The Assistant Commissioner of Income Tax, Central Circle, Dehradun V. M/s. Shiv Mandir Gori Sankar Viswnath Bakunt Dham and Samsan Bhumai Prabandhak Sabha, Saharanpur

ITA 34/DDN/2021

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 2227 (ITAT-DEHRADUN)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 27-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK PAL GARG
• Assessee Lawyers: AKASH KHANDELWAL
• Keywords: Set aside; Unexplained cash credit; Search and seizure; Accommodation entries; Source of fund; Liquidation
• Section: 144; 143(3); 142(1); 143(2); 271(1)(c); 132; 153A; 68; 208; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘DB’, NEW DELHI BEFORE DR. B.R.R. KUMAR, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITAs No.34 & 35/DDN/2021 Assessment Years: 2015-16 & 2016-17 ACIT Dehradun Vs. M/s. Shiv Mandir Gori Sankar Viswnath Bakunt Dham and Samsan Bhumi Prabandhak Saba, Baba Lal Dass Road, Saharanpur-247001 PAN No.AAJAS0099M (APPELLANT) (RESPONDENT) Appellant by Sh. Abhishek Pal Garg, CIT DR Respondent by Sh. Akash khandelwal, CA Sh. Ashok Khandelwal, CA Date of hearing: 30/08/2024 Date of Pronouncement: 05/09/2024 ORDER PER ANUBHAV SHARMA, JM: The Revenue has filed the present appeals against the orders under Section 250(6) of the Income Tax Act 1961 [hereinafter referred as ‘the Act’] passed by Commissioner of Income Tax, ITAs No.34 & 35/Del/2021 2 Kanpur-4 [hereinafter referred as ‘First Appellate Authority’ or in short ‘CIT(A)’] in the appeals arising out of assessment orders u/s. 153A r.w.s. 143(3) of the Act passed by DCIT, Central Circle, Dehradun [hereinafter referred as the ‘Assessing Officer’ or in short ‘the AO’] orders dated 31.12.2019. 2. In this case, a search and seizure operation u/s 132 of the Act was conducted on 06.03.2018 on Gupta Brothers Group of cases. The premises of assessee was also covered under search operation. The assessee is a charitable registered trust and is a society registered under the provisions of section12A of the Act. The AO has referred the assessee as “assessee – company”. As per assessment orders, during the years under consideration the society maintained a cremation ground and small temple and received petty donation such as Rs.10/-to Rs.50/- donated by the person who join the cremation procession. The assessee has also shown unsecured loan of Rs.10.99 crores from late Sh. Sanjay Grover during the AY 2016- 17 and Rs.11.67 Crore in AY 2015-16. The assessee trust filed its returns of income for AY 2015-16 on 08.03.2016 declaring total loss of Rs. 26,41,151/- & for AY 2016-17 on 16.10.2016 declaring nil income. Notices u/s 153A of IT Act were issued on 03.09.2019 for both the years and in compliance to the same the assessee declared same incomes i.e. loss of Rs. 26,41,151/- for AY 2015-16 and nil income for AY 2016-17. Consequently notices u/s 143(2) of I.T. Act were issued on 11.11.2019 in both the years and duly served upon the assessee. Later on, notices u/s 142(1) of the Act along with ITAs No.34 & 35/Del/2021 3 questionnaire were also issued and A.O made an addition of Rs. 11,67,50,000/- in AY 2015-16 and addition of Rs. 10,99,94,330/- in AY 2016-17 u/s 68 of IT Act considering these amounts as unexplained cash credits. Aggrieved, Revenue is in appeal before the Tribunal. 2.2 However, for the purpose of disposal of appeals before us, as we refer facts for AY 2016-17 we find that, an undertaking of Sh. Sanjay Grover was seized from the premises of the assessee. The contents of this under taking dated 08.09.2016 have been reproduced by the AO in the assessment order para 3 and 4 and sum and substance of this is that Late Sh. Sanjay Grover Aged about-56 years had deposed that by various transactions he had given a loan to the society in the period 17.01.2015 to 08.02.2016 of total Rs.226744330/-. He had deposed in affidavit that loan was given for the purpose of construction of temple at Lal Das Baba Road, Near Municipal Colony, Saharanpur and that the same stands converted into donation on 08.09.2016 and the said society is no more under liability for repayment of the above loan. The AO issued notice u/s. 142 (1) for enquiring the source of donation / loans and proof of identity, creditworthiness and genuineness of the transaction. The AO records that the assessee filed reply but the assessee did not file any documents in support of his submissions. ITAs No.34 & 35/Del/2021 4 3. Thereafter the AO had put assessee on notice that as per the account statement of Sh. Sanjay Grover he had received following credits in his account :- S.No. Date of credit in a/c of Late Shri Sanjay Amount 1 20.03.2015 2,50,00,000 2 26.08.2015 3,30,00,000 3 28.09.2015 3,35,00,000 4 26.10.2015 1,00,00,000 5 08.02.2016 1,00,00,000 3.1 It was alleged that the amount so received were given as loan to assessee as per following chart :- S.No. Date of credit in a/c of the society Amount 1 06.04.2015 2,50,00,000 2 26.08.2015 3,30,00,000 3 01.10.2015 3,35,00,000 4 27.10.2015 1,00,00,000 5 08.02.2016 1,00,00,000 4. The AO further alleged that Smt. Renu Grover w/o Late Sh. Sanjay Grover in her statement dated 14.11.2019 has denied the creditworthiness of her late husband to remit Rs.11.15 crores as unsecured loan. ITAs No.34 & 35/Del/2021 5 5. AO observed that as per the information available in the search operations, Sh. Sanjay Grover was employed with Gupta family from 2005 onwards until his demise on 19.10.2016. Accordingly the AO alleged that Sh. Sanjay Grover was merely a conduit for crediting the said amounts. 5.1 The assessee responded to the notice by the reply dated 17.12.2019 submitting that Sanjay Grover, S/o Harbans Lal, was an Indian national holding Passport no. 21834921, previously residing at Flat No. 801, A B Plaza 8, Al Mamzar, Dubai UAE PO Box 90329, Bur Dubai UAE and having his address in India at A 28 behind Pine Wood School, Mission Compound, Saharanur, UP, India. Mr Sanjay Grover was a NRI having moved abroad in the year 2006 and was having his permanent source of income in UAE (outside India) as the beneficial owner of several companies in the United Arab Emirates since 2010. That, within knowledge of assessee, Late Mr. Grover was associated with Global Corporation LLC, (Limited Liability Company) Dubai vide registration No. 1059971 DCCI No. 183388 which was engaged in General Trading, as per commercial license, copy of which was enclosed, issued by the Department of economic Development, Dubai in which his shareholding holding stood at 49% share. This Company was apparently liquidated. Hence in the process of liquidation of the company, distribution of assets he may have yielded money to supplant this benevolent act of his, assessee are not entirely sure. ITAs No.34 & 35/Del/2021 6 5.2 Further it was submitted that receipt of money from Late Sanjay Grover has been offered for taxation as taxable income. The sum of money was earlier received as a loan. It was submitted that due to terminal ailment of Mr. Grover, it is not wholly out of context to mention or disbelieve that a person may not, as his last Will foreclose his right to receive back the money which is to be spent for the benefit of public at large and wholly on account of charitable and philanthropic considerations. It was submitted that during the course of search, documents corroborating the above fact has been found and recovered. It is impossible for an Assessee to have, but for the actual state of affairs to be such, maintained such documentation and which is subsequently recovered in search. Then it was submitted that there is discrepancy in the Statement relied upon by Revenue. 6. The AO was not satisfied with the response and held as follows:- “The reply of the assessee has been duly considered. In the reply, assessee is not able to prove the creditworthiness of the lender Late Shri Sanjay Grover. He is giving so many irrelevant fact and explanation which are not acceptable. (1) Assessee in his reply dated 17.12.2019 has himself stated that M/s. Global Corporation, LLC, Dubai was apparently in the process of liquidation and in the process of liquidation, the distribution of assets might have yielded money to Late Shri Sanjay Grover. The assessee has ITAs No.34 & 35/Del/2021 7 nothing stated as to when Late Shri Sanjay Grover held 49% share in the above company what was the business activities of the Company and how the company earned such a huge amount in a short period of time. It appears that the company created was a paper/shell company created for accommodation entries. (ii) The assessee has further submitted that the receipt of donation from late Shri Sanjay Grover has been incorporated in the income and expenditure account, hence, it cannot be taxed again. This submission of the assessee is also not acceptable as the money was originally credited in the books of accounts of the assessee as unsecured loan and not as a donation, hence, entry point becomes all relevant. (iii) The assessee in his submission regarding the statements of wife of Late Shri Sanjay Grover has stated that she was not aware of the entire financial activity of her husband. This submission is also not acceptable as Smt. Renu Grover always used to live with her husband alongwith her children. Therefore, it is hard to believe that if the transaction of Sanjay Grover with the assessee for such a huge amount were true, she would not have no need. The loan/donation for such a huge amount cannot be without the knowledge of wife. The assessee has further stated that the transactions between Sanjay Grover and the assessee are through cheques so there cannot be any doubt about its genuineness. In this connection, the decision of Hon'ble Kolkata High Court 208 ITR 465 (CAL) vs. Precision Finance Pvt. Ltd. can be cited wherein it is held that mere transaction through cheque is not sufficient. The Hon'ble ITAs No.34 & 35/Del/2021 8 Supreme Court are held that in the case of credits in the name of third party, it is the duly of the assessee to prove identity of creditor, capacity of the creditor to advance money and genuine of transaction (1977) 107 ITR 938 Roshan De Hatti Vs. CIT(SC). (v) The assessee has further stated that in the case of a non-resident all income which accrues or arises outside India would not be taxable in India. This submission has also been examined and it would not also help the assessee. Because section 68 of 1.T. Act, 1961 states that any sum found credited in the books of the assessee and the assessee does not offer satisfactory explanation, such sum credited may be charged to tax. In this case the assessee is in India and the bank account in which the said sum has been credited is in India, hence, the onus lies on the assessee to prove its genuineness whatever be the source of credit. (vi) The assessee has also cited certain case laws in his submission but the facts of the present case are distinguishable. In the cited case laws, it has been held that if donation has been accounted for in income and expenditure account, it cannot be taxed u/s 68 again. In this case the sum originally taken is loan and not donation. (vii) Further, the assessee has failed to furnish evidences to prove the financial worthiness of M/s. Global Corporation LLC Dubai and bank account of this company and its reliable financial statements. In view of the above facts, it is held that Late Shri Sanjay Grover was just a name lender and his name and bank ITAs No.34 & 35/Del/2021 9 account have been used for routing unaccounted money to the assessee's bank account. It may be pertinent to mention here that Shri Anil Gupta and Shri Atul Gupta of Gupta family are among the trustees of the assessee trust. It is also a fact that Late Sanjay Grover was employee of Gupta Family. Therefore, it is held that the assessee has failed to prove the genuineness of transaction and creditworthiness of the creditor. Therefore, the sum of Rs. 10,99,94,330/- shown to have been received as loan during the year under consideration is treated as unexplained cash credit u/s 68 of the I.T. Act, 1961 and the sum of Rs. 10,99,94,330/- is added to the total income of the assessee. (Tax is to be charged as per section 115BBE). Penalty proceeding u/s 271(1)(c) is initiated separately. Addition: Rs. 10,99,94,330/-“ 7. The assessee had challenged the assessment order before the CIT(A) and the CIT(A) has allowed the appeal of the assessee. For which revenue is in appeal before us by raising the following grounds of appeal:- “1. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in observing that the assessee had failed to furnish evidences to prove the financial worthiness of M/s Global Corporation LLC, Dubai and bank account of this company and its reliable financial statements. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in observing that the assessee had 2 stated that M/s Global Corporation, LLC, Dubai was apparently in process of liquidation and in the process of ITAs No.34 & 35/Del/2021 10 liquidation, the distribution of assets might have yielded money to Late Shri Sanjay Grover The assessee had not stated as to when Late Shri Sanjay Grover held 49% share in the above company. what was the business activities of the company and how the company earned such a huge amount in a short period of time. It appears that the company created was a paper/shell company created for accommodation entries. 3 On facts and circumstances of the case and in law, the CIT(A) erred in observing that the contention of the assessee that the receipt of donation from Late Shri Sanjay Grover has been incorporated in the income and expenditure account. Hence, it cannot be taxed again. This submission of the assessee is also not acceptable as the money was originally credited in the books of account of the assessee as unsecured loan and not as a donation, hence, entry point becomes all relevant. 4. On facts and circumstances of the case and in law, the CIT(A) erred in observing that merely because the transactions between Late Shri Sanjay Grover and the assessee were through cheques hence genuineness of the transaction cannot be questioned is not acceptable. In this connection, the decision of the Hon'ble Kolkata High Court 208 ITR 465 (CAL) vs. Precision Finance Pvt. Ltd. can be cited wherein it was held that mere transaction through cheque is not sufficient. The Hon'ble Supreme Court had held that in the case of credits in the name of third party, it is the duly of the assessee to prove identity of creditor, capacity of the creditor to advance money and genuine of transaction (1977) 107 ITR 938 Roshan De Hatti Vs CIT(SC) ITAs No.34 & 35/Del/2021 11 5 On facts and circumstances of the case and in law, the CIT(A) erred in observing that section 68 of 1.T. Act, 1961 states that any sum found credited in the books of the assessee and the assessee does not offer satisfactory explanation, such sum credited may be charged to tax. In this case the assessee is in India and the bank account in which the said sum has been credited is in India, hence, the onus lies on the assessee to prove its genuineness whatever be the source of credit. 6. On facts and circumstances of the case and in law, the CIT(A) erred in observing that it is clear that Late Sri Sanjay Grover was just a name lender and his name and bank account had been used for routing unaccounted money to the assessee's bank account. 7 The order of the Ld. CIT(A) is therefore erroneous in law and on facts of the case and is liable to be set aside. 8. That the appellant craves leave to add or amend any other more ground of appeal as stated above as and when needs for doing so may arise.” 8. Heard and perused the record. 9. The Ld. DR has primarily relied the order of the AO and has submitted that the AO was right in appreciating the circumstances arising out of the manner in which the money was credited in the account of Mr. Grover and then reached the assessee. He relied the statement of the wife of Mr. Grover to submit that her statement establishes that Mr. Grover had no creditworthiness or reasons to ITAs No.34 & 35/Del/2021 12 make loan or donations. It was submitted that CIT(A) has given to much credence to the fact of transaction being from the banking mode. 9.1 On the other hand the AR has reasserted the averments as raised before CIT(A) and relied the order of the CIT(A). 10. Appreciating the matter on record and the rival contentions it comes up that CIT(A) has taken into cognizance the fact that Sh. Sanjay Grover as an individual and non-resident was assessed to tax by the same AO completing assessment u/s. 153C and 144 of the Act and no addition was made in his assessment. This, to our mind is of great assistance to the assessee as where the credibility of source is doubted and the assessment of source is on the reported income then it is not justified to doubt the source and specially when the matter pertains to a charitable and religious society whose funds are to be used for public utility only. 10.1 It further comes up that the CIT(A) has appreciated the fact that funds in the account of Sh. Sanjay Grover had come from Dubai from his bank account with Bank of Baroda. Thus there is no doubt that AO accepts the funds in the NRE account of Mr. Sanjay Grover were remited from abroad. The CIT(A) also appreciated that the source of deposits in NRI account are from the own current in currency AED. Thus, what is established is that Sanjay Gover is maintaining two accounts with Bank of Baroda one being main ITAs No.34 & 35/Del/2021 13 account in India bearing NRI account number 12330 and other at Dubai being current account number 06266. Sh. Sanjay Grover transferred funds from NRI account at Dubai to NRE account to Sharanpur. This detail was given to the AO also which has been relied now by the CIT(A). There is no doubt funds in the Dubai account have been transferred from Global Corporation LLC account and the assessee had provided the proof of identity and genuineness of the transactions by submitting bank statements. Thus, as far as the creditworthiness of Mr. Grover is concerned the certificate of transactions between Sanjay Grover and Global Corporation LLC and financial statement of M/s. Global Corporation LLC have filed which have not been disputed by the AO. Thus the following findings of CIT(A) have to be upheld:- “7.7 In these circumstances, it is, therefore, apparent that first receipts of funds were abroad and therefore income, if any, has accrued/received by Sanjay Grover abroad. Once an income has been received abroad, its subsequent transfer to India is money and not income. There is direct flow of funds from Sanjay Grover's account to Trust without there being anyone in between. In the case of non- resident all income which accrues or arises outside India would not be taxable in India. Admittedly Sh. Sanjay Grover was not working in India, has sources of Income at Dubai only and whatever has come to his bank account in India has come from UAE Dubai as is apparent from a perusal of his bank account with Bank of Baroda, available on record, Documentary evidence on record i.e. Sh. Sanjay Grover bank accounts at Saharanpur and Dubai would clear all doubts that he was a non resident ITAs No.34 & 35/Del/2021 14 Indian, earning abroad, having source of income abroad, transferred the funds from Global Corporation LLC's account with Bank of Baroda AED Bank Account No. 90030200012004 to his current account no. 9001020006266 with Bank of Baroda, Dubai and further transfer of funds from his current account to his own NRE account no.00810100012330 in India from where the funds were transferred to the appellant. Having explained the nature and source and credit worthiness of Late Sanjay Grover by transfer of funds from abroad to India in NRE account and from NRE Account to the appellant, the addition made cannot be sustained. 7.8 The funds from Sh. Sanjay Grover have been utilized in construction of Shamsha Ghat and a temple by the appellant society for public welfare. No personal benefit could be availed of by any person from construction of a Shiva Temple at Shamshan ghat is a charitable and religious activity for the welfare of the society.” 11. We are of the considered view that the assessee being a charitable and registered society is not disputed by the AO. The AO has also not disputed the nature of work of public utility of the assessee including construction and maintenance of cremation ground and the construction of temple by the society for public welfare. It appears that the AO was driven more by suspicion out of Mr. Grover’s association with Gupta brothers. 12. The AO himself observes that the wife of Mr. Sanjay Grover was not aware of the donations in that case reliance on her statement was not justified. It is unjust to draw any inference about the ITAs No.34 & 35/Del/2021 15 credibility of a donor only on the basis of his monthly expenses or the money remitted to family. The AO had alleged Sh. Sanjay Grover was conduit on merely on the basis of statement of the wife about monthly expenses or income as reported. We are of considered view that the deceased cannot be said to be conduit in the absence of any corroborative evidence surfacing during the search from the premises of the family of Gupta Brothers or their institutions. The affidavit in the possession with the assessee was in due course as beneficiary of the donation. 13. Thus, we find no reason to differ from CIT(A) and we find no substance in the grounds raised by the Revenue. Consequently the appeals filed by the Revenue are dismissed. Order pronounced in the open court on 05.09.2024. Sd/- Sd/- (DR. B.R.R.KUMAR) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER dk Date:- 05.09.2024 ITAs No.34 & 35/Del/2021 16 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI