Facts of the Case

The Revenue filed an appeal under Section 260A of the Income Tax Act, 1961 against the order of the ITAT for AY 2012-13. The assessee had filed a return declaring income of ₹7.28 crores.

A search under Section 132 was conducted in the AKN Group, during which certain documents, including an MOU dated 14.12.2011, were seized from the assessee’s premises. The MOU was between Devender Kumar and M/s Newage Infrabuilders Pvt. Ltd., relating to land at Harchandpur, Gurgaon.

Based on this document, the Assessing Officer made an addition of ₹20 crores under Section 68 in the hands of the assessee, alleging unexplained cash transaction. The addition was upheld by CIT(A) but deleted by ITAT.

Issues Involved

  1. Whether addition of ₹20 crores under Section 68 can be made in the hands of the assessee based on an MOU found during search.
  2. Whether reliance on a subsequent contradictory statement of a third party (Devender Kumar) is justified.
  3. Whether absence of corroborative evidence linking the assessee with the transaction invalidates the addition.

Petitioner’s Arguments (Revenue)

  • The MOU was found from the assessee’s premises, indicating involvement.
  • Devender Kumar, in his later statement (2016), admitted acting under the directions of the assessee.
  • The entity Newage Infrabuilders was not traceable, raising doubts about genuineness and suggesting it was a conduit for unaccounted money.
  • The assessee failed to cross-examine Devender Kumar despite opportunity.
  • Therefore, the addition under Section 68 was justified.

Respondent’s Arguments (Assessee)

  • The transaction between Devender Kumar and Newage Infrabuilders was independent and unrelated to the assessee.
  • The assessee had a separate transaction through another company (Megatech Realtors Pvt. Ltd.), which was distinct.
  • The initial statement of Devender Kumar (2013) confirmed receipt of ₹20 crores from Newage Infrabuilders and not from the assessee.
  • The later statement (2016) was contradictory and subsequently retracted through an affidavit.
  • No incriminating material or cash was found linking the assessee to the alleged transaction.

Court Findings / Order

  • The ITAT rightly held that the MOU was executed between Devender Kumar and Newage Infrabuilders, and the assessee was not a party.
  • The initial statement of Devender Kumar (2013) was corroborated by documentary evidence, while the later statement (2016) lacked evidentiary support.
  • The affidavit retracting the later statement was ignored by CIT(A) without justification.
  • No incriminating material or cash was found during the search linking the assessee with ₹20 crores.
  • The presumption that the seized document belonged to the assessee was successfully rebutted.

Held:
The deletion of ₹20 crores by ITAT was justified, and no substantial question of law arose. The appeal of the Revenue was dismissed.

Important Clarification

  • The Court clarified that a separate addition of ₹10 crores relating to another MOU (with Megatech Realtors Pvt. Ltd.) was remanded to the Assessing Officer and was not part of the present appeal. 

Sections Involved

  • Section 68 – Unexplained Cash Credit
  • Section 132 – Search and Seizure
  • Section 131 – Power to summon
  • Section 153A / 153C – Assessment in case of search
  • Section 260A – Appeal to High Court

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/58927102022ITA2712019_113512.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.