SHIVAM UMESH TANNA, KALYAN V. ACIT CENT. CIRCLE-2, THANE

ITA 532/MUM/2021

AI Insights

The case involves an appeal by Shivam Umesh Tanna against the order of the Commissioner of Income Tax (Appeals)-11, Pune, which confirmed the addition of Rs. 10,00,000 to the assessee's income as unexplained cash income under section 69A r/w section 115BBE of the Income Tax Act, 1961. The addition was based on a cash transaction noted during a search and seizure operation. The Tribunal examined the circumstances of the cash transaction, the statements of the assessee and Mr. Mangesh D. Gaikar, and the findings of the Settlement Commission in the case of Umesh D. Tanna. The Tribunal concluded that the amount was not the assessee's income but belonged to Mr. Mangesh D. Gaikar, who had already been taxed for it.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299490 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-12-2022
• Assessment Year: 2018-2019
• Appeal Filed On: 07-04-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIRENDRA POPAT
• Keywords: Search and seizure; Set aside
• Section: 131; 6; 132; 143(3); 250; 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.532/Mum./2021 (Assessment Year : 2018–19) Shivam Umesh Tanna Flat No. A-1001, Krishan Kunj, Mangesh Shara, Near Chatri Bunglow, Chikangarh, Kalyan West, Kalyan - 421 301 PAN – ALAPT7068E ................ Appellant v/s Asst. Commissioner of Income Tax Central Circle-2, Thane ................Respondent Assessee by : Shri Virendra Popat Revenue by : Ms. Smiti Samant Date of Hearing – 08/12/2022 Date of Order – 06/03/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 19/02/2021, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals)-11, Pune [“learned CIT(A)”], for the assessment year 2018-19. 2. In this appeal, the assessee has raised the following grounds: “On the facts and in the circumstances of the case and in law the learned OFFICE OF THE COMMISSIONER OF INCOME TAX, APPEAL CIT (A), Pune- 11. Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 2 1. On the fact in the circumstance of the case and the in law, the learned CIT (A) erred in confirming the Learned Assessing Officer stand of assessment u/s 143 (3) of Income Tax Act 1961. 2. On the facts in the circumstances of the case in the law, The Learned CIT(A) erred in confirming the Learner Assessing Officer stand for the addition made by The Learned AO on account of transaction found of Rs.10,00,000/- U/s 69A r.w.s 115BBE of Income Tax Act, 1961. 3. On the facts in the circumstances of the case The Learned CIT(A) did not accept, the affidavit filed by Shri Umesh D Tanna dated 25/01/2021 as confirmation of transaction of Rs. 10,00,000/- between him and Shri Mangesg D Gaikar. 4. On the facts in the circumstances of the case The Learned CIT(A) did not accept the replay of Showcase submitted by Shri Mangesh D Gaikar in office of Income Tax DCIT CC-2 Thane,that amount Rs 10,00,000/- was belong to him. 5. On the facts in the circumstances of the case The Learned CIT(A) rejected the confirmation of Shri Umesh D Tanna and Shri Mangesh D Gaikar that transaction between them. 6. On the facts in the circumstances of the case The Learned CIT(A) rejected the confirmation without cross verification from The Learned Assessing Officer or any persons. 7. On the facts in the circumstances of the case The Learned CIT(A) that the paper found during Search in case of Shri Umesh D Tanna dated 25/10/2017 which was paid though appellant to Shri Mangesh D Gaikar as per the perusal of page no. 58 of Bundle no. 1 of Party AB-4 which was found and seized on 25/10/2017 and concluded on 27/10/2017. 8. On the facts in the circumstances of the case The Learned CIT(A) 9. The Appellant request the order of the CIT (A) 11 Pune be vacated Rs.10,00,000/- U/s 69A r.w.s 115BBE of Income Tax Act, 1961. Addition made by the learner AO. 10.The appellant craves leave to add, alter, modify, delete any ground or grounds of appeal either before or during the course of hearing of the appeal.” 3. The brief facts of the case as emanating from the record are: The assessee is an individual and is engaged in the business of property brokerage and commission. Search and seizure action under section 132 of the Act was conducted in the case of Umesh D. Tanna (father of the assessee) and Mangesh D. Gaikar group on 25/10/2017. The group is engaged in the Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 3 business of Transfer Development Rights and the real estate market of Kalyan and Dombivali region. The search operations were carried out simultaneously and most of the concerns and individuals are interconnected and have business connections. The residential premise of the assessee was also covered during the search on 25/10/2017. For the year under consideration, the assessee filed his original return of income on 31/10/2018, declaring a total income of Rs.40,800. The return of income filed by the assessee was selected for scrutiny and statutory notices under section 143(2) and section 142(1) were issued and served on the assessee. During the assessment proceedings, on perusal of papers found during search and seized action, it was observed that an amount of Rs.10 lakh was paid by the assessee in cash on 23/10/2017. Accordingly, the assessee was asked to show cause as to why this amount of Rs.10 lakh should not be added to his total income as unexplained income. The Assessing Officer vide order dated 12/12/2019, passed under section 143(3) of the Act in absence of any satisfactory explanation by the assessee made an addition of Rs.10 lakh to the total income of the assessee under section 69A r/w section 115BBE of the Act. 4. The learned CIT(A) vide impugned order, inter-alia, dismissed the appeal filed by the assessee on this issue and held that it is difficult to accept that Rs.10 lakh were returned by the assessee to Mr. Mangesh D. Gaikar on behalf of his father in absence of any corroborative documentary evidence as to when the money in cash was received and how and when the same was kept with the father. The relevant findings of the learned CIT(A) are as under: – Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 4 “A perusal of the above statements confirm that cash of Rs. 10,00,000/- was actually paid by Shivam Tanna on 23/10/2017 to Mr. Shamal Gaikar (Mangesh D. Gaikar's son). The appellant and his father, Shri Umesh D. Tanna has maintained before the AO that the money under consideration belonged to Mangesh D. Gaikar. Shri Mangesh D. Gaikar in his statement has only maintained that the said sum of money was out of the maintenance charges collected for Mageshi Dazel III at Thakurli and the same was kept with Umesh D. Tanna, which was being returned in part by Shivam Tanna and therefore the entry in the diary. This version of the source of money of Rs. 10,00,000/- being returned by the appellant to Mangesh Gaikar is difficult to accept. There is no corresponding entry either in the books of accounts of the Tannas or the Gaikars as to when the so called maintenance charges were received and that too in cash and how and when the money was kept with Shri Omesh D. Tanna, as claimed. In absence of any corroborative documentary evidence, the statements of Umesh D. Tanna and Mangesh D. Gaikar, regarding the source of the cash deposit of Rs. 10,00,000/- by Shivam Tanna cannot be accepted at face value and hence is rejected. Further, on behalf of the appellant it is claimed that in his application before the Settlement Commission, Shri Umesh D. Tanna has disclosed the above said entries and therefore the Settlement Commission has already taken into account the aforesaid transaction of Rs. 10,00,000/- and therefore no addition should be made in the hands of the appellant. I have examined the Order of the Settlement Commission u/s 245D(4) of the Act dated 31/08/2020, in the case of Shri Umesh D. Tanna. In the said Order, there is no mention of seized annexure page 58 of Bundle No. 1 (erroneously mentioned as Page No. 5 by the AO in the assessment order). The income in the case of Umesh D. Tanna for AY 2012-13 to 2018-19 has been determined by estimating 'On-Money of 50% and applying a Gross Profit of 17.5%. From the Settlement Commission's Order in the case of Umesh D. Tanna, it is evident that the transaction of Rs. 10,00,000/- as mentioned in the aforesaid seized annexure does not form part of the 'On-Money' quantification done by the Hon. Settlement Commission. I, therefore, hold that the sum of Rs. 10,00,000/- as found in the seized annexure paid by the appellant assesse is unexplained and is liable for addition as income from other sources. The second ground of appeal, is therefore, dismissed.” Being aggrieved, the assessee is in appeal before us. 5. During the hearing, the learned Authorised Representative (“learned AR”) by referring to the documents forming part of the paper book submitted that the document on the basis of which addition has been made in the hands of the assessee refers to the sum of Rs.10 lakh received from the assessee. In the statement recorded on oath, the assessee had specifically stated that the said amount was given by his father to be handed over to Mr. Mangesh D. Gaikar. Further, the learned AR also referred to the reply of Mr. Mangesh D. Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 5 Gaikar in his assessment proceedings, wherein he stated that a sum of Rs.25 lakh was received from the assessee’s father and his family out of the money kept by him with them. Accordingly, the learned AR submitted that since the addition on account of on-money receipts in cash has already been made in the hands of Mr. Mangesh D. Gaikar, the addition of the same amount cannot be made in the hands of the assessee, particularly when the said money didn’t belong to the assessee. 6. On the contrary, the learned Departmental Representative (“learned DR”) submitted that there is no entry in the cash book of the father from whom the assessee has claimed to have received the cash which was handed over to Mr. Mangesh D. Gaikar. The learned DR further submitted that the loose paper only mentions that the amount has been received from the assessee and there is nothing on record that the said amount belongs either to Mr. Mangesh D. Gaikar or his concern. 7. We have considered the rival submissions and perused the material available on record. As is evident from the record, in the present case, during the search and seizure action conducted under section 132 of the Act in the case of assessee’s father and Mr. Mangesh D. Gaikar group, various documents were seized. In one of the documents (i.e. page No. 59 of bundle No. 1 found by party No. AB – 1) found at the premises of Mr. Mangesh D. Gaikar, it was mentioned that Rs.10 lakh was paid by the assessee in cash on 23/10/2017. As per the assessee, the said amount was paid to Mr. Mangesh D. Gaikar by the assessee on behalf of his father. In support of his aforesaid plea, the assessee has placed reliance on his statement recorded on oath under Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 6 section 131 of the Act, wherein the assessee specifically stated that the cash amount mentioned in the aforesaid document was given by his father to be handed over to Mr. Mangesh D. Gaikar and he is not aware of the purpose of the same. Reference was also made to the submission of his father dated 29/11/2019, filed before the Assessing Officer, wherein it has been mentioned that these pages are from the diary seized from the premises of Mr. Mangesh D. Gaikar and the transaction pertains to Mr. Mangesh D. Gaikar. From the perusal of the said submission on page no.15 of the paper book, we find that the assessee’s father claimed that payments pertain to Mr. Mangesh D. Gaikar and the signatures have been taken from the persons from whom the payments were received. We find that in the affidavit sworn on 25/01/2021, the father of the assessee again reiterated the aforesaid submissions. We further find that during the assessment proceedings in the case of Mr. Mangesh D. Gaikar for the assessment year 2018-19, the Assessing Officer vide show cause notice dated 04/12/2019, forming part of the paper book from pages no.86-109, specifically refer to the aforesaid document and asked Mr. Mangesh D. Gaikar to explain the complete details, inter-alia, of the aforesaid transaction of Rs.10 lakh received from the assessee and how it was accounted in the books of accounts. From the submission dated 16/12/2019, forming part of the paper book from pages no.110-112, we find that Mr. Mangesh D. Gaikar, inter-alia, made the following submissions:- “Lower part of Page No.58 pertains to amount received by Shamal Gaikar during the period 27.09.2017 to 23.10.2017 totaling to Rs. 25,00,000/-. M/s Kalyan Development Corporation, a Partnership Firm, where I am Partner has constructed a Building Mangeshi Dazzel III at Thakurli I have collected maintenance money from various Flat Buyers. These monies were to be deposited in Bank Account of Society which was to be opened. Accordingly, this money was lying with me. I could not keep huge cash in my site office of M/s Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 7 Kalyan Development Corporation or at my office Chikanghar. Mr. Umesh Tanna is very well know to me & he has his residence IN Building Mangeshi Sahara which is exactly opposite to my office Premises. Accordingly, I used to keep the money with Mr. Umesh Tanna which I called back whenever I need. Accordingly, between 27.09.2017 to 23.10.2017 I received the sum of Rs. 25,00,000/- from Mr. Umesh Tanna & his family out of the above money I kept with them. I believe that the explanation given hereinabove shall suffice for the purpose of proving the genuineness of the Transaction & it is not an incriminating material.” 8. We further find that vide order dated 30/12/2019, passed under section 143(3) for the assessment year 2018-19, forming part of the paper book from pages no.113-135, the Assessing Officer held that Mr. Mangesh D. Gaikar was collecting charges in cash but the same was not recorded in the books of accounts as collection and at the same time, corresponding expenses are being recorded thereby getting the double benefit of suppressing the receipts and taxable profit. Accordingly, the Assessing Officer made an addition of Rs.4,84,88,379, as unaccounted income representing on-money received. Thus, from the above, it is evident that not only the father of the assessee but Mr. Mangesh D. Gaikar also admitted to the fact that the money paid by the assessee in fact belong to Mr. Mangesh D. Gaikar, which was returned to Mr. Mangesh D. Gaikar and the same has been recorded in the loose document found during the search and seizure action at the premises of Mr. Mangesh D. Gaikar. In view of the above, we are of the considered opinion that once the Revenue in the case of Mr. Mangesh D. Gaikar, has held that Mr. Mangesh D. Gaikar was receiving maintenance charges in cash and not recording the same in the books of account as collection, there is no merits in rejecting the submission of the assessee on the basis that transaction in cash was not recorded in books and no documentary evidence was produced. Once the non- maintainability of the books of account in respect of the cash received has Shivam Umesh Tanna ITA no.532/Mum./2021 Page | 8 been found by the Revenue after a detailed examination in the case of Mr. Mangesh D. Gaikar, asking the assessee to produce the documentary evidence is contrary to their own findings. Thus, when the claim of the assessee has been duly corroborated by the statement of Mr. Mangesh D. Gaikar and assessee’s father, and Mr. Mangesh D. Gaikar, has been taxed in respect of the aforesaid cash receipt as unaccounted income, we find no basis in upholding addition in the hands of the assessee. Accordingly, the impugned order on this issue is set aside and the Assessing Officer is directed to delete the impugned addition. As a result, grounds raised by the assessee are allowed. 9. In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 06/03/2023 Sd/- S. RIFAUR RAHMAN ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 06/03/2023 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai