ACIT, CENTRAL CIRCLE-1(2), AHMEDABAD vs. M/S. SARTHAV INFRATECH, AHMEDABAD
What did the Tribunal hold?
Regarding the first two grounds of appeal concerning the validity of the notice under Section 153C, the assessee's counsel stated that the assessee did not wish to press these grounds. Consequently, the Tribunal dismissed these grounds as not pressed, leading to the dismissal of the assessee's appeal in IT(SS)A No. 293/Ahd/2018. Concerning the Revenue's appeal (IT(SS)A No. 317/Ahd/2018), the Tribunal addressed the deletion of an addition of Rs. 2,00,00,000/-. The Tribunal held that in the absence of incriminating material found during the search, completed assessments cannot be disturbed, citing the decision in 'M/s. Sarthav Investment' (supra). The AO had made additions under Section 68 for unsecured loans. The Tribunal noted that a significant portion of the credit represented opening balances carried forward from earlier years, which were explained. For the remaining amount credited to Abhishil Shop & Office Co.Op Society, the Tribunal found that it represented journal entries for collections made by the assessee as a developer on behalf of the society, not an actual transfer of funds. Therefore, the CIT(A) was justified in deleting the addition under Section 68. The Revenue's appeal was dismissed.
What were the facts?
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, was hearing multiple appeals and cross-objections filed by various assessees, including Sarthav Investment, Sarthav Infratech, Dharmendra Mahendrabhai Sutaria, Sanjay Mahendrabhai Sutaria, and Sthapatya Shilp Construction, along with appeals by the Revenue (ACIT/DCIT). These appeals pertained to assessment years ranging from 2009-10 to 2015-16. The primary issue revolved around assessment orders passed under Section 143(3) read with Section 153(3) of the Income Tax Act, 1961, following searches. The Tribunal noted that while some assessees were part of the same group, their issues were independent. Specifically, the appeals concerning Sarthav Investment and Sthapatya Shilp Construction were consolidated for disposal.
What were the issues?
1. Whether the notice issued under Section 153C of the Income Tax Act, 1961, was valid in the absence of a valid satisfaction note from the Assessing Officer (AO) of the searched assessee? (Question of law) 2. Whether the notice issued under Section 153C was illegal due to the absence of incriminating material belonging to the appellant firm found during the search, rendering the subsequent assessment illegal? (Question of mixed law and fact) 3. Whether the deletion of an addition of Rs. 2,00,00,000/- by the Commissioner of Income-Tax (Appeals) [CIT(A)] on account of unexplained cash was justified? (Question of mixed law and fact) Assessee's Contentions: For grounds 1 and 2, the assessee argued that the notice under Section 153C was invalid due to the lack of satisfaction and incriminating material. However, the assessee later stated they did not wish to press these grounds. Revenue's Contentions: The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 2,00,00,000/- on account of unexplained cash.
Which sections of the Income-tax Act were involved?
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Income Tax Appellate Tribunal, ‘’B’’ BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED & SHRI T.R SENTHIL KUMAR
आयकरअपीलीयअधिकरण, अहमदाबादनायपीप IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’B’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI T.R SENTHIL KUMAR, JUDICIAL MEMBER
Asstt. Sr.No. IT(SS)A No. Name of Appellant Name of Respondent Year Sarthav Investment, 203-204, Abhishilp Complex, Nr. Vishweshwari IT(SS) A A.C.I.T, 2011-12 Mahadev Temple, 1. No.293/Ahd/2018 Central Circle-1(2), Vastrapur, Ahmedabad Ahmedabad-380015. PAN : ABUFS1295A IT(SS)A Sarthav Investment, No.317/Ahd/2018 D.C.I.T, Ahmedabad. With 2-3. 2011-12 Circle-1(2), C.O Ahmedabad PAN : ABUFS1295A No.125/Ahd/2019 IT(SS)A D.C.I.T, Sarthav Investment, No.318/Ahd/2018 Central Circle-1(2), Ahmedabad. 4-5. With 2015-16 Ahmedabad C.O PAN : ABUFS1295A No.126/Ahd/2019 Sarthav Investment, Ahmedabad. A.C.I.T, IT(SS)A 6. 2015-16 Central Circle-(1)(2), No.294/Ahd/2018 PAN : ABUFS1295A Ahmedabad. M/s.Sarthav Infratech, 203-204, Abhishilp Complex, IT(SS) A A.C.I.T, Nr. Vishweshwari 7. No.509/Ahd/2019 2012-13 Central Circle-1(2), Mahadev Temple, Ahmedabad. Vastrapur, Ahmedabad-380015. PAN : ABUFS3280P M/s. Sarthav Infratech, Ahmedabad. A.C.I.T, IT(SS)A 8. 2013-14 Central Circle-1(2), No.295/Ahd/2018 PAN : ABUFS3280P Ahmedabad.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 2 M/s. Sarthav IT(SS)A Infratech, No.311/Ahd/2018 D.C.I.T, Ahmedabad. 9-10. with 2013-14 Central Circle-1(2), C.O Ahmedabad. PAN : ABUFS3280P No.14/Ahd/2020 M/s. Sarthav IT(SS)A Infratech, No.510/Ahd/2019 ACIT, Ahmedabad. 11-12 With 2014015 Circle-1(2) C.O Ahmedabad PAN : ABUFS3280P No.26/Ahd/2020 Dharmendra Mahendrabhai Sutaria, A.C.I.T, IT(SS)A 16-B, Jadav Chambers, 13. 2009-10 Central Circle-(1)(2), No.296/Ahd/2018 Ashram Road, Ahmedabad. Ahmedabad PAN: AFUPS6552A IT(SSA Dharmendta D.C.I.T, No.327/Ahd/2018 Mahendrabhai Sutaria, 14-15 2009-10 Central Circle-1(2), with C.O Ahmedabad. Ahmedabad. No.148/Ahd/2019 PAN: AFUPS6552A Dharmendta IT(SS)A D.C.I.T, Mahendrabhai No.326/Ahd/2018 16-17 2010-11 Central Circle-1(2), Sutaria, with Ahmedabad Ahmedabad. C.O.131/Ahd/2019 PAN: AFUPS6552A Dharmendta A.C.I.T, IT(SS)A Mahendrabhai Sutaria, 18. 2011-12 Central Circle-1(2), No.297/Ahd/2018 Ahmedabad. Ahmedabad PAN: AFUPS6552A IT(SS)A Dharmendta No.328/Ahd/2018 D.C.I.T, Mahendrabhai 19-20 With 2012-13 Centra Circle-1(2), Sutaria, C.O Ahmedabad Ahmedabad. No.149/Ahd/2019 PAN: AFUPS6552A IT(SS)A Dharmendta No.307/Ahd/2018 D.CI.T, Mahendrabhai 21-22 with 2014-15 Central Circle-1(2), Sutaria, C.O Ahmedabad Ahmedabad. No.130/Ahd/2018 PAN: AFUPS6552A Dharmendta IT(SS)A A.C.I.T, Mahendrabhai No.541/Ahd/2019 23-24. 2015-16 Central Central-1(2) Sutaria, With C.O Ahmedabd Ahmedabad. No.25/Ahd/2022 PAN: AFUPS6552A Dharmendta Mahendrabhai Sutaria, A.C.I.T, IT(SS)A 25. 2011-12 Ahmedabad. Central Circle-1, No.298/Ahd/2018 Ahmedabad. PAN: AFUPS6552A 26-27 IT(SS)A No.153- 2010-11 & D.C.I.T, Sanjay Mahendrabhai
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 3 154/Ahd/2019 2011-12 Central Circle-1(2), Sutaria, Ahmedabad. 1B, Mayur Colony Navrangpura, Ahmedabad. PAN: AAQHS42364N IT(SS)A Sanjay Mahendrabhai No.172/Ahd/2019 D.C.I.T, Sutaria, 28-29 With 2011-12 Central Central-1(2), Ahmedabad. PAN: C.O Ahmedabad. No.166/Ahd/2019 AAQHS42364N Sthapatya Shilp Construction, 203-204, Abhishilp Complex, A.C.I.T, IT(SS) 30. 2011-12 Nr. Vishweshwar Central Circle-(1)(2), No.277/Ahd/2018 Mahadev Temple, Ahmedabad. Vastrapur-380015. PAN: ABFFS2922P IT(SS)A Sthapatya Shilp No.313/Ahd/2018 D.C.I.T, Construction, 31-32 with 2011-12 Central Circle-1(2), Ahmedabad. C.O Ahmedabad. PAN: ABFFS2922P No.121/Ahd/2019 (Applicant) (Respondent) Assessee by : Ms Nupur Shah, A.R Revenue by : Shri Sudhendu Das, C.I.T.DR
सुनवाईकीतारीख/Date of Hearing : 15/06/2023 घोषणाकीतारीख/Date of Pronouncement: 31/07/2023 आदेश/O R D E R PER BENCH:
The above appeals and Co’s have been filed by the Assessee and the Revenue against the orders of the Ld. Commissioner of Income-Tax (Appeals), Ahmedabad, arising in the matter of the Assessment Order passed u/s.143C r.w.s 153(3) of the Act Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years as mentioned in the cause title. Since issues
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 4 involved in all these appeals are identical, we proceed to dispose of all the appeals by this common order for the sake of convenience and brevity.
The bench vide order sheet entry No. 23 dated 05/01/2023, sought clarification from the Ld. Counsel of the assessee by raising a question that why the case of M/s. Sarthav Infrastructure Pvt. Ltd., was not consolidated with the present group of 32 appeals. The Ld. Counsel in response to such query has made reply vide letter dated Nil which is reproduced as under: Against the aforesaid observation so made, it is submitted that Mr. Sanjay Sutaria and Mr. Dharmen Sutaria were partners in various partnership firms of Sarthav Group. That they partners Sanjay Sutaria and Dharmen Sutaria has voluntarily offered income at the time of filing return of income for the funds introduced as capital contribution in various partnership firms. That as the partners had disclosed income which was invested in the firm, the cases of partners were requested to be consolidated with all partnership firms. 2.1 After hearing both the parties on the objection raise by the bench as well as on merit of the case to understand the issue, we note that the primary issue in the present 32 appeals was relating to the capital contribution by the partners of the firm and the loan taken from various parties. On the other hand, the issue involved in the case of M/s. Sarthav Infrastructure Pvt. Ltd, was with respect to the on money received from the parties. As such in principal, it was observed that the issues involve in the present 32 appeals are independent and unconnected to the issues raised in M/s Sarthav Infrastructure Pvt. Ltd. Even the Ld. DR at the time of hearing could not make out any case that the impugned group of 32 appeals needs to be tagged along with M/s Sarthav Infrastructure Pvt. Ltd. As such, the ld. DR left the issue at the bench.
2.2 Considering the fact that, though both the assessee as discussed above belong to the same group, the issues involve in their respective appeals can be disposed off independently. Therefore, we decide to proceed with the matter after hearing both the parties on merits.
IT(SS)A 293/AHD/2018, appeal by the assessee, M/s Sarthav Investment for the A.Y. 2011-12
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 5 3. The assessee has raised following grounds of appeal: 1. The Ld.CIT(A) has erred in law and on facts in confirming the action of the Ld.AO in issuing the notice u/s.153C of the Act dated 28.09.2016 in the case of the appellant firm as no satisfaction is recorded by the AO of the person searched and accordingly, the provisions of section 153C are not applicable on facts and circumstances of the case. 2. That on the facts and in the circumstances of the case, the notice u/s.153C issued on 28.09.2016 is illegal as no incriminating material belonging to the appellant firm was found/seized during the course of search conducted in the case of Barter Group of cases on 04.12.2014 and consequently, the assessment made u/s.143(3) r.w.s 153C of the Act is also illegal and deserves to be quashed. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. 4. The assessee vide ground No. 1 of its appeal has challenged the validity of notice issued under section 153C of the Act in the absence of valid satisfaction note of the AO of the searched assessee.
At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence, the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
The assessee in the next ground of appeal challenged the validity of the notice issued under section 153C of the Act on the reasoning that search material found was not belonging to it.
At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
In the result, the appeal of the assessee is hereby dismissed as not pressed.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 6 Coming to IT(SS)A No. 317/AHD/2018, appeal by the Revenue in the case of assessee namely M/s Sarthav Investment for the assessment year 2011-12
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 deleting the addition of Rs.2,00,00,000/- on account of unexplained cash credit u/s.68 of 1.T. Act. 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 deleting the addition of Rs.55,83,85,000/- (which has been wrongly mentioned in the assessment order as Rs.57,47,94,168/-) on account of unsecured loan u/s. 68 of 1.T. Act. 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 not appreciating the provisions of Section 153A of the IT. Act, 1961 which required the total income to be brought under tax without any restrictions. 4. 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 holding that such assessment or re-assessment u/s. 153A of the I.T. Act, 1961 is to be restricted only to the incriminating material found during the search. 5. 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.1,079/- on account of disallowance of set- off of loss shown in the return of income 6. 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. 7. 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. 10. The first issue raised by the revenue is that the learned CIT-A erred in deleting the addition of Rs. 2,00,00,000/- made on account of capital contribution by one partner namely Shri Dharmendra Sutaria.
The facts in brief are that the assessee is a partnership firm, engaged in the business of Investing in underwriting, shares, stock, debentures, land property etc. There was search and seizure operation under section 132 of the Act dated 04th December 2014 carried out at the “Barter Group” and consequence to such search, proceedings under section 153C of the Act were initiated in the case of present assessee. The AO found that during the year under consideration, one of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 7 partner namely Shri Dharmen Sutaria introduced capital of ₹2,00,00,000/- in the firm. The AO found that Shri Dharmen Sutaria received such fund from Padmavathi Infrastructure (a proprietary concern of Shri Ashish Shah) as unsecured loan. However, he failed to explain the genuineness of credit of such unsecured loan and credit worthiness of the party. The AO further noticed that Padmavati Infrastructure received funds from M/s Sarthav Infrastructure Pvt. Ltd. As per the AO, the unaccounted cash was generated by the group which has been layered into the different bank account as evident from the excel sheet (CCCCC.xls) found from the premises of Shri Anil Hiralal Shah. The same excel sheet was also found from the premises of Shri Sanket Vohra during search proceeding. Thus, the AO in view of the above treated the amount credited in the form of capital contribution by impugned partner as unexplained money under section 68 of the Act and added to the total income of the assessee.
The aggrieved assessee preferred an appeal before the learned CIT-A who after considering facts in totality deleted the addition made by the AO by observing as under: 5.2 The submission of the appellant and the assessment order has been carefully considered. The AO in the assessment order in Para 4 of the assessment order under the head Unexplained cash credits from Partner has made an observation that capital of Rs. 2 crores has been introduced by the Partner Shri Dharmen Sutaria during AY 2011-12 and source of the funds of Dharmen Sutaria are stated to be unsecured loans from Padmavati Infrastructure (Prop. AshishMahendrakumar Shah) However, his creditworthiness has not been proved. The AO made the addition of Rs. 2 crores in the hands of the appellant as unexplained cash credit u/s. 68 of the Act The appellant during the course of appeal hearing in its submission submitted that the Partner Shri DharmenSutaria has received the loan funds of Rs. 2 crores from Padmavati Infrastructure (Prop. Ashish Mahendrakumar Shah) by account payee cheque and thereafter he has introduced the said funds as a capital in the appellant firm. The appellant during the course of assessment proceedings placed on record of the AO the confirmation of account from the books of Padmavati Infrastructure (Prop. Ashish Mahendrakumar Shah) along with PAN Number, Bank Statement of Padmavati & ITR of Ashish Shah (Prop Of Padmavati) The appellant firm has also further submitted that the AO himself has stated the details of income disclosed by Padmavati Infrastructure (Prop. AshishMahendrakumar Shah) for AY. 2008-09 to AY 2011- 12 and for A.Y. 2011- 12, Mr. AshishMahendrakumar Shah, Proprietor of M/s. Padmavati Infrastructure has shown the income of Rs. 23,95,650/- Therefore, the identity of the party Padmavati Infrastructure (Prop.Ashish Mahendrakumar Shah), genuineness of the funds received by Shri DharmenSutaria from Padmavati Infrastructure of Rs. 2 crores which is by account payee cheque only and the creditworthiness of the said party has been duly established on the basis of evidences placed by appellant during the course of assessment proceedings before the AO. Therefore, the addition made by the AO in the hands of the
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 8 appellant firm as unexplained cash credit u/s. 68 of the Act is not justified following the decision of Rohini Builders.) During the course of appeal hearing, the AR of the appellant firm contended that in respect of capital contribution by the partners in the appellant firm, the AO cannot treat the same as unexplained cash credit in the hands of the appellant firm and even if any adverse inference can be drawn, the same can be drawn in the hands of the partner in view of the decision of the Hon'ble Gujarat H.C decision in case of Commissioner of Income Tax v. Pankaj Dyestuff Industries, Income Tax Reference No. 241 of 1993. On careful consideration of the details submitted by the appellant during course of assessment proceedings before the AO in respect of loan funds given by Padmavati Infrastructure (Prop. Ashish Mahendrakumar Shah) by account payee to Shn Dharmen Sutaria, partner of the appellant firm who introduced the said funds of Rs. 2 crores as capital contribution in appellant firm and the AO in the assessment order has also stated about the details of return of income filed by Padmavati Infrastructure Ashish Mahendrakumar Shah) for A.Y. 2008-09 to A.Y 2011-12 and for AY 2011-12, the said party has shown the income of Rs. 23,95,650/- in the return of income for AY 2011-12. Thus taking into consideration all the facts and material evidence available on record as discussed above, the AO is not justified in making the addition of Rs. 2 crore in the hands of the appellant as unexplained cash credit u/s. 68 of the Act in respect of capital contribution made by Shri Dharmen Sutaria, partner of the appellant firm, once the source of capital funds introduced by partner has been fully explained by the appellant by placing on record the necessary evidences required u/s 68 of the Act (Therefore, I hereby delete the addition of Rs. 2 Crores made by the AO as unexplained cash credit u/s. 68 of the Act. This ground of appeal is allowed. Further, the appellant's case has been found covered by several judgments of the Hon'ble High Court of Gujarat, Ahmedabad vide which it has been held that transaction is through normal banking channels, additions u/s 68 cannot be made. The appellant has cited several case laws in the submission, which has been reproduced in paras above. 13. Being aggrieved by the order of the learned CIT-A, the Revenue is in appeal before us.
13.1 The learned DR before us reiterated the findings contained in the assessment order and further submitted that the assessee failed to discharge the onus cast upon it under the provisions of section 68 of the Act.
13.2 On the other hand, the learned AR before us filed a paper book running from pages 1 to 234 and contended that there cannot be any addition in the hands of the partnership firm on account of capital contribution by the partner. The learned AR vehemently supported the order of the learned CIT-A.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, one of the partners of the assessee firm introduced capital of ₹ 2,00,00,000/- only. The AO treated the same as
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 9 unexplained cash credit in the hand of the assessee because, the partner, Shri Dharmen Sutaria received the amount from other party being Padmavati Infrastructure in the form of loan but failed to explain the creditworthiness of Padmavati Infrastructure. On appeal the learned CIT-A was pleased to delete the addition made by the AO.
14.1 The provision of section 68 of the Act fastens the liability on the assessee to make proper and reasonable explanation regarding the nature and sources of sum credited in the books to the satisfaction of the AO. The assessee is liable to provide proof of the identity of the lenders/creditors, establish the genuineness of the transactions and creditworthiness of the parties. In the case on hand, the amount credited was capital introduced by the partner of the assessee firm. The identity of the partner who introduced capital is not in doubt. The AO himself found that partner acquired an unsecured loan for making capital contribution. It is settled position of law that the assessee is expected to explain the sources of credit only not the sources of source. Therefore, in our considered opinion the assessee cannot be held responsible if the partner was not able to explain the source of credit in his books of account to the satisfaction of the AO.
14.2 Be that as may be, the Hon’ble Gujarat High court in the case of CIT v. Pankaj dyestuff Industries IT Reference No. 241 (Guj.) of 1993, dated 6-7-2005 held the amount credited by the partner as capital in the firm cannot be taxed in the hands of the assessee firm under section 68 of the Act. The relevant observation of the Hon’ble High court reads as under: "13. Applying the aforesaid principles to the facts of the present case, it is apparent that the assessee had furnished the details, which would discharge the onus which lay on the assessee. It is not the case of the revenue that the partners of the assessee firm are fictitious. The Income Tax Officer has not disputed that the credits in the accounts of the partners were not deposits from the partners. Moreover, it is an admitted position that this was the second year of the firm, and that it was running in loss. It is true that the Income Tax Office did not accept the explanation given on behalf of the assessee in respect of the new deposits or cash credits in the accounts of the partners. The mere non-acceptance of that explanation does not, however, provide material for finding that the said sum represented income of the assessee firm. As held by the Allahabad High Court in case of Jaiswal Motor Finance (supra), in the absence of any material to indicate that there were profits of the firm, the amount credited to the partners' accounts could not be
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 10 assessed in the hands of the firm. Once the partners have owned that the monies deposited in their accounts are their own, the Income Tax Officer is entitled to and may proceed against the partners and assessee the same in their hands, if their explanation is not found satisfactory." 14.3 In view of the above and after considering facts in totality, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT-A erred in deleting the addition made by the on account of unexplained loan credit for Rs. 57,47,94,168/- only.
The AO during the assessment proceedings found that the books of accounts of the assessee were credited by unsecured loan for Rs. 57,47,94,168/- from the following parties:
Name of entity PAN Loan(Rs.) Deesa Tie-Up Pvt. Ltd. 29.32,00,000 Dharamnath Shares & Service 5,00,00,000 Sarthav Infrastructure Pvt. Ltd 21,15,85,000 Total 57,47,94,168 16.1 On question by the AO, the assessee submitted the above parties were subject to the assessment proceedings with the same AO. Therefore, all the details were readily available on record. The AO found that the parties namely M/s Deesa Tie-Up Pvt Ltd and M/s Dharamnath Shares & Services are managed and controlled by Shri Atul Hiralal Shah who introduced unaccounted income earned by manipulation of Stock market in the form of capital and loan in the books of these two loan parties which subsequently transferred the fund to the assessee firm. According to the AO, the impugned amount was treated as unexplained cash credit under section 68 of the Act in their respective cases. Likewise, the loan from the party namely Sarthav Infrastructure Pvt Ltd which is engaged in real estate business and the unaccounted receipt from various parties are layered through various accounts in the form of unsecured loan. Therefore, the genuineness of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 11 loan transaction was not established. Thus, the AO treated the credit of unsecured loan of Rs. 57,47,94,168/- from the above parties as unexplained cash credit under section 68 of the Act.
Aggrieved assessee preferred an appeal before the learned CIT(A). The learned CIT(A) after considering the facts in totality deleted the addition made by the AO on technical count as well as on merit. The relevant finding of the learned CIT(A) reads as under: From the perusal of the assessment order, it reveals the fact that the AO has not identified any of the seized material and/or incriminating material found and seized during the course of search proceedings in respect of unsecured loan received during the year under consideration from the aforesaid three as stated above. Therefore, in absence of any incriminating material and /or seized material found during the course of search proceedings in respect of unsecured loan received during the year under consideration, the addition made by the AO on account unexplained credits u/s 68 of the Act of Rs. 57.47,94,168/- is not justified. The appellant's case is covered by the decision of Hon'ble Gujarat High Court in the case of Pr. CIT-4 vs Saumya Construction Pvt. Ltd [2017] 387 ITR 529 (Gujarat)and other judicial pronouncements relied upon by the appellant herein above. As the facts of this case are identical to the facts of the above mentioned case laws, addition of Rs. 57.47,94,168/-(correct figure Rs. Rs. 55,47,85,400/-) made by the AO is required to be deleted 6.2.1 On merit, on perusal of the details of unsecured loan parties, it is noticed that the AO has made the addition on account of unsecured loan received during the year from Sarthav Infrastructure Pvt. Ltd (SIPL) for an amount of Rs. 21,15,85,000/- Deesha Tie Up Pvt. Ltd for an amount of Rs. 29,32,00,000/- and Dharmanath Share & Service Pvt. Ltd for an amount of Rs 5,00,00,000/- All the aforesaid three loan parties identity are getting established as the AO of the appellant is also AO of the aforesaid three companies and Deesha Tie Up Pvt. Ltd and Dharmanath Share & Service Pvt. Ltd are the group companies of Anil Hiralal Shah and Atul Hiralal Shah and all the aforesaid three companies were under the assessment proceedings u/s 153A/153C of the Act before the AO and therefore, the return of income of all the aforesaid three companies as well as bank statements and books of accounts were already available on the record of the AO The appellant has already placed from its books of accounts ledger accounts of aforesaid three companies along with statements highlighting the transactions in support of the contention that the unsecured loan received from Sarthav Infrastructure Pvt Ltd., Deesa Tie Up Pvt Ltd and Dharmanath Shares & Service Pvt. Ltd were by account payee cheuges through a proper banking channel. 6.2.2 The appellant has also taken a contention that as per the information available with it from the directors of Sarthav Infrastructure Pvt. Ltd the AO has prepared a chart on page 99 of the assessment order by stating the name of lender parties, PAN No and return of income for A.Y. 2009-10, 2010-11, 2012-13, 2013-14 and 2014-15 showing substantial income. As the company Deesa Tie Up Pvt. Ltd is also being assessed by the AO of the appellant and therefore, all necessary details as regards to the return of income, audited balance sheet of the company, books of accounts and bank statements were available on the record of the AO in respect of Deesa Tie Up Pvt. Ltd as the search proceedings were also carried out in the case of Deesa Tie Up Pvt. Ltd and it was subject to 153A/153C proceedings. The appellant has also placed on record the audited balance sheet of Deesa
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 12 Tie Up Pvt. Ltd and from verification of the audited balance sheet, it is noticed that the said company is having huge funds by way of share capital and reserves and surplus to the tune of Rs. 17,48,75,500/-. All the aforesaid facts and evidence available on the record of the AO establish the identity of the depositor Deesa Tie Up Pvt Ltd and genuineness and creditworthiness to lend the unsecured loan amount of Rs. 29,32,00,000/- to the appellant. Therefore, the addition made by the AO for the unsecured loan amount of Rs. 29,32,00,000/- received from Deesa Tie Up Pvt. Ltd during the year under consideration is not justified and is hereby deleted. 6.2.3. In respect of unsecured loan party Dharmanath Share & Service Pvt. Ltd the appellant has contended that the said company was assessed to tax with the AO himself and therefore, the observation made by the AO in the assessment order is unjustified and bad in law as regards to the identity and creditworthiness of the lender party Dharmanath Share & Service Pvt Ltd. Further, the appellant firm submitted the contra confirmation of the said party along with bank statement of the lender party as per Page No. 28 to 32 of Exhibit - VII of its written submission. The appellant has also downloaded the master data of the company Dharmanath Share & Service Pvt. Ltd from MCA website and copy of the same has been submitted as per Exhibit - VIII, Page No 33 along with its written submission and from perusal of the said master data, the company is active and regularly files Form No. 32 with ROC. The appellant has also taken a legal contention that as per the version of the AO in the assessment order, in respect of share capital received in the case of Dharmanath Shares & Service Pvt. Ltd, which remains unexplained, the addition can be made in the case of Dharmanath Shares & Service Pvt. Ltd u/s. 68 of the Act in view of following judgments:- CIT vs. N. Tarika Properties Investment Pvt.Ltd. (2013) 40 taxmann.com 525 (Delhi) b. CIT vs. Nova Promoters and FinleasePvt.Ltd. (2012) 342 ITR 169 (Del.) 18 taxmann.com 217 and CIT v. NR Portfolio Pvt. Ltd. (IT Appeal Nos. 1018 and 1019 of 2011 dated 22.11.2013). In the above referred judgment the Hon'ble Delhi High Court has considered the judgment of Hon'ble Supreme Court in the case of CIT vs. Lovely Exports Ltd., (2008) 216 CTR 195 (SC) and overruled the said Judgment in favour of revenue. An SLP was filed against the decision of Hon'ble Delhi High Court in the case of CIT vs. N. Tarika Properties Pvt. Ltd. (2013) 40 taxmann.com 525 (Delhi) before the Hon'ble Supreme Court and the Hon'ble Supreme Court dismissed the SLP filed by N.R.Tarika Properties Pvt.Ltd. on merits. c. CIT vs. Navodaya Castles Pvt.Ltd. 367 ITR 306 (Del.) d. DCIT vs. Rohini Builders 256 ITR 360 (Guj.) I have verified the ledger account of the unsecured loan party Dharmanath Share & Service Pvt. Ltd and their contra confirmation and bank statement and it noticed that the appellant has received the unsecured loan during the year under consideration by account payee cheque in the regular bank account of the appellant All the aforesaid facts and evidence available on the record of the AO establish the Identity of the depositor Dharmanath Share & Service Pvt. Ltd and genuineness and creditworthiness to lend the unsecured loan amount of Rs. 5,00,00,000/- to the appellant company. Therefore, the addition made by the AO for the unsecured loan amount of Rs. 5,00,00,000/- received from Dharmanath Share & Service Pvt. Ltd during the year under consideration and is hereby deleted 6.2.4. In respect of unsecured loan of Rs. 21,15,85,000/- from Sarthav Infrastructure Pvt Ltd., the has observed on Page 5 of the assessment order that "Sarthav Infrastructure Pvt. Ltd., is also involved in the real estate / infrastructure projects and cash receipt of the same project are deposited in various accounts and then routed to the company as
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 13 unsecured loan. Hence genuineness of the transactions with the company is not proved" The appellant submitted that since SIPL falls under the jurisdiction of the AO himself, a copy of income tax return and bank statement would already be available with the AO in order to verify the creditworthiness and the genuineness of the said transaction. The appellant has also submitted the copy of the contra confirmation of the unsecured loan received from the lender compan, the acknowledgment of return filed for AY 2011-12 of SIPL, bank statement of SIPL along with bank statement of the appellant firm highlighting the transactions which has been compiled at Page No. 34 to 72 of Paper Book. Further, SIPL is a regular filer of income tax return since its incorporation in FY 2007-08 The Lender company SIPL had filed return for AY 2011-12 showing substantial income of Rs 6,69,59,730/- and hence the appellant firm has duly disposed its onus of providing the identity, credit worthiness and genuineness of the lender company The appellant has also filed the copy of audited balance sheet of SIPL as well was company's Master Data downloaded from the ROC Website and from verification of the same, it is evident that the company SIPL is having huge funds by way of share capital reserve and surplus aggregating to Rs 4,10,66,896 Considering the aforesaid facts and material available on record, the addition made by the AO in respect of unsecured loan amounting to Rs.21.15,85,000 from Sarthav Infrastructure Pvt Ltd (SIPL) is not justified and the same is deleted. Keeping in view the discussion above, the addition made by the AO on account of unexplained cash credits u/s: 68 of the Act for an aggregate amount of Rs. 57.47,94, 168/- is not found justified and hence the same is deleted. This ground of appeal is allowed. Moreover the appellant's case is found covered by the judgment of Hon'ble High Court of Gujarat, Ahmedabad in the case of Rohini Builders, Ranchod Jivabhai Nakhava Ridhi Sidhi Corporation etc vide which it has been held that additions u/s 68 of the Act are not sustainable, if transactions are made through normal banking channel. 18. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.
18.1 The learned DR before us submitted that the assessee failed to discharge the onus imposed under section 68 of the Act. The learned DR reiterated the findings contained in the assessment order.
18.2 On the other hand, the learned AR before us contended that all the necessary details of the loan parties were already available with the AO. Besides, there was the repayment of loan in the year under consideration which was duly accepted by the revenue. Accordingly, the learned AR contended that there cannot be any addition to the total income of the assessee. The learned AR vehemently supported the order of the learned CIT-A.
We have heard the rival contentions of both the parties and perused the materials available on record. The provision of section 68 of the Act fastens the
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 14 liability on the assessee to make proper and reasonable explanation regarding the nature and sources of sum credited in the books to the satisfaction of the AO. The assessee is liable to provide proof of the identity of the lenders/creditors, establish the genuineness of the transactions and creditworthiness of the parties. In the case on hand, the books of accounts of the assessee were credited by unsecured amount of loan from three parties as mentioned in previous paragraphs. Admittedly, all these three parties were subject to the proceeding either under section 153A or 153C of the Act before the same AO who has jurisdiction over the assessee. Thus, the identity of the loan parties cannot be doubted.
19.1 Coming to the next aspect that is creditworthiness of the parties, in this regard we note that the AO himself found that first 2 parties (Deesa Tie-Up Pvt Ltd and Dharamnath Shares & Services) received huge sum in the form of loans or capital whereas third party namely M/s Sarthav Infrastructure Pvt Ltd was engaged in the business of real estate development. They were also filing regular return of income and declared handsome amount of income. Thus, these three loan parties were having creditworthiness to advance loan.
19.2 Likewise, the transaction was carried out through the banking channel which was duly recorded in the books of account of the assessee and counter parties. There is no finding of the AO or material on record suggesting that the assessee and counter party exchanged cash. As such, the only reason of the AO for holding the credit of loan as not genuine was that the first two parties were controlled by the one Shri Atul Hiralal Shah who generated unaccounted income and introduced his unaccounted in their books in the form of loan or capital. A similar reason was also given by the AO for the party, namely M/s Sarthav Infrastructure Pvt. Ltd. In our considered opinion the credit in books of assessee cannot be held unexplained merely for the reason there is doubt regarding the genuineness of source of credit in books of creditor party. As such, it is the settled position of law that in case of credit of loan, the assessee is only expected to explain the sources of credit in its books only and not the sources of source. If the
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 15 Revenue has any doubt regarding genuineness of fund in the hands of the creditor, then the Revenue can take appropriate action in the case of the creditor party but not the present assessee. It is pertinent to mention, the AO himself noted that there was an addition under section 68 of the Act in the hand of the creditor party namely Deesa Tie-Up Pvt Ltd and Dharamnath Shares & Services on account credit of loans and capital. Thus, no further addition can be made in the hands of the assessee company.
19.3 Without prejudice to the above, we note that the year under consideration is an unabated/ completed assessment year and present assessment proceeding under section 153C r.w.s. 143(3) of the Act was initiated in consequence to search proceeding. It has been settled by various Hon’ble Court including Hon’ble Jurisdictional High Court that the completed assessment cannot be disturbed in the absence of any incriminating material/ documents whereas the assessment/ reassessment can be disturbed with respect to abated assessment years. The word 'assess' in Section 153A/153C of the Act is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to the completed assessment proceedings. The Hon’ble Gujarat High Court in the case of Saumya Construction Pvt. Ltd. reported in 81 taxmann.com 292, has held that there cannot be any addition of regular items shown in the books of accounts until and unless there were certain materials of incriminating nature found during the search. The word incriminating has not been defined under the Act, but it refers to materials/ documents/information which were collected during the search proceedings and not produced in the original assessment proceeding. Simultaneously, these documents had bearing on the total income of the assessee.
19.4 Now coming to the facts of the case in hand, we note that addition was made for the loan amount credited in the books of the assessee. However, no material of incriminating nature was found during search proceedings regarding credit of such loan. The AO also did not refer to any incriminating material found in this regard which would have made basis for the addition in the assessment.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 16 The assessee during the appellate proceeding made specific contention in this regard and the learned CIT(A) concurred with the submission of the assessee that no material in connection with loan transaction was found.
19.5 At the time of hearing, the learned DR has not brought anything on record referring to incriminating material in connection with loan transaction. Accordingly, we hold that there cannot be any addition of the regular items which were disclosed by the assessee in the regular books of accounts. In holding so, we draw support and guidance from the judgment of Hon’ble Gujarat High Court in case of Saumya Construction (P.) Ltd (supra) wherein it was held as under: Thus, while in view of the mandate of sub-section (1) of section 153A in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, the earlier assessment would have to be reiterated. 19.6 In view of the above, we hold that there cannot be any addition to the total income of the assessee of the regular items as made by the AO in the present case. Accordingly, we do not find any reason to interfere in the finding of the learned CIT(A) on technical count as well as on merit and direct the AO to delete the addition made him. Thus, the ground of appeal of the revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT-A erred in deleting the disallowance of loss to be carried forward of Rs. 1079/- only.
The necessary facts are that the assessee for the year under consideration filed return of income declaring loss of Rs. 1079/- only. However, the AO in the assessment framed under section 143(3) r.w.s. 153C of the Act disallowed the loss in pursuance to the provision of section 80 of the Act as the return was filed belatedly.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 17 22. The aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that it has not carry forwarded the loss, therefore the provision of section 80 of the Act cannot be invoked. The learned CIT-A concurred with the submission of the assessee and deleted the disallowances of loss by observing as under: 7.2. Submission of the appellate, the facts mentioned in the assessment order have been considered carefully. The AO has observed that in terms of section 80 of I.T. Act, 1961 since the return has been filed belatedly, no loss is allowed to be carried forward. Further, in view of Hon'ble Gujarat High Court decision in Fakir Mohamad HaziHasan 247 ITR 290, the loss returned by assessee of Rs. 1079/- is also not allowed to be set-off against addition made u/s.68 of the I.T. Act, 1961. The appellant has already contended that it has not carried forward the loss of Rs. 1,079/- while filing the return u/s. 153C of the Act. Thus the addition made by the AO of Rs. 1,079/- is not justified and the same is hereby deleted. 23. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.
23.1 The learned DR before us vehemently supported the order of the AO.
23.2 On the contrary, the learned AR before us contended that the assessee has not carried forward any loss as alleged by the AO. The learned AR vehemently supported the order of the learned CIT-A.
We have heard the rival contention of both the parties and perused the material available on record. The provision of section 80 of the Act has direct bearing on issue on hand which reads as under: 80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (2) of section 73A or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A.. 24.1 On the perusal of the above provision, we note that it restricts the set-off and carry forward of business losses if return is not filed as per the provision of section 139 subsection 3 of the Act. However, in the case on hand, we note that the assessee before the learned CIT-A claimed that it has not made any claim of carry forward of losses, therefore the provision of section 80 of the Act cannot be
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 18 applied. The submission of the assessee has been found true by the learned CIT-A. The learned DR at the time of hearing before us has not brought any material contrary to the finding of learned CIT-A. Therefore, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the Revenue is here by dismissed.
In the result, the appeal of the revenue is hereby dismissed.
Coming to CO No. 125/Ahd/2019 in IT(SS) No 317/Ahd/2018 by the assessee, Sarthav Investment for A.Y. 2011-12.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
26.1 In the result, the CO filed by the assessee is hereby dismissed.
Coming to IT(SS)A No. 294/AHD/2018, by the assessee, Sarthav Investment for the AY 2015-16
The only issue raised by the assessee is that the learned CIT-A erred in confirming the order of the AO by sustaining the disallowance of carry forward of losses of ₹ 92,91,731/- only.
At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
In the result, the appeal of the assessee is hereby dismissed as not pressed.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 19
Coming to IT(SS)A No. 318/AHD/2018, an appeal by the revenue in case of assessee, Sarthav Investment for the assessment year 2015-16
The Revenue has raised following grounds of appeal:
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 made by the AO in respect of unexplained cash credit u/s.68 of the Act of Rs.21,41,48,294/- from Deesha Tie Up Pvt. Ltd., Rs.5,00,00,000/- from Dharmanath Share & Service Pct. Ltd., Rs.25,00,28,706/- from Sarthav Infrastructure Pvt. Ltd. (SIPL), Rs.6,76,84,468/- from Vaibhavi Capital Management and Rs. 1,30,00,000/- from Mainak Comtrade Pvt. Ltd. 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 deleting the addition of Rs.21,41,48,294/- in respect of Sarthav Infrastructure Pvt. Ltd. (SIPL) on the ground that the same cash was added by the AO in A.Y. 2011-12 without the assessee leading evidence before the AO (refer para 5 of Assessment Order) that this amount was the same that has been received by the assessee from SIPL in the previous year relevant to A.Y. 2011-12 and was added in the assessment order for A.Y. 2011-12. 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 not appreciating the provisions of Section 153A of the IT. Act, 1961 which required the total income to be brought under tax without any restrictions. 4. 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 holding that such assessment or re-assessment u/s. 153A of the I.T. Act, 1961 is to be restricted only to the incriminating material found during the search. Not Relent 5. 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 not appreciating that the assessee did not discharge its onus before the to establish the nature and source of creditors amounting to Rs.59,48,61,468/- in its books. 6. 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. 7. 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. 31. The only effective issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO on account of unexplained credit of loan for Rs. 59,48,61,468/- under section 68 of the Act.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 20 32. The assessee during the year has received unsecured loans of Rs. 59,48,61,468/- from the following parties: Name of entity PAN Loan(Rs.) Deesa Tie-UP Pvt. Ltd. 21,41,48,294/- Dharamnath Shares & Service 5,00,00,000 Sartyhav Infrastructure P Ltd 25,00,28,706 Mainak Comtrade Pvt Ltd 1,30,00,000 Vaisbhavi Capital Management 6,76,84,468 Total 59,48,61,468 32.1 The AO treated the same as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. However, the AO inadvertently has made the final addition for Rs. 57,47,94,168.00 leaving a difference of Rs. 2,00,67,300.00 only.
On appeal by the assessee the learned CIT(A) deleted the addition made by the AO on technical ground i.e. no addition in the absence of incriminating material found in the search as well on merit of issue.
Being aggrieved by the order of the ld. CIT-A, the revenue is in the appeal before us.
34.1 Both the learned DR and the learned AR before us supported the finding of the authorities below to the extent favorable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that similar addition has been made by the AO in AY 2011-12 against the unsecured loan received by the assessee from the party namely Deesa Tie-up Pvt Ltd, M/s Dharmnath Shares and Services and M/s Sarthav Infrastructure Pvt Ltd. The addition in earlier years has been made on identical reasoning which came to be deleted by the learned CIT(A). Subsequently, we also deleted the addition made by the AO on appeal preferred by the Revenue bearing IT(SS)A No. 317/AHD/2018. The relevant finding for AY 2011-12 has been given in paragraphs no. 19 of this order. Therefore, considering
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 21 all the facts and materials available on record, we hold that the learned CIT(A) rightly deleted the addition made on account of unsecured loan from the parties namely M/s Deesa Tie-up Pvt Ltd, M/s Dharmnath Shares and Services and M/s Sarthav Infrastructure Pvt Ltd.
35.1 Coming to the issue of addition of Rs. 1,30,00,000/- on account of the loan received from the party namely M/s Mainak Comtrade Pvt Ltd., at the outset, we note that the assessee before the learned CIT-A claimed that no fresh loan form the impugned party was received during the year under consideration. As such, the impugned amount was representing the opening balance. The claim of the assessee has been found true by the learned CIT(A). The learned DR before us did not bring any material contrary to the finding of the learned CIT(A). Thus, because no fresh loan was received by the assessee from the impugned party, namely Mainak Comtrade Pvt Ltd, we hold that the provision of section 68 of the Act cannot be invoked for the amount received in earlier year. Hence, the learned CIT(A) rightly deleted the addition made by the AO.
35.2 Moving to the issue of unsecured loan of Rs. 6,76,84,468/- from Vaibhavi Capital Management, in this regard, we note that the learned CIT(A) has given a finding that the impugned party regularly filing return of income since AYs 2009- 10 to 2015-16 and have declared substantial income which has also been noted by the AO of the present assessee while finalizing the assessment of group concern. The learned CIT(A) also found that the fresh loan of Rs. 3,15,31,557/- was only credited during the year whereas the AO wrongly alleged the amount of loan of Rs. 6,76,94,468/-. As such, there was an opening outstanding balance of Rs. 4,68,60,471/- out of which an amount of Rs. 1,25,07,560/- was repaid during the year and fresh amount of Rs. 3,15,31,557/- was received during the year. The learned CIT(A) further found that the assessee and M/s Vaibhavi Capital Management continuously entered into transaction of advance (received and repaid) from FY 2013-14 to 2015-16 which was finally settled in FY 2015-16 i.e. in the immediate subsequent year. All these transactions of receipt and payment of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 22 loan and advances were carried out through banking channel. At the time of hearing, the learned DR before us did not bring any material contrary to the finding of the learned CIT(A). Thus, considering the facts that loan amount was received through banking channel and subsequently repaid through banking channel, we hold that such credit of loan in the given facts and circumstances cannot be treated as unexplained cash credit in the light of judgment of Hon’ble jurisdictional High Court in the case CIT Vs. Rohini builders reported in 256 ITR 360 wherein it was held as under: “The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.” 35.3 Thus, in view of the above elaborated discussion, we do not find any infirmity in the order of the learned CIT(A). Therefore, we uphold the same and direct the AO to delete the addition made by him under section 68 of the Act. Hence, the ground of appeal of the Revenue is hereby dismissed on merit.
35.4 Without prejudice to the above, we note that the year under consideration is unabated/ completed assessment year and present assessment proceeding under section 153C r.w.s. 143(3) of the Act initiated in consequence to search proceeding. In our considered opinion the completed assessment cannot be disturbed in the absence of any incriminating material/ documents. In this regard there has been an elaborate finding given by us vide paragraph no. 19.3 to 19.6 of this order. For detailed discussion on this issue, refer to the above-mentioned paragraph of this order. Thus, on technical ground also the issue raised by the Revenue is hereby dismissed.
In the result, the appeal of the Revenue is hereby dismissed.
Coming to CO No. 126/Ahd/2019 in IT(SS) No. 318/Ahd/2018 by the assessee, Sarthav Investment for the AY 2015-16.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 23 37. At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
37.1 In the result, the CO filed by the assessee is hereby dismissed.
Coming to IT(SS)A No. 509/Ahd/2019, an appeal by the Revenue in case of the assessee, Sarthav Infratech for AY 2012-13.
The Revenue has raised the following grounds of appeal:
On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that any addition during the assessment u/s 153C has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec. 153C of the Act. 2.On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in not appreciating that sec. 153C requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years, and that the scheme of assessment or re-assessment of the total income of a person searched will be brought to naught if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, there is no such stipulation in sec.153A and sec. 153BI specifically states that the provisions of Chapter-XIV-B, under which sec 158BB falls, would not be applied where a search was initiated u/s 132 after 31/5/2003. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that assessment in relation to certain issues not related to the search and seizure may arise in any of the said six assessment years after the search u/s. 132 is conducted in the case of the assessee, and that if the interpretation of the Id. CIT(A) were to hold it will not be possible to assess such income in the 153C proceedings, while no other parallel proceedings to assess such other income can be initiated, leading to no possibility of assessing such other income, which could not have been the intention of the legislature. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs 6,00,000/- being protective addition in the case of assessee.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 24 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.5,00,000/- being cash deposit in bank accounts which remained unexplained during the course of assessment proceedings. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.4,26,12,849/- being unexplained credit in the form of unsecured loan u/s 68 of the Act. 8. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought have upheld the order of the A.O. 9. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of A.O. be restored to the above extent. 39. Additional ground of appeal was also filed by the assessee challenging validity of proceeding u/s 153C of the Act but there was no appeal/CO filed by the assessee. Therefore, in absence of appeal or cross appeal by the assessee and moreover because the learned AR for the assessee at time hearing before us has submitted that he was instructed by the assessee not to press the issue raised in additional ground of appeal. Hence, we hereby reject the same as infructuous.
The first effective issue raised by the Revenue vide ground Nos. 1 to 4 & 7 of its appeal is that the learned CIT-A erred in deleting the addition of Rs. 4,26,12,849/- being unexplained credit of loan by holding that no addition can be made in the absence of incriminating material in the proceedings under section 153C of the Act.
The facts in brief are that the assessee, a partnership firm, is engaged in the business of Construction and development. The assessee in the return of income filed under section 139 of the Act declared income at Rs. NIL. Subsequently a search and seizure operation under section 132 of the Act dated 04th December 2014 was carried out at the “Barter Group” and consequence to such search, proceedings under section 153C of the Act were initiated in the case of present assessee. Finally, the assessment under section 143(3) r.w.s. 153C of the Act was framed by the AO after making addition of Rs. 4,26,12,849/- under section 68 of the Act, on account of credit of unsecured loan beside making other addition to the total income of the assessee.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 25
The aggrieved assessee preferred an appeal before the learned CIT(A). The learned CIT(A) while adjudicating the issue of addition of unsecured loan of Rs. 4,26,12,849/- deleted the addition made by the AO on technical count i.e. in the proceeding under section 153C of the Act, the addition can be made only to the extent of incriminating material. The learned CIT(A) also deleted the impugned addition on merit. The relevant finding of the learned CIT(A) is extracted as under: 8.1 The appellant's arguments are in two fold. Firstly, on the basis of legal contention that during the course of search proceedings, no incriminating material as regards to loan received during the year from the aforesaid parties were found and seized from the residence of Shri Anil Hiralal Shah as well as from the residence of Shri Sanket Jitendrabhai Shah (Vora) of Barter Group for which the aggregate addition of Rs. 4,26,12,849/- has been made by the AO u/s. 68 of the Act and the appellant further contended that during the course of assessment proceedings also, the AO has not brought on record any incriminating material in respect of addition made by the AO for the unsecured loan received during the year under consideration from the aforesaid two parties. It is also submitted that Section 153C of the Act does not lay down any different procedure than provided under 153A and in absence of any incriminating material, no addition can be made while making assessment u/s 153A/153C and in support of this contention, the appellant relied upon the decision of Hon'ble jurisdictional Gujarat High Court in the case of Pr. CIT-4 vs. Saumya Construction Pvt.Ltd [2017] 387 ITR 529, other High Courts and Ahmedabad Tribunal as well as other Tribunals in its written submission filed before the AO during the course of assessment proceedings. The appellant also submitted that the said legal contention was also taken up before the AO during the course of assessment proceedings in its written submission filed before the AO and the AO without considering the aforesaid legal contention of the appellant as well as without identifying any of the incriminating seized material with regard to the addition made for unexplained cash credit for the loan received during the year under consideration from the aforesaid two parties has made the addition in the assessment order rendered u/s. 143(3) r.w.s. 153C of the Act which is not tenable under the law. From perusal of the assessment order, reveals the fact that the AO has not identified any of the seized material and/or incriminating material found and seized during the course of search proceedings in respect of unsecured loan received during the year under consideration from two unsecured loan parties as stated above. On-going through the case laws relied upon by the appellant, it is found that the appellant's case is squarely covered by the following binding judgments of higher authorities:- i) CIT vs. Saumya Construction Pvt.Ltd (Tax appeal No. 24 of 2016) 81 taxmann.com 292 dated 14.03.2016. ii) PCIT v. Surnrise Finlease (P) Itd [2018] 89 taxmann.com 1 (Gujarat) ii) vs. Ms. Lata Jain [2017] 81 taxmann.com 83 (Del.) iv) DCIT vs. shri Ankush Saluja (ITA No. 2047/Del/2016) order dated 07.12.2017. v) The Pr.CIT-1 vs. Devangi Allas Rupa, Tax Appeal No. 54 of 2017 with Tax Appeal No. 22 of 2017 to Tax Appeal No. 57 of 2017 order dated 02.02.2017 (Gujarat). vi) Pr. CIT,
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 26 Ahmedabad -3, vs. Dipak Jashvantial Panchal, Tax Appeal No. 110, 111, 115 and 116 of 2017, order dated 14.02.2017 (Gujarat) vii) Pr. CIT-2, Ahmedabad vs. Jay Infrastructure and Properties Pvt.Ltd Tax Appeal No. 740 of 2016, order of Hon'ble Gujarart High Court dated 10.10.2016. viii) Pr. CIT (Central)-3, Ahmedabad vs. Dharampal Premchand Ltd. ITA No. 512/2016 ITA 513/2016 and ITA No. 514/2016, Hon'ble Delhi High Court Order dated 21.08.2017. ix)Intas Pharmaceuticals Ltd. Vs. Dy. CIT (2015) 44 CCH 0490 (Ahd. Trib) x) CIT-II, Thane v. Continental Warehousing Corporation (Nhava Sheva) Ltd [2015] 58 taxmann.com 78 (Bom.) xi) Hon'ble High Court of Delhi in the case of CIT (Central)-Ill vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi) Keeping in view the above mentioned binding orders of higher judicial authorities, additions of Rs 4,26,12,849/- are deleted. This ground of appeal is allowed. 8.2 On merit, on perusal of the details of unsecured loan parties, it is noticed that the AO has made the addition on account of unsecured loan received during the year from M/s. Adi Corporation, on Page 99 of the assessment order of Sarthav Infrastructure Pvt. Ltd, the AO himself has stated the PAN No. of the said lender party 145(3) r.w.s. 1530 and income disclosed by the said party for A.Y. 2009-10 to A.Y. 2015-16 and for AY. 2012-13, the said party has declared substantial income of Rs. 1,42,25,420/- As the firm M/s. Adi Corporation is also being assessed by the AO of the appellant and therefore, all the necessary details as regards to return of income of all the years of the lender party Adi Corporation so as to say that identity and/or genuineness of the transaction was not at question since it was cross verifiable from Page 99 of the assessment order rendered in the case of Sarthav Infrastructure Pvt. Ltd, the copy of which has submitted as per Exhibit - IV, Page No. 13 to Synopsis of Arguments submitted on 23.07.2018 in the appellate proceedings. It was also submitted that the observation made by the AO on Page 4 of the assessment order in the table prepared, the AO has mentioned that the lender party M/s. Adi Corporation has not filed the return of income for A.Y. 2010-11, 2011-12 & A.Y. 2012- 13 is factually incorrect in view of the fact that in the order rendered by the same AO in the case of M/s. Sarthav Infrastructure Pvt.Ltd, on Page 99 of the assessment order, the AO has already prepared a table and stated the details of returns of income filed by the lender party M/s. Adi Corporation for A. Y. 2009-10 to A. Y. 2015-16, wherein, the said party has shown substantial income. It was brought to my notice that the unsecured loan received from M/s. Adi Corporation was by account payee cheque through regular banking channel and duly reflected in the bank account of the appellant as well as in the books of accounts of the appellant. The appellant also placed on record the contra confirmation of the lender party for A.Y. 2012-13, bank. statement highlighting transaction, acknowledgment of return of income filed to establish the transaction has taken place through proper banking channel. On careful consideration of the aforesaid facts, the identity of the depositor M/s. Adi Corporation and its creditworthiness has been duly established and therefore, the addition by the AO in respect of unsecured loan of Rs. 1,00,00,000/- received by the appellant is not justified and the same is hereby deleted. 8.3 With regards to the unsecured loan of Rs. 3,26,12,849/- from the lender party Shri Utkarsh B. Shah, it is contended that the unsecured loan of Rs. 3,26,12,849/- has been received by the appellant during the financial year 2011-12 relevant to A.Y. 2012-13which is evident from the ledger account submitted by the appellant during the course of assessment proceedings vide letter dated 08.12.2016 the copy of which has been compiled at Page No. 1240 of Paper Book No. VI. The appellant has also submitted the contra
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 27 confirmation reflecting the PAN Number of the lender party which is compiled at Page No. 1240 of Paper Book No. VI.It is also Submitted that the lender party Shri Utkarsh B. Shah had duly charged the interest and the appellant after deducting the TDS on such interest has paid / credited interest in the account of unsecured loan party Utkarsh B. Shah which establish the fact that the transaction is genuine. It is further submitted that during the course of assessment proceedings, appellant had already submitted the PAN Number. address and contra confirmation of the lender party for A.Y. 2011-12 and income disclosed in the return of income of the lender party for A.Y. 2012-13 declaring the income of Rs. 59,64,268/ which itself proves that the financial capacity and creditworthiness of the lender party. Appellant has also taken a contention that from verification of the ledger account of Utkarsh B. Shah, it can be observed that the loan received during the year is of Rs. 3,10,00,000/- and interest 17,92,055/- was paid during the year under consideration as well as TDS of Rs. 1,79,206/- was duly deducted on the same in respect of unsecured loan received from Shri Utkarsh B. Shah. It is also contended that it cannot be disputed that the burden to establish prima face that the genuineness and creditworthiness of the investors is that of the appellant, but once the appellant has proved the genuineness vis-à- vis creditworthiness of the lenders by placing on record concrete material evidence in the form of contra confirmation from the books of the lender party reflecting the transaction undertaken with regards to the same, PAN Number, address, contra confirmation have already been provided thereby fulfilling the litmus test u/s. 68 of the Act, then the burden shifts on the Revenue. In support of the aforesaid contention, the appellant has also relied upon decision of Hon'ble Gujarat High Court in the case of DCIT vs. Rohini Builders 256 ITR 360 (Guj.) and various other judicial pronouncements of Hon'ble Gujarat High Court, other High Court and Tribunals. The appellant has also in the written submission filed on synopsis of arguments made an analysis as to the similarity between Rohini Builders and appellant's case. On careful consideration of the material available on record, the identity of the depositor Shri Utkarsh B. Shah and creditworthiness is duly established. It is also established beyond doubt that the said party Shri Utkash B. Shah, who has given the unsecured loan to the appellant, is filing the return of income showing substantial income in his hand. I have also verified the ledger account of the aforesaid unsecured loan party and contra confirmation and bank statement of the appellant and it is noticed that the appellant has received the unsecured loan during the year under consideration by account payee cheque in the regular bank account and the appellant has also paid the interest to the unsecured loan party after deducting TDS. During the course of search, no evidence was found which show payment in cash by the appellant in lieu of cheques and there is no such findings given by the AO in the assessment order. Considering the aforesaid facts and material available on record, the addition made by the AO in respect of unsecured loan amounting to Rs. 3,26,12,849/- is not justified and the same is deleted. Keeping in view the discussion above, in respect of the addition made for the unexplained credit u/s. 68 of the Act for an amount of Rs. 4,26,12,849/- is not found justified and hence the same is deleted. This ground of appeal is allowed. 43. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us.
43.1 The learned DR before us reiterated the findings contained in the assessment order.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 28 43.2 On the other hand, the learned AR before us reiterated the submissions before the authorities below and supported the order of the learned CIT-A.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there was search proceedings under section 132 of the Act dated 4th December 2014 (i.e. during the financial year 2014-15 corresponding to A.Y. 2015-16) which was carried out in the case of Barter Group i.e. group concern of the assessee and accordingly proceedings under section 153C of the Act was started in the case of respondent assessee. The assessment under section 143(3) r.w.s. 153C of the Act for the year under consideration i.e. A.Y. 2012-13 was framed wherein an addition of Rs, 4,26,12,849/- was made on account of unsecured loan by treating the same as unexplained cash credit under section 68 of the Act. On appeal by the assessee, the learned CIT (A) deleted the addition made by the AO both on the ground of law as well as on the ground of merit. The ld. CIT-A while deleting the addition on the ground of law found that there was no material of incriminating nature in relation to unsecured loan found during the search proceeding, therefore the year under consideration being unabated/completed assessment year, any addition made in absence of incriminating material is not justified. The learned DR before us vehemently argued that there is no provision under section 153C which restricts the assessment or reassessment in case of search to the extent of incriminating material only.
44.1 At the outset we note that the issue that no assessment of income in the proceeding under section 153A/153C can be made in the absence of incriminating material found during the search came before us in IT(SS) NO. 317/Ahd/2018 an appeal by the revenue is case of assessee namely Sarthav Investment. The issue has been elaborately discussed in paragraph no. 19.3 to 19.6 of this order where we have confirmed the finding of the learned CIT(A). Thus, the technical ground of appeal of the Revenue is hereby dismissed. As such we hold that there cannot be any addition of regular items to the total income of the assessee which have
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 29 only been disclosed in the return of income. Admittedly the additions/disallowances made by the AO represent the regular items disclosed in the return of income, therefore it is directed to the AO to delete the addition made by him.
44.2 However, without prejudice to the above finding on technical ground, we proceed to adjudicate the issue raised by the revenue on merit also. The necessary fact on the merit is that the assessee in the year under consideration has been received unsecured loan from the following parties: Name of entity PAN Loan(Rs.) Utkarsh B Shah 3,26,12,849 Adi Corporation AALFA7078F 1,00,00,000 Total 4,26,12,849 44.3 The provision of section 68 of the Act fastens the liability on the assessee to make proper and reasonable explanation regarding the nature and sources of sum credited in the books to the satisfaction of the AO. It has been settled position of law now by the various judicial pronouncement that the assessee is liable to provide proof of the identity of the lenders/creditors, establish the genuineness of the transactions and creditworthiness of the parties.
44.4 In the case on hand, the assessee received an unsecured loan from the 2 parties. The first party, namely M/s Adi Corporation from whom unsecured loan of Rs. 1 crore was received. We find that the learned CIT(A) has given clear finding that M/s Adi Corporation has been assessed by the same AO who assessed the respondent assessee. Thus, all the necessary details about identity, credit worthiness and genuineness were available before the AO. Further, the transaction was carried out through banking channel duly reflected in the books of the assessee as well counter party. M/s Adi Corporation also confirmed the transaction which can be verified from confirmation letter filed by the assessee at the time of assessment. M/s Adi Corporation is a regular assessee and declared substantial amount of income i.e. Rs. 1,42,25,420/- for the year under consideration. Therefore, considering the facts in totality we are of the considered
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 30 opinion that the learned CIT(A) rightly deleted the addition made by the AO on account of loan received from M/s Adi Corporation.
44.5 Coming to the loan of Rs. 3,26,12,849/- received from Shri Utkarsh B Shah, in this regard, we note that the assessee received the loan through banking channel and partial loan amount of Rs. 3.1 crores along with interest of Rs. 17,92,055/- after deducting TDS was repaid through banking channel. At the outset, we note that the Hon’ble Gujarat High Court in the case of the CIT Vs. Rohini builders reported in 256 ITR 360 held that once loan received through banking and repaid through banking channel then the genuineness of such transaction is proved, and hence, no addition should be made. The relevant observation of the Hon’ble bench is extracted as under: “The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.” 44.6 In view of the above elaborated discussion and after considering facts in totality, we hereby hold that the assessee on merits discharged the onus cast under section 68 of the Act. Hence, we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal of the Revenue on merit is also hereby dismissed.
The next issue raised by the revenue vide ground no. 5 of its appeal is that the learned CIT(A) erred in deleting the protective addition of Rs. 6 Lakh on account of capital contribution by one of the partners of the assessee firm.
At the outset, we note that the issue of credit in the books of accounts of partnership firm by the partner as capital contribution has been settled by Hon’ble Gujarat High court in the case of CIT v. Pankaj dyestuff Industries IT Reference No. 241 (Guj.) of 1993, dated 6-7-2005 wherein it was held the amount credited in the books of the firm by the partner as capital cannot be taxed in the hands of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 31 the assessee firm under section 68 of the Act. The relevant observation of the Hon’ble High Court reads as under: "13. Applying the aforesaid principles to the facts of the present case, it is apparent that the assessee had furnished the details, which would discharge the onus which lay on the assessee. It is not the case of the revenue that the partners of the assessee firm are fictitious. The Income Tax Officer has not disputed that the credits in the accounts of the partners were not deposits from the partners. Moreover, it is an admitted position that this was the second year of the firm, and that it was running in loss. It is true that the Income Tax Office did not accept the explanation given on behalf of the assessee in respect of the new deposits or cash credits in the accounts of the partners. The mere non-acceptance of that explanation does not, however, provide material for finding that the said sum represented income of the assessee firm. As held by the Allahabad High Court in case of Jaiswal Motor Finance (supra), in the absence of any material to indicate that there were profits of the firm, the amount credited to the partners' accounts could not be assessed in the hands of the firm. Once the partners have owned that the monies deposited in their accounts are their own, the Income Tax Officer is entitled to and may proceed against the partners and assessee the same in their hands, if their explanation is not found satisfactory." 46.1 In view of the above and after considering facts in totality, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the Revenue is hereby dismissed.
The next issue raised by the Revenue vide ground No. 6 of its appeal is that the learned CIT(A) erred in deleting the addition of Rs. 5 lakh being cash deposited in the bank.
The AO in the assessment proceedings noted that during the search at the residence of Shri Anil Hiral Shah an excel sheet named as CCCCC.xls was found containing information with regard to unaccounted cash receipt of Sarthav Infratech Pvt Ltd (SPIL) and the layering of such unaccounted cash in the bank of account of various individuals and groups concern during the period 2nd April 2010 to 27th August 2010. The information about layering cash into bank accounts of different individuals and group concern matched with the bank statements of such individuals or group concern. As per the impugned excel sheet an amount of Rs. 11 Lakh was deposited in the bank of the assessee held with Corporation bank from April 2010 to August 2010 which in the opinion of the AO was unexplained cash deposit.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 32
48.1 The AO further found that during the year under consideration i.e. as on 8th October 2011 cash amounting to Rs. 5 Lakh deposited in the bank of the assessee. Thus, the AO held since cash deposit in immediate previous assessment year was not genuine therefore cash amounting to Rs. 5 Lakh deposited in the impugned bank account during year under consideration i.e. as on 8th October 2011 is also not genuine. Hence, the AO added the same to the total income of the assessee.
The aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that cash was deposited out of capital contribution made by the partner namely Shri Dharmen Suataria. The assessee, in support of his contention, has also filed a copy of the cash book.
49.1 The learned CIT(A) after considering the facts deleted the addition made by the AO by observing as under: On careful consideration of the facts of the case and material available on record, it is evident that the AO has already made an addition of Rs. 6,00,000/-on Page 9 of the assessment order passed u/s. 143(3) r.ws. 153A(1)(b) of the IT Act, 1961 dated 30.12.2016 for A.Y. 2012-13 under the head "Capital introduction in Partnership firm", in the case of Shri Dharmen Mahendrabhai Sutaria, the copy of assessment order has been compiled at Page No. 1 to 10 of Exhibit - 1 to the Synopsis of Arguments submitted by the appellant along with synopsis of arguments filed on 23.07.2018. Therefore, once the addition has already been made on substantive basis in the case of Partner Shri Dharmendra Sutaria for A.Y. 2012- 13, the AO is not justified in make the addition again in the case of appellant for A.Y. 2012-13 on account of unaccounted cash credit u/s.68 of the Act of Rs.5,00000/- is not justified and hence the same is hereby deleted. This ground of appeal is allowed. 50. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us.
50.1 Both the learned DR and the AR vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contention of both the parties and perused the material available on record. Admittedly in the year under consideration cash
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 33 amounting to Rs. 5 lakh was deposited in the bank account of the assessee. The AO treated the same as accommodation entry because in the immediate previous year an incriminating material was found suggesting that unaccounted income of main company of the group namely Sarthav Infrastructure Pvt Ltd deposited cash in the bank account of different group concern including the assessee firm. In our considered opinion the foundation adopted by the AO for making the addition of cash deposit in the year under consideration is merely based on surmise and conjecture and it settled position of law that no addition can be made to the total income of the assessee on surmises and conjecture or suspicion howsoever strong it is. There is no material with the AO suggesting that the cash deposited during the year under consideration represents accommodation entry. On the other hand, the assessee contended that cash was deposited out of capital contribution made by one of partner of the firm. The AO in the assessment order also made addition of capital contribution on protective basis in the hand of the assessee firm and substantive basis in the hand of the partner. Thus, it substantially proved that cash was deposited out of cash received from the partner in the form of capital contribution. Thus, considering the facts in totality as discussed above, we do not find any reason to interfere in the finding of the learned CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed.
In the result, the appeal of the Revenue is hereby dismissed.
Coming to IT(SS) No. 295/Ahd/2018 by the assessee, Sarthav Infratech for A.Y. 2013-14.
The assessee vide the captioned appeal challenged the validity of initiation of proceeding under section 153C of the Act, and thereby validity of assessment order framed under section 143(3) r.w.s. 153C of the Act.
53.1 At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 34 press the impugned ground of appeal. Hence the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
53.2 In the result, the appeal of the assessee is hereby dismissed as not pressed.
Coming to IT(SS) No. 311/Ahd/2018, by the revenue in case of the assessee, Sarthav Infratech for A.Y. 2013-14.
At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.17 of 2019 dated 08/08/2019 revising the previous thresholds pertaining to tax effects. It is inter alia noticed that the CBDT vide Instruction No. F. No. 279/Misc/M- 93/2018-ITJ dt. 20/08/2019 has observed that Circular No.17/2019 dated 08/08/2019 relating to enhancement of monetary limits is also applicable to all pending appeals. As per the aforesaid Circular read with instruction, all 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.
54.1 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 will be open to Revenue to seek restoration of its appeal showing inapplicability of the aforesaid CBDT Circular in any manner as per the provisions of law.
54.2 In the result, the appeal of the Revenue is dismissed.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 35 Coming to CO. No. 14/Ahd/2020 in IT(SS) No. 510/Ahd/2019 by the assessee Sarthav Infratech for A.Y. 2014-15.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
55.1 In the result, the CO filed by the assessee is hereby dismissed.
Coming to IT(SS) No. 510/Ahd/2019 by the revenue in case of the assessee, Sarthav Infratech for A.Y. 2014-15.
The Revenue has raised following grounds of appeal: 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 11,00,000/- being cash deposit in bank accounts even though out of the total said cash deposit, Rs.9,00,000/- remained unexplained in the hands of appellant as well as partner of the firm Dharmen M. Sutaria. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.9,00,000/- made on protective basis in the case of assessee on the ground that additional income of Rs.9,00,000/- has been offered/disclosed on substantive basis by the partner of the firm Shri Dharmen M Sutaria in AY 2014-15, even though no additional income of Rs.9,00,000/- was disclosed by the partner Shri Dharmen M Sutaria in his ROI for AY 2014-15, and the Ld. CIT(A) did not verify that substantive addition was made in this 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.3,31,64,271/- being unexplained credit in the form of unsecured loan u/s 68 of the Act. 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. 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. 57. The assessee vide letter dated 10-06-2022 filed Additional ground of appeal challenging the validity of proceeding u/s 153C of the Act but there was no appeal filed by the assessee. As such the assessee in the appeal filed by the Revenue in IT(SS)A 510/AHD/2019 raised the additional ground of appeal. Therefore, in
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 36 absence of appeal by the assessee and moreover considering the fact that the learned AR for the assessee at time hearing before us has submitted that he was instructed by the assessee not to press the issue raised in additional ground of appeal. Hence, we hereby reject the same as infructuous.
The first issue raised by the revenue is that the learned CIT(A) erred in deleting the addition made by the AO for Rs. 11,00,000/- on account of cash deposited from unexplained sources.
At the outset, we note that the issue raised by the Revenue in the captioned ground of appeal for the AY 2014-15 is identical to the issue raised by revenue in IT(SS)A No. 509/Ahd/2019 for AY 2012-13. Therefore, the findings given in IT(SS)A No. 509/Ahd/2019 shall also be applicable for assessment year under consideration i.e. AY 2014-15. The appeal of the Revenue for A.Y. 2012-13 has been decided by us vide paragraph No. 51 of this order against the revenue. The learned AR and the DR also agreed that whatever will be the findings for the A.Y. 2012-13 shall also be applied for the year under consideration i.e. AY 2014-15. Hence, the grounds of appeal filed by the Revenue is hereby dismissed.
The next issue raised by the revenue is that the ld. CIT-A erred in deleting the addition of Rs. 9 Lakh representing partner’s contribution in cash without verifying the fact that no such income was offered by the partner on substantive basis.
At the outset, we note that the issue raised by the revenue in the captioned ground of appeal for the AY 2014-15 is identical to the issue raised by revenue in IT(SS)A No. 509/Ahd/2019 for AY 2012-13. Therefore, the findings given in IT(SS)A No. 509/Ahd/2019 shall also be applicable for assessment year under consideration i.e. AY 2014-15. The appeal of the Revenue for A.Y. 2012-13 has been decided by us vide paragraph No. 46 of this order against the revenue. The learned DR and the AR also agreed that whatever will be the findings for the A.Y.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 37 2012-13 shall also be applied for the year under consideration i.e. AY 2014-15. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO under section 68 of the Act for Rs. 3,31,64,271/- being unsecured loan representing unexplained cash credit.
The AO found that the assessee has received an unsecured loan of Rs. 1,05,00,000/- and Rs. 2,26,64,271/- from the parties namely Gujarat Bituman Ltd and Adi Corporation respectively. The assessee did not furnish any detail explaining the genuineness of transaction and creditworthiness of the creditors. Thus, the AO treated the said unsecured loan as unexplained cash credit under section 68 of the Act and added to the total income of the assessee.
On appeal, the learned CIT(A) was pleased to delete the addition made by the AO on merit.
Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
65.1 Both the learned DR and the learned AR supported the order of the authorities below to the extent favourable to them.
We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we note that similar addition has been made by the AO in own case of the assessee for A.Y. 2012-13 against the unsecured loan received from the party M/s Adi Corporation. The addition in earlier year has been made on identical reasoning which came to be deleted by the learned CIT(A) and subsequently we also deleted the addition made by the AO on appeal preferred by the Revenue bearing IT(SS)A No. 509/AHD/2019. The relevant finding for AY 2012-13 has been given in paragraph no. 44 of this order.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 38 Therefore, considering all the facts and materials available on record, we hold that the learned CIT(A) rightly deleted the addition made on account of unsecured loan from the party namely M/s Adi Corporation for Rs. 2,26,64,271/- only.
66.1 Coming to the issue of addition of Rs. 1,05,00,000/- on account of the loan received from the party namely Gujarat Bitument Ltd., we note from the assessment order that the assessee furnished copy of contra ledger confirmation from the party showing the transaction carried out through banking channel. The AO himself found that the impugned party for the A.Ys 2011-12 to 2013-14 has shown income of Rs. 41.27 Lakh, 1.42 crore and Rs. 1.56 Lakh respectively. Further, we note that the impugned loan party namely Gujarat Bitumen Ltd is a well-known listed company and details are available in public domain. Therefore, in our considered view the primary onus to prove identity of the creditor, genuineness of the transaction and creditworthiness of the creditor has been duly discharged. In the given facts, the genuineness of the impugned loan transaction cannot be doubted merely because the assessee did not provide the bank statement of the loan party. Thus, in view of the above detailed discussion, we do not find any reason to interfere in the finding of the learned CIT(A). Therefore, we uphold the same and direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is hereby dismissed.
In the result, the appeal of the Revenue is hereby dismissed.
Coming to CO. No. 26/Ahd/2020 in IT(SS) No. 510/Ahd/2019 by the assessee, Sarthav Infratech for AY 2014-15.
The assessee has raised following grounds of objection:
All the grounds in this Cross Objections are mutually exclusive and without prejudice to each other- 1. The Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O in initiating the proceedings u/s. 153C of the Act without properly considering the contention
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 39 of the Respondent as well as various judicial pronouncements relied upon by the Respondent as the AO has not observed the basic requirement for initiation of assessment proceedings under section 153C of the I.T. Act, 1961 in the case of Respondent firm. 2. The Ld. correctly on facts and under law after considering the settled legal position held that considering the aforesaid facts, I am in agreement with contention of the firm that the cash deposit in aggregate of Rs. 11,00,000/- in F.Y. 2013-14 relevant to A.Y. 2014-15 is out of the cash withdrawn and capital introduction by the partners and the addition made by the AO as unexplained money for an amount of Rs. 9,00,000/- in the case of appellant is unjustified once again and bad in law and tantamount to multiple addition of the same amount resulting into double taxation and double assessment which is not permissible as per the provisions of Income Tax Act, 1961 and the judicial pronouncements and the AO has made the addition in the hands of the appellant once u/s. 68 as unexplained cash for the capital contribution by the partner Dharmen Sutaria, the same funds cannot be taxed in the hands of the appellant firm in view of the Hon'ble Gujarat High Court decision in the case of CIT vs. Pankaj Dyestuff Industries, IT Reference No. 241 of 1993 as it leads to duplication of addition once in the hands of partner and other in the hands of the appellant firm". The Ld. CIT(A) further following the judicial pronouncement of the Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah & Co vs. CIT A.P. 123 ITR 457 and other High Court's decisions for the principle of telescoping effect correctly delete the addition made by the AO on account of unexplained cash credit u/s. 69 for an amount of Rs. 11,00,000/-. 3. The Ld. CIT(A) has correctly on facts and under the law after considering the submission of the Respondent as well as various judicial pronouncements relied upon by the respondent held that Mr. Dharmen Sutaria has already disclosed the amount in the return of income filed u/s. 153A of the Act and hence the AO should not have made the addition in the case of the appellant again as the same would amount to duplicate addition of the same amount once in the case of Dharmen Sutaria and again in the case of appellant which is not permissible under the provisions of the Income Tax Act" in view of the decision of Hon'ble jurisdictional Gujarat High Court decision in the case of ITO vs. Pankaj Dystuff Industries and Hon'ble Supreme Court ITO vs. Bachu Lal Kapoor Kewal Ram (1966) 60 ITR 74 and the Ld. CIT(A) has rightly deleted the addition made by the AO on account of unaccounted cash credit u/s. 68 of the Act of Rs. 9,00,000/-. 4. The Ld. CIT (A) correctly on facts and under the law after considering the facts of the case, submission of the Respondent held that in respect of unsecured loan party Gujarat Bitumen Ltd for the an amount of Rs. 1,05,00,000/-, the said party's identity are getting established and the Respondent already placed on record from its book of accounts ledger accounts of the party Gujarat Bitumen Ltd along with ban statements highlighting the transactions in support of the contention that unsecure loan received from Gujarat Bitumen Ltd was by account payee cheques through proper banking channel and the identity of the depositor Gujarat Bitumen Ltd., a well- known public limited company and its accounts are in public domain and creditworthiness is duly established. The respondent has submitted from its books of accounts, copy of ledger accounts of the said party alongwith bank statements highlighting the transaction in support of the contention that the unsecured loan received from Gujarat Bitumen Ltd, was by account payee cheques through proper banking channel. Thus the identity and creditworthiness of the lender party is getting established. The Ld.CIT(A) after taking into consideration the above material held that the addition made by the AO on account of unsecured loan of Rs.1,05,00,000/- received from Gujarat Bitumen Ltu, is not justified and the Ld.CIT(A) has rightly deleted the addition made by the AO of Rs. 1,05,00,000/-. In respect of unsecured loan party Adi Corporation, the AO has made the addition on account of unsecured loan received during the year from the said party for an amount of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 40 Rs.2,26,64,271/-, on Page No. 99 of the assessment order of Sarthav Infrastructure Pvt. Ltd, the AO himself has stated the PAN Number of the said lender party and income disclosed by the said party for A.Y. 2009-10 to A.Y. 2015-16 and for A.Y. 2014-15, the said party has declared substantial income of Rs. 39,75,750/- and for A.Y. 2012-13, M/s. Adi Corporation returned income of Rs. 1.42 Crore as mentioned by AO himself on Page 99 of the assessment orders Sarthav Infrastructure Pvt. Ltd and all necessary details as regards to return of income, audited balance sheet, books of accounts and bank statements of M/s. Adi Corporation were available on the record of the AO. All the aforesaid facts and evidences available on record of the AO establish the identity, genuineness and creditworthiness of the depositor to lend the unsecured loan amount of Rs. 2,26,64,271/- to appellant and the Ld. CIT(A) appeal has rightly deleted the addition of Rs. 2,26,64,271/-. In nutshell, keeping in view all the details and evidences available on record, the Ld. CIT(A) has rightly deleted the addition made by the AO for the unexplained cash credit u/s. 68 of the Act for an amount of Rs. 3,31,64,271/- (i.e. Rs. 1,05,00,000/- from Gujarat Bitumen Ltd and Rs. 2,26,64,271/- from M/s. Adi Corporation). The Respondent craves right to add, amend, alter, modify, substitute , delete or modify all or any of the above grounds of cross objection. 69. The assessee vide first ground of objection challenged the validity of initiation of proceeding under section 153C of Act on reasoning that the notice under section 153C of the Act was issued without complying with the basic requirement of law.
At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
Coming to the other ground of objection, we note that the assessee has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the other ground of objection filed by the assessee. Hence, we dismiss the same as Infructuous.
In the result, the CO of the assessee is hereby dismissed.
Coming to IT(SS) No. 296/Ahd/2018 by the assessee, Shri Dharmenbhai Mahendra bhai Sutaria for A.Y. 2009-10.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 41
The assessee has raised the following grounds of appeal: 1. The Ld.CIT(A), has erred in law and on facts in failing to consider the fact that during the year under consideration i.e A.Y. 2009-10, there is a cash deposit of Rs.15,55,000/- in the bank account of appellant, however, merely on the basis of submission of the appellant in his letter dated 21.12.2016 that he is going to file the return of income u/s.143A by offering the additional income of Rs.65,00,000/-, the AO has made the addition of Rs.65,00,000/- in the case of the appellant reserves its right to add, amend, alter or modify any of the grounds state hereinabove either before or at the time of hearing. 74. The only issue raised by the assessee is that the learned CIT-A erred in confirming the addition of Rs. 65 Lacs on account of cash deposit.
The facts in brief are that the assessee is an individual and deriving income from business, partnership firm and other sources. He is also a director of M/s Sarthav Infrastructure Pvt Ltd. There was a search and seizure action under section 132 of the Act dated 04-12-2014 carried out at the Barter/entry provider Group and the assessee was also part of search authorization. Accordingly, assessment proceedings under section 153A of the Act were initiated in the case of the assessee.
75.1 During the assessment proceedings, the AO found that the cash amounting to Rs. 15.5 lacs were deposited in the bank of the assessee. On question by the AO, the assessee vide letter dated 21-12-2016 offered additional income of Rs. 65 Lacs on account of opening cash balance. Thus, the AO accordingly made the addition of Rs. 65 Lacs to the total income of the assessee.
The aggrieved assessee preferred an appeal before the learned CIT(A) who confirmed the order of the AO by observing as under: 4.2 Submission of the appellant, the facts mentioned in the assessment order have been considered carefully. The facts of appellant's case is that he has filed the return of income u/s 139 of the Act on 27.04.2010 declaring total income of Rs. 70,71,749/- for A. Y. 2009-10. However, in response to notice issued u/s. 153A of the Act, the appellant did not file the return of income before the assessment order by the AO u/s 143(3) r.ws. 153A(1)(b) of the Act passed on 30.12.2016. During the year under consideration, the appellant has made cash deposit of Rs. 15,55,000/- in the bank account of the appellant as discussed by the AO in the assessment order. The appellant during the course of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 42 assessment proceedings in his submission dated: 21.12.2016 submitted before the AO, that he himself has suo-motto voluntarily offered the unexplained cash deposit of Rs. 65,00,000/- as on 01.04.2008 available with the appellant which he proposed to offer as unexplained cash as an additional income under the head "Income from other sources" for the return of income to be filed by the appellant in response to the notice issued u/s 153A of the Act for A.Y. 2009-10. The appellant till the date of passing the assessment order by the AO on 30.12.2016 did not file the return of income in response to the notice issued u/s 153A of the Act by paying the tax on the unexplained cash of Rs. 65,00,000/- on 01.04.2008 that he had agreed to offer as additional income in the return of income to be filed in response to notice u/s. 153A of the Act. Therefore, though there is a cash deposit only in the bank account of the appellant of Rs. 15,55,000/-, the AO has made the addition of Rs. 65,00,000/- on the basis of submission made by the appellant vide letter dated 21.12.2016 before the AO being unexplained cash with the appellant as on 01.04.2008. I did not find any reason to interfere into the addition made by the AO for an amount of Rs 65,00,000/- as it is made on the basis of written submission filed by the appellant himself. Therefore, additions of Rs.65,00,000/- are confirmed. This ground of appeal is dismissed. 77. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.
77.1 The learned AR before us submitted that the assessee has already offered the impugned income of Rs. 65 lakhs and paid the due tax thereon. Therefore, no further addition is warranted in the given facts of the case. The learned AR reiterated the submissions made before the authorities below.
77.2 On the other hand, the learned DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the order of the authorities below, we note that the assessee in the original return filed under section 139 of the Act declared an income of Rs. 46,44,420/- but the same was assessed at Rs. 71,36,230/- vide assessment order under section 143(3) of the Act dated 21st November 2011. Subsequently, the search proceeding under section 132 of the Act was carried in case of the assessee as on 4th December 2014 and in consequence to such search, the proceeding under section 153A of the Act was initiated vide notice dated 22nd July 2015. The assessee in response to the notice under section 153A of the Act
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 43 did not file any return of income. However, during the assessment proceeding the assessee vide letter dated 21st December 2016 offered an additional income of Rs. 65 Lakh on account of unexplained cash. The AO, considering the submission of the assessee made addition of Rs. 65 Lakh on account of unexplained cash which was also confirmed by the learned CIT-A.
78.1 As per the submission of the assessee during the appellate proceeding, we note that the assessee after search carried out upon him examined his bank account and capital account with the firm in which he has been partner for the A.Y. 2009-10 to 2015-16 and accordingly prepared cash book for the aforesaid period. Wherever the assessee was not able to explain the sources of cash deposit in the bank and introduction of capital in the firm in the form of cash, he decided to offer additional income for the same. Accordingly, an amount of Rs. 65 Lakh was worked out for the year under consideration i.e. A.Y. 2009-10 as additional income. The assessee before the learned CIT(A) also submitted that though he worked out the amount of the additional income for different years falling between AY 2009- 10 to 2015-16 but not filed the return of income under section 153A of the Act because he was not having sufficient fund to deposit tax on such additional income. Once the fund was arranged, he deposited the due taxes as on 30th December 2016 and tried to file return of income, but the assessment order was passed by the AO on 30th December 2016.
78.2 From the above submission of the assessee during the appellate proceeding, it is transpired that the assessee himself worked out the unexplained income of Rs. 65 Lakh and paid due taxes on the same without being any pressure from the Revenue authority. The revenue merely considering the submission of the assessee assessed the income after making the addition of Rs. 65 Lakh to the income declared in the original return of income on account of unexplained cash. Thus, we do not find any reason to interfere on the order of the authorities below. Hence, the ground of appeal of the assessee is hereby dismissed.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 44 79. In the result, the appeal of the assessee is hereby dismissed.
Coming to IT(SS) No. 327/Ahd/2018 by the Revenue in case of assessee namely Dharmenbhai Mahendrabhai Sutaria for A.Y. 2009-10.
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 deleting the of Rs.2,53,19,733/- made by the AO as unsecured loans u/s 68 of the Act. 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 admitting additional evidence produced by the assessee before the CIT(A) in respect of unsecured loan without following the procedure prescribed in Rule 46A and with giving Assessing Officer opportunity to examine the evidence as mandated by Rule 46A of the IT Rules, 1962 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.55,17,500/- made by the AO as capital introduction in partnership firm. 4. 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.5,856/- made by the AO on account of unaccounted interest in Form 26AS. 5. 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. 6. 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. 81. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 2,53,19,733/- made under section 68 of the Act on account of unsecured loan.
The AO during the assessment proceedings found that the book of accounts of the assessee was credited by Saral Management and Consultancy for Rs. 2,53,19,733/- on account of unsecured loan. The AO treated the same as unexplained cash credit under section 68 of the Act and added to the total income of the assessee.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 45 83. On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO on merit as well as on technical grounds. The relevant finding of the learned CIT(A) contained in para 5.2 page 32 to 35 of his order as reproduced below: 5.2 Submission of the appellant, the facts mentioned in the assessment order have been considered carefully and in totality. The AO has discussed this issue in Para 7 on Page 3 to 7 of the assessment order. The AO has made an observation that it is pertinent to mention here that in case of Saral Management & Consultancy, majority of funds have come from CUB A/c no: 37918 of Sthapatya Shilp Construction, Sthapatya, in turn, has taken funds from CUB a/c 37954 of Sarthav Projects. This entity is also sourcing funds from Siddham Finance & Others. Further, Sarthav Projects has filed returns of nominal income. On the basis of aforesaid observation, the AO has reached to the conclusion that the creditworthiness of lender and genuineness of transactions not proved and unsecured loan of Rs. 2,53,19,733/- received by the appellant from Saral Management and Consultancy during the year under consideration is added to the total income of the appellant The appellant's arguments are in two fold. Firstly, on the basis of the legal contention that during the course of search proceedings, no incriminating material as regards to loan received from the aforesaid party were found and seized. Therefore, the addition made by the AO in respect of loan received during the year u/s 68 of the Act while framing the assessment order u/s 143(3) r.ws. 153A(1)(b) of the Act in absence of any incriminating seized material found. It is also submitted that section 153C of the Act does not lay down any different procedure than provided u/s 153A and in absence of any incriminating material, no addition can be made while making assessment u/s 153A/153C. The appellant relied upon the decision of Hon'ble jurisdictional Gujarat High Court in the case of Pr. CIT-4 vs. Saumya Construction Pvt.Ltd [2017] 529, other High Courts and Hon'ble Ahmedabad Tribunal as well as other Tribunals in his written submission filed during the course of appeal hearing. The appellant also submitted that the AO without identifying any of the incriminating seized material in respect of the unsecured loan received from Saral Management Consultancy made the addition in the assessment order rendered u/s 143(3) r.w.s. 153A(1)(b) of the Act which is not tenable under the law. It is also submitted that section 153C of the Act does not lay down any different procedure than provided u/s 153A and in absence of any incriminating material, no addition can be made while making assessment u/s. 153A/153C. The appellant relied upon the following judicial pronouncements in support of his contention.- 1) Pr. CIT-4 vsSaumya Construction Pvt. Ltd [2017] 387 ITR 529 ii) PCIT V. Sunrise Finlease (P.) Ltd. [2018] 89 taxmann.com 1 (Gujarat) iii) PCIT V. Ms. Lata Jain [2017] 81 taxmann.com 83 (Delhi) iv) DCIT V. ShriAnkushSalujavide order dated 07.12.2017 (ITA No. 2047/Del./2016
v) The Pr. CIT-1 vs. Devangi Alias Rupa, Tax Appeal No. 54 of 2017 with Tax Appeal No. 22 of 2017 to Tax Appeal No. 57 of 2017 order dated 02.02.2017(Gujarat), Hon'ble Gujarat High Court. vi) Pr. CIT, Ahmedabad -3, vs. DipaklashvantialPanchal, Tax Appeal No. 110, 111, 115 and 116 of 2017, order dated 14.02.2017 (Gujarat). vil) Pr. CIT-2, Ahmedabad vs. Jay Infrastructure and Properties Pvt. Ltd. Tax Appeal No. 740 of
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 46 2016, order of Hon'ble Gujarat High Court dated 10.10.2016. vill) Pr. CIT (Central)-3 Ahmedabad vs. DharampalPremchand Ltd, ITA No. 512/2016, ITA 513/2016 and ITA No. 514/2016, Hon'ble Delhi High Court order dated 21.08.2017. x) Intas Pharmaceuticals Ltd. Vs. Deputy Commissioner of Income Tax (2015) 44 CCH 0490 (AhdTrib) x) CIT-II, Thane v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bombay) xi) High court of Delhi In the case of Commissioner of Income Tax (Central)-III vs. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) On merit, on perusal of the details of unsecured loan party, it is noticed that the AO has made the addition on account of unsecured loan received during the year from Saral Management and Consultancy, Prop Mahendrabhai M. Sutaria- HUF. The identity of the loan party is getting established as the AO being the Assessing officer of Sarthav Infrastructure Pvt.Ltd has duly provided in the assessment order of SarthavinfrastructurePvt Ltd for AY 2009-10 at Page No. 99 the details with regard to Saral Management and Consultancy himself stated the details such as PAN Number, Returned income from A.Y. 2009-10 till AY 2015-16 and therefore, all the necessary details as regards to the PAN and return of income for all the years were on the record of the AO The Lender party has filed the return of income for A. Y 2009-10 showing total income of Rs 2,22,26,632/- The AO at Page 19 of the assessment order of Sarthav Infrastructure Pvt.Ltd for A. Y. 2009-10 has provided a chart showing PAN No and return of income details, thus providing the identity and creditworthiness of the parties of Sarthav Group. Further, the appellant has also submitted that in respect of Saral Management & Consultancy (Prop. MahendraSutaria - HUF) unsecured loan for an amount of Rs. 2,53,19,733/- has been received during the year under consideration and Rs 3,87,21,500/- was also repaid during the year under consideration and hence the addition of Rs. 2.53.19.733/- is not justified. Moreover, during the year under consideration the said unsecured loans are converted into loans and advances as the repayment amount (i.eRs: 3,87,21,500/-) is more than the amount received (ie: Rs. 2,53,19,733/-). Further, loans and advances given during the year does not fall under the ambit of section 68 as it is not fresh loans received during the year but merely repayments of advances given. That apart the AO of the appellant is also the AO of Saral Management & Consultancy which is of Sarthav Group and was under the assessment proceedings u/s 143(3) rws. 153C before the AO and hence the return of income of the aforesaid lender party as well as bank statement and books of accounts were already available on the record of the AO The appellant has also placed on record the ledger account of DharmenSutana in the books of Saral Management and Consultancy, ITR, confirmationas well as bank statements to prove that the transaction has taken place through proper banking channel The appellant has also relied upon the decision of decision of Hon'ble High Court of Gujarat in the case of DCIT vs. Rohini Builders 256 ITR 360 and various judicial pronouncements of the Hon'ble Gujarat High Court, other High Courts and Tribunals and also made a comparison and similarity between the decision of Rohini Builders (cited supra) and the appellant's case under dispute On careful consideration of above mentioned material, the identity of the lender party Saral Management and Consultancy (Prop Mahendrabhai M. Sutaria) and creditworthiness is duly established. It is also seen that appellant has also repaid an amount of Rs.3,87,21,500/- during the year under consideration. Therefore, the addition made by the AO on account of unsecured loan of Rs. 2,53,19,733/- received during the year under consideration from SaralManagement and Consultancy, is not justified and the same is hereby deleted. This ground of appeal is allowed.
Being aggrieved by the order of the learned CIT-A, the revenue is in appeal before us.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 47
84.1 The learned DR before us supported the order of the AO by reiterating the findings contained in the assessment order.
84.2 On the other hand, the learned AR before us vehemently supported the order of the learned CIT-A.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that transactions carried out by the assessee with the party namely Saral Management & Consultancy is current account where the assessee received and provided fund from each other on need basis. As such during the year under consideration, the assessee received an amount aggregating to Rs. 2,53,19,733/- from impugned party against which paid an amount aggregating to Rs. 3,87,21,500/-. Accordingly at the year end, the party becomes debtor on account of loans and advances instead of creditor. All these transactions were carried out through the banking channel. Therefore, considering the judgment of Hon’ble Gujarat High Court in the case of DCIT vs. Rohini Builder (supra) where it was held that genuineness of loan transaction proved by the fact the amount received through banking channel and repayment of the same made through banking channel. Therefore, we hold that no addition under section 68 of the Act is required to be made.
85.1 Be that as may be, we note that the regular assessment under section 143(3) of the Act has already been completed. As per the principles laid down by the Hon’ble Gujarat High Court in the case of PCIT vs. Saumya Construction Pvt Ltd. (Supra) the completed assessment cannot be disturbed in the absence of the incriminating material found during the search proceedings. From the perusal of the assessment order and the finding of the learned CIT(A), we note that no incriminating material was found or referred to by the AO in relation to unsecured loan. Therefore, addition made by the AO in absence of incriminating material is not sustainable. On this issue detailed finding has been given by us vide
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 48 paragraph no 19 of this order while adjudicating the Revenue appeal bearing IT(SS)A No. 317/Ahd/2018. For detailed discussion, please refer to the aforesaid paragraph of this order. Thus, in view of the above detailed discussion, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, the ground of appeal of the Revenue is hereby dismissed.
The next issue raised by the revenue is that the learned CIT-A, erred in deleting the addition of ₹ 55,17,500/- on account of unexplained contribution towards the partner capital account in the firm.
The AO during the assessment proceeding found that the assessee has introduced capital contribution for Rs. 55,17,500/- in the form of cash in the following firms:
Row Labels Sum of cash contribution 2009-10 5517500 Sarthav Projects 2000000 Sthapatya Shilp Builder 1117500 Sthapatya Shilp Construction 1700000 Sthapatya Shilp Developers 700000
87.1 The AO, in the absence of satisfactory explanation, treated the same as unexplained investment and added to the total income of the assessee under the provision of section 69 of the Act.
The aggrieved assessee preferred an appeal before the learned CIT-A who deleted the addition made by the AO by observing as under: 62 Submission of the appellant and assessment order has been carefully considered. The facts of appellant's case is that he has filed the return of income u/s 139 of the Act on 27 04 2010 declaring total income of Rs 70 71.749/- for A Y 2009-10 Further, in response to notice u/s 153A, the appellant did not file the return of income but admitted Rs 65 lakh as undisclosed income for the year. The same was added by the AO and confirmed by me in para 4.2 of this order Once the unexplained cash of Rs 65,00,000/- is taken in to consideration and thereafter the cash book is prepared and submitted by the appellant, the cash contribution in partnership firm where he is a partner is required to be treated as
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 49 explained against the opening balance of unexplained cash of Rs. 65,00,000/- as on 01.04.2008 shown by the appellant. Hence, the only issue which remains to be dealt with is the claim of the appellant for giving the telescoping effect and set off of unexplained cash of Rs. 65,00,000/- shown by the appellant on 01.04.2008 in the cash book submitted by the appellant for AY 2009-10 to AY 2015-16 before the AO as well as during the course of appellate proceedings. Thus following various judicial pronouncements of the Hon'ble Apex Court and various High Courts relied upon by the appellant in his Synopsis of Arguments filed on 13.08.2018 in the appeal proceedings, the addition made by the AO for an amount of Rs. 55,17,500/- as per the table prepared in Para 8 of the assessment order for the capital contribution in various partnership firms in the form of cash by the appellant is required to be treated as fully explained and the telescoping effect and set off has to be given against the unexplained cash of Rs. 65,00,000/-shown by the appellant as on 01.04.2008 for which the AO has made the addition in the assessment order and confirmed by me in para 4.2 of this order. The appellant has also taken a contention that the AO has not taken into consideration the reply filed by appellant vide letter dated 26.12.2016 and made a factual error and made a duplicate and double addition as the addition of Rs. 65,00,000/- which is inclusive of capital contribution in Partnership firm by the appellant for an amount of Rs 55,17,500/- and also relied upon the decision of the Hon'ble Supreme Court in the case of ITO vs. BachuLalKapoorKewal Ram [1966] 60 ITR 74 wherein, it has been held that the Act does not envisage taxation of the same income twice" and this view was again reiterated by the Hon'ble Supreme Court in the case of LaxmipatSinghania vs. CIT [1996] 72 ITR 291 holding that it is fundamental rule of the law of taxation that unless otherwise expressly provided, income cannot be taxed twice. Reliance is placed on the decision of the Hon'ble Supreme Court given in the case of Sri Krishna Das Vs. Town Committee, Chirgaonand also the decision of Hon'ble Gujarat High Court in case of Pr. CIT Vs. Kanubhai Manganlal Patel (2017) 79 taxmann.com 257 and it is contended that the Act nowhere provides that parallel assessments can be made in respect of the same income on two different persons. On verification of the facts of the case, it is found that the AO has already made an addition of Rs 65,00,000/- in appellant's case on account of cash deposit in various bank accounts including capital contribution in cash on the basis of additional income offered by the appellant vide submission dated 21 12 2016. The contention of the appellant is found correct. Considering the aforesaid facts, I hereby direct the AO to delete the addition made by the AO for an amount of Rs. 55,17,500/- on account of capital contribution introduced in various partnership firms as per the details given by the AO in Para 8 of the assessment order This ground of appeal is allowed. 89. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us.
89.1 Both the learned DR and the learned AR supported the finding of the authorities below to the extent favourable to them.
We have heard the rival contention of both the parties and perused the material available on record. Admittedly the assessee introduced cash in the partnership firms as capital contribution. The AO found that the assessee did not
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 50 explain the source of such cash introduced in the firms. Hence, the AO added the same to its total income.
90.1 In this regard, we find that the assessee on account of cash deposit and cash introduced in firms as capital offered an additional income of Rs. 65 Lakh and paid due taxes on the same. The additional income for Rs. Rs. 65 lakh was added to the total income of the assessee by the AO and the same has been confirmed by the learned CIT(A) as well as by us vide paragraph no. 78 of this order. Therefore, in our considered view, making separate addition on account of capital contribution in the firms by the assessee will lead to double taxation/addition in the hands of the assessee which is not desirable under provision of the Act. Thus, we hereby uphold the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is hereby dismissed.
The next issue raised by the revenue is that the learned CIT-A, erred in deleting the addition made by the AO for ₹ 5,856/- being interest income as per Form-26AS but not recorded in the books of accounts.
The AO found that the assessee during the year received interest income of ₹ 5,856/- from City Union Bank but the same was not offered to tax. Hence, the AO added the same to the total income of the assessee.
On appeal by the assessee, the learned CIT-A deleted the addition made by the AO by observing that the assessee has already offered the interest income and paid due taxes on the same.
Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 51 94.1 Both the learned DR and the learned AR supported the finding of the authorities below to the extent favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee received interest income from the City Union Bank. The AO alleged that the assessee has not included the impugned interest income in the computation of income whereas the assessee before the learned CIT-A contended he has offered the interest income to tax. The claim of the assessee has been found correct by the learned CIT-A. The learned DR before us has not brought any material contrary to the finding of the learned CIT-A. Therefore, we hereby uphold the finding of learned CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is hereby dismissed.
In the result appeal of the Revenue is hereby dismissed.
Coming to CO No. 148/Ahd/2019 in IT(SS)A No. 327/AHD/2018 by the assessee for assessment year 2009-10.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
In the result, the CO of the assessee is hereby dismissed.
Coming to IT(SS) No. 326/Ahd/2018 by the Revenue in case of assessee namely Dharmenbhai Mahendrabhai Sutaria for A.Y. 2010-11.
The Revenue has raised following grounds of appeal:
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 52 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 deleting the addition of Rs.2,25,84,000/- made by the AO as unexplained cash deposit in various bank accounts u/s.69 of the Act. 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 deleting the addition of Rs.2,23,32,374/- made by the AO as unsecured loans u/s.68 of the Act. 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.10,75,000/- made by the AO as capital introduction in Partnership Firm. 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. 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. 100. The interconnected issue raised by the revenue vide ground Nos. 1 and 3 of its appeal is that the learned CIT(A) erred in deleting the addition made by the AO of Rs. 2,25,84,000/- and Rs. 10,75,000/- on account of cash deposits in bank accounts and cash introduced in firms as capital respectively.
The AO found that during the year under consideration, cash amounting to Rs. 2,25,84,000/- was deposited in the different bank account of the assessee. Likewise, the assessee made a cash investment in partnership firms as capital for Rs. 10,75,000/-. However no satisfactory explanation was furnished by the Assessee regarding the sources of such cash deposits and cash investment. Hence the AO added the same to the total income of the assessee.
The aggrieved assessee preferred an appeal before the learned CIT(A).
102.1 The assessee before the learned CIT(A) submitted that he has an opening cash balance of Rs. 35,88,500/- and during the year received cash from firms namely Sthpatya Shilp Organiser and made regular withdrawals from bank accounts. This cash was utilized for making investment in the partnership firms as well as re-deposit in the banks. The assessee in support of his contention furnished cash book for the period AYs 2009-10 to 2015-16. The assessee also
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 53 claimed that the cash withdrawn from the bank and received from above mentioned partnership firm was not utilized anywhere else other than redepositing in bank accounts and investment in partnership firms.
102.2 The learned CIT(A) after considering the facts in totality deleted the addition made by the AO by observing as under: Regarding deposit in bank: It is also submitted that the AO has not proved that the appellant has utilized the cash in any other manner than the one which is represented by the appellant and AO has also not brought on record anything to show otherwise. Thus, it can be seen that only in a span of months, the appellant has deposited the cash which was withdrawn during the year under consideration. Further, it is also pointed out that appellant has also made the withdrawals at regular intervals and received the cash from various partnership firms and the amounts that were remaining with the appellant out of such withdrawals were deposited in the bank account and accordingly, the source of cash deposit remains fully explained by the appellant being regular cash withdrawals and amount of opening cash balance, hence no addition with respect of such cash deposits being fully explained can be made in hands of the appellant as can be ascertained from the detailed cash book and corresponding entries in the bank statement as submitted with the AO at the time of assessment proceedings The appellant has also submitted that there is no requirement with regard to the reason for carrying any amount of cash balance and orice the source of deposit is explained subsequent withdrawal from explained remains explained as well as subsequent redeposit into the bank account The appellant has relied upon the decision of Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd vs. CIT. 26 ITR 775 (SC). The appellant drawn my attention to the deosion of Chandigarh Tribunal in the case of Arundeep Singh Prop. Vs. Joint Commissioner of Income Tax, ITA No. 860/CHD/2016, H is also submitted that mere cash deposits in the bank account of the appellant do not render the transactions to be questionable in support of which the appellant relied upon the following judicial pronouncements - 1) CIT vs. Shailesh Kumar Rasiklal Mehta (2014) 41 tamann.com 550 (Gujarat) ii)Gurpal Singh vs. ITO (2016) 71 taxmann.com 108/2016] 159 TD 797 (Amritsar Trib.) iii) BirBahadurSiwali vs. ITO (2015) 53 taxmann.com 366 (Delhi-Trib] iv) Jaspal Singh Sehgalvs. ITO (2017) 83 taxmann.com 246 (Mumbai-Trib] v) Mehul V. Vyasvs.ITO (2017) 80 taxmann.com 311 (Mumbai-Trib] vi) Sudhirbhai Pravinkant Thaker vs. ITO. (2017) 88 taxmann.com 382 (Ahmedabad-Trib] Further, the copy of cash chart reflecting opening balances, cash withdrawals, cash deposits and closing balances has also been submitted during the course of hearing which is as under:
Cash Chart for A.Y 2009-10 to 2015-16 Years Opening Cash Other cash Cash Cash Closing
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 54 Balance deposits receipts disclosure withdrawals Balance A.Y. 2009- 15,55,000 45,00,000 65,00,000 17,00,225 35,88,500 10 A.Y. 2010- 35,88,500 2,19,84,000 20,00,000 - 1,80,05,000 34,500 11 A.Y. 2011- 34,500 4,95,000 - 31,50,000 45,00,000 35,61,850 12 A.Y. 2012- 35,61,850 30,00,000 - - 20,00,000 19,01,850 13 A.Y. 2013- 19,01,850 25,00,000 10,00,000 - 23,50,000 13,51,850 14 A.Y. 2014- 13,51,850 5,00,000 - - 18,00,000 17,51,850 15
There was no incriminating material for the year under consideration. Hence, the additions made by the AO in respect of cash deposits during the year u/s. 68 while framing assessment order u/s 143(3) rws 153C of the Act in absence of any incriminating material found and seized during the course of search proceedings is not justified in support of the said contention, the appellant relied upon following judicial pronouncements - 1) Pr. CIT-4 vsSaumya Construction Ltd (2017) 387 ITR 529 The Pr. CIT-1 vs. Devang) Alias Rupa, Tax Appeal No. 54 of 2017 with Tax Appeal No, 22 of 2017 to Tax Appeal No. 57 of 2017. order dated 02.02.2017(Gujarat), Hon'ble Gujarat High Court. ) Pr. CIT, Ahmedabad -3, vs. DipaklashvantialPanchal, Tax Appeal No. 110, 111, 115 and 116 of 2017, order dated 14.02.2017 (Gujarat). e) Pr. CIT-2, Ahmedabad vs. Jay Infrastructure and Properties Pvt. Ltd. Tax Appeal No. 740 of 2016, order of Hon'ble Gujarat High Court dated 10.10.2016. v) Pr. CIT (Central)-3 Ahmedabad vs. DharampalPremchand Ltd, ITA No. 513/2016, ITA 513/2016 and ITA No. 514/2016, Hon'ble Delhi High Court order dated 21.08.2017. vil INTAS PHARMACEUTICALS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (2015) 44 CCH 0490 AhdTrib, Hon'ble ITAT Ahmedabad. vii) CIT-II. Thane v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bombay) "No addition can be made in respect of assessments which have become final if no incriminating material is found during search" viii) High court of Delhi In the case of Commissioner of Income Tax (Central)-ill vs. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) ix) PCIT V. Sunrise Finlease (P.) Ltd. [2018] 89 taxmann.com 1 (Gujarat) x) PCIT V. Ms. Lata Jain [2017] 81 taxmann.com 83 (Delhi) xi) DCIT V. ShriAnkushSalujavide order dated 07.12.2017 (ITA No. 2047/Del./2016 xii) Dy. CIT Range 2, Lucknow vs. ShriPawanAgrawal ITA No. 374/LKW/2013 xii) Dy. CIT Range 2, Lucknow vs. ShriSudhir ShanakrHalwasiya ITA No. 285/LKW/2016 Thus, the additions made by the AO are deleted. This ground of appeal is allowed.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 55 Regard investment in firm 7.2 The submission of the appellant and the assessment order has been carefully considered The facts of the case in brief are that the appellant filed the return for A. Y. 2010-11 u/s 139 of the Act on 03.11.2011 declaring total income of Rs 34,18,656/- which is compiled at Pg No 212 to 221 of Paperbook No. II. Further, in response to notice issued u/s 153A of the Act the appellant filed the return of income u/s 153A on 07 12 2016 declaring total income of Rs 34,18,660/- which compiled Pg No 222 to 235 of Paperbook- II. It is submitted that in the synopsis of arguments filed on 13.08.2018 for AY 2009-10 the appellant has already taken the cash disclosure of Rs 65,00,000/- on 01.04.2008. It is also contended that appellant has already submitted the cash book for A. Y. 2009-10 to 2015-16 as per Exhibit-l to appellant's letter dated 21.12.2016 which has been compiled at Page No 117A to 117Y of Consolidated Paper Book. It is submitted that as per the cash book submitted for all the assessment years, as on 31.03.2009 there was a closing balance of Rs. 35.88.500/- which was the opening balance as on 01.04.2009. Further, the cash book so submitted by the appellant with narration has explained the source of each and every cash deposit and capital contribution in partnership firms. There was capital contribution of Rs. 3,50,000/- in the firm 'Sarthav Projects' and of Rs 7,25,000/- in the firm SthapatyaShilp Builders' As evident from the cash book, these capital contribution are from the opening cash balance on 01.04.2009 of Rs 35,88,500/- and from other cash withdrawals. Further, the said facts can be verified from the cash book, bank statement and the capital account submitted at the time of assessment proceedings and duly compiled in the Paperbook Hence the source of such capital contribution remains fully explained and hence the addition made by the AO is bad in law. Considering the facts of the appellant's case, I hold that the addition made by the AO on account of capital introduction in the partnership firms for an amount of Rs. 10,75,000/- is not justified and the same is hereby deleted. This ground of appeal is allowed. 103. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.
103.1 The learned DR before us vehemently supported the order of the AO by reiterating the findings contained in the assessment order.
103.2 On the other hand, the learned AR before us vehemently supported the order of the learned CIT-A.
We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the cash deposited by the assessee was treated as unexplained cash credit under section 69 of the Act by the AO on the reasoning that the assessee failed to make satisfactory explanation regarding the sources of such cash deposit. The assessee during appellate proceeding before the learned CIT(A) explained that the cash was deposited out
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 56 of the opening cash balance, cash receipt from partnership firm M/s Sthapatya Shilp Organisor and cash withdrawal made in the year under consideration. The learned CIT(A) concurred with explanation of the assessee and accordingly was pleased to delete the addition made by the AO.
104.1 From order of the AO and the learned CIT(A), we note the assessee offered explanation regarding the sources of every deposit made in the bank accounts and in support his explanation furnished copy of cash book, bank books for the period starting from 01-04-2008 to 31st March 2015 and other relevant ledger. The activity of the assessee, i.e. withdrawing the cash and re-depositing the same in the bank account on a regular basis, might appear to be very unusual. It is because no prudent businessman will do so, particularly in a situation where there was already sufficient cash in hand available with the assessee all the time. Indeed, a suspicion arises in the mind for the genuineness of the transaction on hand as discussed above.
104.2 However, it is the settled law, a suspicion cannot take the place of the evidence as held by Hon’ble Supreme Court in the case of CIT vs. Daulat Ram Rawatmull reported in 53 ITR 574, the relevant extract reads as under: “The circumstances relied upon by Mr. Sastri do raise suspicion, but suspicion cannot take the place of evidence.” 104.3 For the sake of repetition, we also note that indeed, the activity of withdrawing the cash and redeposit the same in the bank is very unusual practice but there is no prohibition under any of the law for the time being in force for doing such activity. Thus, merely an unusual activity of the assessee does not give any authority to the revenue to make the addition to the total income of the assessee.
104.4 In fact the assessee in the given facts and circumstances has discharged the onus imposed under the provisions of section 69 of the Act by furnishing the necessary details which have been elaborately discussed in the preceding
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 57 paragraph. Thus, the onus shifted upon the revenue to disprove the contention of the assessee based on the tangible materials. But we note that the learned DR has not brought any iota of evidence suggesting that the amount of cash deposit was not out of the cash withdrawal from the bank. Likewise, there was no information that the assessee has spent the cash withdrawal somewhere else towards the capital or revenue expenses. At this juncture, we also find pertinent to refer the order of this tribunal in case of Sudhirbhai Pravinkant Thaker vs. ITO reported in 88 taxmann.com 382, wherein similar facts and circumstances it was held as under: 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the ld. counsel for the assessee. There is no dispute with regard to the fact that the assessee had deposited the cash of Rs.11,27,800/- starting from 07/06/2007 to 31/02/2008. The cash withdrawn from the bank was of Rs.4,20,000/- on 01/07/2006, Rs.4,90,000/- on 06/07/2006, Rs.83,000/- on 26/06/2007, Rs.51,000/- on 20/11/2007, Rs.1,28,000/- on 14/12/2007 and Rs.2,00,000/- on 07/01/2008. However, the cash was deposited on 07/06/2007 of Rs.2 lacs, on 08/06/2007 of Rs.2 lacs, on 11/06/2007 of Rs.1,50,000/-, on 12/06/2007 of Rs.2 lacs, on 13/06/2007 of Rs.2,25,000/-. The total deposits till 13/06/2007 was of Rs.9,75,000/- and the amount withdrawn till 06/07/2006 was of Rs.9,10,000/- (Rs.4,20,000 + 4,90,000). Rest of the deposits of the total addition were made on 18/06/2007, 26/06/2007 and 13/02/2008. However, withdrawal after 06/07/2006, the assessee had withdrawn on 26/06/2007 of Rs.83,000/-, on 20/11/2007 of rs.51,000/-, on 14/12/2007 of Rs.1,28,000/- and on 07/01/2008 of Rs.2,00,000/-. From 20/11/2011 to 07/01/2008 the assessee had withdrawn total amount of Rs.3,79,000/-. However, cash was deposited in the bank account after 13/06/2007 of Rs.1,52,800/-. So far as the amount of Rs.83,000/- is concerned, i.e. matching from withdrawals and deposits and rest of the amount, there is a gap between withdrawals and deposits of the amount. In respect of deposit made on 13/02/2008 is also within one month from the withdrawal of amount on 07/01/2008. In respect of other entries, the cash withdrawal is even before one year of deposit of the amount. The contention of the assessee is that the amount was kept as cash in hand. The authorities have doubted about the explanation furnished by the assessee. The authorities below have doubted the source of the cash deposits, however, the contention of the ld. counsel for the assessee is that he had withdrawn the amount from his bank account and there is no finding by the authorities below that the cash withdrawn by the assessee was utilized for any other purpose. In the absence of such finding, addition is not justified. We find merit into the contention of the ld. counsel for the assessee that there is no dispute that the amount which was withdrawn by the assessee on various dates during the year 2006 was available with him for making deposits. In the absence of finding that the amount which was previously withdrawn by the assessee had been utilized for any other purpose merely on the basis of conjecture that the amount might have been utilized for any other purpose and was not available with the assessee for making the deposits, we are unable to accept the reasoning of the authorities below. In our considered view, when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilized for any other purpose, in that event, it is not open to the authority to make the addition on the basis that the assessee failed to explain the source of deposits. Moreover, the authorities below have not disputed the fact that the assessee had withdrawn amount of Rs.9,10,000/- before the deposits made on various
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 58 dates during the FY 2007-08. Therefore, the orders of the authorities below are set aside and the AO is directed to delete the addition. Thus, ground raised in the assessee's appeal is allowed. 104.5 In view of the above, there cannot be any addition to the total income of the assessee on account of cash deposited in the bank unless the revenue demonstrates that the amount in question has been used by the assessee for any other purpose. Thus, in our considered view the addition on account of cash deposit in the bank is based on assumption and presumptions which is bad in law.
104.6 Once it has been held by us that the assessee was having sufficient cash in hand out cash withdrawal then the sources of capital contribution in cash to the partnership firm also got established. As such there was opening cash in hand 35,88,000/-, cash receipt during the year of Rs. 20 lakh and cash withdrawal from the bank during the year was Rs. 1,80,05,000/- only. All this cash was sufficient for making deposit in bank for Rs 2,19,84,000/- and cash investment in firm for Rs. 10,75,000/- only.
104.7 Accordingly, we do not find any infirmity in the order of the learned CIT(A). Thus, we direct the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is hereby dismissed.
The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 2,23,32,374/- made under section 68 of the Act on account of unsecured loan.
At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in IT(SS)A No. 327/AHD/2018 for the assessment year 2009-10. Therefore, the findings given in IT(SS)A No. 327/AHD/2018 shall also be applicable for the assessment years 2010-11. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 85 of this order against the Revenue. The
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 59 learned AR and the DR also agreed that whatever will be the findings for the assessment year 2009-10 shall also be applied for the assessment years 2010-11. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
In the result appeal of the Revenue is hereby dismissed.
Coming to CO. No. 131/Ahd/2019 in IT(SS)A No. 326/AHD/2018 by the assessee for assessment year 2010-11.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
108.1 In the result, the CO of the assessee is hereby dismissed.
Coming to IT(SS)A 297/AHD/2018 appeal by the assessee, Dharmenbhai Mahendra bhai Sutaria for A.Y. 2011-12
The only issue raised by the assessee is that the learned CIT(A) erred in not considering the judgment of the Hon’ble High court of Gujarat in the case of Saumya Construction Pvt Ltd. 387 ITR 529.
The necessary facts are that in consequence to search proceeding under section 132 of the Act at barter group dated 04-12-2014 to which the assessee was a party, the proceeding under section 153A of the Act was initiated against the assessee. In the assessment order finalized under section 143(3) r.w.s. 153A of the Act, the AO besides making other addition made an addition of Rs. 73,03,000/- on account of unsecured loan from M/s Saral Management and Consultancy. The assessee challenged the addition made by the AO on merit as well on technical grounds. As such the assessee on technical grounds submitted
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 60 that there was no incriminating material in relation to the unsecured loan found during the search. Therefore, considering the principles laid down by the Hon’ble Gujarat High Court in the case of PCIT vs. Saumya Construction Pvt Ltd. reported in 387 ITR 529, no addition can be made in the absence of incriminating material.
The learned CIT(A) allowed the appeal of the assessee on merit. However, on technical ground, it was held that the principle laid down in the case of PCIT vs. Saumya Construction Pvt Ltd. (supra) cannot be applied in given facts. The relevant finding of the learned CIT(A) in this regard reads as under: The appellant's arguments are in two fold. Firstly on the basis of the legal contention that during the course of search proceedings, no incriminating material as regards to loan received from the aforesaid party were found and seized. Therefore, the addition made by the AO in respect of loan received during the year u/s. 68 of the Act while framing the assessment order. u/s 143(3) r.ws. 153A(1)(b) of the Act in absence of any incriminating seized material found. It is also submitted that section 153C of the Act does not lay down any different procedure than provided u/s. 153A and in absence of any incriminating material, no addition can be made while making assessment u/s. 153A/153C. The appellant relied upon the decision of Hon'ble jurisdictional Gujarat High Court in the case of Pr. CIT-4 vs. Saumya Construction Pvt.Ltd [2017] 529, other High Courts and Hon'ble Ahmedabad Tribunal as well as other Tribunals in his written submission filed during the course of appeal hearing. But the contention of the appellant is not found acceptable for this assessment year, as incriminating document for the period from 2.4.2010 to 27.4.2010 was found, which pertain to this assessment year. Hence, this contention of the appellant is found factually incorrect, thus dismissed
Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.
112.1 The learned AR before us contended that there was no document of incriminating nature found during the course of search and seizure operation and therefore no addition in the absence of incriminating documents can be made in the hands of the assessee.
112.2 On the other hand, the learned DR vehemently supported the order of the authorities below.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 61 113. We have heard the rival contentions of both the parties and perused the materials available on record. The limited issue before us is regarding the applicability of the principles laid down by the Hon’ble jurisdictional High Court of Gujarat in the case of PCIT vs. Saumya Construction Pvt Ltd. (supra) in the case of the present assessee. The Hon’ble High Court in the case mentioned above has held that in case of assessment proceeding initiated in consequence of search proceedings and the regular assessment for that year has already been completed/unabated, then no income can be assessed in the absence of incriminating materials found from the assessee. The view taken by the Hon’ble High Court has been followed by us while deciding the identical issue raised by the Revenue in IT(SS) 317/AHD/2018 vide paragraph No. 19 of this order.
113.1 Now coming to case of the present assessee, the learned CIT(A) held that there were incriminating materials for the period from 2-04-2010 to 27-08-2010 found during search. However, we find that the material referred by the learned CIT(A) is an excel sheet found from the premises of Shri Anil Hiralal Shah and Ashit Vohra who were also part of group. The impugned sheet contained the information in relation to unaccounted cash receipt concerning of the group namely Sarthav Infrastructure Private Limited and layering of such cash into bank account of different individual and group concern. Thus, impugned incriminating material referred to by the learned CIT(A) was neither found from the present assessee nor in connection with receipt of unsecured loan by the present assessee from M/s Saral Management and Consultancy.
113.2 In view of the above we are of the considered opinion that no incriminating found in relation/connection to unsecured loan transaction shown by the assessee. Therefore, the principle laid down by the Hon’ble Gujrat High Court in the case of PCIT vs. Saumya Construction Pvt Ltd. (supra) is squarely applicable to the facts of the present assessee. Hence, the ground of appeal raised by the assessee is hereby allowed.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 62 114. In the result, appeal of the assessee is hereby allowed.
Coming to IT(SS) No 328/Ahd/2018 by the Revenue in case of assessee namely Dharmenbhai Mahendrabhai Sutaria for A.Y. 2012-13.
At the time of hearing, it was submitted by the Ld.AR for the assessee that the appeal filed by the Revenue is hit by recently issued CBDT Circular No.17 of 2019 dated 08/08/2019 revising the previous thresholds pertaining to tax effects. It is inter alia noticed that the CBDT vide Instruction No. F. No. 279/Misc/M- 93/2018-ITJ dt. 20/08/2019 has observed that Circular No.17/2019 dated 08/08/2019 relating to enhancement of monetary limits is also applicable to all pending appeals. As per the aforesaid Circular read with instruction, all 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.
115.1 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 will be open to Revenue to seek restoration of its appeal showing the inapplicability of the aforesaid CBDT Circular in any manner as per the provisions of law.
115.2 In the result, the appeal of the Revenue is dismissed.
Coming to CO No. 149/Ahd/2019 in IT(SS)A No. 328/AHD/2018 by the assessee for assessment year 2012-13.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 63 required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
116.1 In the result, the CO of the assessee is hereby dismissed.
Coming to IT(SS) No 307/Ahd/2018 by the Revenue in case of assessee namely Dharmenbhai Mahendrabhai Sutaria for A.Y. 2014-15.
The Revenue has raised following grounds of appeal:
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.5,00,000/- made by the AO as unexplained cash deposit in various bank accounts u/s 69 of the Act. 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 deleting the addition of Rs.2,97,72,056/- as unsecured loans u/s 68 of the Act 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.4,61,564/-on account of unaccounted interest in Form 26AS. 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. 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. 118. The first issue raised by the revenue is that the learned CIT(A) erred in deleting the addition of Rs. 5 lakh made on account of cash deposit.
At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2014-15 is identical to the issue raised by the Revenue in IT(SS)A No. 326/AHD/2018 for the assessment year 2010-11. Therefore, the findings given in IT(SS)A No. 326/AHD/2018 shall also be applicable for the assessment years 2014-15. The appeal of the Revenue for the AY 2010-11 has been decided by us vide paragraph No. 104 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 64 assessment year 2010-11 shall also be applied for the assessment years 2014-15. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 2,97,72,056/- made by the AO under section 68 of the account of unexplained unsecured loan.
At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2014-15 is identical to the issue raised by the Revenue in IT(SS)A No. 327/AHD/2018 for the assessment year 2009-10. Therefore, the findings given in IT(SS)A No. 327/AHD/2018 shall also be applicable for the assessment years 2014-15. The appeal of the Revenue for the A.Y. 2009-10 has been decided by us vide paragraph No. 85 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2009-10 shall also be applied for the assessment year 2014-15. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 4,61,564/- being interest income as per form 26-AS.
The AO during the assessment proceeding found that as per Form-26AS the assessee earned interest income of Rs. 4,61,564/-from Nutan Nagrik Co.Op. Bank but the same was not offered to tax. Thus, the AO added the same to the total income of the assessee.
On appeal by the assessee, the learned CIT(A) found that no income being interest from Nutan Nagrik Co.Op. Bank was earned by him (the assessee). As such, the Form-26AS was also not reflecting any such interest income. Hence the learned CIT(A) deleted the addition made the AO.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 65 125. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.
125.1 Both the learned DR and the learned AR supported the finding of the authorities below to the extent favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the AO alleged that the assessee has not included the interest income of Rs. 4,61,564/-from Nutan Nagrik Co.Op. Bank in the computation of income whereas the assessee before the learned CIT-A contended that he has not earned any interest income from Nutan Nagrik Co.Op. Bank. The claim of the assessee has been found correct by the learned CIT-A. The learned DR before us has not brought any material contrary to the finding of the learned CIT-A. Therefore, we hereby uphold the finding of learned CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the Revenue is hereby dismissed.
In the result appeal filed by the Revenue is hereby dismissed.
Coming to CO No. 130/Ahd/2019 in IT(SS)A No. 307/AHD/2018 by the assessee for assessment year 2014-15.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
128.1 In the result, the CO of the assessee is hereby dismissed.
Coming to IT(SS) No. 541/Ahd/2019 by the Revenue in case of assessee namely Dharmenbhai Mahendrabhai Sutaria for A.Y. 2015-16.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 66
The Revenue has raised following grounds of appeal: Challenging the validity of order quashed by Ld.CIT(A) passed u/s.143(3) r.w.s 153B(1)(b) r.w.s 144 of the Act.] 1. The Ld.A.O as passed this order under section 144 of the Act while making an observation that appellant has not filed any reply. In this regard the appellant would like to submit that appellant had duly complied with the following notices u/s.142(1) of the Act issued by the Ld.A.O and their submission dates are hereby tabulated as under: Date of Date of letter Date of submission notice 09.12.2016 21.12.2016 28.12.2016 13.12.2016 21.12.2016 26.12.2016 22.12.2016 23.12.2016 26.12.2016 24.12.2016 26.12.2016 26.12.2016 28.12.2016 26.12.2016 28.12.2016 26.12.2016 26.12.2016 2. The appellant had also made request to the Ld.A.O to consider that the appellant financial crisis is a genuine reason for non filing of return of income for AY 2015-16. There was no malafide intention on the part of appellant in not filing the return of income. However the appellant had filed the return of income u/s 139(4) of the Act on 30/03/2017 declaring income Rs 47,02,590/- and taxes and interest duly paid thereon. 3. That the Best Judgment Assessment should be reasoned and judicious order and not in a way the AO has framed the assessment order for A.Y. 2015-16, being unrealistic assessment in making best judgment assessment the Assessing Officer does not possess absolutely arbitrary authority to guess at any figure he likes and that although he is not bound by strict judicial principles he should be guided by rules of justice equity and good conscience. Reliance is placed on the following decisions i. Abdul Qayum and Co. vs. CIT (1993) 1 ITR 375 378 ii. Jot Ram Sher Singh vs. CIT (1974) 2 ITR 129 (All) iii. GundaSubbayya vs. CIT (1939) 7 ITR 21 iv. Commissioner of Income Tax vs. Popular Electric Co. Pvt. Ltd. 2131TR631 (Cal.) Hence, the L.d. CIT(A) has rignthly quashed the order passed u/s. 143(3) r.w.s 153B(1)(b) r.w.s 144 of the Act. GROUND NO. II-ADDITION U/S. 68 OF THE ACT ON ACCOUNT OF UNSECURED LOANS OF RS. 1,64,45,000/- That 2 grounds are raised before Hon'ble ITAT for the said addition which are as under. a. The assesse has not discharged the burden 68 of the Act by furnishing the copy of ITR, ledger account and bank statement to verify the creditworthiness and genuineness of loan transaction b. Admission of Additional Evidence produced by the Appellant in respect of Unsecured Loan without following the procedure prescribed in Rule 46A. 1. For the ground so raised, it is submitted that the appellant during the course of assessment proceedings vide submission dated 21.12.2016 (Refer Page No, 24 of Paper Book) had submitted the details of unsecured loan along with supporting evidences. The
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 67 appellant with the submission dated 21.12.2016 had submitted the copy of Bank Statement and return of income of Shreyasi Hence, the allegations so made in the are baseless and illogical 2. The Ld. A.O in the assessment order has made the addition in respect of unexplained loan during the year u/s. 68 of the Act for an aggregate amount of Rs. 2,53,19,733/ and the break-up of the same i.e. name of the party and amount are as under- Sr. Name of Entity PAN Amount No. I Shreyasi Sutaria AWOPS1881R 1,64,45,000 Total 1,64,45,000/-
That in respect of Shreyasi Sutaria, there was opening debit balance of Rs. 1,48,57,600/-, further funds for an amount of Rs. 1,64,45,000/- has been received during the year under consideration i.e. AY 2015-16, repayment of Rs. 4,36,000/-had been made. That according to provisions of section 68 of the Act the appellant has to satisfy the litmus test in order to prove the identity, creditworthiness and genuineness of the lender party. 4. The assessee during the course of assessment proceedings had already satisfied the litmus test as mentioned in section 68 of the Act by submitting the copy of bank statements as well as ITR of the said lender party. The copy of unsecured loan chart containing the page number of paper book of relevant submitted documents is attached herewith as per Exhibit - I. That the appellant during the course appellate proceedings had only submitted a copy of confirmation from books of Shreyasi Sutaria. It is also pertinent to mention that the identity of the lender party Shreyasi Sutaria is duly established beyond doubt for the reason that the Ld. A.O who was the Assessing Officer of the appellant was also the Assessing Officer of Shreyasi Sutaria as the said entity was part of Sarthav Group and was under the assessment proceedings u/s 153A of the Act before the Ld. A.O and therefore, the return of income, bank statements and books of accounts of the aforesaid mentioned party were already on record of the Ld. A.O. So, e contra confirmation so placed on record during the course of appellate proceedings cannot be called a additional evidence. Hence, the L.d. CIT(A) has rightly deleted the addition made u/s. 68 of the Act on account of unsecured loan. Further, for your honour's perusal the appellant would like to submit a copy of chart attached herewith as per Exhibit - Il wherein the relevant para of A.O.'s order and L.d. CIT(A)'s order are mentioned. 130. The first issue raised by the Revenue is that the learned CIT(A) erred in quashing the assessment order passed under section 143(3) r.w.s. 153B(1)(b) r.w.s. 144 of the Act.
The necessary facts are that during the year under consideration, a search proceeding under section 132 of the Act dated 4th December 2014 was carried at the assessee and in consequence to such search, assessment proceeding under
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 68 section 153B(1)(b) of the Act was initiated. The AO during the assessment proceeding found that the assessee has not filed the return under section 139(1) of the Act and also not furnished the required details except for very few details provided vide letter dated 21-12-2016. Therefore, the AO, in the absence of necessary details finalized the assessment under section 144 r.w.s. 143(3) r.w.s 153B(1)(b) of the Act and assessed the income of the assessee at Rs. 1,89,80,280/- vide order dated 30-12-2016.
Aggrieved assessee preferred an appeal before the learned CIT(A) and challenged the validity of the assessment order. The assessee before the learned CIT(A) submitted that return of income under section 139(1) of the Act as well as in response to notice under section 142(1) of the Act was not filed due to reason that he was facing financial stringency and there no fund available with him for payment of taxes. However once fund was arranged, he filed return under section 139(4) dated 31st March 2017 (after assessment) wherein declared income at Rs. 47,02,590/- including additional income of Rs. 10 lakh along with payment of due taxes and interest thereon. The genuine hardship of arrangement of finance was also explained to the AO, therefore the finding of AO that return was not filed despite issuing notice is not fully correct. The AO further noted that no required detail was furnished is also factually incorrect as such several submissions were made in response to the notices issued under section 142(1) of the Act.
132.1 Further, the best judgment assessment under section 144 of the Act should a reasoned order and required to made with judicious approach whereas the AO passed the assessment order in unrealistic manner. Accordingly, the assessee contended that the assessment order passed needs to quashed being invalid.
132.2 The learned CIT(A) after considering the facts in totality quashed the assessment order by observing as under: On careful consideration of the facts of the case, it is noticed that the AO has passed order under section 143(3) r.w.s. 153B(1)(b) r.ws. 144 of the IT. Act, 1961 dated 30.12.2016 by stating that the assessee has not furnished the details after many opportunities given
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 69 except very few details filed on 21.12.2016, the assessment for AY. 2015-16 in this case is finalized u/s 144 of the Act on the material available on record The appellant has also filed various replies before the AO in the assessment proceedings as per the table reproduced herein above. In the case of State of Kerala vs. C. Velukutty (1966) 60 ITR 239 (SC), it has been observed that limits of powers are implicit in the expression "best of his judgment". Judgment is a faculty to matters with wisdom truly and legally. Judgment does not depend upon arbitrary caprice of a judge, but on settled and invariable principles of justice and though there is an element of guesswork in a "best judgment" assessment, it shall not be a wild one but shall have a reasonable nexus to the available material and the circumstances of each case. Therefore, keeping in view the aforesaid facts and binding judgments, the AO is not justified in passing the order u/s. 143(3) r.w.s. 153B(1)(b) r.w.s. 144 of the Act and hence, the same is quashed 133. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us.
133.1 The learned DR before us submitted that at the time of assessment the assessee had not filed the return of income which is the primary document and therefore the AO had no option except to frame the assessment under section 144 of the Act.
133.2 On the contrary, the learned AR before us claimed that all the necessary details were furnished by the assessee narrating all the facts. There was financial difficulty for the assessee and therefore the return was not filed on time. On a later date the return was filed along with the tax. Furthermore, whatever notices were issued by the AO, the replies were made by the assessee in the assessment proceedings.
133.3 Both the learned DR and AR before us vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the ground raised by the revenue on merit against the deletion of the addition made by the learned CIT(A) for ₹ 1,64,45,000/- under the provisions of section 68 of the Act has already been decided by us against the revenue and in favour of the assessee vide paragraph
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 70 number 139 of this order. As such the revenue lost its case on merit and therefore, we are inclined to refrain ourselves from deciding the issue raised by the revenue on the technical ground as discussed above. As such the technical ground raised by the Revenue in the given facts and circumstances becomes infructuous and therefore no separate adjudication is required. Hence the ground of appeal raised by the Revenue is hereby dismissed as infructuous.
The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 1,64,45,000/- made under section 68 of the Act of account of credit of unsecured loan.
The assessee during the year received an unsecured loan of Rs. 1,64,45,000/- from Smt. Shreyashiben Sutaria which was treated as unexplained credit under section 68 of the Act by the AO and added the same to the total income.
On appeal by the assessee the learned CIT(A) deleted the addition made by the AO by observing as under: The appellant in the appellate proceedings in its written submission filed on 13.08.2018 has given the chart showing break-up as regards to unsecured loan party with necessary supporting details of unsecured loan party as per Exhibit-ll. The appellant has stated that the unsecured loan from the aforesaid party was by account payee cheques through regular banking transactions and duly reflected in the bank account of the appellant as well as in the books of accounts of the appellant The appellant has also submitted detailed submission before the AO vide letter dated 10.10.2016 during the course of proceedings in response to notice issued u/s. 142(1) of the Act dated 10.10.2016. In the assessment proceedings, the appellant has already discharged the burden casted upon him u/s. 68 of the Act
In respect of identification of depositor, genuineness of the transaction and creditworthiness of the depositor by placing on record the ITR and copy of Bank Statements of ShreyasiSutaria vide submission dated 19.12.2016, the copy of which has been compiled at Page No. 1072 to 1076 of Paper Book - VII. Besides the aforesaid details, the appellant has also submitted the copy of ledger account and contra confirmation as per Exhibit-Ill of his submission filed on 13.08.2018 to prove the genuineness of the transaction. The appellant has reliedupon the decision of ITO Vs. Shanti Enterprise [2016] 71 taxmann.com 275. Theappellant further contended that it is necessary for the appellant firm to prove prima-faciethe transaction which results in its books of accounts Such proof includes proofof identity of its lenders, the capacity of such lender to advance the money
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 71 andgenuineness of the transactions. In the present case, as the appellant firm hasadduced evidences to establish prima facie the aforesaid onus shifts to thedepartment in support of the same the appellant firm has placed reliance on thefollowing decisions: 1) Vinod Kumar Bhandari vs. ACIT [2003] 174 Taxation 49 (Del. Trib.) ACIT (Investigation) vs. Shree Ram Hard Coke & Allied Industries [2003] 1 MTC 780 (ITATLucknow] CIT v. Orissa Corpn. (P) Ltd [1986] 159 ITR 78 (SC). Acchayalal Shaw ITO [2009] 30 SOT 44 (Kol. ITAT) iv) DCIT vs. Rohini Builders 256 ITR 360 (Guj.) CIT vs. RanchhodJivabhaiNakhava (Tax Appeal No. 50 of 2011) vi) vii) CIT vs. Apex Therm Packaging (P) Ltd [2014] 42 taxmann.com 473 (Guj.) viii) CIT vs. RamniklalHirji [2014] 41 taxmann.com 493/222 taxman 15 (Mag.) (Guj.HC) ix) CIT vs. Shailesh Kumar Rasiklal Mehta [2014] 41 taxmann.com 550/224 taxman 212 (Mag.)(Guj.) x) CIT vs. Jai Kumar Bakliwal [2014] 366 ITR 217 (Raj.HC) xi) LabhChandra Bohra vs. ITO [2014] 219 CTR 571 (Raj.HC) xii) Aravall Trading Co. vs. ITO 8 DTR 199 (Raj). It was further contended by the appellant that in respect of ShreyasiSutario, amount of Rs. 1,64,45,000/- has been received during the year under consideration as repayment of advances, the identity of the said party is duly established beyond doubt for the reason that the AO was the Assessing Officer of appellant and of ShreyasiSutaria of Sarthav Group and was under the assessment proceedings u/s 143(3) r.w.s. 153C of the Act before the AO. Thus, the return of income showing total income of Rs. 15,35,280/- of the aforesaid party and the bank statements of the said party were already available on the record of the AO. The appellant has also placed on record of the AO the bank statements to establish that the transaction being taken place through proper banking channel and also the copy of ITR of said lender party, the copy of which were compiled at Page No. 1072 to 1076 of the Paper Book No. VII Therefore, the identity of the depositor, genuineness of the transactions and creditworthiness of the depositor as per section 68 of the Act has been discharged by the appellant as well as all the assessment records of ShreyasiSutaria were already available on the record of the AO in the form of Income Tax return and bank statements to examine the genuineness of the loan The appellant contended that the observation of the AO in the assessment order that the onus of the assessee to prove the genuineness of such loans and it is established that the assessee failed to prove the creditworthiness and genuineness of such addition in the existing loan is factually incorrect as the AO also being the Assessing Officer of ShreyasiSutaria and all the details were already available on the record of the AO and PAN and return of income of ShreyasiSutaria so as to establish the identity and/or genuineness of the transaction was not a question since it was cross verifiable from the records available with the records available with the AO as the AO on Page 19 of the Assessment order in the case of Sarthav Infrastructure Pvt. Ltd, given the details of return of income filed by ShreyasiSutariafor AY 2009-10 to 2015- 16 establishing the fact that the AO had the access to both the PAN and return of income
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 72 for all the years of the alleged party so as to say the identify genuineness of the transactions was not at question as it was cross verifiable from the records available with the AO. The appellant has already proved the creditworthiness and genuineness of the lender party by submitting various details as stated herein above and hence, an addition of Rs. 1,64,45,000/- is not required to be made in the case of the appellant. This establishes that the transactions have been made through proper banking channel. So, the addition of Rs.1,64,45,000/- made by the AO with respect to the unsecured loan of ShreyashiSutia in unjustified and the addition is delete. This ground of appeal is allowed. 138. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us.
138.1 Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly during the year under consideration, the books of the account of the assessee have been credited by the unsecured loan. The provision of section 68 of the Act fastens the liability on the assessee to make proper and reasonable explanation regarding the nature and sources of sum credited in the books to the satisfaction of the AO. The assessee is liable to provide proof of the identity of the lenders/creditors, establish the genuineness of the transactions and creditworthiness of the parties.
139.1 In the case on hand, the books of accounts of the assessee were credited by unsecured amount of loan from one Smt. Shareyashiben Sutaria who was part of the group and subject to the proceeding under section 153C of the Act before the same AO who has jurisdiction over the assessee. Thus, her identity cannot be doubted.
139.2 Coming to the next aspect that is her creditworthiness, in this regard we note that the AO himself found that she has been regularly filing return of income and for the A.Ys. 2008-09 to 2014-15 declared a substantial amount of income. The learned CIT(A) also found that the assessee during the assessment
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 73 proceeding also furnished the copy of return of income for the year under consideration disclosing substantial income. Thus, the loan party i.e. Smt. Shreyashiben Sutaria had sufficient creditworthiness.
139.3 Likewise, the transaction was carried through banking channel which was duly recorded in the books of account of the assessee and counter party which was also established by the assessee during the assessment proceedings by furnishing necessary bank statement of counter party.
139.4 Thus, the assessee furnished the primary evidence to prove identity of the creditor, genuineness of transaction and creditworthiness of the creditor. It is also pertinent to mention that the AO was having access to all the other details of the creditor party. The provision of section 68 of the Act cast primary onus on the assessee to explain nature and sources of credit in the books and once the assessee discharged such onus by furnishing primary documents in respect of identity, genuineness and creditworthiness, the onus shifts on the AO to carry out necessary inquiry and bring contrary material on record. In the present case, the assessee has discharged primary onus cast upon him. However, the AO without making necessary verification and bringing contrary materials on record proceeded to treat such credit as unexplained under section 68 of the Act. Therefore, in our considered opinion the learned CIT(A) rightly deleted the addition made by the AO. Hence, the ground of appeal raised by the Revenue is hereby dismissed.
In the result appeal of the Revenue is hereby dismissed.
Coming to CO No. 25/Ahd/2022 in IT(SS)A No. 541/AHD/2019 by the assessee for assessment year 2015-16.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 74 required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
141.1 In the result, the CO of the assessee is hereby dismissed.
Coming to IT(SS)A 298/AHD/2018 appeal by the assessee Dharmen Mahendrabhai Sutaria- (HUF) for A.Y. 2011-12
The only issue raised by the assessee is that the learned CIT(A) erred in holding the validity of issue of notice under section 153C of the Act.
At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence, the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
143.1 In the result appeal of the assessee is hereby dismissed.
Coming to IT(SS) No. 153/Ahd/2019 by the Revenue in case of assessee namely Shri Sanjay Mahendrabhai Sutaria for A.Y. 2010-11.
The Revenue has raised following grounds of appeal:
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 not appreciating the provisions of Section 153A of the I.T. Act, 1961 which required the total income to be brought under tax without any restrictions. 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 holding that such assessment or re-assessment u/s. 153A of the I.T. Act, 1961 is to be restricted only to the incriminating material found during the search. 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. 1,87,33,500/- on account of unexplained cash credits.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 75 4. 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.2,60,82,374/- on account of unsecured loans u/s.68 of the Act. 5. 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. 18,25,00,000/- on the basis of seized material. 6. 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. 7. 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.
The first issue raised by the revenue is that the learned CIT(A) erred in holding that the assessment or reassessment under section 153A of the Act can only be made based on incriminating material found during the search.
At the outset, we note that the issue of assessment or reassessment under section 153A of the Act for unabated/completed assessment year based on incriminating material found during the search proceeding has been settled in favour of the assessee by various Hon’ble High Court including the jurisdictional High Court in case of Saumya Construction (supra). We further note that this issue has also been also decided by us in favour of the assessee vide paragraph no. 19 of this order while adjudication the appeal of the Revenue in IT(SS)A No. 317/AHD/2018. Hence the ground of appeal of the revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 1,87,33,374/- being cash deposits in the bank account.
At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2010-11 is identical to the issue raised by the Revenue in IT(SS)A No. 326/AHD/2018 in case of assessee Shri Dharmendra M Sutaria for the assessment year 2010-11. Therefore, the findings given in IT(SS)A No. 326/AHD/2018 shall also be applicable for issue raised by the revenue against the current assessee for the assessment years 2010-11. The appeal of the Revenue
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 76 for the A.Y. 2010-11 in case of assessee namely Shri Dharmendra M Sutaria has been decided by us vide paragraph No. 104 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the issue raised by the revenue in the case of Shri Dharmendra M Sutaria assessment for the year 2010-11 shall also be applied for issue raised by the revenue in case of current assessee for the assessment years 2010-11. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 2,60,82,374/- being unsecured loan treated as unexplained credit u/s 68 of the Act.
At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2010-11 in case of current assessee is identical to the issue raised by the Revenue in IT(SS)A No. 327/AHD/2018 in case of assessee Shri Dharmendra M Sutaria for the assessment year 2009-10. Therefore, the findings given in IT(SS)A No. 327/AHD/2018 shall also be applicable for issue raised by the revenue against the current assessee for the assessment years 2010-11. The appeal of the Revenue for the A.Y. 2009-10 in case of assessee namely Shri Dharmendra M Sutaria has been decided by us vide paragraph No. 85 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the issue raised by the revenue in the case of Shri Dharmendra M Sutaria assessment for the year 2010-11 shall also be applied for issue raised by the revenue in case of current assessee for the assessment years 2010-11. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT(A) erred on deleting the addition made by the AO for Rs. 18,25,00,000/- based on seized materials found during search.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 77 152. The necessary facts are that during the search proceeding at Barter Group certain loose sheet marked as page No. 2 and 8 of annexure AS-1 were found from the residence of Shri Ashit Vohra. The impugned page number 2 contained information for the loan of Rs. 25 Lakh and likewise page no. 8 contained information regarding an amount of Rs. 18 crores being Adani Old account. The AO found that the assessee was not able to prove the loan amount of Rs. 25 lakh and transaction of 18 Crore being Adani old account. Thus, the AO treated the same as unexplained cash credit u/s 68 of the Act and investment under section 69 of the Act. Accordingly, the AO made the addition of Rs. 18.25 crores to the total income of the assessee.
On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: 7.4. The facts of the case have been considered in totality with reference to seized documents and case laws cited by the appellant. There are two additions made on the basis of seized document which has been made part of the assessment order by the AO by scanning the same and placed at page No.5 of the assessment order. Upper side of the page (right side) contain "25000-00 Sanjaybha Uchina 16.11.09". On the basis of this noting, the AO held that the appellant has taken loan of Rs.25 lakh and same is not shown in books of accounts, it was added to the returned income. First of all, before discussing the notings on paper, it is important to mention that the AD himself held that this amount is loan taken by the appellant and made additions. The amount of loan taken cannot be considered income of the assessee, as it is liability and not an asset. Therefore, findings of the AO is not sustainable from accounting point of view it is clear that this amount has been shown in the right side of the page and left side of the page containing 25000-00 11.11.09 AMD-cheque no entry Joy This seems cash book Rs 25 lakh left side is receipt and the same amount was given to Sanjaybhai as loan (uchina). Thus, it cannot be considered as income of the appellant, as it is liability and not the asset of the appellant. Moreover, this page was not found at the premise of the appellant, not in the handwritings of the appellant and not signed by the appellant. It is also not certain who is Sanjaybhai, as Sanjay is common name. This page was found at the premises of Shri Asit Vora, whose statement has not been recorded on this issue during the course of search, during post search enquiries and during assessment proceedings: Presumption of section 292C of the Act is not against the appellant, being third party. in this case In such circumstances, there is no concrete evidence to prove that the name Sanjay written on this page is the name of the appellant. Keeping in view the factual position, as stated above and various case laws cited upon by the appellant, as reproduced above in the submission, additions of Rs.25 lakh made by the AO are not sustainable, hence, these are deleted. 7.5 The lower part of the page containing "Adani old A/c 18-00". Other jottings are "CR. 15-32 Ag property A/c new, 3.65 ch uplak A/c new (25 oganac A/c), 1.15 new, Aryan kaka omaj/382, Mulsane township A/c, 8.00 new in March, Charmi Rajshah etc. But name of the appellant is nowhere written on this page. This page was also found from the premises of Shri Asit Vora and not from the appellant's premises Hence, presumption u/s, 292C of the Act is not applicable against the appellant. It is not in the handwriting of the appellant. It is
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 78 not signed by the appellant. There is no statement of Shri Asit Vora from whose place, this page was found at any stage of investigation/assessment which state that the appellant has any connection with the entries of this page. In such circumstances, additions made by the AO are not justified. Moreover, it is not clear from the notings that Rs. 18-00 written "Adani Old A/c is payment/payable or receipt/receivables. Adani has not been identified in the assessment order. There are several names like Charmi, Rajshah, Arjan kaka are written on this page, but appellant's name is not written on this page. The appellant had no transaction with any Adani and no document was found at the premises of the appellant during the course of search. The appellant and his all family members, brother were subjected to search on the same day, but no document was found showing any transaction with Adani, date of payment/receipt is also not written. Whether these transactions were by cheques/or cash is also not written. It is not clear from these jottings about the transaction and persons involved. Keeping in view these facts and the binding judgements of various higher judicial authorities, the additions made by the AO are not found justified, hence, additions of Rs. 18 crore are deleted. The appellant's case has been found covered by the following binding judgements :- i) DCIT v/s. Prarthana Construction P Ltd in TA No.79 of 2000 by Hon'ble High Court of Gujarat, Ahmedabad. ii) Dr. Keyur Parikh & Others v/s. ACIT Cent.Cir.2(3), Ahmedabad in IT(SS) No.604/Ahd/2011 A.Y. 2008-09 by ITAT 'B' Bench, Ahmedabad. iii) Nishant Construction P Ltd v/s. ACIT in ITA No.502/Ahd/2015 by ITAT, Common Cause & Others v/s. Union of India & Others in CA No.505 of 2015 Ahmedabad. iv) Common cause & others v/s. Union of India & Others in CA No.505 of 2015 by the Hon’ble Supreme Courtby the Hon'ble Supreme Court. Thus, this ground of appeal is allowed.
Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.
154.1 The learned DR before us reiterated the findings contained in the assessment order and vehemently relied on the order of the AO.
On the other hand, the learned AR before us placed reliance on the order of the learned CIT-A by reiterating the submissions made before the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that there
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 79 was a search and seizure operation under section 132 of the Act at the premises of barter group dated 4-12-2014. As a result of search, there were found certain loose sheets form the premises of Shri Ashit Vohra being a third party to the present assessee. Based on these documents, the addition was made by the AO in the hands of the assessee for the different amounts which have been elaborated in the preceding paragraph. Before we deal with the specific issue arising from the order of the authorities below, we note that there is a presumption under section 132(4A) as well as under section 292C of the Act, providing that the documents found in the course of search shall be presumed belonging to person from whose possession (i.e. the search party) such document, books of account etc found. There is no ambiguity to the fact that the documents were found from the 3rd party which have been used for the purpose of the addition in the hands of the assessee. In other words, the documents found from the 3rd party have been used against the assessee. However, on perusal of the assessment order, we note that nothing had been mentioned by the AO regarding reasons for using such documents against the assessee which is against the spirit of the provisions of section 132(4A) of the Act. Admittedly, the presumption provided under section 132(4A) r.w.s. 292C of the Act is a rebuttable presumption i.e. the search party by bringing the evidence on record can rebut such presumption. However, on perusal of the assessment order nothing arises or suggests that the documents belonged to the assessee. As such the learned CIT(A) has given a clear finding that no question was asked from the Shri Ashit Vohra from whose premises such loose sheets were found either during the search proceeding, after search proceeding or during the assessment proceeding. It was the onus upon the Revenue to produce the cogent reasons for using the documents against the assessee which were recovered from the 3rd party premises during search, but we note that such onus has not been discharged by the Revenue. Thus, at the threshold, we are inclined to hold that no addition based on the documents found from the premises of the 3rd party can be made in the hands of the assessee in the given facts and circumstances.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 80 156.1 Furthermore, on perusal of the loose bearing mark as page no. 2 of annexure AS-1 we note that the left side of said page contain “25000-00 11.11.09 AMD-cheque no entry Joy” whereas the left side of the page contain "25000-00 Sanjaybha Uchina 16.11.09". There is no material on record to show that impugned noting was made by the present assessee, there was not appearing sign of any of the party. As such name appearing “Sanjaybhai” but we agree with learned CIT(A) that “Sanjaybhai” is very common name therefore merely on basis of name “Sanjaybhai” written on the impugned page does not mean that such transaction belong to present assessee whose name happen to be Sanjay Mahendrabhai Sutaria. Therefore, in our considered opinion, the inference drawn by the AO that assessee has received loan of Rs. 25 Lakh which represents unexplained cash credit is without any basis.
156.2 Likewise, the other loose sheet marked as page 8 of annexure AS-1 Containing "Adani old A/c 18-00". Other jottings are "CR. 15-32 Ag property A/c new, 3.65 ch uplak A/c new (25 oganac A/c), 1.15 new, Aryan kaka omaj/382, Mulsane township A/c, 8.00 new in March, Charmi Rajshah etc. The impugned sheet does not contain the name of the assessee, the date of transaction, the nature of transaction, there was no reference made by the AO in his assessment order referring to the statements recorded of the search party who said nothing about noting made on impugned sheet wherein the flow of transaction as discussed above was described. There is no basis given by the AO that how he has reached to draw inference that the noting made on impugned sheet belongs/pertains to assessee which is in nature of investment. Thus, it appears to us that there were not sufficient documents available with the AO for making the impugned addition in the hands of the assessee. It was expected by the AO at least to refer the statements in the assessment order of the search party for making the addition in the hands of the assessee. But no such exercise has been done by the AO. Under the provisions of section 69A of the Act, the primary onus lies upon the revenue. In other words, it is the onus of the revenue to prove based on the documentary evidence that the assessee has made an investment
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 81 which has not been recorded in the books of account. But we note that the entire addition lacks reasonable basis and supporting corroborative evidence. The Hon’ble High Court of Bombay in the case of CIT Vs. BG Shirke Construction Technology (P) Ltd. reported in 257 taxman 561 has held that the primary onus under the 69C lies upon the revenue. However, such judgment was passed in respect of the provision of section 69C of the Act and the issue before us relates to the provision of section 69 of the Act but the principles under both provisions are the same. Therefore, the principles laid down in the said judgment are also applicable to the provisions of section 69 of the Act. The relevant extract of the judgment is reproduced as under: "The primary requirement for application of section 69C is that assessee should incur expenses out of unexplained source of income. The section cannot apply if the source of income for making expenses is explained. This section refers to the source of expenditure and not to the expenditure itself. No evidence of any unexplained expenditure has been brought on record either by search party or by the AO. None of the seized material or document indicates that the appellant has incurred any unexplained expenditure out of books. Section 69C is a deeming provision. Therefore, it has to be interpreted strictly. Onus was on the AO to prove that the appellant had incurred expenses out of books of account. The AO has not brought on record any material to show that the appellant incurred expenses out of books of account” 156.3 In view of the above, and after considering the facts in totality, we do not find any reason to interfere in the order of the learned CIT-A. At the time of hearing the learned DR also has not brought anything on record contrary to the finding of the learned CIT-A. Thus, we uphold the order of the learned CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed.
In the result, the appeal of the Revenue is hereby dismissed.
Coming to IT(SS) No. 154/Ahd/2019 by the Revenue in case of assessee namely Sanjay Mahendrabhai Sutaria for A.Y. 2011-12.
The only issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 1,82,81,135/- being unsecured loan treated as unexplained credit u/s 68 of the Act.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 82
At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2011-12 in case of current assessee is identical to the issue raised by the Revenue in IT(SS)A No. 327/AHD/2018 in case of assessee Shri Dharmendra M Sutaria for the assessment year 2009-10. Therefore, the findings given in IT(SS)A No. 327/AHD/2018 shall also be applicable for issue raised by the revenue against the current assessee for the assessment years 2011-12. The appeal of the Revenue for the A.Y. 2009-10 in case of assessee namely Shri Dharmendra M Sutaria has been decided by us vide paragraph No. 85 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the issue raised by the revenue in the case of Shri Dharmendra M Sutaria for the year 2009-10 shall also be applied for issue raised by the revenue in case of current assessee for the assessment years 2011-12. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
In the result appeal of the Revenue is hereby dismissed.
Coming to IT(SS) No. 172/Ahd/2019 by the Revenue in case of assessee namely Sanjay Mahendrabhai Sutaria-HUF for A.Y. 2011-12.
The Revenue has raised following grounds appeal:
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.4,50,000/- on account of unexplained- credit-entries in the bank account u/s.69 of the Act. 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 deleting the addition of Rs.85,05,959/- on account of undisclosed receipt u/s.69 of the Act. 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 admitting additional evidence produced by the assessee before the CIT(A) in respect of undisclosed receipt without following the procedure prescribed in Rule 46A and with giving Assessing Officer opportunity to examine the evidence as mandated by Rule 46A of the IT Rules, 1962
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 83 4. 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. 20,87,70,071/- on account of unsecured loan during the year u/s.68 of the Act. 5. 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.46,94,386/- on account of interest disallowed against payment to unsecured loan. 6. 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.25,00,000/-on account of cash received in lieu of cheque. 7. 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. 8. 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.
The first issue raised by the revenue is that the learned CIT(A) erred in deleting the addition made by the AO under section 69 of the Act for Rs. 4.5 Lakh on account of unexplained credit in the bank.
The necessary fact is that the in consequence to search proceeding dated 04-12-2014 at the premises of barter group proceeding under section 153C of the Act was initiated against the assessee. The assessee in the return filed in response to the notice under section 153C declared an income at Rs. 89,78,744/- which includes an additional income of Rs. 36 lakh offered on account of unaccounted cash receipt.
163.1 However, the AO during the assessment proceeding found that the cash aggregating to Rs. 40,50,000/- deposited in the bank which is corelating with excel sheet found from the premises of Shri Anil Hiralal Shah. The impugned excel sheet found during the search contains information regarding unaccounted receipt against various projects of Barter/Sarthav group and the layering of the same in the bank account of the various individuals and other concern of the group. As per impugned sheet an amount of Rs. 40.5 Lakh layered into the bank account of the present assessee which directly matches with the cash deposit made in the bank
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 84 account of the assessee. Thus, the AO held that the cash deposit in the bank of the assessee was sourced from unexplained sources. Hence, the same needs to be treated as income under section 68 of the Act. However, the AO allowed the adjustment of Rs. 36 Lakh offered by the assessee as additional income from other sources. Thus, the AO made the final addition of Rs. 4.5 Lakh to the total income of the assessee on account of cash deposit.
On appeal by the assessee the learned CIT(A) deleted the addition made by the AO by observing as under: Submission of the appellant and the facts mentioned in the assessment order have been considered carefully and in totality. The facts of case is that the return of income u/s 139 was filed for A.Y. 2009-10. Later, in response to notice issued u/s. 153C of the Act, the appellant filed the return of income on 28.11.2016 the appellant has disclosed additional income of Rs. 36,00,000/-. During the year under consideration, the appellant has made cash deposit of Rs. 35,50,000/- in the bank account of the appellant which has been erroneously stated as Rs. 40,50,000/- in the assessment order On verification of the bank statements it becomes apparent that the observation made by the assessing officer regarding cash deposit of Rs. 5,00,000/- on 04.08.2010 in its HDFC bank account is factually incorrect. This fact has been rightly pointed out by the appellant. On scrutiny of the bank statements of the appellant maintained with City Union Bank having account no SB-463206and HDFC bank having account no. 00481930005799 and City union bank having account no. CA-91864under the name of Siddham Finance of which the appellant is a proprietor, it becomes apparent that the total of cash deposits made amounts to Rs. 35,50,000/-, Against the said cash deposits of Rs. 35,50,000/- the has made a voluntary disclosure Rs. 36,00,000/- while filing the return u/s 153C of the Act. Thus, the appellant has offered a sum higher than the cash deposits reflected in its bank statements. Thus making an addition over and above such disclosure is not justified. Considering the facts of the appellant's case, I hold that the addition made by the AO of Rs. 4,50,000/- u/s 69 is not justified and the same is hereby deleted. This ground of appeal is allowed 165. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the AO found that there was cash amounting to Rs. 40,50,000/- deposited in the bank account of the assessee from unexplained/unaccounted sources but the assessee only offered additional income of Rs. 36 Lakh. Hence the AO made addition of Rs. 4.5 Lakh on account remaining cash deposit.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 85
166.1 However, the learned CIT(A) during the appellate proceeding found that cash amounting to Rs. 35.5 lakh only deposited in the bank account of assessee. As such, the cash deposit of Rs. 5 Lakh dated 04-08-2010 considered by the AO as cash deposit of the assessee was deposited in the bank account of M/s Siddham Finance in which the present assessee is partner. Thus, the learned CIT(A) was pleased to delete the addition made by the AO by holding, against the cash deposit of Rs. 35.5 Lakh, that the assessee has already offered income of Rs. 36 Lakh therefore no further addition is required to be made. At the time of hearing before us, the learned DR has not brough any material contrary to the finding of the learned CIT(A). Therefore, we do not find any reason to interfere in the finding of the learned CIT(A). Hence the ground of appeal raised by the revenue is hereby dismissed.
The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 85,05,959/- on account of undisclosed income.
The AO during the assessment proceedings found that assessee has declared interest income of Rs. 54,20,940/- whereas as per the Form-26AS he has earned interest income of Rs. 1,39,26,901/-. Hence the AO made the addition of difference amount of Rs. 85,05,959/- to the total income of the assessee.
On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO by observing as under: 6.2 Submission of the appellant, the facts mentioned in the assessment order have been considered carefully and in totality. The AO has discussed this issue in Para 6 on Page 7 & 8 of the assessment order. The AO has made an observation that it is pertinent to mention here that, interest income credited in the books account is Rs.54,20,940/- but as per Form 26AS, interest income of the assessee for A.Y. 2011-12 is Rs. 1,39,26,901/- I have perused all the supporting documents placed on record and thereby it is apparent that the total interest income credited is in fact Rs.1,32,95,874/- (wrongly stated by the AO as Rs. 1,39,26,901/-) and this amount also matches with the income as per Form 26AS, which is submitted at Page no. 198 of the paper book. On perusal of the interest ledger account submitted by the appellant at page no. 197 of the paper book as well as the contra confirmations of the lender parties to whom interest has been paid it is clear that the appellant has paid interest amounting to Rs.78,74,934/- and after netting off the same, Rs.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 86 54,20,940/- is credited to profit and loss account. Considering the facts of the appellant's case, I hold that the addition made by the AO of Rs. 85,05,959 u/s 69 is not justified and the same is hereby deleted. This ground of appeal is allowed. 170. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.
Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contentions of both the parties and perused the material on record. From the preceding discussion, we note that the AO noted that there was difference in amount of interest income offered by the assessee viz-a- viz amount of interest income earned by the assessee as per Form-26AS. Thus, the AO made the addition of differential amount. However, we note that the learned CIT(A) found that the assessee has offered interest income after netting of the interest expenses. As such there was no difference in amount of interest income as per books viz-a-viz as per Form-26AS. Hence the learned CIT(A) deleted the addition made by the AO. At time hearing before us, the learned DR has not brough any material contrary to the finding of the learned CIT(A). Therefore, in absence of any contrary material, we restrict ourselves from interfering in the finding of the learned CIT(A). Hence the ground of appeal of the Revenue is hereby dismissed.
The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made under section 68 of the Act on account of unsecured loan of Rs. 20,87,70,071/- and disallowances of interest payment thereon for Rs. 46,94,386/- only.
The AO found that the assessee during the year has received unsecured loan from the following parties: Name Addition during the year Others 128050000
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 87 Shreej Infrastrucuture 128050000 Total Group entities Abhihree Villa Co. 22875000 Sarthav Builders 20689474 Sarthav Farms & Resort 11492000 Sarthav Projects 5012440 Sthapatya Shilp Construction 8888540 Sthapatya Shilp Developer 11762617 Total unsecured loans 80720071 Total addition of unsecured to others 128050000 Total addition of unsecured to group entities 80720071 Total unsecured loan during the year 208770071
173.1 The AO treated the above-mentioned receipt of unsecured loan as unexplained cash credit under section 68 of the Act and added to total income of the assessee by holding that the assessee failed to establish the identity & creditworthiness of the creditor and genuineness of transaction. The AO also disallowed the claim of the interest paid against the impugned unsecured loan of Rs. 46,94,386/- only.
On appeal by the assessee, the learned CIT(A) deleted the addition made by the AO on merit as well as on technical ground by following the judgment of Hon’ble Gujarat High Court in case of PCIT vs. Saumya Construction Pvt Ltd (supra).
Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, there was search proceedings under section 132 of the Act dated 4th December 2014 (i.e. during the financial year 2014-15 corresponding to A.Y. 2015-16) which was carried out in the case of Barter Group i.e. group concern of the assessee and accordingly proceedings
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 88 under section 153C of the Act was started in the case of respondent assessee. The assessment under section 143(3) r.w.s. 153C of the Act for the year under consideration i.e. A.Y. 2011-12 was framed wherein an addition was made on account of unsecured loan by treating the same as unexplained cash credit under section 68 of the Act. On appeal by the assessee, the learned CIT (A) deleted the addition made by the AO both on the ground of law as well as on the ground of merit. The ld. CIT-A while deleting the addition on the ground of law found that there was no material of incriminating nature in relation to unsecured loan found during the search proceeding, therefore the year under consideration being unabated/completed assessment year, any addition made in absence of incriminating material is not justified. The learned DR before us vehemently argued that there is no provision under section 153C which restricts the assessment or reassessment in case of search to the extent of incriminating material only.
176.1 At the outset, we note that the issue that no assessment of income in the proceeding under section 153A/153C can be made in the absence of incriminating material found during the search came before us in IT(SS) NO. 317/Ahd/2018 an appeal by the revenue in the case of assessee namely Sarthav Investment. The issue has been elaborately discussed in paragraph no. 19.3 to 19.6 of this order where we have confirmed the finding of the learned CIT(A). Thus, the technical ground of appeal of the Revenue is hereby dismissed. As such we hold that there cannot be any addition of regular items to the total income of the assessee which have only been disclosed in the return of income. Admittedly the additions/disallowances made by the AO represent the regular items disclosed in the return of income, therefore the AO is directed to delete the addition made by him.
176.2 Without prejudice to the above, we proceed to adjudicate the issue on merit as well. Admittedly the books of account of the assessee have been credited in the form of unsecured loan from 7 parties. The provision of section 68 of the
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 89 Act imposes on the assessee to explain the nature and the sources of the credit to the satisfaction of the AO. Over the years, the courts have laid down the primary onus on the assessee to establish the identity of the creditor, genuineness of transaction and the creditworthiness of the creditor. Once the assessee furnishes the primary document with regard to said three ingredients i.e. identity, genuineness and creditworthiness, the no onus shifts on the AO to bring contrary material by making necessary enquiry or verification.
176.3 In the present case name, PAN and address of all the 7 parties were before the AO and all these 7 parties were subject to assessment proceedings before the same AO. Therefore, the onus of the assessee regarding the identity of creditor has been fully discharged. Likewise, with regard to genuineness of transaction and credit worthiness of creditor, the assessee furnishes the detail such as ledger copy from its books of account and contra ledger copy from the books of the creditors along with bank statement of the creditor. The assessee also furnished a copy of ITR of the creditor parties except for two parties namely Abhishree Villa Co and Sarthav Project. It is pertinent to mention that the AO was having access to all these documents and entire other details being the AO of the creditor parties. Thus, in our considered opinion, the assessee also discharge onus cast on it regarding genuineness of transaction and credit worthiness and onus shifted on the AO. The AO without pointing any infirmity in all these primary documents and bringing contrary material on record held that the assessee failed to discharge its onus and made addition under section 68 of the Act which in our considered opinion is not justified.
176.4 Be that as may be, we note the assessee has received amount from the creditor through banking channel which has been repaid to the parties through banking channel in the year under consideration and in subsequent years along with interest wherever applicable. The assessee also deducted TDS from the interest paid to the parties. Thus, the ratio laid down by the Hon’ble Gujarat high
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 90 court in the case of CIT Vs. Rohini builders reported in 256 ITR 360 squarely applicable on the present case wherein it was held as under: “The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.” 176.5 Thus, in view of the above elaborated discussion, we do not find any infirmity in the order of the learned CIT(A). Therefore, we uphold the same and direct the AO to delete the addition made by him under section 68 of the Act. Hence, the ground of appeal of the Revenue is hereby dismissed on merit.
In the result appeal the Revenue is dismissed.
Coming to Co No. 166/AHD/2019 in IT(SS) No. 172/Ahd/2019 by the assessee namely Sanjay Mahendrabhai Sutaria-HUF for A.Y. 2011-12.
The assessee vide objection No. 1 of the captioned cross objection challenged the validity of issue of notice under section 153C of the Act on the ground that notice was issued without recording necessary satisfaction note.
178.1 At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
Coming to the other ground of objection, we note that the assessee has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the other ground of objection filed by the assessee. Hence, we dismiss the same as Infructuous.
In the result, the CO filed by the assessee is hereby dismissed
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 91 Coming to IT(SS) No. 277/Ahd/2018 by the assessee namely Sthapatya Shilp Construction for A.Y. 2011-12.
The assessee vide caption appeal challenged the validity of issue of notice under section 153C of the Act in the absence of valid satisfaction note and on account of incriminating material not found during the search operation.
181.1 At the outset, we note that the learned AR for the assessee at the time of hearing before us submitted that he has been instructed by the assessee not to press the impugned ground of appeal. Hence the impugned ground of appeal of the assessee is hereby dismissed as not pressed.
181.2 In the result appeal of the assessee is hereby dismissed.
Coming to IT(SS) No. 313/Ahd/2018 by Revenue in case of assessee namely Sthapatya Shilp Construction for A.Y. 2011-12.
The Revenue has raised the following grounds of appeal:
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.39,00,000/- made by the AO u/s.68 of the IT Act, 1961. 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 deleting the addition on account of unsecured loan u/s.68 of the Act of Rs. 1,84,07,452/-. 3. 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. 4. 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. 183. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 39,00,000/- being cash deposits in the bank account.
At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2011-12 in case of current assessee is identical to the issue
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 92 raised by the Revenue in IT(SS)A No. 326/AHD/2018 in case of the assessee namely Shri Dharmendra M Sutaria for the assessment year 2010-11. Therefore, the findings given in IT(SS)A No. 326/AHD/2018 shall also be applicable for issue raised by the revenue against the current assessee for the assessment year 2011- 12. The appeal of the Revenue for the A.Y. 2010-11 in case of assessee namely Shri Dharmendra M Sutaria has been decided by us vide paragraph No. 104 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the issue raised by the revenue in the case of Shri Dharmendra M Sutaria for the assessment year 2010-11 shall also be applied for issue raised by the revenue in case of current assessee for the assessment year 2011-12. Hence, the ground of appeal filed by the Revenue is hereby dismissed.
The last issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO of Rs. 1,84,07,252/- being unsecured loan treated as unexplained cash credit u/s 68 of the Act.
The AO in the assessment proceedings found that the assessee has taken an unsecured loan aggregating to Rs. 1,84,07,452/- from the following parties: Name Total (Rs.) Others Alpa Laboratories 2700000 Samribhai Narendra Bhai Patel 700000 Sarthav Builders 338814 Zodiac Energy Pvt. Limited 2353819 Abhishilp Shops & Office Co-op. Society 11914819 Sthapatya Shilp Builders 400000 Total 18407452
186.1 The AO in absence of satisfactory explanation regarding genuineness of transaction and credit worthiness of the party treated impugned unsecured from above parties as unexplained cash credit under section 68 of the Act and added to the total income of the assessee.
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 93
On appeal by the assessee, the learned CIT(A) was pleased to delete the addition made by the AO by on technical ground i.e. no incriminating material in relation to unsecured loan transaction was found which could have been made basis for addition in the proceeding under section 153C of the Act and deleted the addition on merit as well.
Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.
We have heard the rival contentions of both the parties and perused the materials available on records. At the outset, we note that the regular assessment under section 143(3) of the Act has already been completed. Thus, as per the principles laid down by the Hon’ble Gujarat High Court in the case of PCIT vs. Saumya Construction Pvt Ltd.(supra), the completed assessment cannot be disturbed in the absence of the incriminating material found during the search operation. On perusal of the assessment order and the finding of the learned CIT(A), we note that no incriminating material was found or referred to by the AO in relation to unsecured loan. Therefore, the addition made by the AO in the absence of incriminating material was not sustainable. On this issue, a detailed finding has been given by us vide paragraph no 44 of this order while adjudicating the Revenue’s appeal bearing IT(SS)A No 509/Ahd/2019. For detailed discussion, please refer to the aforementioned paragraph of this order.
189.1 Without prejudice to the above, we proceed to adjudicate the issue on merit. The provision of section 68 of the Act requires the assessee to explain the nature and source of credit in the books of the account maintained for any previous year. However, we find that the learned CIT(A) has given clear finding that there were certain parties from whom no fresh amount was credited during
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 94 the year. As such the amount represents opening outstanding amount carried forward from earlier years which are detailed as under:
Name Total (Rs.) Opening Balance AlpaLaboratries 27,00,000 27,00,000 Samirbhai Narendrabhai 7,00,000 7,00,000 Patel Sarthav Builders 3,38,814 3,38,814 Zodiac Energy Pvt. Ltd 23,53,919 23,53,819 Abhishilp Shops & 1,19,14,819 25,51,279 OfficeCoop. Society Sthapatyashilp Builders 4,00,000 4,00,000 Total 1,84,07,452 90,43,912
189.2 Thus, because the above amount represents opening balance based on which the AO invoked the provision of section 68 of the Act, we hold that no addition is sustainable and needs to be deleted. Hence, we do not find any reason to interfere in the finding of the learned CIT(A) to this extent.
189.3 Coming to the remaining amount of Rs. 93,63540/-( 1,19,14,819 – 25,51,279) credited during the year in the name of party namely Abhishil Shop & Office Co.Op society, in this regard, we find that the assessee firm was working as developer of the land of the impugned society and made collection from member/customer of society on various accounts which were to be reimbursed to the society. Accordingly, a journal entry in the ledger crediting the society was passed during the year. As such no actual transfer of funds has taken place. Further, the nature and origin of such credit in the books of account was duly explained. There was no doubt raised by the revenue with regard to fact that the assessee firm was working as developer for the land owned by the party namely Abhishil Shop & Office Co.Op society and collected certain charges from the members of society on behalf of society and passed journal adjustment entry. Thus, in our considered opinion the learned CIT(A) rightly deleted the addition
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 95 made by the AO under section 68 of the Act on such credit in the books of account of the assessee.
189.4 In view of the above and after considering the facts in totality, we do not find any reason to interfere in the finding of the learned CIT(A). Therefore, we uphold the same. Hence the grounds of appeal raised by the Revenue is hereby dismissed.
In the result appeal of the revenue is hereby dismissed.
Coming to CO No. 121 in IT(SS) No. 313/Ahd/2018 by assessee namely Sthapatya Shilp Construction for A.Y. 2011-12.
At the outset, we note that the assessee in the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous.
In the result, the CO of the assessee is hereby dismissed.
In the combined result:
Asstt. Sr.No. IT(SS)A No. Appeal By Result Year IT(SS) A Asessee 2011-12 1. No.293/Ahd/2018 Sarthav Investment Dismissed IT(SS)A No.317/Ahd/2018 With 2-3. 2011-12 Revenue with CO Dismissed C.O No.125/Ahd/2019 IT(SS)A No.318/Ahd/2018 Revenue with CO 4-5. 2015-16 Dismissed With C.O
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 96 No.126/Ahd/2019 IT(SS)A Assessee 6. 2015-16 Dismissed No.294/Ahd/2018 IT(SS) A Revenue 7. No.509/Ahd/2019 2012-13 M/s.Sarthav Infratech, Dismissed IT(SS)A 8. 2013-14 Assessee Dismissed No.295/Ahd/2018 IT(SS)A No.311/Ahd/2018 9-10. with 2013-14 Revenue with C.O Dismissed C.O No.14/Ahd/2020 IT(SS)A No.510/Ahd/2019 11-12 With 2014015 Revenue with CO Dismissed C.O No.26/Ahd/2020 Assessee IT(SS)A Dharmendra 13. 2009-10 Dismissed No.296/Ahd/2018 Mahendrabhai Sutaria, IT(SSA No.327/Ahd/2018 14-15 2009-10 Revenue with CO Dismissed with C.O No.148/Ahd/2019 IT(SS)A No.326/Ahd/2018 16-17 2010-11 Revenue with CO Dismissed with C.O.131/Ahd/2019 IT(SS)A 18. 2011-17 Assessee Allowed No.297/Ahd/2018 IT(SS)A No.328/Ahd/2018 19-20 With 2012-13 Revenue with CO Dismissed C.O No.149/Ahd/2019 IT(SS)A No.307/Ahd/2018 21-22 with 2014-15 Revenue with CO Dismissed C.O No.130/Ahd/2018 IT(SS)A No.541/Ahd/2019 23-24 2015-16 Revenue with CO Dismissed With C.O No.25/Ahd/2022 IT(SS)A 25. 2011-12 Assessee Dismissed No.298/Ahd/2018 IT(SS)A No.153- 2010-11 & 26-27 Revenue Dismissed 154/Ahd/2019 2011-12 IT(SS)A 28-29 2011-12 Revenue with CO Dismissed No.172/Ahd/2019
IT(SS)A No.293/Ahd/2018 and 31 others A.Y. 2011-12 97 With C.O No.166/Ahd/2019 Assessee IT(SS) Sthapatya Shilp 30. 2011-12 Dismissed No.277/Ahd/2018 Construction, IT(SS)A No.313/Ahd/2018 31-32 with 2011-12 Revenue with CO Dismissed C.O No.121/Ahd/2019
Order pronounced in the Court on 31/07/2023 at Ahmedabad.
Sd/- Sd/- (T.R SENTHIL KUMAR) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER
(True Copy) Ahmedabad; Dated 31/07/2023 Manish आदेशकीपधरधलधपअगेधेर/Copy of the Order forwarded to : 1. अपीलार्/ The Appellant 2. प् र्/ The Respondent. 3. संबंधितआयकरआयुक/ Concerned CIT 4. आयकरआयुक(अपील) / The CIT(A) 5. धवभागीयपधतधनधि, आयकरअपीलीयअधिकरण/ DR, ITAT, 6. गार्फाईल/ Guard file. आदेशानुसार/ BY ORDER,
उप/सहायकपंजीकार(Dy./Asstt.Registrar) आयकरअपीलीयअधिकरण, अहमदाबाद/ ITAT, Ahmedabad
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