Sh. Vijay Kumar Jindal, Chandigarh V. DCIT, Central Circle -1, Chandigarh

ITA 680/CHANDI/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5285 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 22-08-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 03-11-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Business income; TDS
• Section: 69; 69C; 143(3); 250; 139(1); 13

Judgement Text

आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B” CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.680/CHANDI/2022 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Shri Vijay Kumar Jindal C/o Parikshit Aggarwal, Chartered Accountant, H. No.3035, Sector 27D, Chandigarh बनाम DCIT, Central Circle-1, Chandigarh èथायी लेखा सं./PAN NO: AASPJ9512G अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Parikshit Aggarwal, ca राजèव कȧ ओर से/ Revenue by : Shri Mahesh Thakur, CIT-DR स ु नवाई कȧ तारȣख/Date of Hearing : 23.08.2023 उदघोषणा कȧ तारȣख/Date of Pronouncement : 16.11.2023 आदेश/ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 29.08.2022 of the Commissioner of Income Tax (Appeals)-3, Gurgaon [hereinafter referred to as the ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 2 of 14 “1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A), Appeal No. 496/2018-19 dated 29.08.2022 has erred in passing that order in contravention of provisions of s. 250(6) of the Income Tax Act, 1961. 2. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in upholding the action of Ld. AO to the extent of confirming the addition of Rs. 50,69,335/- by holding that the transactions written on a slip found from the appellant at the time of search is his unexplained expenditure u/s 69C. 3. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in upholding the addition to the extent of Rs. 50,69,335/- by holding it to be unexplained expenditure u/s 69C even when the Ld. A.O did not hold it to be unexplained expenditure and the Worthy CIT(A) erred in replacing it and that too without affording any opportunity to the appellant. 4. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in upholding the action of Ld. AO by confirming that the contents of the loose slip found from the appellant is his unexplained expenditure and the explanation tendered by the appellant about that slip is not justified. 5. That on facts, circumstances and legal position of the case, the Worthy CIT(A), at Para 5.3 of his order, has erred in giving directions/ advise for A.Y 2016-17 while adjudicating the appeal for AY 2017-18 and that too without confronting or issuing show cause notice to the appellant and therefore, the said comments deserves to be expunged from that order. 6. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO of charging tax rate of 60% u/s 115BBE on addition made even when the said addition, if accepted academically, could have been bought to normal tax rates only. 7. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in confirming the action ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 3 of 14 of Ld. AO of charging tax rate of 60% u/s 115BBE on surrender of income of Rs. 40,00,000/- even when the said addition, if accepted academically, could have been bought to normal tax rates. 8. That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in not quashing the assessment order even when the said order passed by Ld. AO acquiring jurisdiction u/s 143(3) is invalid and unlawful as stated and purported approval u/s 153D seems to be without due application of mind and merely in ritualistic manner stated approval is accorded. 9. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.” 3. Ground No.1 is general in nature and does not require any specific adjudication. 4. Ground Nos.2 to 4 – The assessee vide Ground nos.2 to 4 has agitated against the confirmation of addition of Rs.50,69,335/- on account of unexplained expenditure invoking the provisions of section 69 of the Act. 5. The brief facts of the case are that a search and seizure operation was carried out at the business and residential premises of M/s Barnala Builder Group on 13.07.2016. The assessee was also covered under the said search action. During the year under reference, the assessee derived income from business or profession and filed return u/s 139(1) of the Act declaring total income at Rs.43,55,550/-. During the course of search action, incriminating document Annexure-A was found and seized which contained an entry of Rs.6,03,72,287/-. During the ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 4 of 14 course of search, this document was confronted to the assessee and in response to the Question No.13, the assessee stated that the said entry in the page contained the balance in respect of cement, sand and bajri used for construction. In response to the further Question No.14 as to from whom this material was ordered and to whom this balance amount was to be given; the assessee answered that the material collected from different builders and he did not remember exactly about the name of persons and the amount due to each of such party. He can only tell about the same after consulting his books of account. Thereafter, during the assessment proceedings, the assessee was again asked to explain the aforesaid transaction of Rs.6,03,72,287/- recorded in the seized page Annexure-A. In response, the assessee, vide reply filed on 23.12.2016, submitted as under: "Kindly refer to the matter above cited. As regards the explanation called for from us regarding Page No. 1 of Annexure A-1 found from residential House No. 52, Sector- 9, Panchkula of the assessee, it is submitted that this document was prepared by accountant of M/s Paradigm Business Ventures (PBV) wherein assessee is one of the promoter partner, for showing to the partners about the outstanding loans liabilities (secured as well as unsecured loans) in the firm on the relevant dates. The accountant appears to have prepared this document without adding accrued interest as at 31.03.2016 payable to unsecured lenders and there TDS deductions. The calculation in this regard from the books of accounts is attached. This figure closely matches with the approx. computation made by the accountant at that time. In the subsequent period from 01.04.2016 to 30.06.2016, M/s PBV raised a loan of Rs. 50 lacs from M/s Sushma Buildtech Limnited which has been ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 5 of 14 mentioned in this paper. Copy of the ledger account is attached herewith. Further installments of secured loans were paid which has been reduced in the paper to arrive at outstanding loan balances. Their ledgers for the period from 01.04.2016 to 30. 06.2016 are also attached. This clearly shows that the relevant transactions in the impounded paper stands recorded in the regular books of PBV " The Assessing Officer however was not satisfied with the above reply and observed that the assessee during the search action had told a different story claiming that it was outstanding balance of cement, sand and bajri etc., however, the assessee during the assessment proceedings has taken a different stand claiming the said amount as its loan liability. The assessee had claimed that this amount of Rs.6,03,72,287/- was outstanding loan liability of the firm i.e. M/s Paradigm Business Ventures in which the assessee was one of the partner. The assessee in support of his claim filed ledger account of the concerned parties from whom secured/unsecured loans were taken. The Assessing Officer, however, observed that the reply filed by the assessee was contrary to the explanation filed at the time of search. He, therefore, rejected the above reply and treated the said amount of Rs.6,03,72,287/- as unexplained expenditure and made the addition of the same into the income of the assessee. 6. Though, the ld. CIT(A) upheld the findings of the Assessing Officer to the extent that the explanation offered by the assessee at the time of search was contrary to the ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 6 of 14 explanation offered during the assessment proceedings, and, therefore, the addition has to be made, however, the ld. CIT(A) deleted the addition of Rs.5,63,28,952/- by holding that in the document, the said amount was mentioned pertaining to the preceding years. He however noted that since the balance amount of Rs.50,69,335/- pertained to the year in question, he, therefore, restricted the addition to the extent of the said amount only. The assessee now has come in appeal before us agitating the confirmation of the addition of Rs.50,69,335/-. 7. We have heard the rival contentions and gone through the record. The Ld. AR has submitted that the document Annexure-A did not belong to the assessee and belonged to the partnership firm M/s Paradigm Business ventures. That the figures noted in the document and the amount loan of liabilities as shown in the books of the M/s Paradigm Business ventures were almost tallied except the minor differences. The reason for such difference was that the books for the preceding year as well as the year of search had not been audited at that point of time since the time to get them audited was upto 30.09.2016, whereas, the search happened on 13.07.2016. The Ld. AR has further contended that the assessment of the said partnership firm was also completed by the same Assessing Officer at the same point of time in which no addition was made and the books of the concern were duly accepted by the Assessing Officer but still the addition was sustained ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 7 of 14 in the hands of the assessee. Another contention raised by the counsel for the assessee has been that the statement was recorded under mistaken belief of fact. However, explanation provided during the assessment proceedings was backed with the documentary evidences by stating the correct facts. He has contended that once the statement was retracted and the new explanation was backed by documentary evidences and when no defect was pointed out by the Assessing Officer in the explanation and affidavit of the accountant, in such situation, the Assessing Officer could not have relied upon the earlier statement and made addition by merely stating that there was contradiction in the statements. In support of his contentions, the ld. counsel also relied upon the following case laws: a. PCIT (Central)–3 vs. Anand Kumar Jain (HUF) (Del HC)February 12, 2021 (432 ITR 384) b. Amod Shivlal Shah vs. ACIT (ITAT Mumbai) February 23, 2018 (ITA No. 795/Mum/2015) c. DCIT vs. Studio Aethletic Health & Hospitality Pvt. Ltd (ITAT Mumbai) November 15, 2017 (ITA No. 2525 and 2526/Mum/2015) d. Chetnaben J Shah vs. ITO (Guj HC) July 14, 2016 (140 DTR 235) e. CIT vs. Ramanbhai B Patel (Guj HC) July 20, 2016 (96CCH 495) 8. The ld. counsel for the assessee has also submitted that merely relying on the loose sheet of paper without having any ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 8 of 14 corroborative evidence of making of any of such investment found during the course of search or post search or during the course of assessment proceedings, no addition can be made. He in this respect has relied upon the following case laws: f. S.P. Goyal vs DCIT (ITAT Bombay) (ITA No. 4117/Mum/2019) (supra) g. Apex court decision in case of Common cause vs UOI 394 ITR 220 h. Shri Dilipkumar Lalwani and Other 75 to 80/Ahd/2019 ITAT Ahmedabad” 9. The ld. DR, on the other hand, has relied upon the findings of the lower authorities. 10. We have considered the rival submissions and gone through the record. The issue involved is relating to the entries made in the relevant document seized during the search action marked as Annexure-A. During the search action, the assessee had stated that the handwriting in the document appeared to be of the accountant and further that the said document pertained to the liability of the assessee on account of material purchased relating to the construction activity from different suppliers. However, during the assessment proceedings, the assessee stated that the said entries did not pertain to the liabilities on construction material, rather, the same was relating to the liability on account of loans outstanding against the ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 9 of 14 business firm of the assessee i.e. M/s Pradigm Business Ventures. The ld. Counsel for the assessee has submitted that the entries in the document, when compared with the books of account, the figures almost matched. The minor differences, if any, were only due to the fact that books of account have not been audited and the minor differences were normal. 11. It is to be noted that the alleged seized document was not in the handwriting of the assessee. During the search action, the assessee was of the view that the same might be pertained to the outstanding liabilities of the suppliers of the construction material. However, in reply to Question No.14, the assessee had categorically stated that he cannot tell about each of the entry and even he cannot name each of the persons from whom the material was purchased and towards whom the liability was outstanding. He, in this respect, has categorically stated that he can tell about the same only after consulting the books of account. Admittedly, at the time of search, the assessee had not filed the return of income. Admittedly, the search was conducted on 13.07.2016, whereas, the return of income for the year under consideration was filed on 07.11.2017. The assessee after the search action reconciled the said entries with his books of account and found that the same pertained to the outstanding loan amounts of his firm M/s Pradigm Business Ventures. The assessee also reconciled the figures with the books of account. The Assessing ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 10 of 14 Officer did not point out any error or infirmity in the submissions furnished by the assessee. The addition has been made by the Assessing Officer only on the ground that the assessee has changed his stand during the search action. However, the Assessing Officer has neither rebutted nor found any infirmity in the claim of the assessee. That the said entries were on account of outstanding loan liabilities of the firm. The fact, in this case, is to be noted is that during the search action, the assessee has given the statement on his own presumption/estimation, however, the assessee could neither tell about the different materials received, the name of suppliers and even he could not tell as to what amount was outstanding towards each of them. He in this respect has categorically stated that to give exact reply, he would have to consult his books of account. The Assessing Officer has not found any error or infirmity in the reply given by the assessee after consulting the books of account. The Assessing Officer has not pointed out that the outstanding loan liabilities shown by the assessee in respect of its firm i.e. M/s Pradigm Business Ventures were wrong or false. In view of this, the impugned addition sustained by the CIT(A) cannot be held to be justified and the same is ordered to be deleted. 12. Ground No.5 – Vide Ground No.5, the assessee has contested the observations of the CIT(A) given in para 5.3 of the impugned order observing that since the entry pertaining to amount of Rs.5,63,28,952/- pertained to the ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 11 of 14 preceding year i.e. A.Y 2016-17, the Assessing Officer may take proper action for A.Y 2016-17 if required for consideration of the facts of the case and independent application of mind. 13. We note that the ld. CIT(A) deleted the additions of Rs.5,63,28,952/- holding that the entry relating to the same pertained to the preceding year i.e. A.Y 2016-17. The observations made by the CIT(A), in our view, does not require any interference. Ground No.5 of the appeal is, therefore, dismissed. 14. Ground No.6 – Vide Ground No.6, the assessee has agitated the action of the Assessing Officer in taxing the impugned addition of Rs.50,69,335/- @60% by invoking provisions to section 115BBE of the Act. Since, in view of our findings given above, the impugned additions have been ordered to be deleted, therefore, the aforesaid ground of the assessee is dismissed as infructuous. 15. Ground No.7 - During the course of search action at the residential premises of the assessee, cash amounting to Rs.11,85,000/- was found and further from bank locker of the assessee, jewellery amounting to Rs.60,54,732/- and cash of Rs.6,07,000/- was found. The assessee explained about the jewellery that part of the same was ancestral and another part was received in the marriage of the assessee’s son and some jewellery was purchased. The assessee filed letter dated 19.08.2016 and surrendered an amount of ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 12 of 14 Rs.40,00,000/- as over and above his normal income. The Assessing Officer noted that in the return of income filed after the search action, the assessee surrendered the said amount of Rs.40,00,000/- under the head ‘income from other sources’. The Assessing Officer taxed the aforesaid surrendered income of Rs.40,00,000/- @60% invoking the provisions of section 115BBE of the Act. 16. The ld. Counsel for the assessee has submitted that during the course of search, no other source of income was detected/brought on record by the revenue authorities. He, therefore, has submitted that the source of surrendered income was out of business/commission income of the assessee. He has submitted that the surrendered income of Rs.40,00,000/- was duly disclosed by the assessee in his return of income under the head ‘business and profession’ and that the observation of the Assessing Officer that the surrendered income was disclosed as income from ‘other sources’ was not correct. The ld. Counsel for the assessee, in this respect, has brought out attention to the copy of the ITR and computation of income to submit that the surrendered income was declared under the head ‘business’ and submitted that the same was from the property dealing business of the assessee. The ld. Counsel for the assessee, further, submitted that it was undisputed fact that the assessee was carrying on business of property dealing on commission basis. The ld. Counsel has submitted that even in the statement, the assessee had offered the said amount ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 13 of 14 in addition to his normal business income and it was never stated that the said amount was earned by assessee from any other sources. The ld. Counsel has further submitted that even in respect of two partnership firms of the assessee, namely, M/s Pradigm Business Ventures and M/s City Centre Developers, the said firms had surrendered an amount of Rs.4.37 crores and Rs.8.75 crores, respectively, as real estate business income and the Assessing Officer had accepted the same. The ld. AR submitted that the assessee has carried out the property dealing business in his individual capacity also which was not rebutted by the Assessing Officer. 17. Considering the above submissions of the assessee, we are of the view that since the assessee has explained the source of the surrendered income and considering the relevant provisions of section 115BBE as applicable for assessment year under consideration, the Assessing Officer was not justified in taxing the said amount at the higher rate of 60%. The assessee has already offered the said amount at the normal rate of 30%. Therefore, the action of the Assessing Officer taxing the amount at a higher rate is set aside and the Assessing Officer is directed to tax the said amount at normal rate. 18. Ground No.8 – No arguments have been advanced in respect of this ground, therefore, Ground No.8 is dismissed as not pressed. ITA No.680/CHANDI/2022 Assessment Year : 2017-18 Shri Vijay Kumar Jindal Page 14 of 14 19. Ground No.9 is general in nature. 20. In the result, the appeal of the assessee is treated as partly allowed. Order pronounced in the Open Court on 16 th November, 2023. Sd/- ( VIKRAM SINGH YADAV) लेखा सदèय/ Accountant Member Sd/- ( SANJAY GARG) ÛयाǓयक सदèय/ Judicial Member Dated: 16.11.2023. RS आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar