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Facts
A search related to AsaramBapu revealed an unaccounted money lending business, with Sh. Sant Lal Aggarwal identified as a handler. Information reached the ITO that the assessee, Suresh Chand Goel, had received cash loans from this network. Based on this, the AO reopened assessments under Section 147, believing income had escaped assessment, and made additions under Section 69 for undisclosed income for Assessment Years 2010-11 to 2013-14, which were upheld by the Ld. CIT(A).
Held
The Tribunal noted that the issue was covered by its previous orders in M/s Shagun Jewellers Pvt. Ltd. and Gian Chand & Sons, which had deleted similar additions based on the same ledger accounts and statements. Finding no new material from the Revenue to deviate from these precedents, the Tribunal allowed the assessee's appeals, deleting the additions confirmed by the Ld. CIT(A).
Key Issues
Validity of reopening assessment under Section 147 based on 'borrowed satisfaction' and lack of nexus, and the sustainability of additions under Section 69 solely based on third-party statements and ledger entries without direct evidence.
Sections Cited
69, 132A, 131, 147, 148, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
order of the Commissioner of Income Tax (Appeals)-16 New Delhi [‘Ld.
CIT(A)’ for short] dated 22/11/2018 and 25/11/2018pertaining for the Assessment Years 2010-11 to 2013-14 respectively.
In all the above Assessment Years, the A.O. made addition u/s 69 of the Act on account of investment made out of books of account as undisclosed income. Since all the above appealsare preferred by the single assessee, involving identical issues, the above appeals are consolidated and heard together. For the sake of convenience Brief
2ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO facts of the case for Assessment Year 2010-11 as mentioned in the order of the Ld. CIT(A) are as under:-
“On 09.03.2015, the Directorate of Income Tax (Inv.), Ahmedabad took custody of 42 gunny bags seized by Surat Police after executing a warrant u/s 132A of the Income Tax Act, 1961 in the case of Sh. Narayan Sai and AsaramBapu. A perusal of the documents found in the 42 gunny bags revealed the unaccounted money lending business of AsaramBapu and his associates. Material evidence in this regard was also retrieved from the data backup of the computer, pen drives, hard disks etc. also found inside the gunny bags. During the course of post-search proceedings, on 25- 26/09/2015, several beneficiaries of the money lending business were identified by the Surat Directorate. The statement of Sh. DevidasTikamdasChattani alias Dev Kumar, a close confidant of Asarambabu, was recorded on 25.09.2015 u/s 131 of the Income Tax Act. At Asaram's instance, ShDevidas had conducted an audit of cash loans account of Delhi Ashram of AsaramBapu and was hence privy to and could throw light on the contents of the data. He identified the ledger bearing title "Bhagat" as that pertaining to the funds managed by Sh. Santlal Aggarwal, amounting to Rs.200 crores. He further stated that loan was disbursed to around 100 parties from the Delhi Ashram, out of which the transactions with approximately 60 of such parties were done through Sh. Santlal Agarwal, popularly known as Bhagat. Further, when Sh. Dev Kumar was shown the printout of the Master Ledger and asked to identify the persons whose names are appearing in it, he stated that apart from individual ledger balance of Sh. Santlal Aggarwal in the name of Bhagat, there are a number of other accounts which were being transacted through Sh. Santlal Aggarwal, meaning thereby that he was the handler on behalf of such persons. Subsequently, on 09.03.2016 a survey action was conducted at the office premises of Sh. Sant Lai Agarwal at 5586 Lahori Gate, Naya Bazar, Delhi as well as 802 Ambadeep Building, Connaught Place, New Delhi. During the course of survey and in post survey proceedings, Sh. Santial Aggarwal was confronted with the ledger accounts
3ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO reflecting loan transactions with the assessee that had been retrieved from the gunny bags seized u/s. 132A. In a statement recorded on oath, ShSanlal Aggarwal admitted to having business transactions with the assessee. However, evidence to substantiate claim was not filed. Information regarding such parties was communicated to the concerned Assessing Officers. Information was received by ITO Ward 47(1), New Delhi that Sh.Suresh Chand Prop. M/s Anshu Trading is one of the many entities who has received cash loans from AsaramBapu through Sh. Santlal Agarwal. The amount of cash loan/interest paid as per ledger account in possession of the Income Tax Department was Rs 1,30,09,600/- for A.Y 2010-11. Based on this information the AO formed a prima facie belief that income to the extent of Rs 1,30,09,600/-had escaped assessment. Accordingly, the case was reopened u/s 147. Subsequently, an addition of the said amount was made by the AO in his order dated 29.12.2017 for Assessment Year 2010-11.”
Similarly the A.O. made addition of Rs. 99,96,800/- for Assessment Year 2011-12, Rs. 53,78,400/- for Assessment Year 2012- 13 and Rs. 1,44,30,000/- for Assessment Year 2013-14 as undisclosed income. As against the assessment orders for the Assessment Year 2010-11 to 2013-14, the Assessee preferred four Appeals before the Ld. CIT(A). The Ld. CIT(A) vide orders impugned dismissed the appeal of the Assessee. Aggrieved by the orders of the Ld. CIT(A), the Assessee preferred the above captioned Appeals.
The Ld. Counsel for the Assessee addressing on Ground No. 1 to 7 submitted that there is an absence of live linking or nexus between thematerial and the A.O’s belief of escarpment of incomeand submitted that the A.O. assumed jurisdiction u/s 147 of the Act on 4ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO the basis of borrowed satisfaction Investigation Wing, whereinthe A.O. had made no independent enquiry and approval has been granted in mechanical manner by the PCIT u/s 151 of the Act. The Ld. Counsel has also taken us through the reasons recorded by the A.O. and submitted that the A.O. in order to formabelief of escarpment, relied upon the ledger account in the form of table/chart and statement of Devidas Tikamdas Chattani alias Dev Kumar. The Ld. Counsel further submitted that the issue involved in the present appeal is squarely covered by the order of the Tribunal dated 16/06/2020 in in the case of M/s Shagun Jewellers Pvt. Ltd. and further submitted that the said order of the Tribunal has been followed by the Co-ordinate Bench of the Tribunal in the case of Gian Chand & Sons Vs. ACIT in and ors and allowed the Appeals of the Assessee on 01/11/2021 which was having similar set of facts. Thus, prayed for allowing the captioned Appeals.
Per contra, the Ld. Ld. Departmental Representativesubmitted that the statement and corroborative evidence in the form of ledgers reflects the transaction of loan and also proves that the Assessee indeed taken loan/paid interest on the loans from/to Sh. Shantlal Agarwal of Jagat Group, the felicitator of Sh. Asaram Bapu. Apart from the same, the Assessee himself admitted to having trading
5ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO transaction with Shantlal Agarwal of Jagat Group, therefore, relying on the orders of the Lower Authorities, sought for dismissal of the Appeals of the Assessee.
We have heard both the parties and perused the material available on record.We have perused the order of the Co-ordinate Bench of the Tribunal in the case of M/s Shagun Jewellers Pvt. Ltd. (supra) and we find that facts and the circumstances of the said case are similar except the quantum involved in the present Appeals.
7. Further the Co-ordinate Bench of the Tribunal in the case of Gian Chand & Sons (supra) has relied on the order of the Tribunal order made in M/s Shagun Jewellers Pvt. Ltd. (supra) and deleted the addition. For the sake of ready reference the finding and the conclusion part of the order of the Tribunal in the case of Gian Chand & Sons (supra) are reproduced as under:-
“6. We have perused the above quoted order and find the background and facts of the case are similar except the quantum involved. For the sake of ready reference, the relevant portion of the order relied by the ld. AR is reproduced as under:
“5. Briefly stated, the facts of the case are that a search was conducted at Ahmadabad and New Delhi in which certain documents were found and seized by the search party. From the documents found, unaccounted money lending business of Shri Asharam Bapu and his associates came into light. It also came to the knowledge of the Revenue that there were several beneficiaries. Statement of one Shri Devi Das Tikamdas
6ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO was recorded u/s 131A r.w.s 131 of the Act on 25th and 26th September, 2015.
6. In his statement, Shri Devi Das Tikamdas Chattani stated that whole of the loan account was maintained by one Shri PopatLalVani. Shri Devi Das TikamdasChattani also stated that one Shri SantLal Aggarwal was handler of Rs. 200 crores at Delhi from where the loan was disbursed to around 100 parties, out of which 60 such parties were transacted through Shri SantLal Aggarwal.
The Assessing Officer of the assessee was informed by the Investigation Wing of the department that from verification of documents seized, it clearly appears that Shri SantLal Aggarwal received cash loans from Shri Asharam and further disbursed to other parties and the assessee is one of the beneficiaries. According to the Assessing Officer, the following cash loans were given to the assessee: Date Beneficiary Name Debit Credit Group Contra 01.07.2009 Shagun Jewellers 0 72,00,090 Govind Delhi 01.07.2009 Shagun Jewellers 72,00,090 0 Govind Interest Pvt. Ltd. received 01.07.2009 Shagun Jewellers 75,00,000 0 Govind Delhi 29.03.2010 Shagun Jewellers 0 83,16,000 Govind Delhi 29.03.2010 Shagun Jewellers 83,16,000 0 Govind Interest Pvt. Ltd. received 29.03.2010 Shagun Jewellers 83,00,000 0 Govind Delhi
Total 3,13,16,090 1,55,16,090
8. On the strength of the information received from the ADIT, INV, the Assessing Officer assumed jurisdiction u/s 148 of the Act and accordingly, statutory notices were issued and served upon the assessee. ……..
Coming to the merits of addition of Rs. 1,55,16,090/-, once again, the entire addition revolves around the statement of Shri Devi Das TikamdasChattani. In his statement, Shri Devi Das
7ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO
TikamdasChattani stated that Shri SantLal Aggarwal is handler and is the main person for disbursing cash loan to 60 parties. The alleged cash loans given to the assessee is already exhibited elsewhere at para 7 hereinabove.
As mentioned elsewhere, the foundation of the impugned addition is the statement of Shri Devi Das TikamdasChattani. Except for that, there is no direct evidence brought on record to show that any cash transactions took place between the assessee and the said person.
On the contrary, the statement of Shri SantLal Aggarwal which is part of the assessment order and is extracted at pages 17 to 24 of the assessment order shows that Shri SantLal Aggarwal, answering to question No. 13, emphatically stated that he does not know who Shri Devi Das TikamdasChattani is. Once again, answering to question No. 18, Shri SantLal Aggarwal stated that he does not know who is Shri Devi Das TikamdasChattani. Answering to question No. 19, Shri SantLal Aggarwal stated that he does not know Shri Devi Das TikamdasChattani and never handled Rs. 200 crores and no such transaction was done by him except selling rice to the Ashram. In the very same statement, Shri SantLal Aggarwal accepted the transaction of M/s Index Securities and Research Pvt Ltd and the appellant company.
The Assessing Officer never confronted Shri Devi Das TikamdasChattani to Shri SantLal Aggarwal. If the statement of Shri Devi Das TikamdasChattani is to be believed, then on the same facts, statement of Shri SantLal Aggarwal cannot be ignored or brushed aside lightly. Merely because the statement of Shri SantLal goes in favour of the assessee, cannot be a reason to disbelieve the same. As mentioned elsewhere, there is no direct evidence brought on record which could suggest that some cash transactions took place between the assessee and the searched person. The observations made by the Assessing Officer at page 25 of the assessment order clearly show that the entire addition has been made on surmises and conjectures. The relevant para of the assessment order reads as under:
"From above it is clear that M/s. Shagun Jewellers has had transactions with M/s Index Securities & Research Put Ltd which was a conduit company managed by Mr.Santlal Aggarwal who has further acted on behalf of Sh. AsharamBapu. Hence, it
8ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO cannot be ruled out that cash loan were received by the assessee from Santlal Aggarwal. Moreover, the seized material retrieved, clearly indicates that the assessee company has paid Rs. 1,55,16,090/- in cash on account of interest on such cash loan.
Considering the facts of the case in hand, in the light of statement of Shri SantLal Aggarwal, we do not find any merit in the impugned addition and the same is directed to be deleted. Accordingly, Ground Nos. 4 and 5 are allowed.”
7. The amounts mentioned in the ledger account in the case of the assessee which is the similar ledger considered by the ITAT in the order of the M/s Shagun Jewellers is mentioned below:
A.Y. 2009-10 Date Debit Credit Beneficiary Name Contra Group 01.04.2008 30000 0 Gian Chand Mohinder Kumar Delhi 01.04.2008 0 30000 Gian Chand Mohinder Kumar Interest received 14.06.2008 270000 0 Gian Chand Mohinder Kumar Delhi 14.06.2008 0 270000 Gian Chand Mohinder Kumar Delhi 26.07.2008 0 11000000 Gian Chand Mohinder Kumar Interest received 26.09.2008 487800 0 Gian Chand Mohinder Kumar Delhi 26.09.2008 0 4878000 Gian Chand Mohinder Kumar Interest received 01.01.2009 567000 0 Gian Chand Mohinder Kumar Delhi 01.01.2009 0 567000 Gian Chand Mohinder Kumar Interest received 01.01.2009 1000000 0 Gian Chand Mohinder Kumar Delhi 31.03.2009 540000 0 Gian Chand Mohinder Kumar Interest received 31.03.2009 0 540000 Gian Chand Mohinder Kumar Delhi A.Y. 2010-11
Date Debit Credit Beneficiary Name Contra FY Group 06.12.2009 1000000 0 Gian Chand Mahender Delhi 2009-10 07.01.2009 534300 0 Gian Chand Mahender Delhi 2009-10 07.01.2009 0 534300 Gian Chand Mahender Interest 2009-10 received 29.09.2009 513000 0 Gian Chand Mahender Delhi 2009-10 29.09.2009 0 513000 Gian Chand Mahender Interest 2009-10 received
9ITA Nos. 459 to 462/Del/2019 Suresh Chand Goel Vs. ITO
0 Gian Chand Mahender 31.10.2009 2000000 Delhi 2009-10 0 Gian Chand Mahender 12.07.2009 2000000 Delhi 2009-10 0 Gian Chand Mahender 01.08.2010 461700 Delhi 2009-10 461700 Gian Chand Mahender 01.08.2010 0 Interest 2009-10 received 0 Gian Chand Mahender 28.03.2010 405000 Delhi 2009-10 405000 Gian Chand Mahender 28.03.2010 0 Interest 2009-10 received A.Y. 2011-12
Date Debit Credit Beneficiary Name Contra FY Group 04.01.2010 0 4000000 Gian Chand Mahender Delhi 2010-11 24.04.2010 0 1000000 Gian Chand Mahender Delhi 2010-11 24.06.2010 532200 0 Gian Chand Mahender Delhi 2010-11 24.06.2010 0 532200 Gian Chand Mahender Interest 2010-11 received 17.08.2010 2500000 0 Gian Chand Mahender Delhi 2010-11 1000000 Gian Chand Mahender 09.09.2010 0 Delhi 2010-11 0 Gian Chand Mahender 10.01.2010 514800 Delhi 2010-11 514800 Gian Chand Mahender 10.01.2010 0 Interest 2010-11 received 0 Gian Chand Mahender 12.03.2010 1000000 Delhi 2010-11 0 Gian Chand Mahender 18.01.2011 491100 Delhi 2010-11 491100 Gian Chand Mahender 18.01.2011 0 Interest 2010-11 received 31.03.2011 472500 0 Gian Chand Mahender Delhi 2010-11 31.03.2011 0 472500 Gian Chand Mahender Interest 2010-11 received A.Y. 2012-13
Date Debit Credit Beneficiary Name Contra FY Group 30.06.2011 412500 0 Gian Chand Mahender Delhi 2011-12 30.09.2011 0 412500 Gian Chand Mahender Interest 2011-12 received 09.02.2011 1500000 0 Gian Chand Mahender Delhi 2011-12 30.09.2011 461250 0 Gian Chand Mahender Delhi 2011-12 30.09.2011 0 461250 Gian Chand Mahender Interest 2011-12 received 0 Gian Chand Mahender 27.12.2011 432000 Delhi 2011-12 432000 Gian Chand Mahender 27.12.2011 0 Interest 2011-12 received 0 Gian Chand Mahender 02.08.2012 1000000 Delhi 2011-12 A.Y. 2013-14
Date Debit Credit Beneficiary Name Contra FY Group 29.06.2012 450000 0 Gian Chand Mahender D. Kumar 2012-13 29.06.2012 0 450000 Gian Chand Mahender Interest 2012-13 received 03.10.2012 450000 0 Gian Chand Mahender D. Kumar 2012-13 03.10.2012 0 450000 Gian Chand Mahender Interest 2012-13 received 01.01.2013 458000 0 Gian Chand Mahender D. Kumar 2012-13 458000 Gian Chand Mahender 01.01.2013 0 Interest 2012-13 received
Since, the order of the ITAT has already dealt with the copy of the ledger account, statements of various persons recorded during the search and post search, in the absence of any new material brought before us, we decline to deviate from the ratio in the order of the ITAT in the case of M/s Shagun Jewellers Pvt. Ltd.
9. With regard to the Ground No. 5 in the A.Y. 2011- 12 pertaining to repayment of loan since the same being the part of the same ledger account, the similar ratio of adjudication applies mutatis mutandis.”
8. In view of the above, as the Co-ordinate Bench of the Tribunal has already tested the very same copy of ledger account, statement of various person recording during the search and post search and deleted the addition, since no new material brought before us by the Revenue, we find no reason to deviate from the ratio of the Tribunal in the case of M/s Shagun Jewellers Pvt. Ltd. (supra) and Gian Chand & Sons (supra). Accordingly, we allow Grounds of Appeal of the Assessee by deleting the additions confirmed by the Ld. CIT(A).
In the result, Appeal of the Assessee in 460/DEL/2019, 461/DEL/2019 and ITA No. 462/DEL/2019)are allowed.