Mr. Rajesh Prabhudas Parekh vs. CIT(A), ITO National Faceless Appeals Centre, Delhi.

Case snapshot

Sections / provisions: See packaged judgment

Questions before the Court / Tribunal

• Cash addition based on third-party statement: need for corroborative material and cross-examination before relying on statement recorded behind taxpayer's back.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

(अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent)

Assessee by: Shri Anil Thakrar Revenue by: Shri Anil Gupta

आदे श / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 17.11.2022 for AY. 2010-11. 2. The main grievance of the assessee is against the action of the Ld. CIT(A) confirming the addition of Rs.3,86,000/- (being 50% of Rs.7,72,000/-) made by the AO.

3. Brief facts as noted by the AO are that, the assessee is an individual employed with M/s. Shapoorji Pallonji & Co and had not filed his return of income for AY. 2010-11. The AO notes that he received an information regarding the assessee having made payment of Rs.7,72,000/- in cash (on money) to M/s. Shakti Developers of Ekta Group for purchase of flat in “Ekta Bhoomi Garden. And therefore, the assessment of the assessee was reopened by issue of notice u/s 148 of the Income Tax Act, 1961 (hereinafter “the Act”); and pursuant thereto

the assessee filed return of income declaring income of Rs.7,74,590/-. The AO thereafter issued show cause notice to assessee as to why the cash payment of Rs.7,72,000/- (i.e. on money purportedly paid developer of flat) should not be added to his income. However, the assessee denied to have made any such payment to M/s. Ekta Shakti Developers and requested AO for furnishing of any evidence from the developer to prove such payment (cash/on-money) for purchase of flat. Pursuant thereto, the AO issued summons dated 05.12.2017 to key person of M/s. Ekta Shakti Developers to be present before him. And on the date fixed for appearance, the AO noted that even though the assessee was present, none appeared on behalf of M/s. Ekta Shakti Developers. Neverthless, according to the AO, the promoter of M/s. Ekta Shakti Developers, Shri Vivek Mohanani during search has given statement on oath that assesee and his wife (co-owner) had paid cash (Rs. 7,72,000) over and above the sale consideration of Rs. 54,18,115 for purchase of a flat. And since the flat has been jointly purchased by assessee along with his wife, and the assessment in the case of Mrs. Bhakti Parekh (wife of assessee) has been…

Appellant / assessee submissions

The packaged judgment does not separately label the appellant's submissions in an independently extractable passage. No contention is inferred; read the full order.

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

The reasoning is integrated into the packaged record. Read it with the facts, statutory text and operative directions; this editorial article does not invent missing reasons.

Operative decision and relief

the assessee filed return of income declaring income of Rs.7,74,590/-. The AO thereafter issued show cause notice to assessee as to why the cash payment of Rs.7,72,000/- (i.e. on money purportedly paid developer of flat) should not be added to his income. However, the assessee denied to have made any such payment to M/s. Ekta Shakti Developers and requested AO for furnishing of any evidence from the developer to prove such payment (cash/on-money) for purchase of flat. Pursuant thereto, the AO issued summons dated 05.12.2017 to key person of M/s. Ekta Shakti Developers to be present before him. And on the date fixed for appearance, the AO noted that even though the assessee was present, none appeared on behalf of M/s. Ekta Shakti Developers. Neverthless, according to the AO, the promoter of M/s. Ekta Shakti Developers, Shri Vivek Mohanani during search has given statement on oath that assesee and his wife (co-owner) had paid cash (Rs. 7,72,000) over and above the sale consideration of Rs. 54,18,115 for purchase of a flat. And since the flat has been jointly purchased by assessee along with his wife, and the assessment in the case of Mrs. Bhakti Parekh (wife of assessee) has been…

stated when (date) the statement of promoter u/s 131 of the Act has been recorded; and that statement of Shri Vivek Mohanani has not been furnished to assessee and his wife. And even though on the request of assessee, Shri Vivek Mohanani was summoned, he did not appear before the AO, therefore,, the veracity of the statement could not be tested on the touch stone of cross-examination. In such a scenario, it would be unsafe to rely only on the statement of Shri Vivek Mohanani, which has been recorded behind the back to the assessee to saddle the addition without some corroborative material which has been found during search showing that the assessee and his wife had paid cash of Rs.7,72,000/- over and above the sale consideration of Rs.54,18,115/-. For such a preposition, I rely on the decision of the Hon’ble Supreme Court in the case of Andaman Timber Industries Vs. CCE (281 CTR 241) (SC). Therefore, the AO is directed to delete the addition of Rs.3,86,000/-. 6. Ground no. 2, 3 and 4 are argumentative/general in nature so dismissed. 7. In the result, the appeals of the assessee are partly allowed. Order pronounced in the open court on this 31/03/2023.

Ratio and legal principle

• The packaged judgment addresses Cash addition based on third-party statement: need for corroborative material and cross-examination before relying on statement recorded behind taxpayer's back. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with cash addition based on third-party statement: need for corroborative material and cross-examination before relying on statement recorded behind taxpayer's back. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• See the statutory provisions identified in the packaged judgment.

Case network

Similar issue / useful comparison

• Bridge India Fund, New Delhi v. ACIT - ITAT Mumbai - I Bench
• SECUNDRABAD CLUB VS. C.I.T.-V - Supreme Court of India
• PCIT v. Indravadan Jain, HUF - Court / Tribunal to be verified

Different outcome / possible distinction

• ACIT v. Ashok W. Wesavkar - Operative order controls
• ACIT CIR 6(1) VS ASAHI INFRA & PROJECTS LIMITED - Remanded / restored

Full judgment and source control

Read / download packaged judgment record

Source class: Sanitized local full-judgment copy; official primary replacement pending · Repository status: Later-history status: verification on hold pending source confirmation