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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
PER R.S.SYAL, VP :
These appeals by two different but related assesses (father and son) arise from the different orders passed by the
2 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
Commissioner of Income-tax (Appeals)-1, Nashik on 25-08-2014
in relation to the assessment year 2010-11.
First we are taking up the appeal of Sh. Mohinder T. Kalani
legal heir of Late Sh. Trilokchand T. Kalani in ITA
No.1910/PUN/2014. The assessee is part of Kalani group of cases
at Nashik, which was subjected to search and seizure action
u/s.132(1) of the Income-tax Act, 1961 (hereinafter called ‘the
Act’) on 02-02-2011. During the course of search, certain
incriminating documents were found from the residential premises
of the assessee, which were seized. One of such seized documents,
numbered as page no. 147 to 150 of Annexure-A/1, was a Hand
Loan Deposit Receipt dated 04-12-2009 made on a stamp paper of
Rs.100/- between Mr. Trilokchand T. Kalani and Mr. Mohinder T.
Kalani (the payers) and M/s. Karda Construction Pvt. Ltd.
(M/s.KCPL) (the payee) through its Director Mr. Naresh J. Karda.
The said Receipt acknowledged the receipt of hand loan of Rs.2.00
crore by Mr. Naresh J. Karda on behalf of M/s KCPL from Mr.
Trilokchand T. Kalani and Mr. Mohinder T. Kalani for purchase of
agricultural land at Survey No.41/1/1+2+3+4+5+6, total area
admeasuring 3153.73 sq.mtrs, Aanandvali, Nashik. Towards the
security of the said loan, the Receipt records that the payee gave
3 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
three cheques of Rs.40.00 lakh each totaling Rs.1.20 crore in the
name of Mr. Trilokchand T. Kalani and two cheques of Rs.40.00
lakh each totaling Rs.80.00 in the name of Mr. Mohinder T.
Kalani. The said Receipt was signed by Mr. Naresh J. Karda,
Director of M/s. Karda Construction Pvt. Ltd. During the course
of the assessment proceedings, the assessee was asked to explain as
to whether such transaction was recorded in the books of account.
In response, the assessee denied the transaction and submitted that
no such loan was actually given and in fact, no such transaction
took place. The Assessing Officer (AO) observed that the assessee
vide his statement u/s.132(4) had admitted to be involved in
business of money lending, giving hand loan finance, purchase and
sale of land. He further admitted that he had given cash loan to
various persons and against such loans he had taken the cheques as
security. In this backdrop of facts, the AO refused to accept the
contention of the assessee that no transaction actually took place
for which Hand Loan Receipt was found at the premises of the
assessee. He made an addition of Rs.1.20 crore on this count in the
hands of the assessee and a further addition of Rs.80.00 lakh in the
hands of Mr. Mohinder T. Kalani, the other assessee in this batch
of appeals, being the amounts for which the cheques were issued
4 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
by M/s. KCPL. The ld. CIT(A) affirmed the action of the AO
against which the assessee has approached the Tribunal.
We have heard both the sides and gone through the relevant
material on record. The foundation of the addition is the Hand
Loan Receipt dated 04-12-2009 found from the place of the
assessee at the time of search, whose english translation has been
placed on record. This is a receipt on non-judicial stamp paper of
Rs.100/-. As per this Receipt signed by M/s. KCPL through Sh.
Naresh Karda, being Loan receiver, there is a description of
property, namely, land bearing Survey No. 41/1/1+2+3+4+5+6,
admeasuring 3153.73 sq.mtrs situated at Aanandvali, Nashik,
which was sought to be purchased by the M/s KCPL. Para 2 of the
Hand Loan Receipt records that both the payer and the payee of the
loan are familiar and well connected. Then there is clear cut
mention of Karda Construction Pvt. Ltd. having received loan
from Mr. Trilokchand T. Kalani and Mr. Mohinder T. Kalani, the
relevant part in this regard reads as under :-
“2) ….We wanted to purchase the property mentioned in para 1, from its previous owners, in our name. We need financial assistance to purchase the said property, we made a request to you for hand loan to us and in view of our request, our business and on demanding a hand loan of Rs.2,00,00,000/- ( in words two crore only) from us, you accepted our request of hand loan considering our business, our financial situation and our needs and you have already paid us an
ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
amount of Rs.2,00,00,000/- ( in words two crore only) by cheque and in cash from time to time. We have received the said amount and we acknowledge to have received the same. We have no grievance or objection of the same and there will be no complaints after this.
3) You have given this amount without interest to us for use and we shall refund the said amount by the cheques written hereunder, the said amount is to be returned without any reason or complaint and we hereby give assurance to you by this HAND LOAN RECEIPT for the same.
4) You shall recover the said amount time to time by depositing the cheques as mentioned hereunder. If we fail to refund the said amount to you or refused to pay the said amount or if the said cheques are dishonoured and you will not received the cheque amount then you shall take necessary legal action for recover the said amount and we will be responsible for the expense incurred by such legal action.
The cheque details of the refund amount is mentioned as under :
The cheques of the Business Co-op. Bank Ltd. Branch Nashik Road, as mentioned below, have been issued in favor of Mr. Trilokchand Tejandas Kalani :
Sr.No. Cheque No. Amount Date 1 973769 40,00,000/- 01/05/12 2 973770 40,00,000/- 01/08/12 3 973771 40,00,000/- 01/11/12 Total 1,20,00,000/-
The cheques of the Business Co-op. Bank Ltd., Branch Nashik Road, as mentioned below, have been issued in favor of Mr. Mohindar Trilokchan Kalani.
Sr.No. Cheque No. Amount Date 1 973772 40,00,000/- 01/02/13 2 973773 40,00,000/- 01/05/13 Total 80,00,000/-
Thus we have issued the cheques against repayment of hand loan amount Rs.2,00,00,000/- (in words two crore only) which we have taken from you. You should present the said cheques on respective date and encash the cheque amount. To honor the said cheques no respective date shall be our responsibility.
6 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
On going through the contents of the above Hand Loan
Receipt, it is clear beyond any shadow of doubt that Sh. Karda
received a sum of Rs.2.00 crore from both the assessees under
consideration and further such a receipt was in parts and the
process of receipt of the amount by Sh. Karda on behalf of M/s
KCPL got over on 4.12.2009, when he acknowledged to have
received loan of Rs.2.00 crore from them. It is further evident that
the loan was taken for a specific purpose, being, purchase of the
agricultural land as described in the Hand Loan Receipt. Pursuant
to the remand by the ld. CIT(A), the AO made further enquiries
from M/s KCPL, which though denied to have received loan from
the assessee, but accepted that the transaction of purchase of
agricultural land as mentioned in the Receipt did take place and
further it did not positively declare the source of receipt of money
for the transaction. It is very clearly written in the Receipt that:
`you have already paid us an amount of Rs.2,00,00,000/-. We have
received the said amount and we acknowledge to have received the
same. Para 3 of the Receipt categorically records `You have given
this amount’ and then there is undertaking that `we shall refund the
same amount of the cheques written hereunder.’ Not only that,
there is an apparent mention of Name of the bank, cheque Nos.,
7 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
amount and date through which the loan was proposed to be
repaid. There is a further mention that the cheques have been
issued in favour of both the assesses. Three cheques of Rs.40.00
lakh each dated 01-05-2012, 01-08-2012 and 01-11-2012 were
issued in favour of the assessee under consideration and two
cheques of Rs.40.00 lakh each dated 01-02-2013 and 01-05-2013
were issued in favour of Sh. Mohinder T. Kalani, the other
assessee in this batch of appeals. All these dates are post the
receipt of Hand Loan. Once we examine the Hand Loan Receipt in
entirety, it becomes manifest that the assessees under consideration
had given loan of Rs.2.00 crore to M/s. KCPL. The fact that the
entire transaction of Rs.2.00 crore has not been recorded in the
regular books of account of both the assesses, is not disputed. The
denial of transaction by M/s. KCPL in the subsequent proceedings
is of no avail in view of unambiguous incriminating evidence
found during the course of search from the residential premises of
the assessee. The ld. AR contended that non-signing of such a
document by the assessee proved that the same was not acted upon.
We do not agree with this contention. Unlike an agreement, which
is required to be signed by all the parties to it, a receipt for money
is to be signed only by the person receiving it. There is no
8 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
requirement that the payer of the money should also sign the
Receipt of money. Since the obligation to return the money is of
the payee, it is he who has to sign the Receipt. We, therefore, hold
that the authorities below were fully justified in not accepting the
contention of the assesse that he had not given any such loan to Sh.
Karda on behalf of M/s KCPL.
The assessee has raised the following additional ground,
reading as under :
“1. Without prejudice to the other grounds, the Ld. Assessing Officer as well as CIT(A) erred in confirming addition without giving the benefit of telescoping against the income already offered/addition made in the hands of the Appellant/group concerns.”
Through the above additional ground, the assessee is seeking
the benefit of telescoping against the income already
offered/addition made in the hands of the assessee. The ld. DR did
not raise any serious objection to the admission of the additional
ground. We, therefore, admit the additional ground and take it up
for disposal on merits.
The ld. AR contended that the assessee ought to have been
given the benefit of telescoping of other undisclosed income suo
9 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
motu offered or the addition made in respect of such undisclosed
income. The ld. DR objected to the same.
We have heard both the sides and gone through the relevant
material on record. If some undisclosed income is earned by an
assessee, which has been offered/taxed either by way of surrender
or addition and such undisclosed income is found to be utilised
elsewhere, then, obviously the spending of such an income will not
again attract taxation. Undisclosed inflow of income taxed gets
telescoped into the undisclosed outflow of income.
Taxability/addition can be only to the extent of the higher of the
undisclosed income/expenditure.
Adverting to the facts of the extant case, it is found that one
of the seized documents found during the course of search, whose
copy has been placed on record at page 62 of the paper book,
contained details of loan given by the assessees to the tune of
Rs.1,22,06,750/- in July, 2008. Thereafter, this document records
interest from July, 2008 to August, 2009 at Rs.1,22,06,750/- per
month. There is reference of further interest of Rs.1,54,472/- at the
end of the calculation with remarks “9 Sept to March-10”. Two
things are discernible from the document. First is that the assessee
10 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
advanced a loan of Rs.1.22 crore from undisclosed sources in July,
2008, out of which a sum of Rs.1.00 crore was received back in
August, 2009. Second is that on such a loan made out of
undisclosed sources, the assessee earned interest income of Rs.15
lakh and odd. It is an admitted position that the assessee offered a
sum of Rs.1.37 crore (Rs.1.22 crore towards principal amount of
loan and interest of Rs.15 lakh) for taxation in his return for the
A.Y. 2009-10. While finalizing the assessment of the assessee for
A.Y. 2009-10, the AO noted discrepancy in calculation of interest
on such principle of Rs.1.22 crore for the period July, 2008 to
March, 2009 and made further addition of Rs.1,98,603/-. Apart
from that, for the year under consideration, the assessee had suo
motu offered interest on such loan as income amounting to
Rs.6,51,657/-. Continuing with the same discrepancy, the AO
made further addition of Rs.91,085/-. Thus, the position which
emerges from the above discussion is that the assessee got taxed
for a sum of Rs. 146.4 lakh and odd in his assessments for the
A.Ys. 2009-10 and 2010-11. The ld. AR contended that surrender
of income of Rs.1.37 crore for the A.Y. 2009-10 has not been
assailed in further appeals and further the additions made by the
AO for the A.Y. 2009-10 at Rs.1,98,603/- and for the A.Y. 2010-
11 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
11 at Rs.91,805/- have also not been challenged, thereby allowing
the finality to happen. It is thus evident that the loan of Rs.22 lakh
as advanced out of Rs.1.22 crore in July, 2008 continued up to the
date of advancing of Hand loan of Rs.2.00 crore to M/s KCPL up
to 4.12.2009. The crux of the matter is that out of the above
surrendered/taxed undisclosed income, the assessee had
availability of funds to the tune of Rs. 1,24,42,065/- (Rs.1.00 crore
received back out of principle amount of Rs.1.22 crore + Interest
income of Rs.15.00 lakh for the A.Y. 2009-10 and Rs.6,51,657/-
offered for taxation for the A.Y. 2010-11 + addition of interest
made by the AO at Rs.1,98,603/- for the A.Y. 2009-10 and
Rs.91,805/- for the A.Y. 2010-11) for use. The loan in question
was given up to 04-12-2009, meaning thereby that the amount of
income earned by the assessee and subjected to tax for the A.Yrs.
2009-10 and 2010-11 comes to Rs.1,24,42,062/-, which was
available with the assessee at the time of advancing loan to M/s.
KCPL. The Department has not shown that such an amount was
spent elsewhere. In that view of the matter, it will have to be
presumed that such amount was utilized by the assessees in
question in advancing loan of Rs.2.00 crore to M/s. KCPL. The
advancing of total loan of Rs.2.00 crore by the assessee and his son
12 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
Sh. Mohinder T. Kalani to M/s KCPL is treated as explained to the
extent of Rs.1.24 crore. Since addition of Rs.1.20 crore has been
made in the hands of the assessee on this count, we allow the
benefit of telescoping and order to delete the addition of Rs.1.20
crore. The balance amount of available funds to the extent of
Rs.4,42,062/- will be considered for telescoping in the hands of
Mr. Mohinder T. Kalani.
The ld. AR did not press Ground Nos. 3, 4, 5 and 6 in the
appeal, which hereby stand dismissed.
Ground No.7 of the appeal is against levy of surcharge
@10% on the amount of tax payable. The ld. AR contended that
no surcharge was payable for the relevant year. The AO is directed
to verify the contention of the assessee and then proceed as per law
accordingly.
Now we espouse ITA No.1911/PUN/2014, being, the appeal
filed by Sh. Mohinder Kalani for the A.Y. 2010-11.
The only issue raised in this appeal is against the confirmation
of addition of Rs.80.00 lakh towards loan advanced to M/s KCPL
through the Hand Loan Receipt dated 4.12.2009 as discussed
above. Both the sides agreed that the facts and circumstances of
13 ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
this appeal are similar to those of the appeal in the case of Sh.
Mohinder Kalani legal heir of Sh. Trilokchand T. Kalani, father
of the instant assessee. While disposing off the above appeal in
ITA No.1910/PUN/2014, we have deleted the addition of Rs.1.20
crore by allowing the benefit of telescoping. The amount still
available for the benefit is Rs.4,42,065/-. We, ergo, allow the
benefit of telescoping to the instant assessee to the extent of
Rs.4,42,065/- on the same raison détre and sustain the remaining
addition of Rs.75,57,935/- (Rs.80 lakh minus Rs.4,42,065/-).
In the result, both the appeals are partly allowed.
Order pronounced in the Open Court on 04th October, 2019.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 04th October, 2019 सतीश
ITA Nos.1910 & 1911/PUN/2014 A.Y. 2010-11
आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-1, Nashik
The CCIT, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “ए” / DR ‘A’, ITAT, Pune; 6. गाड� फाईल / Guard file.
/ True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
Date 1. Draft dictated on 01-10-2019 Sr.PS 2. Draft placed before author 01-10-2019 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *