The case of ACIT Vs Shanker Nebhumal Uttamchandani, as decided by ITAT Surat, underscores the significance of substantial evidence in tax assessments, particularly regarding additions made based on digital device data. The Assessing Officer (AO) had made additions to the taxpayer’s income based on information obtained from a digital device during the investigation.
The tribunal observed that the AO solely relied on WhatsApp images without verifying the authenticity of the transactions depicted in them. For instance, the AO added Rs. 5.31 lakhs as unexplained expenditure on furniture solely based on a WhatsApp image, without confirming whether the furniture was actually purchased.
Similarly, another addition of Rs. 3.00 lakhs under Section 69A of the Act, labeled as unexplained money, was made based on a digital image containing coded numbers. However, the tribunal noted that the AO erred in not summoning or recording the statement of the sender mentioned in the image, Vijay Jain.
The tribunal concluded that these additions lacked substantiation and were made purely on presumption, without supporting evidence.
Furthermore, the tribunal addressed an addition of Rs. 34.56 crores for unexplained money, based on a page discovered during the investigation. Despite the AO presuming a transaction involving land, the tribunal found no evidence linking the taxpayer to the transactions mentioned in the document. The tribunal emphasized the absence of specific details such as the location of the land or the parties involved in the transactions. Additionally, the document was not written by the taxpayer or their family members, weakening the basis for the addition.
The tribunal highlighted the necessity for corroborative evidence and dismissed the addition, considering the document as a “dump document” lacking substantial evidentiary value.
This case underscores the importance of conducting thorough investigations and providing substantiated evidence in tax assessments. It serves as a caution against making additions solely based on digital device data or documents lacking verifiable details.
It reaffirms the principle that tax assessments should be grounded in factual evidence to uphold justice and prevent arbitrary additions to the income of taxpayers.
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