DCIT, Central Circle, Ghaziabad V. Pummy Sahni, Delhi

ITA 1347/DEL/2021

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kanpur, which had deleted substantial additions made by the Assessing Officer following a search and seizure operation under section 132 of the Income-tax Act, 1961. The primary issues revolved around discrepancies between the income declared in the return and the profit & loss account, and the treatment of unsecured loans as unexplained cash credits under section 68 of the Act. The Tribunal's decision affirmed the Commissioner of Appeals' findings, which were based on detailed submissions and evidence provided by the assessee, including a remand report from the Assessing Officer acknowledging the reconciliations made.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121397 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 09-05-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 04-10-2021
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHREY JAIN
• Keywords: Search and seizure
• Section: 68; 132; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DLEHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 1347/Del/2021 Assessment Year: 2016-17 DCIT, Central Circle, Ghaziabad. Versus Pummy Sahni, D-835, 2 nd Floor, New Friends Colony, Zakir Nagar, SO, Delhi. PAN: AAFPP2471F (Appellant) (Respondent) Revenue by : Ms. Sapna Bhatia, CIT/DR Assessee by : Shri Somil Aggarwal, Adv. & Shri Shrey Jain, Adv. Date of hearing : 11.05.2023 Date of pronouncement : 17.05.2023 ORDER PER SAKTIJIT DEY, J.M.: This is an appeal by the Revenue against order dated 12.07.2021 of learned Commissioner of Income-tax (Appeals), Kanpur for the assessment year 2016-17. 2. Ground No. 3 & 4 being general grounds do not require adjudication. ITA No. 1347/Del/2021 2 3. In ground No. 1, Revenue has challenged deletion of addition of Rs.1,44,69,493/-. 4. Briefly, the facts relating to this issue are, the assessee is a resident individual. Pursuant to search and seizure operation u/s. 132 of the Income-tax Act, 1961 conducted in case of assessee on 03.11.2016, proceedings u/s. 153A of the Act were initiated against the assessee. In course of assessment proceedings, Assessing Officer noticed that in course of search and seizure operation, a hard disc was seized from the premises containing personal balance sheet of the assessee for financial year 2015-16 relevant to assessment year under dispute. On perusal of the said balance sheet and profit & loss account, he found that the assessee has shown net profit of Rs.1,51,29,583/-, whereas, in the return of income filed in pursuance to notice u/s. 153A of the Act, the assessee has declared income of Rs.6,60,090/-. Thus, he was of the view that income declared in the return of income is not in consonance with profit & loss account. After issuing a show cause notice to the assessee and examining her explanation, Assessing Officer ultimately made addition of Rs.1,44,69,493/-, being the difference between net profit as per profit & loss account and the income declared in the return of income. Assessee contested the addition before ld. Commissioner (Appeals). After ITA No. 1347/Del/2021 3 considering the submissions of the assessee in the context of facts and materials on record, ld. Commissioner (Appeals), being convinced, deleted the addition. 5. We have considered rival submissions and perused the materials on record. Undisputedly, alleging that the assessee has offered lesser income in the return of income than what is reflected in the profit & loss account, Assessing Officer has made the disputed addition. However, it is the say of the assessee that there is no difference in the income shown in profit & loss account and as offered in the return of income. It is the contention of the assessee that the income declared in the return of income is after claiming certain deductions/exemptions. It is observed, in course of proceedings before the first appellate authority, the assessee has not only made submissions but has also furnished documentary evidences to reconcile the alleged difference between the income reflected in profit & loss account and as shown in the return of income. The submissions made and evidences furnished by the assessee were forwarded to Assessing Officer for factual verification. After verifying evidences and reconciliation made by the assessee, Assessing Officer has furnished a remand report accepting that major amount of income shown in the profit & loss account and as reflected in the return of ITA No. 1347/Del/2021 4 income stands reconciled. He has reported a difference of Rs.2,40,000/- only. Admittedly, ld. Commissioner(Appeals) has upheld the addition to the extent of Rs.2,40,000/-, which according to learned Commissioner (Appeals) was short reported by the assessee. Considering the fact that Assessing Officer has found difference between the income reflected in profit & loss account and as declared in the return of income only to the extent of Rs.2,40,000/-, we do not find any infirmity in the decision of ld. Commissioner (Appeals) in restricting the addition to that extent only. Accordingly, ground raised is dismissed. 6. In ground No.2, the Revenue has challenged deletion of addition of Rs.3,60,88,611/-. 7. Briefly, the facts relating to this issue are, in course of assessment proceedings, the Assessing Officer while verifying the balance sheet of the assessee as found in the hard disc recovered in course of search and seizure operation, noticed that under the head ‘loans and liability’, unsecured loan of Rs.3,60,88,611.44 has been shown. Noticing this, Assessing Officer called upon the assessee to furnish complete names and postal addresses of the parties who advanced unsecured loans along with confirmations, Income-tax returns, relevant bank statements etc. ITA No. 1347/Del/2021 5 Further, he called upon the assessee to explain why unsecured loan should not be treated as unexplained cash credits u/s. 68 of the Act. Alleging that the assessee failed to furnish cogent and corroborative evidences to prove the genuineness of unsecured loan, Assessing Officer added back the amount of Rs.3,60,88,611/-. Assessee contested aforesaid addition before ld. Commissioner (Appeals). Being convinced with the submissions of the assessee and evidences furnished, ld. Commissioner (Appeals) deleted the addition. 8. We have considered rival submissions and perused materials on record. It is observed, while explaining the source of unsecured loan in dispute, the assessee had submitted before learned first appellate authority that except an amount of Rs.65,803/-, which was received as unsecured loan from her husband during the year under consideration, all other unsecured loans appearing in the balance sheet were carried over from earlier assessment years. Necessary documentary evidences in this regard were also furnished before ld. Commissioner (Appeals). Submissions made by the assessee along with evidences furnished were forwarded to Assessing Officer for his examination. After examining the evidences furnished by the assessee, Assessing Officer has furnished a remand report, wherein, he has admitted that none of the unsecured ITA No. 1347/Del/2021 6 loans except the amount of Rs.65,803/- were received during the year under consideration. Taking note of aforesaid observations of Assessing Officer in the remand report, ld. Commissioner (Appeals) has held that unsecured loans received by the assessee in earlier assessment years cannot be treated as unexplained cash credits of the year under consideration. As regards fresh loan of Rs.65,803/- availed from assessee’s husband, ld. Commissioner(Appeals) after verifying the evidences on record has recorded a factual finding that the identity and creditworthiness of the lender has been established. Further, the loan having been received through proper banking channel, genuineness cannot be doubted. The aforesaid factual finding recorded by learned Commissioner (Appeals) remains uncontroverted before us. In view of the aforesaid, we do not find any valid reason to interfere with the decision of ld. Commissioner (Appeals). Ground raised is dismissed. 9. In the result, appeal is dismissed. Order pronounced in the open court on 17/05/2023. Sd/- Sd/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 17.05.2023