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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI G. MANJUNATHA, HON’BLE
आदेश / O R D E R
PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by the assessee is arising out of the revision order passed by the Principal Commissioner of Income Tax, Madurai-1, Madurai, u/s.263 of the Income Tax Act, 1961 (hereinafter “the Act”) vide C.No.401/12/PCIT/MDU-1/2017-18 dated 31.03.2019. Original assessment was framed by the Dy. Commissioner of Income Tax, Corporate Circle-2, Madurai, for the AY 2014-15, u/s.143(3) of the Act, vide order dated 30.06.2016.
Subsequent to assessment framed by the Dy. Commissioner of Income Tax, Corporate Circle-2, Madurai, dated 30.06.2016, u/s.143(3) of the Act, the PCIT noticed and issued show cause notice dated 02.01.2019 that during the previous year 2013-14 relevant to AY 2014- 15, the assessee has availed fresh cash loan of Rs.12,39,34,326/- from 653 parties. According to the PCIT, the assessee has only furnished name of parties & amount availed and the AO has neither conducted any enquiry nor sought for any explanation in regard to these cash deposits and hence, the AO has not carried out any enquiry or examination.
According to the PCIT, the AO ought to have examined the genuineness of creditworthiness and identity of the parties who are depositing cash and also genuineness of interest claimed to have been paid. The AO also has to examine whether the assessee is contravening the provisions of Sec.269SS or Sec.269T of the Act. Accordingly, the PCIT revised the assessment and passed revision order by holding that the assessment is erroneous and prejudicial to the interest of the revenue. Aggrieved, the assessee came in appeal before the Tribunal.
3. Before us, the ld.Counsel for the assessee filed copy of the Hon’ble Income Tax Settlement Commission order in the assessee’s own case vide Settlement Application No.TN/CN 51/2019-20/60/IT dated 14.12.2020 u/s.245D(4) of the Act, wherein unexplained loans for AYs 2012-13 to 2018-19 amounting to Rs.44,99,65,000/- has been considered and the Hon’ble Income Tax Settlement Commission accepted additional income
:: 3 :: of Rs.11.87 Crs. on account of these cash deposits and the total deposits considered by the Hon’ble Income Tax Settlement Commission at Rs.24,71,20,227/-. The relevant findings passed by the Hon’ble Income Tax Settlement Commission vide Para Nos.3 to 3.2 & 4 including computation of income, reads as under:
The case was posted for hearing u/s.245D(4) of the Act. The reports/submissions made by the Department and the AR of the applicant have been carefully considered. The arguments put forth by both the sides during the course of hearing and our findings are given below: 3.1 The Joint Verification Report of the-Assessing Officer as well as the reply of the applicant have been carefully considered. It is seen that some of the loans have been verified while in some cases, the balances were 'Nil' as on the date of search and, therefore, no verification was carried out in such cases. However, in respect of following four cases, the applicant has not been able to conclusively discharge the onus on him to explain with regard to the genuineness and /or the creditworthiness of the lenders: - (1) Shri Alagumalai. Kochadai In this case, the applicant has stated that the lender was undergoing treatment for nephrological issues and they have filed a copy of affidavit from the creditor. Further, they filed copy of sale deed regarding land sold by him. However, the sale deed only proves receipt of money by cheque. It is not clear as to how this explains the source of cash loan alleged to have been given to the applicant. (2)Dr.D. Ramasubramaniyam Out of the total loan returned against him of Rs.1.28 crores, the AO has informed that Dr.Ramasubramaniyam has confirmed loan of only Rs.99 lakhs. The applicant has sought to explain the difference by saying that it is on account of unpaid interest. However, there is no proof of the same. (3) Vinayaga Auto Finance & (4) Shivalaya In both these cases, in the pen drive seized from the applicant, outstanding loans of Rs.1.93 crores and Rs.2.9 crores were stated to have been received. However, during the Joint Verification proceedings,the applicant stated that these loans had already been repaid a few days before the search, but the fact of repayment was not updated in pendrive. Since the loans were fully paid, he did not produce these parties for verification before the A.O. The contention of the applicant is not acceptable as he has failed to substantiate the alleged repayment. 3.1.1 As regards the issue of commission from Mr.LaljiVora, the applicant has stated that entire loanof Rs.12 crores is payable as there is no commission involved. However, it is seen that during the search, Mr.LaljiVora had stated in his statement that out of Rs.12 crores, Rs.9.5 crores was to be received back and the balance Rs.2.5 crores is commission to the applicant. However, during the joint verification proceedings, Mr.LaljiVora appeared before the AO and stated that theentire amount of Rs.12 Crores is loan and that he has to receive back the same from the applicant. Thus, there are contradictions and it is not clear whether the AO sought explanation for changing his statement after so many years and whether he produced any fresh evidence to this effect. However, to put quietus to the issue of alleged receipt of commission and in the absence of any other proof and not in a position to prove to the satisfaction of the Settlement Commission for want of time, the applicant offered the amount of Rs.2.52 Crores, a business income and not as commission, for the A.Yr.2018-19.
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3.1.2 In the light of these facts, the applicant has come forward to make a further additional offer of Rs.11.87 crores as under:-
Sl.No. Name of the creditor Amount (Rs.) 1 Business income 2.5 Cr. 2 Alagumalai 4.5 Cr. 3 Dr.D.Ramasubramaniyam 0.29 Cr. 4 Vinayaga Auto Finance 1.68 Cr. 5 Shivalaya 2.9 Cr. Total 11.87 Cr.
3.1.3 In respect of Vinayaga Auto Finance, the applicant has pointed out that out of Rs.1.93 Crores, Rs.25 lakhs was received in cheque and, therefore, cash loan is only Rs.1.68 crores. The claim of the applicant in this regard is accepted. 3.14 The applicant has stated that he has already declared an income of Rs.3.8 crores before the A.O. and Rs.1.86 crores before the ITSC i.e. total of Rs.5.66 crores. It is requested by the applicant that this cash was available with him to explain the loans now being added as his unexplained money. This request for telescoping is allowed and, therefore, the net additional income will be Rs.6.21 crores [Rs.11.87 Cr. (-) Rs.5.66 Cr.] 3.1.5 The applicant has further requested that this additional income of Rs.6.21 Crores is being offered for A.Yr.2018-19 since his cessation of liability on account of his inability to prove beyond doubt the genuineness of these loans. We have considered the request of the applicant. However, as per law, the unproven credits have to be added in the year in which these credits were taken. As regards the amount of Rs.2.5 Crores offered as business income, for the reasons stated in para 3.1.1 above, the same will be taxed in A.Yr.2018-19. 3.1.6 The applicant also submitted a revised cash flow statement in which earlier the omission and commission was shown at Rs.24,71,20,227 and now the same is reduced to Rs.21,55,20,227 and the investment in gold and silver of Rs.1.20 Cr. is included therein. The applicant has requested to be allowed to- capitalize the investment in gold and silver as already admitted in the cash flow statement and the same is allowed. 3.1.7 Thus the year wise working of further additional income to be added is as under: A.Yr. Name Amount (Rs.) 2015-16 Vinayaga Auto Finance 1,50,00,000 2016-17 Vinayaga Auto Finance 18,00,000 Shivalaya 1,00,00,000 Dr.D.Ramasubramaniyam 20,00,000 2017-18 Alagumalai 4,50,00,000 Dr.D.Ramasubramaniyam 9,00,000 Shivalaya 1,90,00,000 2018-19 Business income 2,50,00,000 Total 11,87,00,000 Less: (Rs.3.8 Cr. + 1.86 Cr.) 5,66,00,000 Further addl. Income 6,21,00,000
3.2 The order is passed after considering the materials on record and the submissions made by both the sides with the enhanced offer of additional income of Rs.6.21 crores. The case is hereby settled for A.Ys 2012-13 to 2018-19 as per the computation given below:-
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Computation of Income: 4. In view of the discussions made above, the total income is computed as under:
AY Income Addl. Income Income Addl. Opening Further Aggregate returned returned income credit additional Total income u/s.139 u/s.153C offered income before ITSC brought to tax Amount Ref. Para No. A B C D E F = B – (C G=A+C+D+F + D+E) 2012-13 62,24,848 Nil Nil 24,00,0000 Nil Nil 3.1.7 86,24,848 2013-14 52,92,413 Nil Nil 24,00,000 Nil Nil 76,92,413 2014-15 1,01,18,490 Nil Nil 24,00,000 Nil Nil 1,25,18,490 2015-16 1,18,20,430 1,50,00,000 Nil 27,00,000 72,00,000 51,00,000 1,96,20,430 2016-17 1,18,17,320 1,38,00,000 3,80,00,000 27,00,000 Nil Nil 5,25,17,320 2017-18 63,74,400 6,49,00,000 Nil 30,00,000 2,69,00,000 3,50,00,000 4,43,74,400 2018-19 47,02,880 2,50,00,000 Nil 30,00,000 Nil 2,20,00,000 2,97,02,880 Total 5,63,50,781 11,87,00,000 3,80,00,000 1,86,00,000 3,41,00,000 6,21,00,000 17,50,50,781
When these were confronted to the CIT-DR, he agreed that the matter is settled by the Hon’ble Income Tax Settlement Commission and hence, the revision order passed by the PCIT can be considered by the Bench.
After hearing rival contentions going through the facts of the case, order passed by the PCIT dated 31.03.2019, subsequent to that the Hon’ble Income Tax Settlement Commission passed order dated 14.12.2020, in which, the entire cash deposits of Rs.44,99,65,000/- from the AYs 2012-13 to 2018-19 in regard to unexplained loans, was considered and accepted. Once, the Hon’ble Income Tax Settlement Commission has accepted the explanation of the assessee and assessed the income and made computation of income of the relevant AY 2014-15, we are of the view that the Hon’ble Income Tax Settlement Commission has considered its entirety and hence, revision order passed by the PCIT has become infructuous and accordingly, quashed.
In the result, the appeal filed by the assessee is dismissed in terms of the above.
Order pronounced on the 22nd day of September, 2022, in Chennai.