THE ACIT, 4(1), INDORE vs. SHRI SANJAY LUNAWAT, INDORE

PER MANISH BORAD, A.M

The above captioned appeal & Cross-objection for Assessment

Year 2010-11 are directed against the orders of Ld. Commissioner

of Income Tax(Appeals)-II (in short ‘Ld. CIT(A)], Indore dated

15.1.2018 which is arising out of the order u/s 143(3) of the

Income Tax Act 1961(In short the ‘Act’) dated 22.03.2013 framed by

JCIT, Range-3, Indore.

“On the facts and in the circumstances of the case the Ld. CIT (A):-

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 assessee by holding that similar claim made by the assessee was allowed in subsequent year.

4, Whether on the facts and in the circumstances or the case, Ld. CIT (A) is justified in deleting the additions of Rs. 9,15.600/- on account of disallowances or claimed of interest out of income from other sources. by holding that similar claim made by the assessee was allowed in subsequent year.

C.O.No.32/Ind/2018 Assessment Year 2010-11

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 Departmental ITA No.396/Ind/2018 - A.Y. 2010-11

to deletion of additions of Rs. 85,00,000/- and Rs 1,07,51,000/- as

received from Shri Rakesh Agrawal and M/s Royal Township [ Prop

concern of Shri Rakesh Agrawal] as advance against the sale of

land. Facts as culled out from the orders of Revenue Authorities are

that the assessee during the course of assessment proceeding filed

confirmation with PAN of the persons from whom advances were

received against sale of land. It was also pointed out to the

Assessing Officer that land was sold and also registered in the name

of the persons from whom advances were received by the assessee

but the said amount was added to the total income of the assessee

by the Assessing Officer on the ground that mere filing of

confirmation and providing of PAN is not sufficient as to justify the

genuineness of the amount as received in the form of advances. The

Assessing Officer relied on certain judicial pronouncements in the

assessment order and added Rs. 85,00,000/- and Rs 1,07,51,000/-

u/s 68 of the I.T. Act to the total income of the assessee as

undisclosed income.

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 5. Being aggrieved, the assessee challenged the action of the

Assessing Officer before the ld. CIT(A) who called for the remand

report and after having gone through the facts/circumstances,

material and submissions thereof deleted the addition. The

Operative part/findings recorded by the ld. CIT(A) are reproduced

hereunder:

“..........The appellant during the course of hearing filed copy of confirmation letter as filed before the assessing officer, copy of affidavit and copy of registry in respect of land actually sold and registered in the name of Shri Rakesh Agrawal. These papers were forwarded to the assessing officer but the assessing officer in his remand report re-iterated the same facts as stated in the assessment order. The appellant during the course of hearing furnished complete details in respect of advances as received by him against the sale of Agricultural land through cheques and also in cash, details of landsold to Shri Rakesh Agrawal including the registry as provided which was also made available to the assessing officer mentioning the details of cheques as actually received by the appellant and significant amount of cash which was adjusted in these two registry. The appellant has provided the PA No, Confirmation and affidavit. In addition to that, copy of the registry as executed was also provided proving not only the identity but the genuineness of transactions as executed by the appellant. The amount as received by the appellant as advance against sale of land was thus proved by the appellant. Hence, the assessing officer was not justified in adding the same as income of the appellant. I hereby direct the assessing officer to delete the addition of Rs 85,00,000/- and Rs 1,07,50,000/- totaling to Rs 1,92,50,000/- made to the total income of the appellant. This ground of appeal is accordingly allowed.”

submitted that mere filing of confirmation and providing of PAN is 5

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 not sufficient as to justify the genuineness of the amount, thus, the

Assessing Officer rightly made the additions. On the other hand, ld.

Counsel for the assessee, reiterating the submissions made before

Revenue Authorities, relied upon the order the ld. CIT(A) and

submitted that since the amount of advances received by the

assessee were subsequently adjusted against the sales made by the

assessee and the same was also verifiable from the registered sale

deeds, the Assessing Officer was not justified in treating the

amount of advance received by the assessee as his income because

the assessee had sold agricultural land belonging to him to Shri

Rakesh Agrawal in lieu of consideration which included the amount

of advance received from the said party. Further, ld. Counsel for the

assessee also relied upon certain judicial pronouncement/synopsis

of arguments as detailed in the paper books filed before us and

submitted that the view drawn in these judicial pronouncements

supports the order of the ld. CIT(A).

perused material available on record. We find that the assessee

during the course of first appellate proceedings filed copy of

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 confirmation of accounts and affidavit of Shri Rakesh Agrawal

wherein he categorically accepted that he had advanced Rs.

85,00,000/- and Rs. 1,07,51,000/- to the assessee as advance

against purchase of land. The assessee also filed copy of sale

registries executed subsequently wherein substantial amount of

advance received was shown to have been adjusted. The ld. CIT(A)

called for a remand report from the Assessing Officer on these

documents filed during the course of appellate proceedings. The

Assessing Officer submitted remand report dated 05-04-2017 which

is filed on page nos. 187-193 of the paper book. On perusal of the

remand report, the ld. CIT(A) found that the Assessing Officer did

not comment on any of the documents filed by the assessee during

the course of the appellate proceedings rather the Assessing Officer

simply reiterated the findings of the then Assessing Officer. Thus, it

is clear that the assessee filed ample documentary evidences to

establish the identity and creditworthiness of Shri Rakesh Agrawal

and genuineness of the transaction entered into with him.

Therefore, we are of the view that ld. CIT(A) was right in recording

that the Assessing Officer failed to controvert the genuineness of

the transaction and identity as well as creditworthiness of the said 7

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 party. Before us too, the ld. Counsel for the assessee filed the

following documents in support of the action of the ld. CIT(A):

S. No Description of documents Page No. of Paper Book 1 Copy of confirmation of accounts of Shri Rakesh Agrawal wherein he duly confirmed the amount of advances of Rs. 85,00,000/- and 59-60 1,07,51,000/- given to the assessee 2 Copy of affidavit of Shri Rakesh Agrawal on oath wherein he again confirmed that he gave advances of Rs. 85,00,000/- and Rs. 61-62 1,07,51,000/- to the assessee towards purchase of agricultural land 3.1 Copy of registry as executed between the assessee and Shri Rakesh Agrawal for sale of agricultural land for a consideration of Rs. 63-69 1,50,79,000/- 3.2 Copy of registry as executed between the assessee and Shri Rakesh Agrawal for sale of agricultural land for a consideration of Rs. 70-76 63,94,000/- 3.3 Copy of registry as executed between the assessee and Shri Rakesh Agrawal for sale of agricultural land for a consideration of Rs. 77-84 3,46,27,000/- 3.4 Copy of registry as executed between the assessee and Shri Rakesh Agrawal for sale of agricultural land for a consideration of Rs. 85-92 3,59,00,000/-

Further, the details of the amount received as advance and

subsequently adjusted against sales made to Shri Rakesh Agrawal

were also filed before us as follows:

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018

S. No Particulars Amount of advance Relevant adjusted Page No. [in Rs.] 1 Registry as executed between the assessee and Shri Rakesh Agrawal for sale of 85,00,000 65 agricultural land for a consideration of Rs. 1,50,79,000/- Total 85,00,000 2.1 Registry as executed between the assessee and Shri Rakesh Agrawal for sale of 45,79,000 65 agricultural land for a consideration of Rs. 1,50,79,000/- 2.2 Registry as executed between the assessee and Shri Rakesh Agrawal for sale of 8,94,000 72 agricultural land for a consideration of Rs. 63,94,000/- 2.3 Registry as executed between the assessee and Shri Rakesh Agrawal for sale of 29,27,000 79 agricultural land for a consideration of Rs. 3,46,27,000/- 2.4 Registry as executed between the assessee and Shri Rakesh Agrawal for sale of 23,51,000 87 agricultural land for a consideration of Rs. 3,59,00,000/- Total 1,07,51,000

From perusal of the above, it is clear that amount of advances

of Rs. 85,00,000/- and Rs. 1,07,51,000/- received from Shri

Rakesh Agrawal were subsequently adjusted against sale of

agricultural land made to Shri Rakesh Agrawal and the entire

particulars of these advances were duly mentioned in the

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 registered sale deeds as well. Thus, there was no justification

for adding the amount of these advances to the total income of

the assessee u/s 68 of the Income-Tax Act, 1961. So far as the

case-laws cited by the Assessing Officer are concerned, we find

that these are not applicable to the facts of the present case

since the same deal with receiving of unsecured loan by an

assessee and in the present case, no unsecured loan was

received by the assessee from Shri Rakesh Agrawal rather the

assessee received advance against sale of land from Shri

Rakesh Agrawal which was subsequently adjusted against

sales made to Shri Rakesh Agrawal and this fact was duly

verifiable from the registered sale deeds executed

subsequently. It is a settled position of law that no addition is

called for u/s 68 of the Income-Tax Act, 1961 in respect of

advances (cash credits) found recorded in the books of

accounts which are subsequently adjusted against sales. It is

also a well settled proposition of law that no addition is

sustainable on account of advance received which stands duly

reconciled against different sale deeds executed by the

assessee in absence of any evidence to doubt the genuineness 10

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 or correctness of registered sale deeds executed by the

assessee. Our view finds support from the following judicial

pronouncements:

Sahid as reported in [2018] 402 ITR 110 (Allahabad) held as

under:

“12. Then as to question no. 2, we find that there is nothing to doubt the correctness of the finding of the Tribunal that upon two remand reports, the entire cash credit entry of Rs. 37,10,000/- considered for the purpose of addition made under Section 68 of the Act, stood reconciled against different sale deeds executed by the assessee. Once registered sale deeds had been executed by the assessee and the cash credit entries found standing in the books of account of the assessee during the previous year relevant to the Assessment Year 2005-06 had been adjusted against the same, there remained no further doubt as to the identity of the persons who deposited the money with the assessee in the previous year relevant to Assessment Year 2005-06. The fact that such person did not receive the letter or did not appear in person during the inquiry made by the assessing officer at the original assessment stage gets overshadowed and looses its relevance in absence of any evidence to doubt the genuineness or correctness of registered sale deeds executed by the assessee. 13. Even in respect of amount of Rs. 8,00,000/- the second remand report as extracted by the CIT (Appeals) clearly mentioned that Aashiq Ali Siddiqui had got the sale deed executed in his favour wherein an amount of Rs. 8,00,000/- had been adjusted. Thus, the finding of the Tribunal on this issue is also a concluded finding of fact recorded on the basis of material and evidence on record and warrants no interference. Questions of law are answered in favour of the assessee and against the revenue.”

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 9. Hon’ble Supreme Court of India in the case of Pr. CIT v.

Montage Enterprises (P.) Ltd. as reported in [2018] 100

taxmann.com 100 (SC) dismissed the SLP filed by the Department

against the order of the Hon’ble Delhi High Court. The Hon’ble Delhi

High Court in the case of Pr. CIT v. Montage Enterprises (P.) Ltd. as

reported in [2018] 100 taxmann.com 99 (Delhi) approved the

findings of the Ld CIT(A) and Hon’ble ITAT wherein it was held that:

“5. The Assessee has three manufacturing Units, i.e. Malanpur, Jammu and Noida. The original income declared was 'Nil' for the relevant Assessment Years. A search and seizure operation was conducted in respect of M/s. Flex Group of Companies on 23.02.2006, which led to the notice being issued under Section 153A of the Act to the Assessee. In the course of search assessment proceedings, the Assessing Officer added the sum of Rs.2.32 crores, which the Assessee claim towards trade credit. The CIT(Appeal) directed deletion of this amount after due verifications of the record by expressing his satisfaction that the credits claimed were genuine and in accord with the documents and the records produced by the Assessee. The CIT's findings are as follows :— "10.3 I have carefully considered the facts of the case, submissions made by the appellant and remand report submitted by the A.O. It is observed that the appellant could not file the confirmations from the trade customers from whom the advance against sale is received in this year and in the absence of confirmations, the A.O. treated the amount of Rs. 2,32,13,640/- as income of the appellant under Section 68 of the Act. It is observed from the details filed before the A.O. that the ledger accounts of the concerned parties were filed before the A.O. as well as during the remand proceedings. The trade customers as appearing in the list are the regular customers making purchases from the 12

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 appellant for the last many years. A perusal of the statement of accounts of the said parties for the current as well as subsequent year shows that the appellant had supplied the goods in the normal course of the business. The realization of proceeds thereof is an ongoing business activity. The only finding of the A.O. is that the appellant has been unable to produce the confirmations from few of the parties. It is observed from the submissions that the goods have been supplied under various invoices and the payments have been received by account payee cheques from time to time. In view of the totality of facts and circumstances, it is held that the parties from whom the appellant had received the advances are the regular customers of the appellant in the preceding as well as subsequent years. The trade advances received by the appellant have been adjusted against the sales made to them in the subsequent years. Few of the customers from whom substantial amount of advance is received are limited companies. It is not the case of the A.O. that the advance is outstanding in the books for the last many years. The advance is adjusted against the sale in the immediate next year. As such, the addition made by the A.O of Rs.2,32,13,640/- is deleted." 6. The Income Tax Appellate Tribunal (ITAT) affirmed the above finding. The Court is of the opinion that the question urged is purely factual. Since the findings recorded by the CIT(A) and the ITAT are concurrent, they reflected that the trade advances received by the applicant were adjusted against the sales made to them in the subsequent years. As such, no question of law arises.”

supports the above view drawn by us:

a) Pr. CIT, Durgapur v. Dutta Automobiles (P.) Ltd. as reported in [2016] 287 CTR 684 (Cal); b) Ayushi Builders & Developers v. DCIT, Central Circle-2, Jodhpur as reported in [2014] 50 taxmann.com 396 (Jodhpur - Trib.); 13

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 c) ACIT v. Titan Engineers as reported in [2011] 15 taxmann.com 340 (ITAT-Bangalore);

the light of the judicial precedents (supra), we are of the view that

the additions of Rs. 85,00,000/- and Rs. 1,07,51,000/- as made by

the Assessing Officer on account of advance received against sale of

land by invoking the provisions of section 68 of the Income-Tax Act,

1961 were unjustifiable since the amount of advances received by

the assessee were subsequently adjusted against the sales made by

the assessee and the same was also verifiable from the registered

sale deeds. Thus, the Assessing Officer was not justified in treating

the amount of advance received by the assessee as his income as

the Assessing Officer failed to consider the fact that the assessee

had sold agricultural land belonging to him to Shri Rakesh Agrawal

in lieu of consideration which included the amount of advance

received from the said party. Accordingly, we are of the view that

the additions of Rs. 85,00,000/- and Rs. 1,07,51,000/- made by

the Assessing Officer were rightly deleted by the Ld CIT(A). We

confirm the order of the ld. CIT(A) on this issue. Therefore, ground

no.1 raised in the appeal of the Revenue is dismissed. 14

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 12. Second ground raised by the Revenue is with regard to

deletion of the additions of Rs. 1,59,30,060/- made u/s 68 of the

I.T. Act in respect of unsecured loan from various persons. Facts,

in brief, as culled out from the orders of the Revenue Authorities

are that the Assessing Officer noted that the assessee has, during

the year under consideration, received unsecured loans from the

following persons:

S. Name of the party PAN Amount [in Rs.] No 1 Anjana Bhachawat ARQPB6739A 5,00,000 2 Manisha Morya AITPM2857J 18,00,000 3 Deepak Jain ABBPJ7325B 31,00,000 4 Shree Mangal Murtee Tradex Private Limited AALCS7463B 18,60,060 5 Vijit Ramavat ADUPR0676G 25,00,000 6 The IESM Academy AAEFT4206F 32,00,000 7 Jain Infratech [Prop. Deepak Jain] ABBPJ7325B 29,70,000 Total 1,59,30,060

The Assessing Officer during the course of assessment

proceedings observed that the assessee could furnish only the

copy of ledger extract and confirmation of accounts of the

parties from whom unsecured loans were taken during the

year. The Assessing Officer accordingly noted that the assessee

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 failed to prove the genuineness of the transaction, identity and

creditworthiness of the depositor with corroborative evidences.

Assessing Officer before the ld. CIT(A) who called for the remand

report and after having gone through the facts/circumstances,

material and submissions thereof deleted the addition. The

Operative part/findings recorded by the ld. CIT(A) are reproduced

hereunder:

“The appellant further claimed that as against fresh addition of Rs 79,00,000/-, an amount of Rs 1,59,30,060/- was added to the total income of the appellant which in any case was not justified. The amount as added by the assessing officer is dealt in detail hereunder:- 4.4.1] SMT ANJANA BHACHAWAT OF Rs 5,00,000/- The appellant had received loan of Rs 5,00,000/- from Smt Anjana Bhachawat during the course of assessment proceeding. Copy of her ledger account in the books of the appellant was filed. The amount was added to the total income of the appellant by stating that PA No and address of the loan creditor was not provided. The appellant has provided copy of confirmation letter, PAN No and also bank account of the loan creditors. The documents as filed by the appellant were referred to the assessing officer for his comments but nothing new was submitted by him. The appellant has filed copy of confirmation letter, copy of ledger of the loan creditor in his books of account and has also filed copy of bank account of the loan creditor wherein the amount as advanced to the appellant was duly reflected. On perusal of the bank account of the loan creditor, it is also clear that no cash was deposited prior to issuance of the cheques to the appellant. The appellant therefore discharged the onus lying on him and no contrary finding was given by the

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 assessing officer on these documents even in remand proceeding. I, therefore, direct the assessing officer to delete the addition of Rs 5,00,000/- as made to the total income of the appellant.

4.4.2] SMT MANISHA MAURYA OF Rs 18,00,000/-. The appellant had received loan of Rs 18,00,000/- from Smt Manisha Maurya during the course of assessment proceeding.Copy of her ledger account in the books of the appellant was filed. The amount was added to the total income of the appellant by stating that PA No and address of the loan creditor was not provided. The appellant has provided copy of confirmation letter, PA No and his bank account wherein the amount as received was duly credited. The documents as filed by the appellant were referred to the assessing officer for his comments but nothing new was submitted by him. The appellant filed copy of confirmation letter, copy of ledger of the loan creditor in his books of account and also filed his bank account wherein the amount as received by him was reflected. The appellant by filing the confirmation and PA No discharged onus lying on him and no contrary finding was given by the assessing officer on these documents even in remand proceeding. I, therefore, direct the assessing officer to delete the addition of Rs 18,00,000/- as made to the total income of the appellant.

4.4.3] SHRI DEEPAK JAIN OF Rs 31,00,000/-

The appellant had received loan of Rs 31,00,000/- from Shri Deepak Jain.During the course of assessment proceeding, the confirmation letter was filed. The amount was added to the total income of the appellant by stating that only confirmation letter was filed but PAN No of the loan creditor was not provided. The appellant during the course of appellate proceeding filed copy of confirmation letter, PAN No, copy of account of the appellant in the book of loan creditor, copy of statement of affairs of Shri Deepak Jain wherein the amount as advanced to the appellant was properly reflected and copy of the Bank statement of loan creditor. The documents as filed by the appellant were forwarded to the assessing officer for his comments but nothing new was submitted by him. The appellant filed copy of confirmation letter, PAN No, copy of account of the appellant in his books, copy of statement of affairs and also filed copy of bank account of the loan creditor wherein the amount as advanced to the appellant was duly reflected. I find that the appellant by filing ample documents has discharged his onus lying on him and no contrary findings were given by the assessing officer on these documents even in remand proceeding. I, therefore, direct the assessing officer

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 to delete the addition of Rs. 31,00,000/- as made to the total income of the appellant.

4.4.4] M/s SHREE MANGAL MURTI TRADEX P LIMITED OF Rs 18,60,060/-

The assessing officer during the course of assessment proceeding added an amount of Rs. 18,60,060/- to the total income of the appellant by invoking the provision of section 68 of the Act by stating that only copy of ledger was filed without PAN No and address. The appellant during the course of appellate proceeding filed copy of account of the appellant in the book of Shri Mangal Murti Tradex P Limited and contra account in the book of the appellant, Copy of Bank statement of M/s Shri Mangal Murti Tradex P Limited with Bank of Baroda, Copy of computation of Income and audited final account. The documents as filed by the appellant were forwarded to the assessing officer but in the remand report nothing new was submitted by him. On perusal of the copy of account of the appellant in the book of that company it is clearly evident that an amount of Rs 21,05,056/- was received at the beginning by the appellant but at the end an amount of Rs 56,86,839/- was due to theappellant. The amount as due from M/s Shri Mangal Murtee Tradex P Limited was shown as loans & advances in the book of the appellant. The assessing officer added two cheques as received from this company by invoking the provision of section 68 of the Act. The appellant from the ample documents as filed has duly discharged the onus lying on it. Hence, the assessing officer was not justified in adding an amount of Rs 18,60,060/- to the total income of the appellant. I, therefore, direct the assessing officer to delete the addition of Rs 18,60,060/- made to the total income of the appellant.

4.4.5] SHRI VIJAY RAMAWAT OF Rs 25,00,000/-

The appellant had received loan of Rs 25,00,000/- from Shri Vijay Ramawat, during the course of assessment proceeding and the confirmation letter was filed. The amount was added to the total income of the appellant by stating that only confirmation letter was filed. The appellant during the course of appellate proceeding filed copy of confirmation letter, PAN No, copy of account of the loan creditor in the book of the appellant and copy of bank statement of loan creditor wherein the amount as advanced to the appellant was properly reflected. The documents as filed by the appellant were forwarded to the assessing officer for his comments but nothing new was submitted by him. The appellant has filed copy of confirmation letter, PAN No, copy of account of the loan creditor in his books of 18

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 account and copy of bank account of the loan creditor wherein the amount as advanced to the appellant was duly reflected. The appellant by filing ample documents has discharged the onus lying on him and no contrary finding was given by the assessing officer on these documents even in remand proceeding. I, therefore, direct the assessing officer to delete the addition of Rs 25,00,000/- as made to the total income of the appellant.

4.4.6] M/s THE IESM ACADEMY, INDORE OF Rs 32,00,000/-

The assessing officer during the course of assessment proceeding added an amount of Rs 32,00,000/- to the total income of the appellant by invoking the provision of section 68 of the Act by stating that only the copy of ledger was filed. The appellant during the course of appellate proceeding filed the copy of account of the appellant in the book of M/SThe IESM Academy, Indore and contra account in the book of the appellant, copy of Computation of total income as filed with Acknowledgment, copy of final account and Copy of Bank statement of that party. The documents as filed by the appellant were forwarded to the assessing officer but in the remand report nothing new was submitted by him. On perusal of the copy of account of the appellant in the book of that firm, it is clearly evident that an amount of Rs 1,65,682/- was due to the appellant at the beginning and at the end an amount of Rs 2,18,833/- was payable by the appellant. The appellant let-out his premises to the said firm for use of office and also to run Hostel by it. The amount as due from the appellant was also reflected in its final account as receivable from the appellant. The two cheques as received by the appellant from the firm was added to the total income of the appellant which was neither proper nor correct to pick isolated one or two transactions from whole copy of account. The amount as issued in the name of the appellant was duly reflected in the bank account of that firm and source of the same is also clear from the Bank statement. The appellant from the ample documents as filed duly discharged onus lying on it. Hence, the assessing officer was not justified in adding an amount of Rs 32,00,000/- to the total income of the appellant. I, therefore, direct the assessing officer to delete the addition of Rs 32,00,000/- made to the total income of the appellant.

4.4.7]M/s JAIN INFRATECH , INDORE OF Rs 29,70,000/-

The assessing officer during the course of assessment proceeding added an amount of Rs 29,70,000/- to the total income of the appellant by invoking the provision of section 68 of the Act by stating that only copy of ledger was filed without PAN. The appellant during 19

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 the course of appellate proceeding filed copy of account of the appellant in the book of M/s Jain Infratech and contra account of M/s Jain Infratech in the book of the appellant, copy of final account of M/s Jain Infratech and Copy of acknowledgment and computation of Income of Shri Deepak Jain Prop of M/s Jain Infratech. The documents as filed by the appellant were forwarded to the assessing officer but in the remand report nothing new was submitted by him. On perusal of the copy of account of the appellant in the book of that firm it was clearly evident that an amount of Rs 15,30,000/- was due to the appellant at the beginning and at the end an amount of Rs 4,40,000/- only was payable by the appellant. The cheques as received by the appellant towards his dues were also added to the income of the appellant which was neither legal nor proper. The amount as due from the appellant was also reflected in its final account as receivable from the appellant. The three cheques as received by the appellant from the firm were added to the total income of the appellant even when first two cheques were adjusted against the amount due from that firm. The assessing officer was therefore not justified in ignoring the opening balance and simply pickingup some entries in isolation for making addition to the total income of the appellant. The amount as due from the appellant was duly reflected in the books of that firm, and the appellanthad filed the ample documents so as to duly the discharge onus lying on it. Hence, the assessing officer was not justified in adding an amount of Rs 29,70,000/- to the total income of the appellant. I, therefore, direct the assessing officer to delete the addition of Rs 29,70,000/- as made to the total income of the appellant.

4.4.8] The decisions as referred aboveare also applicable on the facts of the present case of the appellant. The appellant with the sufficient documents has properly discharged onus lying on it. I, therefore, direct the assessing officer to delete the entire addition made U/s 68 of the Act to the tune of Rs 1,59,30,060/-. This ground of appeal is thus allowed.”

submitted that since the assessee failed to furnish the sufficient

documents in respect of the parties from whom unsecured loans

were taken during the year, the Assessing Officer was right in 20

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 observing that the assessee failed to prove the genuineness of the

transaction, identity and creditworthiness of the depositor with

corroborative evidences. On the other hand, ld. Counsel for the

assessee, reiterating the submissions made before Revenue

Authorities, relied upon the order the ld. CIT(A) and submitted that

the Assessing Officer made addition not only in respect of the

amount of unsecured loans received during the year but also in

respect of the amount received back during the year against the

amount initially advanced to the group concerns which is

unjustified. The Assessing Officer failed to appreciate the fact that

the addition comprised of the amount received from unsecured loan

creditors, amount received as advance against land and amount

received from parties to whom loans and advances were given. The

assessee filed various documentary evidences before ld. CIT(A) in

support of this explanation and the ld. CIT(A) called for a remand

report from the Assessing Officer on these documents filed during

the course of appellate proceedings and on receipt of remand

report, the ld. CIT(A) found that the Assessing Officer failed to

controvert the genuineness of the transaction and identity as well

as creditworthiness of the these parties. Thus, the ld. CIT(A) was 21

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 right in deleting the addition. Further, ld. Counsel for the assessee

also relied upon certain judicial pronouncement/synopsis of

arguments as detailed in the paper books filed before us and

submitted that the view drawn in these judicial pronouncements

supports the order of the ld. CIT(A).

perused material available on record. Having gone through the

material available on record, the detail of the amounts received

from the parties in question is summarised as under:

S. No Name of the Nature Opening Amount Amount Closing Amount of party balance received paid during balance addition during the the year [in Rs.] [in Rs.] [in Rs.] year [in Rs.] [in Rs.] 1 Anjana Unsecured NIL 5,00,000 NIL 5,00,000 5,00,000 Bhachawat Loan 2 Manisha Morya Unsecured NIL 18,00,000 NIL 18,00,000 18,00,000 Loan 3 Vijit Ramavat Unsecured NIL 25,00,000 NIL 25,00,000 25,00,000 Loan Sub-Total NIL 48,00,000 NIL 48,00,000 48,00,000 4 Deepak Jain Advance against NIL 31,00,000 NIL 31,00,000 31,00,000 Land Sub-Total NIL 31,00,000 NIL 31,00,000 31,00,000 5 Shree Mangal Loans and 21,05,056 18,60,060 96,51,955 (56,86,839) 18,60,060 Murtee Tradex Advances

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 Private Limited 6 The IESM Loans and (1,65,684) 32,00,000 28,15,481 2,18,835 32,00,000 Academy Advances 7 Jain Infratech Loans and [Prop. Deepak Advances (15,30,000) 29,70,000 10,00,000 4,40,000 29,70,000 Jain] Sub-Total 80,30,060 80,30,060 Grand Total 1,59,30,060 1,59,30,060

From the perusal of the above details, we find that the amount of

Rs.1,59,30,060/- comprised of the amount received from unsecured

loan creditors, amount received as advance against land and

amounts received from parties to whom loans and advances were

given. We further find that the assessee during the course of first

appellate proceedings filed various documentary evidences

including confirmation of accounts, ledger extracts, income-tax

acknowledgment, bank statement and statement of affairs/ audited

financial statements of these parties so as to justify the identity and

creditworthiness of these parties and genuineness of the

transactions as entered into with them and therefore, the ld. CIT(A)

called for a remand report from the Assessing Officer on these

documents filed during the course of appellate proceedings.

Thereafter, the Assessing Officer filed remand report dated 05-04-

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 2017 which is filed before us at page nos. 187-193 of the paper

book. On perusal of the remand report, we find that the Assessing

Officer did not comment on any of the documents filed by the

assessee during the course of the appellate proceedings rather the

Assessing Officer reiterated the findings of the then Assessing

Officer. Thus, it is clear that the Assessing Officer failed to

controvert the genuineness of the transaction and identity as well

as creditworthiness of these parties. The following documents filed

before the ld. CIT(A) and also available with the Assessing Officer

were filed before us as under:

S. No Description of documents Page No. of Paper Book 1 Anjana Bhachawat [PAN: ARQPB6739A] – Addition of Rs. 5,00,000/- 1.1 Copy of confirmation of accounts of the unsecured loan creditor 94 1.2 Copy of ledger account of the unsecured loan creditor in the books of the 95 assessee 1.3 Copy of bank statement of the unsecured loan creditor duly highlighting the 96 amount as advanced to the assessee 2 Manisha Morya [PAN: AITPM2857J] – Addition of Rs. 18,00,000/- 2.1 Copy of confirmation of accounts of the unsecured loan creditor 97 2.2 Copy of ledger account of the unsecured loan creditor in the books of the 98 assessee 2.3 Copy of bank statement of the assessee duly highlighting the amount as 99 received from the unsecured loan creditor

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 3 Deepak Jain [PAN: ABBPJ7325B] – Addition of Rs. 31,00,000/- 3.1 Copy of confirmation of accounts of the unsecured loan creditor 100 3.2 Copy of ledger account of the assessee in the books of the unsecured loan 101 creditor 3.3 Copy of acknowledgment of income-tax return along with computation of 102- income of the unsecured loan creditor for the Assessment Year 2010-11 104 3.4 Copy of Statement of Affairs and Capital account of the unsecured loan creditor for the year ended 31st March, 2010 wherein the amount receivable 105 from the assessee is duly reflected 3.5 Copy of bank statement of the unsecured loan creditor duly highlighting the 106- amount as advanced to the assessee 108 4 Shree Mangal Murtee Tradex Private Limited [PAN: AALCS7463B] – Addition of Rs. 18,60,060/- 4.1 Copy of ledger account of the company in the books of the assessee 109 4.2 Copy of ledger account of the assessee in the books of the company 110 4.3 Copy of bank statement of the company duly highlighting the amount as 111 advanced to the assessee 4.4 Copy of acknowledgment of income-tax return along with computation of 112- income of the company for the Assessment Year 2010-11 113 4.5 Copy of audited financial statements of the company for the year ended 31st 114- March, 2010 wherein the amount payable to the assessee is duly reflected 129 [Page No. 124] 5 Vijit Ramavat [PAN: ADUPR0676G] – Addition of Rs. 25,00,000/- 5.1 Copy of confirmation of accounts of the unsecured loan creditor 130 5.2 Copy of ledger account of the unsecured loan creditor in the books of the 131 assessee 5.3 Copy of bank statement of the unsecured loan creditor duly highlighting the 132 amount as advanced to the assessee 6 The IESM Academy [PAN: AAEFT4206F] – Addition of Rs. 32,00,000/- 6.1 Copy of ledger account of the creditor in the books of the assessee 133- 134 6.2 Copy of ledger account of the assessee in the books of the creditor 135- 136 6.3 Copy of acknowledgment of income-tax return along with computation of 137-

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 income of the creditor for the Assessment Year 2010-11 139 6.4 Copy of final accounts of the creditor for the year ended 31st March, 2010 140- wherein the amount receivable from the assessee is duly reflected [Page No. 142 142] 6.5 Copy of bank statement of the creditor duly highlighting the amount as 143- advanced to the assessee 145

7 Jain Infratech [Prop. Deepak Jain] [PAN: ABBPJ7325B] – Addition of Rs. 29,70,000/- 7.1 Copy of ledger account of the assessee in the books of the unsecured loan 146 creditor 7.2 Copy of ledger account of the unsecured loan creditor in the books of the 147 assessee 7.3 Copy of acknowledgment of income-tax return along with computation of 148- income of the unsecured loan creditor for the Assessment Year 2010-11 150 7.4 Copy of Balance Sheet and Profit and Loss account of the unsecured loan creditor for the year ended 31st March, 2010 wherein the amount receivable 151 from the assessee is duly reflected 7.5 Copy of bank statement of the assessee duly highlighting the amount as 152 received from the unsecured loan creditor

In view of the above documentary evidences, it is apparent that the

assessee satisfactorily discharged the primary onus cast upon him

under section 68 of the Income-Tax Act, 1961 to establish the

identity and creditworthiness of these parties and genuineness of

the transactions as entered into with them. Taking into

consideration all these facts, the ld. CIT(A) examined each and every

entry in respect of unsecured loan received from the creditors and

reached to the conclusion that the addition made by the Assessing 26

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 Officer is unjustified. In view of these facts, we are of the view that

it is a settled position of law that no addition is called for under

section 68 of the Income-Tax Act, 1961 on account of unsecured

loans if the assessee establishes the identity and creditworthiness

of the parties and genuineness of the transactions as entered into

with them. Our view is supported by the following judicial

pronouncements:

CIT, Meerut v. Avant Grade Carpets Ltd. as reported in [2015] 54 taxmann.com 216 (All); CIT-1 v. Apex Therm Packaging (P.) Ltd. as reported in [2014] 42 taxmann.com 473 (Guj); CIT v. Ranchhod Jivabhai Nakhava as reported in [2012] 21 taxmann.com 159 (Guj.) Ashok Pal Daga v. CIT as reported in [1996] 220 ITR 452 (MP); CIT v. Metachem Industries as reported in [2000] 245 ITR 160 (MP) CIT v. Mark Hospitals (P.) Ltd. as reported in [2015] 373 ITR 115 (Madras)(Mag.)

pronouncements (supra), we are of the view that the addition of Rs.

1,59,30,060/- as made by the Assessing Officer on account of

unsecured loans received during the year by invoking the provisions

of section 68 of the Income-Tax Act, 1961 was not justified and was 27

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 rightly deleted by the ld. CIT(A) as the assessee filed requisite

documentary evidences so as to justify the identity and

creditworthiness of these parties and genuineness of the

transactions as entered into with them. Thus, we confirm the order

of the ld. CIT(A) on this point. Accordingly, ground no.2 raised in

the appeal of the Revenue is dismissed.

deletion of additions of Rs.10,18,580/- made on account of

disallowance of interest out of property income and Rs.9,15,600/-

made on account of disallowance of interest out of income from

other source. Facts as culled out from the orders of Revenue

Authorities are that the assessee took mortgage loan and home loan

from ICICI Bank and State Bank of India which were used towards

repayment of the loans taken earlier for purchase of the properties

let-out by the assessee and also for the purpose of advancement of

loan to other parties from whom interest income was earned. Thus,

the assessee claimed deduction on account of interest paid against

the income offered for tax under the head ‘Income from House

Property’ and ‘Income from Other Sources’. The assessee actually

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 paid interest of Rs. 37,27,311/- during the year on the amount of

loans / overdraft facility taken from banks and detail of the same is

as summarised as under:

S. No Particulars Amount of interest [in Rs.] 1 Loan from ICICI Bank Ltd. 14,75,006 2 Loan from State Bank of India 16,33,438 3 Overdraft facility from Bank of Baroda 6,18,867 Total 37,27,311

However, the assessee claimed deduction on account of interest of

Rs. 35,67,618/- only against the income offered for tax under the

head ‘Income from House Property’ and ‘Income from Other

Sources’ as against the actual amount of interest of Rs. 37,27,311/-

paid by him during the year under consideration and detail of the

amount of deduction of Rs. 35,67,618/- claimed by the assessee

and the amount disallowed by the Assessing Officer is summarized

as under:

S. No Particulars Amount of Amount of interest claimed interest [in Rs.] disallowed [in Rs.]

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 1 Deduction of interest claimed under the head ‘Income from 26,52,018 10,18,580 House Property’ 2 Deduction of interest claimed under the head ‘Income from 9,15,600 9,15,600 Other Sources’ Total 35,67,618 19,34,180

The Assessing Officer observed that the assessee purchased and let-

out the commercial properties situated at Dhenu Market prior to

the date of sanction of loan from ICIC Bank Ltd. and State Bank of

India. The Assessing Officer also observed that the assessee failed

to furnish any evidence in respect of loan taken for purchase of

other properties. Accordingly, the Assessing Officer disallowed an

amount of Rs. 10,18,580/- out of interest claimed under the head

‘Income from House Property’ which is worked out as under:

S. No Description of property Amount of interest disallowed [in Rs.] 1 13-14, Dhenu Market 2,33,540 2 13-14, Dhenu Market, 2nd Floor 2,33,540 3 12, Dhenu Market 1,01,500 4 103, Horizon, Saket Nagar 3,00,000 5 Self-occupied property at Old Palasia 1,50,000 Total 10,18,580

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 18. Being aggrieved, the assessee challenged the action of the

Assessing Officer before the ld. CIT(A) having gone through the

facts/circumstances, material and submissions thereof deleted the

addition. The relevant portion of the order of the ld. CIT(A) are

reproduced hereunder:

“5] GROUND No 6

5.1] The assessee in this ground of appeal has challenged the disallowance of Interest of Rs 10,18,580/- out of property Income.

5.2] The assessee had claimed deduction for interest of Rs 26,52,018/- under the head of Income from House property. The assessing officer has disallowed claim for Rs 10,18,580/- by stating that whether interest bearing funds were used by the assessee was not clear.

5.3] The detail of cost of assets and corresponding interest as claimed by the assessee is as under:-

S.No Description of the Cost of Interest Interest Property the claimed Disallowed Property 1 13-14, Dhenu Market 3892340 467080 467080

2 12, Dhenu Market 845890 101500 101500

103, Horizon Saket, 3 2505000 300000 300000 Indore

4 SOP 150000 150000 1018580

5.4] The claim of interest of the assessee was legal and proper and the same was also accepted in the succeeding years by the assessing officer himself. Copy of assessment orders as passed for the Asst Years 2009-10 & 2012-13 are enclosed for your kind reference. 31

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018

5.5] That in view of the above, the deduction of Interest as claimed by the assessee was legal and proper, the addition so made by the assessing officer was therefore not right, the same now requires to be deleted in full.

the other hand, ld. Counsel for the assessee, reiterating the

submissions made before Revenue Authorities, relied upon the

order the ld. CIT(A).

perused material available on record. We find that the assessee

categorically submitted that the amount of loan taken from ICICI

Bank Ltd. and State Bank of India was utilized towards repayment

of the loans taken earlier and utilized towards purchase of the

properties which were let-out and rental income earned therefrom

was duly offered for tax under the head ‘Income from House

Property’ and the borrowed funds were invested by the assessee

towards purchase of commercial as well as residential properties.

The assessee paid interest @ 12% on the amount borrowed from

banks and accordingly claimed deduction on account of interest @

12% of the cost of properties which were either let-out or self-

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 occupied. Detail of the deduction claimed on account of interest

under the head ‘Income from House Property’ is summarized as

under:

S. No Description of property Cost of property Amount of interest claimed @12% which was [in Rs.] disallowed by the assessing officer [in Rs.] 1 13-14, Dhenu Market 38,92,340 4,67,080 (2,33,540 (+) 2,33,540) 2 12, Dhenu Market 8,45,890 1,01,500 3 103, Horizon, Saket Nagar 25,05,000 3,00,000 Self-occupied property at Old 4 1,50,000 Palasia Total 10,18,580

We find that copy of repayment schedule/ loan statement in respect

of the loan taken from ICICI Bank Ltd. and State Bank of India have

been filed on Page No. 161-174 of the paper book so as to justify the

amount of interest paid and claimed as deduction during the year

under consideration. In view of these facts, it is clear that the

disallowance of Rs. 10,18,580/- made by the Assessing Officer was

unjustified as the borrowed funds were utilized towards purchase of

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 the properties which were let-out and rental income earned

therefrom was offered for tax under the head ‘Income from House

Property’ and more so when such deduction on account of interest

was allowed in the preceding as well as subsequent years.

Therefore, we do not find any reason to interfere with the order of

the ld. CIT(A) on this point. Accordingly, ground no.3 raised in the

appeal of the Revenue is dismissed.

on account of interest claimed under the head ‘Income from Other

Sources’ is concerned, the Assessing Officer observed that the

assessee failed to prove the direct nexus of funds borrowed and

advanced to the parties from whom interest income was earned.

Accordingly, the Assessing Officer disallowed an amount of Rs.

9,15,600/- on account of interest claimed under the head ‘Income

from Other Sources’. The details of claimed deduction on account of

interest paid on the borrowed funds only to the extent of interest

income earned from the following parties and offered for tax under

the head ‘Income from Other Sources’ is as under:

S. No Name of the party Amount of interest

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 income [in Rs.] 1 Jitendra Soni 6,08,000 2 Lunawat Management and Educational 35,810 Services Limited 3 Lunawat Publications and Media Pvt. Ltd. 2,71,830 Total 9,15,640

Assessing Officer before the ld. CIT(A) who having gone through the

facts/circumstances, material and submissions thereof deleted the

addition. The relevant portion of the order of the ld. CIT(A) are

reproduced hereunder:

“6] GROUND No 7

6.1] The assessee in this ground of appeal has claimed deduction for Interest of Rs 9,15,640/-.

6.2] The assessee had paid interest of Rs 35,67,618/-, deduction for Rs 26,52,018/- was claimed from the Income from House property and Rs 9,15,600/- was claimed from Income from Other sources.

6.3] The assessee has utilised its interest bearing funds for advancing to different parties and interest income was earned from the same. The assessee had claimed deduction to the extent of Interest received. Hence, claim of deduction of Interest against the interest income of the assessee was legal and proper.

6.4] The assessing officer in the remand report has not discussed any new thing and simply referred the finding of the assessing officer as discussed in the original assessment order.

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 6.5] The claim of deduction of interest has already been allowed by the assessing officer himself in the Assessment Years 2009-10 and also in the Asst Year 2012-13. Copy of both these assessment order are enclosed for your ready reference. 6.6] That in view of the above, the claim of deduction of interest from Income from other sources was legal and proper. The deduction for the same now requires to be allowed to the assessee.”

the other hand, ld. Counsel for the assessee, reiterating the

submissions made before Revenue Authorities, relied upon the

order the ld. CIT(A).

perused material available on record. We find that as observed by

us above, the assessee utilized the borrowed funds towards

repayment of the loans taken earlier for purchase of the properties

let-out by the assessee and also for the purpose of advancement of

loan to other parties from whom interest income was earned and

during the course of assessment proceedings, the assessee filed

copy of account of the parties to whom loans were advanced and

from whom interest income was earned and offered for tax under

the head ‘Income from Other Sources’. Thus, the assessee

categorically explained that the amount borrowed was advanced to 36

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 these parties and therefore, interest paid on the borrowed funds

was rightly claimed as deduction against the interest income earned

and offered for tax under the head ‘Income from Other Sources’. We

find that the assessee claimed deduction on account of interest paid

on the borrowed funds only to the extent of interest income earned

from the parties and offered for tax under the head ‘Income from

Other Sources’ and the deduction claimed on account of interest

paid against the income offered for tax under the head ‘Income from

Other Sources’ was duly examined and allowed in the preceding as

well as subsequent years. A comparative chart showing the amount

of deduction claimed on account of interest against the income

offered for tax under the head ‘Income from Other Sources’ in the

preceding as well as subsequent years’ is summarized as under:

S. No Particulars Assessment Years 2009-10 2010-11 2012-13 (Year in appeal) 1 Type of Regular Regular Regular assessment assessment – assessment assessment – Section – Section Section 143(3) 143(3) 143(3) 2 Deduction claimed 7,44,657 9,15,600 17,95,623

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 3 Deduction allowed 7,44,657 NIL 16,95,623 4 Deduction NIL 1,00,000 9,15,600 disallowed

On consideration of above facts and discussion, it is clear that the

disallowance of Rs. 9,15,600/- made by the Assessing Officer was

unjustified as the borrowed funds were utilized towards

advancement of loan to the parties from whom interest income was

earned and was duly offered for tax under the head ‘Income from

Other Sources’ and more so when such deduction on account of

interest was allowed in the preceding as well as subsequent years.

Therefore, we do not find any reason to interfere with the order of

the ld. CIT(A) on this point. Accordingly, ground no.4 raised in the

appeal of the Revenue is dismissed.

Cross-objection relate to taxability of agricultural income as income

from other sources. Facts, in brief, as culled out from the orders of

Revenue Authorities are that the Assessing Officer observed that

the assessee failed to submit any supporting evidence in respect of

agricultural income shown in the income-tax return. The Assessing

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 Officer accordingly taxed the amount of agricultural income of Rs.

8,14,000/- shown by the assessee as income from other sources.

