DCIT, Central Circle-1(3), Ahmedabad V. L/R. Smt. Pannaben M. Patel W/O. Late Mahendra Shantilal Patel, Ahmedabad

ITA 326/AHD/2019

AI Insights

This case involves an appeal by the Deputy Commissioner of Income Tax against the order of the CIT(A)-12, Ahmedabad, concerning the assessment year 2010-11. The primary issues revolved around the deletion of additions made under various sections of the Income Tax Act, including unexplained money and commission incomes. The assessee, Smt. Pannaben M. Patel, had multiple PANs which were clubbed for assessment after a search operation revealed discrepancies. The CIT(A) had partly allowed the assessee's appeal, leading to the Revenue's challenge in the Tribunal. The Tribunal's decision affirmed the CIT(A)'s order, dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129365 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-09-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Accommodation entries; TDS; Set aside
• Section: 68; 69A

Judgement Text

ITA No.326/Ahd/2019 A.Y: 2010-11 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No.326/Ahd/2019 Assessment Year: 2010-11 Deputy Commissioner of Income Tax, Central Circle – 1(3), Ahmedabad – 380 009. Vs. Smt. Pannaben M. Patel, L/H. of Late Shri Mahendra Shantilal Patel, 202, Hardrushna Tower, Near Sorabji Compound, Juna Wadaj, Ahmedabad. [PAN – AYVPP 7593 G] (Appellant) (Respondent) Assessee by None Revenue by Shri Ashok Kumar Suthar, Sr. DR Da te o f He a r in g 05.09.2023 Da te o f P ro n o u n ce m e n t 18.10.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the Revenue against order dated 20.12.2018 passed by the CIT(A)-12, Ahmedabad for the Assessment Year 2010-11. 2. The Revenue has raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in directing to delete the addition of Rs.1,26,80,100/- u/s.69A on account of unexplained money after verification and satisfaction. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in setting aside this matter to the AO for verification even though he has no power under the Act to do so. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the additions of Rs.1,62,19,806/- & Rs.1,60,13,738/- being commission incomes. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. ITA No.326/Ahd/2019 A.Y: 2010-11 Page 2 of 4 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. Assessee was an individual and had shown in his return of income to have derived income from business and profession of financing during the year under consideration. A search operation was carried out u/s.132 in the case of the assessee and his family members on 06.02.2017. During the search, it was observed that person named Mahendra Shantilal Patel alias Mahenddabhai Shantilal Patel alias Mahendrabhai Shantilal Patel alias Mahendrabhai Shanteelal Patel is one and the same person and the assessee used 5 PANs. Accordingly, the cases of assessee with the said PANS were reopened after duly recording the reasons. During the search action, post search inquiry and in submissions filed during the assessment proceedings, assessee had accepted that he owns all the five PANs. He also submitted applications to cancel 4 PANs except AYVPP7593G and he accepted to continue only the said one PAN and surrendered all other PANs. Since assessee never had any objection, the Assessing Officer clubbed all the PANs for the assessment proceedings for A.Y. 2010-11. The assessee had not filed any voluntary return of income u/s.139 of the Income Tax Act, 1961 against the other four PANs, the case was reopened u/s.147 of the Act after duly recording the reasons. Accordingly, a notice u/s.148 of the Act was issued on 31.03.2017 against the other four PANs. In response to the statutory notices, the Authorised Representative of the assessee filed written submission and attended the assessment proceedings. The Assessing Officer observed that all the entities run by the assessee were non-existent and the business concerns claimed by the assessee in assessee’s bank records were not real or present. Thus, the Assessing Officer stated that these concerns were created merely on paper to carry out shadowy activities of providing accommodation entries of bogus bills and accommodation entries of other nature. The assessee admitted in his statement u/s.132(4) of the Act dated 06.02.2017 recorded during the search that he provided accommodation entries and he has not carried out any genuine business. Cash Amounts of Rs.1,26,80,100/- have deposited/credited in various Bank Accounts of Kotak Mahendra and Axis Bank. Therefore, the Assessing Officer made addition of Rs.81,09,90,322/- as unexplained credit u/s 68 of the Act. Besides this as the source remained unexplained as regards the cash payment in the hands of the assessee, the Assessing Officer also made addition of Rs. 81,09,90,322 as unexplained expense u/s 69C of the Act. The Assessing Officer also observed that the assessee and Dhruv ITA No.326/Ahd/2019 A.Y: 2010-11 Page 3 of 4 Patel was providing accommodation entries for 1 to 2% of commission on the same. Therefore, the Assessing Officer taken 2% of the amount relating to commission for providing accommodation entries which comes to Rs.1,60,13,738/- and made addition as unaccounted expenditure from unexplained money u/s.69A of the Act. The Assessing Officer further made addition of Rs.1,26,80,100/- which was deposited in various banks and treated the same as unexplained credit u/s.68 of the Act. The Assessing Officer made disallowance of Rs.34,21,408/- as TDS and receipt thereafter thereby making addition of Rs.3,49,662/-. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. At the time of hearing none appeared on behalf of the assessee despite giving several notices. The postal remark is “LEFT” on the returned envelope of the post and no new address was available with the Registry or the Revenue of the assessee. Hence, we are proceeding on the basis of the submissions of the assessee mentioned in the order of the CIT(A) as well as before the Assessing Officer which are mentioned in the respective orders. 6. The Ld. DR submitted that as regards Ground No.1 of the Revenue’s appeal, the CIT(A) was not right in deleting the addition of Rs.1,26,80,100/- under Section 69A of the Act on account of unexplained money after verification and satisfaction. The Ld. DR submitted that the source of the amount of Rs.1,26,80,100/- deposited in various Bank Account were not genuine and the same remained unexplained to the Assessing Officer, therefore, the same should have been confirmed. The Ld. DR relied upon the Assessment Order. 7. We have heard Ld. DR and perused all the relevant material available on record. It is pertinent to note that the Revenue accepted and estimated the commission at 2% on the total of credit entries. Once the Revenue accepts the aggregate of credit entries then the earnings of the commission on the same has been explained as cash deposits by the Assessee and the same was taken into account by the CIT(A) as the source of the cash deposit appears to be explained. Hence, the CIT(A) was right in directed the Assessing Officer for deleting the addition if the addition of Rs.81,09,90,332/- does not stand. There is no need to interfere with the same. Ground Nos.1 and 2 are dismissed. ITA No.326/Ahd/2019 A.Y: 2010-11 Page 4 of 4 8. As regards to Ground No.3, the Ld. DR submitted that the CIT(A) erred in deleting the additions of Rs.1,62,19,806/- and Rs.1,60,13,738/- being commission income. The Ld. DR relied upon the Assessment Order. 9. We have heard the Ld. DR and perused all the relevant material available on record. It is pertinent to note that the CIT(A) has given a finding that if the addition of Rs.81,09,90,332/- does not stand, the Commission income would be treated as income of the assessee along with additional amount as seed investment for the business and the source being unaccounted and therefore, the CIT(A) has rightly given direction at that stage to take into account and treated at this juncture the said amount on protective basis. There is no need to interfere with the findings of the CIT(A). Ground No.3 is dismissed. 10. As regards to Ground Nos.4 and 5 the same are general, hence not adjudicated at this juncture. 11. In result, appeal of the Revenue is dismissed. Order pronounced in the open Court on this 18 th October, 2023. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 18 th day of October, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE CO Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad