ITAT Deletes Rs 75.22 Lakh Addition, Says Unverified Excel Sheet Cannot Prove Cash Property Deal

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the appeal of taxpayer Vijay Kumar Manchanda and deleted an addition of Rs. 75.22 lakh made by the Income Tax Department for the Assessment Year 2016-17.

The assessee (Vijay Kumar Manchanda) in the present case was engaged in the business of manufacturing and trading chemicals. The name of his company was M/s Shyne Industries Limited. According to the tax authorities, the assessee had made certain cash payments amounting to Rs 75.22 lakh to Omaxe Group for the acquisition of immovable property which is mentioned in the agreement during the year under consideration, i.e., Assessment Year 2016-17, and had not reflected the same in its income tax return (ITR). Consequently, his case was reopened following a search operation on Omaxe Group.

The Assessing Officer (AO) treated the cash payments in question as unexplained income and made an addition of the same to the assessee’s income. The assessee asserted that the AO’s claim is false; he had not entered into any transaction with Omaxe Group and also furnished relevant documents in evidence of his claim. However, the AO rejected them all. The aggrieved assessee filed an appeal before the lower appellate authority, i.e., CIT(A), wherein the impugned Rs 75.22 lakh addition was sustained.

On appeal, the ITAT observed that the Revenue had failed to establish any actual property transaction involving the assessee. The Tribunal noted that the Excel sheet did not contain complete details of the alleged property purchase and that no independent evidence was produced to show that the assessee had acquired any property from Omaxe Group.

The tribunal had noted that “this excel sheet mainly mentions certain figures which has been allegedly suppressed by factor of Hundreds. However, on examination of the impugned orders we find that there was no categorical evidence or details of what property was actually purchased by the assesse and apart from what is alleged to be cash payment, what payments were made by any other mode for acquiring that property.”

The Tribunal further held that an affidavit filed by a taxpayer cannot be ignored without proper examination or rebuttal. Since the affidavit remained unchallenged and the alleged electronic evidence was unsupported by any corroborative material, the addition could not be sustained.

Accordingly, the ITAT deleted the addition of Rs. 75.22 lakh and allowed the assessee’s appeal.