Assessing Officer before the ld. CIT(A) who having gone through the

facts/circumstances, material and submissions thereof accepted

the income of Rs.5 lacs as agricultural income but the rest income

was treated as income from other sources. The relevant portion of

the order of the ld. CIT(A) are reproduced hereunder:

“ Ground No 8 The appellant in this ground of appeal has challenged the treatment of Agricultural income as given by the assessing officer as income from other sources. The appellant during the course of hearing and also during the appellate proceeding provided detail of Agricultural land given on Batai for Rs 8,14,000/- to various persons. The detail contain name of the person to whom lands were given on Batai, Name of village where agricultural land was situated, area of land and the amount actually received by the appellant. The appellant has consistently shown Agricultural income which was duly accepted by the assessing officer, year-wise detail of Agricultural Income as shown by the appellant and as accepted by the assessing officer is as under:- S.No Particulars 2009-10 2010-11 2011-12 2012-13 1 Agricultural income as 382000 814000 501400 9,00,000 shown 2 Agricultural income as 382000 NIL 501400 8,00,000 accepted

Considering the overall facts of the case and on perusal of the above table, it is clear that the appellant owned Agricultural land which was not disbelieved by the assessing officer himself. Hence, to meet the end of justice, I hereby direct the assessing officer to accept the Agricultural income to the tune of Rs. 5,00,000/-and the appellant

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 accordingly get relief in this ground. This ground of appeal is partly allowed.”

Being aggrieved, both the parties are before this Tribunal. 27. Ld. CIT-DR relied upon the order of the Assessing Officer. On

the other hand, ld. Counsel for the assessee, reiterating the

submissions made before Revenue Authorities, relied upon the

order the ld. CIT(A) to the extent of acceptance of agricultural

income at Rs.5 lacs. But, for non-acceptance of rest income i.e.

Rs.3,14,000/-, ld. Counsel for the assessee submitted that during

the course of assessment and first appellate proceedings, the

assessee explained that agricultural land owned by him was given

on Batai and agricultural income earned therefrom was duly shown

in the income-tax return and the Assessing Officer himself did not

disbelieve the agricultural lands owned by the assessee. Therefore,

the ld. CIT(A) was not justified in treating the rest agricultural

income as income from other sources.

perused material available on record. We find that the assessee had

submitted before the Revenue Authorities that that agricultural

land owned by him was given on Batai and agricultural income 40

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 earned therefrom was duly shown in the income-tax return and the

Assessing Officer himself did not disbelieve the agricultural lands

owned by the assessee. Further, the assessee has filed the detail of

the persons to whom agricultural land was given on Batai and from

whom agricultural income of Rs. 8,14,000/- was received during

the year along with the details with respect to area of land given on

Batai on Page No. 186 of the paper book. We find that the assessee

owned agricultural lands costing Rs. 5,64,74,791/- as on 01-04-

2009 and Rs. 5,81,65,931/- as on 31-03-2010 as is evident from

the audited final accounts of the assessee filed on Page No. 9 of the

paper book. We also find that the amount of agricultural income

was duly shown by the assessee in his income-tax return every year

and the agricultural income shown by the assessee had also been

duly examined and accepted in the preceding as well as subsequent

years as is evident from the following comparative chart:

S. No Particulars Assessment Years 2009-10 2010-11 2011-12 2012-13 (Year in appeal) 1 Type of assessment Regular Regular Summary Regular assessment – assessment assessment assessment – Section – Section – Section Section

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 143(3) 143(3) 143(1) 143(3) 2 Agricultural income 3,82,000 8,14,000 5,017,400 9,00,000 shown Agricultural income 3 3,82,000 NIL 5,01,400 8,00,000 accepted 4 Agricultural income NIL 8,14,000 NIL 1,00,000 not accepted

of agricultural income of Rs. 8,14,000/- shown by the assessee in

his income-tax return was unjustified more so when agricultural

income was shown by the assessee on a year-to-year basis and

such agricultural income had also duly been examined and

accepted in the preceding as well as subsequent years. Thus, we

direct the Assessing Officer to accept the agricultural income in full

i.e. Rs. 8,14,000/-. Accordingly, ground no.5 raised in the appeal of

the Revenue is dismissed whereas ground no.2 raised in the

assessee’s Cross-objection is allowed.

regard to deletion of addition of Rs.18,99,796/- made by the

Assessing Officer on account of disallowance u/s 40(a)(ia) of the I.T.

Act for non-deduction of TDS on the amount of late payment

charges as charged by M/s Arihant Capital Markets Limited. Facts, 42

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 in brief, as culled out from the orders of the Revenue Authorities

are that the Assessing Officer observed that the assessee claimed

late payment charges of Rs. 18,99,796/- during the year under

consideration out of which an amount of Rs. 18,24,447/- was paid

to Arihant Capital Market Ltd. The Assessing Officer further

observed that the assessee did not deduct TDS on the amount of

late payment charges. Accordingly, the Assessing Officer disallowed

an amount of Rs. 18,99,796/- under section 40(a)(ia) of the Income-

Tax Act, 1961.

Assessing Officer before the ld. CIT(A) who having gone through the

facts/circumstances, material and submissions thereof deleted the

addition. The relevant portion of the order of the ld. CIT(A) are

reproduced hereunder:

“ Ground No 9 The appellant in this ground of appeal has challenged the disallowance of Rs 18,99,796/- made on account of late payment charges as charged by M/s Arihant Capital Markets Limited by invoking the provision of section 40[a][ia] of the Act. It was claimed by the appellant that the amount as debited in the account of the appellant was reversed in the previous year relevant to the Asst Year 2011-12. The appellant also filed a certificate from chartered accountants of M/s Arihant Capital Markets Limited duly certifying that an amount of Rs. 18,99,796/- as charged from the appellant was duly offered for tax by them in their income tax return. The said issue stands now settled in favour of the appellant, since the 43

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 recipient has offered the income in its return of total income and therefore the appellant is not to be treated as appellant indefault.Similar addition as made in the case of the appellant in the AsstYear 2009-10 has already been deleted by this office vide order Appeal No IT-193/ 15-16 / 185 dt 30-11-2016. Considering the decisions as relied upon by the appellant and present position of law in connection with the provision of section 40[a][ia] of the Act; I hereby direct the assessing officer to delete the addition of Rs 18,99,796/- made to the total income of the appellant U/s 40[a][ia] of the Act. This ground of appeal is accordingly allowed.”

Being aggrieved, the Revenue is in appeal before this Tribunal.

the other hand, ld. Counsel for the assessee, reiterating the

submissions made before Revenue Authorities, relied upon the

order the ld. CIT(A).

perused material available on record. We find that the assessee

categorically submitted during the course of assessment

proceedings that the broker, Arihant Capital Market Ltd. debited

the amount of late payment charges on the amount which remained

outstanding on account of F & O Trading and purchase of shares

and securities. The assessee had also submitted that the said

entries were unilaterally passed by the broker and as such, there

was no occasion for the assessee to deduct TDS on the amount of 44

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 late payment charges. Further, we find that the amount of late

payment charges unilaterally debited by the broker were reversed

by the broker itself in the subsequent year i.e. during the previous

year 2010-11 relevant to the Assessment Year 2011-12 and were

accordingly offered for tax by the assessee in that year. Thus, we

are of the view that there was no justification for making any

disallowance under section 40(a)(ia) of the Income-Tax Act, 1961 on

account of non-deduction of TDS on the amount of late payment

charges. We find that the assessee furnished copy of certificate from

the Chartered Accountant of the broker, Arihant Capital Market

Ltd. during the course of first appellate proceedings wherein it was

duly certified that the amount of late payment charges charged

from the assessee were included in the total income of the broker

and requisite amount of taxes due thereon were also paid and the

ld. CIT(A) called for a remand report from the Assessing Officer in

respect of this certificate filed during the course of appellate

proceedings. The Assessing Officer filed remand report dated 05-04-

2017 which is filed on Page No. 187-193 of the paper book. On

perusal of the remand report, we find that the Assessing Officer did

not comment on the certificate filed by the assessee during the 45

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 course of the appellate proceedings rather the Assessing Officer

simply reiterated the findings of the then Assessing Officer. Further,

the assessee has also filed copy of ledger accounts of the assessee

in the books of accounts of the broker, Arihant Capital Markets Ltd.

for the Financial Year 2009-10 and Financial Year 2010-11 at Page

No. 179-182 of the paper book and copy of certificate obtained from

the Chartered Accountant of the broker, Arihant Capital Markets

Ltd. at Page No. 183 of the paper book. Further, we are of the view

that the law is no more res-integra that second proviso to section

40(a)(ia) of the Income-Tax Act, 1961 inserted by the Finance Act,

2012 with effect from 1st April, 2013 is declaratory and curative in

nature and it shall have retrospective effect from 01-04-2005. This

view is supported by the following judicial pronouncements:

CIT-1 v. Ansal Land Mark Township (P.) Ltd. – [2015] 377 ITR 635 (Delhi) Rajeev Kumar Agarwal v. ACIT, Range-3, Mathura - [2014] 45 taxmann.com 555 (Agra - Trib.) DCIT, Circle-2(1)(1), Ahmedabad v. Esaote India (NS) Ltd. - [2018] 96 taxmann.com 624 (Ahmedabad - Trib.) DCIT, Circle 1, Udupi v. Ananda Marakala - [2014] 48 taxmann.com 402 (Bangalore - Trib.) ITO v. Dr. Jaideep Kumar Sharma – [2014] 34 ITR(T) 565 (Delhi - Trib.) ACIT, Central Circle-24(1), New Delhi v. Satish Sehrawat – [2018] 92 taxmann.com 231 (Delhi – Trib.) ACCME (Urvashi Pumps) Eng. (P.) Ltd. v. JCIT (OSD) Circle-4 Jaipur - [2018] 90 taxmann.com 189 (Jaipur - Trib.) Dilip Kumar Roy v. ITO, Ward-1, Nadia - [2016] 68 taxmann.com 129 (Kolkata - Trib.)

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 New Alignment v. ITO, Ward-51(4), Kolkata - [2016] 69 taxmann.com 122 (Kolkata - Trib.) Punjab Goods Transport (P.) Ltd. v. ITO, Ward-12(3), Kolkata - [2017] 77 taxmann.com 37 (Kolkata - Trib.) Brijgopal Madhusudan Bhattad v. ITO, Khamgaon - [2015] 61 taxmann.com 266 (Nagpur - Trib.)

the above judicial pronouncements, we are of the view that second

proviso to section 40(a)(ia) of the Act shall have retrospective effect

from 01-04-2005 and in the present case, the relevant assessment

year is the Assessment Year 2010-11 and the benefit of the second

proviso to section 40(a)(ia) of the Act shall be available to the

assessee as the assessee had obtained and furnished the certificate

of the CA of the broker wherein it has been clearly certified that the

amount on which TDS not deducted by the assessee was included

in the total income of the payee and requisite amounts of taxes due

were also paid on it. Therefore, we do not find any reason to

interfere with the order of the ld. CIT(A) on this point. Accordingly,

ground no.6 raised in the appeal of the Revenue is dismissed.

assessee’s Cross-objection which is regarding the confirmation of

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 addition of Rs.2 lacs made by the Assessing Officer u/s 68 of the

I.T. Act. Facts, in brief, as culled out from the orders of the Revenue

Authorities are that the Assessing Officer made the addition of Rs.

2,00,000/- on account of amount received back against the amount

advanced earlier to Shri Tarun Dassani as the Assessing Officer

observed that the assessee failed to prove the identity and

creditworthiness of the party and genuineness of the transaction as

entered into with him.

Assessing Officer before the ld. CIT(A) who having gone through the

facts/circumstances, material and submissions confirmed the

addition. The relevant portion of the order of the ld. CIT(A) are

reproduced hereunder:

“] Ground No 3 The appellant in this ground of appeal has challenged the addition of Rs 2,00,000/- made to the total income of the appellant. The appellant had advanced an amount of Rs 2,00,000/- to Shri Tarun Dasani and the said amount was received back from him. On perusal of the copy of account as filed by the appellant during the course of hearing which was also provided to the AO for his comments. On perusal of the said account, it appears that an amount of Rs 2,00,000/- was first advanced by the appellant which

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 was refunded on very next date. The appellant during the course of assessment proceeding also brought these facts to the notice of the assessing officer. Considering the overall facts of the case and submission as made by the appellant during the course of assessment proceeding and also in the appellate proceeding, I find that the amount as received by the appellant was nothing but the amount as advanced by him received back and therefore there was no justification for adding the same by invoking the provision of section 68 of the Act but the fact of the matter remains that the appellant has not provided complete postal addresses and even Pan No of this party neither during the course of assessment proceeding nor the appellate proceedings.I therefore have no hesitationin confirming the addition of Rs 2,00,000/- as made by the assessing officer. This ground of appeal is dismissed.”

Being aggrieved, the assessee is in Cross-objection before this

Tribunal.

made before Revenue Authorities, submitted that assessee had

initially advanced an amount of Rs. 2,00,000/- to Shri Tarun

Dassani which was returned back by him on the very next day and

as such, there was no justification for taxing the amount of Rs.

2,00,000/- under section 68 of the Income-Tax Act, 1961. On the

other hand, ld. CIT-DR relied upon the orders of the Revenue

Authorities. 49

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018

perused material available on record. We find that the assessee,

during the course of assessment and first appellate proceedings,

submitted that he had initially advanced an amount of Rs.

2,00,000/- to Shri Tarun Dassani which was returned back by him

on the very next day and both these entries were inadvertently

posted in two different accounts as is evident from perusal of copy

of ledger account of Shri Tarun Dassani in the books of accounts of

the assessee filed before us at Page No. 184-185 of the paper book.

Thus, we are of the view that the Assessing Officer and ld. CIT(A)

failed to appreciate the contentions of the assessee and

unjustifiably added the amount of Rs. 2,00,000/- to the total

income of the assessee. Since, the assessee did not receive any loan

from Shri Tarun Dassani rather the amount of Rs. 2,00,000/- was

initially advanced to Shri Tarun Dassani which was returned back

by him on the very next day itself, there was no reason for adding

the amount of Rs. 2,00,000/- to the total income of the assessee for

want of supporting documentary evidences. We find that the ld.

CIT(A) accepted the fact that the amount received by the assessee 50

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 was nothing but the amount initially advanced by him, therefore,

there was no reason for adding the same by invoking the provisions

of section 68 of the Income-Tax Act, 1961. But, the ld. CIT(A) even

after understanding the true nature of the transaction sustained

the addition merely for the reason that complete postal address and

PAN of the party was not provided, which, in our humble opinion,

is not justified because non-furnishing of address and PAN of the

party to whom amount is advanced cannot by any stretch of

imagination of lead to an inference that such amount constitutes

income of the assessee thereby warranting addition to the total

income of the assessee. In our view, the ld. CIT(A) should have

required the assessee to furnish justification with respect to source

of funds advanced to Shri Tarun Dassani. However, no such

justification was sought from the assessee and addition of Rs.

2,00,000/- was sustained in unjust manner. Thus, we delete the

addition of Rs.2 lacs. Accordingly, ground no.1 raised in the

assessee’s Cross-objection is allowed.

Sanjay Lunawat ITA No.396/Ind/2018 & C.O.No.32/Ind/2018 dismissed whereas assessee’s Cross-objection No.32/Ind/2018 is

allowed. Order was pronounced as per Rule 34 of ITAT Rules, 1963 on 13.09.2021.

Sd/- Sd/- (RAJPAL YADAV) (MANISH BORAD) VICE-PRESIDENT ACCOUNTANT MEMBER

�दनांक /Dated : 13.09.2021 !vyas!

Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file.

By Order, Asstt.Registrar, I.T.A.T., Indore