N G Realty Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-5(1), Now Ward 3(1)(1), Ahmedabad

ITA 1359/AHD/2015

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7728 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Keywords: Unexplained expenditure; Cost of acquisition; Set aside
• Section: 68; 69; 263; 69C; 143(3); 133A; 143(2)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1359/AHD/2015 िनधाᭅरण वषᭅ/Asstt. Year: 2008-09 NG Realty Pvt. Ltd., 9 th Floor, Astron Tech Park, Opp. Fun republic, Satellite Cross Road, Satellite, Ahmedabad-380015. PAN: AACCN2175N Vs. I.T.O., Ward-5(1), Ahmedabad. (Applicant) (Respondent) Assessee by : Shri Mehul K. Patel, A.R Revenue by : Shri R.R. Makwana, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 12/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 25/11/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-9, Ahmedabad, dated 05/02/2015 arising in the matter of assessment order passed under s. 143 r.w.s 263 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2008-09. ITA no.1359/AHD/2015 A.Y. 2008-09 2 2. The assessee has raised the following grounds of appeal: 1. On the facts and circumstances of the case , the order passed by Ld. CIT -(A) is against the Law Equity and Justice . 2. The Ld. CIT- (A) , erred in Law and on Facts by upholding the addition of Rs. 6010250/- made by The Ld. Assessing officer, ITO ward 5(1) (Addl) now 3(1)(1) Ahmedabad under section 69 C of the Income Tax Act 1961, 3. The Ld CIT - (A) erred in Law and on facts by upholding the addition of Rs. 2806000/- u/s 69 C of the Income Tax Act 1961 , made by Id. Assessing officer which has already been added and forms part of Rs.6010250/- resulting into double addition. 4. It is therefore prayed that the additions made above , by Ld. AO and confirmed by Ld. CIT- A may please be deleted. 5. The appellant craves liberty to add/ alter, withdraw, submit or change and of the grounds of appeal either before and during the course of appellate proceedings. 3. The interconnected issue raised by the assessee is that the learned CIT (A) erred in confirming the addition made by the AO for Rs. 60,10,250/- on account of unexplained expenditures and unaccounted cash payment of Rs. 28 lakhs. 4. The present appeal before us is arising against the assessment order framed under section 143(3) read with section 263 of the Act. The assessment was originally framed by the AO under section 143(3) of the Act dated 30 th November 2010 after making the addition of Rs. 10 lakh under section 68 of the Act. On a later date, the learned PCIT under section 263 of the Act found that there was a document bearing loose paper page No. 4 which was discovered during the survey proceedings conducted at the premises of the assessee dated 19 February 2008. Such document was containing the details of the unrecorded cash expenditures incurred by the assessee. The details of such document reads as under: Rs.7,50,000/- Zad Zakar kapva Mate Rs.28,00,000/- Zamin no kabjo levana Rs.22,00,000/- Zamin levling thatha puran mate Rs.2,50,000/- Zamin ni vigat levani khedutu pase this levani.... Rs.1,250/- Parchuran kharch ITA no.1359/AHD/2015 A.Y. 2008-09 3 4.1 As per the learned PCIT, such document, containing the details of unrecorded cash expenditure, for ₹ 60,10,250/- was not verified by the AO during the assessment proceedings. Therefore, the assessment framed by the AO vide order dated 30 th November 2010 was set aside by the learned Principal CIT under section 263 of the Act with the direction for making the fresh assessment. 4.2 Consequently, the AO initiated the proceedings by issuing notice under section 143(2) of the Act and sought an explanation about the unrecorded cash expenditure as discussed above. In reply thereto, the assessee contended that the impugned expenditures were incurred for the acquisition of the land and land levelling, tree cutting, and other connected expenditures which are detailed as below: A For obtaining the possession of Survey/Block No.146/B Village Rajoda Rs.28,06,000/- B Payment made for land leveling & tree cutting Rs.29,50,000/- C Expense incurred by the concerned employee/person relating to farmer and land Rs.2,06,050/- 4.3 The assessee contended that impugned expenses were incurred out of cash balance available in the books of accounts. However, the same was omitted to be recorded in books of account which resulted difference in cash balance as per books viz-a-viz physical cash available on the date of survey. The assessee further submitted that subsequent of survey proceeding it recorded these unaccounted expenses and filed revised/ updated cash book along with explanation before the AO vide letter dated 5 th March 2008 and 15 th April 2008 which was accepted and no further question or dispute was raised. Thus the expenditures as discussed above are no longer unaccounted as alleged by the revenue. 4.4 However, the AO found that the impugned expenditures were incurred in connection with the acquisition of land bearing survey No. 146/B through Banakhat ITA no.1359/AHD/2015 A.Y. 2008-09 4 which was executed dated 3 rd November 2007. Furthermore, these expenditures were not recorded in the regular books of accounts till the date of survey 19 th February 2008 whereas it was noticed that cash book was updated upto 11 th February 2008. Thus the AO did not believe on the explanation submitted by the assessee that such expenditures were incurred out of the accounted cash of the receipt of the assessee. Likewise, the director of the assessee at the time of survey has duly admitted that such expenditures were incurred out of unaccounted receipts representing the undisclosed income. Hence the AO, treated the sum of ₹ 60,10,250/- as unexplained expenditure under section 69C of the Act. 4.5 The AO further found that as per submission of the assessee it has made payment for a sum of Rs. ₹ 28,06,000/- towards the purchase of land bearing survey number 146/B through Banakhat dated 3 rd November 2007, but the source of making the payment for purchase of the impugned land at relevant time was not explained by the assessee. Therefore the same was treated as unexplained expenses under section 69 C of the Act. 4.6 In view of the above, the AO made the addition of ₹ 60,10,250/- and ₹ 28,06,000/- on account of unexplained expenditure under section 69C of the Act respectively to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO by observing as under: 2.1 I have carefully considered the contention as well as the case laws relied upon the appellant. I am not inclined TO agree with the view of appellant as it lac factual matrix. The appellant has contended that the expenses amounting to Rs.60.10 lacs was incurred for meeting expenditure relating to obtaining the possession of block No.146/B, payment made to labourer for tree cutting and levelling etc. was yet to be recorded in its books. The appellant has produced a voucher and a banakhat agreement before A.O, as evidence, for payment of Rs.28,06,000/- to one Mr. Parveen Singh for obtaining possession of the land at 146/B. As per the voucher, Shri Parveen Singh was paid Rs.18,06,000/- on 04.11.2007 by the appellant The alleged banakhat was executed on 03.11.2007 in which it is mentioned that Shri Parveenbhai had received Rs.10 lacs in cash from the assessee. The appellant's contention is unacceptable that the expenses and payment made in month of November, 2007, is the reason of shortage of cash. The cash book was found to be recorded till 11.02.2008. It is beyond any logic to accept that when the cash book was being written ITA no.1359/AHD/2015 A.Y. 2008-09 5 regularly till 11.02.2003, how it should be acceptable that cash book is yet to be entered wrt old entries pertaining to Nov. 2007. This contention cast a serious doubt on the authenticity of cashbook and in general overall state of affairs of books of accounts of the appellant. The Ld. A.O has rightly observed that, the appellant has not furnished any evidence to prove that the expenses recorded on page-4 of the loose paper file were out of withdrawal from the cash book. The appellant has failed totally to pin point any particular entry in cash book wrt withdrawal prior to Nov. 2007, to demonstrate the cash withdrawal for the cash given to Praveenbhai on 4.11.2007. It is clearly an afterthought on the part of appellant, to cover up its loophole, in the view of clear admission by the director at the time of survey in his statement on oath, that the expenditure have been met out of cash out of its books of accounts. Practically also it is totally unacceptable that in garb ot non completion of cash book upto fag end of F.Y. acceptance of any entry pertaining 10 earlier period of F.Y will be logical, i am in agreement with the contention of Ld. A.O Therefore, the addition of Rs.60.10 lacs u/s.69C is confirmed. Accordingly, the appeal on this ground is dismissed. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 3.2 I have carefully considered rival contention. In view of fact of the case I am not inclined to agree with contention of appellant. The Id AO has rightly made addition of Rs. 23,06,000/- , on account of payment made in November, 2007 to Shri Parveenbhai. The appellant has contended that at the time of Banakhat i.e on 04/11/2007, Rs.10,00,000/- was paid to Shri Pravinbhai and later Rs 18,06,000/-was also paid. The total amount of Rs. 28,06,000/- was yet to be recorded in the books when the survey was conducted on 19.02.2008. This logic of appellant is not at all acceptable, that entries pertaining to withdrawal of cash in November were pending to be recorded in the month of February, 2008. The appellant has failed to point specific entries in cash book pertaining to withdrawal of cash on the given dates to Praveenbhai. The theory as presented by appellant is clearly an afterthought which is not acceptable. Accordingly, the addition made by Id A.Q is upheld. The appeal on this ground is dismissed 6. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 7. The learned AR before us filed a paper book running from pages 1 to 163 and cash book for the year under consideration and contended that the impugned expenditures of Rs. 60,10,250/- were incurred by the assessee out of its accounted cash receipts. Therefore, there cannot be any addition to the total income of the assessee. 7.1 The learned AR likewise further submitted that the addition of ₹ 28,06,000/- has been made 2 times by the authorities below. Firstly, the entire amount of expenditure noted on loose paper bearing page number 04 was treated as unexplained expenditure under section 69C of the Act and secondly the land ITA no.1359/AHD/2015 A.Y. 2008-09 6 acquisition cost of ₹ 28,06,000/- was treated as unaccounted cash payment under section 69C of the Act. The act of the authorities below has led to double additions of ₹ 28,06,000/- which is unwarranted under the provisions of law. 8. On the other and, the learned DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case there was a survey operation under section 133A of the Act at the office premises of the assessee dated 19 th February 2008. As on the date of survey, the cash balance as recorded in the books of accounts was appearing at Rs. 1,77,04,284/- whereas physical cash was available for Rs. 11,64,950/- only leading to a difference of ₹ 1,65,39,334/. In other words the physical cash was short by ₹ 1,65,39,334/ only. 9.1 Likewise, there was a document bearing loose paper page No. 4 found during the survey showing the cash expenditures of ₹ 60,10,250/- towards land development which were not appearing in the cash book of the assessee. 9.2 It was explained by the assessee that excess cash was found as per the books of accounts than the physical cash available as on the date of survey. It was mainly for the reason that the assessee has given advances of ₹1 crores to Shri Hanuba prior to the date of survey which was returned and deposited in bank account as on 25 th February 2008. Further it has incurred an expense of ₹ 60,10,250/- as noted on page 4 of the seized document which were not recorded in the books of accounts as on the date of survey. But the same were recorded post survey and to this effect updated cash book was filed before the revenue authority vide letter dated 05 th March 2008 and 15 th April 2008. The revenue also admitted the contention of the assessee except for the cash expenditure incurred by the assessee for Rs. 60,10,250/- on the reasoning that the impugned expenditures were ITA no.1359/AHD/2015 A.Y. 2008-09 7 incurred in the month of November 2007 which were not recorded until the date of survey. Thus, the revenue was of the view that such expenditures of ₹ 60,10,250/- have been incurred out of the unaccounted receipts of the assessee. 9.3 It is an admitted fact that as on the date of survey there was a difference found between the cash recorded in the books of accounts viz a viz cash physically found available leading excess cash balance in the books of accounts by ₹ 1,65,39,334/-. As per the assessee the impugned expenditures were incurred out of the accounted receipt of cash but omitted to record the impugned expenditures. Undeniably, it is the onus of the assessee to justify based on the cogent material that the impugned cash expenditure of ₹ 60,10,250/- was incurred out cash balance of the regular cash book of the assessee. If that be so, there cannot be any addition to the total income of the assessee merely on the reasoning that the assessee failed to record the expenditure in the books of accounts on the date of incurrence of the expenses which were actually recorded in the books of accounts on a later date. It is a matter of verification. In other words, it has to be seen whether there was the cash available in the books of accounts of the assessee as on the date on which the impugned expenditures were incurred i.e. November 2007. If there was sufficient cash in the books of the firm of the assessee, there is no possibility of treating the impugned expenditure as unexplained expense as provided under section 69C of the Act until and unless the revenue brings on record based on cogent materials that there was no cash available in the books of the assessee on the relevant dates or the source of such expenditure was from the third source which was unexplained. 9.4 Likewise, we note that once the revenue has treated the entire amount of expenditure of ₹ 60,10,250/- as unexplained expense under section 69C of the Act, there cannot be any addition separately for ₹ 28,06,000/- being part and parcel of the total addition of ₹ 60,10,,250/- otherwise it would lead to the double addition which is not warranted under the provisions of law until and unless the provisions of law requires so. In view of the above, we set aside the issue to the file of the AO ITA no.1359/AHD/2015 A.Y. 2008-09 8 for fresh adjudication as per the provisions of law and after necessary verification of the cash book. Hence, the ground of appeal of the assessee is partly allowed for the statistical purposes. 10. In the result the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the Court on 25/11/2021 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 25/11/2021 Manish