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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER PER D. KARUNAKARA RAO, AM: There are 10 appeals under consideration involving the assessment years 2006-07 to 2011-12. Out of these appeals, Revenue filed 6 appeals
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for the said assessment years. Further, the assessee filed 4 appeals for
the assessment years 2007-08, 2009-10, 2010-11 and 2011-12. All
these appeals are filed in connection with (i) Addition on account of loans
u/s 68 of the Act (by the Revenue and by the assessee) for the
assessment years 2006-07, 2007-08 to 2011-12, (ii) Addition on account
of agricultural income (by the assessee only) for the assessment years
2010-11 and 2011-12, (iii) Unexplained silver (by the assessee only) for
the assessment year 2011-12, (iv) Unexplained jewellery (by the assessee
only) for the assessment year 2011-12 and (iv) unexplained investment in
FDRs (by the assessee only) for the assessment years 2007-08 and
2011-12.
The issue of addition on account of loans u/s 68 of the Act is
common in various appeals filed by both the parties. Considering the
connectivity of the issue, all these appeals are being adjudicated in this
composite order. For the sake of clarity, the chart furnished by the
assessee giving the details of additions in assessment year-wise is
extracted hereunder :-
2006-07 2007-08 2007-08 2008-09 2009-10 2009-10 2010-11 2010-11 2011-12 2011-12 D A D D D A D A A D Addition on 220000 - 12075000 600000 35390000 1910000 16900000 2805000 25000000 11033383 account of loans u/s 68 Addition on - - - - - - - 444475 287894 - account of agricultural income Unexplained - - - - - - - - 220000 - silver Unexplained - - - - - - - - 916863 - Jewellery Unexplained - 149903 - - - - - - 15000 - investment in FDR
3 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
Other relevant facts of the case include that the assessee is an
individual and one of the Director of M/s Parag Milk and Milk Products
Pvt. Ltd. There was action u/s 132 of the Act on Parag group of cases on
04.02.2011. Accordingly, as per the due process of law, the assessments
were completed u/s 153A of the Act. Before us, there is no issue relating
to the incriminating material or non-abated assessments etc. The
appeals pertain to the assessment years 2006-07 to 2011-12.
Issue-wise Adjudication is taken as follows :
Addition on account of loans u/s 68 of the Act – Common issue in
appeals by the assessee and the Revenue.
On this issue, ld. Counsel for the assessee submitted that this
issue is exactly similar to the additions made by the Assessing Officer in
the case of Shri Devendra P. Shah (brother of the assessee). Further, Ld.
AR submitted that the creditors are also common and, therefore, the
decision taken by the Assessing Officer in the case of Shri Devendra P.
Shah in respect of the creditors hold relevant for the creditors involving
the assessee under consideration. Further, he submitted that the
appeals by Shri Devendra P. Shah already adjudicated by the Tribunal
vide ITA Nos.675 to 679/PUN/2016 read with Revenue’s appeals vide ITA
No.793 to 796/PUN/2016 dated 12.10.2018. Brining our attention to
the contents of para 4 of the order of the Tribunal dated 12.10.2018
(supra), ld. Counsel for the assessee submitted that the Tribunal
remanded the entire issue of unsecured loans raised in the appeals to
4 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
the file of the Assessing Officer for fresh adjudication. Ld. Counsel read
out the contents of para 4.7 in this regard.
On hearing both the sides on this issue, we find it relevant to
extract the contents of said para 4.7 of the order of the Tribunal (supra)
which read as under :-
“4.7 We heard both the parties on the issue of loan creditors involving the assessee. The inconsistencies with reference to the confirmation letters filed by the assessee, their signatures, their PAN Numbers, lack of credit worthiness, etc are essentially the reasons for confirming the additions by the CIT(A). From the Revenue side, the grant of relief despite the offer of additional income on account of bogus investments in shares before the ITSC, the CIT(A) granted relief on account of loan creditors without going into the facts. In all other cases of creditors, the documentation furnished by the assessee was accepted by the CIT(A) to a large extent and the creditors were found genuine. AO is of the opinion that the “bogus investors in Equity” cannot be “genuine loan creditors”. CIT(A) relied heavily on the remand report furnished by the AO in this regard. However, heavily on the remand report furnished by the AO in this regard. However, CIT(A) rejected the AO’s contention that all the transactions undertaken by the persons whose transaction that the share application money contributed to M/s. Bhagyalaxmi Dairy Pvt. Ltd., are bogus. CIT(A) is of the opinion that non-genuine transactions were already offered by the assessee through the ITSC and it has become final. Therefore, it is an admitted fact that there are common names in the loan creditors and the list of investments in shares of certain companies of the group. This is the admitted position as evident from the application filed before the ITSC. It is the claim of the assessee that the transactions entered into by such names of persons can be partly genuine when it comes to “unsecured loans” and partly bogus when it comes to “investment in shares”. This aspect was not properly examined by the CIT(A) applying the strict tests while adjudicating the issue and while granting part relief to the assessee. This is the case of Revenue, when it comes to the unsecured loans, that the relief was liberally granted by the CIT(A) without scrutinizing the loan transactions properly. Further, we examined the documentation filed by the assessee with regard to the correctness of the transactions of loan creditors. We find “all is not well” with the documentation qua the creditworthiness, signatures on the confirmations, PANs etc. It is not justified as to why the creditors failed to give their signatures on the confirmation letters. It is the prayer of both the authorities before us that this entire issue may be remanded to the file of AO for want of one more round of adjudication at the level of the assessing authorities. The remand proceedings already entertained by the AO were not done in a proper perspective due to various constraints including the issue of time limitation. On considering the entire gambit of the facts and the circumstances, we are of the opinion, as informed in the open court, that the entire issue of unsecured loans raised in all the appeals is required to be remanded to the file of AO.”
5 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
From the above, it is evident that the issue now stands remanded
to the file of the Assessing Officer for fresh adjudication. With identical
directions, the issue under consideration relating to the addition on
account of loans u/s 68 of the Act raised in all the appeals under
consideration stands remanded to the file of the Assessing Officer for
fresh adjudication. Accordingly, the issue no.1 is stand allowed for
statistical purposes.
Addition on account of agricultural income – Specific to appeals by
the assessee – A.Y. – 2010-11 & 2011-12
At the outset, ld. Counsel for the assessee submitted that this
issue is also identical and the same stands already adjudicated by the issue is also identical and the same stands already adjudicated by the
Tribunal in the case of Shri Devendra P. Shah (supra). In this regard, ld.
Counsel brought our attention to the contents of para 5 of the said order
of the Tribunal (supra). The CIT(A) in that case where 65% of gross
agricultural income was considered as net agricultural income. Similar
finality of conclusion applies to the facts of the present case.
Considering the commonality of the facts he read out the relevant
operational para 5.4 of the order of the Tribunal (supra) in this regard.
On hearing both sides, we find it relevant to extract the contents of
said para 5.4 of the order of the Tribunal (supra) which read as under :-
“5.4 We find, the following are the ratios decided by the revenue authorities in their respective orders : AO – Net agricultural income is assessed at 40% of the gross agricultural income
6 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
CIT(A) – Net agricultural income is assessed at 65% of the gross agricultural income Assessee-Net agricultural income is assessed at 88% of the gross agricultural income Considering the adhocism involved in this matter, we find the average of all the above comes very close to the decision of 65% as held by the CIT(A) in his order. Therefore, we are of the opinion that the decision of CIT(A) is appropriate and it does not call for any interference. Accordingly, the relevant grounds raised by the assessee are dismissed.”
Considering the above, we are of the opinion the ground raised by
the assessee on this issue is decided as above with identical finding.
