DY. COMMISSIONER OF INCOME TAX, CEN-CIRCLE-4(1), MUMBAI vs. M/S EVERGREEN ENTERPRISES, MUMBAI

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ITA 2141/MUM/2023Status: DisposedITAT Mumbai27 September 2023AY 2013-20147 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the substantive additions were already made in the hands of Shri Nilesh Bharani, the protective additions made in the assessee's hands were rightly deleted by the CIT(A). The Revenue's appeals were dismissed as unnecessary litigation.

What were the facts?

The Revenue appealed against the deletion of additions made under Section 68 (unexplained cash credits) and for undisclosed brokerage income. These additions were made on a protective basis after a search and survey operation revealed evidence of money lending and borrowing activities.

What were the issues?

Whether protective additions made to the assessee's income were justified when substantive additions for the same income were made in another person's hands. The issue also concerns the validity of challenging the deletion of protective additions by the Revenue.

Which sections of the Income-tax Act were involved?

Section 68,Section 153A,Section 143(3),Section 143(1),Section 142(1),Section 132,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI

Before: SHRI KULDIP SINGH & MS. PADMAVATHY S

For Appellant: Shri Vinod Kumar Bindal, A.R. &, Shri Satish Kumar, A.R
For Respondent: Ms. N.V. Nadkarni (CIT DR)

Present for: Assessee by : Shri Vinod Kumar Bindal, A.R. & Shri Satish Kumar, A.R. Revenue by : Ms. N.V. Nadkarni (CIT DR) Date of Hearing : 27. 09 . 2023 Date of Pronouncement : 27. 09 . 2023 O R D E R Per Bench: Since common question of law and facts have been raised in these inter-connected appeals, the same are being disposed of by way of composite order to avoid repetition of discussion. to 2141/M/2023 2 M/s. Evergreen Enterprises.

2. The appellant, Deputy Commissioner of Income Tax, Central Circle-4(1), Mumbai (hereinafter referred to as ‘the Revenue’) by filing the present appeals, sought to set aside the impugned orders even dated 31.03.2023 passed by Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] qua the assessment years 2013-14 to 2018-19 on the grounds inter-alia that:- “ITA No.2141/M/2023 for A.Y. 2013-14 1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Unexplained Cash Credits of Rs.631,74,02,800/ made u/s 68 of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition of undisclosed Brokerage of Rs.17,29,38,902/- without appreciating the fact that the assessee has earned brokerage on the undisclosed interest received on cash loans given.

3. The appellant craves to leave, to add, to amend and/or to alter any of the ground of appeal, if need be.”

“ITA No.2140/M/2023 for A.Y. 2014-15 1. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Unexplained Cash Credits of Rs.562,42,94,400/- u/s 68 of Income Tax Act, 1961.

2. On the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition of undisclosed Brokerage of Rs.32,69,03,961/- without appreciating the fact that the assessee has earned brokerage on the undisclosed interest received on cash loans given.

3. The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal, if need be.

“ITA No.2139/M/2023 for A.Y. 2015-16 1. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Unexplained cash credits of Rs.406,97,58,000/- made u/s 68 of Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition of undisclosed Brokerage of Rs.43,83,13,586/- without appreciating the fact that the assessee has to 2141/M/2023 3 M/s. Evergreen Enterprises. earned brokerage on the undisclosed interest received on cash loans given. 3. The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal

, if need be.” “ITA No.2138/M/2023 for A.Y. 2016-17

1. On the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition of undisclosed Brokerage of Rs.43,83,13,586/- without appreciating the fact that the assessee has earned brokerage on the undisclosed interest received on cash loans given.

2. The appellant craves to leave, to add, to amend and/or to alter any of the ground of appeal, if need be.”

“ITA No.2137/M/2023 for A.Y. 2017-18 1. On the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Unexplained cash credits of Rs.66,06,06,000/- made u/s 68 of Income Tax Act, 1961.

2.

On the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition of undisclosed Brokerage of Rs.45,63,97,675/- without appreciating the fact that the assessee has earned brokerage on the undisclosed interest received on cash loans given.

3. The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal

, if need be.” “ITA No.2136/M/2023 for A.Y. 2018-19

1. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is not justified in deleting the addition of undisclosed Brokerage of Rs.45,63,97,675/- without appreciating the fact that the assessee has earned brokerage on the undisclosed interest received on cash loans given.

2. The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal, if need be.”

3.

Briefly stated facts necessary for consideration and adjudication of the issues at hand are : initial returns of income filed by the assessee company for A.Y. 2013-14 to A.Y. 2018-19 were processed under section 143(1) of the Income Tax Act, 1961 (for short 'the Act'.). Thereafter on the basis of search and survey to 2141/M/2023 4 M/s. Evergreen Enterprises.

action carried out under section 132/133A of the Act on 06.10 2017 in case of M/s. Sabri Developers LLP and M/s. Evergreen Enterprises and other entities incriminating evidences relating to undisclosed money lending and borrowing activities were found and seized vide annexure A-1 to A-117 at the assessee's premises. Assessment proceedings under section 143(3) read with section 153(A) were initiated. Statements of the partners of the assessee firm were recorded wherein it was admitted that he has been engaged in the business of finance and involved in cash lending and borrowing business and income in cash in the form of brokerage in his personal capacity. In response to the notice issued under section 153(A) assessee had filed its returns of income declaring total income of Rs.10,61,190/- for A.Y. 2013-14 to A.Y. 2018-19. After issuance of notice under section 143(2) and 142(1) and after hearing the assessee the assessment was framed under section 143(3) read with section 153A for A.Y. 2013-14 to A.Y. 2017-18 and for A.Y. 2018-19 assessment has been framed under section 143(3) of the Act making addition under section 68 of the Act and for unexplained brokerage income for A.Y. 2013-14 to A.Y. 2018- 19 as under: Addition made For A.Y. Rs.6,49,14,02,890/- 2013-14 Rs.595,27,26,500/- 2014-15 Rs.450,95,74,650/- 2015-16 Rs.44,03,75,660/- 2016-17 Rs.1,11,80,99,490/- 2017-18

Rs.45,67,75,480/- 2018-19 to 2141/M/2023 5 M/s. Evergreen Enterprises.

4.

The assessee carried the matter before the Ld. CIT(A) by way of filing appeals who has passed a composite order for A.Y. 2013-14 to A.Y. 2018-19 by deleting the addition in the hands of the assessee by partly allowing the appeals. Feeling aggrieved with the impugned orders passed by the Ld. CIT(A) revenue has come up before the Tribunal by way of filing present appeals.

5.

We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

6.

Undisputedly notice under section 153A was issued in this case on the basis of search and seizure operation carried out in case of M/s. Sabri Developers LLP and M/s. Evergreen Enterprises on 06/10/2017. It is also not in dispute that in the aforesaid appeals from A.Y. 2013-14 to A.Y. 2018-19 addition has been made on account of unexplained cash credit under section 68 and unexplained brokerage income on brokerage basis only. It is also not in dispute that the addition which is made in the aforesaid assessment years in case of the appellant has already been made on substantive basis in the hands of Shri Nilesh Bharani.

7.

In the backdrop of the aforesaid undisputed facts the Ld. CIT(A) deleted the protective addition made in the hands of the assessee by returning following findings:

“16.2. In the case of Sh. Nilesh Bharani the appeals for AY 2012-13 to 2018-19 have been dismissed. Since the substantive addition is made in the hand of Sh. NileshBharani have been sustained therein, the to 2141/M/2023 6 M/s. Evergreen Enterprises. protective additions made in the hands of the appellant (i.e. quantum additions) stand deleted. All other grounds stand dismissed for the same reasons as discussed therein. Thus these appeal are treated as PARTLY ALLOWED for AY 2013-14 to 2018-19.”

8.

The Ld. D.R. for the revenue challenging the impugned deletion made by the Ld. CIT(A) relied upon the order passed by the AO and contended that to protect the interest of the revenue, the protective addition made in this case should be sustained.

9.

However, on the other hand to repel the argument addressed by the Ld. D.R for the Revenue, the Ld. A.R. for the assessee contended that since same addition made on protective basis in the hands of present assessee as has been made in the hands of Shri Nilesh Bharani on substantive basis the Ld. CIT(A) has rightly deleted the addition.

10.

We are of the considered view that when after duly thrashing the facts and by relying upon the incriminating materials and evidence available with AO he has arrived at a definite conclusion that the addition made in this case on protective basis has already been made on substantive basis in the hands of Shri Nilesh Bharani, filing of present appeals before the Tribunal by the revenue is just to generate the unnecessary litigation. Even otherwise the appellant revenue department has no machinery provisions under the Act to raise demand against the present assessee on the basis of protective addition and as such it is a futile exercise on the part of the revenue to challenge the protective addition deleted by the Ld. CIT(A). to 2141/M/2023 7 M/s. Evergreen Enterprises.

11.

In view of what has been discussed above finding no illegality or infirmity in the impugned deletion made by the Ld. CIT(A) aforesaid appeals filed by the Revenue are dismissed.

Order pronounced in the open court on 27.09.2023.

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