Kanishka Gupta, Hyderabad V. ACIT Central Circle-3(1), Hyderabad

ITA 119/Hyd/2022

AI Insights

The case involves three appeals filed by different assessees against the orders of the Commissioner of Income Tax (Appeals) - 11, Hyderabad, for the assessment year 2018-19. The primary issue in these appeals was the addition of Rs. 35,00,000 each as unexplained cash investment under Section 69B of the Income Tax Act, related to cash payments made for the purchase of property. The assessees contended that the source of the cash was from unaccounted business income and sales of scrap, which were not substantiated with adequate evidence. The tribunal examined the submissions, the evidence on record, and the legal provisions applicable, ultimately dismissing the appeals and upholding the additions and the tax computation under Section 115BBE.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122313 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 08-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 17-04-2022
• Other Referred Cases: CIT Vs. Durga Prasad More, Sumathi Dayal Vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Depreciation; Wrong claim; Documents seized
• Section: 147; 131; 68; 132; 69C; 143(3); 153A; 234B; 69B; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member Appellant by : Shri Narahari Biswal. Respondent by : Shri K.P.R.R. Murthy. Date of Hearing : 09.01.2023 Date of Pronouncement : 11.01.2023 O R D E R Per Bench : The captioned three appeals filed by different assessees are against the separate orders passed by the learned Commissioner of Income Tax (Appeals) – 11, Hyderabad for the assessment year 2018-19. Sl. No ITA No A.Y. Appellant / Assessee Respondent 1 119/Hyd/2022 2018-19 Kanishk Gupta, R/o.Hyderabad. PAN : AIPPK9057L ACIT, Central Circle – 3(1), Hyderabad. 2 120/Hyd/2022 2018-19 Ronak Gupta, R/o.Hyderabad. PAN : AIAPG3319G -do- 3 121/Hyd/2022 2018-19 M/s. Supreme Agro, Hyderabad. PAN :ADDFS6011R -do- 2 ITA Nos.119 to 121/Hyd/2022 2. The grounds raised by the respective assessees in both the appeals i.e. ITA No.119 and 120/Hyd/2022 are same and hence, we are reproducing the grounds of ITA No.119/Hyd/2022 only, for the sake of brevity and the same read as under : “1. The order of ld.CIT(A) is erroneous both on law and on facts. 2. The ld.CIT(A) erred in confirming the addition of Rs.35,00,000/- made by the Assessing Officer u/s 69B. 3. The ld.CIT(A) erred in upholding Assessing Officer’s rejection of appellants explanation regarding return of advance of Rs.35,00,000/- in cash which was paid to M/s. Aditya Constructions for purchase of villa without making cross verification with this company and without considering the fact that such claim and documentary evidences were filed before the ADIT(Inv.) in post search enquiry. 4. The ld.CIT(A) erred in agreeing with Assessing Officer’s rejection of appellants claim that the source of cash was withdrawal from partnership firm. 5. The ld.CIT(A) erred in rejecting appellants explanation that money was withdrawn from firm M/s. Supreme Agro which was given in cash to M/s. Adithya Construction Ltd which was later on returned to appellant. 6. The ld.CIT(A) erred in rejecting appellants claim that section 69B is not applicable to the facts of the case. 7. The ld.CIT(A) erred in confirming the addition though same amount has been treated as unexplained cash credit in the hands of the firm M/s. Supreme Agro by the Assessing Officer which was confirmed by the ld.CIT(A) in his appeal order for A.Y. 2018-19 in case of the firm. 8. The ld.CIT(A) erred in upholding Assessing Officer’s computation of tax u/s 115BBE. 9. The ld.CIT(A) erred in rejecting appellant’s claim that interest u/s 234A and 234B are to be levied on returned income in place of assessed income as held by courts.” 3 ITA Nos.119 to 121/Hyd/2022 3. The grounds of appeal in ITA No.121/Hyd/2022 read as under : “1. The order of ld.CIT(A) is erroneous both on law and on facts. 2. The ld.CIT(A) erred in upholding the order of the Assessing Officer where the Assessing Officer has rejected appellants claim of sale of scrap which was accounted for in the books of accounts. 3. The ld.CIT(A) erred in upholding Assessing Officer’s treatment of sale proceeds of scrap of Rs.70,00,000/- as unexplained cash credit u/s 68 without any valid reason even though it was accounted for as business income in the books of accounts of the appellant firm. 4. The ld.CIT(A) erred in upholding Assessing Officer’s computation of tax u/s 115BBE. 5. The ld.CIT(A) erred in rejecting appellant’s claim that interest u/s 234A and 234B are to be levied on returned income in place of assessed income as held by courts.” 