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Facts
A search and seizure action was conducted on Triton Hotels & Resorts Private Limited. The Assessing Officer made several additions to the assessee's income under section 69C, primarily for alleged unaccounted payments to an interior designer (RGDCL) and bogus accommodation entries from Akbar Travels, based on seized diaries and ledger entries. Many additions were made on a protective basis, with substantive additions identified in the case of M/s. Vardha Enterprises Private Limited.
Held
The Tribunal allowed the assessee's cross-appeal for AY 2020-21 by deleting the additions related to RGDCL, finding no direct link or valid agreement with the assessee, and deleting the addition related to Akbar Travels as the income was already offered. For all Assessment Years (2018-19, 2019-20, 2020-21, 2021-22), the Tribunal dismissed the revenue's appeals, upholding the CIT(A)'s deletion of protective additions made against the assessee since the substantive additions were considered in the case of M/s. Vardha Enterprises Pvt. Ltd.
Key Issues
Whether additions for unexplained expenditure under section 69C can be sustained against the assessee when there's no direct evidence linking them to the assessee, and whether protective additions are valid when substantive additions for the same transactions are made against a related entity.
Sections Cited
Section 132, Section 153A, Section 69C, Section 288A
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 3122/Mum/2023 & I.T.A. No. 2485/Mum/2023, are cross-appeals by the assessee and the revenue preferred against the very same order of the ld. CIT(A)-52, Mumbai, dated 14/06/2023 pertaining to AY 2020-21. I.T.A. No. 3143/Mum/2023, I.T.A. No. 3123/Mum/2023, Ι.Τ.Α. No. 3144/Mum/2023, are three separate appeals by the revenue preferred against three separate orders of ld. CIT(A)-52, Mumbai, dated 14/06/2023 pertaining to AYs 2018-19, 2019-20 & 2021-22. 2. All these appeals were heard together and are disposed off by this common order for the sake of convenience and brevity. Since the underlying facts in the issues are common in the captioned appeals, for the sake of our convenience, we have heard the representatives on the facts of AY 2020-21 in ITA No. 2485/Mum/2023 and ITA No. 3122/Mum/2023. 3. Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought on record, duly considered in light of Rule 18(6) of the ITAT Rules, 1963. 4. Briefly stated, the facts of the case are that a search and seizure action u/s 132 of the Act was carried out in the cases related to Triton Group on 13/07/2020 which included the assessee M/s. Triton Hotels & Resorts Private Limited. The statutory notices u/s 153A of the Act were issued and served upon the assessee pursuant to which the assessee filed its return of income. The return income of the assessee for the assessment year under consideration was assessed as under:- Sr. No. Particulars Amount (in Rs.) 1 Income as per return u/s 153A of the Act NIL 2 Add: Addition u/s 69C of the Act Para 4 29,40,245 3 Add: Addition u/s 69C of the Act Para 5 3,23,99,505 4 Add: Addition u/s 69C of the Act Para 6 - Protective 1,60,000 5 Add: Addition u/s 69C of the Act Para 7- Protective 32,00,000 6 Add: Addition u/s 69C of the Act Para 8- Protective 1,12,04,750 7 Add: Addition u/s 69C of the Act Para 9- Protective 7,11,40,000 8 Add: Addition u/s 69C of the Act Para 10- Protective 1.80.00.000 9 Add: Addition u/s 69C of the Act Para 11- Protective 51,66,000 10 Add: Addition u/s 69C of the Act Para 12- Protective 30,00,000 11 Add: Addition u/s 69C of the Act Para 13- Protective 3,12,88,054 12 Add: Addition u/s 69C of the Act Para 14- Protective 87,82,550 13 Add: Addition u/s 69C of the Act - Para 15- Protective 14 Add: Addition u/s 69C of the Act - Para 16- Protective 15 Add: Addition u/s 69C of the Act - Para 17- Protective 16 Add: Addition u/s 69C of the Act - Para 18- Protective 17 Add: Addition u/s 69C of the Act - Para 20 - Protective Total Income Rounded off u/s 288A 1,14,55,500 84,00,700 3,85,66,850 35,00,000 10,11,20,500 35,03,24,654 35,03,24,650
It can be seen from the aforementioned chart of assessed income that, only two additions u/s 69C of the Act amounting to Rs. 29,40,245/- and Rs.3,23,99,505/- were made on substantive basis and all other additions were made on protective basis.
Before us, it has been fairly stated by the rival representatives that the additions made on protective basis have been deleted because corresponding addition on substantive basis have been confirmed by the Tribunal/or deleted by the Tribunal in the case of Vardha Enterprises Private Limited. The copy of the order of the Co-ordinate Bench in the case of Vardha Enterprises Private Limited in ITA Nos. 3142, 3140 & 3141/Mum/2023; AYs 2017-18, 2020-21 & 2021-22 and ITA Nos. 2435, 2436 & 2437/Mum/2023; AYs 2017-18, 2020-21 & 2021-22, order dated 22/11/2024, has been supplied which has been duly considered. In the present appeal by the assessee, we are concerned with only two additions which have been partly affirmed by the ld. CIT(A) u/s 69C of the Act.
The first addition is in respect of payments made to Randolph Grey Design Co. Ltd. (hereinafter ‘RGDCL'), being interior designer, Mr. Clive Grey.
During the course of search and seizure proceedings, ledgers pertaining to the unaccounted payments made to RGDCL for hotel purchase have been found to be recorded and seized from the residential premises of Mr. Jiten Pujari. The scanned copy of the document is reproduced below:- CLIVE 06/01/2018 Hime cv@76/-(pided by Clive Sec) 16/01/20 Pd thno Hitesh in his account-Paid from fauppies Cash Back- Sent from Ashok 9/4 to clive RJA 4/c 10000/ U 20,000/- 8500/-
The AO was of the opinion that the aforementioned payments are unaccounted and the total payments come to US$ 38500 equivalent to Rs.29,40,245/-. The assessee was asked to provide complete details of the transactions and also provide the nature and source of payments. In its reply, the assessee explained that the alleged payments have been found and seized from the residential premises of Mr. Jiten Pujari, who was maintaining the diaries and the assessee is not in a position to comment upon the contents of the same. It was brought to the notice of the AO that Mr. Jiten Pujari has confirmed that the said diaries were his personal diaries having nothing to do with the assessee. It was strongly contended that the name of the assessee is not found mentioned anywhere on the page.
The contention of the assessee did not find favour with the AO. The AO was of the opinion that the retraction filed by Mr. Jiten Pujari is clearly an afterthought and, therefore, no cognizance can be taken of the retraction statement and concluded that the assessee has failed to establish the source of expenditure amounting to Rs.29,40,245/- and made addition u/s 69C of the Act.
Proceeding further, based on another seized document being Annexure A-462, containing ledger account titled “CV/ABR