THE ACIT, CENTRAL CIRCLE-2(1), AHMEDABAD vs. RELIC PROPERTY DEVELOPMENT PVT. LTD, AHMEDABAD

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ITSSA 323/AHD/2019Status: DisposedITAT Ahmedabad17 February 2023AY 2009-105 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Revenue had not challenged the finding that the addition had already been confirmed/admitted in the hands of Mr. Sanjay H. Thakkar, as evidenced by the ITSC order. Therefore, once the sum had already been subjected to tax in the hands of Mr. Thakkar, the Tribunal found no infirmity in the CIT(A)'s order deleting the addition in the hands of the assessee company. The Departmental Representative had not disputed that the same amount had already been taxed in Mr. Thakkar's hands. The Tribunal found no reason to interfere with the CIT(A)'s order. The CIT(A) had deleted the addition of Rs. 3,00,00,000/- based on the fact that Mr. Sanjay Thakkar had offered this amount as additional income, which was accepted by the ITSC. The ratio decidendi is that income already taxed in the hands of one person, based on a settlement accepted by the ITSC, cannot be taxed again in the hands of another entity, especially when the Revenue does not dispute this fact.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2009-10. The Assessing Officer (AO) made an addition of Rs. 3,00,00,000/- to the assessee company's income under Section 68 of the Income Tax Act, 1961, on account of an unexplained unsecured loan received from Kanhai Infrastructure Pvt. Ltd. The assessee had provided a confirmation from Kanhai, but the AO was not satisfied with the creditworthiness. The assessee's appeal before the CIT(A) was based on the submission that Mr. Sanjay H. Thakkar had initiated land transactions, and the Rs. 3,00,00,000/- received by the assessee was part of a larger transaction. Mr. Thakkar had made a disclosure of Rs. 11,38,62,664/- in his return filed under Section 153A, which included this amount, and this disclosure was accepted by the Income Tax Settlement Commission (ITSC).

What were the issues?

1. Whether the CIT(A) erred in law and on facts by deleting the addition of Rs. 3,00,00,000/- on account of unexplained unsecured loan under Section 68, despite no clear finding in the ITSC order regarding objections raised in the Pr.CIT's Rule 9 report and issues raised by the CIT-DR concerning higher income declared by the assessee in the Section 153A return, which was subsequently reduced before the Settlement Commission? (Revenue's contention: The CIT(A) erred by deleting the addition. Assessee's contention: The amount was already offered to tax by Mr. Sanjay H. Thakkar and accepted by the ITSC, thus no addition can be made in the assessee's hands. Reliance was placed on the ITSC order in Mr. Thakkar's case.) 2. Whether the CIT(A) erred by deleting the addition when the ITSC order did not clarify whether the entire Rs. 3 crore was declared or only the actual profit offered for taxation, leading to a reduction in income? (Revenue's contention: The CIT(A) erred. Assessee's contention: The amount was already offered to tax by Mr. Sanjay H. Thakkar and accepted by the ITSC.) 3. Whether the CIT(A) erred in observing that Mr. Sanjay Thakkar offered additional income of Rs. 3,61,10,000/- which was accepted by the ITSC, when the assessee had offered additional income of Rs. 32,15,130/- for AY 2009-10, as per Annexure-40 of the ITSC order? (Revenue's contention: The CIT(A) erred by relying on an incorrect figure. Assessee's contention: The amount was already offered to tax by Mr. Sanjay H. Thakkar and accepted by the ITSC.) 4. Whether the CIT(A) erred in not appreciating that the assessee reduced its income for AY 2009-10 from that declared in its Section 153A return compared to what was offered in the Statement of Facts (SOF), with a difference of Rs. 1,38,41,132/-? (Revenue's contention: The CIT(A) erred by not considering this reduction. Assessee's contention: The amount was already offered to tax by Mr. Sanjay H. Thakkar and accepted by the ITSC.)

Which sections of the Income-tax Act were involved?

Section 68,Section 153A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH

Before: Ms. Annapurna Gupta & Shri Siddhartha Nautiyal

For Respondent: Shri Sudhendu Das, CIT-D.R

आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-

This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-6, Ahmedabad in Appeal no. CIT(A)-6/390/2015-16, in proceeding u/s. 143(3) r.w.s. 153A vide order dated 25/03/2019 passed for the assessment year 2009-10.

2.

The Department has taken the following grounds of appeal:-

I.T(SS).A No. 323/Ahd/2019 A.Y. 2009-10 Page No. 2 ACIT vs. Relic Property Development Pvt. Ltd.

Sl. Grounds of Appeal Tax effect No. relating to each Ground of Appeal 1 On the facts and in the circumstances of the case and in law, 1,01,97,000/- the Ld CIT(A) has erred in law and on facts in deleting the addition of Rs.3,00,00,000/- on account of unexplained unsecured loan u/s.68 of the Act, though there is no clear finding in the Income Tax Settlement Commission's order in respect of objections raised in Rule 9 report by the Pr.CIT(Central), Ahmedabad and issues raised by CIT-DR regarding the higher income declared by the assessee in return of income filed u/s.153A of the Act, which was reduced before the Settlement Commission.

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.3,00,00,000/- on account of unexplained unsecured loan u/s.68 of the Act, though there is no mention in the order of Income Tax Settlement Commission, whether the assessee had declared entire amount of 3 crore or actual profit has been offered for taxation, which resulted in reduction of income. 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 observing that Shri Sanjay Thakkar has offered additional income of Rs.3,61,10,000/- and same is accepted by Hon'ble Settlement Commission whereas the assessee had offered additional income of Rs.32,15,130/- for A.Y. 2009-10 and same was accepted by the Hon'ble Settlement Commission as per Annexure-40 of order u/s 245D(4).

4 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating that the assessee had reduced his income for A.Y. 2009-10 from that declared in his return filed u/s 153A than offered in the SOF, and the difference was Rs. 1,38, 4 1,1 32/- as per page 57 of order u/s 245D(4).

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. Total Tax Effect 1,01,97,000/-

I.T(SS).A No. 323/Ahd/2019 A.Y. 2009-10 Page No. 3 ACIT vs. Relic Property Development Pvt. Ltd.

3.

The brief facts of the case are that the assessee company had received a sum of Rs. 3,00,00,000/- through account payee cheque from Kanhai Infrastructure Pvt. Ltd. (Kanhai). During the course of assessment, the assessee submitted the confirmation of such party but the Assessing Officer made addition u/s. 68 of the Act on the ground that assessee has failed to prove the creditworthiness of the deposits.

4.

The assessee filed appeal against the order passed by ld. CIT(A).

5.

Before ld. CIT(A), the assessee submitted that one Mr. Sanjay H. Thakkar had initiated transactions for purchase and sale of land at village Godhvi. Since, Mr. Sanjay H. Thakkar could not purchase such land, he introduced Mr. Janak Barot of Kanhai Infrastructure Pvt. Ltd. (Kanhai) for purchase of such land from B. Nanji Group and in turn Rs. 3,00,00,000/- was received by the assessee company as unsecured loan. The assessee submitted that in the return of income filed by Mr. Sanjay H. Thakkar in response to notice u/s. 153A, he had made disclosure of 11,38,62,664/- for entire transaction of land situated at Village Godhvi which included the sum of Rs. 3,00,00,000/- received by the assessee from Kanhai Infrastructure Pvt. Ltd. The assessee also submitted copy of settlement application filed by Mr. Sanjay H. Thakkar wherein the relevant transaction of land was discussed and he has submitted before the Settlement Commission that the total income of Godhavi land is Rs. 9,95,20,468/- which includes figure of Rs. 3,00,00,000/- received by the assessee company. The assessee submitted copy of settlement order passed in the case of Mr. Sanjay H. Thakkar by Settlement Commission on 29th Sep, 2016 and contended that disclosure

I.T(SS).A No. 323/Ahd/2019 A.Y. 2009-10 Page No. 4 ACIT vs. Relic Property Development Pvt. Ltd.

made by Mr. Sanjay H. Thakkar with respect to above land transaction was accepted by the Settlement Commission and hence addition cannot be made in the hands of the assessee because income is already offered to tax by Mr. Sanjay H. Thakkar in his Settlement Petition. In the light of above submission made by the assessee, the ld. CIT(A) allowed the assessee’s appeal on the ground that since addition made in the hands of the assessee has already been owned up by Mr. Sanjay H. Thakkar and which has also been accepted as correct disclosure by Hon’ble Settlement Commission, the addition made by the A.O. of Rs. 3,00,00,000/- in the hands of the assessee is hereby deleted. While passing the order ld. CIT(A) observed as follows:-

“It is pertinent to note that Mr. Sanjay Thakkar vide letter dated 16th September, 2016 has agreed to offer additional income of Rs.3,61,10.090/- and same is accepted by Hon'ble Settlement Commission at page No. 97 of its order. In view of above narrated facts it is clear that Mr. Sanjay Thakkar while filing his settlement petition has already conceded above amount received by Appellant through cheque from Kanhai as additional income and there is credence in the argument of Appellant that addition made in its case is already owned up by Mr. Sanjay Thakkar and which is accepted to be correct by Hon'ble Settlement Commission hence present addition made by AO for Rs.3,00,00,000/- is deleted. This ground of appeal is allowed.”

6.

The Department is in appeal before us against the order passed by the ld. CIT(A) allowing complete relief to the assessee. Before us, the ld. Departmental Representative has not challenged the finding that the addition has already been confirmed/admitted in the hands of Mr. Sanjay H. Thakkar as evident from the order passed by Hon’ble Settlement Commission. Accordingly, once, the aforesaid sum has already been subject to tax in the hands of Mr. Sanjay H. Thakkar, we find no infirmity in the order of ld. CIT(A) that the same amount cannot be again taxed in the hands of the

I.T(SS).A No. 323/Ahd/2019 A.Y. 2009-10 Page No. 5 ACIT vs. Relic Property Development Pvt. Ltd.

assessee company. Even the ld. Departmental Representative has not disputed that the same amount has already been subject to tax in the hands of Mr. Sanjay H. Thakkar. Accordingly, we find no infirmity in the order of ld. CIT(A) so as to call for any interference.

7.

In the result, the appeal of the Department is dismissed.

Order pronounced in the open court on 17-02-2023

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 17/02/2023 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

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