DCIT CENTRAL CIRCLE 6(1), MUMBAI, NARIMAN POINT MUMBAI V. GNP REALTY LLP, Thane

ITA 3105/MUM/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2114 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-04-2024
• Assessment Year: 2021-2022
• Appeal Filed On: 03-09-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Search and seizure; Document seized; Documents seized; TDS
• Section: 132; 28; 142(1); 37(1); 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “G”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No.3105/M/2023 Assessment Year: 2021-22 DCIT Central Circle-6(1), 19 th Floor, Air India Building, Nariman Point, Mumbai - 400021 Vs. M/s. GNP Realty LLP, Office No.1203, Bldg No.A1, Rupa Solitaire, Sector-1, Millenium Business Park (MBP), Mahape, Navi Mumbai, Maharashtra – 400 701 PAN: AASFG3348K (Appellant) (Respondent) Present for: Assessee by : Shri Nishit Gandhi, A.R. Revenue by : Dr. Kishor Dhule, D.R. Date of Hearing : 25 . 04 . 2024 Date of Pronouncement : 29.05.2024 O R D E R Per: Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Revenue against the order dated 02.06.2023, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2021-22. ITA No.3105/M/2023 M/s. GNP Realty LLP 2 2. In the instant case, the assessee had declared its total income at Rs.2,90,943/- by filing its return of income under section 139(1) on 15.03.2022 for the assessment year under consideration. Subsequently, a search and seizure action under section 132 of the Act was conducted in the middleman/businessmen group of cases on 23.09.2021 wherein various premises were covered, including of the assessee under section 132 of the Act and thereafter the case of the assessee was selected for complete scrutiny and accordingly statutory notices have been issued to the assessee, in response to which the assessee e-filed the details as called for through ITBA. 2.1 On perusing the details filed by the assessee it was observed by the Assessing Officer (AO) that the assessee is engaged in the business of mining of Manganese Ore located in Nagpur which is still at the initial stage of prospecting and exploration stage. During the course of search and seizure action under section 132 of the Act at the office premises of M/s. GNP Consultancy & Solutions Pvt. Ltd. at office No.704, 705, 706 & 708, 7 th Floor, Embassy Centre, Nariman Point, Mumbai, a red color pen drive of 8GB Cruzer blade with the tag “Soniya PD 1” was found, in which an excel sheet with the name “Sunny-Mining Accounting” was found containing data related to mining activities of the assessee, according to which and findings of the search proceedings, it was gathered by the AO that the assessee has received Rs.2,74,90,000/- unaccounted cash. Though during the course of assessment proceedings, the GNP group accepted to have received the said cash as unaccounted in its books of accounts, however, offered the said unaccounted cash in the hands of another group entity i.e. M/s. GNP Consultancy & Solutions Pvt. Ltd., therefore the AO, vide notice under section 142(1) of the Act dated 01.08.2022 asked the Assessee to provide the details of entries appearing in the aforesaid excel sheet, names and PAN of ITA No.3105/M/2023 M/s. GNP Realty LLP 3 the parties appearing in the said sheet as well as details of nature of work done and cash received from the parties and accounting thereof in books of accounts. 2.2 In response to the said query, the assessee vide letter dated 12.08.2022 filed its submissions wherein the assessee has claimed that the entries/transactions appearing in the aforesaid excel sheet pertains to M/s. GNP Consultancy & Solutions Pvt. Ltd. and the income of Rs.2.75 crores has already been offered in the hands of the said entity pursuant to search action and findings therefrom. 2.3 Though the AO considered the said claim of the assessee, however, not found acceptable mainly on the reasons that Shri Girish Pawar in response to the questions while explaining the verticals of the business categorically claimed that M/s. GNP Consultancy & Solutions Pvt. Ltd. does the mining related business for the GNP group; Sunny is the nickname of Shri Parashar Kudalkar who looks after the mining related activities of GNP group; the assessee has himself stated that the transactions in the said excel sheet are undertaken by the Sunny; the conjoint reading of the above facts clearly establishes that the transactions found in the aforementioned excel sheet associated with the name of Sunny are indeed the transactions of M/s. GNP Realty LLP; during the course of search proceedings Shri Rajendra Pawar, CFO, GNP group and Shri Girish Pawar also accepted the fact that these transactions are unaccounted transactions of the assessee. The context of the said answers establishes that these transactions are related to the assessee only. Therefore, their acceptance during the search proceedings that the transactions in the excel sheet are the unaccounted income of the M/s. GNP Realty LLP leaves no doubt ITA No.3105/M/2023 M/s. GNP Realty LLP 4 that the claim of the assessee that the said transactions are related to consultancy business is merely an afterthought. 2.4 The AO ultimately treated the amount of Rs.2.75 crores as unaccounted receipts/business income and accordingly taxed under section 28 of the Act. 2.5 The AO also considering the fact “ ! " # disallowed the said amount of Rs.1,343/- as per the provisions of section 37(1) of the Act. 3. The assessee being aggrieved with the aforesaid additions preferred first appeal before the Ld. Commissioner. With regard to the addition of Rs.2.75 crores the assessee before the Ld. Commissioner submitted as under: $% &'( ))( * * *+ " ) ) ! ( *++, !- . / / / 0 / / ! % / 0 !- % &'( ))( . / / % / 1 % 2 / 3 % ( 0 ) / 0 ! & 0 *, + *+** ! 0 / / / 4 1 ! * "5 6 / 7 +8 9 % &'( 6 4 (0 ) : *+* ** ! 6 / ; 4 / / 0 0 ! % &'( 6 4 ( 0 ) / ( < ; 7' ; ' 9 6 0 %= 6 4 % / ! / % &'( 6 4 ITA No.3105/M/2023 M/s. GNP Realty LLP 5 (0 ) % &'( ))( 0 0 0 0 / % &'( 6 4 ( 0 ) . / / / / ' / / > 0 0 ! 0 0 0 ? ! . / * "5 6 / ! ! ; / ! 0 0 ! &'( 6 (0 ) / 0 0 0 / / / / 0 / / ! 0 ; % ( 6 @ A '16 %= 6 / / / % &'( 6 4 ( 0 ) ! / 5 B ! ; 7 (@9 / % &'( 6 4 ( 0 ) "+8 * "5 ++ +++ C* 5+ +++ / : *+* ** ! / % &'( 6 4 ( 0 ) 5 + *+** * 5 C* " C* 5+ +++ 7 D +8 * "5 ++ +++ 9 / / / 0 + + *+** ! + + *+** ! = 7= 09 7 / CC (@9 * "5 6 ! / ! 4 *7 9 / % &'( 6 4 ( 0 ) > 0 / / ! / 0 ! 1 / / ! ! ! 0 ! % &'( 6 ( 0 ) ! 0 ! &'( 6 4 (0 ) ! ! 1 ! # ITA No.3105/M/2023 M/s. GNP Realty LLP 6 4. The Ld. Commissioner by considering the aforesaid submission/claim of the assessee, ultimately deleted the aforesaid addition of Rs.2.75 crores by observing and concluding as under: $C 5 = 0 / / 1 ! C E = ! / / / / / & ( / ! 1 ))( &'( / / / 0 0 F EE / "" & ( ! G HF EE @ &'( & 3 % &'( ))( 0 0 / * *+*+ + *+* ** +C *+* ! - ( *" +E *+* = ! 0 % / / * H % / /H @ @ ; ( 6 G : = @ @ ; H C " / 0 F "E - ( = ! ! ! ; &'( ))( C , / / ! * "5 6 ! / / &'( 6 4 (0 ) / / : *+* ** = / / &'( 6 4 (0 ) +8 &'( 6 4 (0 ) / C* 5+ +++ 7 "+8 / * "5 6 9 = 0 / / &'( / ITA No.3105/M/2023 M/s. GNP Realty LLP 7 + + *+** = 7= 0 9 / * "5 6 ! &'( 6 4 (0 ) 30 / / 1 C C 1 0 = ; / 1 &'( 6 4 (0 ) : *+* ** " 5 "" +++ 7/ 9 * "5 ++ +++ / ))( / +8 &'( 6 4 (0 ) 5 + + C++ : *+* ** 0 * "5 6 / ! / &'( 6 4 (0 ) C + 1 0 & ( / / ! ))( = ; / * "5 6 > - ! ! ; ))( ; / > ; / ! ))( > 0 ! & ( C ! 0 0 - 0 ! G • ) / 0 6= 7"* = *C 9 7 69 • I ( / 0 = 1 J " = +"K J ==K • 6= 0 % I 4 ( & / ( / A JE+ = C5K C * % &'( ))( ) ) ! ( * * *+ " ) ) ! ( *++, !- . / / / 0 / / ! % / 0 / / ' + *+*+ + *+* ))( / 0 0 ITA No.3105/M/2023 M/s. GNP Realty LLP 8 A: *+*+ * 1 &'( 6 4 (0 ) / 0 0 0 / / / / 0 / / ! 0 ; % ( 6 @ A '16 %= 6 / 0 = 0 / 0 C / % / %3' & ( / 0 ! ; * "5 6 / / F E & ( = ))( ; 0 - 0 ! 0 * "5 6 ! 0 ! ; 4 / / ' / / 0 ! ! 0 = / 0 ; ! 0 / / 0 ? ! / ))( C F * & ( / 0 0 ; ! &'( / ( &'( ))( / ! % / / / ))( / ! / / 0 // / 0 0 % 0 B / 0 ; ! F * % / / C 5 F * ( &'( 6 (0 ) ! ITA No.3105/M/2023 M/s. GNP Realty LLP 9 6 ! ! 0 / ! F * C E 0 / / / +8 "+8 / / / 0 ! ! / ! G • 6= 0 % ( 0 = ' *5 * *+ , +" *+ E 7@ ! > / 6 9 • ( 0 6 6 0 6= J CC,K CE LMNOMP * 7%Q% 9 • 6= 0 6 ' - ! J*+ CK + *5+ 7< 9 • 6= 0 = 3 (0 ) J*+* K + * 7% ! ! 9 • 6= 0 ( 6 = ' * *5 *+++ 7@ ! > / 6 9 • 6= 0 & @ = X " C *E *" 4 * *+ 5 7@ ! > / 6 9 • ! 0 = '1 5* 1A *++*7& -9 C " A ! 0 B B ! ! / / 0 / ! G 6= 0 > @ ! = ' *+ 7@ ! 9 6= 0 ( = J*++*K *5, = E5 7& - 9 C , D "+8 ! / &'( 6 4 (0 ) C* 5+ +++ 7 "+8 / * "5 6 9 ! ! 0 - C C % 0 1 ! / > / / ITA No.3105/M/2023 M/s. GNP Realty LLP 10 = / &'( 6 4 (0 ) 1 &'( 6 4 (0 ) 1 0 & ( / &'( 6 4 (0 ) = 0 ! 0 0 & ( / &'( ))( % 0 1 / : *+* ** &'( 6 4 (0 ) 0 &'( 6 4 (0 ) = 0 ! 0 ! 0 & ' ! / * "5 ++ +++ ! # 5. The Revenue Department being aggrieved is in appeal before us. 6. Heard the parties and perused the material available on record. The Ld. D.R. before us claimed that the partners of the assessee’s group companies have accepted the aforesaid amount of Rs.2.75 crores as an unexplained income specifically earned by the assessee and therefore the AO has rightly made the addition under consideration. Further the Ld. Commissioner erred in deleting the addition of Rs.2.75 crores stating that the said amount has already been offered as additional income in the case of M/s. GNP Consultancy & Solutions Pvt. Ltd. (group concern) while ignoring the fact that the offer of additional income by the said company was not accepted by the AO and corresponding amount was reduced while passing the assessment order in the case of M/s. GNP Consultancy & Solutions Pvt. Ltd. for the A.Y. 2021-22 which is evident from the computation of income for the A.Y. 2021-22. Further, the Ld. Commissioner erred in adjudicating that the offer of additional income of Rs.2.75 crores was accepted by the AO in the case of ITA No.3105/M/2023 M/s. GNP Realty LLP 11 M/s. GNP Consultancy & Solutions Pvt. Ltd. ignoring the fact that the same was not accepted and hence the addition was made in the case of the assessee LLP. 7. On the contrary the Ld. A.R. refuted the claim of the Ld. D.R. 8. We have given thoughtful considerations to the determination made by the authorities below and rival claims raised by the parties. It is admitted fact that during the post search proceedings, GNP group had written a letter dated 03.03.2022 to the DDIT (Inv.), Mumbai wherein they stated that such income of Rs.2.75 crores was offered to tax by M/s. GNP Consultancy & Solutions Pvt. Ltd. and during the assessment proceedings as well this fact was also communicated to the AO. The Ld. Commissioner duly considered and verified the record and thereafter only found the aforesaid contention of the assessee as correct. The Ld. Commissioner also perused and considered the copy of acknowledgment of return of income, computation of total income and assessment order of M/s. GNP Consultancy & Solutions Pvt. Ltd. for the A.Y. 2021-22 wherein the additional income offered pursuant to the search was Rs.7,15,77,000/- (gross) which included Rs.2,75,00,000/- qua the assessee. M/s. GNP Consultancy & Solutions Pvt. Ltd. after claiming deduction @ 30% for estimated expenses, has offered additional income of Rs.5,01,03,900/- for the A.Y. 2021-22 which goes to show that such income of Rs.2.75 crores pertaining to the search has already been taxed in the hands of its group entity i.e. M/s. GNP Consultancy & Solutions Pvt. Ltd. for the same year. The Ld. Commissioner also considered the peculiar facts/aspect of the instant case vis-à-vis that in fact the assessee has not commenced its mining activities when the search took place and in the absence of any evidence found qua mining ITA No.3105/M/2023 M/s. GNP Realty LLP 12 activity as part of the seized documents it cannot be concluded that documents seized during the search proceedings under section 132 of the Act in fact pertains to the assessee. The Ld. Commissioner also considered another aspect that M/s. GNP Consultancy & Solutions Pvt. Ltd., after claiming a deduction of 30% as explained, offered 70% of mining consultancy as income and even otherwise if any undisclosed sales are found during the search, only the profit element can be taxed and therefore the Ld. Commissioner found the additional income offered at the rate of 70% income as offered by M/s. GNP Consultancy & Solutions Pvt. Ltd. as reasonable and in line with the judicial precedents and therefore deleted the addition under consideration. 9. Though the Revenue Department has claimed in the grounds of appeal that offer of additional income by M/s. GNP Consultancy & Solutions Pvt. Ltd. was not accepted by the AO and corresponding amount was reduced while passing the assessment order in the case of M/s. GNP Consultancy & Solutions Pvt. Ltd. for the A.Y. 2021-22 as evident from the computation of income. Further, the said income of Rs.2.75 crores was not accepted by the AO in the case of M/s. GNP Consultancy & Solutions Pvt. Ltd. and therefore the addition was made in the case of assessee. However, before us no such facts and/or documents were produced or demonstrated to strengthen this contention. As per Article 265 of the Constitution of India “no tax shall be levied or collected except by authority of law”. It is also the mandate of the law that the income offered cannot be taxed twice. As in this case, the income of Rs.2.75 crores may be rightly or wrongly by the sister concern of the assessee, has already been offered and even has also been considered and accepted by the Revenue Department as verified by the Ld. Commissioner as observed in impugned order, therefore the ITA No.3105/M/2023 M/s. GNP Realty LLP 13 addition under challenge, if sustained, will amount to double taxation, which is not permissible at all. Even considering the peculiar facts and circumstances of the case in totality and the specific findings of the Ld. Commissioner, we do not find any infirmity, impropriety and/or illegality in the decision arrived at by the Ld. Commissioner in deleting the addition of Rs.2.75 crores which is under consideration. Hence, the decision of the Ld. Commissioner for deleting of the addition under consideration is affirmed and the grounds raised by the Revenue Department pertaining to the issue under consideration stand dismissed/rejected. 10. Coming to the challenge to the disallowance of interest on late payment of Rs.1,343/- as TDS under section 37(1) of the Act, we observe that before the AO the assessee has claimed the said amount of expenses on account of interest paid on late payment of TDS, as allowable expense as per the provisions of the Act. However, the AO disallowed the same as per the provision of section 37(1) of the Act. 10.1 The Ld. Commissioner on appeal reversed the findings of the AO and consequently allowed the aforesaid expense by holding the same as allowable deduction by following the judgment of the co- ordinate Bench of the Tribunal in the case of Resolve Solvage and Fire India Pvt. Ltd. vs. DCIT (2022) 139 Taxman.com 196 (Mum.) wherein the co-ordinate Bench has followed the decision of another co-ordinate Bench of the Tribunal in the case of Stup Consultants (P.) Ltd. vs. Addl. CIT 5827 (Mum.) of 2012. Conclusion drawn by the ld. Commissioner is as under: $ + / / ; - ! ITA No.3105/M/2023 M/s. GNP Realty LLP 14 ! ! 1 ! + * / / ! ! "7 9 0 % ! = 0 0 / 4 A = ( ) 0 =6 7*+**9 C CE 7% 9 + = 0 / / 1 ! A / - / 0 0 / 4 A = ( ) 7 9 ! 0 % ! = % ! = - / Q( 6 7( 9 ) 0 6= J= ' 5,*" 7% 9 *+ * * *+ , *+ 7 9 ! + A / - / - > B! % ! = & ' 5 "7 9 ! # 10.2 The Revenue Department being aggrieved also challenged this addition. 10.3 We have given thoughtful consideration to the rival claims of the parties and observed that Hon’ble Apex Court in the case of Bharat Commerce & Industries Ltd. vs. CIT 230 ITR 733 (SC) (1998) has also dealt with the identical issue as to whether interest paid for delayed payment of advance tax could be considered as wholly and exclusively for business to be allowable as business expenditure. The Hon’ble Apex Court ultimately laid down the dictum that interest paid for delayed payment of advance tax cannot be allowed as business expenditure. Hence, respectfully following the judgment of the Hon’ble Apex Court we are inclined to reverse the decision of the Ld. Commissioner in deleting the addition under consideration and consequently allow the corresponding ground raised by the Revenue Department. Consequently, the disallowance of Rs.1,343/- is upheld. ITA No.3105/M/2023 M/s. GNP Realty LLP 15 11. In the result, the appeal filed by the Revenue stands partly allowed. Order pronounced in the open court on 29.05.2024. Sd/- Sd/- (RATNESH NANDAN SAHAY) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.