ASHISH GARG,NOIDA V. ACIT CENTRAL CIRCLE-2, NEW DELHI

ITA 1018/DEL/2023

AI Insights

This case involves cross appeals by the assessee, Ashish Garg, and the revenue against the order of the Commissioner of Income Tax (Appeals)-23, New Delhi, concerning the Assessment Year 2017-18. The primary contention revolves around the additions made under section 68 of the Income Tax Act, 1961, which pertained to unexplained cash deposits in the bank accounts of various companies allegedly controlled by Ashish Garg. The Tribunal examined whether the additions made in the hands of Ashish Garg constituted double taxation, given that similar additions had already been made in the hands of the companies involved. The Tribunal concluded that the additions in the hands of Ashish Garg were unjustified, leading to the allowance of his appeal and dismissal of the revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473158 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: CIT v. P. Mohankala, Smt. Shanta Devi v. CIT, DCIT Central Circle-5(1) v. Jogia Properties Ltd., DCIT Central Circle - 1(4). Ahmedabad v. Basant R. Agarwal, Laxmipat Singhania v/s CIT UP
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR; AMIT KATOCH
• Assessee Lawyers: AMIT GOEL; PRANAV YADAV
• Keywords: Unexplained cash credit; Salary income; Accommodation entries; Deemed to accrue or arise in india; Bogus
• Section: 147; 144; 143(3); 142(1); 143(2); 143(1); 192; 132; 153A; 68; 13; 139; 72; 20

Judgement Text

" ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 1 of 15 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘A’: NEW DELHI) BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 1018/Del/2023 (Assessment Year- 2017-18) Ashish Garg, B-16, Sector-2, Noida-201301 Vs. Assistant Commissioner of Income Tax, Central Circle-2, Delhi. PAN No: AEJPG9666H APPELLANT RESPONDENT ITA No:- 1758/Del/2023 (Assessment Year- 2017-18) Deputy Commissioner of Income Tax, Central Circle-02, New Delhi. Vs. Sh. Ashish Garg, F-22, Model Town –II, New Delhi-110009. PAN No: AEJPG9666H APPELLANT RESPONDENT Assessee by : Shri Amit Goel, CA & Shri Pranav Yadav, Adv. Revenue by : Shri Javed Akhtar, CIT- DR & Shri Amit Katoch, Sr. DR Date of Hearing : 27.12.2024 Date of Pronouncement : 31.01.2025 ORDER ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 2 of 15 PER : SUDHIR PAREEK, JM These cross appeals by the assessee and Revenue are directed against the order of Commissioner of Income Tax (Appeals)-23, New Delhi, vide order dated 01.03.2023 pertaining to Assessment Year 2017-18. The Ground raised by the assessee and revenue are as under: ITA No.-1018/Del/2023 (Assessee) “1. On the facts and circumstances of the case and in law, the initiation of assessment proceedings and issue/service of notices are not in accordance with the provisions of law and accordingly the assessment order passed on foundation of such notice(s) is liable to be quashed and CIT(A) erred in not holding so. 2. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is without jurisdiction and barred by limitation and CIT(A) erred in not holding so. 3. On the facts and circumstances of the case and in law, the CIT(A) has erred in confirming the addition to the extent of Rs. 18,12,34,000/- u/s 68 of the Act on the fact and circumstances of the case and in law, the CIT(A) ought to have deleted the entire addition made by the assessing officer. 4. On the facts and circumstances of the case and in law, the various reasons given by assessing officer for making the additions are erroneous and CIT(A) erred in not holding them erroneous. 5. On the facts and circumstances of the case and in law, the various adverse / remark / inferences made by the CIT()A) are erroneous, ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 3 of 15 6. On the facts and circumstances of the case and in law, the CIT(A) erred in not holding that the addition made by the AO u/s 68 of the Act is contrary to the CBDT instruction. 7. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is liable to be quashed as it is contrary to provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so. 8. The aforesaid grounds of appeal are without prejudice to each other.” ITA No.-1758/Del/2023 (Revenue) “1. The Ld. CIT(A) has erred in deleting the substantive addition of Rs. 48,22,50,000/-, Rs. 79,97,000/- and Rs 52,14,06,000/-on account of unexplained cash deposits in the bank accounts of Friends Telecom Pvt. Ltd., Modular International Pvt. Ltd. and Gracious Overseas Pvt. Ltd. respectively. 2. The Ld. CIT(A) has erred in ignoring the evidences seized during the search which prove that Friends Telecom Pvt. Ltd., Modular International Pvt. Ltd. and Gracious Overseas Pvt. Ltd. are only paper companies and ultimately controlled by the assessee. 3. The Ld. CIT(A) has erred in ignoring the evidences seized during the search which prove that cash deposited in the bank accounts of Friends Telecom, Modular International Pvt. Ltd. and Gracious Overseas Pvt. Ltd. belonged to the assessee. 4. The Ld. CIT(A) has erred in deleting the substantive addition in hands of Assessee Sh. Ashish Garg despite specific finding in Appellate orders passed by Ld. CIT(A) in case of Friends Telecom Pvt. Ltd. (paragraph no 20 of Appeal No. CIT(A)/10246/2019-20 dated 29.06.2022), Modular International Pvt. Ltd. (paragraph no 21 Appeal No. CIT(A)/10246/2019-20 dated 26.07.2022) and Gracious Overseas Pvt. (paragraph no 44 Appeal No. CIT(A)/2019-20 dated 30.06.2022) that these companies have no business apart from giving entries.” 2. Facts of this case may be summarized as that a search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 4 of 15 referred to as the ‘Act’) was carried out in Apple Group and Associates on 07.12.2018. A search warrant of authorization, u/s 132 of the Act was issued in the name of Sh. Aashish Garg for the residence F-22, Model Town-II, New Delhi-110009 on 07.12.2-18. Search in this case was initiated on -7.12.2018. Thereafter, jurisdiction of this case was transferred to this office by centralization order vide F. No Pr. CIT(C)/ KNP/Decentralization /2019-20/ dated 13.02.2020 from the erstwhile Pr. Commissioner of Income Tax (Central), Kanpur. Assessee had furnished his original return of income u/s 139 of the Act on 04.11.2017 declaring total income of Rs. 6,61,760/-. The same was processed u/s 143(1) of the Act on 10.01.2018. Since search was initiated in this case, notice under section 153A of the Income Tax Act, 1961, was issued on 17.09.2020 and duly served. In response to the notice u/s 153A of the Act, return of income was filed on 12.12.2020 declaring total income at Rs. 6,61,760/-. With respect to return of income dated 12.12.2020 filed in response to notice u/s 153A of the Act, a statutory notice u/s 143(2) dated 21.12.2020 has been issued through ITBA portal and duly served upon the assessee. Thereafter, notice u/s 142(1) of the Act dated 23.12.2020 ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 5 of 15 along with a detailed questionnaire was issued and served upon the assessee to furnish details, documents as mentioned therein. In response to these notices, the assessee filed submissions from time to time which are placed on record. During the year under consideration, the assessee derived income from Salary and Income from Other Sources. 3. On the analysis of seized material/ digital material and on finding that Sh. Aashish Garg, and his associates are controlling and running paper companies which are solely doing no actual business but are engaged in business of providing accommodation entries in the shape of bogus bills, accommodation entries, share premium etc. to the beneficiary. The Ld. AO was of the view that evidences gathered in the search corroborated by statements of directors enabled the lifting of the corporate veil to show that the business in the paper companies is only a façade and ultimate control of the companies is by assessee / appellant, Ashish Garg, so cash deposit during the FY 2016-17, Rs. 119,28,87,000/- reflecting the bank accounts of these companies is undisclosed income of the ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 6 of 15 assessee and to be taxed u/s 68 of the Act, substantially in the hands of Ashish Garg. 4. Heard rival submissions and perused the material available on record. 5. The Ld. AR submitted that the AO has made the addition u/s 68 of the Act in the case of assessee / appellant, Ashish Garg in respect of cash deposits in bank accounts of following companies: S.No. Name of Company Amount 1. Nirajit Trading Pvt. Ltd. 7,71,48,000/- 2. Friends Telecom Pvt. Ltd. 48,22,50,000/- 3. Gracious Overseas Pvt. Ltd. 52,14,06,000/- 4. Saccharine Infrastructure Pvt. Ltd. 5,27,00,000/- 5. Pooran Trading Pvt. Ltd. 4,46,50,000/- 6. Modular International Pvt. Ltd. 79,97,000/- 7. Propitious Infrastructure Pvt. Ltd. 42,00,000/- 8. Jigar Mercantile Pvt. Ltd. 23,00,000/- 9. Aston Multi Trade Pvt. Ltd. 1,14,000/- 10. Antonius Tradex Pvt. Ltd. 1,22,000/- Total 119,28,87,000/- 6. In this regard, it is submitted that, additions in respect of amounts pertaining to following companies have been deleted by CIT(A) because the additions have already been made in the hands of those companies:- S. No. Name of Companies Amount 1 Gracious Overseas Pvt. Ltd. 52,14,06,000/- 2 Modular Internationals Pvt. 79,97,000/- ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 7 of 15 Ltd. 3 Friends Telecom Pvt. Ltd. 48,22,50,000/- Total 101,16,53,000/- 7. And the Ld. CIT(A) has held that additions cannot be made in the case of assessee as it will amount to double additions. As a matter of fact, the Ld. CIT(A) has mentioned that additions in respect of above 3 (three) companies made in their own cases have also been confirmed by the Ld. CIT(A). 8. In the support of above submissions, the Ld. AR referred relevant para nos. 16,17,18 and 19 of the impugned order. “16. The addition of Rs. 119,28,87,000/- made in the hands of the appellant, consist of deposits of Rs. 48,22,50,000/- in the case of Friends Telecom Pvt. Ltd. The addition made by the Assessing Officer in the hands of Friends Telecom Pvt. Ltd. has been confirmed by the CIT(A) in his order dated 29.06.2022. Therefore, the same cannot be made once again in the case of the appellant. 17. Further the addition in the hands of the appellant includes addition of Rs. 79,97,000 that was else made in the hands of Modular International Pvt. Ltd. This addition has been confirmed by the CIT(A) in his order dated 26.07.2022 in the hands of Modular international Pvt. Ltd. Therefore, the same cannot be made once again in the case of the appellant. 18. The addition of Rs. 119,28,87,000/- made in the hands of appellant consist of one amount of Rs. 52,14,06,000/- in the hands of M/s Gracious Overseas Pvt. Ltd. The CIT(A) vide his order dated 30.06.2022 has confirmed the addition in the hands of M/s. Gracious Overseas Pvt. Ltd., therefore the same addition cannot be made in the hands of appellant once again. ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 8 of 15 19. To sum up, an addition of Rs. 101,16,53,000/- is directed to be deleted because the same has been added back in the case of three companies and upheld by the CIT(A) as stated above. Double addition is not permissible in law.” 9. It was further submitted that additions regarding balance of Rs. 18,12,34,000/- confirmed by CIT(A), it is submitted that even in the following cases, addition have been made in the hand of respective companies. Accordingly, there is no reasons left for making additions in the hand of the assessee Ashish Garg as it amounts to double additions:” 10. Further, the Ld. AR referred relevant copies which are complied in Paper Book filed by the assessee, as under: • Copy of assessment order dated 24.04.2023 u/s 147 in the case of Nirajit Trading Pvt. Ltd. (PB page 1-5) • Copy of assessment order dated 24.12.2019 u/s 143(3) in case of Nirajit Trading Pvt. Ltd. (PB page 6-18) • Copy of assessment order dated 28.12.2019 u/s 143(3) in case of Friends Telecom Pvt. Ltd. (PB page 19-24) • Copy of assessment order dated 23.12.2019 u/s 144 in case of Saccharine Infrastructure Pvt. Ltd. (PB page 31-42) ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 9 of 15 • Copy of assessment order dated 30.12.2019 u/s 143.3) Case of Pooran Trading Pvt. Ltd. (PB page 43-58) • Copy of assessment order dated 28.12.2019 u/s 143(3) in Case of Modular International Pvt. Ltd. (PB page 59-64) • Copy of assessment order dated 07.04.2023 u/s 147 in Case of Jigar Mercantile Pvt. Ltd. (PB page 65-72) • Copy of assessment order dated 28.12.2019 m/s 143(3) in Case of Gracious Overseas Pvt. Ltd. (PB page 25-30) 11. Revenue also raised the issue in the ground no. 1 and assails the deletion. Remaining 3 (three) companies, the Ld. AR submitted that: Sl. No. Name Amount Remarks 1 Propitious Infrastructure Pvt. Ltd. PB page 83 42,00,000/- Case already reopend u/s 148 of the Act. 2. Aston Multi Trade Pvt. Ltd. PB 3-75 1,14,000/- Assessment made u/s 143(3) and cash deposit in bank accepted and no addition made 3. Antonius Tradex Pvt. Ltd . PB 76-81 1,22,000 Assessment made u/s 147 and cash deposit in bank accepted and no addition made ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 10 of 15 12. The Ld. AR further submitted that in conclusion, out of total additions of Rs. 119,28,87,000/- made by the Ld. AO in the hands of the assessee Sh. Ashish Garg, the status is as under: Sl. No. Particulars Amount 1. Additions already made in the hand of respective companies 118,84,51,000/- 2. Assessment reopened u/s 147 for cash deposit 42,00,000/- 3. Assessment made u/s 143(3) / 147 and no addition made in the respect of cash deposit 2,36,000/- Total 119,28,87,000/- 13. In the course of hearing, the Ld. AR produced written submissions as follows: “it is evident that for the applicability of provision of Section 68, the first requirement is that any sum is found credited in the books of an assessee' and the assessee offers no explanation about the nature and source thereof. In the present case of the assessee, no sum is found credited in the books of the assessee i.e. Ashish Garg. There is no cash deposit in the bank account of the assessee i.e. Ashish Garg. Therefore, the assessee cannot be expected to explain the nature and source of amounts which are not even found to be credited in the books of the assessee. Therefore, the provisions of section 68 cannot be applied to the case of the assessee Sh. Ashish Garg in respect of cash deposited in the bank accounts of carious companies. As per AO himself, the cash has been deposited in the bank accounts of the companies and, therefore, explanation about the nature and source of the amount deposited in the bank accounts of the companies can be given by those respective companies. As per the department itself, those companies are separate income tax assessee filing their return of income and the department is making assessments in their cases. ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 11 of 15 In view of the above factual position, no addition can be made in the hand of the assessee. 8. The Hon'ble Apex Court in the case of CIT v. P. Mohankala 2007 (5) TMI 192 -Supreme Court held as under: - The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 of the Act come into play? A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by an assessee, such credit has to be of a sum during the previous year, and the assessees offer no explanation about the nature and source of such credit found in the books, or the explanation offered by the assessees in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessees of that previous year. The expression \"the assessees offer no explanation\" means where the assessees offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. 9. The Hon'ble Punjab and Haryana High Court in the case of Smt. Shanta Devi v. CIT 1987 (10) TMI 26 held as under: - Perusal of section 68 of the Income-tax Act would show that in relation to the expression\" books\", the emphasis is on the word \" assessce\". In other words, such books have to be the books of the assessee himself and not of any other assessee, In the present case, admittedly, the assessee maintained no books of account. The cash credit entry of which the sum in question forms part, was found in the books the account of the partnership firm which in its own right is an assessse. In the above view of the matter, the books of account of the partnership firm herein cannot be considered as those of the individual assessee herein and, therefore, section 68 of the Income- tax Act would not be attracted in the present case. ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 12 of 15 The above view receives support from Laxmi Narain Gupta v. CTT (19801 124 ITR 94 (Pat). 10. The Hon'ble Mumbai bench of ITAT in the case of DCIT Central Circle-5(1) v. Jogia Properties Ltd. 2022 (10) TMI 1047-ITAT Mumbai held as under :- 024. We find that Section 68 of the Act does not talk about any beneficiaries but is added in the hands of each and every person where Assessee fails to prove identity, creditworthiness and genuineness of the transaction to the satisfaction of the learned Assessing Officer. It is deemed income in the hands of the assessee who fails to explain nature and source of the same before the AO. Deeming fiction applies in the hands of the person in whose book's sums are credited. There it ends, such deeming fiction cannot travel to other assessee for satisfying ingredients of section 68 of the Act.- - - - - - - - - - - - - There is no concept of beneficial ownership of income u/s 68 of the act, Importing the same in section 68 is in clear violation of simple provisions of that section. 11. The Hon'ble Ahmedabad bench of ITAT in the case of DCIT Central Circle - 1(4). Ahmedabad v. Basant R. Agarwal 2023 (5) TMI 634 held as under: - 16.3 Coming to the facts of the case to hand, the AO based on the statement recorded by the investigation wing of certain person held that the share capital and premium thereon credited in the books of private company managed/controlled/owned by the respondent assessee are not genuine and treated the same as unexplained credit under section 68 of the Act. At the outset we note that the provision of section 68 of the Act is a deeming provision wherein any sum credited in the books of the assessee can be treated deemed income of the concerned assessee if fails to explain the nature and source of such credit to the satisfaction of the AO. Thus, under the provision of section 68 of the Act, it is not the case that it has been established bevond that the certain income accrued or arisen in a particular assessment vear but there is uncertainty regarding the person liable to tax. Indeed, the provision of section 68 of the Act triggered when any sum credited in the books of an assessee and that assessee fails explain the nature and source of such credit then same can be deemed to be the income of that assessee in whose books the sum was credited, Thus, to assess deemed income under section 68 of the ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 13 of 15 Act, there is no ambiguity regarding who should be liable to pay tax. Therefore, in our considered opinion the concept of protective assessment cannot be applied in the given facts and circumstances. In view of the above, it is submitted that entire addition made by the assessing officer in the case of the assessee Sh. Ashish Garg is liable to be deleted.” 14. The Ld. AR also submitted that the Hon’ble Supreme Court held in the case of Laxmipat Singhania v/s CIT UP(1969) 72 ITR that it is fundamental rule of law of taxation that, unless otherwise expressly provided, income cannot be taxed twice It was also submitted that no addition can be made in the hands of assessee as there is no any applicability of sec. 68 of the Act in his case because u/s 68 of the Act it must be proved that when any sum is found credited in the books of assessee maintained for any previous year but here no any sum found to be credited in the books of assessee so assessee / appellant not supposed to offer any explanation regarding nature and source thereof. It was also submitted that the Ld. CIT(A) rightly held that an addition of Rs. 101,16,53,000/- deserves to be deleted as same has been added back in the case of Friends Telecom Pvt. Ltd., Modular International Pvt. Ltd. and M/s Gracious Overseas Pvt. Ltd. and double addition is not permissible ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 14 of 15 in law. It was also argued that it is established legal position that there has to be credit of amounts in the books maintained by assessee. Fact situation mentioned above never been rebutted by revenue and by following binding judicial precedents, ground no. 3 of the appeal of assessee deserves to be allowed whereas there is no any substance in the grounds nos. 1-4 of appeal of Revenue. As the Ld. CIT(A) rightly deleted the disallowance supported by the relevant law and fact, liable to be dismissed. 15. In the result, appeal of the assessee is allowed and revenue’s appeal stands dismissed. Order pronounced in the Open Court on 31.01.2025 Sd/- Sd/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31/01/2025. Pooja/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA No.- 1018 and 1758/Del/2023 Ashish Garg Page 15 of 15 1. Date of dictation of Tribunal order 27.01.2025 2. Date on which the typed draft Tribunal Order is placed before the Dictating Member 27.01.25 3. Date on which the typed draft Tribunal order is placed before the other Member 4. Date on which the approved draft Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Despatch of the order "