INCOME TAX OFFICER -5(1), INDORE vs. SHRI ASHISH KUMAR BHATIA, INDORE

PER Ms. MADHUMITA ROY - JM:

The instant appeal filed by the Revenue is directed against the order dated 06.07.2018 passed by the Ld. CIT(A)-II, Indore, arising out of the order dated 23.12.2016 passed by the ITO-5(1), Indore under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2014-15.

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questionnaire dated 21.07.2016. The reason for scrutiny was the large investment made in the property by the assessee as compared to the total income from other sources. The assessee purchased a plot of land admeasuring about 3060 sq.ft. lying and situated at Gulmohar Extension, khajrana, Indore for a consideration of Rs.2,13,00,000/- and paid stamp duty charges Rs.15,46,500/- on 10.09.2013. During the course of assessment proceedings, the assessee was asked to explain the source of investment whereupon it was stated to have been filed all the required details, bank statements, agreement for sale and registered sale deed upon perusal of which it revealed that the assessee entered into an agreement for sale of a plot of land lying and situated at Mumbai with one M/s. Mount Capital Pvt. Ltd. who made payment of Rs.2Crore to the appellant which was opined by the Ld. AO to have been made for making investment in purchase of the property at Indore by the assessee. The learned AO, therefore, treated the same as unexplained and added to the total income of the assessee under S.68 of the Act, which was, in turn, deleted by the learned CIT(A). Hence, the instant appeal before us.

Date Amount F.Y.(A.Y.) PB Ref 22.03.2013 1,00,00,000 (vide three 2012-13 (A.Y. 2013-14) PB 45, 64 different RTGS) Total (A) 1,00,00,000 2.06.2013 40,00,000(RTGS) 2013-14 (A.Y.2014-15) PB 46, 66 25.06.2013 10,00,000(RTGS) 2013-14 (A.Y. 2014-15) PB 46, 66

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05.08.2013 15,00,000 (RTGS) 2013-14 (A.Y. 2014-15) PB 46, 66 19.08.2013 15,00,000 (RTGS) 2013-14 (A.Y. 2014-15) PB 46, 66 04.09.2013 20,00,000 (RTGS) 2013-14 (A.Y. 2014-15) PB 46, 65 TOTAL (B) 1,00,00,000 TOTAL (A+B) 2,00,00,000

“2.1 Remand report submitted by the AO "The assesses Shri Ashish Kumar Bhatia, filed his return of income for A.Y. 2014-15 on 26.03.2015 declaring total income of Rs. 2,20,330/-. Assessee derives income

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from salary, income from house property and income from other sources etc. The case was selected for scrutiny assessment, which was completed u/s 143(3) of the Income Tax Act, 1961 Dated: 23.12.2026 at assessed income ofRs. 2,03,53,663/-, which includes an addition of Rs. 2,00,00,000/- made u/s 68 of the Income Tax Act, 1961. ii. The case was selected for scrutiny assessment through CASS module and reasons of selection are as mentioned below: a. Large investment in property (AIR) as compared to total Income. b. Low income from other sources as compared to large value fixed deposits (GIB 183, 403). c. High Value property transaction reported u/s 194IA. During the course of assessment proceedings, on perusal of records particularly AIR information, it was found that during the period relevant to the A.Y. 2014-15, the assessee has purchases an immovable property situated at 21, Gulmohar Extension Colony, Indore in total consideration amount of Rs. 2,13,29,375/-. In this continuation, vide query letter of this office Dated: 03.08.2016, the assessee was asked to furnish the details with regard to the sources of this consideration amount of Rs. 2,13,29,375/-. On perusal of purchase deed of purchase of land under reference, it is found that amounting to Rs. 2,13,00,000/- has been paid through cheque of HDFC Bank A/c No. 00361500014931. iv. Further on perusal of Bank statement of HDFC Bank A/c No. 00361500014931 for the period 01.04,2012 to 31.03.2012 to 31.03.2014(copy enclosed herewith), it is found that amounting to Rs. 2.00 crores has been credited on various dates through RTGS, details thereof are as under;

SI. No. Dated Mode Description/ narration Amount 1. 22.03.2013 RTGS THROUGH BULDANA URBAN 35,00,000 2. 22.03.2013 RTGS THROUGH BULDANA URBAN 40,00,000 3. 22.03.2013 RTGS THROUGH BULDANA URBAN 25,00,000 4. 22.06.2013 RTGS MOUNT CAPITAL PVTLTD. 40,00,000 5. 25.06.2013 RTGS MOUNT CAPITAL PVTLTD. 10,00,000 6. 05.08.2013 RTGS MOUNT CAPITAL PVT LTD. 15,00,000 7. 19.08.2013 RTGS MOUNT CAPITAL PVTLTD. 15,00,000 8. 04.09.2013 RTGS MOUNT CAPITAL PVT LTD. 20,00,000 TOTAL 2,00,00,000/-

Considering above facts, the assessee was asked to furnish the details with regard to sources of these credit in HDFC Bank to the tune of Rs, 2,00,00,000/- and also reason thereof. In this regard, the assessee replied that actually an agreement was executed with Mount Capital Private Limited through its director Mr. Rajendra Prakash Agrawal, to sell of immovable properties situated at Khasra No. 280/2/5 area 9600 sq. Ft and Khasra No. 279/2 Area 15000 Sq. ft. total area of 24600 Sq. Ft,

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Gram - Khajrana, Dist; Indore in total amounting to Rs. 8.61 Crores. Out of sale consideration amount to the tune of Rs. 8.61 Crores, as per the contents mentioned in aforesaid agreement, amounting to Rs. 2.00 crores was to be paid up to April 2013 remaining amount of Rs. 6.61 Crores was to be paid up to 30.10.2013. v. Therefore considering this fact the assessee has replied actually this amount of Rs. 2.00 crores was "advance from customer against sale of land at Khajrana. In support of his claim, the assessee has claimed to submit the confirmation letter of mount Capital Private Limited, but on perusal of records, it is found that the same was submitted on the part of the assessee, during the course of assessment proceedings. Albeit the assessee has submitted a copy of ledger of Mount Capital Limited for the period of 01.04.2012 to 31.03.2013 and 01.04.2013 to 31.03.2014, which was maintained in assessee's books of accounts. Later the AO has issued a notice u/s 133(6) of the Income Tax Act, 1961 Dated : 09.12.2016 toMount Capital Private Limited to verify genuineness of assessee' s claim with regard to the payment received. The Assessing Officer has Mentioned in his assessment order that in compliance to the notice issued u/s 133(6) of the Act, no any reply and confirmation was received on the part of the company Mount Capital Private Limited. Then the AO has pointed out that these all things have been prepared only to show or establish the sources to purchase the property at Gulmohar Extension and since the assessee has been utterly failed in Justifying and explaining the same by furnishing documentary evidences. The then AO has also doubted over the genuineness of sale agreement of Rs, 8.61 Crores and has held that this modus operandi has been adopted to bring in unaccounted money in its books of accounts by utilizing banking channel. Ultimately taking in account above facts, the AO has considered that amounting to Rs. 2.00 crores is unexplained credit within the meaning of section 68 of the Income Tax Act, 1961 and accordingly made the addition of Rs. 2.00 crores to the total income of the assessee. 3. Later being aggrieved with the addition made by the then AO, the assessee has filed appeal before your goodself At the appellate stage the assessee has claimed that the AO has made the addition to Rs. 2.00 crores without calling for relevant details from the assessee. So, the requisite details which could not be submitted by the assessee during assessment proceedings, the same have been presented now at appellate stage and after perusal thereof the under signed is directed to submit the report. On consideration of the facts of the case and also on perusal of written submission, famished additionally, the comments of the undersigned are as under; a. First of all. the assessee is not Justified in claiming that during the course of assessment proceedings, the assessee was not asked to furnish the details which were related with addition of Rs. 2.00 crores and without giving an opportunity to justify the same, the AO made the addition. From perusal of assessment record, it is very much evident that vide notice u/s 142(1) cum query letter dated:15.12.2016, the assessee was specifically asked to 'furnish details and documentary evidences with respect to the payment received from sale of property which you sale to Mount Capital Private, Mumbai as per agreement to sale as you furnish previously. This fact has also been confirmed by the assessee in its written submission. Then it was the duty of the assessee company to furnish entire details, with respect to the amount

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of Rs. 2.00 crores credited in assessee's account. The assessee was duty bound to furnish the details of Mount capital private limited. Even perusal of written submission reveals that even after claiming, confirmation on the part of the Mount Capital Private limited could not be submitted by the assessee and in view of this fact, the assessee has not complied the relevant provision stated u/s 68 of the Act. Because it was assessee's duty to establish altogether all the facts like identity and creditworthiness of the lender and also genuineness of the transactions. Merely submission of ledger of the lender firm does not establish all the ingredient factors. So far as genuineness of confirmation is concerned, in additional evidences too, the assessee has been failed in establishing clear creditworthiness of the creditor, like confirmation is Just like print out and genuineness thereof is doubtful. Further as far as genuineness of the transaction are concerned, it is evident from Bank statement that 7 crore has been received through 'Buldana Urban C' and relation with Mount capital Pvt. Ltd. is not clear. b. Secondly, perusal of records reveals that total amount of Rs.2.00 crores has not been received by the assessee during the period relevant to the A. Y. 2014-15. In this regard, there are two facts available on records. First of all as per the ledgers submitted by the assessee and also as per the bank statement called for by the AO during assessment proceedings, amounting to Rs.1crore has been received on 22.03.2023 through RTGS which pertains to the A.Y. 2013-14 and remaining 1crore has been received during the F.Y. 2013-14 relevant to the A.Y. 2014-15. Further as per ledger of 'Adv. Ag. Sale of Land Agrem. KhajranaJagi (Mount Capi' (enclosed as annexure-A) maintained in the books of the assessee, it is evident that such amount of Rs. One crore has been received from Mount Capital Private Limited but on perusal to copy of Bank statement of HDFC Bank in which this amount is claimed to be credited (copy is enclosed herewith annexure-B), it is found that on 22.03.2013 amounting to Rs. 1 crore has been credited through RTGS appears to, from some another concern through ‘Buldana Urban C’, as claimed by the assesses. In the Balance Sheet of Mount Capital Private limited as 31.03.2013 which has been submitted by the assesses along with additional evidences, it is clearly mentioned that 'Advance against Land Purchase (Ashish Bhatia)' Rs. 1,00,00,000/-. Further Balance sheet for period 31.03.2014 relevant to the A.Y. 2014-15 has not been submitted by the assesses so, that ultimate claim of the assessee may be verified. Third, on perusal of agreement, execution of the same is not clear on which the assessee has relied upon and has claimed that as per the schedule mentioned in such agreement, the assessee was to receive total Rs. 8.61 crores against sale of land at khajrana. d. Fourth, the assessee has claimed that after payment of Rs. 2.00 crores, the purchaser company i.e. Mount Capital Private Limited, breached the schedule discussed in the above mentioned agreement and did not pay remaining 6.61 crores. Thereafter the assessee has submitted documents related with legal proceeding to receive remaining 6.61 crores. So, far as fate of this proceedings is concerned, the AO has clearly mentioned in his assessment order that how it is possible that even after paying such a huge amount of Rs.2.00 crores, the purchaser company did not care about this amount and it seems that everything is being happened on mutual understanding. So considering this fact, the AO denied assessess' story regarding

ITA No.775/Ind/2018 ITO vs. Shri Ashish Kumar Bhatia Asst.Year –2014-15 - 7 – payment of remaining 8.61 Crores. Therefore taking into account above facts, details available on assessment records, facts involved in the additional evidences submitted by the assessee, it is concluded that the AO was justified in making addition of Rs. 2.00 crores u/s 68 of the Act, to the total income of the assessee."”

Under these circumstances, the duty cast upon the assessee to proof the genuineness and identity of the alleged purchaser company has duly been fulfilled by furnishing confirmation letter issued by M/s. Mount Capital Pvt. Ltd.

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“5.1 I have carefully analyzed the factual matrix in this regard taking into account the assessment order, the remand report of the AO, the submission of the appellant and his rejoinder to the remand report. Based on the evidences and documents so submitted by the appellant both during the course of assessment proceedings and the appellant proceedings, the following facts emerge out clearly: (i) The said receipt was against sale of Plot of Land as per agreement produced before the AO and undersigned . (ii) The said receipt was clearly through banking channel and not in cash. It was also confirmed by the bank in response to notice issued u/s. 133 (6) of IT Act, 1961. (iii) The entire sum of Rs.2.00 crore is not .a receipt in the year of assessment but receipt of only Rs. 1.00 crore pertains to this assessment year. (iv) The assessee had furnished all relevant details including copy of sale agreement, confirmation letter with PAN No. to establish the identity of the purchaser, which was neither individual nor partnership firm, but was an independent legal judicial corporate body. (v) The learned ITO had issued notice u/s. 133(6) of the I.T. Act, 1961 on 09.12.2016 calling them to provide details of money paid by them to the assessee during the period from 01.04.2013 to 31.03.2014 and to furnish whether this property purchase agreement was cancelled or live. (vi) In response to above referred requirement letter the assessee had not only furnished such details but also had furnished confirmation letter received from the purchaser. Thus, the assessee had not only fulfilled his onus to prove the genuineness and identity of the alleged purchaser company but by furnishing confirmation letter the purchaser company had also responded to the notice u/s. 133(6) issued to them for confirmation of details of payments made. 5.2 In light of the above crystal clear facts based on the documents and evidences so submitted and the case laws so cited by the appellant, it is clear that this addition so made on account of property advance received which was duly confirmed by the purchaser company also was not warranted. Accordingly, this addition is hereby deleted.”

ITA No.775/Ind/2018 ITO vs. Shri Ashish Kumar Bhatia Asst.Year –2014-15 - 9 – 12. After taking into consideration, the entire aspect of the matter and upon perusal of the entire set of documents including the order passed by the authorities below, it appears that so far as the identity of the creditor being M/s. Mount Capital Pvt. Ltd. is concerned, it is an independent identity and registered as a company under the Companies act, 1956 having valid PAN. It is also a regular Income Tax assessee. In that view of the matter, the identity of that party not required to be separately proved by the appellant though documents to that effect has duly been filed before the authorities below. The agreement for sale of land further justifies the transaction and the amount paid on the basis of the agreement only through banking channel. Furthermore, the said M/s. Mount Capital Pvt. Ltd. has confirmed the transactions which is appearing at page no.47 of the paper book filed before us, which was duly filed before the authorities below too by said M/s. Mount Capital Pvt. Ltd. Once the confirmation has been made by the party, the addition in the hands of the assessee is not justifiable. So far as any non-compliance made by the said M/s. Mount Capital Pvt. Ltd. is concerned, the assessee did not have any role to play. In fact, since the terms and conditions of the agreement in question were not complied with by the said Pvt. Ltd. company, a civil suit was filed by the appellant before the concerned Court. The relevant evidence to that effect is also on record. Taking into consideration this particular aspect, the view of the Ld. AO that everything happened on mutual understanding is found to have no basis or no leg to stand. In fact, Revenue has failed to bring any evidence to establish any collusion between the assessee and the said Mount Capital Pvt. Ltd. Therefore, keeping in view the entire aspect of the matter and the compliance made by the assessee in response to the notice under S.133(6) of the Act, we do not find any justification in making addition of Rs.2 Crores in the hands of the assessee and the order passed by the learned CIT(A),

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therefore, is found to be just a proper in deleting such addition made by the AO wrongly, without any ambiguity so as to warrant interference. The same is, therefore, upheld. Revenue’s appeal is, thus, found to be devoid of merit and hence dismissed.

(Dy./Asstt.Registrar) ITAT, Indore 1. Date of dictation 19.07.2022 & 01.09.2022 2. Date on which the typed draft is placed before the Dictating Member 01.09.2022 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .09.2022 5. Date on which the fair order is placed before the Dictating Member for pronouncement .09.2022 6. Date on which the fair order comes back to the Sr.P.S./P.S .09.2022 7. Date on which the file goes to the Bench Clerk .09.2022 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order……………………………………