SMT. GUNJAN AGRAWAL, Bhopal V. SMT. DY./ACIT 3(1), Bhopal

CO 47/IND/2015

AI Insights

The case revolves around a Cross-Objection filed by Smt. Gunjan Agrawal against the order of the Commissioner of Income-tax (Appeals) which confirmed an addition of Rs. 38,000 to her income as unexplained unsecured loans. This addition was part of a larger sum of Rs. 6,11,300 added by the Assessing Officer (AO) under section 68 of the Income-tax Act, 1961. The AO made this addition during the assessment proceedings following a search operation, without any incriminating material, and the CIT(A) upheld this addition. The ITAT, however, found that the addition was not sustainable as the AO did not have any seized or incriminating material to justify the addition for a completed/unabated year, referencing decisions from the Delhi High Court and the Supreme Court which supported the assessee's position.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130859 (ITAT-INDORE)
• Duration Of Justice: 8 year(s) 2 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2023
• Assessment Year: 2004-2005
• Appeal Filed On: 25-06-2015
• Other Referred Cases: National Thermal Power Co. Ltd. Vs. CIT, CIT Vs. Kabul Chawla, PCIT Vs. Gahoi Dal & Oil Mills, PCIT Vs. Abhisar Buildwell (P) Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 68; 143(3); 153A

Judgement Text

Page 1 of 6 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER C.O.No. 47/Ind/2015 (Arising out of I.T(SS)A.No.65/Ind/2015 Assessment Year:2004-05 Smt. Gunjan Agrawal, E-1/50, Arera Colony, Bhopal बनाम/ Vs. DCIT/ ACIT, 3(1), Bhopal (Assessee / Appellant) (Revenue / Respondent) PAN: ADLPA 3299 H Assessee by Shri Sumit Nema, Sr. Adv. Mr. Gagan Tiwari, Adv Revenue by Ms. Simran Bhullar, CIT DR Date of Hearing 29.08.2023 Date of Pronouncement 31.08.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by a consolidated appeal-order dated 23.02.2015 passed by learned Commissioner of Income-tax-2, Bhopal [“CIT(A)”], which in turn arises out of a consolidated assessment-order dated 30.12.2011 passed by learned ACIT, 3(1), Bhopal [“AO”] u/s 153A r.w.s. 143(3) of Income-tax Act, 1961 [“the Act”], the assessee has filed this Cross-Objection for assessment- years [“AY”] 2004-05. 2. This Cross-Objection filed by assessee arises from appeal filed by Revenue. The appeal of Revenue has already been dismissed vide order dated 09.02.2021 of ITAT, Indore on account of low-tax effect. However, in Smt.Gunjan Agrawal, Bhopal vs. DCIT/ACIT, 3(1), Bhopal C.O.No.47/Ind/2015 Arising out of I.T.(SS)A No.65/Ind/2015 Assessment year 2004-05 Page 2 of 6 terms of section 253(4) of the act, the Cross-Objection is required to be disposed of by the ITAT as it were an appeal. Therefore, we proceed to dispose of this Cross-Objection by this order. 3. Originally, the assessee raised following effective ground in Form No. 36A: “On the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs. 38,000/- out of the unsecured loans of Rs. 6,11,300/- wrongly added by the Assessing Officer.” Subsequently on 13.01.2023, the assessee has raised following additional grounds: 1. That the CIT(A) erred on facts and in law, in upholding the addition in the assessment for the impugned year passed by the AO u/s 153A of the Act for which no proceedings were pending on the date of search, is without jurisdiction, bad in law and void ab initio as the same has been passed in the absence of any incriminating material for the impugned assessment year found/seized as a result of search. 2. The impugned addition made to the income of the assessee for assessment year 2007-08 is not sustainable because no incriminating material concerning such additions was found during the course of search and further no assessment for such years were pending on the date of search i.e. 04/02/2010.” 4. Learned Representatives of both sides are ad idem that the additional grounds are legal in nature; go to the root of the matter; do not call for any new evidence; and can be decided on the basis of material already held on record. Therefore, in view of the decision in National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC), the additional grounds are admitted and taken for adjudication. 5. Since additional grounds challenge the very legality/maintainability of additions, we would first take up additional grounds. In these grounds, the assessee claims that while completing assessments u/s 153A, the AO has made additions in “completed/unabated year” without having any seized or Smt.Gunjan Agrawal, Bhopal vs. DCIT/ACIT, 3(1), Bhopal C.O.No.47/Ind/2015 Arising out of I.T.(SS)A No.65/Ind/2015 Assessment year 2004-05 Page 3 of 6 incriminating material which is without jurisdiction, bad in law and unsustainable. 6. Referring to the original ground raised in Form No. 36A re-produced above, Ld. AR for assessee submitted that in this Cross-Objection, the assessee is contesting only the addition of Rs. 38,000/- confirmed by CIT(A) out of total addition of Rs. 6,11,300/- made by AO u/s 68 on account of unsecured loans. Then, Ld. AR carried us to the assessment-order to show as to how the AO has made this addition; the same is re-produced below: “(E) UNSECURED LOANS TAKEN BY THE ASSESSEE During the course of assessment proceedings, the assessee was asked to provide details of loans taken and repaid including details of squared up accounts. Following is the position of unsecured loans at the end of each financial year :- Balance sheet as at Amount of Unsecured Loan 31.03.2004 6,11,300 The assessee did not submit name, address, PAN, bank account, IT return mode of payment or any other information about the unsecured loans as above. Therefore, incremental increase in every year is added to the income of the assessee: A.Y. AMOUNT 2004-2005 6,11,300 [Emphasis supplied] 7. Thereafter, Ld. AR carried us to the relevant paras of the order of CIT(A); the same are re-produced below: “8.2.1 For A.Y. 2004-05, addition in unsecured loans during the year is found to be of Rs. 1,21,300/- since there is opening balance of Rs. 4,90,000/- as on 31.03.2003 consisting of advance against SNCF shares (Rs. 3,25,000/-) and amount of Rs. 1,65,000/- received from Shri Chhaganlal Panchumal – appellant’s grandfather as per details given to the AO during assessment proceedings. AO has also added Smt.Gunjan Agrawal, Bhopal vs. DCIT/ACIT, 3(1), Bhopal C.O.No.47/Ind/2015 Arising out of I.T.(SS)A No.65/Ind/2015 Assessment year 2004-05 Page 4 of 6 this opening balance of Rs. 4,90,000/- while making addition of Rs. 6,11,300/- for assessment year 2004-05. Nowhere in the assessment order and assessment records, AO has rejected appellant’s SOA, Balance Sheets, Fund Flow/Cash Flow statement as filed by the appellant before him nor any other adverse material been brought on record on the basis of any third party enquiry during the entire course of search, extensive post search investigations or assessment proceedings. Thus, the AO is not found justified in adding the opening balance of Rs. 4,90,000/- for assessment year 2004-05 as unexplained unsecured loans especially when the appellant is a regular income tax payer and her original returns filed in due course have been accepted by the AO himself. No adverse material has been brought on record by the AO before treating the amount of Rs. 4,90,000/- as unexplained and as shown in the appellant’s bank account as received through cheques during the period prior to the A.Y. 2004-05. Appellant’s submissions regarding balance of Rs. 83,300/- in books of Madhya Bharat Phosphate (P) Ltd, are also verifiable as per its books of accounts which have been found accepted by the same AO himself. However, the appellant has failed to satisfactorily explain the source of Rs. 38,000/- is, hereby, confirmed for assessment year 2004-05 for unexplained unsecured loans.” [Emphasis supplied] 8. Referring to the emphasized portion of above orders, Ld. AR submitted that the AO has made addition on mere re-appraisal of the unsecured loans already existing in assessee’ regular books of account maintained prior to search and there is no reference of any seized-material in AO’s order. Further, the CIT(A) has categorically mentioned that the AO was not having any material. Thus, Ld. AR successfully demonstrated that the impugned addition has been made without having any seized or incriminating material. 9. Having shown this, Ld. AR submitted that the search was conducted on 04.02.2010 and the AY 2004-05 involved in this Cross-Objection was a “completed/unabated year” within the meaning of section 153A. He submitted that the Hon’ble Delhi High Court in the landmark decision in CIT Vs. Kabul Chawla (2015) 61 taxmann.com 412 (Delhi HC) : (2016) 380 Smt.Gunjan Agrawal, Bhopal vs. DCIT/ACIT, 3(1), Bhopal C.O.No.47/Ind/2015 Arising out of I.T.(SS)A No.65/Ind/2015 Assessment year 2004-05 Page 5 of 6 ITR 573 has held that no addition can be made u/s 153A in an “completed/unabated year” without having incriminating material. The said decision was also followed by Hon’ble Jurisdictional High Court of Madhya Pradesh in the case of PCIT Vs. Gahoi Dal & Oil Mills (2021) 11 ITJ Online 314 (MP), ITA No. 21, 31 & 32 of 2019, order dated 12.07.2019. Recently on 24.04.2023, the Hon’ble Supreme Court has also approved Kabul Chawla’s decision in PCIT Vs. Abhisar Buildwell (P) Ltd. Civil Appeal No. 6580/2021, order dated 24.04.2023. Therefore, in view of these decisions, the addition made by AO has to be deleted. 10. Ld. DR for the revenue dutifully relied upon the orders of lower- authorities. 11. We have considered submissions of both sides and perused the orders of lower-authorities in the light of judicial decisions cited before us. We find that in the present matters, the AO has made addition u/s 68 without having recourse or reference to any seized or incriminating material. Further, the assessment-year involved in present cross-objection is a “completed/unabated year”. These vital aspects are not rebutted or disputed by revenue. When it is so, the addition being contested by assessee in present matter is not sustainable as per binding decisions cited above. In that view of matter, we are inclined to delete the impugned addition. Ordered accordingly. The assessee succeeds in additional grounds. Smt.Gunjan Agrawal, Bhopal vs. DCIT/ACIT, 3(1), Bhopal C.O.No.47/Ind/2015 Arising out of I.T.(SS)A No.65/Ind/2015 Assessment year 2004-05 Page 6 of 6 12. Since we have deleted the addition on legality/maintainability itself, it would be unnecessary to go into the merit of same. Accordingly, the merits are left open without adjudication. 13. Resultantly, this Cross-Objection is allowed. Order pronounced in the open court on 31.08.2023. Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated : 31.08.2023 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore