THE ACIT, CENTRAL CIRCLE-2(3), AHMEDABAD vs. BHARATKUMAR RASIKLAL SHAH, MEHSANA

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ITSSA 67/AHD/2021Status: DisposedITAT Ahmedabad26 June 2024AY 2016-1713 pages
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What did the Tribunal hold?

On the issue of booking cancellation and site expenses (Assessee's appeal Ground 1-3, Revenue's appeal Ground 2), the Tribunal held that the AO was not justified in adding the total amount of Rs.55,05,000/- under Section 69C. The Tribunal noted the assessee's claim of refund and expenses reducing cash in hand, and that the AO accepted a portion of the refund. The Tribunal found that the assessee did not provide documentary evidence for the refund of Rs.52,40,000/- or site expenses of Rs.2,65,000/-. However, it applied the principle of preponderance of probabilities, citing Sumati Dayal v. CIT. The Tribunal concluded that the AO's approach of accepting one plot's refund while rejecting others was inconsistent and that the cash balance needed to be considered after accounting for refunds and expenses. The Tribunal directed that the addition of Rs.55,05,000/- be deleted, thereby allowing the assessee's appeal on this point. On the deletion of Rs.16,44,423/- (Revenue's appeal Ground 1), the Tribunal upheld the CIT(A)'s order. It found that the AO's approach of treating amounts as investments by way of loans was flawed. The Tribunal confirmed that the receipt of Rs.3,00,000/- in AY 2015-16 was accounted for, and the remaining Rs.34,74,440/- was correctly considered in AY 2016-17. Therefore, the addition of Rs.16,44,423/- was considered a duplication and not warranted. On the deletion of Rs.76,34,91,720/- made on a protective basis (Revenue's appeal Ground 3), the Tribunal concurred with the CIT(A) that the addition was not justified. It found that the addition was primarily based on unsubstantiated statements by Mr. Hitesh Shah. The documentary evidence provided by the assessee supported the contention that M/s. J. P. Angadia was operated by Mr. Hitesh Shah, not as an employee. The absence of rent or salary payments corroborated the assessee's claim. The AO's reliance on statements without corroborating evidence and failure to address the assessee's contentions rendered the protective addition unsustainable. The Tribunal deleted the protective addition.

What were the facts?

The appeals by the assessee and the revenue are against the order dated 31-3-2021 passed by the CIT(A)-12, Ahmedabad. This order arose from an assessment under Section 143(3) read with Section 153A of the Income Tax Act, 1961, for Assessment Year 2016-17. A search and survey action on 15-02-2017 covered the assessee, leading to a notice under Section 153A on 09-04-2018. The assessee filed a revised return on 30-09-2019, declaring a higher income. The AO passed an assessment order on 28-12-2019, determining a significantly higher total income after making various additions, some on a protective basis. The CIT(A) partly allowed the assessee's appeal, leading to the present cross-appeals.

What were the issues?

1. Whether the Tribunal had to decide on the disallowance of Rs.52,40,000/- claimed towards booking cancellation and partial disallowance of Rs.1,15,000/- for site expenses, as upheld by the CIT(A) (Assessee's appeal)? The assessee argued that if receipts are considered for addition, expenses and refunds should also be considered, and the CIT(A) granted relief only on site expenses. The revenue relied on the AO's order. 2. Whether the Tribunal had to decide on the deletion of an addition of Rs.16,44,423/- made by the AO treating it as unexplained expenditure under Section 69C (Revenue's appeal)? The assessee contended that the amounts noted as investments by way of loans were flawed, and the actual receipt of Rs.3,00,000/- in AY 2015-16 was accounted for, with the remaining Rs.34,74,440/- correctly considered in AY 2016-17, making the addition a duplication. The revenue relied on the AO's order. 3. Whether the Tribunal had to decide on the deletion of an addition of Rs.76,34,91,720/- made by the AO on a protective basis, as deleted by the CIT(A) (Revenue's appeal)? The revenue argued that the addition was made on a protective basis due to statements from Mr. Hitesh Shah, even though a substantive addition was to be made in his hands. The assessee contended that Mr. Hitesh Shah was the proprietor of M/s. J. P. Angadia, not an employee, and provided documentary evidence like a franchise agreement and registration. The CIT(A) deleted the addition for lack of documentary evidence and failure to confront the assessee with Mr. Hitesh Shah's statements. The revenue relied on the AO's order.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153A,Section 69C,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD

Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER

For Appellant: Shri K.C. Thaker, AR

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त ( अपील ) / The CIT(A)-12, Ahmedabad 5. �वभागीय ��त�न�ध , आयकर अपील�य अ�धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड� फाईल /Guard file.

आदेशानुसार/ BY ORDER,

स�या�पत ��त //True Copy//

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

1476.2024 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 2. Date on which the typed draft is placed before the : 17.6.2024 Dictating Member. 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating : Member for pronouncement. 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the : 26.6.’24 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 26.6.’24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar : for signature on the order. 10. Date of Despatch of the Order :

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