SH. TARACHAND GUPTA,ALWAR vs. ACIT, CENTRAL CIRCLE, ALWAR, ALWAR

ITA 447/JPR/2024Status: DisposedITAT Jaipur10 March 2025AY 2015-1682 pages
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What did the Tribunal hold?

The Tribunal decided on the issues as follows: Regarding the P&L account additions (Issue 1), the Tribunal noted that the assessee's contention that the P&L was for bank limit purposes was not explicitly addressed by the lower authorities. However, it found that the addition of Rs. 1.20 crores based on a lump sum surrender for M/s Raja Bricks (AY 2017-18) was made separately from additions based on seized documents. The Tribunal held that when specific additions are made based on seized documents, a separate addition on a lump sum surrender might lead to double taxation. It also noted that the CIT(A) had allowed set-off of investments against undisclosed income, which was more than the investment itself. The Tribunal found no infirmity in the CIT(A)'s order regarding the deletion of additions related to unexplained investment in cash loans (Rs. 65,02,600) for AY 2017-18, stating that both income and investment cannot be taxed to avoid double taxation. The Tribunal dismissed the Revenue's ground on this point. For the addition of Rs. 6,57,000 (unaccounted cash deposit in labour account), the Tribunal held that the CIT(A) sustained the addition based on the cash flow statement, considering it covered, and thus no separate addition was required. The Tribunal found no infirmity in this finding. For the deletion of Rs. 7,08,500 under Section 40A(3), the Tribunal upheld the CIT(A)'s deletion, relying on Rule 6DD(g) and the absence of contrary submissions. The Tribunal held that the addition of Rs. 3,27,370 for alleged unaccounted sales (AY 2017-18) should be restricted to the profit element, not the entire sale, citing various precedents. Similarly, for other unaccounted sales additions, the Tribunal directed that only the net profit rate should be applied. The Tribunal did not find infirmity in the CIT(A)'s decision regarding the P&L account additions for AYs 2015-16 and 2016-17, and the addition of Rs. 12,55,058 for AY 2017-18, as the assessee's explanation regarding cash balance and receipt of advance was not accepted by the CIT(A). The Tribunal also upheld the CIT(A)'s decision to tax additions at 60% under Section 115BBE for AY 2017-18, as the amendment was applicable from April 1, 2017. The operative directions were that the assessee's appeals were partly allowed, and the Revenue's appeal was dismissed.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) heard a consolidated set of four appeals: three by the assessee, Shri Tarachand Gupta, and one by the Revenue (ACIT, Central Circle, Alwar). These appeals pertained to Assessment Years (AY) 2015-16, 2016-17, and 2017-18. The appeals challenged orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)] on February 15, 2024, which in turn upheld assessment orders passed by the Assessing Officer (AO) under Section 143(3) read with Section 153 of the Income Tax Act, 1961. The AO's orders were dated December 30, 2019, and December 31, 2019. The original assessments stemmed from a search and seizure action under Section 132 of the Act conducted on September 22, 2017, on the 'Gupta Group' of Alwar, to which the assessee belongs.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the CIT(A) erred in upholding the AO's action of treating a Profit and Loss (P&L) account prepared by the assessee for M/s Raja Bricks (a proprietary concern) as the actual P&L account, thereby confirming additions of undisclosed profits for AY 2015-16 (Rs. 8,75,085), AY 2016-17 (Rs. 15,55,043), and AY 2017-18 (Rs. 12,55,058) based on the difference between this seized P&L and declared profit. The assessee argued that this P&L was prepared for bank limit purposes and not as the actual P&L, and that additions should be based on net profit rates, not the entire difference. The Revenue contended that the CIT(A) correctly upheld the AO's action. 2. Whether the CIT(A) erred in confirming additions under Section 68 of the Act for alleged unaccounted sales for AY 2015-16 (Rs. 57,930) and AY 2017-18 (Rs. 3,27,370 and Rs. 90,500). The assessee argued that only the profit on alleged unaccounted sales should be added, not the entire sale amount, and that certain entries were 'dumb papers' or represented money received back. The Revenue argued that the CIT(A) correctly confirmed these additions. 3. Whether the CIT(A) erred in confirming additions under Section 69C of the Act for alleged unexplained expenditure for AY 2015-16 (Rs. 66,000 and Rs. 50,000). The assessee argued that the Rs. 66,000 was paid by another entity (M/s Jai Ambey Motors) and the Rs. 50,000 was an advance from available cash that was later received back. The Revenue argued that the CIT(A) correctly confirmed these additions. 4. Whether the CIT(A) erred in confirming an addition of Rs. 1.20 crores for AY 2017-18 based on a lump sum surrender made by the assessee under Section 132(4) when additions were already made based on seized documents. The assessee argued that no separate addition could be made on surrender if specific additions were already confirmed. The Revenue argued that the CIT(A) correctly confirmed this addition. 5. Whether the CIT(A) erred in taxing additions at 60% under Section 115BBE for AY 2017-18 instead of 30%, arguing that Section 115BBE, as substituted, was not applicable to AY 2017-18. The Revenue argued that the CIT(A) correctly applied Section 115BBE. 6. Whether the CIT(A) was justified in deleting additions of Rs. 65,02,600 (unexplained investment in cash loans) and Rs. 6,57,000 (unaccounted cash deposit in labour account) and Rs. 7,08,500 (disallowance under Section 40A(3)) for AY 2017-18. The Revenue challenged these deletions, arguing that the CIT(A) erred in considering unaccounted receipts already taxed, not appreciating the assessee's role in depositing cash, and failing to appreciate the facts regarding cash payments. The assessee argued that these amounts were either covered by other assessments, cash flow statements, or fell under exceptions to Section 40A(3).

Which sections of the Income-tax Act were involved?

Section 143,Section 153,Section 132,Section 139,Section 68,Section 69C,Section 132(4),Section 115BBE,Section 40A(3)

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM

Hearing: 08/01/2025Pronounced: 10/03/2025

PER: RATHOD KAMLESH JAYANTBHAI, AM The present bunch of four appeals consists of three appeals filed by the assessee and one by the revenue. These appeals were file

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