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Facts
The Revenue filed appeals against the deletion of additions made by the Assessing Officer (AO) concerning unexplained cash transactions found during a search. The AO had treated cash transactions of Rs. 2,86,29,100/- (AY 2016-17) and Rs. 1,50,00,000/- (AY 2017-18) as unexplained money under Section 69A of the Income Tax Act. The assessee contended these were for arranging finance and brokerage, with commission earned.
Held
The Tribunal held that the CIT(A)'s findings, corroborated by third-party inquiries, indicated that the transactions were in the nature of loan arrangements and brokerage activities, not unexplained cash. The AO's interpretation of the seized document was inconsistent. Consequently, the additions made by the AO were deleted by the CIT(A) and upheld by the Tribunal.
Key Issues
Whether the cash transactions found in the seized document represent unexplained money or legitimate commission earned from arranging finance and brokerage services.
Sections Cited
143(3), 153A, 69A, 115BBE, 133(6), 271AAB
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आदेश/Order PER BENCH:
1. These two appeals by Revenue are arising out of two different orders of Commissioner of Income Tax (Appeals)-5, Ludhiana in appeals Nos. 10864/2015-16/IT/CIT(A)-5/Ldh/2020-21 and 10871/2016-17/IT/CIT(A)-5/Ldh/2020-21 both of even date i.e., 29.5.2023. Assessments were framed for relevant assessment years 2016-17 and 2017-18 by DCIT, Central Circle-2, Ludhiana, both u/s 486 & 490-Chd-2023 – Sanjeev Kumar Mittal, Rajasthan 2 153A read with section 143(3) of the Income Tax Act, 1961 (herein referred to as 'the Act') vide orders of even date 29.9.2021.
2. Only identical common issue in these two appeals of Assessee is as regard to the order of CIT(A) in deleting the additions made by the Assessing Officer being cash transaction found during the course of search on one incriminating document amounting to Rs. 2,86,29,100/- for A.Y. 2016-17 and Rs. 1,50,00,000/- in A.Y. 2017-18 added by the Assessing Officer u/s 69A of the Act treating the same as unexplained money. Since the issue raised by Revenue in both these appeals is common except the quantum of addition and grounds raised are identically worded, we will take the facts from the lead year i.e. A.Y. 2016-17 in ITA No.486/Chd/2023. The grounds raised by Revenue reads as under: -
1. That, the ld. CIT(A) is not justified in deleting the addition of Rs. 2,86,29,100/- made u/s 69A of the Income Tax Act, 1961 on account of unexplained money.
2. That, the ld. CIT(A) has erred in treating the unexplained cash transaction as commission receipt.
3. That, the ld. CIT(A) has ignored the facts that the assessee has received cash which was higher than cash paid.
486 & 490-Chd-2023 – Sanjeev Kumar Mittal, Rajasthan 3 4. That, the CIT(A) has ignored the facts that the assessee had never shown his commission income in his return of income.
The appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.
Brief facts are that the Assessee belonged to Homeland Group of cases, Mohali and Assessee was searched u/s 132 of the Act by the Department on 26.2.2020. During the course of search operation, a document with the heading “BTD 2011” was seized by Income Tax Department. Accordingly, notice u/s 153A of the Act was issued and assessment proceedings were started. The Assessing Officer noted and reproduced the relevant documents in the assessment order and required the Assessee to explain the entries recorded in the documents amounting to Rs. 2,86,29,100/- i.e., cash received and of Rs. 20,96,000/- being cash paid. The Assessee before the Assessing Officer vide reply to show cause notice dated 28.9.2021 stated that perusal of seized “BTD 2011”, which pertained from the period 1.4.2015 to 31.3.2016 contained some entries written in the relevant transactions which prove that these are neither Assessee’s cash receipts nor cash payments. The Assessee contended before Assessing Officer that he has been arranging the finance for some parties and working as a broker for which he charged commission ranging 1 to 2%
486 & 490-Chd-2023 – Sanjeev Kumar Mittal, Rajasthan 4 and earning commission accordingly. He pointed out that the transactions noted in the seized documents relate to various loans raised by him whether in cash or through banking channels. He enclosed the copies of ledger account to main party i.e. Apex Fibre and Rama Traders and tried to correlate the transactions but the A.O. rejected the reply of the Assessee by stating that the specific transactions are found recorded in the seized documents, which were having incriminating information relating to cash transactions undertaken by the Assessee with specific mention of the particulars of cash. He noted that the Assessee admitted these transactions as noted in the seized incriminating material but he has not accepted the explanation of the Assessee that he has been arranging finance for some of of the parts and working as a broker. Accordingly, he rejected the explanation of the Assessee and assessed this amount of Rs. 2,86,29,100/- as unexplained money u/s 69A of the Act. The Assessing Officer also taxed the same u/s 115BBE of the Act. Aggrieved, Assessee preferred appeal before the ld. CIT(A).
The CIT(A) after conducting inquiries u/s 133 (6) of the Act and confronted the same to the Assessing Officer restricted the addition to the extent of commission earned by the Assessee @ 3% of the total fund noted in the ledger account or seized document at Rs.
486 & 490-Chd-2023 – Sanjeev Kumar Mittal, Rajasthan 5 4,20,96,000/- and thereby estimated the commission at Rs. 12,62,880/- by observing as under:- “Enquiry u/s 133(6) during appellate proceedings
During the course of appellate proceedings, it was felt necessary to make enquiry with M/s. Apex Fibre India Limited and M/s. Rama Traders whose names were mentioned in the said seized document to corroborate the version of the assessee. Information was called for from M/s. Apex Fibre India Ltd., Bathinda and M/s. Rama Traders, Bathinda u/s 133(6) of the Act to confirm whether the transactions of copies of accounts as furnished by the appellant during the assessment and appellate proceedings were true or not. The said transactions were confirmed by the respective parties in response to enquiries made u/s 133{6). The reply received from the above- mentioned parties is scanned below for ready reference:
“Date:10.05.2023 To The Commissioner of Income Tax CIT (Appeals)-5 Ludhiana
Sub: Enquiry u/s 133(6) of income tax act, 1961 during the appellate proceedings in the case of Sh. Sanjeev Mittal, PAN: ABBPM9387M
Re : Your letter F.No.E.No.,-5/LDH/22-23/313 dated 03.05.2023 Sir, We are in receipt of your above referred letter and we submit as under: 1 That the copy of account of M/s Steeple Commodities Pvt. Ltd. attached with the letter is true and as per our books of Accounts. We are also attaching the certified copy of Account of M/s Steeple Commodities Pvt. Ltd. for FY 2015-16 and 2016-17.
486 & 490-Chd-2023 – Sanjeev Kumar Mittal, Rajasthan 6
2. That the copy of account of M/s Aspo Light Vlncom Pvt. Ltd attached with the letter is true and as per our books of account are also attaching the certified copy of Account for FY 2015-16.
3 That the copy of account of M/s Krishveer Agritrade Pvt. Ltd. attached with the letter is true and as per our books of Accounts. We are also attaching the certified copy of Account for FY 2016-17. For Apeax Fibre India Ltd., Sd/- Authorized Signatory To The Commissioner of Income Tax CIT (Appeals)-5, Ludhiana Sub: Enquiry u/s 133(6) of income fax act, 19G1 during the appellate proceedings in the case of Sh. Sanjeev Mittal, PAN: ABBPM9387M Ref: Your Letter F.No. CIT-(A)-5/LDH/22-23/312 dated 03.05.2023 Sir, We are in receipt of your above referred letter and we submit as under-
We confirm that copy of Account of Mr Parvinder Mittal attached with our letter for the Period 01.04.2015 to 23.02.2016 and 01.04.2016 to 31.03.2017 is true and as per our books of Accounts. We are also attaching the certified copy of Mr. Parvinder Mittal for FY 2015-16 and FY 2016-17.
We confirm that copy of Account of Mr. Kasturi Lai Mittal attached with your letter for the Period 01.04.2015 to 23.02.2016 and 01.04.2016 to 31.03.2017 is true and as per our books of Accounts.
486 & 490-Chd-2023 – Sanjeev Kumar Mittal, Rajasthan 7 We are also attaching the certified copy of Mr. Kasturi Lai Mittal for FY 2015-16 and FY 2016-17.