The ACIT, Mehsana Circle, Mehsana V. M/s. Raj Enterprise, Mehsana

ITSSA 161/AHD/2019

AI Insights

The case revolves around an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) which had deleted an addition made by the Assessing Officer. The addition pertained to Rs. 5,00,00,000 which was alleged to be unaccounted cash received by the assessee, M/s. Raj Enterprise, from Venus Group. The Tribunal examined the evidence presented, including bank statements, ledger accounts, and confirmations from M/s. Sunderdeep Builders, and found that the transactions were genuine and properly recorded. The Tribunal also noted that the documents relied upon by the Assessing Officer were not found at the premises of the assessee but were related to the Venus Group, thus not implicating the assessee directly.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 114147 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-11-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 03-04-2019
• Other Referred Cases: PCIT vs. Ganesh Plantation Ltd., CIT vs. Andaman Timbers, PCIT vs. Kanubhai M. Patel, CIT vs. Indrajit Singh, CIT vs. Ranchhod Jivabhai NaUhawa, DCIT Vs. Rohini Builders, CIT vs. Apex Therm Packaging P. Ltd., Ayachi Chandrashekhar Narsangji vs. Income Tax Department
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Source of fund; Documents seized; TDS
• Section: 68; 132; 143(3); 153A; 251; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The ACIT, Mehsana Circle, Mehsana (Appellant) Vs M/s. Raj Enterprise, 5, Ashok Nagar Society, Radhanpura Road, Mehsana-384002 PAN: AAFFR7302H (Respondent) Appellant by : Shri Anshu Prakash, CIT-DR Respondent by : Shri S.N. Divatia, A.R. Date of hearing : 09-11-2022 Date of pronouncement : 30-12-2022 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against appellate order dated 29.01.2019 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, as against the assessment order passed under section 153C r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2013-14. IT(SSA No. 161/Ahd/2019 Assessment Year 2013-14 I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 2 2. The sole ground raised by the Revenue is that the Ld. CIT(A) erred in deleting the addition of Rs. 5,00,00,000/- made on account of unaccounted cash received from Venus Group. 2.1. The brief facts of the case is that the assessee is a Partnership firm engaged in the business of land, land development, share and earns rental income and interest income. The assessee filed its original Return of Income on 29.09.2013 declaring total income of Rs. 54,18,030/-. A search operation u/s. 132 of the Act was carried out at the residence and office premises on 03.01.2013, no incriminating material or cash transactions were found during the course of search. The assessee was issued a notice u/s. 153A and in response the assessee filed the income as declared in the original return and the assessment was completed by the Assessing Officer making an addition of Rs. 1,04,45,974/- u/s. 68 of the Act. 2.2. There was another search action conducted in the case of Venus Group of Companies on 10.03.2015, one of the seized material from the terrace of Crystal Arcade, C.G. Road of Venus Group related to cash paid “Against EC” to M/s. Raj Enterprise through Shri Raju Desai. The “EC” entries have been found correlated with bank account of M/s. Sunderdeep Builder and it was found that there were RTGS transfers to the account of Sunderdeep Builders from the account of M/s. Raj Enterprise. Annexure A-87 showed the transactions aggregating to Rs. 5 crore in cash and the amounts paid in cheque/RTGs to M/s. Sunderdeep Builders. I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 3 2.3. Pursuant to this, a notice u/s. 153C was issued to the assessee. The assessee filed its Return of Income on 14.11.2017 declaring the total income of Rs. 54,37,360/-. After detailed hearing, the Assessing Officer held that the amount of Rs. 5 crore received in cash by the assessee against payment through bank account of the assessee on various dates and therefore treated as the income of the assessee. 3. Aggrieved against the same, the assessee filed an appeal before the Ld. Commissioner of Income Tax(Appeals). The assessee clarified that it had borrowed funds in the form of unsecured loans from M/s. Sunderdeep Builders for which, interest @ 9% per annum was given and appropriate TDS was deducted. The search action conducted in Venus Group and loose papers seized thereon which does not carry the signature of the assessee or hand writing of the assessee, but recovered from third party premises which has no relation with the assessee and no enquiry was conducted by the A.O. Thus without conducting independent enquiry and bringing any cogent material on record, the addition made is not sustainable in law. 3.1. After considering the submissions, the Ld. CIT(A) deleted the addition as follows: 5.4. However, it is the irrefutable case of appellant that it had unsecured loan outstanding of Rs.15,13,46,625/- as on 01/04/2012 from M/s. Sunderdeep Builders and that during the year under consideration the amount ha$ been repaid by it to M/s. Sunderdeep Builders through various RTGS remittances and all these transactions are reflected in the books of account and the bank accounts of the appellant. The appellant has paid an interest of Rs.13,50,863/- out of which TDS of Rs. 1,35,086/- I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 4 on the interest/has been deducted and deposited in the Govt. account. During the year under consideration the loan has been squared up. The appellant has filed the copies of ledger account and confirmation of account along with bank statements which are claimed to have been produced before the AO during the assessment proceedings. The Assessing Officer has not doubted the unsecured loan of Rs.5,13,46,625/- and has not considered the claim of the repayment of loan by the appellant. These hard facts cannot be brushed aside. 5.5 Further the documents which have been relied upon by the AO for the impugned addition in the hands of the appellant were found from the premises of the Venus group and not from the premises of the appellant. The documents were written by the persons of the appellant and do not bear the signature / seal of the partner/employee of the appellant. It appears that no statement was recorded during the course- of search about the nature of the transactions recorded in these seized papers. During the post-search inquiries neither any inquiry has been made nor was any statement recorded from the appellant. Thus the AO is not legally justified in holding the amount as per the seized documents as income of the appellant. The case of the AO further fails because the remittances by the appellant to M/s. Sunderdeep Builders are repayment of loans which is not refuted by him. The AO has neither doubted the unsecured loan taken/outstanding as claimed by the appellant from M/s. Sunderdeep Builders nor has doubted the source of funds (as per the books of accounts and the bank account) in the hands of the appellant for the purpose of repayment of the said loan during the year. The AO has not made any disallowances of interest paid of Rs.13,50,863/-. These imply that the loans and the interest paid have been held genuine by the AO and if it is' so, the stand of the AO in making the impugned addition is contradictory. There is no evidence with the AO that the repayment of loan along with interest to M/s. Sunderdeep Builders has been made by the appellant on receiving of cash from the Venus Group. 5.6 As the documents relied upon by the AO were not found from the premises of the appellant, the presumption in favour of the Revenue by virtue of sections 132(4A) and 292C are not applicable against the appellant. The appellant is not required to explain the seized receipts / vouchers. But the appellant has filed confirmations from M/s. Sunderdeep Builders in support its contention and as already held before, the transactions so far as contained in the books of account and bank statement of the appellant are not hit by the provisions of Income Tax Act. All these facts establish that the appellant has discharged its onus as to the genuineness of the transactions with M/s. Sunderdeep Builders and that no adverse inference can be withdrawn against the appellant on account of the receipts / vouchers found from the premises of the Venus group. I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 5 5.7 The appellant is further protected by various case laws, some of them being CIT vs. Andaman Timbers, PCIT vs. Kanubhai M. Patel 79 Taxman.com 257 (Guj), CIT vs. Indrajit Singh 215 Taxman 58 (Guj), CIT vs. Ranchhod Jivabhai NaUhawa, 21 Taxman.com 159 (Guj), DCIT Vs. Rohini Builders 256 ITR 360 (Guj), CIT vs. Apex Therm Packaging P. Ltd. 42 Taxman.com 473 (Guj). 6. In the facts and circumstances, the addition made by the AO on the premises as narrated in the assessment order are not found factually correct and legally justified. The AO is directed to delete the addition of Rs.5 crore made into theimpugned assessment order. The ground of appeal succeeds. 4. Aggrieved against the Appellate Order, the Revenue is in appeal before us. The Ld. CIT-D.R. Mr. Anshu Prakash appearing for the Revenue submitted that the Ld. CIT(A) erred in deleting the addition made by the Assessing Officer and the same is to be restored. 5. Per contra, the Ld. Counsel Mr. S.N. Divatia appearing for the assessee submitted that it is the irrefutable case of the assessee that it had unsecured loan outstanding of Rs. 15,13,46,625/- as on 01/04/2012 from M/s. Sunderdeep Builders and that during the financial year 2012-13, the amount has been repaid by the assessee to M/s. Sunderdeep Builders through various RTGS remittances and all these transactions are reflected in the books of account and bank account of the assessee. The assessee had paid an interest of Rs. 13,50,863/- out of which TDS of Rs. 1,35,086/- on the interest has been deducted and deposited in the Govt. account. Thus during the financial year, the loan has been squared up. The assessee filed copies of the ledger account and confirmation of account along with bank statements during the I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 6 assessment proceedings. The Assessing Officer has not doubted the unsecured loan and has not considered the claim of repayment of loan made by the assessee. Seized material namely loose papers relied by the A.O. were not found from the premises of the assessee, therefore no addition can be made in the hands of the assessee. The assessee further discharged its onus as to the genuineness of the transactions with Sunderdeep Builders and no adverse inference can be drawn against the assessee on the basis of the seized materials. Thus the Ld. CIT(A) after considering the entire issue on facts, deleted the addition made by the assessing officer, which does not require any interference. Therefore requested to dismiss the Revenue’s appeal. 5.1. The Ld. A.R. further relied upon by the Jurisdictional High Court Judgment in the case of PCIT vs. Ganesh Plantation Ltd. in Tax Appeal No. 251 of 2021 dated 22.11.2021 wherein the Revenue’s appeal was dismissed on the ground that additions made on the strength of the suspicion of the assessing officer, which were rightly deleted by the Lower Authorities was dismissed as no merits in the appeal filed by the Revenue. 6. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee. On similar set of facts, search conducted in the premises of Venus Group of Companies and cash transactions, Co-ordinate Bench of this Tribunal in IT(SS)A No. 248/Ahd/2018 dated I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 7 09.11.2022 considered the above issue and passed the following orders: 7. We have given our thoughtful consideration and perused the materials available on record. The addition made by the Assessing Officer invoking Section 68 does not hold it good since the assessee has filed the confirmation letter from the lender, Bank statement from the assessee, Income Tax Return and statement of total income of the lender namely Mr. Rajesh Vaswani proprietor of M/s. Sunderdeep Builders. Thus the assessee has discharged its initial onus namely identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. Further the Assessing Officer has disbelieved Rs. 5 Crores received from creditor and not doubted about the Rs. 30 Crores received from the same lender. Further the Assessing Officer has not doubted the interest payment of Rs. 1,83,79,553/- as against the above loan, with appropriate TDS made by the Assessee. Therefore the addition made by the Assessing Officer u/s. 68 of the Act is not sustainable in law. Further the Hon’ble Jurisdictional High Court in the case of Ayachi Chandrashekhar Narsangji (cited supra) it was held as follows: Section 68, read with section 143, of the Income-tax Act, 1961 - Cash credit [Loans] -Assessment year 2006-07 - Assessing Officer framed assessment under section 143(3) wherein he made addition of Rs. 1.45 crore under section 68 on ground that loan taken from one ‘IA’ was not explained satisfactorily - On appeal, Commissioner (Appeals) was satisfied with respect to genuineness of transaction and creditworthiness of MA' and, therefore, deleted addition - It was found that total loan of Rs. 1.60 crore was advanced to assessee, out of which Rs.15 lakh was repaid - Therefore, an amount of Rs.1.45 crore remained outstanding to be paid to ‘IA’ - Balance loan amount was repaid by assessee in immediately next financial year - Whether when Department had accepted same, addition made by Assessing Officer was to be deleted - Held, yes [Para 6] [In favour of assessee] 8. Respectfully following the above ratio of the judgment, we have no hesitation in confirming the order of the Ld. CIT(A), who deleted the addition made by the Assessing Officer u/s. 68 of the Act. Thus the grounds raised by the Revenue in IT(SS)A No. 248/Ahd/2018 does not hold good on merits and the same is dismissed. For this reason we are not addressing on the other issues namely non-furnishing of relevant documents and not providing of cross examination to the assessee. I.T.(SS)A No. 161/Ahd/2019 A.Y. 2013-14 Page No ACIT vs. M/s. Raj Enterprise 8 6.1. Facts in present case is also identical and the entire loan is repaid during this financial year and interest paid with appropriate TDS, which is not doubted by the A.O. Thus the addition made by A.O. is not sustainable in law. Respectfully following the Jurisdictional High Court judgment in the case of Ayachi Chandrashekhar Narsangji and Co-ordinate Bench of this Tribunal, we are of the considered opinion the grounds raised by the Revenue does not hold good on merits and therefore the same is dismissed. 7. In the result, appeal filed by the Revenue is hereby dismissed. Order pronounced in the open court on 30-12-2022 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 30/12/2022 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद