ACIT, MUMBAI V. ANILKUMAR JAGDISHRAJ SETH , MUMBAI

ITA 3378/MUM/2024

AI Insights

The case involves Anil Kumar Jagdishraj Seth, a director at M/s Radium Creation Ltd., who faced scrutiny under the Income Tax Act for the assessment year 2018-19. The Assessing Officer made additions to the assessee's income, treating certain loans and expenses as unexplained investments and disallowing brokerage expenses. The CIT(A) partially upheld these additions, leading to appeals by both the Revenue and the assessee to the Income Tax Appellate Tribunal. The Tribunal examined the applicability of section 50C and the treatment of brokerage expenses, ultimately favoring the assessee's position.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38067 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 28-06-2024
• Other Referred Cases: Rajpal Mehra (HUF) vs. ITAT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: MADHUR AGRAWAL
• Keywords: Set aside; Unexplained expenditure; Unexplained investment; Sale consideration of property below Jantri Value; Valuation report
• Section: 50C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 3378/MUM/2024 Assessment Year: 2018-19 ACIT, 506, 5th floor, Piramal Chamber, Lalbaug, Parel, Mumbai-400012. Vs. Anil Kumar Jagdishraj Seth, Flat No. 1201, Jeevan Satya Co-op. Housing Society, 15th Road, Plot No. 411, Bandra (W), Mumbai-400050. PAN NO. AOBPS 8150 E Appellant Respondent CO No. 137/MUM/2024 (Arising out of ITA No. 3378/MUM/2024) Assessment Year: 2018-19 Anil Kumar Jagdishraj Seth, Flat No. 1201, Jeevan Satya Co- op. Housing Society, 15th Road, Plot No. 411, Bandra (W), Mumbai-400050. Vs. ACIT, 506, 5th floor, Piramal Chamber, Lalbaug, Parel, Mumbai-400012. PAN NO. AOBPS 8150 E Appellant Respondent Assessee by : Mr. Madhur Agrawal Revenue by : Mr. Ram Krishn Kedia, Sr. DR Date of Hearing : 23/10/2024 Date of pronouncement : 28/10/2024 PER OM PRAKASH KANT, AM This appeal by the Revenue and cross assessee are directed against order dated 30.04.2024 passed by the Ld. Commissioner of Income Appeal Centre, Delhi [in short 2018-19. 2. The grounds raised by the Revenue are reproduced as under: 1. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restriction the addition of Rs. 1,62,00,000/ account of unexplained investment, without appreciating the fact that unsecured loan advanced by the assessee amounting to Rs. 1,62,00,000/ recorded by the assessee in his book of account.\" 2. \"Whether on the facts an and in law, the Ld. CIT (A) has erred in restriction the addition of Rs. 1,62,00,000/ account of unexplained investment, without appreciating the fact that unsecured loan advanced by the assessee amounting to Rs 1,62,00,000/ recorded by the assessee in his book of account and only when the SCN was issued to the assessee identifying the discrepancies, the assesses tried to correlate the same in guise of investment.\" 3. \"Whether on the and in law, of Rs. 1,62,00,000/ unexplained investment, without appreciating the fact that closing balance in the head of appeared in the 5,62,36,555/ assessee in the balance sheet of M/s RCL is shown at Rs. 6,23,50,363/ that assessee has given unsecured during the year under his books of account ?\"* Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue and cross-objection by the assessee are directed against order dated 30.04.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year The grounds raised by the Revenue are reproduced as under: \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restriction the addition of Rs. 1,62,00,000/- to Rs.61,13,808/ account of unexplained investment, without appreciating the fact that unsecured loan advanced by the assessee amounting to Rs. 1,62,00,000/- to M/s. RCL was not recorded by the assessee in his book of account.\" \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restriction the addition of Rs. 1,62,00,000/- to Rs.61,13,808/ account of unexplained investment, without appreciating the fact that unsecured loan advanced by the assessee unting to Rs 1,62,00,000/- to M/s RCL was not recorded by the assessee in his book of account and only when the SCN was issued to the assessee identifying the discrepancies, the assesses tried to correlate the same in guise of investment.\" \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in restriction the addition of Rs. 1,62,00,000/- to Rs.61,13,808/- on account of unexplained investment, without appreciating the fact that closing balance in the head of loans and advances appeared in the assessce's balance sheet at Rs. 5,62,36,555/-whereas the unsecured loans against the assessee in the balance sheet of M/s RCL is shown at Rs. 6,23,50,363/- as on 31.03.2018, which clearly proves that assessee has given unsecured loan to the company during the year under consideration was not recorded in his books of account ?\"* Anil Kumar Jagdishraj Seth 2 3378/MUM/2024 & CO No. 137/M/24 objection by the assessee are directed against order dated 30.04.2024 passed by the National Faceless ‘the Ld. CIT(A)’] for assessment year The grounds raised by the Revenue are reproduced as under: \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in restriction the Rs.61,13,808/- on account of unexplained investment, without appreciating the fact that unsecured loan advanced by the assessee to M/s. RCL was not d in the circumstances of the case and in law, the Ld. CIT (A) has erred in restriction the to Rs.61,13,808/- on account of unexplained investment, without appreciating the fact that unsecured loan advanced by the assessee to M/s RCL was not recorded by the assessee in his book of account and only when the SCN was issued to the assessee identifying the discrepancies, the assesses tried to correlate the same in facts and in the circumstances of the case Ld. CIT (A) has erred in restriction the addition on account of unexplained investment, without appreciating the fact that d advances assessce's balance sheet at Rs. whereas the unsecured loans against the assessee in the balance sheet of M/s RCL is shown at Rs. as on 31.03.2018, which clearly proves loan to the company consideration was not recorded in 4. \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is right in allowing the safe harbor limit of 5 pereent to the asses appreciating the facts that it is introduced by Finance Act, 2018, and applicable with effect from 1 5. \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) is right in allowing the brokerage in transfer of p assessee has failed to furnish any corroborative evidence to prove thatan amount of Rs. 7,20,000/ paid to Mr. Lal Hathiramani pertains to brokerage fees only towards sale of the property in questio 6. \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in allowing the brokerage in transfer of property without appreciating the facts that as per clause No “27 of the registered agreement of sale dated 04.01.2018 sale/incidental expenses and expenses in connection with the stamp duty, registration. charges, out of pocket expenses, legal charges etc. were to be borne and paid by the purchaser only? 2.1 The cross-objection under: 1. (a) The CIT(A) erred in confirming the action of AO in making an addition to the extent of Rs.61,13,808/ the Company M/s Radium Creation Limited(RCL) on behalf of Appellant and recoverab expenditure. The Appellant submits that M/s Radium Creation Limited has incurred expenses aggregating to Rs.61,13,808/ Appellant and same is payable by Appellant to RCL, expenses are duly been recorde hence on the facts and circumstances of the case same cannot be treated as unexplained expenditure. (b) The CIT(A) erred in confirming the addition to the extent of Rs.61,13,808/- holding it as unexplained expenditure. (c) The CIT(A) erred in confirming the action of AO in making addition u/s 115BBE of the Act without appreciating that the reimbursement of expenses are duly been recorded in the books of M/s Radium Creation Limited as well as Appellant and provisions of section 115BBE r. w.r. 69 of the Act has no application in its case. Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is right in allowing the safe harbor limit of 5 pereent to the assessee without appreciating the facts that it is introduced by Finance Act, 2018, and applicable with effect from 1-4-2019.\" \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) is right in allowing the brokerage in transfer of property without appreciating the facts that assessee has failed to furnish any corroborative evidence to prove thatan amount of Rs. 7,20,000/- claimed to be paid to Mr. Lal Hathiramani pertains to brokerage fees only towards sale of the property in question?' \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in allowing the brokerage in transfer of property without appreciating the facts that as per clause No “27 of the registered agreement of sale dated 04.01.2018, all expenses in connection with sale/incidental expenses and expenses in connection with the stamp duty, registration. charges, out of pocket expenses, legal charges etc. were to be borne and paid by the purchaser only? objections raised by the assessee are reproduced as 1. (a) The CIT(A) erred in confirming the action of AO in making an addition to the extent of Rs.61,13,808/- being expenses incurred by the Company M/s Radium Creation Limited(RCL) on behalf of Appellant and recoverable from the Appellant as unexplained The Appellant submits that M/s Radium Creation Limited has incurred expenses aggregating to Rs.61,13,808/- on behalf of the Appellant and same is payable by Appellant to RCL, expenses are duly been recorded in the books of Appellant as well as hence on the facts and circumstances of the case same cannot be treated as unexplained expenditure. (b) The CIT(A) erred in confirming the addition to the extent of - made by the AO as unexplained investment by holding it as unexplained expenditure. (c) The CIT(A) erred in confirming the action of AO in making addition u/s 115BBE of the Act without appreciating that the reimbursement of expenses are duly been recorded in the books of M/s Radium ation Limited as well as Appellant and provisions of section 115BBE r. w.r. 69 of the Act has no application in its case. Anil Kumar Jagdishraj Seth 3 3378/MUM/2024 & CO No. 137/M/24 \"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is right in allowing the safe see without appreciating the facts that it is introduced by Finance Act, \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) is right in allowing the brokerage in roperty without appreciating the facts that assessee has failed to furnish any corroborative evidence claimed to be paid to Mr. Lal Hathiramani pertains to brokerage fees \"Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) has erred in allowing the brokerage in transfer of property without appreciating the facts that as per clause No “27 of the registered agreement of sale , all expenses in connection with sale/incidental expenses and expenses in connection with the stamp duty, registration. charges, out of pocket expenses, legal charges etc. were to be borne and paid by the assessee are reproduced as 1. (a) The CIT(A) erred in confirming the action of AO in making an being expenses incurred by the Company M/s Radium Creation Limited(RCL) on behalf of le from the Appellant as unexplained The Appellant submits that M/s Radium Creation Limited has on behalf of the Appellant and same is payable by Appellant to RCL, expenses are RCL and hence on the facts and circumstances of the case same cannot be (b) The CIT(A) erred in confirming the addition to the extent of investment by (c) The CIT(A) erred in confirming the action of AO in making addition u/s 115BBE of the Act without appreciating that the reimbursement of expenses are duly been recorded in the books of M/s Radium ation Limited as well as Appellant and provisions of section 3. Briefly stated facts of the case are that the assessee is director in M/s Radium Creation Ltd. For the year under consideration, the assessee filed return of income revised on 28.03.2019 declaring total income at Rs.69,49,440/ incuding capital loss amounting to Rs.51,52,000/ income filed by the assessee was selected for scrutiny assessment and statutory notices under the Income Act’) were issued and complied with. During the assessment proceedings, the Assessing Officer noticed Rs.1,62,00,000/- given to the company M/s Radium Creation Ltd. which according to him assessee and therefore, same was held as unexplained