THE JT. CIT,(OSD) CENTRAL CIRCLE-2(1),, AHMEDABAD vs. SHRI LAVJIBHAI S. MEHTA, BHUJ

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ITSSA 180/AHD/2018Status: DisposedITAT Ahmedabad30 November 2023AY 2011-1218 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal decided the appeals and cross-objections as follows: For AY 2011-12, the Revenue's appeal was dismissed as not maintainable, accepting the assessee's submission regarding CBDT Circular No. 17 of 2019 and the tax effect not exceeding Rs. 50 lakhs. The Revenue was permitted to seek restoration if the circular was inapplicable. The assessee's cross-objection for AY 2011-12 was dismissed as not pressed, as the assessee did not wish to pursue the issue of professional expenses due to the small amount. For AY 2013-14 and 2014-15, the Tribunal addressed the issues concerning brokerage and interest income. Regarding interest income, the Tribunal noted that the assessee's son, Shri Mehul Mehta, had offered interest income of Rs. 2,92,33,027/- for AY 2013-14 and Rs. 53,40,053/- for AY 2014-15, which was accepted by the Settlement Commission. Therefore, the Tribunal held that no addition should be made in the hands of the assessee on account of interest income to avoid double taxation, dismissing the Revenue's ground on this issue. The Tribunal also dismissed the Revenue's grounds related to brokerage additions for AY 2013-14 and 2014-15, and the assessee's cross-objections on these matters, by referring to the findings in paragraph 12, 19, and 28 of the order which dealt with similar issues for AY 2013-14. The operative direction was the dismissal of all appeals and cross-objections.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, heard appeals filed by the Revenue and cross-objections by the assessee, Shri Lavjibhai S Mehta, for Assessment Years (AY) 2011-12, 2013-14, and 2014-15. These appeals arose from assessment orders passed under Section 143(3) read with Section 153A of the Income Tax Act, 1961, following search proceedings. For AY 2011-12, the Revenue's appeal was dismissed based on CBDT Circular No. 17 of 2019 concerning monetary limits for appeals. The assessee's cross-objection regarding disallowance of professional expenses was dismissed as not pressed due to the small amount involved. For AY 2013-14 and 2014-15, the Revenue challenged the CIT(A)'s decision to restrict additions on account of brokerage and delete additions on account of interest income. The assessee's cross-objections also pertained to brokerage and interest income.

What were the issues?

1. Whether the Revenue's appeals for AY 2011-12, 2013-14, and 2014-15 are maintainable in light of CBDT Circular No. 17 of 2019, which revises monetary limits for tax effect in pending appeals? (Question of law, turning on CBDT Circular No. 17 of 2019). 2. Whether the assessee's cross-objection for AY 2011-12, concerning the disallowance of professional expenses of Rs. 1 lakh, should be pressed? (Question of fact and law). 3. Whether the CIT(A) erred in restricting the addition on account of brokerage on sale value of land/flats from Rs. 48,84,048/- to Rs. 7,17,131/- for AY 2013-14? (Question of mixed law and fact, turning on Section 153A). 4. Whether the CIT(A) erred in restricting the addition on account of brokerage on sale value of agricultural commodities from Rs. 1,24,02,750/- to Rs. 39,13,647/- for AY 2013-14? (Question of mixed law and fact, turning on Section 153A). 5. Whether the CIT(A) erred in deleting the addition of Rs. 3,85,33,373/- made on account of interest income for AY 2013-14? (Question of mixed law and fact, turning on Section 153A). Assessee's Contentions: - For AY 2011-12, the Revenue's appeal is hit by CBDT Circular No. 17 of 2019 and should be dismissed as not maintainable as the tax effect does not exceed Rs. 50 lakhs. - For AY 2011-12, the assessee is not interested in pressing the ground raised in the cross-objection regarding professional expenses due to the small amount involved. - For AY 2013-14 and 2014-15, the assessee contends that the CIT(A) erred in assuming commission should be charged from both parties and in confirming additions to brokerage income. The assessee also argues that interest income, if any, has already been taxed in the hands of his son, Shri Mehul Mehta, by the Settlement Commission, thus avoiding double taxation. Revenue's Contentions: - The Revenue's representative fairly admitted the applicability of CBDT Circular No. 17 of 2019 for AY 2011-12, agreeing to the dismissal of its appeal. - For AY 2013-14 and 2014-15, the Revenue's grounds of appeal challenge the CIT(A)'s reduction of brokerage additions and deletion of interest income additions, arguing that the Assessing Officer's order should have been upheld.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153A,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘’ B’’ BENCH, AHMEDABAD

Before: SHRI WASEEM AHMED

For Respondent: Shri Sudhendu Das, C.I.T D.R, Shri Bandish Soparkar with Shri Parin Shah, A.Rs
Hearing: 05/10/2023Pronounced: 30/11/2023

Heard together (3 matters)

CO No.37/Ahd/2019
CO No.39/Ahd/2019
CO No.40/Ahd/2019

Read from the judgment's own cause title. This page is filed under one of them.

आदेश/O R D E R PER BENCH:

The captioned appeals and COs have been filed at the instance of the Revenue and the assessee against the order of the Learned Commissioner of Income Tax (Appeals)12, Ahmedabad, (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 143(3) r.w.s. 153A of the Income Tax Act 1961 (here-in-after referred to as "the Act"). The assessee has filed the Cross Objection in the Revenue’s appeal as mentioned in the cause title for the Assessment Years 2011-2012, 2013-14 & 2014-15.

First, we take up IT(SS)180/Ahd/2018, an appeal by the Revenue for A.Y. 2011-12.

2.

At the time of hearing, it was submitted by the Ld. AR for the assessee that appeal filed by the Revenue is hit by recently issued CBDT Circular No. 17 of 2019 dated 08/08/2019 revising the previous thresholds limits pertaining to tax effects. As per the aforesaid Circular, all the pending appeals filed by Revenue are liable to be dismissed as a measure for reducing litigation where the tax effect does not exceed the prescribed monetary limit which is now revised at Rs.50 Lakhs. In the instant case, the tax effect on the disputed issues raised by the Revenue is stated to be not exceeding Rs.50 lakhs and therefore appeal of the Revenue is required to be dismissed in limine.

2.1 The Learned DR for the Revenue fairly admitted the applicability of the CBDT Circular No. 17 of 2019. Accordingly, the appeal of the Revenue is dismissed as not maintainable. However, it

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will be open to Revenue to seek restoration of its appeal showing the inapplicability of the aforesaid CBDT Circular in any manner.

2.2 In the result, the appeal of the Revenue is hereby dismissed.

Coming to the CO No. 37/AHD/2019 in ITA No. 180/Ahd/2018 for A.Y. 2011-12.

3.

The only issue raised by the assessee in the captioned cross objection is that the learned CIT(A) erred in confirming the disallowance of professional expense of Rs. 1 lakh.

3.1 At the outset we note, the learned counsel for the assessee before us submitted that considering the smallness of the amount involved in the dispute, the assessee is not interested in pressing the ground raised in the CO as discussed above. Accordingly, we dismiss the same as not pressed.

3.2 In the result, the CO of the assessee is hereby dismissed as not pressed.

Coming to ITA No. 182/Ahd/2018, an appeal by the Revenue for A.Y. 2013-14

4.

The Revenue has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in restricting the addition of Rs.48,84,048/- to Rs.7,17,131/- made on account of estimation of Brokerage of sale value of land /flats. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in restricting the addition of Rs.1,24,02,750/- to Rs.39, 13,647/- made on account of estimation of brokerage of sale value of agricultural commodities. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.3,85,33,373/- made on account of interest income. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.

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5.

It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 5. The first issue raised by the Revenue is that the learned CIT(A) erred in reducing the brokerage income from Rs. 48,84,048/- to Rs. 7,17,131/- in the dealing of land/flats.

6.

The facts in brief are that the assessee is an individual and claimed to be engaged in the business of trading of shares and securities and future & option. There was a search proceeding under section 132 of the Act which was carried out in the case of “Commodity Future Group” dated 3rd September 2013. The assessee was also subject to the impugned search proceeding. During the search, certain documents in the form of loose papers/ diaries were found from the premises of Shri Sohit Mehta (Nephew of the assessee). The seized documents contained the various transactions in respect of property dealings, physical commodity dealing etc. In consequence of the search proceeding, a notice under section 153A of the Act was issued to the assessee. The assessee in the return filed u/s 153A of the Act for the year under consideration declared income at Rs. 3,37,010/- and subsequently revised the return under section 153A of the Act, declaring income at Rs. 63,99,290/- only. During the assessment proceedings, the AO found that the diary recovered during search, contained transactions regarding property dealings which are detailed as under:

S. Page no. of diary Amounts involve particular No. 1. 11 Rs. 2,00,00,000/- Kalupur 2. 6 Rs. 2,50,00,000/- Safal-Sanand Plot 3 4 Rs. 1,07,76,112/- Vrundavan 4 8 Rs. 7,71,01,200/- 32 Deesa 50% share

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6.1 On question by the AO, the assessee submitted that the transactions recorded on above mentioned pages of diary do not represent his investment, but he was only involved in those transaction as facilitator/broker and earned brokerage income @ 1 % of deal value. As such, the assessee submitted that the first two properties in the above table were purchased by Shri Jethabhai Dhanabhai Varchand from Safal group. He introduced the said proposed buyer to Safal Group, accordingly, the Safal Group paid commission @ 1% of deal value as mentioned above which has been offered to tax vide return filed under section 153A of the Act. Similarly, the property at S. No. 3 i.e. Vrundavan also purchased by Shri Jethabhai Dhanabhai Varchand and the deal value of the same was Rs. 53,88,056/- and he gets commission income @ 2% for Rs. 1,07,761/- which has been offered to tax. Likewise, in property at S. No. 4 in the above table, he only worked as broker/facilitator for Shri Shivaji Hakamji Mali (Solanki) and earned commission @ 1% for Rs. 7,71,012/- which has been offered to tax.

6.2 However, the AO proposed to make addition of commission income @ 5% of deal value. The view of the AO was based on the fact that the impugned transaction was undisclosed one and only unearthed during the search, therefore normal rate of commission prevailing in disclosed business cannot be accepted. The AO was also of the view that in the property dealing the broker earned commission from both sides. The AO finally, after considering the contention of the assessee estimated the brokerage income @ 5% of the deal value of the property mentioned in above table and accordingly made addition of Rs. 48,84,048/- to the total income of the assessee.

7.

On appeal by the assessee, the learned CIT(A) restricted the brokerage income @ 1% of the deal value on the property at Kalupur and Sanand from one side i.e. seller side namely Safal Group. In other words, the income offered by the assessee from dealing of property at Kalupur and Sanand between Safal group and Shri Jethabhai Dhanabhai Varchand was accepted. Regarding the other 2 properties at Varundavan and Deesa the learned CIT(A) directed to AO to

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estimate commission @ 2% and 1% of deal value, as the case may be, from both sides. Thus, the learned CIT(A) confirmed the addition to the extent of Rs. 1,07,761/- and 7,71,012- on the property at Varndvan and Deesa respectively.

8.

Being aggrieved by the order of the learned CIT(A), both the Revenue and the assessee are in appeal before us. The revenue is in appeal before us against the deletion of addition made by the AO whereas the assessee is in cross objection against the confirmation of addition for Rs. 1,07,761.00 and 7,71,012/- on the property at Vrundavan and Deesa. The relevant ground of assessee’s objection reads as under: 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in assuming that in respect of transactions of resale/renting of immovable properties, the Respondent- assessee must have charged commission from both parties and accordingly directing the learned Assessing Officer to calculate total commission on such transactions @ 2% of the transaction value as against 1% shown by the assessee, thereby confirming additions to the extent of Rs.7,71,012 (Deessa land) and Rs.1,07,761 (Vrundavan plot).

9.

The learned DR before us submitted that commission income was representing the unaccounted income which was earned in cash and therefore commission income should be on the higher side than the market in such facts and circumstances.

10.

On the other hand, the learned AR before us filed a paper book running from pages 1 to 277 and submitted that the assessee has charged commission income at the rate of 1% only of the deal value from both the sides and therefore the income declared in the return should be accepted without making any addition.

11.

Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.

12.

We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that search proceeding under section was carried out in case of present assessee and others

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termed as “Commodity future group”. During the search certain documents were found containing details regarding transactions in connection with land property at different locations. The assessee has not disputed the transaction decoded based on the seized documents and admitted having worked as broker/facilitator in the dealing of such properties for commission. As such, the assessee offered brokerage income @ 1% of deal value of Rs. 12,21,01,200/- for the property at Kalupur, Sanand and Deesa and 2% of deal value (Rs. 53,88,056/-) on Vrundavan property whereas the AO estimated the brokerage income at 5% of the said deal values. The learned CIT(A) was pleased to restrict the rate of brokerage at 1% only for the property at Kalupur and Sanad (deal value 4.5 crore and 2% on the Deesa property (deal value Rs. 7,71,01,200/-) as well as 4% at Vrundvan property. Thus, the only dispute before us is what should be the rate of brokerage income. 12.1 The basis of the AO for estimating the brokerage income at 5% against the 1% offered by the assessee was that the transaction in question was unaccounted one therefore general rate of brokerage in the disclosed business cannot be accepted. The other reason given by the AO is that in this type of transaction the broker gets commission from both sides, i.e. from the seller as well as from the buyer. In our considered opinion, the reasoning given by the AO is merely a doubt or suspicion. It settled a position of the law that the doubt or suspicion howsoever strong, cannot be made the basis for making addition to the income of the assessee. As such, the AO did not bring any material suggesting that the assessee earned brokerage income at the rate of 5% of the deal’s value. Therefore, in our considered the commission income estimated by the AO @ 5% of deal value cannot be sustained.

12.2 On the other hand, the assessee claimed that he earned commission @ 1% only and in support of his claim provided comparable cases where the top broker firm were charging brokerage commission between 0.5% to 1%. The assessee during the appellate proceeding before the learned CIT(A) also submitted details of other brokers who earned commission @ 1% from “Safal Group” in dealing of

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the project “Applewood”. It was also submitted by the assessee that there were loose papers found during the search evidencing that he has earned commission @ 1% for the brokerage services provided in case of third/ other party namely Shri Dilip Mavavi. However, we note that the learned DR has not brought any contrary material against the above claim of the assessee.

12.3 Thus, we find that the assessee has offered brokering commission @ 1% on the dealing of plot of “Safal Group” at Kalupur and Sanand which is also evident based on comparables. Furthermore, the brokerage charges paid by the “Safal Group” to other brokers and brokerage, commission charged by the assessee himself from another party i.e. 1% is evident from the seized document. Therefore, we don’t find any infirmity in the finding of the learned CIT(A) in restricting the commission income @ 1% from one side that too from Safal group only.

12.4 Coming to the issue of rate of commission on the dealing of Deesa and Vrundavan plot, in this regard we note that the learned CIT(A) has given categorical finding that the brokering firm is in the dealing of land property usually charge commission from both side i.e. from seller as well as from buyer. The learned CIT(A) also found that the assessee has not brought any evidence suggesting that he has not earned commission from both side or the commission from each side was not possible. Thus, the learned CIT(A) considering the usual market practice and in the absence of evidence from the assessee, held the commission income on the impugned property from both side and accordingly estimated income at 1% each side on Deesa plot and 2% each side on Vrundavan plot. The learned AR before us has not brought any material contrary to finding of the learned CIT(A). Thus, considering the facts and circumstances available before us, we do not find any infirmity in the finding of the learned CIT(A). In view of the above, we hereby confirm the finding of the learned CIT(A) and accordingly dismissed the ground of appeal raised by the revenue as well as the ground of objection raised by the assessee.

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13.

The next issue raised by the revenue is that the learned CIT(A) erred in reducing the addition on account brokerage income from commodity from Rs. 1,24,02,250.00 to Rs. 39,13,647/-

14.

The AO based on a diary found during the search from Shri Sohit Mehta that the pages of such diary bearing Nos. 39 to 54 and page 68 to 105 were containing the details regarding off marketing trading agricultural commodities such as isabgul, Jeeru, Iranda etc during the period A.Y. 2012-13 to 2014-15. The transaction noted on impugned pages was aggregating to Rs. 38,48,39,363/- only. On question by the AO, the assessee submitted that he worked as kachcha arhatia for farmers, traders, and businessman. In the process, he earned commission income @ 1% from seller as well as from purchaser and during the year under consideration he offered commission income of Rs. 39,13,147/- being 1% of total transaction value.

14.1 However, the AO found that the rate of commission income offered by the assessee was low and especially considering the unaccounted nature of the transaction, the commission rate should be on a higher side. The AO also found that the assessee on the one hand accepted that he received commission income from both sides i.e. buyer as well as seller but offered income from one side only. The AO was also of view that seized document was containing purchase value of commodities which must have been sold at a value higher than the purchased value. Thus, the AO proposed to estimate the commission @ 2.5% from seller and 2.5% from purchaser at a value of purchase +10%.

14.2 The assessee vide letter dated 30-06-2016 contended that in the business of Arhatia, the commission income is earned from one side i.e. either from the seller or from the buyer depending upon the deal of the transaction. Further, the rate of commission in arhatia market is uniform at 0.5% to 1% be the transaction carried through banking channel or through cash.

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14.3 However, the AO did not agree with the contention of the assessee and worked out the commission @ 2.5% from both sides i.e. 2.5% of purchase value as per seized document and 2.5% of purchase value + 10 markup in the following manner:

7.6 Accordingly, calculation of sales and brokerage income is made as under: A.Y Purchase as Increase @ Estimation of per seized Sales data 2012-13 3,38,83,928 10% 3,72,72,321 2013-14 31,07,88,511 10% 34,18,67,362 2014-15 4,01,66,924 10% 4,41,83,616 Total 38,48,39,363 42,33,23,299 7.6.1 Accordingly, brokerage @ 2.5 from both sides is calculated as under: AY Brokerage Brokerage Income Addition @ 2.5% @ 2.5% already on on sales offered in purchase return of income u/s.153A A B C A+B+C= 2012- 8,47,098 9,31,808 3,38,839 14,40,067 13 2013- 77,69,713 85,46,684 39,13,647 1,24,02,750 14 2014- 10,04,173 11,04,590 4,82,755 16,26,008 15 15. The aggrieved assessee preferred an appeal before the learned CIT(A). The learned CIT(A) after considering the facts in totality held that there is no material to hold commission rate higher than 1% as claimed by the AO. Therefore, the commission income should be estimated @ 1% of deal value from both the side i.e. 1% from buyer and 1 % from seller. There is also no material to hold that there was different value for purchase and sale and the assessee charged commission from buyer and seller at different value therefore commission @ 1 % from buyer as well seller should be computed on same value. Thus, the learned CIT(A) restricted the addition made by the AO to the extent of Rs. 39,13,147/- only. The relevant finding of the learned CIT(A) reads as under:

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6.6 Considering the facts discussed herein above, it is held that brokerage income is required be computed @ 1% received from buyer and 1% from seller separately on transactions value mentioned in loose papers as under: Assessment 1% brokerage 1% brokerage Total Income Addition year from from seller brokerage already confirmed in purchaser (Rs.) (Rs.) offered in appeal (Rs.) (Rs.) return of income(Rs.) A B C D E F=D=E 2012-13 3,38,839 3,38,839 6,77,678 3,38,839 3,38,839 2013-14 39,13,647 39,13,647 78,27,294 39,13,647 39,13,647 2014-15 4,82,755 4,82,755 9,65,510 4,82,755 4,82,755

The AO is directed to recomputed the taxable income after considering income filed on 15th March 2016 and make further addition as per above tabular chart. 16. Being aggrieved by the order of the learned CIT(A), both the Revenue and the assessee are in the appeal before us. The Revenue is in appeal against finding of the ld. CIT-A restricting the addition from Rs. 1,24,02,750/- to Rs. 39,13,147/- whereas the assessee in cross objection against the confirmation of the addition of Rs. 39,13,147/- only. The relevant ground of assessee’s cross objection reads as under: 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in assuming that in respect of commodity transactions the assessee must have earned commission @ 2% (1% from seller + 1% from buyer), thereby confirming addition to the extent of Rs.39,13,647. 17. The learned DR before us contended that in the activity of broking business, the commission is earned from both sides. Accordingly, he was of the view that the order of the AO should be confirmed.

18.

On the other hand, the learned AR before us submitted that the assessee is earning commission income only at the rate of 1% and that too from one side only. Therefore, no addition can be made in the hands of the assessee for the commission at the rate higher than 1% and that too from one side only. Both the learned DR and the AR before us vehemently supported the order of the authorities.

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19.

We have heard the rival contentions of both the parties and perused the materials available on record. Undisputedly the assessee has entered into the transaction of sale or purchase of physical commodity of agricultural produce as kachha arhatia/broker and earned commission income. However, the dispute is regarding the rate at which commission is charged by the assessee. The assessee has claimed that he has eared commission income at @ 1% from one side only whereas the AO estimated the rate of commission at 5% i.e. 2.5% from buyer and 2.5% from seller at a purchase price and sale price (sale price after including 10% of markup on purchase price) whereas the learned CIT(A) has held the rate of commission at 1% from buyer and 1% from seller but value in both case will be same.

19.1 As far as the finding of the AO regarding different value of transaction i.e. being purchase value and sale value is concern, we note that the assessee is not trader of physical commodity of agricultural produce where the assessee may purchase the goods at certain rate and will sell the same after adding profit margin. As such the assessee in the case on hand is only working as facilitator/broker for buyer and seller where he is arranging buyer for farmer or vice versa. In this case, the value of traction for both the buyer and seller will be the same. For example, 1 kg of isafgul sold by Mr. X to Mr. Y at Rs. 100, the Rs. 100 will be the sale value for Mr.X and same will be purchase value for Mr. Y and assessee being facilitator will receive certain percentage of commission on transaction value i.e. Rs. 100. Hence, the learned CIT(A) correctly held that there will not be different sale or purchase value for the computation of brokerage commission.

19.2 Coming to the issue of commission rate taken by the AO at 2.5% each from buyer as well as from seller, in this regard, we note that the AO has not brought any material either found during the search or during the post search or during the assessment proceeding suggesting that the assessee has earned commission income at such a higher rate. The AO also did not bring any comparable

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suggesting the other party in comparable circumstances has charged or earned commission at such higher rate. Therefore, we do not find any force in the finding of the AO to keep the rate of commission at 2.5% from each party (i.e. in aggregate 5%).

19.3 Now coming to the claim of the assessee regarding rate of commission at 1% only from one side only i.e. either from the seller or from the buyer. In this regard we note that the assessee himself before the AO vide letter dated 23/03/2016 submitted that he earned commission @ 1% from both sides i.e. buyer as well as from the seller. The assessee has not brought any material suggesting for not charging commission from both parties i.e. seller as well as buyer or it is not possible or he has not charged or it is not the normal practice in brokering activity. The learned AR of the assessee before us has also not brought any material contrary to the finding of the learned CIT(A). Therefore, in view of the above, we do not find any reason to interfere in the reasoned order passed by the learned CIT(A). Hence the grounds of appeal filed by the revenue and the ground of objection raised by the assessee are hereby dismissed.

20.

The last issue raised by the revenue is that the learned CIT(A) erred in deleting the addition of Rs. 3,85,33,373/- made on account of interest income.

21.

The AO from the diary seized during the search proceedings found that it was containing transaction of unaccounted loans. The assessee in this regard submitted to the AO that he is being broker in land dealing arranged advances for the various parties in connection with such the land deal. However, land deals were not materialized but according to mutual understanding, the interest was charged from the parties for whom advance was arranged and given such interest to the parties from whom advance was arranged. In the process, he earned margin at 0.25% and accordingly offered an income of Rs. 8,19,859/- in the return filed under section 153A of the Act.

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21.1 However, the AO found that the debit entry noted on impugned pages of diary were representing the amount of loan extended and credit entries were representing recovery of loans earlier given. As such there is no evidence provided suggesting that the amount recovered, or compensation was remitted to the original party as claimed by the assessee. The assessee has also not provided the basis for computing income at the rate of 0.25% and similarly the detail of land property for which such transaction was interred into. The assessee did not provide the details of persons whose names were recorded on impugned pages of the diary. Therefore, the AO estimated the interest income earned by the assessee on such loans and advances @ 12% and made addition of Rs. 3,85,33,373/- only.

22.

The aggrieved assessee preferred an appeal before the learned CIT(A). The assessee before the learned CIT-A besides reiterating his contention made during the assessment proceeding contended that the compensatory interest income on the transaction found in the diary has been admitted and offered to tax by his son Shri Mehul Mehta before the settlement commission. The assessee also contended that there was no basis given by AO for charging the interest income @ 12%.

23.

The learned CIT(A) after considering the facts in totality found that the interest income arising from impugned pages of dairy has been owned by the son of the assessee and due taxes was paid before the settlement commission. Therefore, taxing interest income in the hand of the assessee will lead to double taxation. However, the learned CIT(A) in concluded that suo-moto income offered by the assessee will continue to be taxed in the hand of the assessee. The relevant finding of the learned CIT(A) is extracted as under: 7.10 The Hon ble Settlement Commission in above referred order at page No 106 has held that after considering the voluntary surrender of Rs.2,75,00,000/- in connection with Shardham Property and Interest income as discussed in para 3.2 supra, revised income can be worked out as under..... These facts prove beyond doubt that Shri Mehul Mehta has duly offered gross interest income of Rs.2,92,33,027/-in AY 2013- 14 and Rs.53,40,053/-in AY 2014-15 as additional income before Hon'ble Settlement Commission for loose papers found during the course of search at the premises of Shri Sohit Mehta for which the appellant has offered net interest income of Rs.8,19,859/ and Rs 3,72,011/- and AO has made addition in both the assessment years based on such loose papers and enhanced

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income considering interest income offered to tax by the appellant. The above loose papers considered while making addition in the appellant's case are duly discussed in all stages of settlement application till final order in the case of Shri Mehul Mehta and the said assessee has duly accepted such interest income before Hon'ble Settlement Commission hence addition made in the case of the appellant would lead to double taxation of same income. Considering these facts, addition made by AO for Rs.3,85,33,373/-in AY 2013-14 and Rs.1,74,84,517/- in AY 2014-15 are deleted. It is observed that the appellant has not suo moto offered interest income of Rs.8,19,859/- and Rs.3,72,011/- in A.Y.2013-14 and 2014-15 respectively and the same would be taxed in the appellant's case even if it is proved to be owned up by Shri Mehul Mehta in Settlement Commission as the same was suo moto disclosed by the appellant in the return u/s 153A. The grounds of appeal are partly allowed. 24. Being aggrieved by the order of the learned CIT(A) the revenue as well the assessee is before us. The revenue is in appeal against the deletion of addition made for Rs. 3,85,33,373/- whereas the assessee is in cross objection for not reducing the suo moto income offered for Rs. 8,19,859 on account of interest margin considering the fact that the interest income already suffered to tax in his son hand. The relevant ground of objection of the assessee reads as under: 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that interest income of Rs.8,19,859 suo motu (though wrongly) disclosed in the return of income filed u/s.153A, has to be assessed in the hands of the assessee in spite of the categorical finding recorded by the learned CIT(A) that such income, on the basis of some seized loose papers, has already been owned up by Shri Mehul Mehta in the application filed before the Hon'ble Settlement Commission and the same has been taxed in his hands as per the final order passed by the Hon'ble Settlement Commission. 25. The learned DR before us contended that the assessee has earned interest income as alleged by the AO. The learned DR vehemently supported the order of the AO.

26.

On the other hand, the learned AR before us submitted that he was merely acting as the facilitator between the parties and therefore the question of earning any interest income does not arise. 26.1 The learned AR also submitted that the son of the assessee has already offered to tax of interest income and therefore no addition is warranted in the hands of the assessee.

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27.

Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.

28.

We have heard the rival contention of both the parties and perused the materials available on record. Admittedly certain pages of diary found from Shri Sohit Mehta was containing detail of loan transaction. The assessee explained that entries recorded on the pages of diary represent advance arranged by him for various person in connection with land dealing but on occasion of cancellation of land deal charged compensatory interest from the person for whom advance was arranged and remitted to the person who given advances after retaining margin of 0.25%. The explanation of the assessee was not accepted by the AO and estimated the interest income at the rate of 12% on such advances appearing on the pages of the diary found during search.

28.1 Be that as it maybe, we note that the learned CIT(A) has given categorial finding that the son of the assessee namely Shri Mehul Mehta based on the noting on pages of the diary offered interest income of Rs. 2,92,33,027/- in the year under consideration and Rs. 53,40,053/- in next year i.e. A.Y 2014-15. The income offered by the son of the assessee has been accepted by the settlement commission. Thus, in our considered opinion, no addition shall be made in the hands of the assessee based on the seized dairy on account of interest otherwise it will lead to double taxation of the same transaction which is not desirable under the provisions of the Act. Hence, the ground of revenue’s appeal is hereby dismissed. 28.2 As regards the issue raised by the assessee in the CO, we note that the assessee has not offered any interest income in the income tax return but the same is in the nature of brokerage earned by the assessee for providing the facility in arranging the loan. Therefore, the contention of the assessee that his son has offered the interest income cannot help him. It is because, the nature of income in the hands of the assessee is brokerage income whereas the income

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offered by the son of the assessee is in the nature of interest income. Accordingly, we do not find any merit in the ground raised by the assessee in the CO. Hence CO of the assessee is hereby dismissed. 29. In the result, the Revenue appeal is hereby dismissed.

Coming to the CO No. 39/AHD/2019 in ITA No. 182/Ahd/2018 for A.Y. 2013-14.

30.

The assessee raised following ground of objection. 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in assuming that in respect of transactions of resale/renting of immovable properties, the Respondent- assessee must have charged commission from both parties and accordingly directing the learned Assessing Officer to calculate total commission on such transactions @ 2% of the transaction value as against 1% shown by the assessee, thereby confirming additions to the extent of Rs.7,71,012 (Deessa land) and Rs.1,07,761 (Vrundavan plot). 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in assuming that in respect of commodity transactions the assessee must have earned commission @ 2% (1% from seller + 1% from buyer), thereby confirming addition to the extent of Rs.39,13,647. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that interest income of Rs.8,19,859 suo motu (though wrongly) disclosed in the return of income filed u/s.153A, has to be assessed in the hands of the assessee in spite of the categorical finding recorded by the learned CIT(A) that such income, on the basis of some seized loose papers, has already been owned up by Shri Mehul Mehta in the application filed before the Hon'ble Settlement Commission and the same has been taxed in his hands as per the final order passed by the Hon'ble Settlement Commission. 4. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of cross objections either before or during the course of hearing of the same. 31. At the outset we note that the issue raised by the assessee in cross objection has been adjudicated along with the revenue grounds of appeal in ITA No. 182/AHD/2018 vide paragraph Nos. 12, 19 and 28 of this order. The ground of objection raised by the assessee has been decided by us against the assessee vide paragraphs of this order. Therefore, for the detailed discussion please refer to the said paras. Hence, all the grounds of objections raised by the assessee are hereby dismissed.

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32.

In the result, the CO filed by the assessee is hereby dismissed.

Coming to ITA No. 183/Ahd/2018 and CO No. 40/Ahd/2019 for A.Y. 2014-15

33.

At the outset, we note the issue raised by the revenue in its ground of appeal and by the assessee in its objection for A.Y. 2014-15 are identical to ground of appeal raised by the revenue and objection raised by the assessee for A.Y. 2013-14 in ITA No 182/Ahd/2018 & CO No. 39/Ahd/2019. Therefore, the findings given in ITA No. 182/Ahd/2018 & CO No. 39/Ahd/2019 shall also be applicable for the year under consideration i.e. AY 2014-15. The appeal of the revenue and the cross objection of the assessee for A.Y. 2013-14 has been decided by us vide paragraph Nos. 12, 19, 28 and 31 of this order wherein we have dismissed the ground of revenue’s appeal as well as ground of assessee’s objections. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the year under consideration i.e. AY 2014-15. Hence, the grounds of appeal filed by the revenue as well grounds of cross objection filed by the assessee are hereby dismissed.

34.

In the result, the appeal filed by the revenue and cross objection filed by the assessee are hereby dismissed.

35.

In the combined result all the appeals filed by the revenue and cross objections by the assessee are hereby dismissed.

Order pronounced in the Court on 30/11/2023 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 30/11/2023 Manish

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