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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
This appeal of assessee is arising out of the order of Commissioner of Income Tax (Appeals)-50, Mumbai, [in short CIT(A)] in appeal No. CIT(A) 50/IT-36/2014-15 dated 07-04-2014. The Assessment was framed by the Deputy Commissioner of Income Tax, CC44, Mumbai (in short DCIT) for the assessment year 2006-07 order dated 24-03-2014 under section 143(3) read with section 147 of the Income Tax Act, 1961(hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO of entry in the pen drive represents as undisclosed business receipts of ₹ 20 lacs. For this assessee has raised following grounds: -
“1. On the facts and in the circumstances of the case and in law the learned CIT (A)-50, Mumbai erred in holding that the entry in the pen drive represents undisclosed business receipts of Rs.20,00,000/- pertaining to the appellant for the year under consideration;
On the facts and in the circumstances of the case and in law the learned CIT(A)-50, Mumbai erred in not considering the written submissions filed in the course of hearing vide letter dated 03-03- 2016.”
Briefly stated facts are that the assessee a Private Limited Company did not file its return of income for AY 2006-07. A search and seizure action under section 132 of the Act was carried out in the Kamala Group of cases on 09-01-2013. During the course of search, the pen drive was found and seized and that pen drive contains one of the entry for the relevant FY 2005-06 which stands as 02/06, i.e. stands for Feb 2006. As per this entry a sum of ₹ 20 lacs received by cash by the assessee as on money from the project Sunbeam. The AO added this amount as on money under section 69A of the Act as the assessee is not able to explain the receipt of on money. The CIT(A) entirely change the head of income and treated this 20 lakhs as profit of the business of the assessee by observing in Para 5.4 and 5.5 as under: -
“5.4 I have considered the submissions of the appellant. The appellant has admitted in the course of hearing on 28.03.2016 that the sum of Rs. 20,00,000/- recorded in the documents found in the pen drive represented on-money received by the appellant in February 2006. Therefore, it is clear that the receipts of the appellant were suppressed to the Rs.20,00000I-. In the course of the hearing, the appellant contented that the entire amount does not represent appellant's income and that the suppressed income relating to the receipt of on-money of Rs. 20,00,000/- may be taken as 20% of the amount so received The contention of the appellant is not acceptable because the appellant has not been able to established that it had incurred any expenditure which was not recorded in the books of the appellant and which was relatable to the on-money receipt of Rs. 20,00000/- Even if, any such expenditure was incurred, the same is not necessarily deductible from the receipt because the admissibility of any expenditure incurred by the assessee is governed by provisions of sections 36 to 40A of the Act. Therefore, I hold that the entire sum of Rs. 20,00,000/- is to be added to the total income of the appellant.
5.5 However, I find that the Assessing Officer has invoked the provisions of section 69A of the Act and has treated the sum of Rs 20,00,000/- as unexplained money of the appellant. However, actually the sum of Rs. 20,00,000/- represents undisclosed receipts of the business of the appellant and, therefore, the profit of the business of the appellant is to be increased by Rs. 20,00,000/-. Accordingly, I hold that the sum of Rs. 20,00,000/- assessed under the head 'profits and gains of business or profession', and not under the head 'income from other sources' as was done in the assessment order.”
Aggrieved, now assessee is in second appeal before Tribunal.
Before us, the learned Counsel for the assessee stated that admittedly this entry in the pen drive actually represents on money receipt by the assessee but he argued that three more similar transactions are recorded in the pen drive which has been settled before the settlement commission and assessee has offered 20% of the on money receipt as additional income. The learned Counsel for the assessee stated that the same amount has been routed and offered in the next year before the settlement commission. He only urged to examine this aspect, & for this assessee stated that the issue can be remitted back to the file of the AO. Needless to say that he agreed for examination of “Rajubhai-C.R” noted in the pen drive, the print out of which is enclosed in assessee’s paper book at page 69 and there are also three more transactions relating to next assessment years. In view of the above facts, we remand the issue back to the file of the AO for verification of this transaction and accordingly decide the issue as per law. The orders of the lower authorities are set aside and matter is remanded back to the file of the AO for fresh adjudication. The appeal of assessee is allowed for statistical purposes.
In the Result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 16-02-2018.