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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI NARENDER KUMER CHOUDHRY, JM
These three appeals are filed by the Dy. Commissioner of Income Tax, Central Circle-2(2), Mumbai (The learned
The learned Assessing Officer raised following grounds for A.Y. 2017-18 as under:-
“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 68 of the income Tax Act, 1961 amounting to Rs. 13,95,00,000/- made by the assessing officer, without considering facts that there was a seizure of incriminating material and failure of the assessee to prove the genuineness of the transaction.
2. Whether, the Ld. CIT(A) has erred both in law and or facts in failing to appreciate the findings of the assessing officer and overlooking the finding made during the assessment proceedings.
3. Whether the Ld. CIT(A) has failed to appreciate the details/justification given by the AO and therefore addition made and that the AO had established that transactions were not genuine and thus the addition made was correct by giving detailed clarification after through verification of the submission made by the assessee.”
“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 68 of the income Tax Act, 1961 amounting to Rs. 13,55,00,000/- made by the assessing officer, without considering facts that there was a seizure of incriminating material and failure of the assessee to prove the genuineness of the transaction."
2. Whether, the Ld. CIT(A) has erred both in law and on facts in failing to appreciate the findings of the assessing officer and overlooking the finding made during the assessment proceedings.
3. Whether the Ld. CIT(A) has failed to appreciate the details/justification given by the AO and therefore addition made and that the AO had established that transactions were not genuine and thus the addition made was correct by giving detailed clarification after through verification of the submission made by the assessee.”
The learned Assessing Officer raised following grounds for A.Y. 2020-21 as under:-
“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition u/s 68 of the income Tax Act, 1961 amounting to Rs. 1,45,00,000/- made by the assessing officer, without considering facts that there was a seizure of incriminating material and failure of
2. Whether, the Ld. CIT(A) has erred both in law and on facts in failing to appreciate the findings of the assessing officer and overlooking the finding made during the assessment proceedings.
Whether the Ld. CIT(A) has failed to appreciate the details/justification given by the AO and therefore addition made and that the AO had established that transactions were not genuine and thus the addition made was correct by giving detailed clarification after through verification of the submission made by the assessee.”
The fact as culled out from the orders of the lower authorities shows that i. Assessee is an individual engaged in the business of export and trading of Pan Masala, Supari, etc. and consultancy through his proprietary concerns (1), M/s SJJ exports company and (2) SJJ Consultancy. He is also partner in various firms.
ii. For A.Y. 2017-18, assessee filed its return of income under Section 139(1) of the Income-tax Act, 1961 (the Act) on 31 October 2017, declaring total income of ₹10,18,24,860/-. iii. Search and seizure operation under Section 132(1) of the Act was conducted on 8 February 2021, in the case of JMJ Group. Consequent to that search, the case of the assessee was centralized with the iv. A notice under Section 153 of the Act was issued on 17 December 2021. Assessee reiterated his return of income on 28 January 2022, at a total income of ₹10,18,24,860/-. The notice under Section 143(2) of the Act was issued on 31 January 2022. v. During the course of assessment proceedings, the learned Assessing Officer noted that, assessee has provided services to Omkar Group of companies for settlement of non-eligible tenants and possession of constructed rehabilitation units and has received ₹34,81,14,629/- as fees towards income. vi. The learned Assessing Officer noted that for A.Y. 2017-18 ₹13.95 crores, for A.Y. 2019-20 ₹13.50 crores and for A.Y. 2020-21 ₹1.45 crores, is received. The above sum was stated to have been received for facilitation fee for evacuation of tenants, settlement of non eligible tenants, resettlement in permanent accommodation, brokerage etc. against facilitation agreement dated 1st April, 2016. vii. During the course of assessment proceedings, the assessee was asked to prove the genuineness of the above income. ix. An agreement was entered on 1 April 2016, against which the assessee has earned the above sum for four different assessment years. It was the claim of the assessee that he has declared this receipt as his income and offered the same for taxation. x. The learned Assessing Officer after considering the explanation of the assessee rejected the same holding that {1} assessee has not given as to what are the services provided by him to the other party, [2] assessee did not produce any advertisement pamphlets paper or media coverage in support of his claim where the assessee has stated that he being an actor, celebrity, used his brand name for facilitating the services in agreement dated 1st April, 2016., [3] merely showing the receipt in the income tax return as his income does not absolve assessee from showing the genuineness of the receipt.
Accordingly, the assessment order under Section 143(3) read with section 153A of the Act was passed on 31st March, 2022, determining the total income of the assessee at a loss of ₹3,76,75,140/- against the return income of ₹10,18,24,680/- and removing the income of ₹13,95,00,000/- from the business income, taxing it under Section 68 of the Act.
i. Search took place on 8 February 2021, and therefore, A.Y. 2017-18 is a concluded assessment, which could not have been disturbed by the learned Assessing Officer without any incriminating material found during the course of search. ii. Against this argument, the learned CIT (A) called for remand report vide his letter dated 30 January 2023. iii. The remand report was submitted on 6th February, 2023, wherein with respect to the incriminating material, the learned Assessing Officer stated that the facilitator agreement between Shri sachin Joshi and M/s Omkar Realtors Private Limited was found as ‘annexure OF’ and as per annexure ‘OF-1’, a reconciliation statement showing receipt of income from Omkar Realtors and Developers Pvt. Ltd, relevant to various years was found. This was stated to be incriminating material in remand report. iv. The learned CIT (A) referred to the Panchnama dated 8 February 2021 that no valuable goods or accounts were seized during the course of search. This Panchanama was available with him as submitted in a remand report by the learned Assessing Officer. vi. Therefore, the learned CIT (A) noted that the above facilitation agreement was for work undertaken of slum rehabilitation projects of the above party for which assessee has been paid the above remuneration. vii. The learned CIT (A) further examined the facilitator agreement and the reconciliation statement. He accordingly, held that agreement, the reconciliation statement is part of the regular records of the assessee for which return of income is filed, and income is shown in the return of income. viii. The facilitator agreement and the receipt statement are supporting the regular books of account of the assessee. ix. He further noted that A.Y. 2017-18 had not abated and therefore, if and only if any incriminating material is found during the course of search, addition can be made only to the total income. xi. Accordingly, he held that for the impugned A.Y. 2017-18, which is not an abated assessment year, the addition of ₹13.95 crores made under Section 68 of the Income-tax Act, 1961 (the Act), does not survive.
Accordingly, he passed a consolidating appellate order for A.Y. 2017-18 and 2018-19 on 9th February 2023, deleting the above addition. For the sake of completeness, the addition of ₹50 lacs was made for A.Y. 2018-19, which was also deleted giving the same reasons. However, there is no appeal of the learned Assessing Officer for A.Y. 2018-19, before us.
The learned Assessing Officer aggrieved with that has challenged the deletion of addition of ₹13.95 crores.
The learned CIT Departmental Representative submitted that the learned CIT (A) has clearly in error in holding that there is no incriminating material found during the course of search. He submitted that ‘annexure OF’ in the form of facilitating agreement and ‘Annexure OF-1’ in the form of reconciliation statement were in fact the incriminating material and therefore, the order of the learned CIT (A) is not sustainable in law.
The learned Authorized Representative vehemently supported the order of the learned CIT (A) in holding that the facilitating agreement as well as the receipt of
We have carefully considered the rival contentions and perused the orders of the lower authorities. Search took place on 8th February 2021, and therefore, admittedly A.Y. 2017-18 was not an abated assessment year. The impugned assessment can only be disturbed when incriminating material is found during the course of search. It is the claim of the Revenue that facilitating agreement and receipt of reconciliation statement found during the course of search is itself an incriminating material. We find that the assessee has offered the income arising from the above agreement reconciled with the reconciliation statement for the respective years. The facilitator agreement is signed by the assessee, which Omkar Developers is part of the regular books of accounts and records of the assessee supporting his
In the result, for A.Y. 2017-18 is dismissed.
i. Assessee filed his return of income under Section 139(1) of the Income-tax Act, 1961 (the Act) on 31 October 2019, at ₹8,69,60,740/-. ii. Notice under Section 153A of the Act was issued on 17 December 2021, against which the assessee reiterated his return on 28 January 2022, at the same income. iii. During the course of assessment proceedings, the learned Assessing Officer found that for this assessment year, assessee has received ₹13,55,00,000/- on account of income from facilitation fee. So assessee was asked to prove the genuineness of the above receipt offered by him as his income. iv. Assessee also reiterated what was stated in A.Y. 2017-18.
The learned Assessing Officer for the similar reasons as given in A.Y. 2017-18, held that the above sum is required to be added under Section 68 of the Act at the applicable tax rate of 60%.
Accordingly, the assessment order under Section 143(3) read with section 153A of the Act was passed on 31st march, 2022, determining the total income of the assessee at ₹13,55,00,000/- under Section 68 of the Act computing the normal income at a loss of ₹4,85,39,260/- . The unexplained cash credit under Section 68 of the Act
For A.Y. 2020-21, the learned Assessing Officer has filed appeal in CIT (A) dated 10th February, 2023, wherein the addition of ₹1,45,00,000/-was made by the learned Assessing Officer on fees received from Omkar Developers as per facilitation agreement. The fact shows that return of income was filed on 15th February, 2021, at the total income of ₹2,04,35,300/-. In response to notice under Section 153A of the Act, dated 17 December 2021, assessee reiterated his return on 28 January 2022, at the same income.
The learned Assessing Officer raised the similar query about ₹1,45,00,000/- received from Omkar Realtors Developers Private Limited. Assessee also explained the receipt of the above sum as in A.Y. 2017-18. The assessment order under Section 143(3) read with section 153A of the Act was passed on 31 March 2022, wherein ₹1,45,00,000/- was taxed under Section 68 of the Act at tax rate prescribed under Section 115BBE of the Act.
For A.Y. 2019-20 and 2020-21, the learned CIT (A), on appeal by the assessee passed consolidated order wherein the above addition was deleted. The learned CIT (A) categorically noted that i. Income received by the assessee is for rendering services terms of agreement with the Omkar Realtors and Developers Ltd.
iii. He also examined the facilitator agreement, the receipt statement, the tax invoices is raised by the assessee coupled with 37 other documents produced by the assessee listed at page no.22 to 24 of his order in the form of minutes of the meeting, statement of the accounts, invoices, debit notes to show that the services rendered by the assessee is in accordance with the agreement. He also examined the facilitator tax invoices and held that utilization of the services of the assessee has been recorded by both the parties and considered by the Special Court. iv. Accordingly, he deleted the addition of ₹13,55,00,000/- for A.Y. 2019-20 and ₹1.45 crores for A.Y. 2020-21.
The learned Assessing Officer is aggrieved with the order of the learned CIT (A) and is in appeal before us for both the years.
The learned CIT Departmental Representative vehemently submitted that the assessee has failed to prove rendering of the services and therefore, the nature and sources of receipt though offered by the assessee, as
The learned Authorized Representative defending the order of the learned CIT (A) submitted that there is an agreement between the service provider and the service receiver. The assessee has rendered services in accordance with the agreement. Assessee has continuously explained the nature of services, the reason why the assessee was hired, it also gave names of various companies to whom services have been rendered. It was further stated that the services are also subject to the GST, which was collected by the assessee and paid to the GST department. The GST department has also not questioned the rendition of the services. He submits that assessee has not provided services to any one company but to number of different companies from which assessee has received the remuneration. He submits that the nature of remuneration and the services of remuneration both have been explained by the assessee to the learned Assessing Officer. The learned Assessing Officer has merely stated that assessee has not rendered those services. He referred to overwhelming evidences recorded by the LD CIT [A], which are not controverted by the LD AO. He also stated that the learned Assessing
We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee has received certain sums as service fee/ consultancy fee in terms of agreement with Omkar Realtors Pvt. Ltd. and several of group of companies of Omkar Group. To support his income, the assessee has stated in answer to question no. 37 of his statement recorded under Section 132(4) of the Act that assessee has provided facilitation services to that group. The assessee also shown that the income has been offered by him in his return of income along with the tax deduction and source of certification of the various parties. During the course of appellate proceedings, before the learned CIT (A) assessee produce the copies of the minutes of various parties also supported with the tax invoices. The minutes of the meeting clearly shows that assessee has participated in those meetings and has provided services in accordance with the facilitator agreement entered into by him with
In the result, all the three appeals filed by the learned Assessing Officer are dismissed.
Order pronounced in the open court on 17.11.2023.