Shri Mohanlal Savjibhai Tilva, Baroda V. The DCIT, Central Circle-2, Baroda

ITSSA 346/AHD/2019

AI Insights

This case involves an appeal by Shri Mohanlal Savjibhai Tilva against the order of the Commissioner of Income Tax (Appeals)-12, Ahmedabad, which confirmed the addition of Rs. 15,00,000 as unexplained investment under section 69 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer following a search operation under section 132, which revealed documents indicating unexplained cash investments in a project by the Akshar Group. The assessee argued that the investment was a booking amount for a shop in the Akshar Pavilion scheme, which was later cancelled, and the amount was refunded and re-credited to his capital account in M/s Akshar Construction. The Tribunal, after examining the evidence and submissions, concluded that the assessee had sufficiently explained the source of the investment, leading to the allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131412 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-06-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 17-06-2019
• Other Referred Cases: Durga Prasad More vs. ITO, McDowells & Co. vs. State
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Initiation of penalty proceedings
• Section: 132; 250

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Mohanlal Savjib hai Tilva, 301, Kishan Flats, 27/B, Shrinagar Society , Ako ta, Baroda PAN: AAYPT45 95M (Appellant) Vs The DCIT, Cen tral Circle-2, Baroda (Resp ondent) Asses see b y : M s. Urv ashi Sho dhan, A. R. & Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 13-06 -2 023 Date of pronouncement : 14-07 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax, CIT(A)-12, Ahmedabad, in proceeding u/s. 250 vide order dated 06/05/2019 passed for the assessment year 2015-16. 2. The assessee has taken the following grounds of appeal:- IT(SS)A No. 346/Ahd/2019 Assessment Year 2015-16 I.T.(SS)A No. 346/Ahd/2019 A.Y. 2015-16 Page No. Shri Mohanlal Savjibhai Tilva vs. DCIT 2 “1. The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts of the appellant's case in confirming the action of the Ld. A.O. in making an addition of Rs. 15,00,000/- U/s 69 of the Act. 2. Both the lower authorities have erred in law and on facts of the appellant's case in not appreciating the fact that Source of Investment made is fully explained. 3. The initiation of penalty proceedings U/s 271(1) (c) of the Act is not justified. 4. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before hearing of the appeal.” 3. The brief facts of the case are that a search under section 132 of the Act was conducted on 22-09-2015 at the premises of the assessee as well as on the Akshar group viz. M/s Akshar Construction and M/s Akshar PHC Realcon. During the course of search at the residential premises of one of the partners of the Akshar group-Shri Arvindbhai Sitapara, certain loose papers and diaries were found. Further, certain loose papers and diaries also discovered from the premises of another partner of the Akshar group. On the basis of seized documents, a show cause notice dated 02-11-2017 was issued in assessee’s case alleging that assessee had made unexplained investments in cash in a project of Akshar Group – i.e. Akshar Pavillion, which is evident from documents found and seized from the residential premises of Shri Arvindbhai Sitapara- partner of the Akshar group. The assessment was finalised by the Ld. Assessing Officer by making any addition of 15 lakhs as unexplained investment in the hands of the assessee. 4. In appeal, Ld. CIT(Appeals) upheld the addition with the following observations: I.T.(SS)A No. 346/Ahd/2019 A.Y. 2015-16 Page No. Shri Mohanlal Savjibhai Tilva vs. DCIT 3 “5.2 It is the case of the appellant that the addition made by the A.O. is merely on presumptions and it has been made on the pretext that the seized record contains capital introduced by the partner of M/s Akshar PHC Realcon in cash and sources of the some arc unexplained. However, the appellant is not partner of the said firm. As the nature of transactions, the appellant submits that the appellant had booked a Shop GF 53 in Akshar Pavilion scheme developed by M/s. Akshar PHC Realcon and paid Rs.15,00,000/- as booking money, as noted in the seized documents. The booking was as token of good wishes on the inauguration of the new project by the said firm. However, later as the customer for said shop was found, the appellant had cancelled the booking. 5.3 As far as source of booking money given, the appellant claims to have withdrawn the said amount from his capital account with M/s Akshar Construction, being partner therein and later on, when the booking was cancelled, the amount was refunded and the amount was re-credited to his capital account in the partnership firm, M/s Akshar Construction. As far as evidences of the entire transaction are concerned, the appellant submitted the copy of Ledger A/c of the shop booked from the books of M/s. Akshar PHC Realcon duly confirmed by them and the copy of Capital A/c of the appellant from the books of M/s Akshar Construction in which he is a partner. It has been further submitted that the appellant is also maintaining personal books of accounts, so the appellant had submitted the contra account of shop account as well as of partnership firm - M/s Akshar Construction from his books. 5.4 On perusal of all the observations of the AO and the submissions of the appellant, I am of the view that though from the statements recorded, the amounts both cheque and cash, it cannot be made out that the partners have implied to admit the cash in the seized/impounded documents as unaccounted, but at the same time it was not stated that the said amount of Rs.15,00,000/- was given by Shri Mohan Savjibhai Tilva as token money for booking of a shop in the project and for that matter it was as "shagun" on an auspicious occasion. This explanation has come later. At the same time no evidence has been filed during the assessment proceedings and even the appellate proceedings as to booking of the shop by the appellant and subsequent cancellation I.T.(SS)A No. 346/Ahd/2019 A.Y. 2015-16 Page No. Shri Mohanlal Savjibhai Tilva vs. DCIT 4 thereof. This really makes the explanation though plausible at one leel but in reality, an afterthought. 5.5 At the same time this is also the accepted principle in law that once the tax payer has given an explanation and that explanation is plausible, the onus shifts on the revenue to refute the explanation of the tax payer. An explanation of a tax payer cannot be brushed aside by simply alleging it to be an afterthought and the explanation of a tax payer, if found suspicious or untenable, has to be disproved with cogent materials or at least circumstantial evidences. In this regard, I note that if Rs.15,00,000/- was paid as part of "shagun" on "muhurat" at the time of beginning of the project, the amount must have been given in cash. The appellant has resorted to take shelter of withdrawal from capital account of the firm in which he was a partner but no consequential entry in the cash book of the firm and in the cash book of the recipient has been shown. Even booking of shop and cancellation of the booking is not evidenced. Thus the apparent explanation of the appellant is hit by Durga Prasad More 82 ITR 640 and McDowells & Co. and has nothing to do with the reality of the transaction as contained in and evidenced by the seized/impounded paper. The "shagun" booking has been made by paying cash which is unaccounted income/asset of the appellant. 5.6 On weighing of the above, I am not inclined to accept the explanation of the appellant that the amount of Rs.15,00,000/- paid by the appellant was out of his withdrawal from his capital account with M/s Akshar Construction. I find no reason to interfere with the action of the AO in making the said addition.” 5. The assessee is in appeal before us against the aforesaid additions confirmed by the Ld. CIT(Appeals) in the appellate order. Before us, the counsel for the assessee submitted that the additions confirmed by Ld. CIT(Appeals) are on the pretext that the seized record contains capital introduced by partner of M/s Akshar PHC Realcon in cash, the source of which is unexplained. However, the counsel for the assessee submitted that the assessee is not a partner in the said firm M/s Akshar PHC Realcon, which is evident from the partnership deed. So far as the facts of the case are concerned, I.T.(SS)A No. 346/Ahd/2019 A.Y. 2015-16 Page No. Shri Mohanlal Savjibhai Tilva vs. DCIT 5 the counsel for the assessee submitted that the assessee booked a shop in Akshar Pavilion scheme developed by M/s. Akshar PHC Realcon, for which the assessee had paid 15 lakhs as booking amount. The assessee had made booking by giving a token amount of Rs. 15 lakhs on the inauguration of the new project in the said firm. However, subsequently when the customer for the said shop was found, the assessee cancelled the booking, and the aforesaid amount of 15 lakhs was refunded to the assessee. As to the source of the booking money so given, the assessee submitted that assessee is a partner of M/s Akshar Construction and the