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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI RAVISH SOOD, JM
O R D E R Per Shamim Yahya, A. M.: These are appeals by the Revenue directed against the respective order of the Commissioner of Income Tax (Appeals), pertaining to the assessment years 2002-03 to 204-05. Since the issues are common and connected and the appeals were heard together these are being consolidated and disposed of by this common order.
The grounds of appeal read as under:
1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addtion of Rs.2,02,72,000/- even though the assessee failed to discharge the onus u/s.68 of the I.T.Act." (2) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs.1,20,00,000/- even though the assessee failed to discharge the onus u/s.68 of the I.T.Act." (3) The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored,
In this case, the Assessing Officer noted from the perusal of the bank statement of the assessee maintained with Oriental Bank of Commerce and ING Vysya Bank, Bandra Branch that there are three credits appearing in the said account which were not reconciled with the return of income filed by the assessee as well as the submissions made from time to time during the assessment proceedings. In the submissions, the assessee had claimed that out of such credits, Rs.1,20,00,000/- was received on account of flat cancellation and others were loan refunds which were given in the earlier years.
The Assessing Officer noted that no detail/evidence to establish such claims was submitted despite ample opportunities. Accordingly, the Assessing Officer gave notice to the assessee to explain the credits in his bank account as under: 1. Oriental Bank of Commerce dated 29.08.2001 Rs.1,20,00,000/- 2. ING Vysya Bank dated 17.08.2001 Rs.2,00,000/- 3. ING Vysya Bank Rs.2,02,72,000/- dated 23.01.2002
As regards the credit of Rs.1,20,00,000/-, the assessee gave the following submissions: 1) In para 1 of the above referred to letter you have asked the assessee to explain receipt of Rs 1,20,00,0007- on 29.08.2001 which was deposited with OBC having Current A/c No. NRO 1800NS92. 2) The assessee had booked flat No. 101 in 1994 with Trambak Polypack Pvt. Ltd in the building to be constructed at Bandstand, Bandra (W). The purchase consideration was Rs 1,75,00,000/- which was paid in 1994. 3) Trambak Polypack Pvt. Ltd had allotted flat No. 1301 and 1302 to one Mr. Saigal in the said building. 4) Memorandum of Understanding between Trambak Polypack Pvt. Ltd and the assessee was cancelled.
3 to 629/Mum/2014 Kanwarjeet Singh Sandhu 5) On cancellation of Memorandum of Understanding with Trnmbak Polypack Pvt. Ltd repaid following amount to assessee. No. Date Amount (Rs) a) 19-07-2000 60,00,000 b) 20-07-2000 60,00,000 c) 22-12-2003 15,00,000 d) 23-12-2003 20,00,000 e) 24-12-2003 10,00,000 f) 27-12-2003 10,00,000
6) Assessee entered into Memorandum of Understanding with the said Saigal for purchase of flat No. 1301 and 1302 for total consideration of Rs 1,20,00, OOO/- in the said building. The assessee paid Rs 60,00,000/- on 20-07-2000 by cheque No. 841542 drawn on OBC to Saigal Similarly, Rs 60,00,000/- was paid by cheque No. 841541 to Saigal dt. 20-07-2000. 7) Confirmatory letter of Trambak Polypack Pvt. Ltd. confirming repayment of Rs 55 lacs is enclosed herewith. 8) Trambak Polypack Pvt. Ltd subsequently sold the entire project to Mrs Gouri Khan. 9) Allotment of flat No. 1301 and 1302 was cancelled and as per deed of cancellation was entered into wherein Mrs Gouri Khan paid Rs 1,20,00,000/- to the assessee. 10) You had issued notice u/s 133(6) of the I.T. Act, 1961 to Shahrukh Khan to verify payment of Rs 1,20,00,000/-. The reply was submitted in your office on 21-12-2009 which was forwarded to me. 11) As per para 4 of letter dated 23/25/08.2001 written by Trambak Polypack Pvt. Ltd to Gouri Khan which was forwarded with reply to notice u/s 133(6) it is clearly mentioned that Mrs Gouri Khan had paid Rs 1,20,00, OOO/- to the assessee. 12) You have asked the assessee explain deposit of Rs 2,00,OOO/- in ING Vyasa Bank, Bandra (West) Branch on 23-08-2000. My client has paid sum of Rs 2,00,000/- to Rushi Reality as a loan on 10-08-2001 by cheque No. 087081 drawn on ING Vysya Bank. The said amount was received back from the said party and deposited with Vysya Bank. Assessee has asked to the said party to give confirmation but it will take some time to received from them as matter is very old. 13) You have asked my client for to explain deposit of Rs 2,02,72,000/- on 23-01- 2002 in Vysya Bank. It is submitted that on 21-12-2001 sum of Rs 2,02,71,670/-was issued in favour of Raj Bastani by issue of cheque No. 87082 drawn ING Vyasa Bank. I am enclosing herewith Xerox copy of bank statement reflecting ' the payment of said amount wherein name of Raj Bastani is duly reflected. The said' amount was received back from him on 23-01-2002
4 to 629/Mum/2014 Kanwarjeet Singh Sandhu and deposited with Vysya Bank. Assessee has asked Shri Raj Bastani to give confirmatory letter but it will take few days as matter is very old. 14) No adverse inference be drawn for non-submission of confirmatory letter on 23-12-2009.
5. Considering the above submissions, the Assessing Officer noted that the relevant MOU for the flat purchased of Flat Nos. 1301 and 1302 as claimed by the assessee was not produced. The claim of the assessee that the said sum was received from Shri Shahrukh Khan was verified u/s. 133(6) of the Act and the same was confirmed.
However, the Assessing Officer opined that the nature of the receipt has not been established. Thereafter, the Assessing Officer found that in absence of necessary details and the contradictory dates, the assessee’s explanation was not acceptable. In this regard, he gave a detailed finding as under:
AS per the assessee, the amount was returned back to him on account of cancellation of flat booking. The assessee also claimed that same amount of Rs.1,20,00,000/- was paid by him to Mr. Saigal on account of flat booking and theefore there is no taxable profit in-this transaction. However, the amount paid for the said booking has not been verified/ established by the assessee. Necessary evidences to establish that the assessee had paid any amount for such flat booking of flat No. 1301/1302 to Mr. Saigal were not provided. The assessee has further filed a copy of the deed of cancellation dated 23-08-2001 entered with M/s Trambak Polypack Pvt Ltd in which it has been mentioned that the one Shri Harsh K. Saigal has, vide agreements ' dated 18-07-2000 and 19-07-2000 assigned and transferred to the assessee all the benefits arising out of the allotment letter dated 23-11-1993. However, the said cancellation deed nowhere establishes that the assessee actually paid any amount to Shri Saigal on account of these two sale agreements referred in the cancellation.deed. The agreement of M/s Trambak Polypack (P) Limited with Mrs. Gouri S. Khan and Shri Shahrukfr Khan does not say anywhere that the said amount is a refund of any amount paid by the assessee. Further, the letter from Mrs. Gouri Khan/Shri Shahrukh Khan states that, "The assessee has paid Rs.1,20,00,000/- to Mr. Kanwarjeet Singh Sandhu in the discharge of the consideration payable as per the terms of memorandum of intent dated 31-05-2000."
5 to 629/Mum/2014 Kanwarjeet Singh Sandhu 6.2 The letter further states that the relevant agreements were not readily available at this moment. This memorandum of intent was also not provided by the assessee. It is also pertinent to note that the-assessee claims to have paid Rs.1,20,00,000/- to Mr. Saigal vide two cheques of Rs.60,00,000/- each both dated 20-07-2000 whereas the memorandum of intent as referred by Shri Khan in the reply was already executed on 31.05.2000, ie well before the said date of agreement with Shri Saigal. Further there is no confirmation from Mr. Saigal regarding the receipt of Rs.1,20,00,000/- nor there is any details on records which may enable this office to conduct independent enquiries. The claim of the AR of the assessee that the said transaction with Shri Saigal were from FY 2000-01 and therefore the assessee was not liable for maintaining details for the same is also not acceptable. If, as per the claim of the assessee, the amount of Rs.1,20,00,000/- was paid to Shri Saigal for flat purchase, then the relevant entry for the same must have been passed in the balance sheet of the assessee as on 01-04-2002'on the asset .side as advance for flat. Therefore, the assessee was liable to maintain details/evidences for such-entry that was passed in his books during the previous year . relevant to the current year.
6.3 The amount paid by the assessee on account of flat booking to M/s Trambak Ploypack (P) Limited was refunded as per the confirmation filed. There is no details/evidences of any other flat booking made by the assessee for which an amount, of Rs.1,20,00,000/- was received by the assessee which has been claimed as cancellation of. flat booking. In the absence of any details as discussed above, the amount of Rs. 1,20,00,000/- is hereby treated as income from other sources of the assessee as the assessee and taxed accordingly.
Upon the assessee’s appeal, the ld. Commissioner of Income Tax (Appeals) obtained the comments from the assessee and the Assessing Officer. In this regard, we may refer to the remand report of the Assessing Officer as under:
With regard to cash credit of Rs.1,20,00,000/- , the assessee has stated that he has deposited this money in Oriental Bank of Commerce on 23.08.2001 which was received from Shahrukh Khan & Gauri Khan. It is explained that the assessee had booked a flat in 1st floor (Flat No.101) in the year 1994 with M/s. Trambak Polypack Pvt.Ltd. ('the builder') at 'Trambak Garden' and had paid Rs.1,75,00,000/- to the Builder. Copy of letter dated 29th July, 1994 in stamp paper along with From 37-I and its annexure have been filed. Subsequently, the booking of the said flat bearing No.101 was cancelled by the assessee. Later on another fiat in the same building at 13th floor bearing No.1301 was transferred to the assessee which was originally allotted to one Mr. Harsh Saigal & Ors. Mr. Saigal had paid a sum of Rs.1,20,00,000/- to the builder. As per two agreement dated 18.07.2000
6 to 629/Mum/2014 Kanwarjeet Singh Sandhu & 19.07.2000 Mr. Saigal transferred the flat No.1301 in favour of the assessee for Rs. 1,20,00,000/-. In short, the flat No.101 was cancelled and purchased flat No.1301. The builder then refunded a sum of Rs.60,00,000/- on 20.07.2000 to the assessee and in turn the assessee paid Rs 60,00,000/- to Shri Saigal vide cheque No.841542 dated 20.7.2000. The builder paid the balance amount of Rs.60.00,000/- on 20.7.2000. Again, the assessee paid another amount of Rs.60,00,000/- to Mr. Saigal vide cheque No.8415641 dated 20.07.200 . Both these cheques were drawn on Oriental Bank of Commerce, Bandra Branch. Copy of the Bank statement of Oriental BanK of Commerce, highlighting these. transactions has been filed, copy of which is enclosed. It is further stated as per letter dated 20.08.2012 that M/s. Trambak Polypack Pvt.Ltd. could not undertake the project and entire project was sold to Sharukhkah and Gouri Khan. Subsequently, the assessee cancelled his booking. Deed of cancellation dated 23.08..2011 has been produced, copy of which is enclosed. As per clause VI of this Cancellation Deed the purchaser (Shahrukh Khan & Gouri Khan) agreed to pay back Rs.1.20.00,000/- to the assessee which was paid by the assessee to the builder out of total Rs1,75,00,000/- as stated earlier. Accordingly, Sharukh Khan & Gouri Khan paid Rs.1,20,00,000/- to the assescee vide Manager's cheque No.610942 dated 23.08.2001, copy of the sante along with a copy of stamped receipt has been produced which are enclosed for kind perusal. A copy of letter submitted by M/s. R.M.Aigaonkar & Co., CAs, addressed to ITO19(3)-4, Mumbai has been produced by the assessee, being a reply to the notice u/s. 133(6) issued to Shri Shahrukh Khan & Gouri Khan. In this reply, they have stated that the assessee (Mr. Shahrukh Khan) has not maintained ledger account of Mr,.Kanwarjeet Singh Sandhu in his books for F.Y.2001-02. However, they have confirmed that the assessee (Mr.Shahrukh Khan) has paid Rs.1.20.00,000/- to Mr.Kanwarjeet Singh Sandhu in discharge of the consideration payable as per the terms of memorandum of Intent dated 31.05.2000. Copy of the reply is enclosed herewith for your kind perusal. As per assessee's version, this sum of Rs.1,20,00,000/-was given as loan to Mr. Raj Basantani on 30.08.2001 which form part of the total loan amounting to Rs.5,99,66,151/- to Raj Basantani. During the assessment proceedings, the A.O. had observed that the assessee paid Rs.1,20,00,000/- to Saiga on 20/07/2000 whereas memorandum of intent was executed on 31/05/2000 i.e. prior to the date of agreement with Mr.Saigal. When asked about this, the assessee has submitted that memorandum of intent was entered into between TrambaK Polypack Pvt.Ltd. and Sharukh Khan. As per the said memorandum the amount paid by person who had booked the flats were to be refunded. The transaction entered into between the assessee and Saigais has no connection with memorandum of intent because assessee had stepped into the shoes of Saigal hence instead of amount being refunded to Saigal the same was now to be refunded to the assessee. The A.O. further observed that there is no confirmation from Saigal regarding receipt of Rs.1,20,00,000/-When asked about this, the assessee stated that as per para (ii) ,
7 to 629/Mum/2014 Kanwarjeet Singh Sandhu (iii) & (iv) of page 2 of the deed of cancellation dated 23.08.2001 entered into between Trambak Poly Pack Pvt.Ltd. and th.e assessee, it is very clear that as per letter of allotment dated 23,11.1993 flat on 13th floor was allotted to Harsh K. Saigais and Others and pursuant to the said letter of allotment, Saigais had paid a sum of Rs.1,20,00,OOO/- to the builder. Further as per two agreements dated 18.7.2000 and 197.2000 the said Saiga transferred flat on 13th floor to the assessee. The builder recognised the assessee as the allottee of the said flat and builder also confirmed that the assessee had received Rs.1,20,00,000/- on cancellation of the said flat. Since the builder had confirmed the transaction which pertain to period A.Y.2001-02, the confirmation of Saigal is not required to be submitted. However, no separate confirmation from Saigal has been produced. The AR of the assessee submitted that the amount was given to Mr. Saigal prior to 2001 and the assessee had prepared statement of affairs. The A.O. also observed that the amout of Rs.1,20,00, 000/- paid to Saigal was not reflected on the asset side of the balance sheet as on 01.04.2002 and the assessee was liable to maintain the details. In response to this observation, the assessee has stated that Rs.1,20,00,000/-was receivable from Shahrukh Khan on behaf of Trambak Poiy Pack Pvt.Ltd. which was received back on 23.08.2001. During the course of the assessment proceedings, balance sheet as on 31.03.2002 was submitted. Since the amount was received on 23.08.2001 it will not be reflected on asset side of balance sheet because no amount of Rs.1,20.00,000/- was outstanding as receivable as on 31.03.2002. The assessee had given Rs.1,75,00,000/- to Trambak Polypack Pvt.Ltd and had received back Rs.1,20,00,000/-, the balance amount of Rs.55,00,000/- was shown in the balance sheet as receivable from Trambak Polypack Pvt.Ltd. M/s.Trambak Polypack Pvt.Ltd had confirmed the transactions
Considering the remand report, the ld. Commissioner of Income Tax (Appeals) proceeded to adjudicate the issue. The ld. Commissioner of Income Tax (Appeals) noted that in page 4 of the assessment order, the Assessing Officer has himself recorded a source of receipt of the amount of Rs.1,20,00,000/- has been established by the assessee but the nature of the receipt has not been established. Thereafter, the ld. Commissioner of Income Tax (Appeals) proceeded to state the sequence of event as narrated by the assessee already before the Assessing Officer. Thereafter, the ld. Commissioner of of the amount. The ld. Commissioner of Income Tax (Appeals) concluded as under:
7.1.3 As stated above, the AO has not disputed the source of the amount of Rs.1.20 crore, which is from Smt. Gouri Khan and Shahrukh Khan. The entire sequence of events recorded above shows that the amount received by the- appellant is towards purchase of the project by Smt. Gouri Khan and is of capital in nature. In so far as the appellant is concerned, he had purchased the allotment rights of flats from Shri Saigal vide MOU dated 18.7.2000 and 19.7.2000, for Rs.1.20 crores and his rights by way of allotment of flat no.1301 & 1302 in the proposed project were cancelled in the year 2001. There is no profit arising to the appellant on' account of the said capital transaction. The AO has disregarded the above facts and brought the entire amount to tax as unexplained cash credits. I, therefore, do not find, any. justification in the above stand taken by the AO and delete the addition made on the said account. This ground of appeal is allowed.
Against the above order, the assessee is in appeal before us.
