TaxTMI 
TaxTMI 
2024 (1) TMI 479
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....s. 28,58,760/- made by the Assessing Officer on account of unexplained unsecured loan. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 1,33,13,124/- made by the Assessing officer on account of undisclosed investment." These grounds are common for A.Y.2014-15 & 2015-16 except the quantum additions. 2. Ground no.1 is regarding the addition made by the AO on account of estimation on commission income was deleted by the CIT(A). 3. Ld. DR has submitted that the assessee is a partner in partnership firm M/s Kalyan Grain Merchant. On verification of the record the AO noted that the assessee has shown commission income inter alia for A.Y.2014-15 & 2015-16 at Rs. 9,25,000/- & Rs. 9,39,533/- respectively. The AO asked the assessee to furnish the details of the commission income along with documentary evidence. The AO further issued show cause notice vide letter dated 05.12.2016 as to why the income from commission should not be estimated on higher side for these two years in absence of any detail thereto. The assessee has produced only ledger account of commission and no other supporting details were submitted by th....
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....p; 149 taxmann.com 399 (SC) 4.1. Ld. AR has further submitted that the assessee is in the business of brokerage of real estate transaction and working as an agent between buyers and sellers of properties. In this line of business normally commission charges are @1% of the transaction value and therefore, in absence of any material to show that the assessee has received more commission or conducted more transaction then declared by the assessee the addition made by the AO purely on estimation without any basis is not sustainable in law. Ld. AR has referred to the ledger account produced by the assessee which is duly supported by bills and vouchers as placed at page no.127 & 128 of the paper book. Therefore, in absence of any material to show the higher commission income the addition made by the AO is unlawful and unjustified. He has supported the impugned order of the CIT(A). 5. We have considered the rival submissions as well as relevant material on record. For A.Y.2014-15 & 2015-16 the assessee has declared commission income of Rs. 9,25,000/- & Rs. 9,39,533/- respectively. The AO issued show cause notice to the assessee for furnishing of details of commission income al....
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....r 2008 and seized Rs 12,00,000/- unaccounted cash, which was later requisitioned by Income Tax Department. These facts show that the assessee group is involved in unaccounted money transactions including Hawala transactions and commission income earned from these activities are not disclosed in regular books of account and return of income. Considering the above facts, the submission of the assessee is not acceptable and the commission income of the assessee is estimated on higher side by increasing it by 20% for the assessment year 2009- 10, 2010-11, 2011-12, 2012-13, 2014-15 and 2015-16." 5.1. It is pertinent to note that there was search and seizure action u/s 132 of the Act on 3^rd April 2014 in case of M/s. Kalyan Grain Merchant and these assessments were completed by the AO post search and seizure in the case of the partnership firm. As it is clear from the assessment order on this issue the AO has made ad hoc addition by estimating the commission income with increase of 20% of the income already declared by the assesse. The sole basis of the AO for increasing the commission income is the past unaccounted cash found during the search as well as in the raid of Poli....
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....ncome duly recorded in the books of account and declared in the return of income cannot be disturbed in absence of any material. Accordingly we do not find any error or illegality in the impugned order of the CIT(A) qua this issue. 6. Ground no. 2 is regarding the addition made by the AO on account of unexplained unsecured loan which was deleted by the CIT(A). This ground is also common for A.Y.2014-15 & 2015-16 except the quantum of addition made by the AO. 7. Ld. DR has submitted that during the course of assessment proceedings the AO asked the assessee to furnish the details of unsecured loans received by him inter alia for A.Y.2014-15 & 2015-16. The AO found that there are six to eight unsecured loan creditors for A.Y.2014-15 and A.Y.2015-16, respectively. In response the assessee has produced incomplete supporting evidence and failed to produce the copy of the return of income balance sheet of the loan creditors and in some cases the assessee even not produce the bank statements, ITR, balance sheet of the loan creditor. Even the complete name and address of the loan creditors are not submitted by the assesse, therefore, the assessee failed to discharge its onus to prove ....
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.... on 31.07.14 Ajit Chhabra Rs. 43,260/- PAN: ADCPC1559K Loan Confirmation letter (PB 134) Ledger account, bank statement of assessee. (PB 135-136) Excess amount of commission received, which was refunded by chq no 3 of HDFC on 26.0.2014 YashasviTharani Rs. 10,000/- Loan confirmation letter(PB 154) Bank statement (PB 155) Loan raised and repaid through Banking channel. Bank statement of assessee on PB 155. Kamlesh Motwani Rs. 5,00,000/- PAN: ABHPM9519Q and Aadhar Card. (PB 145-146) Loan Confirmation letter (PB 144) Bank statement,(PB 149) Balance Sheet and P&L, (PB 147- 148) ITR (PB 152) Loan raised and repaid through Banking channel. Bank statement of assessee on PB 153 Naresh Tharani (HUF) Rs. 13,00,000/ - PAN: AACHN8207J (PB 164) Loan Confirmation Letter(PB 156) Ledger(PB 157-159) Bank statement ITR(PB 160-162) and Balance Sheet(PB 163) Loan raised and repaid through Banking channel. Bank statement of assessee on PB.,(PB 165-166) Rs. 25,58,760/- For A.Y.2015-16 Name of Party Amount Identity Genuineness Creditworthiness Re....
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....ndani 3,55,500 Lajwanti Devi Tharwani 650000 Ajit Chhabra 43260 Yashasvi Tharwani 10000 Kamlesh Motwani 500000 Naresh Tharwani HUF 1300000 Total 25,58,760 For A.Y.2015-16 Name of Person Amount Siddhartha Sinha 42,00,000 MurlidharKaluram 25,00,000 Namanincy (Naman Ink) 35,00,000 AmitTharani 10,00,000 ChiragTharani 12,00,000 KavitaTharani 50,000 Ravi Wadhwani 10,00,000 Grand PahupatiInfratech 5,00,000 Total 1,39,50,000 10. The AO made additions on account of unsecured loan by giving reasons that the assessee has not produced the copies of ITR, balance sheet and past bank account statements of the loan creditors. This shows that the AO was not satisfied with the evidence filed by the assessee and held that mere confirmation would not discharge the assessee from the onus of proving identity, creditworthiness of the creditors and genuineness of the transactions. Thus, in absence of ITR, balance sheet, bank account statements of the loan creditors the AO held that the assessee failed to prove creditworthiness of the lenders and genuineness of the transactions. It is pertinent to note ....
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....submitted that sum of Rs. 1,75,000/- from Smt Monika Jain and Rs. 4,00,000/- from Shri Ravi Wadhwani was commission received against a real estate transaction. The appellant submitted that he was in deficit of funds and has taken commission before execution of deal as an advance. However, the same has been shown in return for AY 2014-15. On perusal of ITR for AY 2014-15 appellant has shown the said commission income. Further, in AY 2014-15, appellant has received advance commission from Shri Gopichand Moolchandani & Family against real estate transaction and has been offered for taxation in AY 2015-16. Further, sum of Rs. 43,260/- was excess commission received against real estate transaction from Shri Ajeet Chhabra which was returned vide cheque no 00003 of HDFC bank dated 26.05.2014. Further, appellant has received sum of Rs. 6,50,000/- from Smt Lajwanti Devi Tharani, Rs. 10,000/- from Mrs Yashasvi Tharani, Rs. 5,00,000/- from Shri Kamlesh Motwani and Rs. 13,00,000/- from Shri Naresh Tharani (HUF) as unsecured loans. The appellant has filed copies of loan confirmation, ITR, bank account statements and copies of ledger accounts of lender. On perusal of evidences on record it is se....
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.... are regular tax assessee's, and have given the loan through account payee cheque and have confirmed the transaction the liability of the assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion how so strong the reasons of suspicion may be. Also, the appellant has repaid the loan. Hon'ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsangji (2014) 42 Taxmann.com 251 (Guj HC) has held that "It has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Adwaniin the immediate next FY and the Deptt has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible we see no reason to interfere with the impugned order passed by ITAT". Similar view was taken by Hon'ble ITAT Mumbai I the case of HK Pujara Builders (2019) 33 NYPTTJ186 (Mumbai Trib.). Similar view was taken by Hon'ble Delhi ITAT in the case of Supreme Buildcap Pvt Ltd(2020) 34 NYPTTJ 418 (Del Trib.). The amount of loan has been squared ....
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....ount of lender immediately prior to date of loan - HELD- Assessee has established the identity- The party has confirmed the transaction- If AO doubted the transaction, AO should have called creditor u/s 131-Addition cannot be made. Thus, appellant has furnished all the required details in order to prove identity of lenders, genuineness of the transaction and creditworthiness of the lenders. 4.6.5 Therefore, in view of the above discussion, the AO was not justified in making addition on account of unsecured loan received from various individuals and firms. Thus, addition made by the AO amounting to Rs. 5,00,000/- in AY 2010-11, Rs. 43,200/- in AY 2012-13, Rs. 5,75,000/- in AY 2013-14, Rs. 28,58,760/- in AY 2014- 15 and Rs. 1,39,50,000/- in AY 2015-16 is Deleted. Therefore, the appeal on these grounds is Allowed." 11. There is no dispute that the loans were received by the assessee through banking channels as evident from the bank account statement of the assessee as well as the loan creditors. Further, it is also evident that most of the loans were repaid by the assessee in the very next year as reflected in the bank account statement and ledger accounts produce....
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....ents of the assessee was recorded during the search on 16.05.2014 wherein the assessee has explained and denied having sent any massages which were found in the mobile of Shri Narendra Kumar Gupta. The assessee also denied that he knows Shri Narendra Kumar Gupta, director of M/s Tanya Jeweller Pvt. Ltd. as the assessee never communicated with him either through Sms or call or any other mode. Without prejudice the Ld. AR has submitted that even if it is accepted that the assessee was involved in the transactions alleged in the massages only the commission income on such transactions can be assessed to tax and not the quantum of the transactions which is assumed by the AO. He has relied upon the order of the CIT(A) as well as the order of this Tribunal dated 1.12.2022 in case of ACIT vs. Narendra Kumar Gupta, Guwalior in ITANo.795/Ind/2018. 14. We have considered the rival submissions as well as relevant material on record. The AO has made the addition on account of undisclosed investment in the Hawala transactions on the basis of the text massages found in the mobile number of Narendra Kumar Gupta director of M/s Tanya Jeweller Pvt. Ltd. The AO has reproduced the details of the m....
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....umar Gupta in ITANo.795/Ind/2018 has upheld the order of the CIT(A) accepting the involvement of the said party in the Hawala transactions but the addition has been restricted only to the commission income of the Hawala transactions in para 8 as under: "8. We have considered rival submissions of both sides and also perused the material held on record. Regarding first tranche of addition on account of "unexplained-transactions" of Rs. 8,25,03,772/-, the crux of assessee's submission is that those transactions are at par with the "explained- transactions" of Rs. 7,04,89,360/- in every respect and there is no difference whatsoever. Firstly, the revenue-authorities have loudly and unambiguously identified, found and understood (in Para No. 8.1 to 8.4 of the assessment-order) the nature of activity done by assessee which is just a courier/transfer of money for earning a commission of Rs. 100/- to Rs. 200/- per lac. This activity remains same in all transactions. Secondly, all transactions have been retrieved/decoded from the same set of evidences, namely the same mobile phones. Thirdly, the details of all transactions as retrieved/decoded, such as names/mobile numbers of sender....
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....oceeding, that the impugned "unexplained transactions" of 43 persons were different in any manner or structure than the "explained transactions" of 36 persons. We observe that the various reasons cited in the beginning of this paragraph clearly reveal that all transactions were at par. Being so, we do not find any merit in the claim of revenue that the so-called "unexplained transactions" should be accorded a different treatment than the "explained transactions". We observe that the Ld. CIT(A) has given a careful thought to the facts of case and validly held that the assessee must have earned only commission of Rs. 36,71,832/- on all transactions of Rs. 15,29,93,132/-. Having said so, Ld. CIT(A) was justified in applying a commission-rate of Rs. 200/- per lac on 8,25,03,772/- which results in estimated commission-income of Rs. 1,65,007/- for 1 month and extrapolating the same for 12 months arriving at commission of Rs. 19,80,088/- for the whole year. Finally, Ld. CIT(A) has rightly ordered the Ld. AO to assess commission-income of Rs. 19,80,088/- and thereby granted a relief of Rs. 8,05,23,676/- (Rs. 8,25,03,764/- minus Rs. 19,80,088/-) to the assessee. We do not find any infirmity....
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....hole amount rather addition ought to have been made for commission income earned for doing hawala transaction. Onus is on the department to prove that amount which is being added is assessee's income. Interestingly, even after search & seizure operation, department could not find the assets/investments having worth of such huge amount to justify the rationality of this addition. I find a considerable force in the argument of the Id. AR that if the appellant has earned such huge income then it would have been found during search in some or other form. Appellant has also contended that the AO neither provided the copies of the statements of Shri Narendra Gupta nor any opportunity of cross-examination was also provided to him. It is settled law that in absence of cross- examination, any addition made behind the back of the assessee is not sustainable. Hon'ble Supreme Court in the case of Andman Timber Industries v/s CCE (SC) civil Appeal No. 4228 of 2006 dated 02.09.2015 has held that failure of give the assessee the right to cross-examine witnesses whose statements are relied upon results in breach of principles of natural justice. It is a serious flaw which renders the order....
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....g search and seizure operations, "pertains" to assessee and do not "belong" to assessee. 3. The Id CIT(A), NFAC was not justified in confirming the assessment order and notice u/s. 153C when no proper reasons were recorded. 4. The ld CIT(A), NFAC was not justified in confirming the assessment order and notice u/s. 153C when the requirement of issuing two satisfaction note was not fulfilled as the AO of the searched person M/s. Tanya Jewellers Pvt. Ltd, Gwallior and assessee are different." 18. We have heard Ld. AR as well as Ld. DR and considered the relevant material on record. Ground no.1 of the CO is general in nature and assessee has not pointed out any specific infirmity and illegality in the impugned order of the CIT(A). Accordingly the same is dismissed. 19. Ground no.2 regarding validity of assessment order: The Ld. AR of the assessee has fairly submitted that this issue is now covered by the Hon'ble Supreme Court in case of ITO vs. Vikram Sujitkumar Bhatia 149 taxmann.com 123. Accordingly in view of the judgment of Hon'ble Supreme Court as well as fair statement of Ld. AR of the assessee ground no.2 is dismissed being devoid of any merit. 20. Gro....
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....ity in the recording of satisfaction for want of separate satisfaction by the AO of search person as well as by the AO of the assessee. Accordingly we do not find any reason to interfere with the impugned order of the CIT(A) qua this issue. Additional Ground 24. Ld. Sr. counsel has submitted that the additional ground raised by the assessee for both years is purely legal ground and was also raised before the Ld. CIT(A) and also decided against the assessee but due to inadvertence the same was not raised in the original grounds of CO filed by the assesse. Thus, Ld. AR has submitted that the additional ground raises by the assessee regarding disallowance of foreign travel expenses may be admitted and decided on merits. He has relied upon the judgment of Hon'ble Supreme Court in case of NTPC vs. CIT 229 ITR 383 (SC). 25. On the other hand, ld. DR has not disputed the fact that this issue of disallowance of foreign travel expenses was decided by the CIT(A) against the assesse. 26. We have considered the rival submissions as well as relevant material on record. The issue raised in the additional ground by the assessee emanates from the impugned order of the CIT(A). Therefore....