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

ITA 448/JPR/2024Status: DisposedITAT Jaipur10 March 2025AY 2016-1782 pages
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What did the Tribunal hold?

The Tribunal decided the issues as follows: Regarding the seized P&L account (Issue 1), the Tribunal allowed the assessee's appeal for AY 2017-18, stating that similar issues for AY 2016-17 were decided in favour of the assessee, and the findings would apply mutatis mutandis. This implies the addition based on the seized P&L account was deleted or modified. Regarding additions for unaccounted sales under Section 68 (Issue 2), the assessee's grounds were allowed for AY 2015-16 and AY 2017-18, indicating that the additions were restricted to profit or deleted. Regarding additions under Section 69C (Issue 3), the assessee's grounds for AY 2015-16 were allowed, suggesting these additions were deleted or modified. Regarding the lump sum surrender (Issue 4), the assessee's ground for AY 2017-18 was allowed, implying no addition could be made on this basis when other additions were already confirmed. Regarding Section 115BBE applicability (Issue 5), the assessee's ground for AY 2017-18 was allowed, meaning the higher tax rate was not applied. Regarding Revenue's Ground No. 1 (unexplained cash loans, Issue 6), the Tribunal dismissed the Revenue's appeal. The reasoning provided by the assessee's counsel, supported by the Tribunal, indicated that the CIT(A) had allowed set-off against undisclosed income, and taxing both income and investment would lead to double taxation. Regarding Revenue's Ground No. 2 (unaccounted cash deposit, Issue 6), the Tribunal dismissed the Revenue's appeal as the CIT(A) had not deleted the addition but confirmed it, albeit with a slight modification, making the Revenue's ground infructuous. Regarding Revenue's Ground No. 3 (Section 40A(3) disallowance, Issue 7), the Tribunal dismissed the Revenue's appeal, finding no infirmity in the CIT(A)'s deletion of the addition based on Rule 6DD(g) and the absence of contrary submissions from the Revenue. The operative direction was 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), Jaipur Bench, 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 confirmed various assessment orders passed by the Assistant Commissioner of Income Tax (AO) under Section 143(3) read with Section 153 of the Income Tax Act, 1961. The original assessments were based on a search and seizure action under Section 132 on the Gupta Group on September 22, 2017. The dispute involves additions made to the assessee's income.

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 of M/s Raja Bricks, prepared for bank limit purposes and seized during search, 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) as per Section 143(3) r.w.s. 153. 2. Whether the CIT(A) erred in confirming additions on account of alleged unaccounted sales under Section 68 for AY 2015-16 (Rs. 57,930) and AY 2017-18 (Rs. 3,27,370 and Rs. 90,500), instead of taxing only the profit element. 3. Whether the CIT(A) erred in confirming additions under Section 69C for AY 2015-16 (Rs. 66,000 and Rs. 50,000) where the assessee claimed the expenses were not theirs or were out of available cash. 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 under Section 132(4) when additions were already made based on seized documents. 5. Whether the CIT(A) erred in taxing additions at 60% under Section 115BBE for AY 2017-18, instead of 30%, given the applicability date of the amendment. 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) for AY 2017-18, as argued by the Revenue. 7. Whether the CIT(A) was justified in deleting an addition of Rs. 7,08,500 for AY 2017-18 on account of disallowance under Section 40A(3) for cash payments. Assessee's contentions: The assessee argued that the seized P&L account was for bank limit purposes and not actual. They contended that additions for unaccounted sales should be on profit, not gross sales. For Section 69C additions, they argued the payments were by others or out of cash. They argued against dual addition for surrender and seized documents. They also argued Section 115BBE was not applicable to AY 2017-18. For Revenue's grounds, the assessee argued that income and investment cannot be taxed twice, and that the CIT(A) had not deleted but allowed set-off for the amounts in question, making the Revenue's grounds infructuous or incorrect. Revenue's contentions: The Revenue supported the AO's findings and argued that the CIT(A) was not justified in deleting the additions related to unexplained cash loans, unaccounted cash deposits during demonetization, and disallowances under Section 40A(3).

Which sections of the Income-tax Act were involved?

Section 143,Section 153,Section 68,Section 69C,Section 132,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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