Loading judgment…
Facts
The Assessing Officer (AO) made additions under Section 69A for AY 2015-16 and AY 2016-17 based on transactions with M/s Outstripe Suppliers Pvt. Ltd. and VVF (India) Ltd. The assessee had received a loan of ₹2 crores from VVF (India) Ltd. and advanced it to Outstripe Suppliers Pvt. Ltd. for land purchase, which did not materialize. Subsequently, the amount was repaid by Outstripe Suppliers Pvt. Ltd. to the assessee, and the assessee repaid the loan to VVF (India) Ltd.
Held
The Tribunal held that the AO wrongly invoked Section 69A as the transactions were recorded in the assessee's books of account and the assessee provided explanations. The CIT(A) had deleted the additions made by the AO for both AY 2015-16 and AY 2016-17.
Key Issues
Whether the additions made under Section 69A by the Assessing Officer were justified, considering the explanation and recording of transactions by the assessee.
Sections Cited
69A, 147, 144B, 143(2), 148, 133(6), 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI ANIKESH BANERJEE, JM
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI ANIKESH BANERJEE, JM & 4758/Mum/2023 (Assessment Year: 2016-17 &15-16) ART DECO Mumbai Private Limited ITO, Ward 3(3)(3) 32/A, Laxmi Industrial 672, Aayakar Bhavan, Estate New land road, Vs. Mumbai-400 020 Andheri (West), Mumbai-400 053 (Appellant) (Respondent) PAN No. AAACU2004K Assessee by : Shri Satyaprakash Singh, AR Revenue by : Shri Manoj Kumar Sinha, DR Date of hearing: 09.07.2024 Date of pronouncement : 22.07.2024 O R D E R PER PRASHANT MAHARISHI, AM: is filed by 01. the Income Tax Officer, Ward 3(3)(3), Mumbai for A.Y. 2016-17 and 2015-16 respectively, against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 28th October, 2023, for A.Y. 2016-17 and appellate order of the same date for A.Y. 2015-16, wherein the appeal filed by the assessee against the assessment order passed on 31st March, 2022, under Section 147 read with section 144B of the Income-tax Act, 1961 (the Act), 1961, passed by the NFAC, was partly allowed.
“1. Whether on the facts and circumstances of the case and in law, Ld.CIT(A) was right in deleting the addition of Rs. 2,00,00,000/- made by the AO with respect to unexplained income u/s. 69A of the Income Tax Act
Whether on the facts and circumstances of the case and in law, Ld.CIT(A) was right in deleting the addition of Rs. 57,131/- made by the AO with respect to unexplained income u/s. 69A of the Income Tax Act.”
The learned Assessing Officer has also raised following grounds of 03. appeal for A.Y. 2016-17, wherein the assessment order passed on 31stMarch 2022, by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] allowed by the learned CIT (A):-
“1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was right in deleting the addition of Rs. 1,70,00,000/- made by the AO with respect to unexplained income u/s. 69A of the Income Tax Act.
The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the Assessing Officer be restored.”
We first look into the facts for A.Y. 2015-16, wherein the fact shows that assessee filed its return of income on 29thSeptember 2015, at ₹1,33,152/-. This return was processed on 17thOctober 2015, and Aggrieved with the above assessment order of the assessee 05. preferred the appeal before the learned CIT (A), wherein the learned CIT (A) decided the above ground as per Para 5.2 to 5.6 as under:-
“5.2 I have carefully gone through the grounds of appeal, statement of fact, assessment order passed by the AO and written submission along with documentary evidence uploaded by the appellant. It is a matter of record that the report of investigation was received by the Ld. AO from DDIT (Inv.), Unit- 3(3), Kolkata. The subject of the said report is a) Appellant has submitted name, address, PAN No., Bank statement highlighting amount of advance received by it and ledger Account of the party. b) On the basis of documentary evidence submitted by appellant learned AO send notice u/s 133(6) of the Act to the party i.e. VVF (India) Limited (Godrej Group). In response to the same, VVF(India) Limited (Godrej Group) has filed details as per notice u/s 133(6) of the Act which has been reproduced by learned A.O on para no. 7.2 and page number 7 of the Assessment Order. c) On the basis of documentary evidence submitted by appellant it is seen that appellant has taken a loan of Rs. 2,00,00,000/- from VVF d) However, as indicated by the appellant that due to some unavoidable circumstances transaction could not be materialised. Accordingly, appellant has made repayment of Rs. 2,00,00,000/- to VVF( India) Ltd. The summary of repayment to M/s VVF (India) is amply reflected in the Bank account of the appellant as under:
Sr. No. Date of repayment Amount of repayment 1. 13.06.2015 40,00,000 2. 13.06.2015 30,00,000 3. 07.07.2015 45,00,000 4. 24.07.2015 45,00,000 5. 13.08.2015 10,00,000 6. 25.08.2015 30,00,000 Total 2,00,00,000 e) Since, the deals was not materialising, the appellant contended that apprehending some foul play, the appellant continuously requested M/s Outstripe Suppliers Pvt. Ltd. to refund of his money and due to continuous efforts of the appellant, the appellant received its money from the this company as per the detail given here under and this can be duly verified from the books of the account of the appellant. Hence, appellant has received Rs. 2,00,00,000/- which was given as advance to Sr. Date of repayment Amount of No. repayment 13.06.2015 40,00,000 15.06.2015 30,00,000 16.06.2015 5,00,000 29.06.2015 45,00,000 22.10.2015 50,00,000 70,00,000 Total as on 31-03-2016 24.11.2016 12,50,000 24.03.2017 17,50,000 2,00,00,000 Total as on 31.03.2017 Therefore, on perusal of the entire transactions trail revealed that appellant has taken advance from VVF (India) Limited of Rs. 2,00,00,000/- and the same amount has been given to Outstripe Suppliers Pvt. Ltd. for purchase of the land. However, due to cancellation of the transaction, appellant has repaid entire amount to VVF (India) Limited and subsequently M/s Outstripe Suppliers Pvt. Ltd. has also paid back to the appellant. It is quite strange that the Ld. AO is not doubting the first part of the transaction that is the receipt of money by the appellant from VVF (India) and raising all doubts on the subsequent payment arising from the same amount to M/s Outstripe Suppliers Pvt. Ltd. for the purposes of purchasing a land which did not materialise. Such selective approach cannot be a basis of making any addition, the sources of funds acknowledged, and the expenditure incurred there from is treated as unexplained. Further, the bank account also revealed that the money so advanced by the appellant to M/s Outstripe Suppliers Pvt. Ltd is duly received by the appellant in his bank account. Without prejudice to the 5.3 Section 69A of the Act states that where in any year the taxpayer is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the taxpayer offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, than the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the taxpayer for such year. A bare reading of the section makes it clear that the Ld. AO has wrongly invoked the section for the money receipt is duly recorded in the books of account of the appellant and the appellant also gave explanation of the acquisition of the money over which the AO has no doubt. For invoking provisions of Section 69A, the assessee should be the owner of any money, bullion, jewelry, or any other valuable articles. If the assessee is not found to be the owner of any money, bullion, jewelry, or any other valuable articles, in such a situation, invoking the provisions of section 69A was not justified. a) The assessee must be found to be the owner; b) He must be the owner of any money, bullion, jewellery or other valuable articles; c) The said articles are not recorded in the books of account, if any maintained; d) The assessee is unable to offer an explanation regarding the nature and the source of acquiring the articles in question; or e) If the aforesaid conditions are satisfied, then, the value of the bullion, jewellery or other valuable articles may be deemed to be the income of the financial year in which the assessee is found to be the owner; f) In the case of money, the money can be deemed to be the income of the financial year.
5.5 In the present case of the appellant, AO accepted that the money in question was taken as advance from M/s VVF India Limited and is duly recorded in the books of the account of the appellant. Secondly, it is also clear from the bank account entries that the money received from VVF India limited was advanced to M/s Outstripe Suppliers Ltd. for purchase of the land. It is also not denied by the AO that the same money was returned by M/s Outstripe Suppliers Ltd. to the appellant in trenches as evident from the bank accounts details duly submitted by the appellant. It is also accepted by the AO that the appellant had returned the money taken on advance from VVF India Limited. Under these circumstances and in the face of these evidences available on record, the Ld. AO arbitrarily concluded that the money in question is not explained and the appellant is trying to give colour to the entire transaction.
Therefore, the addition of ₹2 crore made by the learned Assessing Officer under Section 69A of the Act, was deleted. Addition of ₹57,131/- was also deleted.
The learned Assessing Officer is aggrieved and has preferred the 07. above appeal wherein as per ground no. 1 and ground no.2, the above two additions were contested.
The learned Departmental vehemently supported the order of the learned Assessing Officer and submitted that the learned CIT (A) has deleted the addition without considering the facts recorded by the learned Assessing Officer. He supported the order of the learned Assessing Officer.
Ld. Authorized Representative vehemently supported the order of 09. the learned CIT (A). He referred to the submission made in ground no 4 of the appeal before the learned CIT (A), his submission was that assessee has taken advance from VVF (India) Ltd.Assessee has submitted name, address and Permanent Account number of that company showing the amount of advance received and ledger account of that company. In response to the notice under Section 133(6) of the Act that the party has confirmed the action and also the number of receipts of the above transactions. The assessee has taken
With respect to addition of ₹57,131/-, he submitted that the learned CIT (A) has considered the above transaction as consequential to the above addition, same was deleted. Accordingly, the appeal of the learned Assessing Officer on ground no.2, is not sustainable.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that in the present case, the assessee has ₹2 crores from VVF (India) Ltd. on 5thMarch 2015 [F Y 2014-15] [AY 2015-16] and the same amount has been invested on the same date to Outstrip Suppliers Pvt. Ltd. It is undisputed that assessee recorded these transactions in its books on 5th April 2015 [ FY 2015-16 ] [Ay 2016-17]. This is admitted by the assessee before the LD AO. However, the issue remains is that despite this error whether addition can be made in hands of assessee u/s 69A of the Act. It is not the case that the assessee has not recorded the
Coming to A.Y. 2016-17 in 4thMay 2017, at ₹1,33,152/-. The return was picked up for scrutiny for reassessment by issue of notice under Section 148 of the Act on 31stMarch 2021. In this case, the learned Assessing Officer made an addition of ₹1,70,00,000/- to the total income of the assessee on account of transaction with Outstripe Suppliers Pvt. Ltd. This transaction is an offshoot of transaction in A.Y. 2015-16, wherein out of ₹2 crores ₹1.70 crores repaid by Outstripe Suppliers Pvt. Ltd. to the assessee and subsequently, same was repaid to VVF (India) Ltd. The assessment order under Section 143(3) read with section 147 of the Act was passed on 31stMarch 2022, determining the total income of the assessee at ₹1.70 crores. The assessee preferred the appeal wherein the learned CIT (A) passed an order on 28thOctober 2023, deleting the addition as per paragraph no. 15.2. The learned CIT (A) further noted that in A.Y. 2015-16, the addition of ₹2 crores is deleted in the appellate order and therefore, the impugned addition of ₹1.70 crores is part of the above sum, hence, the appeal of the assessee was allowed deleing the above addition. The learned Assessing Officer is aggrieved and has preferred this appeal, wherein the deletion of the addition of ₹1.70 crores was challenged.
Contesting the appeal, the learned departmental representative submitted that this is the part of the same addition made of ₹ 2 crores
The learned authorized representative supported the order of the learned CIT – A.
We have carefully heard the parties and perused the orders of the learned lower authorities. The amount of ₹1.70 crores is part of the transaction of ₹2 crores which was part of the addition of ₹2 crores made in A.Y. 2015-16. As we have upheld the order of the learned CIT (A) deleting the addition of ₹2 crore, we also confirmed the order of the learned CIT (A) deleting the addition of ₹1.70 crores for the reason that it is part of the same transaction of ₹2 crores and further, it amounts to double addition of ₹1.70 crores made by the learned Assessing Officer. Accordingly, we do not find any merit in the appeal of the learned Assessing Officer for this year. Accordingly, it is dismissed.
In the result the appeal of the learned Assessing Officer for A.Y. 2015-16 and 2016-17 pertaining to the same transaction are dismissed.
Order pronounced in the open court on 22.07.2024.