assessee had withdrawn this amount against his capital with the said firm. Later on, when the booking was cancelled and the amount was refunded, the aforesaid amount of 15 lakhs has been re-credited to his capital account in the partnership firm M/s Akshar Construction. By way of evidence, the assessee submitted copy of ledger account of the shop booked from the books of Akshar PHC Realcon duly confirmed by them. Regarding the source of investment, the assessee submitted copy of capital account of the assessee, from the books of M/s Akshar Construction, in which the assessee is a partner. Further, the assessee also submitted contra account of shop account as well as account of partnership firm- M/s Akshar Construction, from his own books maintained by him. Accordingly, the counsel for the assessee submitted that the booking made is duly recorded in the books of the M/s. Akshar PHC Realcon, and also the source of investment has been fully explained. Regarding the contention of the assessing officer that the entries are not found in the cash book of the respective firms at the time of survey, the counsel for the assessee submitted that as on the date of survey on 22-09-2019, the return of income for assessment year 2015-16 were not filed by any of the parties, and hence there is no question of missing of any entry in the final accounts. It was submitted that even the audit was not completed for the aforesaid parties as on the date of I.T.(SS)A No. 346/Ahd/2019 A.Y. 2015-16 Page No. Shri Mohanlal Savjibhai Tilva vs. DCIT 6 survey and hence no return of income was filed. The aforesaid facts have also not disputed by the assessing officer. Hence, this is not a case where final accounts were drawn, audited and returns were filed, as on the date of survey, but entries on the basis of which addition has been made by the Ld. Assessing Officer, were not found in the same. The counsel for the assessee submitted the return of income for assessment year 2015-16 has been filed for M/s Akshar Construction on 14-10-2016 and the return of income for the assessee was filed on 15-10-2016, after finalisation of books and in these audited books, these entries are found to be recorded. The counsel for the assessee further submitted that the audited books of accounts have been accepted by the assessing officer in totality and no addition has been made and the book result has been accepted by the assessing officer. Accordingly, looking into the facts of the case, the additions on account of aforesaid investments are liable to be deleted. 6. In response, the Ld. DR placed reliance on the observations made by Ld. CIT(Appeals) in the appellate order. 7. We have heard the rival contentions and perused the material on record. On going to the facts of the case, and the documents placed on record before us, we are of the considered view that the assessee has been able to explain the source of investment in the booking amount. The assessee has established that the aforesaid amount of 15 lakhs was withdrawn in cash from M/s Akshar Construction, in which he is a partner, and subsequently the aforesaid amount was refunded back to the partnership firm and the same was re-credited in the capital account of the partnership firm. The assessee has also produced the relevant ledger accounts in support of the above contention, along-with copy of confirmation from M/s Akshar Construction. Further, it is observed that as on the date of the survey, the books of accounts of the partnership firms had not I.T.(SS)A No. 346/Ahd/2019 A.Y. 2015-16 Page No. Shri Mohanlal Savjibhai Tilva vs. DCIT 7 been finalised and audited and therefore, there is no question of recording of the above entries at the time of search. However, subsequently, when the return of income was filed by the assessee and the Partnership Firms (M/s Akshar Construction and M/s Akshar PHC Realcon), after finalization and Audit of books of accounts, all the above transactions have been duly recorded in the books of accounts. Further, the books of accounts of the assessee and the Partneship Firms M/s Akshar Construction and M/s Akshar PHC Realcon have also been accepted by the Ld. Assessing Officer. Accordingly, looking into the facts of the instant case, we are of the considered view that assessee has been able to explain the source of investment, and the addition is liable to be deleted. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 14-07-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 14/07/2023 TRUE COPY आदेश क त ल प अ े षत / 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 अपील य अ धकरण, अहमदाबाद