4. As the facts and issues in all the appeals are same, except the amounts involved, we are reproducing the facts of appeal in ITA No.119/Hyd/2022 for the sake of brevity. We have not dealt with the various grounds raised by the assessee, as mentioned herein above and we had reframed the grounds of the assessee as under : “Whether the addition made by the assessing officer / ld.CIT(A) to the income of the assessee was in accordance with law not?, 4 ITA Nos.119 to 121/Hyd/2022 4.1 Facts of the case, in brief, are that the assessee filed his return of income for AY. 2018-19 on 20.03.2019 declaring total income of Rs.14,64,590/-. Search and seizure operations under Section 132 of I.T. Act was carried out in the case of M/s. Clarion Agro Products Pvt Ltd and others on 02.05.2018 in which the assessee was a Director. Consequent to search, the assessee’s case was centralized and a notice u/s 153A dt.05.03.2019 was issued to the assessee and in response to the notice u/s 153A, the assessee filed his return of income on 13.04.2019 declaring total income of Rs.14,64,590/-. Thereafter, the Assessing Officer had completed the assessment u/s 143(3) r.w.s. 153A by making an addition of Rs.35,00,000/- u/s 69B of the Act and thereby assessed the total income of the assessee at Rs.39,23,910/-. The assessing officer in paragraphs 4.0 to 4.5 had decided the issue in the following manner:- “4.0 During the course of search in the business premises of M/s Clarion Agro Products Pvt Ltd., certain loose sheets (pages 3 85 4) evidencing payment of cash of Rs.70 lakhs towards purchase of property were found and marked as A/CAPPL/OFF/1. As per these sheets, Rs.20,00,000/- and Rs.50,00,000/-were paid on 09.08.2017 and 31.10.2017 to Aditya (Constructions Ltd) towards advance for purchase of Villa No.39 8; 40, in Casa Grande, Narsingi, Hyderabad. When questioned on the above payments, the assessee in response to summons issued u/s 131 during the course of post-search enquiries, submitted that the cash paid was received back. The operative portion of the submission is as under: " 1. In the course of search at Office premises of M/s Clarion Agro Products Pvt Ltd on 3/ 5/ 2018 two loose sheets were seized. These loose sheets were money receipt issued by Sri B. Venkat Rami Reddy of Sri Aditya Construction Pvt Ltd for receipt of Rs.70,00,000/ - in cash on two dates from Kanishk Gupta and Ronak Gupta towards purchase of two villas in Aditya Casa Grande projects of Sri Aditya Construction Ltd. 5 ITA Nos.119 to 121/Hyd/2022 These villas are under construction. We accept that these payments were made in cash. The source of this cash was unaccounted business income of M/s Supreme Agro in which Kanishk Gupta and Ronak Gupta are partners. However Sri Reddy returned cash of Rs.70,00,000/ - on the ground that as advised by his Chartered Accountant no cash can be received in excess of Rupees two lakhs towards sale of any property as per new provisions of Income Tax Act effective from 1.4.2017. This cash was with us which has been seized in course of search on 2.5.2017. 2. In the show cause there is reference to Rs.1,20,00,000/ - however the total amount of cash paid and received back is Rs.70,00,000/ - as under: Paid Date 09.08.2017 - Rs.20,00,000 (page 4 of Annexyre - A/ CAPPL/ OFF/ 01) Date 31.10.2017 - Rs.50,00,000 (page 3 of Annexyre A/ CAPPL/ OFF/ 01) Received back Date / (During November 2017) Rs.70,00,000/-..... 1. In view of the above the amount of cash paid and received back should not be treated as unexplained investment u/ s 69D of the Act. The cash of Rs.70,00,000 will be offered to tax separately for A.Y 2018-19". 4.1 During assessment proceedings, vide this office letter dated 05.03.2021, the assessee was asked to substantiate the sources for the payment of cash of Rs.70,00,000/- towards purchase of villa on 09.8.2017 and 31.10.2017. In response, the assessee vide their letter dated 08.03.2021 submitted that the source for this cash was business income of M/s Supreme Agro, in which Kanishk Gupta and Ronak Gupta are partners. The assessee further added that the amount of Rs.70 lakhs paid to the builder was returned. However, no other evidences with regard to the sources of cash were furnished. 4.2 The submissions of the assessee with regard to the sources for the cash payment of Rs.70 lakhs, on two occasions, i.e., Rs. 20,00,000/- on 09.08.2017 and Rs.50,00,000/- on 31.10.2017. As seen from the financials of M/s Supreme Agro for the F.Y. 2017-18, it is seen that the firm incurred loss of Rs.33,70,270/-. The capital account of the assessee in the books of firm, M/s Supreme Agro for the period 01.04.2017 to 31.03.2018, shows no cash withdrawals during August and October, 2017 to make payments to the builder towards purchase of villa. 6 ITA Nos.119 to 121/Hyd/2022 However, there was an entry with regard to cash payment of Rs.35,00,000/-to the assessee on 31.03.2018. Since this payment of cash is in the month of March, that too on the last day of the financial year, no credit can be given for the cash payments made by the assessee in the months of August 86 October, 2017. 4.3 Though absence of any cash withdrawals in the capital account of the partners from the firm, M/s Supreme Agro, during the months of August / October 2017 is sufficient to rebut the claims of the assessee that they have not withdrawn any cash from the firm, a further look towards the cash book of the firm was also made. The cash book of M/s Supreme Agro evidences cash balance of Rs.1,75,378 as on 08.08.2017. Likewise, the cash balance as on 30.10.2017 is Rs.1,13,141/- and the same is Rs.72,165/- as on 31.10.2017. The firm M/s Supreme Agro, is a new firm established during the year only and the sales started from 22.11.2017. Even otherwise, as per the cash book, there are no worthwhile cash transactions to withdraw Rs.70 lakhs at any point of time till 31.10.2017 or thereafter, except that there was a debit of Rs.70 lakhs towards scrap on 31.03.2018. Therefore, the claim of the assessee that they withdrew cash from their firm M / s Supreme Agro has no basis and the assessee had not furnished any other material to substantiate cash withdrawals from the firm with any evidences. 4.4 The claim of the assessee that they received back the cash during November, 2017 from the builder has nothing to do with explaining the sources of cash availability in August 85 October, 2017 and will not alter the position of cash payments made during August / October. 4.5 Therefore, since the assessee failed to adduce evidences with regard to the sources for the cash payment of Rs.70 lakhs to M/s Aditya Constructions towards purchase of two villas along with his brother, 50% of the above cash payments, i.e., Rs.35,00,000/- is considered in the hands of the assessee as unexplained cash investment u/s 69B.” 5. Feeling aggrieved with the order of Assessing Officer, assessee carried the matter before ld.CIT(A), who dismissed the appeals of assessee. 7 ITA Nos.119 to 121/Hyd/2022 6. Before us, the submissions made by the ld. AR are as follows : i. The cash which was paid by the assessee to the builder was available to the assessee from the sale of the scrap done by the firm of the assessee. ii. It was the contention of the Ld.AR that the assessee had not maintained details of the sales made to different scrap dealers, as the scrap dealers are unorganized and scrap was sold in cash. iii. The assessee has not reflected the sale of the scrap in the sale register of the assessee. iv. That the scrap by the assessee was belonging to M/s Clarion Agro, which had given the premises to the assessee for the purposes of installing and carrying out the flour milling activity in the premises. v. It was the contention of the ld. AR that the said company had permitted the assessee to dismantle the existing plan and sale the scrap. vi. It was the contention the Ld.AR that the assessee was paying the rent to the tune of ₹ 75,000/- per month to M/s Clarion Agro. 8 ITA Nos.119 to 121/Hyd/2022 7. On the other hand, ld. DR submitted that order passed by the Assessing Officer as well as the Ld.CIT(A) is in accordance with law and no interference is required. 8. We have heard the rival submissions of the parties and perused the material on record. The Ld. CIT(A) in paragraph 6 at page 12 of his order has held as under:- “6. In the instant case, the assessment was completed by making an addition of Rs.70,00,000/- u/s 68 being unexplained cash credit. Going into the facts of the case, the appellant was firm was incorporated on 20.08.2016 and as per the sales register, the first sale took place in November, 2017. During the course of search in the case of M/s Clarion Agro Products Pvt Ltd., in which the partners of the appellant firm (Shri Ronak Gupta and Shri Kanishk Gupta) are directors, certain loose sheets were found which showed payment of Rs.70,00,000/- in cash towards of purchase of property during the year under consideration. The partners of the appellant firm stated that the source of this cash was unaccounted business income of the appellant firm M/s. Supreme Agro. From the financials of the appellant firm, it was observed that it had credited Rs.70,00,000/- to the P&L on account of sale of scrap. On questioning regarding the