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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
O R D E R PER BEENA PILLAI, JUDICIAL MEMBER: Present appeal has been filed by assessee against order dated 30/12/2019 passed by the Ld.CIT(A)-5, Bangalore for assessment year 2011-12 on following grounds of appeal on following grounds of appeal:
Brief facts of the case are as under: 2. The assessee filed its return of income for year under consideration on 29/09/2011 declaring total income of Rs.30,66,980/-. The Ld.AO completed the scrutiny assessment under section 143(3) of the Act, on 28/01/2014, accepting the returned income. Subsequently, the case was reopened on the basis of information received from investigation wing, and the Ld.AO completed the reassessment under section 143(3) read with section 147 by making an addition of Rs.20,00,000/- as unexplained expenditure.
2.1 Against the assessment order passed, assessee filed appeal before the Ld.CIT(A). The Ld.CIT(A) confirmed the order passed by the Ld.AO by observing as under:
“7.2. The issue on merits pertains to the detection of documentary details regarding alleged cash payment / donation of Rs. 20 lakhs to M/s Judutt Kushal Suri Khadhar Gachha Pedhi Trust, during the year under consideration. The departmental investigation wing conducted a survey operation at Ahmadabad in the case of M/s Kalavati Finance, wherein it was found that the appellant, had paid cash donation of Rs. 20 lakhs to the above cited entity namely M/s Judutt Kushal Suri Khadhar Gachha Pedhi Trust. The AG has extracted a properly typed donation-list of the impugned donations, which clearly reflected the assessee's cash donation of Rs. 20 lakhs. The AO has recorded a specific finding that, upon verification it came to his notice that the amount of Rs. 20 lakhs pertained to the appellant and that the telephone number (9844066064) and the address of the assessee available on the said document, indeed pertained to the assessee. In light of these facts, it is amply clear that the cash amounts in question relate to the assessee in question. It is also placed on record by the AG that, the directors of the firm M/s Kalavati Finance. Mr. Deepchand Bafna and Mr. Ashok Bafna were the founding members of the trust alongwith the assessee. The appellant's flat-denial of the transaction at the assessment or the present appellate stage cannot be summarily accepted, and the documentary evidences placed on record cannot be rejected merely because there is no book-trail available. The Assessee's bland argument is that, the impugned cash transactions (appearing in loose sheets) have not been corroborated by entries in any books of account. It is plain logic that, the very purpose of the impugned cash transactions is apparently such as would not form part of any regular books of account. Therefore the application of this sum (shown to be a donation) represents expenditure of an unexplained nature. The appellant on the contrary has failed to substantively refute the AO's findings that the telephone numbers; address and common directorship of the appellant in the concerned entity, gives definitive credence to the conclusion that, there was a live and apparent nexus established in respect of the impugned transaction. In the given facts & circumstances, there is a valid assumption on basis of available documentary evidence that cash payment of Rs. 20 lakhs was indeed made. However, since the nature of expenditure and its application is not sufficiently explained by the appellant, for reasons best known to him, the AO's action of treating the same as unexplained expenditure cannot be set- aside.”
Aggrieved by the order passed by the Ld.CIT(A) assessee is in appeal before us. 3.1 The Ld.AR submitted that, assessee is one of the trustee of the trust named, ‘Shri Jindutt Kushalsuri Khartar Gachha Pedhi”. He submitted that assessee had contributed a sum of Rs.11,111/- towards corpus fund of the said trust during the financial year relevant to assessment year under consideration. The Ld.AR submitted that, during the course of survey at M/sKalavathi Finance by the investigation wing at Ahmedabad, it was found that assessee paid cash donation of Rs.20 Lacs towards trust named “Jindutt Kushalsuri Khartar Gachha Pedhi”. The Ld.AO observed based on the information received from the investigation wing that, the directors of M/s.Kalavathi Finance were members of the trust. The Ld.AO observed that, list was found from the premises of M/s.Kalavathi Finance, stating donations received in the name of the trust. He observed that the name of assessee was mentioned in the alleged list having paid a sum of Rs.20 Lacs as donation to the said trust during financial year 2010-11. 3.2 The Ld.AR submitted that, the Ld.AO based on such information came to the conclusion that, income escaped assessment in the hands of assessee amounting to Rs. 20 Lacs. 3.3 The Ld.AR submitted that, the Ld.AO relied on information for which there was no corroborating evidence and therefore the addition made in the hands of assessee is bad in law. He submitted that assessee filed letter dated 21/12/2018 before the Ld. AO and denying the payment of Rs.20 lakhs having made to the trust. The said letter is placed at page 45-46 of paper book. Ld.AR submitted that, the Ld.AO had summoned the trust vide notice dated 13/11/2018. In response to the said notice the trust also denied having received any payment of Rs.20 lakhs from the assessee.
3.4 The Ld.AR thus submitted that, the Ld.AO without carrying out any further verification of facts made addition in the hands of assessee as unexplained expenditure.
On the contrary the Ld.Sr.DR submitted that the list found during the course of search at the premises of M/s Kalavathy Finance contained the name of assessee with all the details like address, mobile number etc., which were correct. He relied on the orders passed by authorities below to support the addition in the hands of assessee.
We have perused submissions advanced by both sides in the light of the records placed before us. 5.1 We note that the said amount alleged to have been paid by assessee in cash to the said trust is not corroborated by any other evidences by the Ld.AO. The Department has not been able to falsify the correctness of the letter/confirmation filed by the assessee and the trust, denying any payment having made/received. Under such circumstances such addition made by the Ld.AO cannot be sustained. 5.2 We are therefore unable to agree with the addition having confirmed by the Ld.CIT(A). We direct Ld.AO to delete the addition made on account of unexplained expenditure in the hands of assessee. Accordingly ground No. 4 raised by assessee stands allowed.
Ground No.5 is consequential in nature and therefore need not require any adjudication.
6.1 As we have considered the issue on merits, we are not adjudicating the legal issue raised by assessee in ground 2-3 as it has become academic at this stage. In the result appeal filed by assessee stands allowed. Order pronounced in open court on 15th July, 2021 Sd/- Sd/- (Chandra Poojari) (Beena Pillai) Accountant Member Judicial Member Bangalore, Dated 15th July, 2021. Vms Copy to:
1. 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore.