SHRI SANTOSH CHANDUMAL TANWANI,CHHINDWARA vs. ASSISTANT COMMISSIONER OF INCOME TAX, NAGPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JM & SHRI ARUN KHODPIA, AM ITA No. 162/NAG/2021 Assessment Year: 2019-20 Shri Santosh Tanwani Vs. The ACIT A-56, Near Jain Bhavan, Bus Stand, Central Circle 2(1) Pandhurna,Chhindwara 480334 (M.P.) Nagpur PAN No.:ADAPT 8743 N Appellant Respondent Assessee by: Shri Manoj G. Moryani, Adv. & Shri Bhavesh Moryani, Adv Revenue by :Shri Piyush Kolhe (CIT-DR) Date of Hearing: 28/04/2022 Date of Pronouncement: 8 /06/2022 ORDER PER: SANDEEP GOSAIN, J.M. The present appeal has been preferred by the assessee challenging the impugned order dated 8th October 2021, passed by the Commissioner of Income Tax (Appeals)–3, Nagpur, [in short “the learned CIT(A)”] under section 250 of the Income Tax Act, 1961 (in short "the Act") for the assessment year 2019-20. The assessee has filed the present appeal on the following grounds:- 2.

“1. The Commissioner of Income Tax (Appeals)-3, Nagpur erred in confirming addition, therefore order passed is illegal, invalid and bad in law. 2. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur erred in confirming brokerage income at Rs.

2 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR 50,05,900/- as unexplained income U/s. 69A and taxed the same as per section 115BBE of the Income Tax Act, therefore order passed is illegal, invalid and bad in law. 3. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur ought to have accepted returned of Rs. 72,42,820/- out of which Rs. 55,09,500/- were brokerage income on which advance tax were paid before due date of return of income, therefore not considering the same confirmed the addition made by assessing officer and treating the same as unexplained money U/s. 69A is unjustified, unwarranted and excessive. 4. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur ought to have accepted income shown in the return of income before due date of return of income and rejecting the contention of the assessee and treating the same U/s. 69A and charged tax U/s. 115BBE of the Income Tax Act is unjustified, unwarranted and excessive. 5. On the fact and circumstances learned Commissioner of Income Tax (Appeals)-3, Nagpur ought to have accepted returned income which includes income of Rs. 55,05,900/- brokerage income though the assessee has submitted brokerages details before the assessing officer as well as before the Commissioner of Income Tax (Appeals)-3 treating the same as unexplained money U/s. 69A is unjustified, unwarranted and excessive. 6. The learned Commissioner of Income Tax (Appeals)-3, Nagpur erred in not accepting the contention of the assessee and without going into to the merits of case confirmed the income U/s. 69A and charged tax U/s. 115BBE, therefore order passed is illegal, invalid and bad in law. 7. The learned Commissioner of Income Tax (Appeals)-3, Nagpur erred in not considering the wrong levy of interest U/s. 234A, 234B & 234C.’’

3 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR

Grounds no.1 raised by the assessee being general in nature, hence, no 3. separate adjudication is required. The issue arising out of grounds no.2 to 6, relates to addition of an 4. amount of Rs.50,05,900, on account of unexplained income under section 69A of the Act. Brief facts are, the assessee is engaged in the business of Kirana and 5. general items in individual capacity under the name and style of “M/s. Shiv Agency”. The assessee also derives income from brokerage business. The assessee filed his original return of income under section 139(1) of the Act on 31stOctober 2019, declaring total income at Rs.72,42,820. A search and seizure action was conducted in Locker no.365, which was in the name of Shri Ankit Shankarlal Tanwani, in HU Volt, HU Tower Maskasath, Itwari, Nagpur on 22nd November 2018. Sworn statement of the assessee was recorded under section 131 of the Act. The assessee stated that cash of Rs.87,00,000, belongs to him and his family members and claimed that out of the cash thus found Rs.50,00,000, which belongs to him and Rs.15,00,000, is from his Proprietary Firm M/s. Shiv Agency. During the assessment proceedings, the Assessing Officer asked the assessee to explain the cash of Rs.15,00,000, which was claimed as belonging to the assessee in his individual capacity and cash of Rs.50,00,000,

4 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR which the assessee claimed as belonging to his proprietary firm M/s. Shiv Agency. The assessee had shown this brokerage income not under the head “Business Income” but under the head “income from other sources” as there is no such column in the return of income with respect to brokerage income under the head “Business Income” and the same was shown under the head “Income From Other Sources” and the same was mentioned in the column of the return of income. The Assessing Officer, however, held that the brokerage income has been shown only for the purpose of explaining the source of cash found from the locker of Shri Ankit Tanwani, the nephew of the assessee herein. The Assessing Officer rejected the claim of the assessee holding that Rs.50,00,000, is assessee’s brokerage income and the same was treated as unexplained money under section 69A of the Act and charged tax on the same at the rate prescribed under section 115BBE of the Act. The Assessing Officer assessed the total income of Rs.87,42,080, which included Rs.15,00,000, as income from other sources and Rs.17,36,922, as income from business. The assessee being aggrieved by the order so passed by the Assessing Officer, went in appeal before the first appellate authority. The learned CIT(A) confirmed the order passed by the Assessing Officer by 6. dismissing the appeal filed by the assessee. For better appreciation of facts, the

5 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR relevant conclusion so arrived by the learned CIT(A) for dismissing the claim of the assessee is reproduced below:-

“4.1 The grounds of appeal no.2, 3 and 4, are against the AO’s decision to hold the alleged brokerage income as unexplained money u/s 69A of the Act and charging income tax on the same u/s 115BBE of the Act. I have carefully considered the written submissions of the appellant, the assessment order and the material available on record. The facts undisputed that Locker no.365, inHU Volt, HU Tower Maskasath, Itwari, Nagpur in the name of Mr.AnkitTanwani, nephew of appellant was searched on 22.11.2018 and cash of Rs.86,99,800, was found from the said locker. He was asked to explain the source of the cash thus found in her sworn statement recorded on 26.11.2018 u/s 132(4) of the Act. He stated that out of the cash found from the locker, Rs.33,00,000/-, belongs to him and balance belongs to other family member and that only his father Shri Shankar LalTanwani, the appellant knows to whom the rest of the cash belongs. Subsequently, the sworn statement of ShriSankarlalTanwani, was recorded on 20.12.2018 u/s 131 of the Act wherein he was asked to give the break up of the cash found in the said locker. He stated that out cash found from the locker belongs to his various family members including the appellant. Subsequently, it was claimed that cash of Rs.50,00,000/- belongs to the appellant in his individual capacity and cash of Rs.15,00,000/- belongs to his proprietary concern M/s. Shiv Agency. It is important to note that in his entire sworn statement ShriShankarlalTanwani has not made any mention whatsoever of any brokerage activity done by his family members. The reply filed by the appellant’s AR during the assessment proceedings have also been carefully examined by me and it is found that there is no documentary evidence filed by him regarding any

6 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR brokerage activity done by the appellant. The AO has subsequently, vide the rectification order passed u/s 154 of the Act has accepted that the cash of Rs.15,00,000/- belongs to the proprietary firm M/s. Shiv Agency but rejected the appellant’s contention that cash of Rs.50,00,000/- is out of the brokerage income earned by him during the concerned FY 2018-19. It is also seen from the record that in the returns of income filed for the assessment years prior to AY 2019-20, the appellant has never shown any income from brokerage. The main contention of the AR is that the appellant has shown the brokerage income in the return of income and has paid advance tax on brokerage income of Rs.55,05,900/- as per provisions of section 208 to 211 of the Act. However, this by itself does not prove that the appellant has ever carried out any brokerage activity. In the written submissions filed on 23.07.2021, the appellant’s AR has filed a list of persons to whom brokerage services were allegedly provided by the appellant. The AR has stated that this list was also provided to the AO during the assessment proceedings. However, this list is no documentary proof of the claim that the appellant provided any brokerage services to anybody. Despite neumerous opportunities to the AR, no documentary evidence from any independent party has been filed to prove that the appellant has provided any brokerage services. Thus, the appellant’s AR has singularly failed to prove that any brokerage activity was done by the appellant. Therefore, having carefully gone through the submissions of the AR and material available on record, I am of the considered opinion that the AO was correct in coming to the conclusion that the amount of Rs.55,05,900/-, is not the brokerage income of the appellant. It is also obvious that the fact and circumstances in the appellant’s are total different from the facts and circumstances involved in the judicial decisions referred by the AR in his written submissions. The cash found from the locker was Rs.86,99,800/- out of which Rs.50,00,000/- belongs to the appellant. Thus, it is my

7 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR considered opinion that the AO has correctly held that the alleged brokerage income of Rs.55,05,900/- is the appellant’s unexplained money u/s 69 of the Act. Thus, the amount of Rs.55,05,900/- has been correctly taxed by the AO as per the provisions of section 115BBE of the Act. Hence, these grounds of appeal are “dismissed”.”