investment u/s 69 of the Act. Further, the Assessing Officer observed that a property was sold recorded in the books of acc value of the property as on the date of the sale and therefore, the Assessing Officer invoked section 50C of the Act sale consideration shown by the assessee by the value as per stamp duty while computing Assessing Officer also disallowed the brokerage of Rs.7,20,000/ claimed while computing income under the head capital gain. 3. Aggrieved, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the and brokerage expenditure but restricted the addition of the Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 Briefly stated facts of the case are that the assessee is director in M/s Radium Creation Ltd. For the year under the assessee filed return of income revised on 28.03.2019 declaring total income at Rs.69,49,440/ capital loss amounting to Rs.51,52,000/- income filed by the assessee was selected for scrutiny assessment otices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. During the assessment proceedings, the Assessing Officer noticed given to the company M/s Radium Creation Ltd. him was not appearing in books of account and therefore, same was held as unexplained investment u/s 69 of the Act. Further, the Assessing Officer observed that a was sold by the assessee but the sale consideration recorded in the books of accounts was less than the stamp duty value of the property as on the date of the sale and therefore, the Assessing Officer invoked section 50C of the Act sale consideration shown by the assessee by the value as per stamp duty while computing income under the head capital gain. Assessing Officer also disallowed the brokerage of Rs.7,20,000/ while computing income under the head capital gain. the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) deleted the addition in respect of section 50C of the Act and brokerage expenditure but restricted the addition of the Anil Kumar Jagdishraj Seth 4 3378/MUM/2024 & CO No. 137/M/24 Briefly stated facts of the case are that the assessee is a director in M/s Radium Creation Ltd. For the year under the assessee filed return of income, which was revised on 28.03.2019 declaring total income at Rs.69,49,440/- -. The return of income filed by the assessee was selected for scrutiny assessment tax Act, 1961 (in short ‘the Act’) were issued and complied with. During the assessment proceedings, the Assessing Officer noticed a loan of given to the company M/s Radium Creation Ltd., not appearing in books of account of and therefore, same was held as unexplained investment u/s 69 of the Act. Further, the Assessing Officer observed that a by the assessee but the sale consideration ounts was less than the stamp duty value of the property as on the date of the sale and therefore, the for substituting sale consideration shown by the assessee by the value as per stamp income under the head capital gain. The Assessing Officer also disallowed the brokerage of Rs.7,20,000/- while computing income under the head capital gain. the assessee filed appeal before the Ld. CIT(A). The addition in respect of section 50C of the Act and brokerage expenditure but restricted the addition of the unexplained expenditure to the extent of Rs.61,13,808/ amount of the expenditure incurred on behalf of the assessee by the Company. 4. Aggrieved, both the assessee and the Revenue are before us by way of raising respective grounds. 5. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 131. 6. The ground No grounds raised by the assessee in cross addition to the extent of Rs.61,13,808/ therefore, same are adjudicated 6.1 Briefly stated, facts of the case are that the Assessing Officer observed a loan of Rs.2,62, company M/s Radium Creation Ltd. Out of said loan, the company returned an amount of Rs.1,00,00,000/ outstanding balance of Rs.1,62,00,000/ which the Assessing Officer ma Rs.1,62,00,000/- was not appearing in the the assessee. The details appearing in the bo before the Assessing Officer. But sa Assessing Officer. Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 unexplained expenditure to the extent of Rs.61,13,808/ amount of the expenditure incurred on behalf of the assessee by the both the assessee and the Revenue are before us by way of raising respective grounds. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 131. The ground Nos. 1 to 3 of the appeal of the Revenue and ds raised by the assessee in cross-objection for sustaining to the extent of Rs.61,13,808/- are inter connected and adjudicated together. Briefly stated, facts of the case are that the Assessing Officer Rs.2,62,00,000/- given by the assessee to the company M/s Radium Creation Ltd. Out of said loan, the company returned an amount of Rs.1,00,00,000/- and thus outstanding balance of Rs.1,62,00,000/-. The main reason which the Assessing Officer made the addition is that loan of was not appearing in the financial statements the assessee. The details of ledger accounts of the assessee appearing in the books of accounts by the company before the Assessing Officer. But same were not considered by the Anil Kumar Jagdishraj Seth 5 3378/MUM/2024 & CO No. 137/M/24 unexplained expenditure to the extent of Rs.61,13,808/- i.e. the amount of the expenditure incurred on behalf of the assessee by the both the assessee and the Revenue are before us by Before us, the Ld. counsel for the assessee has filed a Paper . 