RAMESHKUMAR SHANKARLAL & CO.,AHMEDABAD vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), AHMEDABAD

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ITSSA 139/AHD/2023Status: DisposedITAT Ahmedabad30 April 2025AY 2018-1911 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A)'s reasoning for rejecting the assessee's plea to set off commission income against surrendered cash was not acceptable. The Department had accepted the cash found during the search as the assessee's undisclosed income. Therefore, the Department could not later argue that the cash pertained to parties from whom it was received. This was considered blowing hot and cold. For AY 2018-19, the commission income of Rs. 12,97,897 related to the period April 1, 2017, to July 11, 2017, which overlapped with the period for which Rs. 71,29,230 was surrendered and accepted by the Department. The Tribunal found that both the surrendered income and the commission income noted in loose papers for this period were likely duplicate. Therefore, the addition of Rs. 12,97,897 for AY 2018-19 was not sustainable, and deletion was directed. However, for AY 2017-18, the commission income of Rs. 8,81,634 was not eligible for set-off against the surrendered income because the surrender was made for AY 2018-19 and pertained to that year, not AY 2017-18. Thus, the addition of Rs. 8,81,634 for AY 2017-18 was confirmed.

What were the facts?

The assessee, Rameshkumar Shankarlal & Co., filed appeals against the common order of the CIT(A)-12, Ahmedabad, for Assessment Years 2017-18 and 2018-19. The appeals concerned additions made to the assessee's income on account of alleged undisclosed commission income under Section 69A of the Income Tax Act, 1961, to be taxed under Section 115BBE. During a survey under Section 133A on July 13, 2017, cash of Rs. 71,29,230 was found. The survey was converted into a search under Section 132, and the cash was seized. The assessee offered this cash as undisclosed income for AY 2018-19. Loose papers found during the search indicated commission income of Rs. 9,34,945 for AY 2017-18 and Rs. 13,41,930 for AY 2018-19. The Assessing Officer (AO) added Rs. 8,81,634 for AY 2017-18 and Rs. 12,97,800 for AY 2018-19 as undisclosed commission income.

What were the issues?

1. Whether the addition of commission income of Rs. 8,81,634 for AY 2017-18 is sustainable, considering the assessee had surrendered cash of Rs. 71,29,230 as undisclosed income for AY 2018-19. (Mixed law and fact, turns on Section 69A and Section 153A). 2. Whether the addition of commission income of Rs. 12,97,897 for AY 2018-19 is sustainable, considering the assessee had surrendered cash of Rs. 71,29,230 as undisclosed income for the same AY. (Mixed law and fact, turns on Section 69A and Section 153A). Assessee's Contentions: - The addition of commission income should be set off against the surrendered undisclosed income of Rs. 71,29,230, as no separate addition is needed. The AO's assessment order under Section 153A was passed without independent application of mind and in violation of the Act's provisions. The invocation of Sections 69A and 115BBE was erroneous without corroborative evidence. Alternatively, the benefit of telescoping should be granted. The lower authorities failed to appreciate facts and ignored submissions. Interest under Sections 234A/B/C/D and penalty under Section 270A were wrongly charged. Revenue's Contentions: - The CIT(A) rejected the assessee's plea, holding that the surrendered cash was from unknown persons and the commission income was earned from earlier activities reflected in seized documents. The CIT(A) noted that no cash book linked earlier commission earnings to the cash found, and the assessee had calculated the commission income before the AO made the addition.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE,Section 133A,Section 132,Section 153A,Section 143(3),Section 234A,Section 234B,Section 234C,Section 234D,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR

For Appellant: Shri Tushar Hemani, Sr. Advocate &, Shri Parimalsinh B. Parmar, AR, Shri B. P. Srivastav, Sr. DR
For Respondent: Shri B. P. Srivastav, Sr. DR
Hearing: 06/02/2025

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील (एस.एस.) सं./I.T(SS).A. Nos. 138 & 139/Ahd/2023 (�नधा�रण वष� / Assessment Years : 2017-18 & 2018-19) बनाम/ Rameshkumar Shankarlal Assistant Commissioner & Co. of Income Tax Vs. 4, Kalgi Apartment, Central Circle-2(3), Tambolino Khancho, Ahmedabad Doshivada ni Pole, Kalupur, Ahmedabad, Gujarat - 380001 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AADFR8798K (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Tushar Hemani, Sr. Advocate & Shri Parimalsinh B. Parmar, AR ��यथ� क� ओर से/Respondent by : Shri B. P. Srivastav, Sr. DR Date of Hearing 06/02/2025 30/04/2025 Date of Pronouncement (आदेश)/ORDER PER SMT. ANNAPURNA GUPTA, AM: Both appeals pertain to the same assessee and have been filed against the common order of the Commissioner of Income- Tax (Appeals)-12, Ahmedabad (in short ‘the CIT(A)’), dated 08.09.2023 pertaining to two different Assessment Years 2017-18 & 2018-19.

2.

At the outset, it was stated that a common issue was involved in both the appeals relating to addition made to the income of the assessee on account of alleged undisclosed commission income

IT(SS)A Nos. 138 & 139/Ahd/2023 [Rameshkumar Shankarlal & Co. vs. ACIT] A.Ys. 2017-18 & 2018-19 - 2 –

u/s.69A of the Income Tax Act, 1961 (in short ‘the Act’) to be taxed at the rate prescribed in Section 115BBE of the Act.

3.

The background of the case leading to the addition in both the issues, it was stated, was identical, with the facts being that the assessee firm being engaged in the activity as Angadia, transferring cash from one place to another for various persons, was subjected to survey proceedings u/s.133A of the Act on 13.07.2017 at its business premises. During the course of survey, cash of Rs.71,29,230/- was found and the employee on the spot failed to explain the source of the same. Accordingly, the survey was converted into search action u/s.132 of the Act and the cash was seized. Thereafter, jurisdiction was assumed to frame assessment u/s.153A of the Act by issuing notice under the said Section, in response to which the assessee filed return of income declaring income of Rs.4,41,090/- for A.Y. 2017-18 and Rs.73,29,230/- for A.Y. 2018-19. The cash found during search was offered/surrendered by the assessee as his undisclosed income and included in the return of income filed for A.Y.2018-19. During course of search, certain loose papers were found and seized as AS-1 consisting of page nos. 1 to 81. These were day- to-day hand written paper of daily cash received and disbursed. Page-wise commission as computed from the said loose paper was as under:

Sr. Dates Page no. Commission Commission Difference F.Y. A.Y. no. as per as per Loose return of Papers income 1 1/10/26 to 1 to 79 9,34,945 53,311 8,81,634 2016-17 2017-18

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01/03/2017 2 01/04/2017 80 to 81 13,41,930 44,033 12,97,897 2017-18 2018-19 to 11/07/2017

4.

The AO noted from the same that the assessee had earned commission income amounting to Rs.8,81,634/- and Rs.12,97,897/- pertaining to A.Ys. 2017-18 & 2018-19; respectively, which had not been disclosed in the return of income filed. Accordingly, after confronting the same to the assessee, and finding no proper explanation given for the same, the AO added the impugned income of Rs.8,81,634/- & Rs.12,97,800/- for A.Y. 2017-18 & 2018-19 respectively, to the income returned by the assessee.

5.

The matter was carried in appeal before the Ld. CIT(A) where the assessee contended that since it had already surrendered undisclosed income of Rs.71,29,230/-, no separate addition needed to be made on account of commission income noted from loose papers found from the assessee’s premises and the addition proposed by the AO needed to be set off against the income surrendered by the assessee. This plea of the assessee was rejected by the Ld. CIT(A) for both the years holding at para 6.3 of his order as under:

“6.3 The argument of the appellant is not acceptable as the cash that was found and seized was explained to be pertaining to unknown persons which was supposed to be handed over to other parties, as part of the business of the appellant as Angadia or Hawala operator. The disclosure of the cash as its own income was due to the fact that the appellant was not willing to give the details of the person/s from whom this cash was received and the circumstances forced it to accept the entire cash as its own income. This does not alter the fact about the

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nature of activity of the appellant. In this business cash is received from a particular party and handed over immediately to the person for whom it is meant. The basic income of an angadia is from commission. It is the daily cash which was received to be handed over that was found during the course of search. The addition of commission income is based on the documents that were seized during the search proceedings which reflected the earlier activities of the firm from which it has already earned the commission income. No cash book was found during the course of search that linked the commission earned earlier to the cash found during the course of search. In fact during the assessment proceedings the appellant itself calculated the correct amount of commission income earned for the two AYs and filed before the AO. Now it is in appeal against that calculation. Addition was made by the AO of the balance amount that was not reflected in the return of income. There is no evidence on record to support the plea of the appellant that the commission income is part of the cash found during search. The case law cited by the appellant is on completely different set of facts and not applicable here. Accordingly, I uphold the action of the AO and confirm the addition of Rs. 8,81,634/- and Rs. 12,97,897/- for AY 2017-18 and 2018-19 respectively in the hands of the appellant firm. Main ground of appeal is dismissed.” 6. Aggrieved, the assessee has came up in appeal before us for both the years by raising the following grounds:

IT(SS)A No. 138/Ahd/2023 – A.Y. 2017-18

“1. The Ld. CIT(A) has erred in law and on facts of the case in upholding the assessment order u/s. 153A r.w.s. 143(3) of the Act which is passed without any independent application of mind as well as in violations of provisions of the Act and against the scheme of assessment related to search cases. 2. The Ld. CIT(A) has erred in law and on the facts of the case in confirming the addition of Rs.8,81,634/-u/s. 69A r.w.s. 115BBE of the Act. In the facts and in law, both authorities have erred in invoking S. 69A and S. 115BBE of the Act and also made the addition without bringing any corroborative and cogent evidence, material, etc. on record. 3. Alternatively, and without prejudice the benefit of telescoping may kindly be granted. 4. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information

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submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 5. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in charging interest u/s.234A/B/C/D of the Act. 6. The Ld. CIT(A) has erred in law and on the facts in confirming the action of Ld. AO in initiating penalty u/s. 270A of the Act. 7. The Appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.”

IT(SS)A No. 139/Ahd/2023 – A.Y. 2018-19

“1. The Ld. CIT(A) has erred in law and on facts of the case in upholding the assessment order u/s 153A r.w.s. 143(3) of the Act which is passed without any independent application of mind as well as in violations of provisions of the Act and against the scheme of assessment related to search cases. 2. The Ld. CIT(A) has erred in law and on the facts of the case in confirming the addition of Rs.12,97,879/- u/s. 69A r.w.s. 115BBE of the Act. In the facts and in law, both authorities have erred in invoking S. 69A and S. 115BBE of the Act and also made the addition without bringing any corroborative and cogent evidence, material, etc. on record. 3. Alternatively, and without prejudice the benefit of telescoping may kindly be granted. 4. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 5. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in charging interest u/s. 234A/B/C/D of the Act.

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6.

The Ld. CIT(A) has erred in law and on the facts in confirming the action of Ld. AO in initiating penalty u/s. 270A of the Act. 7. The Appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.” 7. Before us, Ld. Counsel for the assessee contended that his plea against the order of the Ld. CIT(A) was reiteration of the plea made before the Ld. CIT(A) that the commission income added in the two years needed to be set off against the income surrendered by the assessee in lieu of cash found and seized during search action undertaken on the assessee.

8.

Since, a common argument is being made before us against the addition made to the income of the assessee in both the years, both the appeals are being decided together by way of this common consolidated order.

9.

We have heard both the parties and gone through the orders of the authorities below and have also considered case laws referred to before us. The issue in dispute before us is the addition made to the income of the assessee in both the impugned assessment years on account of commission income. The undisputed fact is that this commission income amounting to Rs.8,81,634/- for A.Y. 2017-18 & Rs.12,97,800/- for A.Y. 2018- 19 was revealed by way of notings found during search on the assessee and which the assessee has also admitted to pertain to these two years. Another pertinent fact to be noted is that cash found during search on the assessee amounting to Rs.71,29,230/-

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was surrendered by the assessee as undisclosed income in the return of income filed for A.Y. 2018-19. The above facts are not in dispute.

10.

The contention of the Ld. Counsel for the assessee is that since the assessee has already surrendered the cash found during search as its undisclosed income, the addition made on account of commission income in both the years is only a duplicate addition and needs to be set off against the cash already surrendered by the assessee.

11.

We have gone through the finding of the Ld. CIT(A)for rejecting this contention of the assessee and we have noted that his reason for not accepting this explanation of the assessee is that the assessee has surrendered the cash found during search as its undisclosed income only because he was not able to substantiate his explanation of the cash belonging to parties for whom he was doing Hawala transactions. The Ld.CIT(A) held that the surrender made by the assessee being for the aforesaid reason, it does not take away the fact that he carries out business of Angariya, and the cash found with him therefore relates to other parties only and in the absence of any cash book maintained by the assessee, there is no evidence of attributing the cash found to the commission income earned by the assessee. In short or to summarize the reasoning of Ld. CIT(A), he rejected the assessee’s contention of setting off addition made on account of commission income

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against the undisclosed income surrendered by him on the ground that it was never the case of the assessee that the cash found was from the earning of his commission income nor was any such evidence found or furnished by the assessee to the Revenue authorities and in the line of business carried out by the assessee cash generally related to that received from the parties for whom assessee was carrying hawala transaction.

12.

We are not in agreement with the reasoning of the Ld. CIT(A) for rejecting assessee’s plea of set off of commission income added against the income disclosed by the assessee on account of cash found during search. The reason for the same is that the fact remains that the assessee had surrendered cash found during search as its undisclosed income and the same also stands accepted by the Department. In the light of the same, the Department having accepted the cash found during search to be attributable to the undisclosed income of the assessee, it cannot now go back on this stand which it has admittedly taken and say that the cash found pertains to that received from parties. It virtually amounts to department blowing hot and cold on its stand regarding the nature of cash found during search. Having accepted the surrender of the assessee attributing the cash to its income, there is no case for the department to go back on this stand taken and hold that the cash does not represent its income. Therefore, the reasoning of the Ld. CIT(A) that the cash found during search is attributable to that received from the parties is

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not acceptable, since, it tantamounts to going back to the admitted stand of the department accepting the same as income of the assessee.

13.

Having said so, we have noted that the cash was found during survey conducted on the assessee on 13th July, 2017. This cash was surrendered as undisclosed income of the assessee for A.Y. 2018-19 and accepted by the department. Therefore, for all purposes the department has accepted the assessee having earned income to the tune of the cash surrendered of Rs.71,29,230/- in A.Y 18-19. The notings of commission income earned for A.Y. 2018-19 and on account of which addition has been made to the income of the assessee for A.Y. 2018-19 of Rs.12,97,897/- reveal the said commission income to the period 01.04.2017 to 11.07.2017 i.e. the same period for which the assessee had already surrendered income of Rs.71,29,230/-. The department having accepted the surrendered income as income from its business and notings in the loose papers reveal the commission income to be relating to the same period during which the cash found was stated to be earned as commission, we see no reason why the commission income for A.Y. 2018-19 needs to be added separately to the income of the assessee in the absence of any evidence in the possession of the Department establishing that there is no link/ connection between the surrendered income and that found in notings. We therefore hold that on the basis of facts on record, both the income surrendered and the income noted in the loose

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paper pertaining to the same period are nothing but duplicate and the plea of the Ld. Counsel for the assessee to this effect for A.Y. 2018-19 is acceptable that making addition of commission income in A.Y. 2018-19 would tantamount to duplicate addition being made in the hands of the assessee. Therefore, as far as commission income added in the hands of the assessee for A.Y. 2018-19 is concerned, to the tune of Rs. 12,97,897/-, same is not sustainable and we direct deletion of the same.

14.

Coming to A.Y. 2017-18, we see no reason for allowing any benefit of set off of the commission income revealed from the loose papers, against the income surrendered by the assessee on account of cash found. The reason being that the income has been surrendered by the assessee in A.Y. 2018-19. Therefore, as per the assessee itself, the income pertains to the said assessment year i.e. A.Y. 2018-19, pertaining to F.Y. 2017-18. The fact remains therefore that this income was not admittedly earned in A.Y. 2017- 18. No question arises therefore for accepting the assesses plea that the commission income added in A.Y 17-18 already stood disclosed by the assessee by way of income surrendered on account of cash seized, which income was surrendered in A.Y 18- 19. As per the assessee itself the surrendered income was not earned in A.Y 17-18, but in A.Y 18-19. Therefore no question arises of giving any benefit of the surrender to the commission income added in A.Y 17-18, to which year the surrender did not relate.

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15.

This plea of the assessee, therefore, cannot be accepted for A.Y. 2017-18 and the addition, therefore, made of commission income of Rs. 8,81,634/- for the A.Y. 2017-18 is confirmed.

16.

In view of the above, while the appeal of the assessee for A.Y. 2017-18 is dismissed in IT(SS)A No.138/Ahd/2023 and that for A.Y. 2018-19 is allowed in IT(SS)A No. 139/Ahd/2023.

17.

In the combined result, the appeal of the assessee for A.Y. 2017-18 in IT(SS)A No.138/Ahd/2023 is dismissed, whereas appeal of the assessee for A.Y. 2018-19 in IT(SS)A No. 139/Ahd/2023 is allowed.

This Order pronounced on 30/04/2025

Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 30/04/2025 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबं�धत आयकर आयु�त / Concerned CIT आयकर आयु�त(अपील) / The CIT(A)- 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad

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