by whom such payment was authorized and the identity of the person to whom such payment was purportedly made. No evidence was placed on record to corroborate such loose documents and prove that payment was actually made.

In the instant case, the document the department relied upon was not a part of regular books of account but merely a loose document that did not even have a date of such transaction, which are essential features of an authentic document. No doubt it is a computer document, so there is no question of any signature or handwriting, but the same also needs to be corroborated.

Accordingly, AO was directed to delete the addition made under section 69C.