Unexplained Jewellery – Assessee’s appeal – A.Y. 2011-12
On this issue, at the outset, ld. Counsel for the assessee submitted
that the Assessing Officer made addition of Rs.9,16,863/- i.e. 50% of
Rs.18,33,726/-, which is the differential amount between jewellery found Rs.18,33,726/-, which is the differential amount between jewellery found
and unaccounted income offered on this discovery during the course of
search action. The addition of Rs.9,16,863/- in the hands of Netra
Pritam Shah was adjudicated by the Tribunal vide ITA
No.1504/PUN/2016 for the assessment year 2011-12 order dated
29.11.2017 and the same was deleted by the Tribunal. Vide the
discussion in para 8 and 9 of the said order, the Tribunal accepted the
explanation given by the assessee with reference to the difference in the
jewellery and the said finding of the Tribunal applies to the facts of the
present case being husband of the said Netra Pritam Shah.
Considering the commonality of the facts, we are of the opinion the
said finding of the Tribunal (supra) applies to the facts of the present
7 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
case. For the sake of completeness, the said paras 8 and 9 are extracted
hereunder :-
“8. We have heard the rival contentions and perused the record. The first issue which arises in the present appeal is on account of value of gold jewellery found during the course of search. Search on Parag group was carried out on 04.02.2011. During the course of search, beside cash and loose papers, jewellery as well as silver articles were found from the possession of assessee and the family members, which comprised of Paras group of cases. The issue which is arising in the present appeal is in relation to jewellery and silver articles found during the course of search. The total value of jewellery of Rs.2.88 crores belonging to different family members was found, out of which jewellery to the extent of Rs.2.20 crores was seized. The assessee explained that jewellery to the extent as allowable as per the CBDT Circular to be held by each member of the family stands explained to that extent and in respect of balance, additional income was offered in the hands of different family members. There is no dispute vis-à-vis additional income offered on account of extra jewellery found from the possession of assessee and his family. 9. The limited issue which arises is in relation to jewellery which was claimed by the assessee to be explained in view of the CBDT Circular. The said Circular provides that jewellery to the extent of 500 grms. in the hands of married lady, 250 grms. in the hands of unmarried lady and 100 grms. in the hands of each male member of the family would not be seized grms. in the hands of each male member of the family would not be seized during the course of search because of family traditions in India, jewellery to the said extents is held by them. Once jewellery to the said extent is assumed to be held by the individuals of family as per the family tradition, hence the sources of said jewellery is on account of various rituals of family tradition and the same stands explained in the hands of assessee. Once the jewellery is explained to that extent and the balance extra jewellery found from the possession has been offered as additional income by the assessee, then there is no merit in making any addition in the hands of assessee on account of gold jewellery. Accordingly, we hold so. We direct the Assessing Officer to delete the addition of Rs.9,16,863/- on this count.”
From the above, it is evident that the jewellery found during the
course of search action was worth Rs.2.88 crores out of the same
assessee disclosed Rs.2.20 crores as unaccounted income of the assessee
leaving the balance of Rs.68 lakhs. The amount added in the hands of
Netra P. Shah (wife of assessee) now stands deleted by the Tribunal. The
relevant extract of the order of the Tribunal is given above. Considering
the commonality of the facts, we are of the opinion the said order of the
8 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
Tribunal in the case of Netra P. Shah (supra) is applicable to the facts of
the issue under consideration. Accordingly, the issue decided in favour
of the present assessee too for the same reasoning.
Unexplained Silver – Assessee’s Appeal – A.Y. 2011-12
On this issue, at the outset, ld. Counsel for the assessee submitted
that the similar discrepancy was noticed in the case of Netra P. Shah (supra) where 1/4th of Rs.8,80,000/- was added in her hands. The same
was deleted by the Tribunal as per discussion given in para 10 of the
said order in the case of Netra P. Shah (supra). The said para is
extracted hereunder :-
“10. Now, coming to the second addition on account of value of silver articles found from the assessee and her family members, which totaled to the value of Rs.8,80,000/-. The list of family members which is available at page 6 of the assessment order reflects 13 members of the said family and in view of family traditions, holding of silver articles to the extent of Rs.2,20,000/- merits to be accepted in the hands of assessee. Accordingly, we hold so. Thus, there is no merit in making aforesaid addition on account of silver of Rs.2,20,000/-. The grounds of appeal raised by the assessee are thus, allowed.”
As discussed above, the facts of the issue are identical. The
Tribunal already deleted similar addition (supra). Considering the same,
we are of the opinion this issue should be decided in favour of the
assessee.
9 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
Unexplained investment in FDRs – Assessee’s Appeal –
A.Y. 2007-08 & 2011-12.
This issue is relating to appeals of the assessee for the assessment
years 2007-08 and 2011-12. At the outset, ld. Counsel for the assessee
submitted that identical issue had come up before the Tribunal for
adjudication in the case of Shri Devendra P. Shah (supra). Bringing our
attention to the contents of paras 8 to 8.5 of the said order of the
Tribunal (supra), ld. Counsel submitted that the Tribunal in the said
case remanded the issue to the file of the Assessing Officer for fresh
adjudication with certain directions. For the sake of completeness, the
operational para 8.5 of the said order is extracted hereunder :-
“8.5 We heard both the sides, perused the orders of the Revenue and the written submissions filed by the assessee before us. On going through the above facts, we find the source of income for making the FDs worth of Rs.2,30,970/- is the core issue under litigation. It is the case of the assessee that the source for the same is the proceeds received by the assessee on maturity of the earlier FDs. There is need for furnishing the cash flow of the matured FDs which form part of the new FDs of Rs.2,30,970/-. It is an admitted fact before us that the assessee offered only an amount of Rs.79,771/- as additional income for taxation and not the entire addition of Rs.2,30,970/-. However, Ld. AR firmly submitted that the entire FDs of Rs.2,30,970/- is explainable if time is granted before the AO. In our view, this matter needs examination in the light of the details of the cash flow. In case of availability of sufficient cash balance is demonstrated by the assessee in the remand proceedings, the benefit of excess cash needs to be granted in favour of the assessee. Only exception to this principle is that the AO should examine the likely use of such excess cash for any other expenditure other than for making the said FDs of Rs.2,30,970/- claimed by the assessee. With these directions, the issue raised by the assessee in the appeals is allowed for statistical purposes.”
Facts of the addition, the explanation of the assessee and the
arguments of the Ld. Counsel are common. Considering the above, we
are of the opinion the issue under consideration for both the years now
10 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
stands allowed for statistical purposes with similar directions of the Tribunal (supra).
In all these appeals, the assessee raised common additional grounds challenging the assessments made u/s 143(3) of the Act and
making various additions in the absence of any incriminating material. The ld. Counsel for the assessee heavily relied on the Jurisdictional High Court judgement in the case of CIT vs. Continental Warehousing
Corporation Ltd. (374 ITR 645).
On hearing both the parties on this legal issue, we remand this issue to the file of the Assessing Officer for distinguishing addition, if
any, in the light of binding judgment cited above. The Assessing Officer is directed to make abated or non-abated assessments in the light of the
judgmental laws in course. With these directions, we admit the additional grounds and remand the same to the file of the Assessing Officer for adjudication.
In the result, all the respective appeals of the assessee and the Revenue are partly allowed for statistical purposes.
Order pronounced on 17th day of December, 2018.
Sd/- Sd/- (िवकास अव�थी/VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER
पुणे/ Pune; �दनांक/ Dated : 17th December, 2018. Sujeet
11 ITA Nos.686 to 689/PUN/2016 ITA Nos.798 to 803/PUN/2016
आदेश क� �ितिलिप अ�ेिषत/ Copy of the Order forwarded to :
अपीलाथ�/ The Appellant. 2. ��यथ�/ The Respondent. 3. The CIT(A)-13, Pune. 4. The CCIT (IT), West Zone, Mumbai. 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, पुणे/ DR, ITAT, “A” Bench, Pune. 6. गाड� फ़ाइल/ Guard File.
आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ ITAT, Pune