1 week ago
Delhi ITAT Rejects Rs 2 Crore Cash Property Addition
Arti Garg bought a house for Rs 3.5 crore.
Tax officials said she had really paid Rs 5.5 crore, including Rs 2 crore in cash.
They relied on a picture of a paper found on someone else’s phone.
The Tribunal said officials did not properly show where the picture came from or how it was handled.
They also did not clearly connect the picture to Garg and her purchase.
A digital picture is not automatically proof of an illegal payment.
Evidence must be collected, preserved and checked carefully.
Because this was not done well enough, the Tribunal removed the additional tax claim.
The seller’s related appeal was also allowed.
Arti Garg bought a New Delhi property for recorded consideration of Rs 3.5 crore in December 2020.
The tax department alleged the actual price was Rs 5.5 crore, including Rs 2 crore paid in cash.
The allegation relied largely on a digital image of a slip recovered from a third-party broker’s mobile phone.
The Delhi ITAT found deficiencies in the image’s authentication, chain of custody and connection to Garg and the transaction.
The Tribunal allowed Garg’s appeal and also allowed the connected appeal of seller Naresh Arora.
- Who
- Homebuyer Arti Garg, seller Naresh Arora and the Income Tax Department were involved.
- What
- The Delhi ITAT overturned a Rs 2 crore addition for allegedly unexplained cash paid toward a property purchase.
- Where
- Property No. 52, Shankar Vihar, New Delhi; the appeal was heard by the Delhi ITAT.
- When
- The property sale deed was dated 30 December 2020; the ITAT case concerned assessment year 2021-22.
- Why
- The Tribunal found that the digital evidence used to support the alleged cash payment lacked sufficient authentication, chain-of-custody documentation and factual linkage.
Tax Department’s Position
Taxpayer and Tribunal’s Position
Meaning of the digital image
Tax Department’s Position
The image allegedly showed that the property’s actual consideration was Rs 5.5 crore and that Rs 2 crore was paid in cash beyond the registered amount.
Taxpayer and Tribunal’s Position
The image was not sufficient proof because the Department did not adequately establish its source, authenticity or connection to the buyer and transaction.
Use of third-party evidence
Tax Department’s Position
Material recovered from a property dealer’s phone was relied upon to support the unexplained-investment addition against the buyer.
Taxpayer and Tribunal’s Position
Third-party digital material cannot automatically establish undisclosed income; its evidentiary trail and factual linkage must be demonstrated.
Section 69 addition
Tax Department’s Position
The alleged difference between the registered and actual consideration was treated as unexplained investment under Section 69.
Taxpayer and Tribunal’s Position
The Revenue must first reliably establish that an unrecorded investment existed; suspicion, a valuation difference or inadequately authenticated material is insufficient.
Key facts
- Recorded property consideration
- Rs 3.50 crore
- Alleged additional cash payment
- Rs 2 crore
- Alleged total consideration
- Rs 5.50 crore
- Property
- Property No. 52, Shankar Vihar, New Delhi
- Sale deed date
- 30 December 2020
- Legal provision for addition
- Section 69 of the Income-tax Act
- Digital evidence source
- An image of a slip allegedly recovered from a third-party property dealer’s mobile phone
- Outcome
- Arti Garg’s appeal and the connected appeal of Naresh Arora were allowed
Quotes
CA (Dr.) Suresh Surana
Appeal tribunal counsel
“At the assessment stage, objections concerning authenticity, evidentiary deficiencies and factual linkage should preferably be placed on record promptly, together with requests for the underlying digital material.”
financialexpress.com
“The Revenue could not satisfactorily demonstrate how the relevant digital image travelled from the seized device through forensic analysis and ultimately came to be relied upon by the AO.”
financialexpress.com
Sources
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