1 to 3 of the appeal of the Revenue and objection for sustaining are inter connected and Briefly stated, facts of the case are that the Assessing Officer given by the assessee to the company M/s Radium Creation Ltd. Out of said loan, the company and thus leaving . The main reason for de the addition is that loan of financial statements of ledger accounts of the assessee oks of accounts by the company were filed me were not considered by the 6.2 On further appeal, the Ld. CIT(A) verified the ledger accounts of the assessee in the books of accounts of the M/s Radium Creation Ltd. After considering submission of the assessee CIT(A) sustained the addition to the extent of Rs. observing as under: “7.3 During the course of appeal proceedings, appellant is contending that appellant has granted loan of Rs. 2,62,00,000/ RCL out of which Rs. 1,00,00,000/ year RCL has incurred various expenses aggregating to Rs.61,13,808/- the appellant to RCL. RCL books the reimbursement of expenses in separate ledger A/c. Appellant has submitted the copy of appella loan account and reimbursement A/c in the books of RCL for AY 2017-18. Appellant contends that ledger A/c of RCL in books of assesse included all the entries of loan given to RCL and repayment received from RCL. 7.4 On perusal of the books of account of appellant has shown Rs.5,62,36,555/ Limited. Further on perusal of books of account of Radium Creations Itd it is seen that the opening balance of unsecured loan from Shri Anil Sheth as on 01.04. during the year is Rs.2,62,00,000/ Rs.1,00,00,000/ Rs.6,23,50,363/ Rs.61,13,808/- appellant to Radium creation Itd. Radium Creations it is clear that during the year appellant has invested Rs.2,62,00,000/ confirmation in it pa per appellant contention the company has incurred expenses of Rs.61,13,808/- has shown loan received from appellant of does not include the expenses incurred by the company). has himself admitted that company on his behalf incurred expense of Rs.61,13,808/- Company RCL. included in the outstanding loan balance of Rs.6,23,50,363/ appellant has failed to reflect the treatment of same on the books of account of the Company. Appellant has not recorded the said expenses on its books of account. Accordingly the same is unexplained ex directed to restrict the addition to Rs.61,13,808. of appeal is hereby partly allowed. Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 On further appeal, the Ld. CIT(A) verified the ledger accounts of the assessee in the books of accounts of the M/s Radium Creation Ltd. After considering submission of the assessee ined the addition to the extent of Rs. 7.3 During the course of appeal proceedings, appellant is contending that appellant has granted loan of Rs. 2,62,00,000/ RCL out of which Rs. 1,00,00,000/- was returned back. During year RCL has incurred various expenses aggregating to - on behalf of Appellant which are to be reimbursed by the appellant to RCL. RCL books the reimbursement of expenses in separate ledger A/c. Appellant has submitted the copy of appella loan account and reimbursement A/c in the books of RCL for AY 18. Appellant contends that ledger A/c of RCL in books of assesse included all the entries of loan given to RCL and repayment received from RCL. 7.4 On perusal of the books of account of the appellant it is seen that appellant has shown Rs.5,62,36,555/- as invest in Radium Creation Limited. Further on perusal of books of account of Radium Creations Itd it is seen that the opening balance of unsecured loan from Shri Anil Sheth as on 01.04.2017 is at Rs.4,61,50,363/-, loan accepted during the year is Rs.2,62,00,000/-, loan repaid during the year is Rs.1,00,00,000/- and closing Balance as on 31.03.2018 is Rs.6,23,50,363/-. Appellant is contending that the difference of - is on account of reimbursement to be paid by the appellant to Radium creation Itd. However, from the books of the Radium Creations it is clear that during the year appellant has invested Rs.2,62,00,000/- only, for which appellant has provided confirmation in it paper book at page no 107. It is to be noted that as per appellant contention the company has incurred expenses of - during the year, however, during the year company has shown loan received from appellant of Rs.2,62,00,000/ lude the expenses incurred by the company). has himself admitted that company on his behalf incurred expense of -. Appellant has submitted confirmation from the Company RCL. Further, the amount of Rs.61,13,808/ e outstanding loan balance of Rs.6,23,50,363/ appellant has failed to reflect the treatment of same on the books of account of the Company. Appellant has not recorded the said expenses on its books of account. Accordingly the same is unexplained expenditure of the appellant. In view of the above AO is directed to restrict the addition to Rs.61,13,808. Hence ground no 3 of appeal is hereby partly allowed.” Anil Kumar Jagdishraj Seth 6 3378/MUM/2024 & CO No. 137/M/24 On further appeal, the Ld. CIT(A) verified the ledger accounts of the assessee in the books of accounts of the M/s Radium Creation Ltd. After considering submission of the assessee, the Ld. ined the addition to the extent of Rs.61,13,808/- 7.3 During the course of appeal proceedings, appellant is contending that appellant has granted loan of Rs. 2,62,00,000/- to was returned back. During the year RCL has incurred various expenses aggregating to on behalf of Appellant which are to be reimbursed by the appellant to RCL. RCL books the reimbursement of expenses in separate ledger A/c. Appellant has submitted the copy of appellant loan account and reimbursement A/c in the books of RCL for AY 18. Appellant contends that ledger A/c of RCL in books of assesse included all the entries of loan given to RCL and repayment the appellant it is seen that as invest in Radium Creation Limited. Further on perusal of books of account of Radium Creations Itd it is seen that the opening balance of unsecured loan from Shri , loan accepted , loan repaid during the year is and closing Balance as on 31.03.2018 is . Appellant is contending that the difference of count of reimbursement to be paid by the However, from the books of the Radium Creations it is clear that during the year appellant has only, for which appellant has provided per book at page no 107. It is to be noted that as per appellant contention the company has incurred expenses of during the year, however, during the year company Rs.2,62,00,000/- (which Appellant has himself admitted that company on his behalf incurred expense of . Appellant has submitted confirmation from the Further, the amount of Rs.61,13,808/- is not e outstanding loan balance of Rs.6,23,50,363/-, hence appellant has failed to reflect the treatment of same on the books of account of the Company. Appellant has not recorded the said expenses on its books of account. Accordingly the same is penditure of the appellant. In view of the above AO is Hence ground no 3 6.3 We have heard rival submission of the parties and perused the relevant material on record. pages 10 to 12, which is balance sheet of the assessee balance sheet, under schedule appearing against the Radium Creation as investment amounting to Rs.5,62,36,555/-. In Creation Ltd. available on Paper Book page 103 and 104 also the closing balance is appearing further referred to Paper Book Page 107 and 108 which is a ledger account in relation to loan transactions. Thus submitted that two separate accounts one for loan and one for investment were maintain Rs.1,62,00,000/- has been paid by the assessee out of bank accounts. The assessee explained the source of said money of sale of the shares Paper Book page 102. Thus Rs.1,62,00,000/- is not explained but it is merely the Officer could not tra statement filed by the assessee. Further before the Ld. CIT(A), the assessee reconciled the amount of loan appearing the books of the assessee as well as in the company and noticed adjusted the amount of Rs.61,13,808/ company on behalf of the assessee. The Ld. CIT(A) has restricted the addition to the extent of the said expenses incurred by the assessee Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 We have heard rival submission of the parties and perused the relevant material on record. The Ld. counsel referred to Paper Book which is balance sheet of the assessee under schedule of Investment, the balances appearing against the Radium Creation as investment amounting to . In the confirmation filed by the M/s Radium Creation Ltd. available on Paper Book page 103 and 104 also the appearing at Rs.5,62,36,554/-. The Ld. counsel further referred to Paper Book Page 107 and 108 which is a ledger to loan transactions. Thus in nutshell it was two separate accounts one for loan and one for maintained by the assessee. The loan of has been paid by the assessee out of bank he assessee explained the source of said money of sale of the shares. A detail of source of loan has been filed on Paper Book page 102. Thus, it is not the case that source of the is not explained but it is merely the ficer could not trace recoding of the transaction statement filed by the assessee. Further before the Ld. CIT(A), the assessee reconciled the amount of loan appearing the books of the ssee as well as in the company and noticed that com adjusted the amount of Rs.61,13,808/- which was incurred by the company on behalf of the assessee. The Ld. CIT(A) has restricted the addition to the extent of the said expenses incurred by the assessee Anil Kumar Jagdishraj Seth 7 3378/MUM/2024 & CO No. 137/M/24 We have heard rival submission of the parties and perused the The Ld. counsel referred to Paper Book which is balance sheet of the assessee. In the said the balances were appearing against the Radium Creation as investment amounting to the confirmation filed by the M/s Radium Creation Ltd. available on Paper Book page 103 and 104 also the . The Ld. counsel further referred to Paper Book Page 107 and 108 which is a ledger in nutshell it was two separate accounts one for loan and one for . The loan of has been paid by the assessee out of bank he assessee explained the source of said money was out has been filed on it is not the case that source of the is not explained but it is merely the Assessing recoding of the transaction in the financial statement filed by the assessee. Further before the Ld. CIT(A), the assessee reconciled the amount of loan appearing the books of the that company has which was incurred by the company on behalf of the assessee. The Ld. CIT(A) has restricted the addition to the extent of the said expenses incurred by the assessee company on behalf of the assessee holding the expenditure. But we note that those expenses reimbursed by the assessee out of loan amount claimed as deduction under any of the head of the income expenses are in the nature of the personal claimed against any of the head of the income held as unexplained expenditure when the source of the claim has been duly explained out of loan from the assessee. Accordingly, finding of the Assessing Officer and the Ld. CIT(A dispute is set aside. The addition of Rs.1,62, Assessing Officer as well as the addition of Rs.61,13,808/ sustained by the Ld. CIT(A) are deleted. The ground No the appeal of the Revenue are dismissed 1(a) and 1(b) of cross objections 6.4 Since, we have already allowed the ground No. 1(a) and 1(b) of the appeal of the cross ground No. 1(c) is rendered infructuous. 7. The ground No. invoking of section 50C of the Act and sustaining the difference in the sale consideration recorded in sale agreement and the stamp value of the property. Briefly stated, facts of the case are that the assessee sold a flat for a sale consideration of Rs.7,20,00,000/- which was valued by the stamp duty authorities Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 company on behalf of the assessee holding the same as unexplained expenditure. But we note that those expenses reimbursed by the assessee out of loan amount and have claimed as deduction under any of the head of the income expenses are in the nature of the personal expenses claimed against any of the head of the income, then same cannot be held as unexplained expenditure when the source of the claim has been duly explained out of loan from the assessee. Accordingly, essing Officer and the Ld. CIT(A) dispute is set aside. The addition of Rs.1,62,00,000/ Assessing Officer as well as the addition of Rs.61,13,808/ sustained by the Ld. CIT(A) are deleted. The ground No the appeal of the Revenue are dismissed, whereas the ground No. of cross objections are allowed. Since, we have already allowed the ground No. 1(a) and 1(b) of the appeal of the cross-objection of the assessee ground No. 1(c) is rendered infructuous. The ground No. 4 of the appeal of the Revenue relates to ion 50C of the Act and sustaining the difference in the sale consideration recorded in sale agreement and the stamp value of the property. Briefly stated, facts of the case t the assessee sold a flat for a sale consideration of which was valued by the stamp duty authorities Anil Kumar Jagdishraj Seth 8 3378/MUM/2024 & CO No. 137/M/24 same as unexplained expenditure. But we note that those expenses have been and have not been claimed as deduction under any of the head of the income. Those expenses and not then same cannot be held as unexplained expenditure when the source of the claim has been duly explained out of loan from the assessee. Accordingly, ) on the issue in 000/- made by the Assessing Officer as well as the addition of Rs.61,13,808/- sustained by the Ld. CIT(A) are deleted. The ground Nos. 1 to 3 of as the ground No. Since, we have already allowed the ground No. 1(a) and 1(b) of objection of the assessee raised in the 4 of the appeal of the Revenue relates to the addition for the difference in the sale consideration recorded in sale agreement and the stamp value of the property. Briefly stated, facts of the case t the assessee sold a flat for a sale consideration of which was valued by the stamp duty authorities at Rs.9,32,82,000/- Rs.7,52,36,000/-. Since, the difference between the value of the property estimated by the DVO and the sale consideration reported by the assessee amounting to Rs.32,36,000/ 4.5% of the sale consid difference being less than 5% amendment brought to section 50C of the Act by way of Finance Act, 2018 w.e.f. 01.04.2019. Accordingly, the computed the long term capital loss of Rs.11,96,000/ term capital loss of Rs.51,52,000/ return of income. On further appeal, the Ld. CIT(A) deleted the addition observing as under: “6. The appellant is director of M/s Radium Creation Ltd. Appellant has filed his return of income for AY 2018 declaring total income at Rs.69,39,44 scrutiny. During assessment proceedings, AO noticed that appellant has sold the property at Rs.7,20,00,000/ property as per the provision of section 50C was found to be Rs.9,32,82,000/ proceedings, appellant submitted copy of valuation report by DVO wherein the value of the property was estimated at . Appellant contended that since the difference in the value adopted by the appellant i.e Rs.7,20,0 Rs.7,52,36,000/ therefore the provision of section 50C is not applicable in his case. However, AO concluded that the applicability of 3rd proviso of sub section (1) of section that the said proviso has been inserted by the Finance Act, 2018, w.e.f. 01.04.2019. assessee's case for the assessment year under consideration. During the course of appeal proceedings appellant is contending that the said proviso is inserted to mitigate the hardship faced by the assesse's in case of genuine transactions wherein the variation between the stamp duty value and actual sale consideration received have occurred due to various factors associated with the individual property as compared to other properties in the same area. Appellant has relied on various judgments wherein it has been Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 . Further the DVO valued the property at . Since, the difference between the value of the imated by the DVO and the sale consideration reported by the assessee amounting to Rs.32,36,000/- was approximately 4.5% of the sale consideration, the assessee contended that the difference being less than 5%, variation might be ignored in view of ent brought to section 50C of the Act by way of Finance Act, 2018 w.e.f. 01.04.2019. Accordingly, the Assessing Officer computed the long term capital loss of Rs.11,96,000/ of Rs.51,52,000/- claimed by the assessee in the turn of income. On further appeal, the Ld. CIT(A) deleted the addition observing as under: 6. The appellant is director of M/s Radium Creation Ltd. Appellant has filed his return of income for AY 2018-19 on 28.03.2019 declaring total income at Rs.69,39,440/-. Case was selected for scrutiny. During assessment proceedings, AO noticed that appellant has sold the property at Rs.7,20,00,000/- whereas the value of the property as per the provision of section 50C was found to be Rs.9,32,82,000/-. However, during the course of assessment proceedings, appellant submitted copy of valuation report by DVO wherein the value of the property was estimated at Rs.7,52,36,000/ . Appellant contended that since the difference in the value adopted by the appellant i.e Rs.7,20,00,000/- and as per the DVO i.e Rs.7,52,36,000/- which comes to Rs.32,36,000/- ( about 4.5% ) and therefore the provision of section 50C is not applicable in his case. However, AO concluded that the applicability of 3rd proviso of sub section (1) of section 50C of the Income Tax Act, 1961, it is noticed that the said proviso has been inserted by the Finance Act, 2018, w.e.f. 01.04.2019. Hence, the said proviso is not applicable in the assessee's case for the assessment year under consideration. During urse of appeal proceedings appellant is contending that the said proviso is inserted to mitigate the hardship faced by the assesse's in case of genuine transactions wherein the variation between the stamp duty value and actual sale consideration ave occurred due to various factors associated with the individual property as compared to other properties in the same area. Appellant has relied on various judgments wherein it has been Anil Kumar Jagdishraj Seth 9 3378/MUM/2024 & CO No. 137/M/24 . Further the DVO valued the property at . Since, the difference between the value of the imated by the DVO and the sale consideration reported was approximately he assessee contended that the variation might be ignored in view of ent brought to section 50C of the Act by way of Finance Assessing Officer computed the long term capital loss of Rs.11,96,000/- against long claimed by the assessee in the turn of income. On further appeal, the Ld. CIT(A) deleted the 6. The appellant is director of M/s Radium Creation Ltd. Appellant 19 on 28.03.2019 . Case was selected for scrutiny. During assessment proceedings, AO noticed that appellant whereas the value of the property as per the provision of section 50C was found to be the course of assessment proceedings, appellant submitted copy of valuation report by DVO Rs.7,52,36,000/- . Appellant contended that since the difference in the value adopted and as per the DVO i.e ( about 4.5% ) and therefore the provision of section 50C is not applicable in his case. However, AO concluded that the applicability of 3rd proviso of sub- 50C of the Income Tax Act, 1961, it is noticed that the said proviso has been inserted by the Finance Act, 2018, Hence, the said proviso is not applicable in the assessee's case for the assessment year under consideration. During urse of appeal proceedings appellant is contending that the said proviso is inserted to mitigate the hardship faced by the assesse's in case of genuine transactions wherein the variation between the stamp duty value and actual sale consideration ave occurred due to various factors associated with the individual property as compared to other properties in the same area. Appellant has relied on various judgments wherein it has been held that the third proviso to section 50C(1) is retrospectively applicable. 6.1 The sole issue involved here is where the amendment to the provision of section 50C(1) introduced from 01.04.2019 applicable in the case of the Reliance is placed on the decision of the jurisdictional ITAT in the case of Rajpal Mehra (HUF) 159 taxman.com 1587, wherein it has been held that \"third proviso to section 50C(1) providing benefit of safe harbour limit of 5 percent as introduced by Finance Act, 2018, with effect from 1 Thus following the decision of the Hon'ble ITAT Mumbai, since the difference in the value of DVO and value adopted by appellant is less the 5%, provisions of section 50C are not applicable in the present case. Accordingly, AO is direc considering sale consideration at Rs.7,20,00,000/ 7.1 We have heard rival submission of the parties and perused relevant material on record. The issue in dispute involved in the ground is whether assessee is entitl transaction value of sale consideration of property recorded and stamp duty value, introduced by way of Finance Act, 2018 be applicable retrospectively. been substituted by the value estimated by the department valuer. The Ld. CIT(A) has followed binding precedent of the Co Bench of the Tribunal in the case of Rajpal Mehra (HUF) (supra) and allowed the claim of assessee, infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground No. 4 of the appeal of the Revenue is therefore 8. The ground Nos brokerage expenses/fees of Rs.7,20,000/ Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 held that the third proviso to section 50C(1) is retrospectively The sole issue involved here is where the amendment to the of section 50C(1) introduced from 01.04.2019 applicable in the case of the appellant for AY 2018-19 or not. Reliance is placed on the decision of the jurisdictional ITAT in the case of Rajpal Mehra (HUF) 159 taxman.com 1587, wherein it has been held that \"third proviso to section 50C(1) providing benefit of safe harbour limit of 5 percent as introduced by Finance Act, 2018, with effect from 1-4-2019 would be applicable retrospectively\". Thus following the decision of the Hon'ble ITAT Mumbai, since the difference in the value of DVO and value adopted by appellant is less the 5%, provisions of section 50C are not applicable in the present Accordingly, AO is directed to recomputed the capital gain considering sale consideration at Rs.7,20,00,000/-.” We have heard rival submission of the parties and perused relevant material on record. The issue in dispute involved in the ground is whether assessee is entitled for 5% variation transaction value of sale consideration of property recorded and stamp duty value, while invoking section 50C introduced by way of Finance Act, 2018 and whether same be applicable retrospectively. In the case the stamp duty value has been substituted by the value estimated by the department valuer. The Ld. CIT(A) has followed binding precedent of the Co Bench of the Tribunal in the case of Rajpal Mehra (HUF) (supra) and allowed the claim of assessee, therefore, we do not finding any infirmity in the order of the Ld. CIT(A) on the issue in dispute and uphold the same. The ground No. 4 of the appeal of therefore dismissed. s. 5 & 6 of the appeal of the Revenue rel brokerage expenses/fees of Rs.7,20,000/- disallowed by the Anil Kumar Jagdishraj Seth 10 3378/MUM/2024 & CO No. 137/M/24 held that the third proviso to section 50C(1) is retrospectively The sole issue involved here is where the amendment to the of section 50C(1) introduced from 01.04.2019 are 19 or not. Reliance is placed on the decision of the jurisdictional ITAT Mumbai in the case of Rajpal Mehra (HUF) 159 taxman.com 1587, wherein it has been held that \"third proviso to section 50C(1) providing benefit of safe harbour limit of 5 percent as introduced by Finance Act, ble retrospectively\". Thus following the decision of the Hon'ble ITAT Mumbai, since the difference in the value of DVO and value adopted by appellant is less the 5%, provisions of section 50C are not applicable in the present ted to recomputed the capital gain We have heard rival submission of the parties and perused the relevant material on record. The issue in dispute involved in the 5% variation in transaction value of sale consideration of property recorded and while invoking section 50C, which was and whether same would mp duty value has been substituted by the value estimated by the department valuer. The Ld. CIT(A) has followed binding precedent of the Co-ordinate Bench of the Tribunal in the case of Rajpal Mehra (HUF) (supra) re, we do not finding any infirmity in the order of the Ld. CIT(A) on the issue in dispute and uphold the same. The ground No. 4 of the appeal of he appeal of the Revenue relate to disallowed by the Assessing Officer. The Ld. CIT(A) has deleted the addition observing as under: “6.2 During the course of assessment proceedings AO noticed that appellant had claimed Rs.7,20,000/ fees. However, as per the sale deed clause no \"27\" of the registered agreement of sale dated 04.01.2018, all expenses in connection with sale/incidental expenses and expenses duty, registration charges, out of were to be borne and paid by the purchaser only. AO issued notice to the appeal to produce documentary evidence. Appellant submitted that payment of Rs.7,20,000/ Appellant submitted the co payment made to Mr Lal Hathiramani. However, appellant could not produce copy of agreement with broker or receipt voucher signed by the recipient towards confirmation of brokerage fees. Hence AO disallowed the said expen proceedings, appellant has submitted the copy of ITR along with computation of income filed by Mr Lal hathiramani for AY 2018 On perusal of the same it is found that, Mr Lal Hathiramnai has declared income from brokerag that the appellant has made payment of Rs.7,20,000/ Hathiramani which has been included by him in his return of income. In view of the above factual position, AO is directed to allowed the expense claimed by Hence ground no 2 of appeal is hereby allowed. 8.1 We have heard rival submission of the parties and perused the relevant material on record. We find that the assessee has duly shown the payment of Rs.7,20, said broker has also declared the said amount in the return of income filed. The Assessing Officer has disallowed the brokerage while appearing the capital gain only for the reason that said broker has only shown the other brokerage income has been shown by him in the return of income . In our opinion, the assessee has discharged his onus regarding the brokerage payment and if the broker is not showing Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 Assessing Officer. The Ld. CIT(A) has deleted the addition observing During the course of assessment proceedings AO noticed that appellant had claimed Rs.7,20,000/- towards brokerage/transfer fees. However, as per the sale deed clause no \"27\" of the registered agreement of sale dated 04.01.2018, all expenses in connection with sale/incidental expenses and expenses in connection with the stamp duty, registration charges, out of pocket expenses legal charges etc. were to be borne and paid by the purchaser only. AO issued notice to the appeal to produce documentary evidence. Appellant submitted that payment of Rs.7,20,000/- was paid to Mr Lal Hathiramani. Appellant submitted the copy of Bank statement reflecting the payment made to Mr Lal Hathiramani. However, appellant could not produce copy of agreement with broker or receipt voucher signed by the recipient towards confirmation of brokerage fees. Hence AO disallowed the said expenses. During the course of appeal proceedings, appellant has submitted the copy of ITR along with computation of income filed by Mr Lal hathiramani for AY 2018 On perusal of the same it is found that, Mr Lal Hathiramnai has declared income from brokerage of Rs.7,20,000/-. Hence it is clear that the appellant has made payment of Rs.7,20,000/- to Mr Lal Hathiramani which has been included by him in his return of income. In view of the above factual position, AO is directed to allowed the expense claimed by the appellant while computing the capital gain. Hence ground no 2 of appeal is hereby allowed.” We have heard rival submission of the parties and perused the relevant material on record. We find that the assessee has duly shown the payment of Rs.7,20,000/- in its bank account and the said broker has also declared the said amount in the return of income filed. The Assessing Officer has disallowed the brokerage while appearing the capital gain only for the reason that said broker brokerage in question as his income and income has been shown by him in the return of . In our opinion, the assessee has discharged his onus regarding the brokerage payment and if the broker is not showing Anil Kumar Jagdishraj Seth 11 3378/MUM/2024 & CO No. 137/M/24 Assessing Officer. The Ld. CIT(A) has deleted the addition observing During the course of assessment proceedings AO noticed that okerage/transfer fees. However, as per the sale deed clause no \"27\" of the registered agreement of sale dated 04.01.2018, all expenses in connection with in connection with the stamp pocket expenses legal charges etc. were to be borne and paid by the purchaser only. AO issued notice to the appeal to produce documentary evidence. Appellant submitted was paid to Mr Lal Hathiramani. py of Bank statement reflecting the payment made to Mr Lal Hathiramani. However, appellant could not produce copy of agreement with broker or receipt voucher signed by the recipient towards confirmation of brokerage fees. Hence AO ses. During the course of appeal proceedings, appellant has submitted the copy of ITR along with computation of income filed by Mr Lal hathiramani for AY 2018-19. On perusal of the same it is found that, Mr Lal Hathiramnai has . Hence it is clear to Mr Lal Hathiramani which has been included by him in his return of income. In view of the above factual position, AO is directed to allowed the the appellant while computing the capital gain. We have heard rival submission of the parties and perused the relevant material on record. We find that the assessee has duly in its bank account and the said broker has also declared the said amount in the return of income filed. The Assessing Officer has disallowed the brokerage while appearing the capital gain only for the reason that said broker in question as his income and no income has been shown by him in the return of . In our opinion, the assessee has discharged his onus regarding the brokerage payment and if the broker is not showing any other brokerage income responsible for the same. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and therefore, we do not find any infirmity in the same and accordingly same. The ground No accordingly dismissed. 9. In the result, the appeal of the Revenue is dismissed whereas cross-objection of the assessee Order pronounced in the open Court on Sd/ (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 28/10/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Anil Kumar Jagdishraj Seth ITA No. 3378/MUM/2024 any other brokerage income, then the assessee cannot be held responsible for the same. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and therefore, we do not find any infirmity in the same and accordingly, same. The ground Nos. 5 and 6 of the appeal of the Revenue are accordingly dismissed. In the result, the appeal of the Revenue is dismissed whereas objection of the assessee is allowed. nounced in the open Court on 28/10/2024. Sd/- Sd/ (RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Anil Kumar Jagdishraj Seth 12 3378/MUM/2024 & CO No. 137/M/24 assessee cannot be held responsible for the same. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and therefore, we do , we uphold the and 6 of the appeal of the Revenue are In the result, the appeal of the Revenue is dismissed whereas /10/2024. Sd/- PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "