DY CIT CC 6(2) , MUMBAI V. M/S SAI ASHRAY DEVELOPERS PVT LTD., MUMBAI

ITA 976/MUM/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7318 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 05-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers
• Section: 69; 132; 143(3); 13; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA No.976/Mum/2020 (Asse ssment Year :2014-15) Dy. Commissioner of Income Tax, Central Circle- 6(2),Mumbai Room No.1903, 19 th Floor Air India Building Nariman Point, Mumbai – 400 021 Vs. M/s. Sai Ashray Developers Pvt. Ltd., A/201, Rajpipla, Opp. Standard Chartered Bank Santacruz (W) Mumbai - 400054 PAN/GIR No. AAQCS4670P (Appellant) .. (Respondent) Revenue by Shri Sanjeev Kashyap Assessee by Shri Vijay Mehta Date of Hearing 01/09/2021 Date of Pronouncement 29/11/2021 आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No.976/Mum/2020 for A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-54, Mumbai in appeal No.CIT(A)-54/IT-10398/DCCC-6(2)/2017-18 dated 25/11/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.153C r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/12/2017 by the ld. Dy. Commissioner of Income Tax, Central Circle 6(2), Mumbai (hereinafter referred to as ld. AO). ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 2 2. The only issue to be decided in this appeal of the revenue is as to whether the ld CIT(A) was justified in deleting the addition made on account of cash outgo of Rs 5,69,93,024/- u/s 69 of the Act in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. We find that the assessee is engaged in the business of construction. A search and seizure action was carried out u/s 132 of the Act on 25.06.2015 in Ahuja Group and assessee was one of the group companies. During the course of search, various incriminating materials in the form of loose papers and digital forms were found. The premises of Shri Sunil Chaudhary, driver of Shri Jagdish Ahuja, Promoter of the group, was also searched and parallel books of accounts of the Ahuja group were found in his premises. Analysis of the data found was confronted to the promoter Shri Jagdish Ahuja who had admitted to receiving on money in various real estate projects undertaken by the group. Notice u/s 153C of the Act was issued to the assessee on the basis of data found during the search. The name of the construction project undertaken by the assessee was styled as ‘PRASADAM’. On the basis of the statements recorded and the corroborative evidences found during the search, the ld AO issued a show cause notice to the assessee proposing to make an addition to the on money received. The year wise details of on money received by the assessee company are as under:- Project Name Asst. Year Amount PRASADAM 2012-13 29,00,001/- PRASADAM 2013-14 33,10,34,600/- PRASADAM 2014-15 6,68,00,000/- ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 3 PRASADAM 2015-16 25,91,94,000/- PRASADAM 2016-17 1,64,800/- Total 66,00,93,401/- 3.1. The details of on money received and returned year wise as found in the parallel books of accounts are as under:- Asst. Year On Money Received On Money Reversal Net On Money 2012-13 29,00,001/- Nil 29,00,001/- 2013-14 33,10,34,600/- 15,25,37,725/- 17,84,96,875/- 2014-15 6,68,00,000/- 30,51,89,900/- (23,83,89,900)/- 2015-16 25,91,94,000/- 22,60,94,000/- 3,31,00,000/- 2016-17 1,64,800/- 1,64,800/- Total 66,00,93,401/- 68,38,21,625/- (2,37,28,224)/- 3.2. The ld AO from the aforesaid table observed that during the Asst Year 2014-15, the on money reversal is more than the on money receipts and that overall there is an excess cash outgoing, resulting in negative cash balance of Rs 5,69,93,024/-. The ld AO observed that this negative cash balance remain unexplained and hence treated the same as unexplained income u/s 69 of the Act while framing the assessment for the Asst Year 2014-15. 3.3. The assessee submitted that totally 9 pen drives were found in the course of search which are marked as Annexures A-9 to A-17 from the residence of Shri Sunil Chowdhary, driver of Shri Jagadish Ahuja, ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 4 promoter of the Ahuja group. Pen drive No. 6 during this period found and seized and marked as Annexure A-14 contained records of parallel books of accounts from the year 1989 to 31/03/2015 in respect of unaccounted transactions of the entire Ahuja group. Pen drive No.2 found and seized and marked as Annexure A-10 contained the details of parallel books of accounts of unaccounted transactions of the Ahuja group for the period April and May 2015. The remaining 7 pen drives also contained parallel books of accounts for different years. However, the same were only duplication of two pen drives stated above. Thus, the entire data of unaccounted transactions of the Ahuja group is found in pen drive 6 (Annexure A-14) and pen drive No.2 (Annexure A-10). The assessee also submitted that the pen drives containing unaccounted transactions of the Ahuja group were maintained in the form of parallel books of accounts in Tally software accounting package. The assessee submitted that Shri Jagdish Ahuja is Matriculate by education and a business man not having much knowledge of accounting entries, however, the Tally accounting software being easy to understand, the unaccounted transactions were maintained therein. The unaccounted transactions related to the entire Ahuja group of concerns and not limited to a particular entity and the data maintained thereon was consolidated data for the entire Ahuja group without any entity wise segregation. This fact was also duly confirmed by Shri Jagdish Ahuja, promoter of Ahuja group in his statement recorded u/s.132(4) of the Act on 28/06/2015 while giving reply to Question No. 42 thereon. The assessee also sought to explain that on-money receipts from various customers are shown as receipts in the parallel books of accounts and out of the same, some customers deals are not materialised and hence, part of the on-money receipts or whole of them had to be returned back to the customers. This return of on-money has been shown as on-money reversals in the cash book maintained in Tally. The assessee ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 5 also submitted that one more aspect of reversal is due to erroneous manner of recording receipts of on-money. In order to to keep a track of total on-money received from a customer, whenever second or subsequent instalment of on-money is received, the assessee would re- enter aggregate amount as amounts received and the earlier amounts received is treated as reversal. For example, if a person had on day 1 given Rs. 10 lakhs as on-money which would be recorded as on-money received on day one in Tally. When on day 5, he pays a further sum of Rs.5 lakhs, since Shri Jagdish Ahuja being not properly trained in accounting entries, instead of recording the receipt of Rs.5 lakhs, he would record that a sum of Rs.15 lakhs was received ( 10 + 5) and a sum of Rs.10 lakhs would be shown as reversal. Because of recording of entries in this manner, the gross amount of on-money receipts was very high at Rs.4,11,21,38,149/- and so does the amount of reversal at Rs.225,78,88,020/- for the entire Ahuja group concerns and for all the years relating to the such period. These submissions were also made by the assessee before the Hon’ble Income Tax Settlement Commission when some of the entities belonging to the Ahuja group had preferred an application u/s.245C(1) of the Act before the ITSC. It was also submitted that these facts were indeed examined in detail by the Income Tax department pursuant to the directions of the ITSC and there is absolutely no dispute with regard to the same as the Income Tax department had accepted to the plea of the assessee before the ITSC. The assessee submitted that one of the receipts of money in the parallel books of accounts represent on-money receipts and on-money reversals are shown as cash out-go in the very same parallel books of accounts maintained in Tally package. These facts are not disputed at all. Overall on-money reversal are much lesser than on-money receipts, hence, there cannot be any separate addition treating a part of the transaction as unexplained ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 6 income u/s.69 of the Act. It was also pointed out that there was absolutely no negative cash balance in the parallel books of accounts maintained by the assessee in the whole Ahuja group. The assessee submitted that the payments made are reflected in the parallel books of accounts and since there is no negative cash as per the Tally data, the payment even if it is excess, has gone out of the balance available in the Ahuja group as a whole and this fact is also noted by the ld. AO in his assessment order in para 10.8 at page 13. Accordingly, the assessee pleaded that the overall picture of the Ahuja group as a whole has to be considered to conclude whether there is any shortage of cash available and as per the factual position, there is no shortage of cash as per parallel books of accounts of the Ahuja group as a whole and hence, there cannot be any addition towards unexplained cash outflow of Rs.5,69,93,024/- warranting addition u/s.69 of the Act. 3.4. The assessee also pointed out that the relevant period cash book print out of the parallel books of accounts was analyzed and it was seen that the amount refunded towards on-money receipt was mainly out of cash loans taken which was already separately assessed in the hands of Shri Jagdish Ahuja by the order of the Hon’ble Tax Settlement Commission wherein total amount of Rs.26 Crores on peak basis was added. Thus, it is pointed out that source for excess refund of cash outgoings were properly explained. The assessee also furnished the relevant period cash book of parallel books of account to show that excess refund is out of cash loans taken. 3.5. The ld. CIT(A) examined the details and duly appreciated the contentions of the assessee and deleted the addition made on account of ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 7 unexplained cash of Rs.5,69,93,024/-. Aggrieved, the Revenue is in appeal before us. 3.6. It is not in dispute that parallel books of accounts containing on- money receipts, on-money reversals, cash loans taken by the assessee, cash loans repaid, interest paid in cash for such cash loans and expenses incurred in cash were duly reflected in the parallel books of accounts maintained in Tally accounting software package. It is not in dispute that the transactions reflected in the aforesaid parallel books of accounts were pertaining to the whole Ahuja group. This fact is also accepted and acknowledged by the ld. AO in para 10.8 at page 13 of his assessment order. Hence, what is to be seen is whether there is any negative cash balance in the parallel books of accounts maintained by the assessee. We find that the assessee had submitted that the excess on-money reversals to the tune of Rs.5,69,93,024/- were made out of cash loans taken by Shri Jagdish Ahuja. We also find that assessee had duly explained that the said cash loans of Rs.26 Crores had been independently added on peak basis in the hands of Shri Jagdish Ahuja by the order of Hon’ble Income Tax Settlement Commission. The purpose of refund of on-money receipts to the customers has been duly explained by the assessee together with its modus-operandi as detailed hereinabove. This is also further confirmed by Shri Jagdish Ahuja in his statement recorded u/s.132(4) of the Act on 28/06/2015. We find that the ld.AO had merely considered on-money receipts portion alone on the receipts side to arrive at the availability of cash with the assessee for making on-money reversal payments. If the cash loans of Rs.26 Crores which has been independently added in the hands of Shri Jagdish Ahuja is considered on the receipt side, there would be no negative cash balance at all in the parallel books of accounts maintained for the whole group. This fact has ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 8 been duly appreciated by the ld. CIT(A). Infact, as per the directions of the Bench, the ld. Counsel for the assessee also furnished the over all cash balance statement showing all the receipts and all the payments reflected in the parallel books of accounts for A.Yrs. 2009-10 to 2016-17. The same are reproduced hereunder:- ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 9 ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 10 ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 11 ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 12 ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 13 3.7. The ld. Counsel for the assessee also submitted various details of additions made on account of net on-money in the case of various group entities of the Ahuja group for A.Y.2014-15 and also on account of inflation of expenses and other income. These facts clearly go to prove that there is lot of force in the submission of the ld. AR that there was absolutely no negative cash balance in the parallel books of accounts maintained in the Tally package. Hence, we hold that there is absolutely no infirmity in the order of order of the ld. CIT(A) granting relief to the assessee as there is no negative cash balance in the parallel books of ITA No.976/Mum/2020 M/s. Sai Ashray Developers Pvt. Ltd., 14 accounts maintained for the whole Ahuja group which is the primary basis for making an addition per se. 3.8. In view of the aforesaid observations, we hold that the order of the ld. CIT(A) does not warrant any interference, accordingly, the grounds raised by the Revenue are dismissed. 4. In the result, appeal of the Revenue is dismissed. Order pronounced on 29/11/2021 by way of proper mentioning in the notice board. Sd/- (AMARJIT SINGH) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 29/11/2021 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//