We have heard both the counsel and perused the record. The ld. Counsel of the assessee in his submissions reiterated the sequence of events as submitted above and referred to his letters in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals). The ld. Counsel of the assessee further referred to evidences in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals).
Upon careful consideration, we note that this issue relates to credit entry of Rs.1,20,00,000/- in the assessee’s bank account. The source of the receipt has been established which remains undisputed. However, initially the Assessing Officer had doubted the nature of the receipt as explained by the assessee. The assessee’s explanation in this regard was that it had initially booked space with M/s. Trambak Polypack Pvt. Ltd. the assessee booked another flat with the same dealer for Rs.1,20,00,000/-. Later on, this booking was cancelled in favour of Shri Shahrukh Khan and Mrs. Gauri Khan. From them, the assessee has received Rs.1,20,00,000/-. All the necessary papers and confirmations in this regard have been produced by the assessee and in the remand report, the Assessing Officer has also not drawn any adverse inference in this regard. In these circumstances, in our considered opinion, there is no infirmity in the order of the ld. Commissioner of Income Tax (Appeals). Accordingly, we uphold the same.
Apropos ground no. 2 relating to addition u/s. 68 of the Act of Rs.2,02,72,000/-:
This regard to the explanation of the credit of Rs.2,02,72,000/- and Rs.200,000/-, the assessee responded as under:
15) You have asked the assessee explain deposit of Rs 2,00,000/- in ING Vyasa Bank, Bandra (West) Branch on 23-08-2000. My client has paid sum of Rs 2,00,000/- to Rush Reality as a loan on 10-08-2001 by cheque No. 087081 drawn on ING Vysya Bank. The said amount was received back from the said party and deposited with Vysya Bank. Assessee has asked to the said partly to give confirmation but it will take some time to received from them as matter is very old.
16) You have asked my client for to explain deposit of Rs 2,02,72,000/- on 23-07-2002 in Vysya Bank. It is submitted that on 21-12-2001 sum of Rs 2,02,71,670/-was issued in favour of Raj Bastani by issue of cheque No. 87082 drawn ING ' Vyasa Bank. I am enclosing herewith Xerox copy of bank statement reflecting the payment of said amount wherein name of Raj Bastani is duly reflected. The said amount was received back from him oh 23-01-2002 and deposited with Vysya Bank. Assessee has asked Shri Raj Bastani to give confirmatory letter but it will take few days as matter is very old. 17) No adverse inference be drawn for non-submission of confirmatory letter on 23-12-2009.
Basantani. However, the Assessing Officer noted that the said confirmation was not supported by any PAN, copy of return of income, bank details of Shri Raj Basantani.
Therefore, the Assessing Officer held that even as the identity of the said party could not be established, let alone the credit worthiness or genuineness of the transaction. The Assessing Officer noted that despite opportunities, the assessee did not filed details in this regard. He held that the same is also drawn in the matter of credit of Rs.2,00,000/-. He held that the assessee was not able to provide even the basic details like address, PAN, etc. for such credit of Rs.2,00,000/- claimed to be loan taken from M/s. Rushi Realty Pvt. Ltd. Accordingly, the Assessing Officer added the afore-said amount of Rs.2,02,72,000/-.
Against the above order, the assessee appealed before the ld. Commissioner of Income Tax (Appeals).
The ld. Commissioner of Income Tax (Appeals) forwarded the assessee’s submissions and evidences before the Assessing Officer and also obtained the remand report of the Assessing Officer. The remand report on the issue of addition of Rs.2,02,72,000/- reads as under:
3.1 On remanding back the issue for further verification, necessary enquiries have been conducted to ascertain the genuineness of these cash credits in the accounts of the assessee Regarding cash credit of Rs.2,02,72,000/-, me assessee's authorised representative Mr.Himank Desai, C.A. has stated that this sum was returned by Shri Raj Basantani out of the total loan given to him amounting to Rs. 5.93 66.1 51 /- in earlier year. When asked about the source of fund from which this loan was given, he has only stated that the assessee has kept money in fixed deposit with Indian Bank and had asked the bank to grant loan against FD to Shri Raj Basantani. Zerox copies of letters written to Bank by the assessee are placed
11 to 629/Mum/2014 Kanwarjeet Singh Sandhu on record. It is also stated that the FDs were kept in the bank prior to 2001. Now, coming to the return of loan of Rs.2,02,72,000/- by Shri Raj Basantani, summons u/s. 131 of the I.T.Act, dated 23.11.2010 was issued to Shri Basantani by the erstwhile A.O. and his statement on oath was recorded. Shri Basantani has confirmed in this statement of having received the amount of Rs.5,93,66,151/- from the assessee. An affidavit duly notarized;' confirming the receipt of '.his amount and returned by Shri Basantani has been filed Copy of ledger account by way of confirmation dated 1.4.2002 has also been filed separately. It is stated by the A.R. that the cash credit, in Question, of Rs.2,02,72,000/-was received from Shri Basantani vide cheque No. 909279 dated 22.01.2002 drawn on Indian Bank, Overseas Branch, Mumbai, Zerox copy of the said cheque along with pay-in-slip for depositing the cheque in assessee's bank account i.e. iNG Vysya Bank, Bandra Branch, SB Account No. 19721, has been produced and available on record In response to summons issued to Indian Bank, Overseas Branch, Mumbai. the Bank vide its letter dated 7.6.2011 has stated that "further to our letter dt. 6. 6 2011 and your telephone with us, we are to state that Cheque No. 909279 forms part of the cheques to Mr. Basantani by Overseas Branch. The continuity number of cheque issue can be seen from the statement submitted to your office for account No. 506 (Cheque Nos. 909281 to 289 all have been debited in the account)". A copy of confirmation is also filed. Further, the asseessee vide its letter dated 30.08.29012 submitted copies of Bank account of The Vysya Bank Ltd., Bandra (West) Branch, Mumbai from where the loan was advanced to Mr. Raj Basantani. The relevant portion is reproduced below:-
Date Particulars Chq. No. withdrawal Deposits 23.10.2001 CL RAJ BASANTANI 87082 20271670 -
Creditworthiness of Shri Raj Basantani is not proved with sufficient documentary evidence. However, in the affidavit sworn in, Shri Basantani has stated that the loan was repaid out of his own fund. It is also stated that he had enough overdraft facility with the Bank and in financial year 2001-02 total turnover of his group was approx. 200 ciore The AR of the assessee produced zerox copy of bank statement of Raj Basantani with Indian Bank. In the said bank statement cheque No.909279 dated 22.01.2002 in favour of assessee is reflected. Further, purpose of advancing this loan is not established. When asked about the interest received relating to this loan, the assessee's AR has stated that this is a friendly loan and no interest is charged. In the statement recorded under oath, in answer to 0.12, Shri Basantani has also stated that 'No, I did not pay any interest to Shri Kanwarjeet Singh Sandhu as the money was not invested in business by me and hence the same was returned back by me'. Copies of relevant documents, as stated above, are enclosed for your kind perusal.
Income Tax (Appeals) referred to the remand report of the Assessing Officer and he observed that the Assessing Officer vide letter dated 10.102.013 has confirmed that the bank statement of Shri Raj Basantani with Indian bank reflect cheque No. 909279 dated 22.10.2012, issued in favour of the assessee. He noted that the Assessing Officer’s only objection is that the purpose of advancing the loan by the assessee to Shri Raj Basantani has not been established. In the remand report, the Assessing Officer submitted that the assessee’s representative has stated that the total loan given to Shri Raj Basantani was Rs.5,93,66,161/- in the earlier year. Regarding the source, it was stated that the assessee has kept loan with the fixed deposits in the Indian Bank and asked the loan against fixed deposit to Shri Basantani. Necessary evidence in this regard in the form of letter from bank was produced. The Assessing Officer also summoned Shri Basantani who confirmed that he has received the loan of Rs.5,93,66,161/-. It was also stated that the cash credit in question of Rs.2,02,72,000/- was received from Shri Raj Basantani vide cheque no. 87082 dated 22.01.2002 drawn by the Indian Bank. The Assessing Officer had observed that Shri Raj Basantani did not have sufficient resource that he had stated that he had enough over draft facility with the bank and in the financial year 2001-02, the total turnover of the group was approximately Rs.200 crores. In this regard, the assessee’s ld. Counsel of the assessee also produced copy of bank statement of Shri Raj Basantani which reflected the above amount. Considering the above report, the ld. Commissioner of Income Tax (Appeals) deleted the addition concluding as under:
13 to 629/Mum/2014 Kanwarjeet Singh Sandhu 7.2.1 In view of the above discussion, I find that following facts are undisputed.
The appellant had advanced total loan of Rs, 5*93,66, 16,1 /- to Raj Basantani, which has also been confirmed by Shri Basantani in his statement of oath recorded by the AO during the course of remand proceedings, 2. Shri Basantani has confirmed that he has not paid any interest on the above amount.
The amount of Rs.2,02,72,000/- was received by the appellant from Shri Basantani vide cheque no. 87082 of his bank account with the Indian Bank. Shri Basantani, also confirmed in his statement recorded by the AO that he had enough overdraft facility with the above bank from which the amount was paid and the. said payment was towards part repayment of loan of Rs,5,93,66,161/-. 7.2.2 Therefore, the above facts show that the appellant had to recover an amount of Rs.5,93,66,161/- advanced to Shri Raj Basantani, and the amount of Rs.2,02,72,000/- received during the year from Shri Basantani's account is towards such repayment. I, accordingly, delete the addition of Rs.2,02,72,000/- and allow this ground of appeal.
16. As regards the addition of Rs.2,00,000/- the ld. Commissioner of Income Tax (Appeals) confirmed the same.
Against the above order, the Revenue is in appeal before us.
We have heard both the counsel and perused the records. The ld. Counsel of the assessee in his submissions reiterated the sequence of events as submitted above and referred to his letters in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals). The ld. Counsel of the assessee further referred to evidences in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals).
Rs.2,02,72,000/- in assessee’s bank account. The assessee has also submitted certain papers in the remand proceedings which have been examined by the Assessing Officer. It has been explained that the assessee has received the said amount from Shri Raj Basantani. The source of the receipt has been submitted to be the bank statement of Shri Raj Basantani who had been summoned u/s. 131 of the Act and had confirmed the transaction. It has been explained by Shri Raj Basantani that he had received a loan of Rs.5,93,66,151/- from the assessee in the past which has now been repaid. The source of the original assessee’s loan to Shri Raj Basantani has been submitted to be maturity of the fixed deposits in the Indian bank. All the necessary papers and documents have been found by the Assessing Officer. In these circumstances, in our considered opinion, there is no infirmity in the direction of the ld. Commissioner of Income Tax (Appeals) to delete the said addition.
The grounds of appeal read as under:
1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs.2,70,94,481/- even though the assessee failed to discharge the onus u/s. 68 of the I. T. Act. (2) The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored.
The facts relating to initiation of proceedings u/s. 147 of the Act, and the issues in appeal, as discussed in the assessment order are that the assessee had not filed any return of income for A.Y.2003-04. A survey action u/s.133A of the IT Act was conducted on the premises of M/s. Sandhu Builders, a firm in which the assessee is a partner. certain credits in the bank accounts of the assessee which were prima facie not verifiable or ascertainable, that is whether the same have been considered as part of the income in A.Y.2003-04. These credits being Rs.1,50,00,000/-, Rs.20,94,481/- and Rs.1,00,00,000/- deposited on 12.8.2002, 13.8.2002 and 18.10.2002 respectively, i.e. total of Rs.2,70,94,481/- in the assessee's bank account with the Global Trust Bank. The assessment was, therefore, reopened by issue of notice u/s. 148 of the IT Act. In response to the said notice, the assessee filed return of income on 3.5.2010 declaring income of Rs.3,343/-. The Assessing Officer vide letter dated 12.10.2010 asked the assessee to furnish copies of bank statements and explain the nature of above entries in his bank account. The assessee vide letter dated 25.10.2010 stated that all the above amounts were return of loan from Shri Raj Basantani, advanced to him earlier. As notice u/s. 133(6) could not be served on Shri Basantani, since he was not found on his addresses given by the assessee, the Assessing Officer called-for further details vide letter dated 2.11.2010.
The assessee, vide letter dated 12.11.2010 submitted that loan given to Mr. Raj Basantani, was out of the fixed deposit made by him, which had matured, and summary of his bank account with ING Vysya Bank showed that on 19.10.2001, FD of Rs.2,02,71,670/- was encashed and paid to Mr. Raj Basantani on 23.10.2001. Further loan of Rs.1,20,00,000/- was given to Shri Basantani on 30.08.2001, followed by another loan of Rs. 2,70,94,481/- on 21.12.2001. The above loans were interest-free, and amount of Rs.2,02,72,000/- was loan received back on 23.1.2002. The assessee, further, submitted that the amount received during the year is return of the balance amount of of the Act to Shri Basantani and recorded his statements on oath. Shri Basantani confirmed the amount of transactions. The Assessing Officer therefore, recorded that though Shri Basantani has confirmed the transaction entered into by him with the assessee, he has not given details of his bank account number with Indian Bank, P.M.
Road' Branch. He, therefore, called for information from the Bank Manager of the above branch who informed that Shri Basantani was not maintaining any account with the bank for the period 1.4.2002 to 31.3.2004. On the basis of the above information and that assessee has failed to prove the identity and creditworthiness of Shri Basantani and genuineness of the transaction, the Assessing Officer held that the assessee has not been able to establish the source of the above amount as repayment of loan and assessed the same as unexplained cash credit u/s. 68 of the Act.
Upon the assessee’s appeal, the ld. Commissioner of Income Tax (Appeals) noted the submissions of the assessee. The assessee also submitted the additional evidences which were remanded to the Assessing Officer.
Considering the above, the ld. Commissioner of Income Tax (Appeals) deleted the addition by holding as under:
7.1 I have duly considered the remand report and the submissions of the appellant, and find that vide para 3.2 of the report, the AO has mentioned that. copy of bank account issued by Indian Bank, Overseas Branch show that Mr. Basantani was enjoying credit facility from the said bank, however, no documentary evidence was produced to establish the claim that turnover of his group companies during the F.Y. 2002-03, was more than Rs.200 crore. The AO, to ascertain the Banker's Pay Order dated 10.8,2002, .for
17 to 629/Mum/2014 Kanwarjeet Singh Sandhu Rs.20,94,481/- issued by the SBI, Khar (West) Branch, in favour of the appellant, issued notice u/s. 133(6) to the Bank,. In response to the same, SBI confirmed the issue of Pay Order of Rs.20,94,481/- in favour of the . appellant by debiting the account of Shri Basantani. He also served summons on the Indian Bank, Fort Branch to confirm the account and status of Shri Basantani. The Bank initially replied that Shri Basantani was not maintaining account from 1.4.2000 to 2003-04 in their branch. However, subsequently, vide reply dated 6.6.2011 and 7.6.2011, Indian Bank in response to notice u/s. 133(6) confirmed that Shri Basantani was maintaining account with the Bank. As for the balance amount of Rs.1 crore, the AO has reported that a copy of account only of the appellant with OBC, was produced from which the amount of Rs.1 crore was given to Shri Basantani. The appellant also stated before the AO that the loan amount of Rs.2,70,94,481/- returned by Shri Basantani was deposited in the Global Trust Bank. The AO; in this regard has recorded that the said transactions are found to be there in the copy of ledger account of Global Trust Bank filed by the appellant, and, in his report, has only stated that purpose of loan taken by Shri Basantani has not been explained and interest thereon has not been charged. The appellant, vide reply dated 6/11.2013, has stated that the AO has confirmed and accepted the loan of Rs.1,50,00,000 and Rs.20,94,481 from Shri Raj Basantani, and, SBI too has confirmed issue of Pay Order of Rs.20,94,481/- by debiting Shri Basantani's account. It is also stated that confirmation letter from Shri Basantani regarding refund by him of Rs.1 crore by cheque no 316392 on 18.10.2012," "as been furnished and bank statement of the appellant with OBC shows that :-e above cheque was deposited and cleared. In view of the above facts discussed in the remand report and, the fact that the AO has not disputed the total loan of Rs.5,93,66,151/- given by the appellant to Shri Basantani in the earlier years and part of the said loan was outstanding at the beginning of the year, I hold that the amount of Rs.2,70,94,481/- received from Shri Basantani is return of the said loan amount. As far as identity of Shr Basantani is concerned, the AO has recorded his statement on oath, which establishes his identity. The creditworthiness of Shri Basantani is proved from the report of the AO that from the xerox of bank statement issued by Indian Bank, Overseas Branch it can be seen that Shri Basantani was enjoying credit facility from the said bank. The Indian Bank, Overseas Branch, has also confirmed issue of banker's pay order dated 9.8.2002 for Rs.1.50 crore. The SBI, Khar(West) Branch has also confirmed issue of pay order for Rs.20,94,481/- by debiting the account of Shri Basantani. The payment of amount of Rs.lcrore has also been confirmed by Shri Basanstani, and reflected in appellant's bank account. The genuineness of the transactions is therefore, also established. In view of the same, I delete the addition of Rs.2,70,94,481/-.
Against the above order, the assessee is in appeal before us. assessee in his submissions reiterated the sequence of events as submitted above and referred to his letters in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals). The ld. Counsel of the assessee further referred to evidences in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals).
Upon careful consideration, we find that this credit entry is also the repayment of loan from Shri Raj Basantani as discussed in above. All the necessary documents in this regard have been produced by the assessee before the authorities below. This is a part of the refund of the total loan of Rs.5,93,66,151/- given by the assessee to Shri Raj Basantani in the earlier years. Part repayment of the above loan has already been confirmed by us in our order as above. Hence, on this issue also, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals).
The grounds of appeal read as under:
1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs.1,30,00,000/- even though the assessee failed to discharge the onus u/s. 68 of the I. T. Act. (2) The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored.
The facts relating to initiation of proceedings u/s. 147 of the Act, and the issues in appeal, as discussed in the assessment order are that the assessee had not filed return of premises of M/s. Sandhu Builders, a firm in which the assessee is a partner. Consequent to the post-survey investigations carried out, it was noticed that there were certain credits in the bank accounts of the assessee which were prima facie not verifiable or ascertainable, that is whether the same have been considered as part of the income in A.Y.2004-05. These credits being; Rs.15,00,000/-, Rs.20,00,000/-, Rs.10,00,000/-, Rs,10,00,000/-, Rs.15,00,000/-, Rs.15,00,000/-, Rs.15,00.000/-, Rs.15,00,000/-, Rs.15,00,000/- deposited on 22.12.2003, 23.12.2003, 24.12.2003, 27.12.2003, 24.02.2004, 03.03.2004, 09.03.2004, 16.03.2004 and 23.03.2004 respectively, i.e. total of Rs. 1,30,00,000/- in the assessee's bank account with the Global Trust Bank(GTB). The assessment was, therefore, reopened by issue of notice, u/s. 148 of the IT Act. In response to the said notice, the assessee filed return of income on 3.5,2010 declaring income of Rs.5,815/-. The Assessing Officer vide letter dated 12.10.2010 asked the assessee to furnish copies of bank statement/pass book of his account with GTB, along with nature and explanation of the entries- made therein. The assessee vide reply dated 25.10.2010 stated that the amounts of Rs.15 lakh, 20 lakh, 10 lakh and 10 lakh credited on 22.12.2003, 23.12.2003, 24.12.2003 and 27.12.2003, that is total of Rs.55 lakh had been received from M/s. Trambak Polypack Pvt. Ltd and the balance amount of Rs 75 lakh has been received back from Fresh Leasing and Finance P. Ltd.(FL&FPL). The assessee also enclosed xerox of confirmation letters from Trambak Polypack for the period 01.04.2001 to 31.03.2004 from M/s. Fresh Leasing, and Finance P. Ltd. The Assessing Officer issued notice u/s, 133(6) to the above parties. In response to the same, they furnished copy of ledger account of the assessee in the books of Trambak Polypack noted that amount of Rs.55 lakh had been received on account of cancellation of agreement. In respect of the other party, M/s Fresh Leasing and Finance P. Ltd, the Assessing Officer deputed an Inspector from his office to serve notice u/s.133(6) of the Act. However, the Inspector reported that no firm by the above name existed on the given address. Therefore, vide notice dated 2.11.2010 u/s. 142(1) of the Act, the AO asked the assessee to furnish the details of loans, source of fund, interest charged and received from the above two parties and their copy of return with Balance Sheet and P& L account. The assessee, vide letter dated 12.11.2010 submitted that he had a fixed deposit with Indian Bank, which was encashed and from the same, loan of Rs.75 lakh was given to Fresh Leasing and Finance Ltd, prior to the year 2001, and from the confirmation letter filed by M/s, Fresh Leasing and Finance Ltd, it can be seen that the above amount was received during the period 24.2,2004 to 23.3.2004, and the remaining amount of Rs.55 lakh was received from M/s.
Trambak Polypack Pvt Ltd, being the return of balance amount out of Rs.1.75 crore paid to M./s. Trambak Polypack P. Ltd, because of the project having sold to Mrs. Gauri Khan and Mr. Shahrukh Khan, on the consequential cancellation of allotment of flat made to him. The Assessing Officer, however, did not accept the above submission of the assessee on the ground that the necessary evidence to establish payment of Rs.1.75 crore to M/s. Trambak Polypack Ltd, for flat booking had not been provided and no detail/evidence of any other flat booking made by the assessee for which amount was paid had been filed. He therefore, treated the amount of Rs.50 lakh as undisclosed income the assessee had failed to establish that he had given loan to M/s. Fresh Leasing and Finance Ltd. and the same was repayment of the loan and added the said amount as undisclosed amount of the assessee.
Upon the assessee’s appeal, the ld. Commissioner of Income Tax (Appeals) noted the submissions of the assessee. The assessee also submitted the additional evidences which were remanded to the Assessing Officer.
Considering the above, the ld. Commissioner of Income Tax (Appeals) deleted the addition by holding as under:
7.1.1 I have duly considered the remand report and the submissions of the appellant. So far as the amount of Rs.55 lakh received during the year from M/s! Trambak Polypack Pvt. Ltd, on account of cancellation of agreement is concerned, as mentioned in the letter dated 6.8.2012, calling for remand report from the AO, the issue regarding booking of a flat by the appellant with M/s. Trambak Polypack Pvt. Ltd and subsequent cancellation of the same was involved in AY 2002-03 also. While deciding the appeal for the said year, I have,-on the basis of details and documents produced by the appellant during the remand proceedings held that the appellant had made booking of flat No. 101 (Trambak Garden) in the project to be constructed by M/s. Trambak Polypack Pvt. Ltd and the same was subsequently cancelled vide MOU with the builder. Out of the above amount receivable by him, Rs.1.20 crore was received and invested in the purchase of rights of allotment of Flat No. 1301 & 1302 in the same project, from Shri Saigal, and when the entire project was sold by M/s., Trambak Polypack Pvt. Ltd to Mrs. Gauri Khan and Shahrukh Khan, the said amount of Rs.1.20 crore was received from them on behalf of M/s. Trambak Polypack Pvt. Ltd. I have, accordingly, deleted the addition of Rs.1 .20 crore made in the Asst.Year. 2002-03. The AO in the remand report has confirmed that the amount of Rs.55 lakh along with dates of deposits in the ledger account are1 tallying with the entries in the bank statement. His only objection is that cheque numbers of the above amounts totaling Rs.55 lakh are not appearing in the said statement. The appellant's submission in this regard is, first of all, amount and dates are tallying which is also confirmed by M/s. Trambak Polypack Pvt. Ltd also. Secondly, the dates are not recorded in the statement in 22 to 629/Mum/2014 Kanwarjeet Singh Sandhu case of deposit of cheques and the same are recorded only in case of clearing of cheques issued by the account holder. 7.1.2 In view of the discussion made above, and in the appellate order in A.Y.2002-03, I hold that Rs.55 lakh received by the appellant during the year is the balance amount out of Rs.1.75 crore receivable by the appellant from M/s. Trmbak Polypack Pvt. Ltd. I, accordingly, delete the addition of the above amount and allow Ground of Appeal No.6.01. Ground of Appeal No.2.02 being a related ground of appeal, is also disposed of in terms of the above decision. 7.2.1 The AO, vide remand report has stated that at the time of assessment proceedings, the appellant did not produce any documentary evidence to substantiate his claim that he had given a loan of Rs.75 lakh to M/s. Fresh Leasing & Finance Ltd, prior to 1.4.2001, and the amount received during the year is return of the said loan amount. It is also reported that the appellant has stated that it was a loan given on friendly basis on which no interest was. chargeable and Mr. Raj Basantani is the Director of the above company and copies of cheques by which the amount of Rs.75 lakh were not received, was produced. The AO has, however, reported that in the copy of account of the appellant with the OBC, Bandra Branch the above amounts of Rs.75 lakh are appearing and Shri Basantani Director of the above company has also confirmed repayment of loan of Rs.75 lakh to the appellant. In his reply dated 6.7.2013, the appellant has stated that in the balance sheet for the year ended 31.3.2003 loan of Rs.75 lakh given to M/s. Fresh Leasing and Finance Ltd is duly reflected and Shri Basantani, Director of the above company has also confirmed refund of the loan amount. In so far as the A.O's report that copy of cheques of the above, amount were not produced, the appellant has stated that when cheques are received and deposited in banks copies are not taken or maintained, however, from the statement of the bank account, it can be seen that Rs,75 lakh was received during the year. 7.2.2 In the appellate order in AY 2003-04, in the case of the appellant, on the basis of evidence produced during the course of remand proceedings and statement of Shri Raj Basantani recorded on oath u/s.131 of the Act, I have confirmed the creditworthiness of Raj Basantani. In view of the decision given in the " said appellate order and, also, the fact that the appellant had to receive Rs.75 fakh from the above company, as reflected in its balance sheet, I hold that the' amount received during the year is return of above amount of loan. I, accordingly, delete the addition of Rs.75 lakh and allow the ground of appeal No.2.03 and 2.04 on this issue.
Against the above order, the assessee is in appeal before us.
We have heard both the counsel and perused the record. The ld. Counsel of the assessee in his submissions reiterated the sequence of events as submitted above and Commissioner of Income Tax (Appeals). The ld. Counsel of the assessee further referred to evidences in this regard filed before the Assessing Officer and the ld. Commissioner of Income Tax (Appeals).
Upon careful consideration, we find that in explanation for the credit entry in the bank account for Rs.1,30,00,000/-, the assessee has claimed two sources as under:
(i) Rs.55 lacs: Rs.55 lacs returned from Trambak Polypack Pvt. Ltd. – the said amount relates to an advance of Rs.1,75,00,000/- paid to Trambak Polypack Pvt. Ltd. for booking of space as discussed in above. Out of this Rs.1,20,00,000/- was returned from Trambak Polypack Pvt. Ltd. earlier and the balance of Rs.55 lacs has been received during this year. In view of all the factual details and the evidences already on record, we do not find any infirmity in the direction of the ld. Commissioner of Income Tax (Appeals) in deletion of Rs.55 lacs.
(ii) Rs.75 lacs:
As regards the balance of Rs.75 lacs, it has been submitted that the same has been received back from M/s. Fresh Leasing and Finance Ltd. It has been explained that the assessee had a fixed deposit in Union Bank which was encashed and from the loan of Rs.75 lacs was given to M/s. Fresh Leasing and Finance Ltd. prior to the year 2001. The confirmation letter from M/s. Fresh Leasing and Finance Ltd. has also been produced. It has been explained that Shri Raj Basantani is the director of the above company. The necessary documents in this regard which in the remand report the Assessing Officer has not disputed. In these circumstances, in our considered opinion, the deletion of the addition by the ld. Commissioner of Income Tax (Appeals) is in-order and we confirm the same.
In the result, all these appeals by the Revenue stands dismissed.
Order pronounced in the open court on 13.06.2018