Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
>
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
TMI Blog
Home / RSS

2025 (7) TMI 1745

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....7 at the Coffee Day Group and its associates. During the search several materials were found & impounded, and statement of several persons were recorded. Late Shri V.G. Siddhartha, who was the promotor and CMD of Coffee Day Group of companies, based on materials found and statement recorded agreed to offer additional income for the relevant assessment years. Accordingly, the proceedings under section 153A of the Act were initiated against late Shri V.G. Siddhartha for A.Ys. 2013-14 to 2017-18 by issuing notice dated 14th November 2018 and assessment proceeding for A.Y. 2018-19 was initiated under section 143(3) r.w.s. 153D of the Act. 2.1 During the pendency of the assessment proceeding, Shri V.G. Sidhartha died as on 29th July 2019. In the assessment proceedings, several notices and show cause notices etc were issued which were replied by the legal heirs of late Shri V.G. Sidhartha. Finally, the AO came to finalized the assessment order for respective assessment years i.e. A.Ys. 2013-14 to 2018-19 as on 31st December 2019 and the order was passed jointly in the name of 3 legal heirs namely Smt. Malavika Hegde, Shri Amartya, and Shri Ishan. We note that the AO has passed a joint a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....the act, dated 22.09.2017 wherein he has clarified the nature of transaction of resale of 100 acres of coffee plantation pertains to owners. 5. The learned Commissioner of Income Tax (Appeals)-1 1, Bangalore erred in confirming the addition of Rs. 3,00,00,000/- in the hands of the appellant when M/s.Kumergode Estates Ltd shares are purchased by M/s.Gonibedu Estates Ltd and not by appellant clarified in statement U/s.132(4) of the act, dated 22.09.2017, answer to Question No.19 to 22. 6. The learned Commissioner of Income Tax (Appeals)-11, Bangalore, has erred in ignoring the position of law laid down in various decisions wherein it is held that, merely on admissions U/s.132(4) of the act no additions can be made unless substantiated by corroborative evidences. PRAYER The appellant prays that the Hon'ble Tribunal may kindly hold that, for the facts and circumstances of the appellant there was no case of addition of Rs. 3,00,00,000/- under the provisions of section 69 of the act and hence the same deserves to be deleted." 4. The assessee vide letter dated 28-10-2024 filed additional ground of appeal which reads as under: "The Appellant while filing Appeal Memo in Form ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ez, certain documents marked as Annexure A/S/JP/03 were found in connection with the acquisition of M/s Kumergode Estate Pvt Ltd by M/s Gonibedu Estate Pvt Ltd. These documents contained information regarding the payment of cash over and above the documented price. 6.1 Upon confrontation with the seized materials, Shri Javeed Parvez, in his statement recorded under section 132(4) of the Act, explained that the assessee group i.e. M/s Gonibedu Estate Pvt Ltd. had entered into an MOU for the purchase of 75% (i.e. 67500 shares out of the total 90,000 shares) of M/s Kumergode Estate Pvt. Ltd from the existing shareholders. The purchase consideration for the acquisition was agreed upon at Rs.46.50 crores, with the payment to be made through banking channels as well as in cash, in the ratio of 75:25 (i.e., 75% through bank and 25% in cash). Thus, a cash payment involved is of Rs.11.625 crores over and above the disclosed price. 6.2 The seized material, along with the statement of the manager, Shri Javeed Parvez, was confronted to the assessee, late Shri V.G. Siddhartha, who agreed to offer an additional income of Rs.11.625 crores for the year under consideration on account of unexplain....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....gard contended that as per the seized document, the payment through banking channel was for Rs. 34,87,50,000/- whereas the final payment, as per the company's ledger and balance sheet, i.e. the payment via banking channels was of Rs.33.71 crores only, which evidences that the payment was not made entirely on the basis of seized material. 6.8 Considering these facts, the assessee submitted that the total cash component required to be paid had been reduced, and an undisclosed income of Rs.8.625 crores had already been offered in the return filed in response to the notice issued under section 153A of the Act. Therefore, the additional Rs.3 crores should not be added back, as it had already been adjusted against the land transaction. The assessee urged the AO to consider this reconciliation and avoid double taxation of the same amount. 6.9 However, the AO rejected the assessee's submission regarding the reconciliation of Rs.3 crores, stating that the noting in the seized documents was clear evidence of an undisclosed cash transaction of Rs. 11.625 crore in connection with purchase of share of M/s Kumergode Estates Pvt Ltd. The AO pointed out that the argument of the assessee,....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....24. The retraction, coupled with the absence of any corroborative evidence, rendered the addition unjustifiable. 9.1 It was also pointed out that the CIT(A) had ignored the statement of Mr. Sadanand Poojary, recorded under Section 132(4) on 22.09.2017, which clarified that the resale of 100 acres of coffee plantation land pertained to its rightful owners. Accordingly, the ld. AR urged to consider that the ld. CIT(A) wrongly attributed the alleged unaccounted cash investment to the appellant when, in fact, the shares of M/s Kumergode Estates Ltd. were acquired by M/s Gonibedu Estates Ltd. and not by the appellant personally. This fact was explicitly clarified in the statements recorded during the search proceedings. 9.2 Furthermore, the learned AR emphasized that judicial precedents establish that mere admissions under Section 132(4) of the Act do not warrant additions unless substantiated by corroborative evidence. Given the facts and legal principles, the learned AR strongly asserted that the addition of Rs.3,00,00,000 was unwarranted under section 69 of the Act and prayed to delete the same in the interest of justice. 10. On the contrary, the learned DR vehemently contended th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ment and statement of Shri Javeed Parveez and late Shri V.G. Siddhartha the cash component was agreed at Rs. 11.625 crores which he agreed to offer to tax. However, we note that such cash component was for 67500 share which valued at 46.25 cored whereas the assessee purchased 66108 shares only. Finally, the assessee offered income of unaccounted investment for Rs. 8.625 crore only leading to difference of Rs. 3 crores. 11.3 It is further noted that out of 45900 shares sold by the promotor group, there were 15,840 shares held by the family member of Shri M.M. Anandram which is detailed as under: S. No. Name of person No. of share 1 M. M. Anandram 9260 2 Premkumar M.A. 4160 3 Premkumari Mysore Anandram 2420   Total 15840 11.4 From the search materials found from one Shri Sadanand Pujary and statement of Shri Sadanand Pujary as well as of Late Shri V.G. Siddhartha, it is discernible that Shri Peremkumar M.A. and Premkumari Mysore Anandram agreed to transfer their shareholding only if 100 acres and 36 guntas land of coffee estate held by M/s Kumergode Estates Ltd is transferred to his family. As per the search materials, the consideration for transfer of land was ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... allowed. Coming to the issue raised by the assessee in additional ground of appeal. 12. The assessee, in the application for the admission of additional grounds, argued that the issue raised is legal in nature and fundamental to the resolution of the case. Consequently, the assessee's learned AR requested that these additional grounds be admitted for adjudication. 13. On the other hand, the learned DR opposed the admission of the additional ground of appeal. 14. We have heard the rival submissions of both the parties and perused the materials available on record. The Hon'ble Supreme Court in the case of National Thermal Power Co. Limited vs. CIT reported in 229 ITR 383 has held as under: "Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decis....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f assessment order made in the name of 3 different legal heirs. 15.1 The learned AR of the assessee argued that the AO has erred by assessing the same income in the hands of multiple legal representatives on a substantive basis and raising a demand under section 156 of the Act, which is three times more than the amount that would have been payable if the deceased assessee were alive. This results in an unjustified and excessive tax burden that contradicts the fundamental principles of taxation. 15.2 The learned AR further contend that under section 159 of the Act, the liability of legal representatives is limited to the extent of their share in the estate of the deceased. It does not impose joint and several liability on all legal heirs. The AO's approach of issuing parallel assessments to all legal representatives creates legal lacunae in recovery and is contrary to settled legal principles, which mandates that income should be taxed only once in the hands of the rightful assessee. 15.3 Citing judicial precedents in the cases such as CIT v. Surat Cotton reported in 202 ITR 932, CIT v. Durgawati reported in 202 ITR 932 (Bombay-HC), and Jagannath Hanumanbux v. ITO reported in 31 ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....been initiated against any one of them. The learned DR submits that since the assessee has not disputed their status as the legal heirs of Shri V.G. Siddhartha, they are collectively liable under section 159 of the Act. Additionally, the assessee has failed to specify their respective shares in the estate or their proportionate liabilities, reinforcing the Revenue's position that liability should be equally distributed among all three legal representatives. 16.2 The learned DR also highlights that judicial precedents prohibit the same income from being taxed multiple times in different hands. However, in this case, the department has merely sought to ensure tax collection from the estate of the deceased, rather than assessing each legal heir independently. The AO's actions are in line with legal provisions that allows recovery from legal representatives up to the extent of the assets inherited by them. 16.3 Given these arguments, the learned DR urges us to reject the appellants' claim that the assessment order is bad in law. The learned DR insists that the demand raised is legally justified and that the proceedings should not be set aside, as they adhere to the principles....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....case, the AO has not issued separate independent assessments for each legal heir but rather a single consolidated assessment order in the names of all three legal representatives. This approach does not violate the fundamental principle that the same income should not be taxed multiple times. 17.6 Furthermore, in Lalji Haridas (1961 43 ITR 387 SC), the Supreme Court clarified that while proceedings can be initiated against multiple legal representatives, the final liability should be determined in a manner that ensures tax recovery from the estate, rather than creating a disproportionate burden on any individual heir. The AO's approach in the present case aligns with this principle. 17.7 The AO's decision to assess the deceased's estate in the combined name of all three legal heirs does not automatically impose joint and several liability on them beyond their inherited estate. The provisions of section 159 of the Act makes it clear that legal representatives are liable only to the extent of the estate they inherit, and not personally liable beyond that. 17.8 Furthermore, the assessee has not provided details regarding their respective shares in the inherited estate. In such ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....namely Smt. Malavika Hegde being a legal heir Late Shri VG Siddhartha for A.Y. 2014-15. 19. The assessee has raised as many as 7 grounds of appeal which are interconnected to each other. The effective issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of Rs. 16,42,50,969/- by treating the unsecured loan as unexplained cash credit u/s 68 of the Act ignoring the fact that no incriminating material found/unearthed during the search in relation to impugned loan. Further erred in confirming the addition for the want of confirmation only ignoring the other evidence. 20. The necessary facts are that the AO during the assessment proceedings under section 153A r.w.s. 143(3) of the Act noticed that the assessee during the year has received unsecured loans from several parties. Accordingly, the assessee was required to produce the confirmation of the loan creditors. However, the assessee failed to provide confirmations from 7 parties against the loan aggregating to Rs. 16,42,50,969/- only. The details of the parties and the amount of respective loans are available on page 21 of the assessment order. Therefore, the AO treated the impugned loan credit of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....an assess the total income of the unabated/completed assessment after considering the incriminating material as well as other materials available with the AO including income declared in return. In the present case, the AO has made addition to the total income of the assessee based on incriminating materials and additionally made addition of unexplained loan credit based on other materials available with the AO including income declared in the return. Accordingly, the learned CIT(A) dismissed the assessee's argument that no addition can be made in the absence of incriminating material in the case of unabated/completed assessment year. 23. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 24. The learned AR before us among the other contentions argued that the year under consideration is an unabated assessment as the regular assessment under section 143(3) of the Act has already been completed. The loan transactions were carried out through banking channel and duly recorded in the books of accounts. The learned accordingly argued that for the under consideration a regular item already disclosed in the books cannot be disturbed in the absence ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ddition of Rs. 16,42,50,969/-, has also made addition of Rs. 12.5 crores on account of cash loan or cash transaction with the party namely Shri Parkash B Talreja and further made addition of Rs. 34,07,000/- on account of unaccounted interest payment to the certain farmers. These additions were allegedly made by the AO based on certain loose paper of diaries found during the search and statement of the late Shri V G Siddhartha. We note that the assessee against these additions was in appeal before the learned CIT(A) who deleted the addition of Rs. 12.5 crore in relation to cash transaction with Parkash B Talreja by holding that the transactions does not pertain to the year under consideration. Likewise, the addition of Rs. 34,07,000/- was also deleted by the ld. CIT-A in relation to the payment of interest to the farmers by holding that the payment to these parties were made from explained sources being cash withdrawal by the sister concern M/s Mysore Amalgamated Coffee Estate Ltd which is duly accounted. 26.2 The above finding of the learned CIT(A) has not been challenged by the Revenue before the higher forum which evidences that the dispute relating to the said two additions has....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Ankith. 31. The relevant facts are that during the search proceedings at the residence of Shri Javeed Parveez (the manager of the assessee group), an excel spread file namely "Timber Statement" was found from his email. The impugned excel sheet contains the details of receipt and payments as per the instruction of late Sri VG Sidhartha from/to various parties. The sheet contains the name of one such party as "Mrs. Nivedhithakka cash" indicating cash receipt of Rs. 70 lakhs. Shri Javeed Parveez in the statement recorded under section 132(4) of the Act explained the cash loan of Rs. 70 lakhs received from the said party which was deposited into the bank account namely Corporation Bank at Chikmagalur and interest of Rs. 8,36,740/- was also paid through cash on the impugned loan amount. He also stated that amount was adjusted in the books of account of M/s Mysore Amalgamated Coffee Estate Ltd (hereafter M/s MACEL) under the ledger "Advance-1". Shri Javeed Parveez also provided the copy of ledger "Advance-1". 31.1 On perusal of impugned ledger "Advance-1", the search team found that there were journal entries dated 3rd August 2017 and 11-08- 2017 debiting proprietary concern of the as....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rein the assessee late Shri VG Siddhartha offered additional income on account of cash loan from Smt. Nivedhithakka for Rs. 70 lakhs only. In the case of other parties, the assessee failed to offer income of Rs. 5 crores as admitted against the receipt of cash from Shri Ankit and Shri Rachet. Likewise, the assessee also did not offer the income on account of payment of interest for Rs. 1.15 crores. 31.6 The AO from the seized material (being page 37 & 39 of annexure A/S/JP/07, Advance-1 ledger, statements etc) observed that the interest in cash paid to Shri Ankith, Shri Rachit and Smt. Niveditha in cash over the period of A.Y. 2015-16 to 2018-19 which are detailed as below: Name A.Y. Interest Total Ankith 2016-17 17,83,850 47,08,850 2017-18 14,62,500 2018-19 14,62,500 Rachit 2015-16 14,90,550 1,03,30,150 2016-17 29,25,500 2017-18 25,01,600 2018-19 34,12,500 Niveditha 2016-17 8,36,740 8,36,740 31.7 The AO, in view of the above, proposed to make addition on account of cash loan of Rs. 5 crores and payment of interest in cash to the respective assessment years. 31.8 The assessee submitted that an admission of Rs.5.75 crores as unexplained investment for th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re fully explainable and documented. 31.11 Another significant point raised by the assessee was that these cash transactions spanned multiple financial years, namely A.Ys. 2015- 16, 2016-17, and 2017-18. Therefore, even if considered, the entire sum of Rs.5 crores could not be brought to tax exclusively in assessment year 2015-16. Furthermore, since the transactions were recorded in the books of M/s MACEL, the assessee contended that they could not be subjected to assessment in the individual case of late Sri V.G. Siddhartha. The assessee reiterated that the original declaration of Rs.5 crores was made under a mistaken understanding and undue pressure during the search, and was based solely on the unverified statements of an employee. As the underlying transactions were explained and supported by records, the assessee argued that they should not be taxed merely on the basis of such statements. 31.12 In conclusion, the assessee maintained that only Rs.70 lakhs had been rightfully offered as undisclosed income in the return filed in response to the notice under section 153A of the Act, and the balance Rs.5 crores should be excluded from the assessment. The assessee requested the AO....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....or misreading of the seized materials by Mr. Javeed Parveez, who gave statements based on memory without corroboration from the accounting records. Late Sri V.G. Siddhartha, relying on those unverified statements, appears to have admitted the declaration, which the assessee now retracts upon verification. 31.16 It is also highlighted that three of the cited payments were passed as journal entries, while the remaining were direct cash withdrawals made through self-cheques. Since no interest expenditure has been claimed by M/s MACEL or late Sri V.G. Siddhartha, the assessee argues that disallowance of such notional interest payments cannot be construed as income. Therefore, the declaration of Rs.1.15 crore as undisclosed income was erroneous and is not offered to tax in the return filed in response to the notice issued under section 153A of the Act for the A.Y. 2015-16. 31.17 In conclusion, the assessee contends that there is no taxable income arising from these transactions and the deviation from the earlier admission is justified based on verified accounting records, absence of actual loan or interest payments, and proper source of funds. 31.18 However, the AO evaluated the subm....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s from Ankith and Racheth and that payments were mere internal transfers recorded in MACEL's books, but no proper documentation was submitted to establish these transactions as genuine business movements. 31.22 The AO highlighted inconsistencies in the assessee's explanation regarding the source and purpose of cash withdrawals from Corporation Bank account No. 898. While the assessee argued these were accounted for via journal entries and treated as receivables in MACEL's books, it was revealed that these entries were not recorded as payments to Ankith, Racheth, or Niveditha. The assessee had only provided debit entries in Chetanahalli D Estate's ledger, failing to link them directly to the cash payments, thus not satisfactorily discharging the burden of proof. Furthermore, Shri Javeed, whose statement formed a key part of the evidence, admitted that the payments were cash withdrawals by self-cheque, without providing clarity on when and to whom they were paid. 31.23 The AO also noted that the payments to Ankith and Racheth were fixed sums disbursed at regular intervals, indicating interest payments rather than operational cash flows. This undermined the assessee's claim ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....shareholders in Kumergode estates. Racheth and Ankit are not shareholders in Kumergode estates, and therefore as per the narration the amount of Rs. 2.5 crores and Rs. 1.5 crores (for AY 2015-16) stands unexplained. Appellants has failed to submit any cogent reason for linking the cash transactions with Racheth and Ankit to the transactions with shareholders in Kumergode estates. It is also noted by the AO that appellants has failed to prove the role and responsibility of Ankit and Racheth in the Coffee Day Group and why these persons were carrying cash. The submission of the appellants relying on transactions recorded by Javed stating that cash withdrawal from head office and deposit in branch office on different dates has been rejected by AO in para 12.6 of the order wherein detailed analysis of the submission of the appellants has been made and the addition made by the AO is on the basis of the amount appearing in ledger reproduced in the assessment order. Further in para 12.6 of the assessment order, AO has pointed out discrepancies in submission of the appellants and hence the addition of Rs. 2.5 Crores and Rs. 1.5 crores in respect of cash loan transaction with Ankit and rach....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re us. The assessee is appeal against the confirmation of the addition in respect of alleged cash loan from Shri Ankit and Shri Rachit whereas the revenue is in appeal against the deletion of addition made on account of payment of interest on the alleged cash loan. 34. The learned AR before us argued that the addition of Rs.4,00,00,000/- was wrongly made by the AO and confirmed by the learned CIT(A). He explained that there were no loans from Mr. Rachith or Mr. Ankith in the appellant's books to justify this addition under section 68 of the Act. Instead, the cash movements were simply transfers from the head office of M/s. MACEL in Bangalore to its branch office at Chikkamagaluru, carried physically by Mr. Ankith and Mr. Rachith. These transactions were properly recorded in both the head office and branch office books of MACEL, which is an independent company assessed separately for tax. 34.1 The learned AR claimed that the addition was made only based on statements from Mr. Javeed Parveez, an employee, and late Sri V.G. Siddhartha under section 132(4) without verifying the actual books of accounts and bank statements. Even after Mr. Siddhartha retracted his statement, the author....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s hands further reinforce that the real entity responsible for the questioned transactions is MACEL, not the assessee. Accordingly, we hold that the addition of Rs.5 crores cannot be made in the hands of the assessee, as the transactions relate to MACEL, and there is no evidence proving otherwise. 36.3 Similarly, the interest payments allegedly made to Shri Ankith and Shri Rachit are claimed to have been made out of cash withdrawn from MACEL's bank account through self-cheques. The assessee has clearly explained that these transactions were accounted for in MACEL's books and not claimed as expenses by the assessee. 36.4 Furthermore, the entries in question-made as journal debits to the proprietary concern of the assessee (Chethanhally D Estate)- represent subsequent internal adjustments within MACEL's accounts and cannot establish the existence of actual third-party loans. The mere presence of such journal entries does not establish a link between the cash withdrawals and any benefit accrued to the individual assessee. In the absence of a direct nexus between the alleged interest payments and the individual, the onus lies on MACEL to explain the nature and source of these ent....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n Brothers announced its intention to file petition under US Bankruptcy code. Therefore, the debenture was not converted into preference share and an arrangement was made between late Shri V.G. Siddhartha and M/s Lehman Brothers through agreement dated 19th February 2010. As per the agreement late Shri V.G. Siddhartha agreed to purchase the debenture held by M/s Lehman Brothers in phased manner starting from March 2010 to August 2013 for a consideration of Rs. 189,24,45,851/- only. The payment for purchase of debenture to M/s Lehman Brothers was made through banking channel in the form of foreign remittance after obtaining necessary approval from RBI. Therefore, the genuineness of the purchase/investment in the said debenture cannot be doubted. The said debenture redeemed during the year under consideration at the face value of Rs. 129,84,00,000/- and in this process, the assessee incurred short term & long-term capital loss of Rs. 59,40,45,851/- only. Hence the claim of capital loss on account of redemption of debenture of M/s Kesar Marbles & Granites Ltd is genuine loss. The assessee regarding the accrual of interest on the said debenture at 13.75%, submitted that the impugned in....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ments amounting to Rs. 189,24,45,851/- in fully convertible debentures of M/s Kesar Marbles & Granites Ltd. This investment was made over several years, from 2010 to 2014, and was properly recorded in the books of accounts and reflected in the financial statements. 41.2 During the financial year relevant to Assessment Year (A.Y.) 2015-16, these debentures were redeemed for a consideration of Rs. 129,84,00,000, which led to a net capital loss of Rs. 59,40,45,851/-. The appellant classified this as both long-term and short-term capital loss, depending on the holding period of the debentures. Importantly, as per the law, no indexation was claimed in computing the long-term capital loss. 41.3 The learned AR pointed out that although during the course of search proceedings, a statement under section 132(4) of the Act was recorded from late Sri V.G. Siddhartha, in which he agreed to withdraw the claim of this capital loss, this statement was later retracted. Upon verification of the relevant books of accounts and supporting documents, it was clear that the transactions were genuine and that the capital loss was real and allowable. Therefore, the appellant, in the return filed under sec....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re, the same does not represent a genuine loss as claimed by the assessee. The ld. DR Vehemently reiterated the findings contained in the order of the lower authorities. 43. We have heard the rival contentions of both the parties and perused the materials available on record. The main issue in this case is the assessee's claim of capital loss of Rs. 59,40,45,851 arising from the redemption of debentures of M/s Kesar Marbles & Granites Ltd. 43.1 It is not in dispute that late Shri V.G. Siddhartha acquired fully convertible debentures from M/s Lehman Brothers, a well-known foreign financial services firm, for a total consideration of Rs. 189,24,45,851/-, using proper banking channels with RBI approvals. These debentures were later redeemed at a value of Rs. 129,84,00,000, resulting in the reported capital loss. The investment, redemption, and resulting loss were all properly recorded in the books and reflected in the assessee's tax return. 43.2 We note that the department has largely relied on the initial statement made under section 132(4) of the Act during the search, where the assessee appeared to admit that the capital loss claim would be withdrawn. However, the assessee later....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....or subsequent assessment year. 43.7 In view of all these facts and the settled legal position, we hold that the assessee's claim of capital loss is genuine and allowable under the law. The waiver of interest does not attract disallowance since the corresponding party has not claimed it as an expense. Moreover, the department cannot question the assessee's business judgment or commercial decisions. We, therefore, set aside the orders of the learned CIT(A) and direct the AO to allow the claimed capital loss of Rs. 59,40,45,851 as per law. Hence the ground of appeal of the assessee is hereby allowed. 44. The next issue raised by the assessee through ground Nos. 10 to 15 pertains to the addition made under section 68 of the Act for Rs. 4,59,00,000/- by treating the unsecured loan as unexplained cash credit. 45. The necessary facts are that the AO during the assessment proceedings under section 153A r.w.s. 143(3) of the Act noticed that the assessee during the year has received unsecured loans from several parties. Accordingly, the assessee was required to produce the confirmation of the loan creditors. However, the assessee failed to provide confirmations from certain parties agains....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... additional income. Further the additional evidence submitted includes detail of the person from whom the loan was claimed to be received, PAN of some of the lenders, extract of ledger copy from the assessee's book and settlement agreement. However, none of these documents satisfactorily explained the identity, creditworthiness and genuineness of the loan transaction in relation to which the addition was made. The extract of ledger account is from the assessee's books of accounts only, hence the same does not constitute independent evidence to substantiate the genuineness of the transaction. Likewise, the settlement agreement cannot prove the credibility to the cash credit. The AO further submitted that the assessee has claimed that the transaction was carried through banking channel however no bank account was submitted to verify the claim. Even assuming, the transaction was carried out through banking channel, but it does not absolve the assessee for discharging its burden of proving the identity, credit worthiness and genuineness of the transaction. 48. The learned CIT(A) after considering the facts in totality rejected the assessee's legal argument by observing that, though th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....upporting documents were received are not sustainable, and therefore, the additions were deleted to that extent. However, in cases where confirmations or settlement agreements were not furnished despite opportunities, the ld. CIT(A) upheld the additions made by the AO. The ld. CIT(A) also tabulated the details of parties for different assessment years and made clear distinctions based on whether confirmations were provided or not. As per the table, there were 24 individuals from whom unsecured for sum of Rs. 5.27 crore was received out which the assessee has provided confirmation in case 14 individual from whom loan aggregating to Rs. 68 Lakh was received. Hence the learned CIT(A) deleted the addition to that extent and confirmed the addition for Rs. 4.59 crore. 49. Being aggrieved by the order of the learned CIT(A), both the assessee and the Revenue are in appeals before us. The assessee is appeal before us against the confirmation addition for Rs. 4.59 crore whereas the revenue is in appeal against the deletion addition for Rs. 68 Lakh by accepting the additional evidence in ground No. (v) in ITA No. 2129/Bang/2024. 50. The Learned AR before us submitted that the AO had asked f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rmed are detailed as under: S. No. Name Amount Status 1 Anand Rao T.N 5 lakh Paid in full 2 Rajesh Kamath 60 Lakh Settlement 3 Suchetha HP 40 Lakh Paid in full 4 B L Kalpana 4 Lakh Paid in full 5 Vedakumari BP 3 Lakh Paid in full 6 Shreenthji Enterprises 25 Lakh Paid in full 7 Ekta Kukreja 50 Lakh Paid in full 8 Pavana Kishore 2.6 crore Paid in full 9 Shahsikala HM 10 lakh Paid in full 10 Preetha MC 2 Lakh Open 52.1 As far as the revenue's ground of appeal is concerned, we find the learned CIT(A) before accepting the additional evidence provided sufficient opportunity to the AO. However, the AO besides opposing the admittance of additional evidence not pointed out any infirmity in such evidence. Therefore, in our considered opinion the learned CIT(A) rightly admitted such evidence and provided the appropriate relief to the assessee. 52.2 Regarding the remaining loan credits, we note that the learned AR of the assessee before us submitted that amount from these loan creditors were received through banking channels and further except for Rajesh Kamath and Preetha MC, the loan received from the other 8 individuals was repaid in full throug....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e has discharged primary onus reading the credit of Rs. 2 lakh from Preetha MC. 52.6 Hence considering the overall material fact we set aside the finding of the learned CIT(A) to the extent of addition confirmed and direct the AO to delete the entire addition. Thus, the ground of appeal filed by the assessee is allowed whereas the ground of appeal of the revenue is hereby dismissed. Coming to the issue raised in the additional ground of appeal: 53. At the outset, we note that the issues raised by the assessee in its additional ground of appeal for the AY 2015-16 is identical to the additional ground raised by the assessee in ITA No. 1442/Bang/2024 for the assessment year 2013-14. Therefore, the findings given in ITA No. 1442/Bang/2024 shall also be applicable for the AY 2015-16. The additional ground of appeal of the assessee for the A.Y. 2013-14 has been decided by us vide paragraph No. 12 to 17 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for the assessment year 2015-16. Hence, the issue raised by the assessee in additional ground of appeal is hereby dismissed.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... of account it is noticed total of Rs. 3 of unsecured was arranged by the Shri Chiman Lal from different persons out of which an amount of Rs. 2 crore was received through banking channel duly recorded in the books of M/s Sivan & Co (a proprietary concern of VG Sidhartha). Therefore, only cash portion of loan of Rs. 1 crore was offered to tax. 57. However, the AO dismissed the submission of the assessee by holding that Shri KM Deekshith categorically stated that cash loan of Rs. 3 crores received from Chiman Lal was repaid in cash along with interest and the same were not recorded in the books. Further, Late Shri VG Siddhartha confirmed his statement and agreed to offer the loan amount of Rs. 3 as an unexplained income. But now the assessee camouflaging the unaccounted cash transactions with transaction recorded in books. Hence the AO held that the remaining amount of Rs. 2 crore needs to be added as unexplained income under section 69A of the Act. The AO found that seized material suggest transaction were carried out in the A.Y. 2017-18, however the assessee has offered part amount of Rs. 1 crore in the year under consideration i.e. A.Y. 2015-16. Hence the AO added an amount of R....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....i K. M. Deekshith, who mentioned that a loan of Rs. 3 crore was received in cash and repaid along with interest, also in cash. 62.1 However, we note that the legal heirs of Shri V. G. Siddhartha provided a plausible explanation, supported by documentary evidence, that only Rs. 1 crore was received in cash while the balance Rs. 2 crores were routed through banking channels and duly recorded in the books of account of M/s Sivan & Co., a proprietary concern of Shri Siddhartha. These details were submitted in the reply dated 2.12.2019 in response to the show cause notice dated 18.11.2019. The AO did not carry out any further enquiry to verify or disprove the claim. There was no independent corroborative evidence brought on record to counter the explanation of the assessee. Instead, the AO merely reiterated the statements made under section 132(4) of the Act during the search and rejected the explanation without sufficient reasoning. 62.2 It is a settled position of law that statements recorded during search operations, though admissible, cannot form the sole basis for addition unless supported by material evidence. The CBDT, through Instruction No. F. No. 286/2/2003-IT(Inv.) dated 10....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....eja as the same was paid through unaccounted cash. Hence, the AO relying on the statement of Shri KM Deekshith made an addition of Rs. 3 crores to the total income of the assessee. 64.2 The aggrieved assessee preferred an appeal before the learned CIT(A) and contended that there was not any material found during the search suggesting the payment of interest made to the Shri Prakash B Talreja. The AO merely relied on the statement of Shri KM Deekshith without bringing any corroborative material. Accordingly, the assessee requested to the learned CIT(A) to delete the addition. 64.3 The learned CIT(A) after considering the facts in totality deleted the addition made by the AO by holding that AO has merely relied on the statement of Shri KM Deekshith. As such there is no reference to any material on record suggesting the payment of interest. The AO also did not conduct any independent enquiry. The learned CIT(A) further held the principal amount of loan has already been offered to tax by the assessee. Therefore, in the given circumstances the question of payment of interest does not arise. Even assuming the interest was paid still it would be assumed that the sources of such payment ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....exure A/MAR-CCD/01 and A/MARCCD/ 02. As she was not available on the date of search her statement was recorded under section 131(1) of the Act as on 20th November 2017. While explaining the noting made in the impugned diaries, she stated that page 118 & 119 of the annexure A/MAR-CCD/01 contains the calculation of interest to be receivable from Shri VG Sidhartha on account of outstanding cash loan of Rs. 65 Lakh as on 1st April 2016. She further stated that a total of Rs. 1 crore was lent at an interest rate of 14% to Shri VG Sidhartha through cash in March 2014 which included Rs. 60 Lakh lent by herself and Rs. 40 lakh by her sister Jasmine Shah. Further page 119 also contains the details of interest of Rs. 4 lakh approximately received in cash on outstanding loan of Rs. 65 Lakh. 70.1 Likewise, she stated that page 34 of annexure A/MAR-CCD/03 again contains the noting in respect of same cash loan of Rs. 1 crore lent to Shri VG Siddhartha. As per the note in the impugned page, interest amounting Rs. 7 Lakh each was received as on 6 September 2014 and 6th March 2015 (total 14 Lakh). Further principal amount of Rs. 35 lakhs (out of Rs. 60 Lakh by Mamta Ajila) and interest amounting o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....iding the opportunity of cross examination also does not arise as Shri VG Sidhartha is no more. Hence, the learned CIT(A) in view of the above deleted the addition made by the AO. 71.3 Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 71.4 The learned DR before us reiterated the findings contained in the assessment order. 71.5 On the other hand, the learned AR before us vehemently supported the order of the learned CIT-A. 72. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, it is noted that the AO made addition on account of alleged unaccounted cash interest payments by Late Shri V.G. Siddhartha to Smt. Mamta Ajila and her sister, Smt. Jasmine Shah. 72.1 The addition of the AO is based solely on entries found in certain diaries seized during a search at the residence of Smt. Mamta Ajila, as well as her subsequent statement. These diaries allegedly recorded cash loans and interest payments from Shri V.G. Siddhartha. However, it is important to note that no documents, diaries, or materials indicating any such cash loan or interest transactions were found at ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al in ITA No. 1444/Bang/2024 for A.Y. 2015-16. We have decided the impugned issue in favour of the assessee and against the Revenue vide paragraph No. 36 of this order. For detailed discussion, please refer the aforesaid paragraph of this order. Hence, the ground of appeal of the revenue in respect of addition on account of payment of interest to Shri Ankith and Shri Rachit is hereby dismissed. 75. Coming to the issue of addition made on account of payment of interest to M/s Kummergode Investors. The relevant facts are that during the search at the residence of the manager, Shri Javeed Parveez, a notebook was found and sized marked as annexure A/S/SP/07. Pages 12 to 15 of the said notebook contains details of payment of interests. On confrontation, Shri Javed Parveez explained the noting made therein by stating that it represents payment of interest to the farmers & planters. He further explained that that these farmers and the planters have made investment in the share of M/s Kummergode Estate on the advice of the assessee. Subsequently, shares on M/s Kummergode were acquired by the new company floated by the assessee group namely M/s Gonibedu and the investment of the farmers co....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....dence exist contrary to the same. The AO has not carried out any independent inquiry which could sustain the addition made. In view of the above facts, the addition made toward unaccounted cash interest paid to Kummergode Estate investors is deleted for the A.Y. 2014-15 to 2018-19. Further the addition under section 69A can be made only if the transaction is not recoded in the books of accounts whereas in the instant case appellant has recorded the transactions in the books of accounts. 77. Being aggrieved by the order of learned CIT-A, the revenue is in appeal before us. 78. Both the learned DR and the AR before us vehemently supported the order of the respective authorities below. 79. We have heard the rival contentions of both the parties and perused the materials available on record. It is clear from the facts that the payments in question, the interest paid to farmers and planters who had invested in M/s Kummergode Estate were made using funds withdrawn from the bank account of M/s MACEL, either through self- cheques or account payee cheques. The assessee has provided a reasonable explanation, linking the payments to recorded withdrawals from an identifiable and accounted....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... several parties. Accordingly, the assessee was required to produce the confirmation of the loan credit. However, the assessee failed to provide confirmation from 25 parties, from whom loan aggregating to Rs. 6,27,98,000/- was received. The details of the parties and the amounts of respective loans are available on pages 44 to 45 of the assessment order. The assessee claimed that the transaction was carried out through the banking channel, hence the genuineness and credit worthiness are duly established. 84.1 However, the AO held that merely the transaction carried out through the banking channel is not sufficient to establish the genuineness of the transaction and credit worthiness of the lender/creditor. The AO held that it is the duty of the assessee to explain the nature and sources of the credit and thereby assessee is required to establish genuineness of transaction and credit worthiness of the creditor which the assessee failed. Therefore, the AO treated the impugned loan credit of Rs. 6,27,98,000/- as unexplained cash credit as provided under section 68 of the Act and added to the total income of the assessee. 85. The aggrieved assessee preferred an appeal before the lear....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ments satisfactorily explained the identity, creditworthiness and genuineness of the loan transaction in relation to which addition was made. The extract of ledger account is from the assessee's books only and hence, the same does not constitute independent evidence to substantiate the genuineness of the transaction. Likewise, the settlement agreement cannot prove the post facto credibility to the cash credit; the AO further submitted that the assessee has claimed that the transaction was carried through banking channel however no bank accounts submitted to verify the claim. Even assuming the transaction was carried through banking channel but that does not absolve the assessee from the burden to prove the identity, credit worthiness and genuineness of the transactions. 86. However, the learned CIT(A) found that the assessee for the year under consideration filed return of income as on 05-08-2016, therefore the time limit for issue of notice under section 143(2) of the Act for regular assessment was available till 30th September 2017. The learned CIT(A) further found that search under section 132 of the Act carried out on 21st September 2017. Accordingly, the learned CIT(A) held t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ovided for the loan amount of Rs. 1.88 crores only. Meaning thereby no confirmation was provided for loan amount of Rs. 4.3998 crore. Thus, considering the entire materials and circumstances, the ld. CIT(A) partly allowed the appeal of the assessee, deleting the additions where documentary confirmations and settlement agreements were provided, and upholding the additions where such evidence was lacking. 87. Being aggrieved by the order of the learned CIT(A), both the assessee and the Revenue are in the appeal before us. The assessee is in appeal against the confirmation of addition to the extent of Rs. 4,39,98,000/- whereas the Revenue is in appeal against the relief provided by the AO based on additional evidence in ground No. (iv) in ITA No. 2130/Bang/2024. 88. The learned AR before us argued that during the assessment, the credits raised by the appellant were genuine, made through banking channels, and properly recorded in the regular books of accounts. The AO added the total receipts of Rs.6,27,98,000/- to the income without making proper inquiries or giving the appellant a chance to explain the sources, which goes against the principles of natural justice. The learned AR als....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... evidence. Therefore, in our considered opinion the learned CIT(A) rightly admitted such evidence and provided the appropriate relief to the assessee. 90.2 Regarding the confirmation of the remaining loan credits, we note that the learned AR of the assessee before us submitted that amount from these loan creditors was received through banking channels and further except for Mrs. Radha MB, the loan received from the other 3 individuals was repaid in full through banking channels. The learned AR in this respect draws our attention to page 102 to 111 of the paper book where the ledger account, leger confirmation and bank statement are placed showing the loan amount were received through the banking channel and repaid in the year under consideration itself or in the subsequent years. Therefore, we are of the considered opinion that once it is established the unsecured loan was received through banking channel and subsequently repaid through the banking channel, the genuineness of such loan transaction cannot be questioned. In holding so, we draw support and guidance from the judgment of Hon'ble Gujarat High Court in the case of PCIT vs. Ojas Tarmake Pvt Ltd reported in 156 taxmann.com....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Revenue for A.Y. 2016-17 in case of legal heir of late Shri VG Sidhartha represented by Smt. Malvika Hegde. 93. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition on account of payment of interest by allowing the benefit of telescoping of income offered on account of receipt of cash loan. 93.1 At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2016-17 is identical to the issue raised by the Revenue in ITA No. 2129/Bang/2024 for the AY 2015-16. Therefore, the findings given in ITA No. 2129/Bang/2024 shall also be applicable for the assessment year 2016-17. The appeal of the Revenue for the A.Y. 2015-16 has been decided by us vide paragraph No. 68 of this order against the Revenue. The learned DR and the AR also agreed that whatever will be the findings for the assessment year 2015-16 shall also be applied for the assessment year 2016-17. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 94. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition on account of payment of interest on cash loan from Smt. Mamta Ajila. 94.1 At the outs....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... VG Siddhartha for A.Y. 2017-18. 98. The assessee has raised as many as 8 grounds in the appeal which are interconnected. The effective issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of Rs. 10,22,80,326/- by treating the unsecured loan as unexplained cash credit u/s 68 of the Act ignoring the fact that no incriminating material was found/unearthed during the search operation in relation to impugned loan. Further, the ld. CIT-A erred in confirming the addition for the want of confirmation only ignoring the other evidence. 99. The relevant facts are that the assessee during the year procured unsecured loans from 67 individuals for a sum of Rs. 12,00,55,326/- only. The AO asked the assessee to furnish the confirmation of such loan credits from the parties. However, the assessee failed to furnish the confirmation but claimed that all the transaction are carried out through banking channel as evident from the bank statements already provided. Therefore, the genuineness and credit worthiness of the transactions are established. 99.1 However, the AO rejected the contention of the assessee and held that mere the fact that the transactions are th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cts in totality noted that during the assessment proceedings, the assessee had filed the confirmation statements submitted for some parties but the AO without conducting any independent verification or necessary enquiries to test their veracity rejected the same. However, the AO during the remand proceedings, when additional evidence and detailed confirmation statements were submitted, the AO merely dismissed these by stating that they were an afterthought, without actually pointing out any specific defects or shortcomings or conducting further verifications. 100.4 The ld. CIT(A), upon detailed perusal of the additional evidence, observed that the confirmation statements submitted contained full particulars, including the names, addresses, PANs of the concerned parties, amounts involved, and the details of repayments or settlements, which were often supported by agreements executed on stamp papers. It was further noted that the appellants had also furnished ledger copies and other documentary evidence establishing the identity, creditworthiness, and genuineness of the transactions. The ld. CIT(A) recorded a categorical finding that the evidence produced during the appellate procee....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....stressed that the learned CIT(A)'s decision to confirm the balance addition was unjustified. Therefore, the learned AR requested the Tribunal to consider all the evidence and delete the remaining additions. 103. On the contrary, the learned DR reiterated the findings contained in the assessment order. The learned DR vehemently supported the order of the AO. 104. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee during the year under consideration has accepted unsecured loan from 67 individuals for a sum of Rs. 12,00,55,326/-. The AO treated the entire unsecured loan from these 67 individuals as unexplained cash credit under section 68 of the Act in the absence of confirmations. Subsequently, the assessee during appellate proceedings filed certain additional evidence to substantiate the genuineness of the impugned loan credit. The leaned CIT(A) based on the same accepted the genuineness of part of loan credit from 16 individual, however confirmed the addition for the sum of Rs. 10,22,80,326/-/ received from 51 individuals by holding that the assessee still not furnished co....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... channel from the party namely Shri Kamalakshama MK. The assessee (legal heir Smt. Malvika Hegde) entered into settlement agreement with said party as on 20th April 2020 as the said party agreed for payment of Rs. 20 Lakh for full and final payment. The said amount was paid by Smt. Malvika Hegde. In this respect the copy of ledger account, ledger confirmation, settlement agreement, receipt acknowledgment of Rs. 20 lakhs are available at pages 121 to 126 of the paper book. - A sum of Rs. 25 lakhs received as on 1st March 2017 through banking channel from the party namely Shri Pavan CS. The account was settled for Rs. 12.5 lakh which was paid from the bank account of Smt. Malvika Hegde as on 24th March 2020. 104.5 A similar settlement agreement was reached with all the remaining parties and the account settled in the subsequent years. Therefore, considering the facts that the amount was received through banking channel and the assessee has furnished name, address details, PAN and settlement agreement and evidence of repayment as per settlement agreement through banking channel, we hold that the assessee has discharged the onus with respect identity, genuineness and creditworthines....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e learned CIT(A) deleted the addition made by the AO both on substantive basis and protective basis. 108.3 Against the deletion of substantive addition in A.Y. 2015-16, the revenue filed an appeal in ITA No. 2129/Bang/2024 which we have decided vide paragraph No. 62 of this order where we have dismissed the ground of appeal of the revenue. Hence, considering the fact that substantive addition already deleted, the protective addition in the year under consideration also is hereby deleted. Thus, the ground of appeal of the Revenue is hereby dismissed. 109. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition on account of payment of interest by allowing the benefit of telescoping of income offered on account of receipt of cash loan. 109.1 At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2017-18 is identical to the issue raised by the Revenue in ITA No. 2129/Bang/2024 for the assessment year 2015- 16. Therefore, the findings given in ITA No. 2129/Bang/2024 shall also be applicable for the assessment years 2017-18. The appeal of the Revenue for the A.Y. 2015-16 has been decided by us vide paragr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....in ITA No. 1446/Bang/2024. The detailed finding in this regard is given in paragraph No. 104 of this order where we have allowed the issue in favour of the assessee and against the Revenue. Hence the ground of appeal filed by the revenue is hereby dismissed. 113. In the result the appeal filed by the revenue is hereby dismissed. Coming to ITA No. 1447/Bang/2024, an appeal by the assessee namely Smt. Malavika Hegde being the legal heir of Late Shri VG Siddhartha for A.Y. 2018-19. 114. The issue raised by the assessee through ground Nos. 1 to 3 of the appeal pertain to addition of Rs. 50 Lakh under section 69 of the Act on account of alleged unexplained investment in Athigere Estate. 115. The relevant facts are that during the search proceeding at the residence of Shri Javeed Parveez certain loose sheets were found and seized and marked as folder A/S/JP/5. Page No. 171 & 172 of the impugned folder contain the detail of cash payments. Question was asked to Shri Javeed Parveez while recording his statement regarding the impugned page to which he admitted that the cash amounting to Rs. 50 Lakh was paid as on 6th April 2017 to Shri M.M. Parthasarathy as advance against the purchase o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed that the alleged cash investment of Rs. 50,00,000/- in the purchase of Athigere Estate was wrongly added as unexplained income under section 69 of the Act. He explained that although a statement was made under section 132(4) of the Act admitting the cash payment, this was later retracted after verifying the books of accounts, which showed that there was sufficient cash balance to cover the payment. The learned AR argued that the only issue was the lack of a proper accounting entry, not the source of funds. He emphasized that both the AO and the learned CIT(A) wrongly ignored the available records and solely relied on the admission made during the search without considering corroborative evidence. Therefore, the learned AR requested us to delete the addition, as the sources of funds were clearly explained and no actual undisclosed income existed. 119. On the other hand, the learned DR vehemently supported the findings of the lower authorities. 120. We have heard the rival contentions of both the parties and perused the materials available on record. The primary issue under consideration pertains to the addition of Rs. 50 lakhs under section 69 of the Act on account of alleged u....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....on, the addition of Rs. 50 lakhs under section 69 of the Act is not justified. Consequently, the addition made by the AO and sustained by the learned CIT(A) is directed to be deleted. Hence the ground of appeal of the assessee is allowed. 121. The next issue raised by the assessee through ground Nos. 4 to 9 of the appeal pertains to the addition of Rs. 1 crore on account of loan from Shri Rachith and Shri Ankith. 121.1 At the outset, we note that the issues raised by the assessee in its grounds of appeal for the AY 2018-19 is identical to the issue raised by the assessee in ITA No. 1444/Bang/2024 for the assessment year 2015-16. Therefore, the findings given in ITA No. 1444/Bang/2024 shall also be applicable for the assessment years 2018-19. The ground of appeal of the assessee for the A.Y. 2015-16 has been decided by us vide paragraph No. 36 of this order against the revenue and in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2015-16 shall also be applied for the assessment year 2018-19. Hence, the ground of appeal filed by the assessee is hereby allowed. 122. The next issue raised by the assessee throu....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... cash of Rs. 1.2 crores found at the residence of Mr. Rajaneesh Gopinath actually belonged to the Coffee Day group and not personally to the appellant. He explained that this cash was kept with Mr. Pranesh Gopinath for safekeeping and was part of the usual cash maintained for plantation operations, where daily labour payments are made in cash. The ld. AR emphasized that the sources of the cash were fully explained and supported by the cash balances recorded in the books of Chandrapore Estate and Bynekhan Estate, which had sufficient funds. Despite these explanations and the confirmation by late Mr. V.G. Siddhartha, the AO and the learned CIT(A) ignored the evidence and wrongly added the amount under section 69A of the Act as unexplained income. The ld. AR firmly submitted that there was no valid basis for this addition since the revenue authorities did not rebut the explanations or the evidence provided. Therefore, the learned AR requested us to delete the addition, as the cash sources were clearly established and explained. 127. On the contrary, the learned DR before us vehemently supported the finding of the lower authorities. 128. We have heard the rival contentions of both th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....trary finding, cannot negate the uncontroverted explanation given contemporaneously during the search. 128.4 Thus, considering the entirety of facts, particularly the fact that no witness or individual has stated that the cash was from an unexplained or unaccounted source, and that there is clear and consistent explanation attributing the cash to bank withdrawals recorded in the books, we are of the view that the addition of Rs. 1.2 crore made under Section 69A is unjustified. Accordingly, the addition made by the AO and sustained by the CIT(A) is directed to be deleted. Hence the ground of appeal of the assessee is hereby allowed. 129. The next issue raised by the assessee through ground No. 11 to 18 pertains to the addition of Rs. 21,93,14,690/- under section 68 of the Act by treating the unsecured as unexplained cash credit. 129.1 At the outset, we note that the issue raised by the assessee in its grounds of appeal for the AY 2018-19 is identical to the issue raised by the assessee in ITA No. 1446/Bang/2024 for the assessment year 2017- 18. Therefore, the findings given in ITA No. 1446/Bang/2024 shall also be applicable for the assessment year 2018-19. The ground of appeal of....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 133. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition on account of payment of interest on cash loan from Smt. Mamta Ajila. 133.1 At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2018-19 is identical to the issue raised by the Revenue in ITA No. 2129/Bang/2024 for the assessment year 2015- 16. Therefore, the findings given in ITA No. 2129/Bang/2024 shall also be applicable for the assessment year 2018-19. The appeal of the Revenue for the A.Y. 2015-16 has been decided by us vide paragraph No. 72 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2015-16 shall also be applied for the assessment year 2018-19. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 134. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition for payment of interest to Shri Ankith, Shri Rachet and the investor of M/s Kummergodu. 134.1 At the outset, we note that the issue raised by the Revenue in its grounds of appeal for the AY 2018-19 is identical to the issue raised by the....