same, the appellant firm stated that it had sold old plant and machinery, but could not produce any evidence in support of its claim or any other details like to whom the scrap was sold etc. As the appellant firm could not explain the sources for the cash credit of Rs.70,00,000/-, the said amount was added to the income of the appellant firm as unexplained credit u/s 68 of the Act. Even during the course of appeal proceedings, the appellant did not furnish and- explanation with supporting documentary evidence except for reiterating the contentions raised before the AO. It is important to note that the firm which was formed in August 2016 could have such sizeable amount of scrap within a year of its operation. The appellant could not furnish any details of scrap and the relevant excise duty and state taxes thereof, there are provisions of TCS on scrap sale which also has not been furnished by the appellant. The appellant has shown this entry of Rs.70,00,000/- as it had a business loss and no tax liability would have arisen in case the same was presented as business income. This whole exercise was done in order to justify certain 9 ITA Nos.119 to 121/Hyd/2022 loose sheets which showed unaccounted investment by the partners of the firm. It is seen that the partners of the appellant firm Shri Ronak Gupta and Shri Kanishk Gupta have made cash payments to the tune of Rs.70,00,000/-towards purchase of property and they were liable to tax on the same and in order to escape tax liability on personal account, a conduit was made in the case of the appellant and it was stated that the money belonged to the appellant out of sales which was later claimed as scrap sales and the same was credited to the P&L account of the appellant. The adjudication of the partners of the appellant firm will bring a proper perspective to the issue under consideration (same is reproduced for convenience): "Going into the facts of the case, during the course of search in the business premises of M/s Clarion Agro Products Put Ltd., in which the appellants are directors, certain loose sheets were found which showed payment of cash of Rs.20,00,000/- and Rs.50,00,000/- on 09.08.2017 and 31.10.2017 to Aditya Constructions Ltd towards advance for purchase of Villa No.39 & 40, in Casa Grande. Narsingi, Hyderabad. During the course of post-search enquiries, on questioning regarding the cash payment, the appellants accepted that the payments were made in cash and claimed that the source of this cash was unaccounted business income of .M/s Supreme Agro in which both the appellants Kanishk Gupta and Ronak Gupta are partners. Further, it was stated that the cash of Rs.70,00,000/- was returned in November, 2017 by the builder and the same was found with the appellants and seized on 02.05.2018. Accordingly, the appellants stated that the amount of cash paid and received back should not be treated as unexplained investment and that the same will be offered to tax separately for A. Y 2018-19. During the course of assessment proceedings, the appellants were asked to substantiate the sources for the payment of cash of Rs.70,00,000/- towards purchase of villa and in reply, it was submitted that the source for this cash was business income of M/s Supreme Agro, in which the appellants are partner. The said contention of the appellants was rejected by the AO stating as under: "4.2. The submissions of the assessee with regard to the sources for the cash payment of Rs. 70 lakhs, on two occasions, i.e., Rs. 20,00,000/ - on 09.08.2017 and Rs.50,00,000/- on 31.10.2017. As seen from the financials of M/ s Supreme Agro for the F. Y. 2017-18, it is seen that the firm incurred loss of Rs.33, 70,270/-. The capital account of the 10 ITA Nos.119 to 121/Hyd/2022 assessee in the books of firm, M/s Supreme Agro for the period 01.04.2017 to 31.03.2018, shows no cash withdrawals during August and October, 2017 to make payments to the builder towards purchase of villa. However, there was an entry with regard to cash payment of Rs.35,00,000/- to the assessee on 31.03.2018. Since this payment of cash is in the month of March, that too on the last day of the financial year, no credit can be given for the cash payments made by the assessee in the months of August & October, 2017. 4.3. Though absence of any cash withdrawals in the capital account of the partners from the firm, M/s Supreme Agro, during the months of August / October 2017 is sufficient to rebut the claims of the assessee that they have not withdrawn any cash from the firm, a further look towards the cash book of the firm was also made. The cash book of M/s Supreme Agro evidences cash balance of Rs. 1,75,378 as on 08.08.2017. Likewise, the cash balance as on 30.10.2017 is Rs.1,13,141/- and the same is Rs.72,165/- as on 31.10.2017. The firm M/s Supreme Agro, is a new firm established during the year only and the sales started from 22.11.2017. Even otherwise, as per the cash book, there are no worthwhile cash transactions to withdraw Rs.70 lakhs at any point of time till 31.10.2017 or thereafter, except that there was a debit of Rs.70 lakhs towards scrap on 31.03.2018. Therefore, the claim of the assessee that they withdrew cash from their firm M/s Supreme Agro has no basis and the assessee had not furnished any other material to substantiate cash withdrawals from the firm with any evidences. 4.4. The claim of the assessee that they received back the cash during November, 2017 from the builder has nothing to do with explaining the sources of cash availability in August &October, 2017 and will not alter the position of cash payments made during August / October. 4.5. Therefore, since the assessee failed to adduce evidences with regard to the sources for the cash payment of Rs.70 lakhs to M/s Aditya Constructions towards purchase of two villas along with his brother, 50% of the above cash payments, i.e., Rs.35,00,000/ - is considered in the hands of the assessee as unexplained cash investment til s 69B..." Even during the course of appeal proceedings, the appellants did not furnish any explanation with supporting documentary evidence except for reiterating the contentions raised before the AO. The AO has elaborately discussed the issues in the assessment order and the appellants did not furnish any bonafide explanation with supporting documentary evidence to counter the observations made by the AO. 11 ITA Nos.119 to 121/Hyd/2022 Further, the submissions of the appellants are contradicting. At one point, it was stated that Rs.70 lakhs pertain to unaccounted cash sales during the year and at another point it was stated that Rs. 70 lakhs pertain to scrap sale. The appellants are only trying to put a convenient argument as it appears that the partnership concern seems to have a business loss and the appellants are trying in vain to create the same cash as part of business receipts to escape the taxation as well as the provisions of Section 115BBE which puts higher quantum of tax on unaccounted cash. Just because the appellants, in their firm MOs Supreme Agro, have passed an entry in the firm's books of a sum of Rs. 70,00,000/ - does not become a bonafide explanation and further just because the appellants have offered the same as business income in the hands of the firm and further taxed by the Assessing Officer in the hands of the firm as unexplained credit, does not become a bonafide source in the hands of the appellants. The appellants are trying to escape taxation through a manufactured story and that does not entitle them to a right of telescoping of unexplained credit taxed in the hands of the firm, in their respective hands. The appellants and the firm are different entitites and therefore needs to be taxed separately in their own hands especially when the nature is different and it is important to note that when the incriminating documents of Rs.70,00,000/ - pertaining to both the appellants were found, the same were manufactured into sales by these appellants in the hands of the firm and during the course of Search, none of the entries of so claimed cash sales of scrap or otherwise or partners' withdrawal were found and the evidence of scrap sales and its respective source has not been established in any manner but for a general statement. The submission without bonafide evidences is just a verbal escape route devoid of merits and only reflects the lack of bonafide explanation for the source of Rs.70 lakhs and the appellants' malicious intention to escape the special rates of taxation as per provisions of Section 115BBE. Considering the appellants' explanation of sources of Rs.70 lakhs being income from sale of scrap, it is beyond logic and comprehension that for sale worth Rs. 70 lakhs, the appellants did not maintain even basic details like name of person etc to whom. the scrap was sold and could not even furnish any explanation as to the nature of scrap sold. Further, it is also to be noted that scrap sale warrants various state taxes like excise duty etc which the appellants did not furnish to support his contention. Therefore, it is clearly a case of self-serving story created by the appellants to explain the sources of investment and avoid the rigors of Section 69B and subsequent taxation as per Section 115BBE. It is very clear that the payments have been made by both the appellants Ronak Gupta and Kanishk Gupta and there is no mention of the firm in the seized documents. The appellants are only trying an argument of 12 ITA Nos.119 to 121/Hyd/2022 convenience as M/s Supreme Agro is in losses and by ascribing the seized cash to the firm, the intent is only to escape taxation. The appellants have failed to prove its bogus claim with any basic evidences also and therefore the same is rejected accordingly. The Assessing Officer has rightly observed that the return of cash has nothing to do with the source of cash at any point in time and the source needs to be explained by the appellants. The appellants have stated that the scrap sales were not recorded and were subsequently recorded is all a bogus story of convenience as already observed that there are various levies on scrap sales and also there has to be reason for generation of scrap, whereas the appellants are just reiterating submissions without giving any justification or evidences, in view of the same, the additions made by the Assessing Officer are confirmed. The Assessing Officer has rightly added the amounts u/s 69B. The relevant provisions of Section 69B are reproduced as under: Amount of Investments, etc., not fully disclosed in books of account. 69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may he deemed to be the income of the assessee for such financial year. In the instant case, the appellants have made the investment in cash towards purchase of property and the explanation regarding the sources was held to be non-satisfactory by the Assessing Officer and therefore, the Assessing Officer has rightly made the additions u/s 69B. Further, the Assessing Officer has rightly invoked the taxation of the same u/s 115BBE which reads as under: 115BBE. j(1) Where the total income of an assessee,— a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or 13 ITA Nos.119 to 121/Hyd/2022 b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income- tax payable shall be the aggregate of— i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent: and ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).J (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance for set off of any loss/ shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) /and clause (b)] of sub-section (1).J In the present case, the Assessing Officer has determined the additions u/s 69B and taxability u/s 115BBE and therefore, the applicability of the Section 115BBE(1)(b) is valid." From the above, it is clear that: a credit entry has been offered by the appellant of Rs.70,00,000/- as a front for the partners. However, this income has been offered by the appellant and the sources of the same are not proved by the appellant regarding the identity, genuineness and the bonafides of the transaction. No proof has been given regardinggenerating of scrap or the identity of the person to whom sales were made along with the proof of deposit of various state and central taxes along with proof of withholding tax. In the case of the appellant, the entry remained unproved within the meaning of Section 68 and the relevant provision of Section 68 is reproduced as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year :" The appellant has not been able to give any bonafide explanation for the sum of Rs.70,00,000/- credited in its P&L account and therefore, the addition has been rightly made u/s 68. Further, the Assessing Officer has rightly invoked the taxation of the same u/s 115BBE which reads as under: 14 ITA Nos.119 to 121/Hyd/2022 115BBE.((1) Where the total income of an assessee,— a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of— ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause N.] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance (or set off of any loss/ shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) [and clause (b)/ of sub-section (1)./ In the present case, the Assessing Officer has determined the addition u/s Section 68 and therefore the applicability of the Section 115BBE(1)(b) is valid. It would not be out of place to mention as adjudicated in the appeal of the partners of the appellant firm, no telescoping of the amount of Rs.70,00,000/- is allowable in the hands of partners as the appellant has offered the same in the P&L account and this credit has been doubted and thus was taxed u/s 1 15BBE. There are no proofs of the above sums being ever given to the partners and the documents seized only indicate the payments by partners for the said villas and the dates of payment made by the partners and the dates of credit entry on account of scrap generated do not match as nothing of this sort has been furnished. In view of the same, the addition is confirmed accordingly and the ground no.2, 3,4 and 6 are dismissed accordingly. The sum of Rs.70.00,000/- has been considered u/s 68, thus the same has to be removed from the computation of business income and the resultant business loss will increase accordingly. The Assessing Officer is directed to recompute the same. In view of the above directions, the ground no.5 is partly allowed. The ground no.7 pertains to levy of interest u/s 234A and 2348. The appellants stated that the Assessing Officer has levied interest u/s 234A and 234B on assessed income instead of returned income. The relevant provisions of Section 234A and 234B are reproduced as under: 15 ITA Nos.119 to 121/Hyd/2022 234A. (1) Where the return of income for any assessment year under sub- section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,— (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of, 2348(3) inhere, as a result of an order of reassessment or recomputation under section 147 or section 153A. the amount on which interest was payable in respect of shortfall in payment of advance tux /Or any financial year under sub-section (1) is increased, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April next following such financial year and ending on the date of the reassessment or recomputation under section 147 or section 153A, on the amount by which the tax on the total income determined on the basis of the reassessment or recomputation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the regular assessment as referred to in sub-section (1), as the case may be; From the above provisions of Section 234A and 2348, interest is to be levied on the shortfall of the tax due on the assessed income. Therefore, the Assessing Officer has rightly levied the interest u/s 234A and 234B on the assessed income and thus the ground no.7 is dismissed accordingly. The ground no. 1 and 8 are general in nature and need no separate adjudication. To sum up the appeal is partly allowed.” 16 ITA Nos.119 to 121/Hyd/2022 9. The explanation given by the assessee was examined by the Assessing Officer / ld.CIT(A) and by the Bench also, on examination of the reason, We do not find it to be plausible and in accordance with law. In fact when the documents were found from the premises of the assessee, at the time of the search ,showing payment of Rs.70 lakhs paid in cash for purchase of property in two instalments on 09.08.2017 and 31.10.2017 for a sum of Rs.20,00,000/- and Rs.50,00,000/- respectively the assessee sought to explain the above transactions by stating that the said money was received by the assessee from sale of scrap by M/s. Supreme Agro in which the assessee is a partner with Mr. Ronak Gupta. Quite contrary to the stand of the assessee, M/s.Supreme Agro commenced its business activities only in November 2017, therefore, it is highly improbable, impossible and incongruous to accept the explanation that Rs.70 lakhs was available with M/s. Supreme Agro even before the commencement of business and before taking the premises on lease. This fact had been mentioned by the Assessing Officer in his order mentioning therein that the said firm, namely Supreme Agro had started its sales only on 22.11.2017 and there was no availability of the cash or withdrawal of the cash at any point of time till 31.10.2017. The above said fact had not been contradicted by the ld.AR. Moreover, the assessee had alleged that the cash paid by the assessee was returned by the builder. However, there is no cogent evidence, except the bald statement relied upon by the assessee. Even 17 ITA Nos.119 to 121/Hyd/2022 otherwise, the facts also goes against the assessee as it is in violation of section 269SS of the Act. 10. There is yet another reason to decide the issue against the assessee as the alleged plant and machinery, which was allegedly sold by M/s. Supreme Agro were owned by M/s. Clarion Agro Products Pvt. Ltd. The sale proceeds if any of old plant and machinery should be to the account of M/s. Clarion Agro and not to the account of M/s.Supreme Agro. 11. In our view, the finding recorded by the Assessing Officer whereby the Assessing Officer had clearly mentioned that even the sale of scrap was required to be reflected into the depreciation statement under the deletion head. In the absence of such mentioning of deletion in the block of asset, the averment of the assessee had no legs to stand. 12. In our considered opinion, the story was cooked up by the assessee with a view to justifying the payment of cash of Rs.70 lakhs to the builders. The assessee has even failed to furnish any evidence showing the return of the cash by the builders, namely Adithya Constructions Limited. In our view, the order passed by the Assessing Officer confirming addition of Rs.35 lakhs each in the hands of assessee and Ronak Gupta was in accordance with law. In this connection, we may fruitfully rely upon the decision of the Hon’ble Supreme Court in the case of CIT Vs. Durga Prasad 18 ITA Nos.119 to 121/Hyd/2022 More, 72 ITR 807 SC and Sumathi Dayal Vs. CIT reported in 1995 AIR 2109. For the sake of clarity we extract the relevant portion of judgment of the Hon’ble Apex Court In the case of Sumathi Dayal Vs. CIT, 1995 AIR 2109, is as under: 7. There is no dispute that the amounts were received by the appellant from various race clubs on the basis of winning tickets presented by her. What is dispute is that they were really the winnings of the appellant from the races. This raises the question whether the apparent can be considered as real. As laid down by this Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities arc entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. (See : Commissioner of Income Tax v. Durga Prasad More,(1971) 82 ITR 540, at pp. 545, 547) ............................................ 13. This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities. The Chairman of the Settlement Commission has emphasised that the appellant did possess the winning ticket which was surrendered to the Race Club and in return a crossed cheque was obtained. It is, in our view, a neutral circumstance, because if the appellant had purchased the winning ticket after the event she would be having the winning ticket with her which she could surrender to the Race Club. The observation by the Chairman of the Settlement Commission that "fraudulent sale of winning ticket is not an usual practice but is very much of an unusual practice" ignores the prevalent malpractice that was noticed by the District Taxes Enquiry Committee and the recommendations made by the said Committee which led to the amendment of the Act by the Finance Act of 1972 whereby the exemption from tax that was available in respect of winnings from lotteries, crossword puzzles, races, etc. was withdrawn. Similarly the observation by the Chairman that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase has to be drawn on the basis of the circumstances available on the record. Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. We are, therefore, unable to agree with the view 19 ITA Nos.119 to 121/Hyd/2022 of the Chairman in his dissenting opinion. In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence. 14. In the circumstances, no case is made out for interference with the order passed by the settlement commission the appeals therefore fail and are accordingly dismissed with costs.” 13. Considering the totality of the facts of the case and the ratio laid down by the Hon’ble Supreme Court in the said cases, we do not find any merit in the assessee's case. It is highly improbable for the assessee to receive the cash from the sale of scrap from a third party and utilize the said cash to purchase the immovable property. No prudent person will sell the property of the third party in cash without any authority and utilizing the same for making the investment in property. The assessee's stand does not inspire confidence as the assessee's conduct is against human behavior and probability. In view of the above, we do not find any merit in the case of the assessee. Accordingly, the appeal of assessee in ITA No.119/Hyd/2022 is dismissed. 14. Now coming to the remaining appeals i.e. ITA Nos.120 and 121/Hyd/2022, which are identical to the facts and issues raised in ITA 119/Hyd/2022, our decision in ITA No.119/Hyd/ 2022 would apply mutatis mutandis. Accordingly, these appeals are dismissed. 20 ITA Nos.119 to 121/Hyd/2022 15. In the result, all the appeals of assessees are dismissed. The copy of the same may be placed in all respective case files. Order pronounced in the Open Court on 11 th January, 2022. Sd/- Sd/- d/- (RAMA KANTA PANDA) ACCOUNTANT MEMBER (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 11 th January, 2022. TYNM/sps Copy to: S.No Addresses 1 Kanishk Gupta, C/o.8-2-618/G/1, New House No.23, Road No.11, Banjara Hills, Hyderabad. 2 Ronak Gupta, C/o.Villa No.51 & 49, Financial District, Ekta Prime Highland Park, Gachibowli, Hyderabad. 3 M/s. Supreme Agro, 14-220, survey No.842/1, Patancheru, Sangareddy, Telangana. 4 ACIT, Central Circle – 3(1), Hyderabad. 5 CIT(Appeals)-11, Hyderabad. 6 Principal Commissioner of Income Tax (Central), Hyderabad. 7 DR, ITAT Hyderabad Benches 8 Guard File By Order