SHRIKANT R. AGARWAL,PUNE vs. INCOME-TAX OFFICER, WARD - 8(3), PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE

BEFORE SHRI R.S. SYAL, VICE PRESIDENT

आयकर अपील सं. / ITA No. 69/PUN/2018 िनधा�रण वष� / Assessment Year : 2007-08

Shrikant R. Agarwal, ITO, Ward-8(3), Shah Khandelwal Jain & Vs. Pune Associates, Chartered Accountant, Level 3, Riverside Business Bay, Plot No.84, Wellesley Road, Near RTO, Pune – 411 001 PAN : ACLPA0438R (Appellant) (Respondent)

Appellant by Shri Rajiv Thakkur Respondent by Shri Rajesh Gawli Date of hearing 15-11-2018 Date of pronouncement 15-11-2018 आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is arising out of the order passed by the CIT(A)-6, Pune, on 17-02-2017 in relation to the A.Y. 2007-08.

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under the name and style of M/s. Mittal Associates, which is

engaged in the business of Civil Construction. In addition, the

assessee is also a partner in M/s. Travelline International,

which firm is engaged in the business of running Hotel. A

survey action u/s.133A of the Income-tax Act, 1961

(hereinafter also called as ‘the Act’) was carried out on 13-03-

2007. In the course of survey action, the assessee’s statement

was recorded at the business premises of M/s. Travelline

International. In reply to Question No.6 of the statement, the

assessee admitted that he purchased a flat from M/s. Darode

Jog for a total consideration of Rs.55,71,000/- but the

agreement value of the flat was recorded at Rs.45 lakhs only.

Remaining amount of Rs.10,71,000/-, over and above the

agreement value, was paid in cash. The assessee admitted his

additional income to the tune of Rs.10,71,000/- for the year

under consideration. However, at the time of filing the return,

such income was not offered for taxation. During the course

of assessment proceedings, the assessee was show-caused as to

why surrender of Rs.10,71,000/-, made during the course of

survey, was not honoured. In reply, the assessee submitted

that a sum of Rs.11 lakhs was debited to the account of the

3 ITA No.69/PUN/2018 Shrikant R. Agarwal

firm in the books of M/s. Travelline International. Not

convinced with the assessee’s submissions, the AO noticed

that the withdrawal was shown to have been made from the

firm after the date of survey. He, therefore, made an addition

of Rs.10,71,000/- in the hands of the assessee, which was

accorded a stamp of approval by the ld. CIT(A). The assessee

is aggrieved by the sustenance of the addition.

material on record. A copy of statement of the assessee

recorded in the course of survey operation has been placed at

page 10 onwards of the paper book. In reply to Question

No.6, the assessee admitted that there was payment of

Rs.10,71,000/- in cash against the purchase of property for

which the agreement showed value only at Rs.45 lakhs. Here,

it is relevant to mention that apart from making this surrender

of Rs.10,71,000/-, the assessee also accepted that he

incurred/paid business promotion expenses as kickbacks

amounting to Rs.26 lakhs and also earned unaccounted

receipts of Rs.25 lakhs in the hands of firm, M/s Travelline

International. In addition, the assessee also offered an income

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of Rs.5 lakhs in the hands of the firm to cover other omissions

and commissions.

Rs.10,71,000/- was offered as additional income in the hands

of partnership firm M/s. Travelline International. A copy of

the assessment order dated 30-12-2009 passed in the case of

M/s. Travelline International for the A.Y. 2007-08 has been

placed at page 27 of the paper book. In the case of firm, the

assessee offered additional income of Rs.17 lakh, with the

following working :

Unaccounted investment in residential flat made out of 1071000 withdrawals from the firm Unexplained business promotion expenses admitted at the survey 2600000 Total 3671000 Less : Unaccounted receipts utilized for aforesaid payments 2500000 Balance (shortfall) 1171000 Additional income offered to cover all omissions & commissions to 500000 avoid any possible litigation & to buy peace of mind Total 1671000 Income offered (rounded off to the nearest Rs.100000/-) 1700000

surrendered a sum of Rs.10,71,000/- in the hands of firm in

addition to a sum of Rs.5 lakhs which were offered to cover

other omissions and commissions and a sum of Rs.1 lakh

which is difference between the unexplained business

promotion expenses admitted at the time of survey over and

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above the unaccounted receipts utilised for such payment. The

AO in the assessment of M/s. Travelline International made an

addition of Rs.39 lakhs by reducing a sum of Rs.17 lakhs

surrendered by the assessee (inclusive of unaccounted

investment in residential flat of Rs.10,71,000) from Rs.56

lakhs, being, a sum total of unexplained business promotion

expenses of Rs.26 lakhs; unaccounted receipts of Rs.25 lakhs;

and additional income of Rs.5 lakh to cover all omissions and

commissions. M/s Travelline International preferred an appeal

against the assessment order before the ld. CIT(A) challenging

the addition of Rs.39 lakhs made by the AO over and above

the surrendered amount of Rs.17 lakhs, which is inclusive of

Rs.10,71,000/- towards unexplained investment in flat. The

ld. CIT(A) has reduced the addition to Rs.14 lakhs out of total

addition of Rs.39 lakhs made by the AO. The ld. AR

contended that the assessee is in further appeal before the

Tribunal challenging the sustenance of addition to the tune of

Rs.14 lakhs.

Travelline International amply manifests that the assessee did

make a surrender of Rs.17 lakhs in the hands of the firm which

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includes an unaccounted investment in residential flat made

out of withdrawals from the firm amounting to Rs.10,71,000/-

which constitutes the filament of the addition made in the

hands of the assessee. It is abundantly clear that the additional

income in the hands of firm includes surrender of

Rs.10,71,000/- which has never been challenged by the

assessee in the appeal proceedings. Once the additional

income of Rs.10,71,000/- has been offered in the hands of the

firm in which the assessee is a partner and that has been

subjected to tax @ 30%, there can be no rationale in repeating

the addition of Rs.10,71,000/- in the hands of the assessee, for

which again the maximum rate of tax is 30%. If such an

addition is made, it would amount to double addition which

can only be sustained, if surrender of Rs.10,71,000/- is not

considered in the hands of M/s. Travelline International. As

the assessment in the hands of M/s. Travelline International

has been finalized considering, inter alia, the surrender of

Rs.10,71,000/- towards unaccounted investment in residential

flat, I hold that the same addition cannot be sustained in the

hands of the assessee. The Revenue is at liberty to take

7 ITA No.69/PUN/2018 Shrikant R. Agarwal

appropriate view qua the other surrenders made during the course of survey by the firm.

Order pronounced in the Open Court on 15th November, 2018. Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 15th November, 2018 सतीश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश आदेश 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; 3. आयकर आयु�(अपील) / The CIT (Appeals)-6, Pune 4. आयकर आयु� / The Pr. CIT-5, Pune 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / DR ‘SMC’, ITAT, Pune; 6. गाड� फाईल / Guard file. // True copy / आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

ITA No.69/PUN/2018 Shrikant R. Agarwal

Date 1. Draft dictated on 15-11-18 Sr.PS 2. Draft placed before author 15.11.18 3. Draft proposed & placed before the - second member 4. Draft discussed/approved by Second - Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.

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