6.1 The assessee being once against aggrieved by the order passed by the learned CIT(A), filed appeal before the Tribunal. Before us, the learned Counsel, Shri Manoj G. Moryani alongwith Shri 7. Bhavesh M. Moryani, appearing for the assessee, at the outset, submitted that the Assessing Officer has not accepted the contention of the assessee and without any basis with respect of addition made at Rs.55,05,900/- treated the same as unexplained money under section 69A of the Act and charged income tax under section 115BBE of the Act. The learned Counsel further submitted that Rs.55,05,900/- earned from brokerage and commission business done by the assessee on individual capacity for which the assessee is maintaining brokerage register. The learned Counsel submitted that out of brokerage business income the assessee has kept Rs.50,00,000/- in the locker and filed return of income within due date of filing of return of income and showing the brokerage income. The assessee also paid advance tax on total income Rs.72,42,820/- as per provision of sections 208 to 211 of the Act at Rs.12,85,000/-. The learned Counsel further submitted that the assessee deals in selling and purchasing of

8 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR grains and the Assessing Officer has not accepted the contention of the assessee and treated the same unreasonable and added the entire income of Rs.55,05,900/- as unexplained money under section 69A of the Act and charged Income tax under section 115BBE of the Act. The learned Counsel argued that though the aforesaid provisions of section 69A of the Act are not applicable in the present case of the assessee, however, the Assessing Officer has charged income under section 115BBE of the Act is unjustified, unwarranted and excessive. The learned Counsel further has drawn the attention of this Bench stating that since the brokerage column is not mentioned in the return of income under the head “Profit From Business and Profession”, therefore, the assessee has shown under the head “Income From Other Sources”. The assessee was specifically asked to submit documentary evidence in support of brokerage income which were submitted by the assessee which clearly reflects – (1) Sr. No., (2) Name of the party (3) amount which is placed at Page-48 to 61 of the Paper Book filed by the assessee. The brokerage details were already submitted before the Assessing Officer as well as before the learned CIT(A). The learned Counsel submitted that the assessee has paid the advance tax on aforesaid income before the due date of filing of income and thus provisions section 69A of the Act are not applicable in the present case. The learned Counsel further has

9 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR drawn the attention of this Bench towards the provisions of section 69A of the Act, which is reproduced below:- “S. 69A Where in any financial year the assessee 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 assessee offers no jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year” The learned Counsel further submitted that since the assessee has already submitted specific details of brokerage income alongwith details in the form of (1) Sr. No., (2) Name of the party (3) amount which are placed at Page-48 to 61 of the Paper Book, the provision of 69A of the Act were not applicable in the case of assessee. In view of the above learned Counsel for the assessee humbly requested that addition made under section 69A of the Act by the Assessing Officer and confirmed by the learned CIT(A) be deleted. During the course of appellate proceedings the assessee placed reliance on following judgments

1) 2019 TaxPub(DT) 5875 (Bang.Trib) TeenaBethala –Vs- Income Tax Officer 2) 2018 TaxPub(DT) 1507 (Mum-Trib) Deputy Commissioner of Income Tax –Vs- Karthik Construction Co.

10 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR The learned Departmental Representative relied upon the order of the 8. authorities below. The learned departmental representative also filed written submission stating that the statement were recorded and same may kindly be considered. In the written submission the department has accepted that the assessee has stated in the statement recorded U/s. 131 that the cash of Rs. 87,00,000/- were belonged to following family members and there is no dispute with respect of bifurcation of income S.No. Name of Family Relation with assessee Amount Members 1. Santosh C. Tanwani Assessee 50,00,000/- 2. M/s. Shiv Agencies Prop. business of 15,00,000/- Assessee 3. AshaShankarlalTanwani Sister in law 50,000/- 4. AnkitShankarlalTanwani Nephew 21,50,000/-

The main contention of the department is that the assessee failed to give 9. any satisfactory explanation i.e. identity of the persons who allegedly gave brokerage and genuineness of the brokerage transaction income and only stated that he has paid advance tax on declared income. In the written submission the department has further relied on statement recorded U/s. 131 of the Act. The contention of the departmental representative was that the assessee has kept cash at Rs. 50,00,000/- in his locker and stated that the source of income is from brokerage income business. The departmental representative further stated that

11 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR brokerage income has been shown only for the purpose of explaining the source of cash found from the locker of his nephew. The departmental representative further relied on following judgments 10. a. Ashok H. JariwalaVs ACIT [20017] 84 taxmann.com 196 SC)/[2017 250Taxman 14 (SC), 2017-TIOL-236-SC-IT; b. Krish Kumar Vs ITO, [2019] 107 taxmann.com 464 (SC)/[2019] 265 Taxman 227 (SC); c. ArvindJarandhanPandeyVs ITO, [2019] 104 taxmann.com 127 (Bombay)/[2019] 262 Taxman 401 (Bombay); d. Fakir Mohmed Haji HasanVs CIT [2002] 120 Taxman 11 (Gujrat)/[2001 247 ITR 290 (Gujrat)/2001] 165 CTR 111 (Gujrat); e. CIT VsArunMalhotra [2014] 47 taxmann.com 385 (Delhi/ [2014) 363 ITR 195 (Delhi); f. CIT Vs P. Mohanakala, [2007] 161 Taxman 169 (SC)/[2007] 291 ITR 278 (SC)/[2007] 210 CTR 20 (SC); g. CIT Vs G.S. Tiwari& Co., [2014] 41 taxmann.com 17 (Allahabad)/[2014] 220 Taxman 111 (Allahabad) (MAG)/ [2013] 357 ITR 651; The Learned Counsel for the assessee submitted that the assessee has 11. submitted supported Brokerage Details i.e. Sr. No. Name of the persons from whom brokerage has been received and how much brokerage income were received, which were already submitted by the assessee during the course of assessment proceedings before assessing officer as well as during the course of appellate proceeding before the learned CIT(A). The same were never cross verified by the department.

12 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR The judgments cited by the department and facts mentioned are totally 12. different as compared to fact of the case of the assessee hence cannot considerable in case of the assessee.

a) In the case of Ashokbhai H Jariwala v/s ACIT (2017) 250 Taxman 14 (SC) relied upon by the departmental officers the ratio of the case speaks about contradictions in the statement of assessee and his sister as alleged by the department, the assessee filed SLP challenging the Order of High Court whereby the High Court held that where there was contradiction in statement of assessee and his sister with respect of ownership of actual amount in cash, seized cash would be included as unexplained income in hands of assessee under section 69A. So far as the case of assesse is concerned the aforesaid facts are totally different and not applicable in the case of the assesse and distinguish on fact itself. b) In the case of Hon’ble SC in Krishan Kumar vs. ITO (2019) 265 Taxman 227 (SC) relied upon by the departmental officers the ratio of the casespeaksabout non-furnishing of details and explanation of source of deposits wherein the assessing officer had made addition of peak cash in hand of Rs. 36,80,000 under section 68. However, AO obtained the copy of VAT return from department and found that sales figures were shown at Rs. 9 lakhs only and assessee had also filed Trading and Profit and loss account in the balance sheet with VAT return. It was held that Assessee filed an income tax return showing gross receipts of Rs. 9 lakhs and there were cash deposits of more than Rs. 37 lakhs in saving bank account. Though assessee tried to explain the source of cash deposits by taking a stand that actual sales were Rs. 29 lakhs instead of Rs. 9 lakhs, in absence of any evidence furnished by assessee, the same deserves rejection. The said case law is clearly distinguishable from the Appellant’s since, the Appellant has filed return of income under section 44AD whereas in the caselaw relied upon by departmental representative the assessee has filed normal return of Income wherein it was mandatory for the assessee to maintain books of account and

13 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR documents whereas as per section 44AD, Appellant is not under obligation to maintain books of accounts or documents. It was a fact that the appellant had not maintained books of account and that is why he had opted for 8% income as per section 44AD.The section also did not put obligation on the assessee to maintain books of account, in view of the fact that his income has been assessed as per section 44AD, he cannot be punished for not maintaining the same. c) In the case of Hon’ble Bombay High Court in ArvindJanardhanPandey vs. ITO (2019) 262 TAXMAN 0401 (Bom-HC) theAssessee was engaged in the activity of securing admissions for students in various academic institutions upon payment of capitation fees in cash. During search operation, some incriminating documents were impounded and seized including a diary. Seized diaries contained various entries of payments allegedly made by assessee to various educational institutions. AO during post-search inquiries, sent several notices to assessee and called for various details such as full name and address of students on whose behalf such amount was collected and paid over to educational institutions. But, assessee did not supply such information and AO carried out estimation of assessee's income and made additions. Tribunal gave partial relief to assessee and reduced the additions to 20% of total cash payments by way of assessee's profit as against 25% estimated by CIT(A). It was held that in absence of assessee bringing on record any material to enable the revenue authorities to estimate the same with any degree of accuracy, revenue was left with no choice but to estimate the same on the basis of available material on record. What would be the calculation of percentage of amount that the assessee would have retained in himself, in such circumstances, would always be a matter of estimation. Thus, appeal of assessee was dismissed. The relied upon case is clearly distinguishable from Appellant’s case. The facts laid down are not applicable to Appellant’s as can be inferred from the facts. Further, the ratio laid down by the Hon’ble Court speaks about the obligation of assesse to produce or bring on record any material to enable revenue authorities to estimate whereas in Appellant’s case no such obligation can be placed on account of section 44AD of the Income Tax Act, 1961.

14 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR d) In the case of Hon’ble Gujarat High Court in case of Fakir Mohmed Haji HasanVs CIT (2002) 120 Taxman 11 (Gujarat) theAssessee had been found in possession of gold and as such he was the owner of the said gold and value of the said gold was liable to be included in the income of Assessee because of the fact that no explanation regarding source from which investment in the said gold had been made, had been given by Assessee. It was held that Tribunal was perfectly right in holding that the value of the gold was liable to be included in the income of Assessee as the source of investment in the gold or of its acquisition was not explained and that Assessee was not entitled to claim that value of the gold should be allowed as a deduction from his income. The facts laid down are not applicable to Appellant’s as can be inferred from the facts. e) In the case of Hon’ble Delhi High Court in case of CIT v/s ArunMalhotra (2014) 47 taxmann 385, AO made addition under section 69A, keeping in view that purchase transactions from ST and RC were not genuine and export transactions relating to ball pens were bogus. The said transactions were related to assessment year 1994-95, in which assessee had filed no return. AO observed that deduction under section 80HHC(4) was not available to assessee on failure to submit Form No. 10CCAC. CIT(A) held that purchase transactions were bogus, but export transactions were genuine and directed AO to recompute deduction under section 80HHC on basis of return filed by IGI successor company for assessment year 1995-96 and to determine disallowance under section 40A(3) required to be made. Thereafter, AO did not allow deduction under section 80HHC. On appeal, CIT(A) deleted said addition. Tribunal deleted the addition made by AO solely on the basis of statement of 'CP', the ostensible proprietor of 'ST' and 'RC' keeping in view that no evidence was found in course of search proceedings to held purchase and sale transactions were bogus and thus entire addition made was deleted. It was held that Tribunal failed to notice the facts found and recorded by AO and findings of CIT (A) in regard to validity of purchase and sale transactions. Further, in case statements of CP were debatable, it was also recorded that Tribunal had not decided the ground of appeal that

15 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR assessee had not filed certificate as per section 80HHC(4) and, therefore, was not eligible for deduction in the said section. Hence, matter remanded to Tribunal to examine all evidences in detail and decide the matter afresh. The said case law is clearly distinguishable from the facts of Appellant’s case In the instant case the return of income was filed by the Appellant under section 44AD declaring the cash position of Rs. 33,00,000/- whereas in the case relied upon by departmental representative no return of income was filed and also the transactions were alleged to be bogus whereas the same is not with the case of Appellant. Also, the transactions and the cash entries have been duly explained by the Appellant and Appellant’s father. f) In the case of CIT v/s P.Mohankala((2007) 291 ITR 278 (SC)), the caslaw speaks about the Assessing Officer, rejecting the explanation of the assessee’s that the amounts credited in their respective accounts were gifts from NRI, proceeded to add it as the income of the assessee’s from the undisclosed sources, on the ground that so called gifts were not real and genuine. On appeal, the Commissioner (Appeals) upheld the findings of the Assessing Officer. On further appeal, the Tribunal observed that the letters exchanged by the person who had sent foreign exchange to the assessee’s only indicated that there was no love and affection between them and upheld the order of the Assessing Officer. The High Court re-appreciated the evidence available on record and substituted its own findings for that of the Tribunal and other authorities. The High Court came to the conclusion that reasons assigned by the Tribunal and other authorities were in the realm of surmises, conjectures and suspicions. In appeal to the Supreme Court, the revenue contended that re-appreciation of evidence and substitution of the findings by the High Court was impermissible and that when once explanation offered by the assessee’s was found unsatisfactory, the sums credited in the books were to be charged to income-tax as the income of the assessee’s. It was held by Hon’ble Supreme Court that the opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. The factual matrix of the case is distinguishable since, the Appellant has submitted its return of

16 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR income by showing opening cash balance at Rs. 3,65,000/- as per capital position. That the addition was made merely on the basis of suspicion. Also, the caselaws speaks about gift received from undisclosed sources as not real and genuine and the same cannot be applied to Appellant’s case on the basis of distinguishable facts. g) In the case of Hon’ble High Court of Allahabad (Lucknow Bench) of Commissioner of Income Tax v/s G.S. Tiwari& Co. (ITA No. 5 of 2008) the brief facts are that the assessee carried on the business as contractor for civil work of Public Works Department, Nagar Palika, and other Government Departments. The Assessing Officer (AO) had provided several opportunities to the assessee, but the assessee did not attend the proceedings, so the Assessing Office, after issuing the notice, has passed the assessment order under section 144, where he has made the addition pertaining to the sundry creditors to the tune of Rs. 23,14,417 by mentioning that the same were not verifiable on account of non-submission of details but the first appellate authority has deleted the addition by observing that since 8 percent net profit rate was estimated under section 44AD, no separate addition could be made. The first appellate authority also reversed the findings of the Assessing Officer in taking the status of assessee as "AOP" instead of "RF". Being aggrieved, the Department has filed the appeal before the Tribunal, who, vide its impugned order dated July 27, 2007, has upheld the finding of the first appellate authority regarding the application of net profit rate at 8 percent; and deletion of disallowance of sundry creditors. Still not being satisfied, the Department has filed the appeal. It was held that no point of time Respondent took stand that sundry creditors were referable to income of business which had been determined on estimate basis. Hence, Respondent must be held to had failed to establish that unexplained sundry creditors were referable to business income. Appellate Tribunal was not justified in deleting disallowance of unsubstantiated sundry creditors. Impugned order was liable to be set aside Appeal of department allowed. The finding of the said case is quite distinguishable from the Appellant’s case as in the caselaw the additions were made on the basis of discrepancy found in the details submitted by the assessee. However, in the Appellant’s

17 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR case, all the required available details were submitted by the Appellant. In the case relied upon by departmental representative, the assessee has total contract receipts, as per Form 16AA, Rs. 3,03,04,527 and it had wrongly estimated the profit as per section 44AD since, When the turnover is more than 40 lakhs then the provisions of section 44AD is not applicable. However, in the case, Assessing Officer, was inspired from section 44AD and applied the 8 percent net profit rate and made the addition on estimate basis on gross contract receipts. The assessee has shown the sundry creditors to the tune of Rs. 23,14,417. No information, as required by law, was furnished by the assessee pertaining to the sundry creditors. When it is so then further examination of the material is required. The case of the assessee is that when the assessing officer is having any doubt on brokerage income then the assessing officer should have called the details from persons from whom brokerage received. The Assessing Officer has not taken any contradiction view and neither made any inquiry with respect to brokerage income. On the above, case law relied upon by the departmental representative cannot support the case of the department and distinguishable on facts itself. We have considered the rival contentions perused the order of the 13. authorities below and the material available on record. Following case laws have been relied upon by the learned Counsel for the assessee in support of his arguments:- 1) TeenaBethala –Vs- ITO 2019 TaxPub(DT) 5875 (Bang.Trib) Held :AO can resort to making addition under section 69A only in respect of monies/assets/articles or things not recorded in

18 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR assessee’s books of account. In the instant case, the cash deposits were recorded in books. Also assessee had furnished necessary details. In these circumstances, it was evident that AO had not made out a case calling for addition under section 69A. Probably, addition under section 68 could have been considered; but that was not the case of the AO. Accordingly, addition made under section 69A could not be upheld.

2) DCITvs.Karthik Construction Co.2018 TaxPub(DT) 1507 (Mum-Trib) Held : As could be seen from the facts on record, the existence of the creditors had been established. Moreover, when the unsecured loans were not taken in the impugned assessment year but same were taken in earlier assessment years wherein the genuineness of such loans were never questioned, it could not be questioned in the impugned assessment year. A reading of section 69A makes it clear, addition can only be made when the assessee is found to be in possession of money, bullion jewellery, etc., not recorded in his books of account. It was not the case of the department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilized in repaying the loan was doubtful. That being the case, the addition under section 69A could not be made. Therefore, the decision of the CIT(A) had to be sustained. Revenue’s appeal was dismissed.

19 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR We have considered the rival contentions perused the order of the 14. authorities below and the material available on record in the light of the decisions relied upon by the learned Counsel for the assessee. The principle laid down in the above judgments are not supported the fact of case of the assessee. It is admitted fact that the assessee is doing brokerage business. The assessee has shown income from brokerage in the return of income, which was filed voluntarily before the due date of return of income. The assessee has also drawn our attention at Page-4 of the computation of income filed by the assessee along with the return of income which clearly states the fact that the assessee is deriving income from brokerage business. We also find that the assessee has filed details of brokerage which is placed at Page-48 to 61 of the Paper Book. We further find that the assessee has mentioned name of the parties from whom the brokerage has been received and shown the amounts thereof which were available before the Assessing Officer during the course of assessment proceedings and same were duly reflected in the return of income. The Assessing Officer has not disputed the aforesaid facts. The Assessing Officer only stated that the assessee has not provided documentary evidence with respect of brokerage income filed before the due date of return of income. The assessee has categorically stated and filed the details of brokerage income before the Assessing Officer which were placed on record before him which is on Page-48

20 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR To 61. When the Assessing Officer disagreeing with respect of brokerage income, then the Assessing Officer ought to have issued summons to the related parties and cross-examined them as per law, which has not been exhausted by the Assessing Officer as well as the learned CIT(A). Since the assessee has submitted each and every detail with respect of brokerage income showing name of the parties and amount received from such parties, therefore, the provisions of section 69A are not applicable in the present case. This provision is applicable only when no explanation has been offered by the assessee regarding his income. However, in the present case, we find that the assessee has in fact filed required details with respect of brokerage income and the assessee has already shown brokerage income in his return of income which was filed before the due date of return of income, as there is no column in respect of brokerage income available in the return of income under the head “Business Income”. The same was shown under the head “Income From Other Sources” and the details of the same were shown in the computation of income which is evident from Page-4 of the Paper Book filed by the assessee. In view of the forgoing paragraphs and in view of the details of brokerage income filed by the assessee as well as shown in the assessee’s return of income which was filed before due date of the return of income. The assesse has also paid advance tax on brokerage income as accordance with provision of section 208 to 219 (both inclusive) in respect of the

21 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year such income being hereafter in this Chapter referred to as “current income”, we are of the considered opinion that the Assessing Officer as well as the learned CIT(A) ought to have considered the details of brokerage income filed by the assessee which is evident from the record and which is admitted fact. In this view of the matter, we set aside the impugned order passed by the learned CIT(A) and allow the grounds no.2 to 6 of the assessee, and direct the Assessing Officer to accept the return of income filed by the assessee by giving credit of pre-paid taxes paid by the assessee as a regular income of the assessee and hold that the provisions of section 69A of the Act and charging income tax under section 115BBE of the Act do not apply in the present case of the assessee and returned income shown by the assessee is directed to be accepted as regular income of the assessee. Thus ground nos. 2 to 6 are allowed.

Ground no.7, relates to levy of interest under section 234A, 234B and 15. 234C of the Act. Since the additions made by the authorities below are deleted and 16. returned income of the assessee has been accepted by us as aforesaid, levy of interest u/s 234A, 234B and 234C of the Act being consequential in nature,

22 ITA162/NAG/2021 SANTOSH CHANDUMAL TANWANI VS ACIT, C.C.2(1), NAGPUR hence imposing interest under these sections does not arise. This ground no.7,is dismissed. In the result, assessee’s appeal is partly allowed. 17. Order pronounced in the open court on 8/6/2022 Sd/- Sd/- Sd/- Sd/- (ARUN KHODPIA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER

NAGPUR, DATED: 8/ 6 /2022 *Mishra Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order

Assistant Registrar ITAT, Nagpur