DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2, LUDHIANA, LUDHIANA vs. SANJEEV KUMAR MITTAL, SRI GANGA NAGAR
आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH, ‘B’, CHANDIGARH
BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT &
DR KRINWANT SAHAY, ACCOUNTANT MEMBER
ITA Nos. 486 & 490/CHD/2023
A.Ys. : 2016-17 and 2017-2018
DCIT,
Central Circle 2,
Ludhiana
Vs.
बनाम
Sanjeev Kumar Mittal,
3-J, Block Area,
Sri Ganga Nagar,
Rajasthan 335001
èथायी लेखा सं./PAN No: ABBPM9387N
अपीलाथȸ/ APPELLANT
Ĥ×यथȸ/ REPSONDENT
( HYBRID MODE )
Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Sudhir Sehgal, Advocate
राजèव कȧ ओर से/ Revenue by : Smt. Kusum Bansal, CIT DR
सुनवाई कȧ तारȣख/Date of Hearing
:
01.01.2025
उदघोषणा कȧ तारȣख/Date of Pronouncement
:
15.01.2025
आदेश/Order
PER BENCH:
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
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: -
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.
That, the ld. CIT(A) has erred in treating the unexplained cash transaction as commission receipt.
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
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 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
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
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., 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. 2. 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
We are also attaching the certified copy of Mr.
Kasturi Lai Mittal for FY 2015-16 and FY 2016-17. For Rama Traders (Gaurav Goyal)
Sharing the Information with the AO
The results of above enquiry were shared with the Assessing Officer vide email dated 11.05.2023 and the AO was directed to offer any comments on the same on or before 19.05.2023. Reminder was issued to the AO vide emails dated 19.05.2023, but no response was received till the date of finalization of appeal.
Analysis
The transactions in cheque as depicted in the ledger accounts furnished by the appellant before the Assessing
Officer and also before this office during the course of appellate proceedings have been confirmed by the third parties under enquiry u/s 133(6). As far as the cheque entries are concerned, the version of the assessee has been accepted by the AO. Before the AO, the assessee has submitted that the same are in the nature of unsecured loans received by the above entities through banking channels from different entities/ persons for whom the assessee acted as a broker. This fact is again corroborated by the seized document wherein, the interest on the said amounts has been calculated
@18% p.a. for the period for which the seized document pertains.
Under these circumstances, there was onus on the Assessing Officer to establish that the cash transactions appearing in the seized document are of a completely different nature. It was also important for the AO to establish that the same does not derive its color from the other transactions entered through banking channels as noted in the same seized document. No entity in the name of BTD, 2011 as written on the top of the seized document has been identified by AO as belonging to the appellant.
486 & 490-Chd-2023 –
Sanjeev Kumar Mittal, Rajasthan
Thus, the interpretation and conclusion drawn by the AO for the cash transactions appearing in the seized document is not supported by any logic or the prevailing facts. The AO is not supposed to interpret the same seized document in two different ways wherein the version of the assessee for part of the transactions in cheque is accepted and for other part, is treated as unaccounted money of the assessee. The version of the assessee with respect to cheque transactions being arrangement of funds done by the assessee for other parties as an independent broker has been accepted by the AO as no addition for the said transactions has been made but the same logic has not been applied to the cash transactions mentioned in the same account/seized document. In fact, the assessee must have received commission outside the books of accounts for which income has also not been declared by the appellant in his return.
Further the CIT(A) finally estimated as under: -
“The appellant has not shown any income on account of the commission earned by him in his return of income, since the funds have been arranged by the appellant from the various money lenders both through cash and banking channels. Under such circumstances, it is held that the commission earned by the appellant can be safely estimated @3% of the total funds which as per the impugned ledger account are Rs. 4,20,96,000/- and thus, the commission income works out to Rs.
12,62,880/-. As a result, the addition is made to the extent of Rs12,62,880/- under the head of "income from other sources". Penalty is also initiated u/s 271AAB.”
Aggrieved, now the Revenue is in appeal against the deletion of addition of Rs. 2,86,29,100/-. 7. We have heard the rival contentions and gone through the facts and circumstances of the case. We have also perused the case records
486 & 490-Chd-2023 –
Sanjeev Kumar Mittal, Rajasthan including the assessment order, order of CIT(A) and the paper book filed by the Assessee consisting of 52 pages. First of all, we noted that the transactions in these seized documents titled as “BTD 2011”
carries the transactions of receipts and payments mainly through banking transactions. The relevant document is reproduced in the order of the CIT(A) and from where we inferred that the main transactions of receipts and payments is from Apex Fiber PNB current account and similarly main payments are again to Apex Fibre PNB current account Similarly, these payments are to Rama Traders PNB account No. 20718. These transactions are by way are either through cheques or through RTGS payments. We noted that the CIT(A) has conducted inquiry u/s 133(6) of the Act in relation to the major two parties Apex Fibre India Limited and Rama Traders, whose names are mentioned in the seized documents. The CIT(A) to corroborate the version of Assessee has called for information u/s 133(6) from these two parties i.e. like copy of ledger account of these parties depicting these transactions. The CIT(A) examined these parties and who filed confirmation letters [which are part of the order of the CIT(A)] and the same was referred to the Assessing Officer for comments but the Assessing Officer has not responded to the letter of the CIT(A) dated
11.5.2023 sent on email. The CIT(A) analyzed the transactions after verifying all the transactions and concluded logically that the interpretation of the seized documents, seems plausible the 486 & 490-Chd-2023 –
Sanjeev Kumar Mittal, Rajasthan explanation of the Assessee that the Assessee is arranging funds for other parties and may be charging commission. When these facts were confronted to ld. CIT DR, she could not controvert the above fact situation but she argued that the seized document has to be considered as it is. We noted that we agree with the argument of the ld. CIT DR and this document has to be read a whole. In case this document is read as a whole, the cheque transaction and RTGS transaction of account of these two parties clearly reflect that these are explained transactions vis-a-vis these two parties who were examined by CIT(A) u/s 133(6) of the Act. Even the ledger account submitted by these two parties before CIT(A) clearly reveals that these transactions are in the nature of loan transactions and present
Assessee acted as loan broker. Hence, we find no infirmity in the order of the CIT(A) and accordingly, this issue of Revenue’s appeals is dismissed. Order of CIT(A) on this issue is affirmed.
Coming to ITA No. 490/Chd/2023 for A.Y. 2017-18, the loan transaction on account of seized document “BTD 2011”, the transaction appearing are exactly identical and facts and circumstances are also exactly identical. The A.O. exactly made addition on the same basis what was in A.Y. 2016-17. Even the. CIT(A) also adjudicated similarly and similar analysis was carried out by CIT(A) in this case and restricted the addition at 3% of commission
486 & 490-Chd-2023 –
Sanjeev Kumar Mittal, Rajasthan on the total turnover noted in ledger account of Rs. 2 Crore,
Therefore, the CIT(A) estimated commission income of Assessee at Rs.
6 lacks and partly sustained the addition. We find that this issue is exactly identical what was in assessment year 2016-17 in ITA No.
486/Chd/2023, hence taking a consistent view we affirm the order of CIT(A) in this year also and dismiss this issue of the Revenue’s appeal.
9. In the result, both the appeals of Revenue are dismissed.
Order pronounced on 15.01.2025 (KRINWANT SAHAY)
Vice President
“आर.के.”
आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to :
1. अपीलाथȸ/ The Appellant
2. Ĥ×यथȸ/ The Respondent
3. आयकर आयुÈत/ CIT
4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH
5. गाड[ फाईल/ Guard File
आदेशानुसार/ By order,
सहायक पंजीकार/