TaxTMI 
TaxTMI 
2024 (3) TMI 651
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.... identified by the Ld. Counsel for the assessee for our adjudication, which are as follows: (i) Loans to M/s. Kangaroo Impex and consequent interest for assessment year 2009-10 & 2010-11. (ii) Investment in M/s. Mars Export for assessment year 2010-11 & 2011-12. (iii) Unaccounted cash loans for assessment year 2009- 10 & 2010-11 (iv) Money swindled for Mrs. Dhanalakshmi, employee of the assessee for assessment years 2011-12 to 2015-16. (v) Difference between income returned originally and income returned in response to notice u/s. 153A of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for assessment year 2009-10 to 2011-12. (vi) Additions towards unaccounted sales for assessment year 2014-15. 3. Since, the issues have been identified from the grounds of appeals filed by the assessee for all assessment years, we deem it not thought pit to reproduce grounds of appeal filed by the assessee for all assessment years. 4. The brief facts of the case are that, the appellant Shri. S. Arputharaj, is engaged in the business of real estate, money lending etc. A search u/s. 132 of the Act, was conducted in the case of ....
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....ated 19.02.2018, sustained additions made by the Assessing Officer towards various undisclosed income and dismissed appeal filed by the assessee. The assessee carried the matter in further appeal before the Tribunal and the ITAT, Chennai Benches vide their order dated 13.06.2018 for assessment years 2009-10 to 2015-16, partly allowed appeals filed by the assessee, where the Tribunal has remitted certain issues to the file of the Assessing Officer. The Tribunal had also deleted additions made towards money swindled by Smt. Dhanalakshmi and unaccounted sales for assessment years 2011-12 to 2015-16. However, confirmed additions towards investment in M/s. Mars Exports, loan to M/s. Kangaroo Impex and interest thereon, unaccounted cash loans and difference between admitted and returned income. Aggrieved by the tribunal order, the assessee as well as the revenue has filed appeal before the Hon'ble High Court of Madras. The assessee has filed appeal for assessment years 2009-10, 2010-11 & 2011-12 for the issues where additions was confirmed by the ITAT. The revenue has filed appeal for assessment years 2011-12 to 2015-16, for the issues where additions were deleted by the ITAT. The Hon'bl....
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....edings, the Assessing Officer called upon the assessee to explain the source for the loans given to M/s. Kangaroo Impex. In response, the assessee submitted that he had given loans to M/s. Kangaroo Impex through bank transactions and final amount outstanding was at Rs. 10.51 crores. The party is unable to repay the loan and thus, he has taken a legal action against M/s. A. Pannerselvam for recovery of loan. The Assessing Officer, however was not satisfied with the explanation furnished by the assessee and according to the Assessing Officer, M/s. Kangaroo Impex and its partners has confirmed receipt of loan of Rs. 6,34,60,000/- for assessment year 2009-10 and Rs. 6,14,50,000/- for assessment year 2010-11. Since, the assessee could not explain source for loans given to M/s. Kangaroo Impex, the Assessing Officer has treated said loans as unexplained investment of the assessee and brought to tax u/s. 69 of the Act. 8. The Ld. Counsel for the assessee, Shri. R. Anish Kumar, Advocate, submitted that the Assessing Officer has made additions towards unexplained investment in the form of loans to M/s. Kangaroo Impex, only on the basis of statement of Shri. A. Paneerselvam recorded on 25.....
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....ned, in light of relevant bank statements pertains to the period of loan. Even if you go by the assessment order, there is no clear observation with regard to the mode of payment, whether it is cash loan or payment through bank. In fact, the loan details tabulated by the Assessing Officer for both assessment years shows loan by way of cheque and by way of cash also. Since, facts are contradictory from both the sides, we are of the considered view that the issue needs to be re-examined by the Assessing Officer, in light of averments of the assessee that loans given to M/s. Kangaroo Impex is through bank account only and source for said loan is explained. Thus, we set aside the issue of addition made towards loans given to M/s. Kangaroo Impex for assessment years 2009-10 and 2010-11 and direct the Assessing Officer to verify the claim of the assessee with reference to seized material, if any. The Assessing Officer, is also directed to ascertain correct facts from M/s. Kangaroo Impex and its partners, before making any addition towards loans given to said parties. 11. In so far as additions towards interest income from loans given to M/s. Kangaroo Impex, the Assessing Officer has m....
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....rty to M/s. Martin Fabrics P Ltd, for a consideration of Rs. 4 crores and offered the capital gains to tax for assessment year 2011-12. 13. The Assessing Officer, however was not satisfied with the explanation furnished by the assessee and according to the Assessing Officer, there are clear evidence to suggest that the assessee has discharged liabilities of M/s. Mars Exports to the tune of Rs. 16.5 crores. The Assessing Officer, further observed that Shri. Vijayakumar, PoA holder of Shri. Manikavasagam, entered into mortgage deed on 30.10.2009 with five representatives of creditors pledging the property of M/s. Mars Export for an amount of Rs. 11 crores, wherein it is stated that the only other liability of the concern is towards bank loan. In the mortgage deed, the total value of land and building owned by M/s. Mars Exports is fixed at Rs. 20 crores, as per registered mortgage deed dated 30.10.2009. Further, the original cash receipts issued by the representatives to Shri. S. Arputharaj for receiving cash of Rs. 11 crores is seized vide pages 66 & 67 of annexure SA/32 dated 27.02.2015. Although, the assessee claims to have settled liability to the tune of Rs. 1,93,50,250/-, but....
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....From the above, it is very clear that there is no basis for the Assessing Officer to make additions towards settlement of loan to Karur Vysya Bank. He further submitted that the Assessing Officer had also made additions of Rs. 16 crores being difference between estimated value of the property as per mortgage deed and sale consideration received by the appellant for sale of property, as unaccounted income for assessment year 2011-12 and said addition is not based on any evidence. The Assessing Officer, has made additions only on the basis of suspicion, even though the evidence clearly shows that the property has been sold for Rs. 4 crores. Further, the Assessing Officer referred the valuation of the property to DVO, for determination of fair market value of the property and said reference was still pending. The Assessing Officer without considering reference to DVO has made additions of Rs. 16 crores, which is incorrect. 15. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, supporting the order of the ld. CIT(A), submitted that as per the documents seized during the course of search, the assessee has purchased a property from M/s. Mars Exports for a registered value of Rs. 3 crores,....
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....s. 11 crores to creditors. The facts are contradictory. The assessee claims that he has settled outstanding creditors of Rs. 1,93,50,250/- and said payment has been cleared through bank, whereas, the Assessing Officer claims that the appellant has settled Rs. 11 crores to creditors by cash payments. Therefore, we are of the considered view that, this fact needs to be verified by the Assessing Officer with reference to seized documents. 17. Coming back to the repayment of outstanding dues to karur Vysya Bank of Rs. 5.5 crores. There is no evidence either in the assessment order regarding repayment of Rs. 5.5 crores in cash to Karur Vysya Bank Limited, against outstanding loan liability. In fact, the Assessing Officer himself admitted in his assessment order in page 22 that the settlement of dues to Karur Vysya Bank is not mentioned in the documents and the assessee has not clarified as to when and how the payment has been made to bank. From the above, it is abundantly clear that there is no evidence with the Assessing Officer to allege that the assessee has repaid a sum of Rs. 5.5 crores to Karur Vysya Bank. Further, the Assessing Officer has not made any attempt to gather inf....
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....s referred the valuation of the property to DVO to ascertain fair market value of the property, then he ought to have obtained said valuation report and ascertain the correct fair market value of the property. The Assessing Officer, failed to obtain necessary valuation report before conclusion of assessment. From the above, it is very clear that the additions made by the Assessing Officer towards unaccounted income of Rs. 16 crores being difference between estimated value of the property as per mortgage deed and consideration received for sale of property at Rs. 4 crores is not with necessary evidence. In any event, assuming for a moment, the value of the property is Rs. 20 crores and assessee has received a sum of Rs. 20 crores for sale of property, but fact remains that the Assessing Officer has made addition of Rs. 16.5 crores towards settlement of dues of M/s. Mars Exports, and this fact is correct then, additions partakes the character of cost of acquisition to the assessee. In case, the Assessing Officer sustained the additions towards settlement of outstanding dues of M/s. Mars Exports, then the same needs to be considered as cost of acquisition for the purpose of computatio....
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.... Shri. C. Giridharan, and mode of payment in para 4.2.1.2 of his assessment order. According to the Assessing Officer, although the assessee claims to have paid amount to Shri. C. Giridharan, for purchase of property, but said transaction is only a loan and further the assessee could not explain source for cash loans given to Shri. C. Giridharan. Therefore, rejected arguments of the assessee and made additions of Rs. 3.96 crores. 19.3. The Ld. Counsel for the assessee, submitted that the ld. Assessing Officer has made additions only on the basis of allegation that, the assessee has not accounted cash loans, but fact remains that the assessee has accounted all the payments made to Shri. C. Giridharan and also proved source for loan given to Shri. C. Giridharan. Further, except one or two documents seized in the name of Shri. C. Giridharan, rest of the documents does not reveal any reference to the mode of payment. No statement has been obtained from the buyer to verify the mode of payment. Therefore, he submitted that the Assessing Officer is completely erred in making additions towards unaccounted cash loans given to Shri. C. Giridharan. He further submitted that the appellant h....
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....e. 19.6. The next item of addition of Rs. 26 lakhs towards unaccounted cash loans to Shri C. Hariharan. Incriminating material found during the course of search reveals that the appellant had given cash loans of Rs. 26 lakhs to Shri C. Hariharan, but the assessee could not explain source for cash loans. Therefore, the Assessing Officer has made additions as undisclosed income of the assessee. 19.7. The Ld. Counsel for the assessee, submitted that the ld. CIT(A) erred in confirming additions made towards unaccounted cash loans to Shri C. Hariharan without appreciating fact that the assessee has filed evidence to prove source for said loans and further, the loans has been accounted in the books of accounts of the assessee. Therefore, he submitted that the additions made by the Assessing Officer should be deleted. 19.8. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, supporting the order of the ld. CIT(A) submitted that, documents found during the course of search clearly shows unaccounted cash loans to above party. The assessee could not explain source. Therefore, the Assessing Officer has made additions and their order should be upheld. 19.9. We have heard both the partie....
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....ion as unaccounted cash loans. Therefore, he submitted that additions made by the Assessing Officer should be deleted. 19.11. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, supporting the order of the ld. CIT(A) submitted that, the Assessing Officer has discussed the issue in light of sale agreement between the assessee and Shri. C. R. Narayanasamy and also sale deed executed for purchase of property and ascertained the fact that the appellant has paid on-money for purchase of property over and above agreed consideration. The payment made in cash to above parties is supported by incriminating material found during the course of search. The appellant could not explain source for cash payments. Therefore, the Assessing Officer has rightly made additions and their order should be upheld. 19.12. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The Assessing Officer has made addition of Rs. 3.95 crores towards cash payments to Shri. C. R. Narayanasamy as unaccounted income, on the ground that the appellant could not explain source for cash payment for purchase of property. According to the Assessing Officer, as....
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....ce amount of Rs. 10 lakhs is due. 19.14. We have heard both the parties and considered relevant material available on record. The argument of the assessee is that, he has paid Rs. 40 lakhs through Kotak Mahindra Bank Ltd for purchase of property from Shri. N. Venakataraman is an afterthought, which is clearly evident from facts brought on record by the Assessing Officer in his assessment order in Para 4.2.4.3, where it has been clearly negated arguments of the assessee that he has paid through bank. The Assessing Officer, observed that the RTGS number referred to by the assessee against payment of Rs. 40 lakhs to Shri. N. Venakataraman is incorrect, because said RTGS reference number is the payment made to Shri. T. Dhamodaran, but not to Shri. N. Venkataraman. Further, the documents found during the course of search clearly shows that, the assessee has paid loan against bank cheque, signed white blank sheets and surety of immovable property documents. The assessee could not explain source for said loan. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make additions of Rs. 40 lakhs towards unaccounted cash loans to Shri. N. Ven....
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....y notes and cheque leafs shows that the assessee has paid loan of Rs. 50 lakhs to Dr. S. Ramesh Krishna. During the course of post-search inquiries statement u/s. 131(1A) of the Act has been recorded from Dr. S. Ramesh Krishna on 15.05.2015, where he has admitted that out of Rs. 61 lakhs a sum of Rs. 15 lakhs has been received in cash. The assessee could not explain source. Therefore, the AO made additions of Rs. 15 lakhs as undisclosed income of the assessee. 19.19. The ld. Counsel for the assessee submitted that the documents seized does not refer to cash payment to Dr. S. Ramesh Kumar. Though, the statement obtained from the party claims that the appellant has paid cash loan, but no proof has been referred or produced to confirm the cash payments. The assessee has paid loans in cheque and the same has been accounted, but the AO ignored all evidences filed by the assessee and made additions. 19.20. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, on the other hand submitted that, the AO has not made addition towards loans given through bank and received back through cheques. The document found during the course of search clearly shows payment of loan in cash, for which there ....
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....ovable property owned by Shri. Thangavel. Since, the assessee could not explain source, the AO has rightly made additions towards unaccounted cash loans and their order should be upheld. 19.24. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The appellant claims to have paid total loan of Rs. 27,43,500/- through Kotak Mahindra Bank by cheque and RTGS. All loan transactions with Shri. Thangavel has been accounted in the books of accounts. But, fact remains that the additions made by the AO is towards unaccounted cash loans of Rs. 55 lakhs paid to Shri. Thangavel, which is supported by incriminating material found during the course of search. During the course of search, a copy of signed cash receipts found, which shows that Shri. Thangavel borrowed cash loan of Rs. 55 lakhs against surety of immovable property. Further, the assessee could not explain source for cash loans. Although, the assessee claims that loans given to Shri. Thangavel has been accounted in the books of accounts, but the details filed by the assessee did not refute the evidence in the form of seized material found during the course of searc....
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.... Paulraj, in light of various evidences filed by the assessee and decide the issue in accordance with law. 19.27. The next item of addition is unaccounted cash loan to Shri. Ponnappan, proprietor of M/s. Sakthivel Casting Private Ltd. The Assessing Officer, has made addition of Rs. 25 lakhs towards unaccounted cash loan on the basis of incriminating material found during the course of search like original signed receipt cum undertaking in the official letter head of M/s. Sakthivel Casting Private Ltd. The assessee claims that, he has paid a sum of Rs. 39,25,000/- loans on various dates through Kotak Mahindra Bank and have received a letter from Shri. Ponnappan for Rs. 15 lakhs for security purpose only. 19.28. We have heard both the parties and considered relevant material available on record. The documents found during the course of search like original signed receipt cum undertaking from M/s. Sakthivel Casting Private Ltd, clearly shows that the appellant has paid Rs. 40 lakhs on various dates in cash and RTGS. Further, out of Rs. 40 lakhs a sum of Rs. 31,75,000/- is paid in cash. Although the assessee claims to have paid loan through RTGS, but could not reconcile payment t....
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....ruganathan, for which no explanation was filed. Although, the assessee claims to have paid advance for purchase of property, but fact remains that source for said payment was not explained. Therefore, the AO has rightly made addition and therefore, their order should be upheld. 19.32. We have heard both the parties and considered relevant materials available on record. We find that the assessee has paid a sum of Rs. 25 lakhs in cash to Shri. S. Muruganathan in pursuant to sale agreement dated 18.11.2009. Further, Shri. S. Muruganathan in the statement of oath recorded on 01.05.2015 has admitted to have received an amount of Rs. 25 lakhs in cash from the assessee by pledging his property in the form of sale agreement. From the above details it is abundantly clear that the assessee has given Rs. 25 lakhs cash loan to Shri. S. Muruganathan. Since, the assessee could not explain source for cash loan, in our considered view the AO has rightly made additions of Rs. 25 lakhs as undisclosed income of the assessee. The ld. CIT(A), after considering relevant facts has rightly sustained additions made by the AO and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject a....
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.... Magistrate Court, Coimbatore. The assessee nowhere acted as an individual and whatever money swindled by her is belongs to M/s. Millennium Motors, a unit of Miracle Cars India Pvt Ltd. Further, the company has accounted said transactions in the books and shown as amount receivable from Smt. Dhanalakshmi. The Assessing Officer, had also made assessment of the company M/s. Miracle Cars India Pvt Ltd and made substantive addition towards very same amount. Therefore, addition in the hands of the assessee on protective basis cannot be made. He further submitted that the police have investigated the case and filed a charge sheet and quantified total amount swindled by her at Rs. 4,00,82,752/-, but not as alleged by Assessing Officer of Rs. 8,30,67,068/-. Further, the company has entered into agreement to sale with the accused employee and taken her property as collateral security and as and when she returns money, the company will offer it as income. Therefore, said transaction cannot be assessed in the hands of the assessee. 22. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, supporting the order of the ld. CIT(A) submitted that, there is no dispute with regard to the fact that the m....
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....of M/s. Millennium Motors itself. Since, the Assessing Officer already made additions towards money swindled by Smt. Dhanalakshmi in the hands of the company on substantive basis, protective addition made in the hands of the assessee has no legs to stand. Thus, we direct the Assessing Officer to delete protective addition made in the hands of the assessee towards money swindled by Smt. Dhanalakshmi for assessment year 2011-12 to 2015-16. 24. The next issue that came up for our consideration from assessee appeal for assessment year 2009-10 to 2011-12 is addition towards difference between income returned originally and income returned in response to 153A notice. During the course of assessment proceedings, the Assessing Officer noticed that income declared in the return of income filed in response to notice u/s. 153A of the Act, was much lesser than the income returned in the original return of income filed u/s. 139 of the Act. Therefore, the Assessing Officer has made additions towards difference between income admitted in the return of income filed u/s. 153A and income originally returned in the return of income filed u/s. 139 of the Act as income of the assessee. 25. We hav....