Lokmanya Multipurpose Co - Operative Society Limited, Belgavi V. DCIT, Central Circle, Belagavi

ITSSA 38/PAN/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4483 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Assessment Year: 2014-2015
• Appeal Filed On: 21-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR
• Assessee Lawyers: SHRINIVAS NAYAK
• Keywords: Gift; Business income; Depreciation; Business expenditure; Principle of natural justice; Block assessment; Notional interest; Reassessment proceedings; Set aside
• Section: 68; 132; 28; 40A(3); 139; 143(3); 54F; 153A; 69B; 251; 143(2); 191; 139(1); 48; 73; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T. (SS) A. Nos. 47 to 53/PAN/2018 Assessment Years: 2009-10 to 2015-16 Deputy Commissioner of Income Tax, Central Circle, Belagavi, Karnataka Vs. Lokmanya Multipurpose Co-op. Society Ltd., Plot No. 8, RS No. 21/2, Khanapur Road, Tilakwadi, Belagavi, Karnataka [PAN: AAAAL 0403B] (Appellant) (Respondent) I.T. (SS) A. Nos. 33 to 39/PAN/2018 Assessment Years: 2009-10 to 2015-16 Lokmanya Multipurpose Co-op. Society Ltd., Plot No. 8, RS No. 21/2, Khanapur Road, Tilakwadi, Belagavi, Karnataka [PAN: AAAAL 0403B] Vs. Deputy Commissioner of Income Tax, Central Circle, Belagavi, Karnataka (Appellant) (Respondent) Appellant by : Shri Shrinivas Nayak, CA & Shri N. N. Lotlikar, CA Respondent by: Shri Ranjan Kumar CIT, DR Date of Hearing: 01.04.2022 Date of Pronouncement: 05.05.2022 2 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). ORDER PER BENCH: This bunch of appeals comprising of seven appeals filed by the Revenue, seven appeals filed by the assessee against the order of Commissioner of Income Tax (Appeals)-2, Panaji, (Hereinafter referred to as “the CIT Appeal”) for assessment year 2009-10 to 2015-16. Since, there are common issue involved in these appeals filed by the department and by the assessee for different assessment years, and therefore, we have heard the appeal on issue basis and accordingly decided by this consolidated order for the sake of brevity. The facts are taken from IT(SS)A No. 47/PNJ/2018 in respect of Assessment Year 2009-10 as a lead case to adjudicate the common issues of the revenue appeal. 2. In revenue’s appeals the ground of appeal reads as under. (i) Whether in the facts and circumstances of the case and in law, the CIT(A) was right in deleting the additions made by the Assessing Officer despite the fact that the said additions were also based on statement u/s 132(4) of the I.T Act, 1961 of Sri. Kiran D Thakur, Founder Chairman of LMC and Sri. Abhijit Dixit, CEO recorded during the course of search u/s 132(1). (ii) Whether in the facts and circumstances of the case and in law, the CIT(A) was right in deleting addition made u/s 69B despite the fact that the true value of the purchase transactions of immovable properties specifically unaccounted cash payments were not recorded in the books of account of the assessee ? (iii) Whether in the facts and circumstances of the case and in law, the CIT(A) was right in deleting addition made u/s 69B by relying on the recast accounts produced before the CIT(A) for the first time when in the regular books of accounts and the final accounts the investments are recorded at a value lesser than the actual value detected during the search. 3 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). (iv) Whether in the facts and circumstances of the case and in law, the CIT(A) was right in holding that the provision of Section 28(iv) are not applicable despite the fact that the society got the benefit of investment in the properties at a price lower than the actual price by virtue of its control over the funds of the members which was diverted without their knowledge ? 3. From the grounds of appeals of the revenue in IT(SS)A No. 47 to 53/PAN/2018, the following issues are crystalised: a) Investment not fully disclosed in the book’s u/s 69B. b) Interest income reduced in return u/s 153A which was charged to taxed u/s 28 of the Act by the AO. 3.1 The CIT Appeal has deleted the additions made u/s 69B being alleged investment not fully disclosed in the books by LMCS, as detailed in respective assessment years hereunder: Asst Year ITA No. Amount 2009-10 47/PNJ/2018 7,38,17,795 2010-11 48/PNJ/2018 9,37,81,572 2011-12 49/PNJ/2018 2,67,00,018 2012-13 50/PNJ/2018 7,48,19,879 2013-14 51/PNJ/2018 3,20,30,814 2014-15 52/PNJ/2018 3,57,05,912 2015-16 53/PNJ/2018 2,01,34,351 3.2 Briefly facts of the case are that, search u/s 132 of the Income Tax Act’1961, was conducted on the premises of the asessee on 23.09.2014, subsequently in response to the notice u/s 153A of the Income Tax Act’1961, the assesee filled return of income on 05.07.2016. Further notices U/S 143(2) was issued and served on the assessee. In response to the subsequent notices / summons, the appellant appeared personally and also with their AR and submitted the details asked for by the assessing officer. The AO has passed the order u/s 153A r.w.s 143(3) of Income Tax Act 1961, dated 30-12- 2016. The assessing officer while completing the assessment order has 4 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). made additions for investment in the aforesaid property being not fully disclosed in the book’s u/s 69B of the IT Act of the various amounts stated in aforesaid para 3, being on-money paid by Lokamanya Multipurpose Co- operative Society Limited (In short “LMCS”) towards purchase of various immovable properties. Alternatively, the assessee has been denied benefit of the disputed sums of money by virtue of its business of accepting deposits and lending the same and therefore chargeable to tax to that extent as perquisites under section 28 (iv) of the act. 3.3 While making the additions the assessing officer in his order has concluded vide para 4.17 as follows: “4.17 The properties of the assessee are understated to the extent mentioned above for the respective years. The explanation of the assessee is also not acceptable for the reasons given in the above paragraphs. Therefore, the on money payments made in excess of the value of the properties recorded in the regular books of account is brought to tax as per the provisions of section 69B of the Income Tax Act’1961 for the respective AY’s mentioned above” 3.4 Aggrieved assessee carried the matter in appeal before the CIT Appeal who has deleted the additions vide para 5.15 of the impugned order by observing as under: “5.7 I have gone through the assessment order and submissions made by the ARs of the appellant and the remand report submitted by the AO. It is a fact not disputed by the appellant that on-money was paid for purchase of immovable properties. It is also not in dispute that the source for payment of on-money in cash is by withdrawal of cash from CC/SB accounts opened in the name of "Lokmanya Constructions" which is a non-existing entity. During the course of search, the CEO and Chairman of the appellant have admitted in their statements that the accounts of Lokmanya Constructions were opened without obtaining any KYC documents and were for facilitating the payment of on-money in cash for 5 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). purchase of immovable properties. All these aspects including the modus operandi for payment of on-money in cash have been accepted by the AO in the assessment order. 5.8. It is also a fact that all the immovable properties purchased by the appellant have been shown as assets in its Balance Sheets of the relevant assessment years but the purchase consideration recorded is what is paid by cheque/DO and as recorded in the purchase deeds. The AO has not brought on record any instance of immovable properties purchased which are not reflected in the Balance Sheets of various assessment years including the A.Y. in appeal. The amount of on-money paid in cash for these immovable properties, which is a part payment other than the payments by cheques/DDs has been withdrawn by the appellant from CC/SB accounts maintained in the name of a dummy entity "Lokmanya Constructions". The withdrawals made from the CC/SB accounts of Lokmanya Constructions have been shown as Loans and Advances in the Balance Sheet of the appellant. Therefore, it is not a case that the source of on-money payment is not recorded or under recorded in the books of accounts of the appellant. The AO has not brought on record any evidence to show that the on-money payment was made from any other source other than through CC/SB accounts maintained with the Head Office Branch of the appellant society. In the light of these factsof the case, it is necessary to see whether the provisions of section 69B of the Act are applicable to the appellant. Let us examine the provision of section 69B of the Act 69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the 64[Assessing] Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the 64[Assessing] Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year]" 5.9. The provisions of section 69B of the Act can be invoked only if the following three conditions are satisfied. 6 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 1) It is found that the assessee had made investment or the assessee is found to be the owner of any bullion, jewellary or other valuable article, and 2) It is found that the amount expended on making such investment or in acquiring such bullion, jewellery or other valuable article exceeds the amount received in that behalf in the books of accounts maintained by the assessee. and 3) Either the assessee offers no explanation about such excess amount, or the explanation offered by him is not satisfactory. 5.10. The above circumstances are cumulative. If all these circumstances exist, the excess amount may be deemed to be the income of the assessee for the Financial Year in which such investment was made or the assessee became the owner of bullion/jewellery/other valuable article etc. Therefore, section 69B of the Act comes into play only where all the above circumstances do factually exist. As per the judicial pronouncements, there is no room or scope for making any presumption about the existence of any of the requisite circumstances. In the appellant's case, in my opinion, the third circumstance does not get satisfied for the reason that the source of payment of on-money in cash has been explained by the appellant as withdrawn from the CC/SB account of a dummy entity "Lokmanya Constructions". The AO has also not disputed this aspect that the payment of on- money was not made from dummy CC/SB accounts. 5.11. Now, the question arises is whether the on monies paid in cash as part consideration for purchase of immovable properties which is withdrawn from the dummy CC/SB accounts maintained with the HO Branch of the appellant can be considered as a recorded transaction. In accounting parlance, the entry or the ledger which forms part of the books of accounts and statements is a recorded transaction. In the instant case, the appellant has recorded the purchase consideration of the immovable properties purchased in two parts. The first part is the consideration paid in cheque/DD is shown against the property concerned and the consideration paid in cash is shown as loan from the dummy CC account of Lokmanya Constructions. Thus, overall it can be seen that the appellant has recorded the purchase consideration of all the immovable properties in the books of accounts. Further, even though it is opined that the on-money paid in cash is not recorded in the books of accounts of the appellant as it is not shown against the 7 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). specific asset in the Balance Sheet, still the third condition specified in para 5.8 above which is regarding the explanation of source of spending the excess amount stands explained as the same is withdrawn from CC/SB accounts. The AO has not brought any material to show that the assessee has made undisclosed investment other than withdrawals from CC/SB accounts in the purchase of immovable properties. The figures of on-money paid on purchase of immovable properties has been taken by the AO from the CC/SB accounts of the dummy entity of Lokmanya Constructions, which is recorded in the books of the appellant before the date of search. 5.12. In the assessment order at para 4.13 and 4.14, the AO has held that the CEO of the appellant company vide statement dated 22.09.2014, Founder Chairman of the appellant company vide statement dated 22.09.2014 which was reconfirmed in statement dated 21.10.2014 and CFO of the appellant company vide statement dated 24.09.2014 had admitted the undisclosed income u/s. 132(4) of the Act and hence, the ratio of the decision of Hon'ble Supreme Court in the case of B. Kishore Kumar Vs DCIT (62 Taxmann.com 215) was applicable to the facts of the case and therefore, the addition was to be made as per the said sworn statements. 5.13. I have gone through the decision of Hon'ble Supreme Court in the case of B. Kishore Kumar (supra). In the said decision, the SLP of the assessee was dismissed and the order of Hon'ble Madras High Court in 52 Taxmann.com 449 was upheld by the Supreme Court. The concluding paras of the order of Hon'ble Madras High Court is reproduced below for the sake of clarity: "6. With regard to the undisclosed income of Rs.52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of undisclosed income of Rs.52.73.920/- is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs.25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some 8 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. 7. The learned counsel for the assessee relied upon a decision of the Delhi High Court in CIT v. Girish Chaudhary, [2008] 296 ITR 619/163 Taxman 608 to plead that loose sheet of papers should not be taken as a basis for determining undisclosed income. However, in the case on hand, loose sheets found during the search are not the sole basis for determining the tax liability. It is a piece of evidence to prove undisclosed income. The printout statements of undisclosed income is not disputed by the assessee and in his sworn statements it is accepted. In fact, he admitted that outstanding loans to be recovered are in the range of Rs.25 Lakhs to 30 Lakhs. We find no error in the procedure followed by the Assessing Officer on admitted facts. The entire exercise by the department to bring to tax undisclosed income, we find has been generous and simple. There appears to be no confusion in the quantification of the tax liability and we uphold the order of the Tribunal." 5.14. From the above finding given by Hon'ble Madras High Court, it is quite clear that the assessee had admitted the existence of a separate business and income derived from the said business was not included in the Income Tax Returns filed. In that case, the Hon'ble High Court held that the admission of undisclosed income was categorical and undisputed and hence, it is a clear admission of undisclosed income for which there is no necessity to scrutinize any further documents. The Court further held that it was not the case that the admission made by the assessee was incorrect or there was a mistake in making such admission. Accordingly, the Court concluded that clear admission which is made voluntarily by the assessee would constitute a good piece of evidence to confirm the addition made by the AO. In the instant case, the appellant is not denying the facts stated in the sworn statements of the respective persons like CEO/Founder Chairman/ CFO. What the appellant is denying is the taxability of the withdrawals made from the dummy CC/SB accounts for making on-money payments for purchase of immovable properties. The appellant 9 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). submitted before the AO that the sources of funds utilized for payment of on-money in cash were disclosed in the books of accounts and only the manner of payment and accounting of such payment was not truly disclosed. As the source of the funds were disclosed, th said funds cannot be subjected to tax u/s. 69B of the Act as done by the AO. For not truly disclosing the correct manner of payment, such payments are chargeable to tax as per the separate provisions of the Act and not certainly u/s. 69B of the Act as done by the AO. Therefore, the ratio of the decision of Hon'ble Supreme Court in the case of B. Kishore Kumar Vs DCIT (supra) is not applicable to the facts of the appellant's case. 5.15 Therefore, I am of the opinion that the provisions of section 69B could not have been invoked by the AO in the instant case. The AO has proceeded on the assumption that the on money paid for purchase of immovable properties by withdraw from dummy cc/sb accounts amounted to understatement of investment without appreciating the fact that the appellant invested the said amount out of its known sources of income/borrowings from its depositors for which the appellant has given satisfactory explanation before the AO. The ratio of decision of Hon. Delhi Court in the case of CIT vs Dinesh Jain / Lata Jain 352 ITR 629 is in my opinion applicable to the facts of the appellant’s case.” 3.5 At the time of hearing, the Ld. CIT (DR) argued that, though the properties are purchased by LMCS and all payments have been made by LMCS through the dummy CC/SB accounts created in the name of “Lokmanya Construction” was not acceptable to the AO has the amount paid from the account of law, the construction of noted reflected in the sale deed as well as not included in the cost of the property in the books of the society. Therefore, value of the property brought or not recorded books of the society at the actual value at which they are bored but are understated to the extent of the cash component in the transaction which is paid from the fictitious account of Lokmanya Construction. The learned DR argued that in the statement recorded, the assessee has made disclosures however he has retracted. The AO stated that the rejection by the assessee without 10 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). assigning any reason is not tenable with the support of the judgement of Hon’ble Madras High Court in the case of B Kishore Kumar versus DCIT 62 taxmann 215. He argued that the only payment made with Nexus of the value of the properties recorded in the regular books of account is brought to tax as per the provisions of section 69B of the act is rightly assessed by the assessing officer. He further argued that alternatively the assessee has denied benefit of the disputed sums of money by virtue of its business of accepting deposits and lending the same and therefore chargeable to tax under section 28 (iv) of the act. He contended that the learned CIT appeal has not appreciated the facts as narrated by the assessing officer in the assessment order and prayed that the impugned order of the CIT appeal may be reversed and assessment order be restored. 3.6 Per contra, the learned counsel for the assessee relied upon the impugned order. In the support of its contentions the following written submission filed in paper book: 1. The appellant society was established with an object of providing credit facilities to its members and to accept deposits from its members. On 28.07.1995 the appellant was registered under the Karnataka Co-operative Societies Act, 1959. The appellant, was subsequently converted into Multipurpose Co-operative Society under the Multi State Co-operative Societies Act, 1984 and registered as such under the said Act on 01.04.2002. 2. During the search proceedings various documents were found and in particular M/s. Lokmanya Constructions (in short LC) Cash Credit account with the appellants Khanapur Road Branch, Belagavi and also a Savings account in the same branch were noted to be opened and operated without obtaining any documents such as account opening forms, ID proof, KYC documents etc. The name of the authorised signatory of account was also not forthcoming from the records of the appellant. It was also noted 11 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). that the appellant used to sanction loan in favour of LC, and the amount used to be credited to the Cash Credit account of LC, from the Cash Credit account the funds used to be transferred to the Savings account and subsequently the cash used to be withdrawn / transferred from the Head Office to any of its branches from where the cash was withdrawn from LC saving account. The cash withdrawn from the saving account for the purpose of payment of an “on money” towards purchase of various immovable properties by the appellant. Copy of the cash credit / sb account along with the confirmation vouchers of the sellers of immovable properties are enclosed. Annex-1 3. The appellant used to sanction loan in favour of LC only if cash was required for the payment of “on money” towards purchase of immovable properties or for other related miscellaneous purposes of immovable property purchases. As a result, the outstanding balance in Cash Credit account gradually increased and the Savings account showed minimal balance. In the books of the appellant the Cash Credit account of the “LC” was categorized under the head “Loans & Advances”. 4. Further, as the amount given to “LC” account was treated as loans given in the books of account and the interest was also charged on the outstanding balance of the Cash credit. 5. Also in some cases, where the transactions have not materialized, the advance paid in cash was returned. It was the usual practice of the appellant to deposit such cash into the Savings Bank / Cash Credit account of “LC”. In few instances the agreements failed and consequently the cash paid in advance was returned to the appellant and the said cash was deposited in the Cash Credit / Savings Bank account maintained in the name of “LC”. 6. Further, during the course of search and in the subsequent proceedings that followed the statements of various persons including Shri Kiran Thakur, the chairman of the appellant, were recorded. In regard to the business of real estate and the nature of the real estate purchase, the appellant was constrained to make huge cash payments, such payments are known as “on money” in the commercial parlance. The appellant was not able to generate such huge cash, therefore the division account by name “M/s Lokmanya Constructions” was opened in the Head Office. The required cash was generated by sanctioning the loan in favour of “LC”. In other words it is appellants own funds withdrawn by cash in a division name. The modus operandi adopted was to 12 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). sanction loan in favour of LC. The said loan amount used to be credited to the Cash Credit account of LC; thereafter the same used to be transferred to the Savings Bank account opened in the same division name of LC. From there the cash used to be withdrawn by debiting the Savings account. There are instances, where the cash was drawn directly from the Cash Credit account. Such cash was paid as “on money” for the purchase of immovable property at various places. During the course of search Shri Kiran Thakur reiterated the same. The answer to Question No.6 of the statement recorded on 21.10.2014 u/s 132(4) from Shri Kiran Thakur reads as under: “ I wish to state that LMC has made payment of on money for purchase of other properties also. The evidence of such on money payment might or might not have been found by the Department during the course of searches or surveys. However, I wish to come out with clean hands and give complete details of such on money payments. I wish to inform that a SB Account and a CC Account were opened in HO Branch of LMC at Belgaum in the name of a fictitious entity viz. ‘Lokmanya Constructions’. Cash was withdrawn either directly from this account or transferred to other Regional Offices for withdrawal and payment of on money. This has been explained by Shri Abhijit Dixit, CEO of LMC, in his statement recorded on 24.09.2014. Copies of the statements of the said SB and CC accounts of ‘Lokmanya Constructions’ have been submitted on 24.09.2014. From the statement of SB Account it will be seen that the account was opened on 03.04.2008 and from that date onwards there is cash withdrawal of Rs.25,55,38,563/-. These cash withdrawals have been used directly for on money payment. During the same period there are transfer debits of Rs.8,94,51,778/-. Out of this, barring Rs.20 lakhs kept as deposit for Sinhgad Road Office at Pune, the remaining Rs.8,74,51,778/- has been transferred to various Regional Officers for payment of on money. Therefore, the payment of on money from the SB Account of ‘Lokmanya Constructions’ is Rs.34,29,90,341/-. In addition, Rs.1.40 Cr. has been paid directly by Mumbai Regional Office for purchase of properties at Vile Parle and Mulund. Out of the payment of Rs.1.40 Cr. made directly by Mumbai Regional Office, Rs.94 lakhs was made out of cash received on sale of Flat No.B-602, Aquaria Grand, Borivli West, Mumbai. Shri Londhe has admitted this in A32 of his statement recorded on 23.09.2014. I will submit details of this transaction within a few days........... “. 13 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 3.6.1 The Ld. AR submitted that the AO has not considered the facts of the case and have made the additions u/s 69B of the IT Act. He submitted that the alleged “on money” investment made in the immovable properties not shown in the books is explained before us with the support of written synopsis where the relevant para reads as under: 12.1 The ld AO at para 4.17 of his order at page no.11 have made the following noting for making the addition u/s 69B of the Income Tax Act’1961. “4.17 The properties of the assessee are understated to the extent mentioned above for the respective years. The explanation of the assessee is also not acceptable for the reasons given in the above paragraphs. Therefore, the on money payments made in excess of the value of the properties recorded in the regular books of account is brought to tax as per the provisions of section 69B of the Income Tax Act’1961 for the respective AY’s mentioned above” 12.2 The relevant provision of section 69B of the IT Act is produced as below: Amount of investments, etc., not fully disclosed in books of account. 69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. 12.3 As noted above, the of 69B is applicable only when the assessee is found to be owner of the property and the same is not recorded in the books or the assessee offers no explanation about the excess amount. 14 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 12.4 It has to be noted that the provisions of Section 69B of the Act are not applicable to the appellant case as the value of the properties purchased are not understated. It was clarified by the appellant during the assessment proceedings that the part of the sale price paid in cash for the purchase of the property is recorded in the regular books of accounts though under the different head. Also that the receipt of the on money is acknowledged by the sellers of the property. 12.5 The properties purchased are noted in the books under fixed assets and the “on money” paid is reflecting in the loans & advances in the books. 12.6 The amount paid for the properties through the cash credit account has been reflected in the financials of the appellant in Loans & Advances. We enclose the financials along with the advances schedule confirming the same. Annex-2 12.7 Further, during the post search investigation, the statement of the sellers of the property were recorded u/s 131(1) of the Act. The appellant reliably understands that the deponents have testified to the fact of the receipt of “on money”. Interestingly, there is no reference to these statements in the impugned order of assessment; nor the said statements are made available to the appellant. Further, during the assessment proceedings the appellant had requested the Assessing Officer to issue summons to the persons who had received on money and to provide an opportunity to cross-examine them. However, this request was also not granted. 12.8 Further, the Assessing Officer inspite of knowing that all the “on money” payment has been accounted in the books, disregarded part of the statement relating to payment of on money by way of cash withdrawal from LC’s Cash Credit / Savings account. The Assessing Officer has not brought any evidence on record to dispel such payments. 12.9 It is to be noted that the “on money” paid in relation to the immovable properties is appellants own funds withdrawn under a division name as detailed above. It is submitted that there is no gain derived by the appellant from such withdrawal. In the present case, there is no gain derived by the applicant, on the other hand appellants own funds are utilised for the payment of “on money”. 12.10 Hence it is the case, were inadvertently the cash has been generated by the appellant after making division entries in the books, whereby the total investment 15 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). made in the immovable properties has been partly account under the specific asset and partly under the advances (Lokmanya Construction account). The counsel plead that in view of above, the provisions of section 69B of the Income Tax Act’1961 are not applicable to the instant case, as such the same has been rightly deleted by the CIT Appeal. 3.7 We have gone through the rival submissions made by both Ld. CIT(DR) and LD AR and perused the material on record and the submission filed before us. Admittedly, the alleged properties purchased are noted in the books of the assessee under the head fixed assets and the “on money” paid is reflecting in the loans & advances account in the books. It is also admitted fact that the amount paid for these properties were through the cash credit account which has also been reflected in the financials statement of the appellant in Loans & Advances (APB, Annex-2). 3.7.1 The provisions of section 69B of the IT Act reads as under: Amount of investments, etc., not fully disclosed in books of account. 69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. 3.7.2 From above, it is abundantly clear, that the of 69B is applicable only when the assessee is found to be owner of the property, which is either not recorded in the books of account or the assessee offers no explanation about the excess amount of investment in such property. Thus, the provisions of 16 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). Section 69B of the Act are not applicable to the appellant case as the value of the properties purchased are not understated. In reply before the AO, the appellant has clarified that during the assessment proceedings, the part of the sale price paid in cash for the purchase of the property is recorded in the regular books of accounts though under the different head and that the receipt of the on money is acknowledged by the sellers of the property. 3.7.3 It is seen that during the post search investigation, the statement of the sellers of the property were recorded u/s 131(1) of the Act wherein the deponents have testified to the fact of the receipt of “on money”. However, there was no reference to these statements either in the impugned order of assessment; or to the appellant request to provide an opportunity to cross- examine them. Further, we do not find any reference of these statement before the appellate authority in remand proceedings or in the proceedings before us. 3.7.4 From the record, it is noted that the AO in spite of knowing the fact that all the “on money” payment has been accounted for in the books of account of the assessee, disregarded part of the statement relating to payment of on money by way of cash withdrawal from Lokmanya Construction’s Cash Credit/Savings account and further, the AO has not brought any evidence on record to dispel such payments. It is explained by the Ld. AR that the “on money” paid in relation to the immovable properties was appellants own funds, withdrawn under a division named Lokmanya Construction’s as above where there is no gain/profit derived by the appellant from such withdrawal as the appellants own funds are utilised for the payment of “on money”. 17 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 3.7.5 Thus, in the instant case, inadvertently the cash has been generated by the appellant by way of making division entries in the books, whereby the total investment made in the immovable properties has been partly account under the head specific asset and partly under the head advances (Lokmanya Construction account). In our view, the Ld. CIT Appeal was justified in observing that the provisions of section 69B could not be invoked in the instant case. The AO has proceeded on the assumption that the on money paid for purchase of immovable properties by withdrawing from dummy cc/sb accounts amounted to understatement of investment without appreciating the fact that the appellant invested the said amount out of its known sources of income/borrowings from its depositors which were satisfactorily explained by the appellant before the AO. The ratio of decision of Hon. Delhi Court in the case of CIT vs Dinesh Jain / Lata Jain 352 ITR 629 is not applicable to the facts of the appellant’s case and rightly distinguished by the Ld. CIT Appeal. The Judgement of Hon’ble Madras High Court in the case of ‘B Kishore Kumar vs DCIT’, referred by the CIT (DR) is distinguishable on peculiar facts of the instant case. 3.7.6 In view of the aforesaid discussion, we hold that the provisions of section 69B and 28(iv) of the Income Tax Act’1961 are not applicable to the facts of the instant case, and therefore, the addition has rightly been deleted by the CIT Appeal. As such, decisions of the Ld. CIT Appeal on this issue are sustained in respect of all the assessment Years. 4. Next issue is regarding deletion of additions made on account of interest income as alleged by the AO that being omitted in computation of income filed in compliance to the returns filed u/s 153A of the IT Act where the CIT (A)-2 Panaji has deleted the following additions: 18 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). Asst Year ITA No. Amount 2009-10 47/PNJ/2018 1,90,03,813 2010-11 48/PNJ/2018 1,62,94,707 2011-12 49/PNJ/2018 3,71,02,097 2012-13 50/PNJ/2018 8,31,34,664 2013-14 51/PNJ/2018 12,61,16,462 2014-15 52/PNJ/2018 17,90,56,049 2015-16 53/PNJ/2018 5,60,17,685 4.1 In revenue’s appeal the ground No. 5 to 6 for AY 2009-10 in ITA No. 47/PNJ/2018 reads as under. (v) Whether in the facts and circumstances of the case and in law , the CIT(A) was right in deleting addition on account of interest income recorded in the regular books of accounts and declared in the return u/s 139 but withdrawn in the return u/s 153A which is against the ratio laid down by the H’ble Supreme Court decision in the case of CIT vs Sun Engineering Works Pvt Ltd (1992) reported in 198 ITR 297 (SC) followed by the decision of Rajasthan High Court in the case of Jai Steels (India) , Jodhpur vs ACIT (2013) reported in 259 CTR 281(Rajasthan) which were relied upon by the Assessing Officer in his Assessment Order ? (vi) Whether in the facts and circumstances of the case and in law, the CIT(A) was right in not appreciating that the department cannot be worse off by reassessing the income and the assessee was barred from claiming any relief u/s 153A . 4.2 During the assessment proceedings u/s 143(3) r.w.s. 153A of the act, the AO has noted from the computation of income filed by the assesee that the assessee had reduced interest income for AY 2009-10 to 2015-16 as listed hereinabove in para 4, being interest reduced by the assesee in the computation filed u/s 153A of the IT Act, cannot be allowed as deduction. The Ld. Assessing Officer added the same to the income for following reasons. The AO alleged that the appellant has paid “on money” as advances in the books and also have accrued interest income on the same as shown in the original return of income filed. Consequent to notice u/s 153A, in the return filed by the appellant, the mistake was corrected by 19 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). reducing the same from the total interest income while filling their return in response to notice u/s 153A of the IT Act. The AO being not satisfied with the explanation of the assessee, added the same back to their income by stating that the provision of section 153A of the Act, cannot be used by the assessee to reduce the income already declared (para 5.4); that the assessee had culpable mind in creating fictitious entity and manipulating its books of account to conceal the fact of illegal cash payments (para 5.6) and that the audited books are submitted to the shareholders meeting year after year (para 5.8). 4.3 In appeal, while adjudicating the issue, the CIT Appeal has observed as follows: “6.5. I have gone through the assessment order and the submissions made by the AR of the appellant and the remand report submitted by the AO. In the remand report, the AO has merely stated that he has elaborately discussed the issue of reversal of interest charged in the assessment order and hence, for the reasons mentioned in the assessment order, the reversal of interest in the return u/s. 153A of the Act should not be accepted. 6.6. It is a fact which is admitted by the AO in the assessment order, that the appellant opened a dummy CC/SB account to make the on-money payments in cash for purchase of immovable properties. The immovable properties purchased are shown as the assets of the appellant in the Balance Sheet. Against the said assets, the purchase consideration shown is the payments made by cheques/DDs and as recorded in the purchase deeds as shown in the Balance Sheet filed. The payments made in cash being on-money for each of the said immovable properties was accumulated in the dummy CC account of the dummy entity Lokmanya Constructions. The appellant has accepted the modus operandi of payment of on-money during search as well as assessment proceedings. The appellant also explained as to why the interest was charged on the dummy CC account though the funds were utilized from the CC account for the benefit of the appellant. 6.7. Now the question arises is whether can the interest be charged to one self. i.e. can the appellant charge an interest on the loan account, the proceeds of which were utilized for purchase of assets of the appellant and not 20 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). any third party. Thus, it is an admitted position by the appellant which is not disputed by the AO that the transactions in the dummy CC account of Lokmanya Constructions are business transactions and the withdrawals made from the said CC account were utilized for on-money payments in cash for purchasing of immovable properties. There is no dispute that the appellant used the CC limits for purchase of immovable properties which are reflected in the Balance Sheet of the appellant. Therefore, the appellant cannot charge interest to itself for investments made for purchase of immovable properties. This view finds support in the decision of Hon'ble Allahabad High Court in the case of CIT Vs Sahara India Mutual Benefit Co ltd. (40 Taxmann.com Further, accounting entries do not determine taxability. If the appellant has accounted a notional interest on the dummy CC account, the same cannot be held to be taxable for the simple reason that one cannot charge interest to oneself. For the reasons mentioned by the appellant for opening of dummy CC account and even for charging of interest on such dummy CC account cannot be the basis for taxing such notional interest. Recently, Bombay High Court in ITA.No.264 of 2015 dated 11.12.2017 in the case of CIT Vs Godrej Realty Pvt. Ltd. held that if the income does not result at all, then the same cannot be taxed even though an entry is made in the books of accounts about such a hypothetical income which has not materialized. 6.8. Now, the question arises is whether notional interest offered to tax in return filed u/s. 139 of the Act, can be withdrawn in the return filed u/s. 153A of the Act. Section 153A(1)(b) provides for assessing or re-assessing the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Therefore, assessment u/s 153A is an assessment or re-assessment of the income whether assessed earlier or otherwise. Similarly, if any income is wrongly assessed earlier, the same can be omitted in the assessment u/s 153A. therefore, in the instant case the notional interest charged on the dummy CC account the proceeds of which were utilized for purchase of immovable properties is not chargeable to tax and hence, the appellants stand to withdraw the said notioinal interest offered to tax in the return u/s 153A of the Act seems appropriate. Hence merely because the notional interest has been offered as a income in the return u/s 139 of the Act cannot be the ground for taxing the same in the assessment u/s 153A of the Act.” 4.4 The Ld. CIT(DR), for the Department contended that, the CIT(A) was not justified in deleting addition on account of interest income recorded in the regular books of accounts and declared in the return u/s 21 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 139 but withdrawn in the return u/s 153A which is against the ratio laid down by the Hon’ble Supreme Court decision in the case of CIT vs Sun Engineering Works Pvt Ltd (1992) reported in 198 ITR 297 (SC) followed by the decision of Rajasthan High Court in the case of Jai Steels (India) , Jodhpur vs ACIT (2013) reported in 259 CTR 281(Rajasthan) as relied upon by the Assessing Officer in his Assessment Order. 4.5 The defendant, Ld. Counsel for the assessee placed reliance on the CIT Appeal order and submitted a written note where the relevant part is reproduced hereunder: 7. Interest income wrongly charged on “Lokmanya Construction” (LC) advance; deduction disallowed. 13.1 As noted above, the “on money” paid for the acquisition was paid by creating cash credit account in the division name of “LC”. The society uses Rachana’s software for their accounting and interest calculation, by which the income is automatically accrued on the loan account. As such the interest on the “LC” CC account errorsly became part of the regular income as per the return filed u/s 139 of the IT Act. Copy of the CC ledger is enclosed. Annex-1 13.2 During the post search proceedings, it was noticed that the appellant has considered the “on money” paid as advances in the books and also have accrued interest income on the same. Noting the same, the appellant corrected the accrued income by reducing the same from the total interest income while filling their return in response to notice u/s 153A of the IT Act, 13.3 The ld AO disallowed the claim of the appellant and added the same back to their income by noting the following: 1) At para 5.4 The provision of section 153A of the Act, cannot be used by the assessee to reduce the income already recognized. 2) At para 5.6 The assessee had culpable mind in creating fictitious entity and manipulating its books of account to conceal the fact of illegal cash payments. 22 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 3) At para 5.8 The audited books are submitted to the shareholders meeting year after year. 13.4 It is mentioned by the AO in his order, that the appellant has created division entity in self name “Lokmanya Construction” and the advances were given to LC, which were used for payment of cash “on money” for purchase of properties. As such the advances given were to self and the appellant has wrongly accrued interest income on the same year after year. The issue was corrected and rightly claimed by the appellant in the returns filed u/s 153A of the IT Act. 13.5 The section 153A of the IT Act, mandates the Assessing Officer to make assessment afresh and compute the total income in respect of each of the relevant six assessment years. 13.6 The appellant, noticed that by doing the round transaction for payment of “on money” for purchase of the immovable properties, the appellant was accruing interest on self-account, which after realizing the mistake, has been corrected by the appellant. 13.7 Due to accounting error’s there are some inherent mistakes do happen, which are correct as and when they are notice and it should not form the basis for denying the opportunity for the appellant to correct the mistake. 13.8 It is to be reiterated that LC is a division entity and no interest is earned as the debit balance standing in the Cash Credit account represent appellants own funds. However, such interest though not earned was offered to tax year after years and was assessed as such. 13.9 After going through the same and as noted by the Hon. CIT(A), that the interest cannot be charged on self and also the notional interest charged on the fictitious self-entity was rightly deleted by the Hon. CIT(A) with the following noting at para 6.8 of their order “Therefore, assessment u/s 153A is an assessment or re- assessment of the income whether assessed earlier or otherwise. Similarly, if any income is wrongly assessed earlier, the same can be omitted in the assessment u/s 153A. therefore, in the instant case the notional interest charged on the dummy CC account the proceeds of which were utilized for purchase of immovable properties is not chargeable to tax and hence, the appellants stand to withdraw the said notioinal interest offered to tax in the return u/s 153A of the Act seems appropriate. Hence merely because the notional interest has been offered as a income in the 23 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). return u/s 139 of the Act cannot be the ground for taxing the same in the assessment u/s 153A of the Act.” 4.6. After considering the rival submissions and perusal of the material on record and submissions filed, it is noted that admittedly, the appellant was accruing interest on self-account, as shown in return in section 139(1), which has been corrected, in the return filed in compliance to notice u/s 153A of the Act. The Ld. AR of the assessee contended that, interest can’t be charged to self and thus cannot be an income under section 28. He argued that the section 153A of the IT Act, mandates the Assessing Officer to make assessment afresh and compute the total income in respect of each of the relevant six assessment years as per law. It is noted that by doing the transaction for payment of “on money” for purchase of the immovable properties, the appellant was accruing interest on self-account, which after realizing the mistake, has been corrected by the appellant in the return filed in compliance to notice u/s 153A of the Act. 4.7 The CIT Appeal has been justified in observing that assessment u/s 153A of the act is an assessment or re-assessment of the income whether assessed earlier or otherwise. The CIT(A) has noted that if any income is wrongly assessed earlier, the same mistake can be or corrected in the assessment u/s 153A. Thus, in the instant case the notional interest charged on the dummy CC account the proceeds which were utilized for purchase of immovable properties is not chargeable to tax and hence, the appellants stand to withdraw the said notional interest from offering to tax in the return u/s 153A of the Act, seems appropriate. Merely, because the notional interest has been offered as an income in the return u/s 139 of the 24 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). Act cannot be the ground for taxing the same in the assessment u/s 143(3) r.w.s.153A of the Act. 4.8 The Ld. Counsel argued that because of accounting error’s there are some inherent mistakes do happen, which are correct as and when they are notice and it should not form the basis for denying the opportunity for the appellant to correct the mistake. He placed reliance on the CBDT circular No. 14 (XI-35) of 1955, dated April 11, 1955 wherein it is instructed that Department must not take advantage of ignorance of assessee as to his right to collect more tax than what is legitimately due. The AR contended that the officers of the Department as per this circular showed that the attention of the assessee to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; and that really advise them and opposed by them as to the rights and liabilities and as to the procedure is to be adopted for claiming refunds and reliefs. 4.7 The Judgement of “CIT vs Sun Engineering Works Pvt Ltd”, (Supra) and Jai Steels (India), Jodhpur vs ACIT (Supra) relied by the department are not applicable to the facts of the instant case. In the present case, the assessee has filed a return of income afresh in compliance to provisions of section 153A the act wherein he has claimed the benefit by way of excluding/omitting notional interest income shown in the return filed under section 139(1) whereas in those cases, the assessee has claimed deduction in the reassessment proceedings. Hence these citations relied by the Department are distinguishable on the facts of the case. 4.8 In the above view, we find no merit and substance in the grounds of the Department on the issue of notional interest Charged by the AO in the 25 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). return of income filed by the assessee in compliance to notice under section 153A. Accordingly, these grounds of appeal of the Department are rejected 4.9 The facts of the appeals in IT(SS)A No. 48 to 53/PAN/2018 in respect of Assessment Year 2010-11 to 2015-16 are exactly identical to the facts of the appeal in IT(SS)A No. 47/PAN/2018 in respect of Assessment year 2009-10. Therefore, our decision given in IT(SS)A No. 47/PAN/2018, in respect of Assessment Year 2009-10, on the issues of investment u/s 69B and interest income u/s 28 of the Act shall apply in IT(SS)A No. 48 to 53/PAN/2018 in respect of Assessment Years 2010-11 to 2015-16, in mutatis mutandis. 5. Now, we shall take up the appeals of the assessee in IT(SS)A No. 33 to 39/PAN/2018, wherein the issues are as follows: a. Enhancement made by Ld. CIT(A)-2 by disallowing expenses u/s 40A(3) of the Income Tax Act. b. Cash credit u/s 68 of the IT Act. 6. On issue of enhancement made by Ld. CIT(A)-2 by disallowing expenses u/s 40A(3) following enhancement has been made by CIT(A)-2 Asst. Year ITA NO Amount 2009-10 33/PNJ/2018 7,38,17,795 2010-11 34/PNJ/2018 9,37,81,572 2011-12 35/PNJ/2018 2,67,00,018 2012-13 36/PNJ/2018 2,96,07,879 2013-14 37/PNJ/2018 3,20,30,814 2014-15 38/PNJ/2018 3,57,05,912 2015-16 39/PNJ/2018 2,01,34,351 6.1 In assessee’s appeal, Ground No. 1 to 5 reads as under. 26 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 2) The Assessment Order passed by the ld AO u/s 143(3) r.w.s 153A of the Income Tax Act’1961, and the enhancement made by the ld CIT(A) is without jurisdiction, misconceived and without following the principles of natural justice. 3) The ld CIT(A) has erred in enhancing the assessment made by the AO by Rs.7,38,17,795/- by applying provision of section 40(A)(3) of the Income Tax Act’1961, whereas the same addition of Rs.7,38,17,795/- made by the AO u/s 69B of the Income Tax Act’1961 has been deleted by the ld CIT(A). 4) The ld CIT(A) has ignored the fact that the provision of section 40(A)(3) of the Income Tax Act’1961 are not applicable to the case. 5) The ld CIT(A) and ld AO has tried their means to tax Rs.7,38,17,795/- which is oppose to the facts and bad in law. 6.2 Considering the identical facts and common issue being involved in the assesses appeal, the facts of the case are taken from IT(SS)A No. 33/PAN/2018, in respect of Assessment Year 2009-10 as a lead case. That, while deciding appeal of the assessee for A. Y. 2009-10, Ld. CIT(A)- 2 has issued enhancement notice and upon conducting enquiry and perusal of reply of the assessee and remand report of the AO, Ld. CIT(A)- 2 has enhanced the assessment by disallowing the expenses u/s 40A(3) being cash payment made by LMCS for purchase of property on behalf of the assessee which is more than Rs. 20,000/- as specified in the said section. 6.3 While making the enhancement, Ld. CIT(A)-2 has observed as under: “8. Enhancement of income of the appellant: 8... During the course of appellate proceedings, it was observed that the appellant 27 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). had made on-money payments in cash towards purchase of immovable properties which were shown as current assets and in some cases as fixed assets as well. Prior to the search, the appellant was showing only the payments made by cheques/DDs for purchase of immovable properties as the cost of the properties purchased in the Balance Sheet. And the payments made in cash as part consideration for the said immovable properties were shown in the CC account of Lokmanya Constructions, a dummy loan account. Even the immovable properties purchased for the purposes of business of the appellant and which were shown as current assets in the Balance Sheet were not routed through the P & L account filed along with the returns of income u/s. 153A of the Act and were directly shown in the Balance Sheets for various assessment years. 8.1. Therefore, the ARs of the appellant were asked during the appellate proceedings to classify all the assets into fixed assets and current assets and route all the current assets through the P & L account so that the financial statements give the true and fair view of the affairs of the appellant. Accordingly, the revised/recastP & L account and Balance Sheet of the appellant for the assessment year in appeal were filed. As the appellant had incurred the expenditure on purchase of immovable properties in cash (for making on-money payments), the provisions of section 40A(3) of the Act were found to be attracted. As the AO had not made any disallowance for the expenditure incurred in cash u/s. 40A(3) of the Act, an enhancement notice as per the provisions of section 251(2) of the Act dated 06.04.2018 was issued to the appellant and the same was duly served. During the previous year relevant to the assessment year in appeal, the appellant had m a d e c a s h p a y m e n t f o r p u r c h a s e o f c u r r e n t a s s e t s a m o u n t i n g t o Rs.7,38,70,795/- as seen from the withdrawals from SB account of dummy entity. In the enhancement notice issued, the appellant was asked to file their objection for the proposed enhancement being disallowance of expenditure claimed (purchase consideration) which is paid in cash as per the provisions of section 40A(3) of the Act. The ARs of the appellant vide letter dated 11.04.2018 made the following submissions: "(a) We wish to inform you that the provisions of section 40A(3) are not attracted where the borrower and the payee are identified and there is no material on record to doubt the genuineness of the payment. The advance payment made in excess of the prescribed limit u/s. 40A(3) of the Act prior to the execution of the Sale Deed are not covered under, the provisions of the said section. Further, we invite your kind reference to Rule 6DD of the I. T. Rules, 28 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 1962. In the present case on the examination the few sellers of the property have admitted the receipt of money. We have submitted the names and addresses of few sellers who insisted on payment in cash and the said sellers have paid the capital gain tax on the aggregate amount (i.e. including the on-money). Therefore it is submitted that the appellant's case falls under exceptional circumstances. 8.2. I have gone through the objections raised by the ARs of the appellant for the proposed enhancement in the form of disallowance u/s. 40A(3) of the Act. The first objection of the AR of the appellant is that because the payment is genuine, the same does not come within the purview of section 40A(3) of the Act. The other objection is that the cash payment has been made before the execution of the sale deed and the same is also not covered by the provisions of section 40A(3) of the Act. Section 40A(3) of the Act speaks about the expenditure incurred and in respect of which the payment or aggregate of payments made to a person in a day, otherwise than by a account payee cheque or a draft exceeds Rs.20,000/-, no deduction shall be allowed in respect of such expenditure. So to say, the section is specific and without any ambiguity. The said section does not make any exception for the genuine payments and payments made before the execution of sale deed/issue of invoice etc. What the section speaks is that expenditure exceeding Rs.20,000/- if paid by a mode other than account payee cheque/draft, such expenditure is not allowable as deduction. Therefore, both the objections raised by the ARs of the appellant about the applicability of the provisions of section 40A(3) to the facts of appellant's case are accordingly rejected. 8.3. The other objection of the AR of the appellant is that the payments made by the appellant for purchase of immovable properties in cash are exempt as per the provisions of Rule 6DD of I.T. Rules, 1962 as the sellers of the properties were examined and who admitted receipt of the additional consideration in cash. Rule 6DD of I.T. Rules, 1962 provides for certain exceptions for disallowance u/s. 40A(3) of the Act. As per the said Rule. if the payments are made to certain entities specified in the said Rule in a mode other than account payee cheque/draft exceeding Rs.20,000/-, such payments cannot be disallowed u/s. 40A(3) of the Act. The list includes RBI, Banks, Co-operative Primary Agricultural Credit Societies, LIC, Credit/Debit Cards, Payments made to purchase Agricultural/Forest produce, produce of Animal Husbandry/Dairy/Poultry/ Fishing/Horticulture, Cottage Industry, Salary payments, payments by money changers etc. However, the payments made for purchase of immovable properties which are current assets by mode other than account payee cheque/draft is not covered 29 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). by the exceptions given in Rule 6DD of I.T. Rules, 1962. Thus, the said objection that the payments made in cash by the appellant are covered by exceptions given in Rule 6DD of I.T. Rules, 1962 is also rejected. 8.4. Coming to the facts of the appellant's case, the same have been dealt with in detail in para 5 above. In brief, the appellant made part payment of purchase consideration for various immovable properties in cash by withdrawing the said cash from CC/SB accounts with HO Branch of the appellant. The payments of purchase consideration made by cheque/DDs were shown against the asset in the Balance Sheet and payments made in cash were shown as loans to a dummy entity, Lokmanya Constructions. During the course of search, the modus operandi of part payment of purchase consideration in cash was found and the same was accepted by the appellant during search as well as during assessment proceedings. While filing the return u/s. 139 as well as 153A of the Act, the appellant had not routed the expenditure incurred on purchase of immovable properties through the P & L account, During appellate proceedings, the ARs of the appellant admitted that the said expenditure on purchase of properties was not routed through P & L account as the accounts were maintained as per the norms laid down by Multistate Co-operative Societies Act. However, the ARs admitted that as per the accounting standards laid down by the Institute of Chartered Accountants of India, the expenditure incurred on purchase of current assets which are in the nature of stock in trade should be routed through P & L account and expenditure incurred on such assets should be claimed in the P account. Accordingly, the ARs filed the revised/recast P & L account and the Balance Sheet for the assessment year in appeal, wherein, the expenditure incurred on purchase of immovable properties which are shown as current assets in the Balance Sheet by cheque/DD and by cash are routed through P & L account. Thus, in the revised/recast P & L account filed, the expenditure incurred on purchase of properties paid in cheque/DD/cash is claimed. The revised/recast P & L account for the year ended 31.03.2009 is reproduced below: Trading Account (Real Estate) 01.04.2008 to 31.03.2009 PARTICULARS AMOUNT PARTICULARS AMOUNT To Opening Balance 35,96,900.00 By Sale - To Purchases By Closing Stock 342,97,360.00 Real Estate Properties 118,82,665.00 30 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). Cash Payment - Lokrnanya Construction CC # 01 188,17,795.00 To Gross Profit Transferred - Total 342,97,360.00 Total 342,97,360.00 Profit and Loss Account 01.04.2008 to 31.03.2009 PARTICULARS AMOUNT PARTICULARS AMOUNT 10th Year Celebration 2,14,000.00 Commission from Insurance 1,78,150.75 Advertising Expenses 48,81,557.00 Commission from MSEB Bills 81,373 00 Audit Fees 8,60,000.00 Interest on Gratuity 2,07,128 Bank Charges 2,05,655.74 Interest recd on Investments 306,05,497.40 Brokerage & Commission 72,900.00 Interest recd on Loans 17,69,53,308.07 Business Promotion Expenses 1,93,610 00 Interest recd from premature FD A/C 9,32,881.00 Conference Fees 19,422.00 Locker Rent 2,37,557 Depreciation 22,69,848.00 Miscellaneous 7,94,921.32 Electricity charges 63,15,576_91 Notice charges 2,20,166 Fringe Benefit Tax 9,84,468.00 Processing Fees 65,65,578 Gifts 4,57,098.00 Rent received 1,02,500 Gratuity A/c 4,30,793.00 Image Building 13,27,405.00 Insurance Premium 5,63,115.80 31 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). Interest Paid 2,49,088 00 Legal Expenses 1578,83,865,61 'Lodging And Boarding 3.79.398.00 News Papers & Magazines 1,28.245.00 Office Expenses 60,053.00 Office Rent 19,57,866.50 Payments to Employees 63,86,231.00 Petrol Expenses 201,93,226.36 Pigmy Commission 5,75,925.00 95,48,944.00 Pooja Expenses 90.376.81 Postage & Telegraph 84,745.95 Printing & Stationery 2,20,765.68 Professonal Tax Societ 's 43,300.00 Rates & Taxes 5,41,530.00 Repairs & Tkilaintenance 8,93,969.00 Security Charges 1,75,283.00 Staff Refreshment 12.18.646.50 Stamp Duty & Registration Fees 5,894.50 . Tele hone Charges 9,17,401.38 Travelling Expenses 1,49,655.00 Vehicle Expenses 4,23,843.00 Profit Net Loss 40,54,642.20 Total 2209,23,702.7474 Total 2209,23,702.74 77702702702.74 32 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 8.5. From the above revised/recast Trading, P & L account filed by the ARs of the appellant during the appellate proceedings, it . is quite clear that the appellant has incurred expenditure on purchase of immovable properties which are shown as current assets in the Balance Sheet and the payments made by cheques/DDs and by cash are included in the cost of the said assets. The total cash payment made for purchase of the immovable properties as shown in the Trading account is Rs.1,88,17,795/-. However, the actual cash payments made for purchase of immovable properties as seen from the CC/SB accounts of the dummy entity 'Lokmanya Constructions' is Rs.7,38,17,7951-, The appellant claims to have received refund of Rs.5,50,00,000i- out of Rs.7,38,17 : 7951- originally spent. Thus, the appellant has debited an amount of Rs.1,88,17,795/-in the Trading a c c o u n t . 6.4 The Ld. Counsel for the assessee objected to the enhancement made by the ld. CIT(A) by disallowing the expenses u/s 40A(3) being alleged cash payment made by LMCS for purchase of property with the support of written submission which reads as under: 9. During the course of appellate proceedings in the case of Lokmanya Multipurpose Co-operative Society Ltd. (LMC), for assessment year 2012-13 and 2013-14, it was found that LMC had made on-money payments in cash towards purchase of immovable properties which were shown as current assets and in some cases as fixed assets as well in the Balance Sheet. Prior to the search, the LMC was showing only the payments made by cheques/DDs for purchase of immovable properties as the cost of the properties purchased in the Balance Sheet. And the payments made in cash as part consideration for the said immovable properties were shown in the CC account of Lokmanya Constructions, a dummy loan account. 9.1. Subsequently, it was found that the advances for on-money paid in cash were shown as refunded in the books of LMC in A.Y. 2013-14. The details of payments and refunds received were examined with the bank statements. On verification, it was found that the immovable properties for which LMC had given the advance of on-money in cash were actually purchased by the appellant and his daughter Ms. Sai Thakur. Accordingly, the P & L account for the year ended 31.03.2013 of the appellant (property development P & L account) filed along with return filed u/s. 153A was examined. In the said P & L account, the appellant has shown purchase 33 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). of property at Malgaon from Mr. Rawool for a total consideration of Rs.56,77,500/-. Out of the said amount, Rs.50,60,000/- was paid in cash initially by LMC which was subsequently transferred to the loan account of the appellant in the books of LMC. But the fact remains that the purchase consideration amounting to Rs.50,60,000/- was paid by the appellant other than by account payee cheque or draft. As the appellant had incurred the expenditure on purchase of immovable properties in cash (for making on-money payments), the provisions of section 40A(3) of the Act were found to be attracted. As the AO had not made any disallowance for the expenditure incurred in cash u/s. 40A(3) of the Act, an enhancement notice as per the provisions of section 251(2) of the Act dated 16.04.2018 was issued to the appellant and the same was duly served. In the enhancement notice issued, the appellant was asked to file their objection for the proposed enhancement being disallowance of expenditure claimed (purchase consideration} which is paid in cash as per the provisions of section 40A(3) of the Act. The ARs of the appellant vide letter dated 20.04.2018 made the following submissions: "(a) We wish to inform you that the provisions of section 40A(3) are not attracted where the borrower and the payee are identified and there is no material on record to doubt the genuineness of the payment. The advance payment made in excess of the prescribed limit u/s. 40A(3) of the Act prior to the execution of the Sale Deed are not covered under the provisions of the said section. Further, we invite your kind reference to Rule 6DD of the I. T. Rules, 1962. In the present case on the examination the few sellers of the property have admitted the receipt of money. We have submitted the names and addresses of few sellers who insisted on payment in cash and the said sellers have paid the capital gain tax on the aggregate amount (i.e. including the on-money). Therefore it is submitted that the appellant's case falls under exceptional circumstances.' 9.2. I have gone through the objections raised by the ARs of the appellant for the proposed enhancement in the form of disallowance u/s. 40A(3) of the Act. The first objection of the AR of the appellant is that because the payment is genuine, the same does not come within the purview of section 40A(3) of the Act. The other objection is that the cash payment has been made before the execution of the sale deed and the same is also not covered by the provisions of section 40A(3) of the Act. Section 40A(3) of the Act speaks about the expenditure incurred and in respect of which the payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque or a draft exceeds Rs.20,000/-, no deduction shall be allowed in respect of such expenditure. So to say, the section is specific and without any ambiguity. The said section does not make any exception for the genuine payments and payments made before the execution of sale deed/issue of invoice etc. What the section speaks is that expenditure exceeding Rs.20,000/- if paid by a mode other than account payee cheque/draft, such expenditure is not allowable as deduction. Therefore, both the objections raised by the ARs of the appellant about the 34 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). applicability of the provisions of section 40A(3) to the facts of appellant's case are accordingly rejected. 9.3. The other objection of the AR of the appellant is that the payments made by the appellant for purchase of immovable properties in cash are exempt as per the provisions of Rule 600 of I.T. Rules, 1962 as the sellers of the properties were examined and who admitted receipt of the additional consideration in cash. Rule 6DD of I.T. Rules, 1962 provides for certain exceptions for disallowance u/s. 40A(3) of the Act, As per the said Rule, if the payments are made to certain entities specified in the said Rule in a mode other than account payee cheque/draft exceeding Rs.20,000/-, such payments cannot be disallowed u/s. 40A(3) of the Act. The list includes RBI, Banks, Co-operative Primary Agricultural Credit Societies, LIC, Credit/Debit Cards, Payments made to purchase Agricultural/Forest produce, produce of Animal Husbandry/Dairy/Poultry/ Fishing/Horticulture, Cottage Industry, Salary payments, payments by money changers etc. However, the payments made for purchase of immovable properties which are current assets by mode other than account payee cheque/draft is not covered by the exceptions given in Rule 6DD of I.T. Rules, 1962. Thus, the said objection that the payments made in cash by the appellant are covered by exceptions given in Rule ODD of I.T. Rules 1962 is also rejected. 9.4. Coming to the facts of the appellant's case, LMC made part payment of purchase consideration for purchase of Malgaon properties in cash by withdrawing the said cash from CC/SB accounts with HO Branch of LMC. During the course of search in the premises of LMC, the modus operandi of part payment of purchase consideration in cash was found and the same was accepted by LMC during search as well as during assessment proceedings. The appellant is the founder Chairman of LMC and controls the functioning of LMC. 9...5 During appellate proceedings in the case of LMC, revised/recast Trading, P & L account was filed by the ARs of LMC. From the said Trading, P & L account, it was found that LMC had incurred expenditure on purchase of immovable properties at Malgaon in cash. Initially, this property was to be purchased by LMC but subsequently, it was purchased by the appellant. Hence, the cash payment being on-money made by LMC was transferred to the account of the appellant by passing a journal entry in the books of LMC. The total cash payments made for purchase of the immovable properties at Malgaon as shown in the Trading account of LMC is Rs.50,60,000/-. 9.6 From the above analysis. it is proved that the appellant paid on-money in cash of Rs.50,60.000/- as seen from SB account of LMC from where the withdrawals of cash were made for making the said on-money payments. During appellate proceedings of LMC, the details of a transaction consisting of Rs.50,60,000/- were sought with dates and the ARs were asked 35 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). to produce the statements of SB account and CC account of LMC. From the CC account produced, it is found that the cash paid as advance to M/s. Sawant, Parab & Rawool of Rs.50,60,000/- was received back and credited on 05.04.2012 in the books of LMC. However, this is a book entry in the books of LMC as the advance given in cash for purchase of Malgaon properties did not materialize and accordingly, the appellant's account was debited and LMC's CC account was credited. This is done as the details found during the course of search showed that the payments were made for purchase of properties at Malgaon, which could not be purchased by the LMC but ultimately were purchased by the appellant, founder Chairman of LMC. Thus, these advances made were transferred from the loan account of the LMC to the loan account of the appellant in the books of LMC. 9.7. These cash payments made of Rs.50,60,000/- for purchase of Malgaon property attract provisions of section 40A(3) of the Act. Therefore, the on-money paid which is admitted by the appellant in the capacity as founder Chairman of LMC, which is on- money paid on purchase of immovable properties at Malgaon amounting to Rs.50,60,000/-, which is actually debited in the books of accounts of the appellant is disallowed u/s. 40A(3) for incurring the expenditure otherwise than by account payee cheque drawn on bank or account payee bank draft exceeding Rs.20,000/- 6.4.1 The Ld. Authorised Representative of the assessee submitted that ld CIT(A) has erred in enhancing the income of the appellant by Rs.31,12,78,341 which is bad in law with the support of a paper book which reads as under. 15.1 The hon. CIT(A) has applied provision of section 251 to enhance the income of the appellant. We note the relevant provision as below: Powers of the Commissioner (Appeals). 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers— (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before 36 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.—In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. 15.2 As noted above, the Hon. CIT(A) has powers to step into the shoes of AO, but the action of CIT(A) cannot amount to replacement of the proceedings already carried out by the AO. 15.3 In the appellant case, the AO neither asked nor viewed the “on money” payments made by the appellant as expenses, but directly added the same u/s 69B of the Income Tax Act’1961. As such the Hon. CIT(A) has to look at the issue on the same lines and use his power vested u/s 251 of the IT Act. 15.4 Further, section 40A(3) of the IT Act, treats the expenses / deduction claimed as actual and disallows the same incase the payment is made in cash above the specific limit. 15.5 As such the Hon. CIT(A) has exceeded his power u/s 251 of the IT Act’ to enhance the income of the appellant, which is bad in law. 15.6 We rely upon the judicial decision in the case of Hari Mohan Sharma v. Assistant Commissioner of Income-tax, Circle-63(1), New Delhi [2019] 110 taxmann.com 119 (Delhi - Trib.) were it was noted that “Section 251, read with sections 68 and 147, of the Income-tax Act, 1961 - Commissioner (Appeals) - Powers of (Power of enhancement) - Whether enhancement under section 251(1)(a) is prohibited on issues which have not at all been considered by Assessing Officer during assessment proceedings and Commissioner 37 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). (Appeals) is not competent to enhance assessment taking an income which was not considered expressly or by necessary implication by Assessing Officer - Held, yes - Assessee, an individual, disclosed capital gain on sale of property and also claimed exemption/deduction under section 54F as sale consideration was invested for purchase of another property - Assessing Officer noted that two residential properties were sold by assessee and, accordingly, deduction under section 54F was denied - Commissioner (Appeals) noted that property was never sold, as neither registry was made nor physical possession was given and source of money given by purchaser to assessee also could not be explained and, hence, he treated sales consideration as unexplained and made addition under section 68 - Whether since no inquiry was made by Assessing Officer on issue of capital gain shown by assessee and he had not at all considered issue of sales consideration received by assessee on sale of house as an issue of dispute before him, Commissioner (Appeals) could not have made enhancement holding that funds received by assessee was unaccounted income of assessee and chargeable to tax under section 68 - Held, yes [Paras 20 & 21] [In favour of assessee]” 15.7 In the case of COMMISSIONER OF INCOME TAX VS UNION TYRES [TS-5470- HC-1999(Delhi)-O], (1999) 157 CTR 286 (Delhi), (1999) 240 ITR 556 (Delhi), (1999) 107 TAXMAN 0447 (Delhi). The Hon. High Court held that. “12. Applying the above well settled principles of law to the facts of the instant case, we are of the view that the Tribunal was justified in holding that in calling for a remand report on the aforenoted four points the AAC had exceeded his jurisdiction. While computing the total business income of the assessee, the AO had estimated the sales at an enhanced figure and had applied a higher rate of gross profit. Thus, the only matter dealt with by the AO in the assessment order was the estimation of profits and gain of the business of the assessee. None of the aforenoted four points had any bearing on the question of estimation of either the sales or the gross profit rate. From the observations, extracted above, it is evident that the AAC had his doubts about the capacity of the assessee to raise finances for the purpose of goods and show a huge turnover in the very first year of his business. In other words, the enquiry orders by the AAC was to satisfy himself about the source 38 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). of investment by the assessee. It is axiomatic that failure to prove the sources of investment will result in addition in the hands of the assessee under a different provision of law and will not have much relevance in the estimation of sales and gross profit rate adopted by the AO. In our opinion, any addition on account of unexplained investment would constitute a new source of income which was not the subject-matter of assessment before the AO and, therefore, it was not open to the first Appellate Authority to direct the AO to conduct enquiry on the said four points. For the foregoing reasons, we answer the question in the affirmative i.e., in favour of the assessee and against the Revenue. No order as to costs.” 16. The ld CIT(A) has erred in enhancing the assessment made by the AO by applying provision of section 40(A)(3) of the Income Tax Act’1961, whereas the same additions made by the AO u/s 69B of the Income Tax Act’1961 has been deleted by the ld CIT(A). 17. The Hon. CIT(A) has enhanced the income of the appellant after asking the appellant to prepare the revise financials and route all the property purchase transactions through profit & loss account. On submission of the same, the Hon. CIT(A) applied provision of section 40A(3) of the Income Tax Act’1961 to disallow the “on money” paid on purchase of immovable properties. 18.1 We note the provision of section 40A(3) of the Income Tax Act’1961 as below: “ 40A(3) Expenses or payments not deductible in certain circumstances. (3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.” 39 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 18.2 As noted above the provision 40A(3) of the IT Act is applicable for the expenses deductible, whereas in the appellant case, the appellant has not claimed any expenses but has incurred the amount as “on money” paid towards purchase of immovable properties, which are part of the current assets / stock in trade of the appellant. 18.3 The ld CIT(A) has willfully asked the appellant, to redraw the statement of profit & loss account, whereby the immovable properties were shown under opening stock, purchases and closing stock. Whereas as per the financials the appellant has never shown the immovable properties in profit & loss account, not have any time claimed expenses of the same in profit and loss account. 18.4 We rely upon the case of Westland Developers Pvt. Ltd., vs ACIT (I.T.A .No.- 1752/Del/2013) where it was held that “We have heard the rival submissions and perused the material available on record. The case law relied upon by the parties has been taken into consideration. On a consideration of the same we are of the view that since in the facts of the present case the material issue is that the said expenditure was never claimed as assessee's business expenditure the occasion to make a disallowance of the same does not arise. On this fact there is no dispute as admittedly the expenditure was not claimed as an expense by the assessee and consequently has not been routed through its P&L A/c. In the circumstances, the occasion to make an addition of the same by way of a disallowance in these peculiar facts and circumstances of the case does not arise.” 6.5 The Ld. CIT(DR) stands by the CIT(A)’s Order. At the same time, he agreed that, though there is no specific mention of section 40A(3) in the assessment order, but the chart given in page para 6.5 of the assessment order mentions about the cash payments made by the assessee and hence, Ld. CIT Appeal has not erred in making enhancement as per section 251(1). 6.6 We have heard rival contentions, perused the material on record and citations referred in support on the issue of enhancement of income by the CIT Appeal. Before us, the ld. AR challenged the legality of enhancement 40 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). by Ld. CIT Appeal with respect to powers of commissioner (Appeals) u/s 251(1) of the Act, by relying upon the decision of ‘Hari Mohan Sharma v/s ACIT’, Circle-63(1) New Delhi 110 Taxman 119 (Delhi –Trib) and CIT v/s Union Tyres 240 ITR 556 (Delhi High Court) wherein the judicial decisions prohibit CIT Appeal from making enhancement under fresh sections which were not considered by the AO in his assessment order. Ld. AR argued that in original assessment order, AO has only made additions u/s 56(2)(vii), disallowance of interest u/s 36(1)(iii) and disallowance of carry forward and setoff of loss u/s 73 being speculative loss. Nowhere in the impugned assessment order there is any mention of additions contemplated u/s 40A(3) of the Act. The Ld. AR argued that, section 251(1) empowers the Ld. CIT appeal to get into the shoes of the AO but certainly does not empower him to replace the AO and start fresh assessment proceedings. Thus, the Ld. CIT Appeal has exceeded the powers given to him under section 251(1) and as such the enhancement needs to be set aside. 6.7 On merits of the case, Ld. AR presented the profit and loss account of the assessee in page 31 of the paper book wherein he demonstrated that the alleged cash payment has not been claimed as expenses and section 40A(3) only talks about assessee incurs any expenditure in respect of which payment or aggregate payments made to a person in a day otherwise than by an account payee cheque. It is seen that in the instant case, no such expenses are debited to the profit and loss account. As regards to alleged payments made by LMCS, the payments are made for purchase of fixed assets as on-money and all assets are accounted in the books of LMCS under Fixed Assets schedule of balance sheet. As such, section 40(3) is not applicable to the assessee. As regards to 41 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). LMCS’s recasting of Trading, Profit and Loss account during the appeal proceedings before Ld. CIT appeal, being done at the instruction of Ld. CIT appeal, and even Revenue has objected such powers of the CIT Appeal in ground 3 of IT(SS)A NO. 47/PAN/2018 of LMCS. In view of the matter, as such, the appeal before CIT Appeal needs to be adjudicated on the basis of issues dealt with reference to relevant section of the Act before the AO at the time of assessment proceedings. 6.7 In view of the aforesaid discussion, we accept the grievance of the assessee justified and we hold that the Ld. CIT(A)-2 has erred in getting accounts recasted in appeal proceedings and making enhancement u/s 40A(3). Therefore, the enhancement made by the Ld. CIT Appeal is deleted in the respective assessment years. 6.8 The facts of the appeals in IT(SS)A No. 34 to 39/PAN/2018 in respect of Assessment Year 2010-11 to 2015-16 are exactly identical to the facts of the appeal in IT(SS)A No. 33/PAN/2018 in respect of Assessment year 2009-10. Therefore, our decision given in IT(SS)A No. 33/PAN/2018, in respect of Assessment Year 2009-10, on the issue of recasting of accounts and enhancement of income by the CIT(A), shall apply in IT(SS)A No. 34 to 39/PAN/2018 in respect of Assessment Years 2010-11 to 2015-16, in mutatis mutandis. 7. As regards to the issue of enhancement made by Ld. CIT(A)-2 by way of addition on account cash credit u/s 68 of the IT Act, following enhancement has been made by CIT(A)-2. Asst. Year ITA NO Amount 2009-10 33/PNJ/2018 5,50,00,000 2010-11 34/PNJ/2018 3,00,00,000 2011-12 35/PNJ/2018 21,00,000 42 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 7.1 In assessee’s appeal, Ground no. 6 to 7 reads as under. 6) The ld CIT(A) has to erred in enhancing the assessment made by the AO by Rs.5,50,00,000/-, u/s 68 of the Income Tax Act’1961. 7) The ld CIT(A) has erred in enhancing the assessment made by the AO by Rs.5,50,00,000/-, without referring the core issue of search proceedings and the incriminating documents / evidences found during the search proceedings. 7.2 Similarly, facts of the case are taken from IT(SS)A 33/ASR/2018 as a lead case that, while deciding appeal of the assessee for A. Y. 2009- 10, Ld. CIT(A)-2 has issued enhancement notice and upon conducting enquiry and perusal of reply of the assessee and remand report of the AO, Ld. CIT(A)-2 has enhanced the assessment by making addition of the payment received back by the assessee u/s 68 of the IT Act. 7.3 While making the enhancement, Ld. CIT(A)-2 has observed as under: “8.5. From the above revised/recast Trading, P & L account filed by the ARs of the appellant during the appellate proceedings, it . is quite clear that the appellant has incurred expenditure on purchase of immovable properties which are shown as current assets in the Balance Sheet and the payments made by cheques/DDs and by cash are included in the cost of the said assets. The total cash payment made for purchase of the immovable properties as shown in the Trading account is Rs.1,88,17,795/-. However, the actual cash payments made for purchase of immovable properties as seen from the CC/SB accounts of the dummy entity 'Lokmanya Constructions' is Rs.7,38,17,7951-, The appellant claims to have received refund of Rs.5,50,00,000i- out of Rs.7,38,17 : 7951- originally spent. Thus, the appellant has debited an amount of Rs.1,88,17,795/-in the Trading a c c o u n t . D u r i n g a p p e l l a t e p r o c e e d i n g s , t h e de t a i l s o f p a y m e n t s o f Rs.5,50,00,000/- made with dates and details of refund of 43 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). the said amount with dates and the persons with whom these transactions were made were sought. The details given by the ARs of the appellant are as under: Date credited to LC CC A/c 01 Narration 31.3.2009 4,50,00,000.00 Kindly refer SB A/c of Lokmanya Constructions. We had sent the funds to our Dadar office for payment to be made to Sunshine Housing for purchase of property in Sunshine Heights, Dadar. However, since the funds were not paid. the same received back from Dadar Office 31.3.2009 10,000,000.00 Kindly refer SB A/c of Lokmanya Constructions. We had sent the funds to our Dadar office for payment to be m a d e t o S u n s h i n e H o u s i n g f o r purchase of property in Sunshine Heights, Dadar. However, since the funds were not paid, Rs.50,00,000/- were received back from amount supposed to be given to Vibhuti C o n s t r u c t i o n s w a s b a c k f r o m Sawantwadi office. 8.6. This issue along with the submissions made by the ARs of the appellant was remanded to the AO seeking his comments on the issue. The AO in his remand report dated 12.03.2018 has submitted as under SL. No. Date Credited to CC account No.1 Assessee's explanation Remarks 1. 31.3.2009 4.50,00,000 We had sent the funds of our Dadar office for payment to be made to Sunshine Housing for purchase of The assessee has not explained on which days the amounts were sent to Dadar office. A perusal of property in Sunshine Heights, Dadar. However, since the funds were not paid same received back from Dadar Office. SB account No.1 reveals that there was no debit for transfer to Ddar office before 31.3.2009. Further. the description in the CC a c c o u n t a g a i n s t t h etransaction it is mentioned as "Land Khanapur Road.tlk 44 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). We had sent the funds ofour Dadar office for payment to be made to Sunshine Housing for purchase of property in Sunshine Heights,Dadar. However, since the funds were not paidRs.50,00.000/- was received back from Dadar office. Similarly, Rs.50,00,000/- was received back from amounts supposed to be givento Vibhuti Constructions was back from Sawantwadi office. There is no evidence to suggest that amounts were sent to Dadar office and Sawantwadi office either in the CC account or SB account. 8.7. l have gone through the submissions of the ARs of the appellant and the remand report of the AO. It is a fact not disputed by the appellant that the appellant purchased a property at Mahim, Mumbai from M/s Sunshine Housing and Infrastructure Pvt. Ltd. for a total consideration of Rs.11,06,00,000/- out of which Rs.6,06,00,000/- were paid by cheques/DDs -and Rs. 5,00,00,000/- was admitted t o h a ve b een pai d i n c ash as on-mon ey . Th e pa ymen t of on- m on e y of Rs.5,00,00,000/- was by withdrawal from CC/SB accounts of the dummy entity Lokmanya Constructions. The details of withdrawals of cash made from the CC/SB accounts is as under: Date of withdrawal from CC/SB accounts Amount cif withdrawal 05.07.2008 1,00,00,000/- 21.07.2008 1,00,00,000/- 26,07.2008 1,00,00,000/- 05.08.2008 1,00,00,000/- 13 08,2008 1,00,00,0001- Total 5,00,00,0001- 8.8. The appellant admits that the above amounts were withdrawn from CC/SB accounts of Lokmanya Constructions in cash and paid as on-money in cash to the builder of the property at Mahim, Mumbai. The payments of Rs.1,00,00,000/- each was made in 5 installments and last being on 45 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 13.08.2008, when the sale deed was registered between the builder and the appellant. Thus, on the facts and circumstances of the case, it can be reasonably proved that the appellant paid the cash as on-money to the builder and it is only thereafter on 13.08.2008 the sale deed was registered. It is not the case of the appellant that the appellant initially agreed to pay the purchase consideration partly by cheque and partly in cash but subsequently paid only by cheques /DDs. It is only in that situation, there was reason for the appellant to redeposit the cash withdrawn earlier. The purchase deeds of the Mahim property were produced for verification which showed that the total consideration recorded in the 3 deeds is Rs.6,06,00,0001-. T h e r e f o r e , i t c a n b e r e a s o n a b l y h e l d t h a t t h e a p p e l l a n t p a i d t h e p a r t consideration of Rs,5,00,00,000/- in cash for the purchase of the said property, In the submissions before me, the appellant has also accepted the fact that the total purchase consideration for the Mahim property was Rs.11.06 crone. In these facts and circumstances, it can be concluded that the appellant paid Rs.11.06 crores to purchase the Mahim property and Rs.5,00,00,000/- was paid in cash which is evident from the withdrawals made by the appellant in cash from the CC/SB accounts of Lokmanya Constructions and before the date of registering the sale deeds on 13.08.2008. 8.9. In the above para, it is proved beyond any doubt that the appellant paid Rs.5.00,00,000/- as on-money in addition to the regular purchase consideration. In such a situation, receiving back the said on-money paid from the builder is totally ruled out. No builder would refund the on-money received unless an equivalent payment is made by cheques or any other mode. The appellant has not been able to prove before me with any documentary evidence that the builder of Mahim property refunded the money received as on- money in cash nor it was proved that the builder was compensated in any other form to refund the on-money paid. Similarly, the appellant has not been able to prove with any documentary evidence about the payment and receipt of balance Rs.50,00,000/- which was claimed to be received back by the appellant on 31.03.2009. 46 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 8.10. Another important aspect which needs emphasis here is that the cash withdrawals for payment of on-money were made between 05.07.2008 and 13.08.2008 but cash deposits of Rs.5,50,00,000/- were made in CC/SB accounts only on 31.03.2009. Then the question arises where this huge cash was kept for almost about 8 months. This query has also not been clarified by the ARs. 8.11. From the above analysis, it is proved that the appellant paid total on- money in cash of Rs.7,38,17,795/- which attracts provisions of section 40A(3) of the Act. In the recast/revised P & L account filed the on-money paid in cash has been shown at Rs.1,88,17,795/- as Rs.5.50,00,000/- was accounted as refund. (Total withdrawals from CC account Rs.7,38,17,795/- less claimed refund of Rs.5,50,00,000/-). However, in the earlier paras, it has been proved beyond doubt that the total amount of on-money paid in cash by the appellant was Rs.7,38,17,795/- and not Rs.1,88,17,7951-. Therefore, the recast/revised P & L account filed by the appellant does not show true and correct view of the state of affairs. The entry of receipt of cash of Rs.5,50,00,000/- passed by the appellant in th e rec ast/ revised b ooks of ac coun ts on 3: 03.2009 is wi thout any documentary evidence and explained source. Therefore, the recast/revised books of accounts in view of this incorrect entry of receipt are rejected and the entire on-money paid on purchase of immovable properties amounting to Rs.7,38,17,795/- which is actually debited in the books of accounts initially (till it was set off against claimed receipt of Rs.5.5 crores) is disallowed u/s. 40A(3) for incurring the expenditure otherwise than by account payee cheque drawn on bank or account payee bank draft exceeding Rs.20,000/- and income of the appellant is enhanced by an amount of Rs.7,38,17,795/-. 8.12. The Courts have held that provisions of section 40A(3) of the Act are applicable to block assessment proceedings u/s. 158BC/BD. The assessments u/s . 153A/C are search assessment and identical to the assessments u/s. 158BC/BD. The provision of section 40A(3) of Act would apply only where expenditure in question has been incurred and claimed in the computation of income. The Supreme Court, in the case of Attar Singh Gurmukh Singh v. ITO [1991j 191 1TR 667/59 Taxman 11, reiterates this position as well. In the instant case, as the 47 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). appellant has cl aimed th e payment of on-mon ey as ex penditu re in cash in the recast/revised statements and as the said expenditure has been claimed in the computation of income, the disallowance made under the said section and resultant enhancement made is supported by judicial pronouncements. The income of the appellant stands enhanced by Rs.7,38,17,795/-. 8.13. The second issue for adjudication which is part of the enhancement notice issued to the appellant is about the cash credit in the SB/CC accounts of Lokmanya Constructions. in the earlier paragraphs, I have dealt in detail about the payment of on-money made in cash for purchase of immovable properties. In the recast/revised P & L account and Balance Sheet filed for the impugned a s s e s s m e n t y e a r , t h e a p p e l l a n t h a s d e b i t e d i n i t i a l l y a n a m o u n t o f Rs.7,38,17,795/- towards the on-money paid in cash by withdrawing the same from SB/CC accounts of Lokmanya Constructions. Subsequently, on 31.03.2009, the appellant showed a receipt of Rs.5,50,00,000/- in the said SB/CC accounts of Lokmanya Constructions. The reason given was that the amount withdrawn for payment of on-money in cash was redeposited as the proposed transaction did not materialize. However, I have held in the earlier pains that the amounts were withdrawn from the said accounts in cash for payment of on-money in cash for purchase of Mahim property and the said cash was admittedly paid to the builder before the registration of the properties purchased on 13.08.2008. Now the question arises is that when the payment of on-money has already been made to the builder and purchase deeds have already been registered, what is the source of Rs.5.50,00,000/- deposited in cash in the SB/CC accounts of Lokmanya Constructions. The appellant has not been able to explain the sources of the said amount of Rs.5,50,00,000/- during the appellate proceedings. I have held in the earlier para that the amount received cannot be the refund from the builder as claimed by the appellant. When once it is proved that it is not out of refund from the builder, the onus lies on the appellant to prove the source of said cash deposited into the accounts of Lokmanya Constructions which the appellant has admitted during search as well as subsequent proceedings that it is a dummy entity only used for withdrawing cash for payments of on- money for purchase of properties. The appellant has not discharged the said 48 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). onus in spite of giving sufficient opportunities during the course of appellate proceedings. Therefore, the said amount of Rs.5,50,00,000/- needs to be separately brought to tax as cash credits u/s. 68 of the Act in the hands of the appellant. Accordingly, the income of the appellant stands enhanced further to the extent of Rs.5,50,00,000/-. 7.4 Before us, the Ld. Counsel of the assessee submitted a paper book which reads as under. 19. Further, the hon. CIT(A) has applied the provision of section 68 of the Income Tax Act’1961 to tax the amount re-deposited by the appellant in the division bank account of “Lokmanya Construction”. 20. We note the provision of section 68 of the IT Act as below: Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: 49 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). 20.1 The CIT(A) does not have any powers to enhance the assessment by applying section 68 of the IT Act,. As the term Assessing Officer as defined u/s 2(7A) of Income Tax Act 1961 does not include the CIT(A) within its ambit. On conjoint reading of section 68 and section 2(7A), the inevitable conclusion arises that it is the Assessing Officer, and not the CIT(A), who is required to cast his opinion as to satisfactory explanation of nature and source of income Further, as laid down u/s 120 of Income Tax Act 1961, the CIT(A) cannot be conferred the powers and functions of the Assessing Officer. In other word’s the reference to Assessing Officer /'s 68 cannot be stretched to include the CIT(A) in its ambit. Notably, section 68 does not make any reference to the satisfaction of any person lest the CIT(A). The question only arises in respect where a satisfaction is to be recorded since that is the domain of the Assessing Officer. As far as the first limb is concerned the CIT(A) may change the head from section 68 to 69 under the Act but in case the second limb, the Act requires the satisfaction of Assessing Officer which in all fairness is a subjective satisfaction. 20.2 The appellant has duly explained that the amount re-deposited in the account pertains to the funds withdrawn from the same account and due to non- materializing of the property purchase deal, the same was re-deposited in the account. 20.3 The position of the amount withdrawn and redeposited was duly noted by the AO in his order and have also accepted the same during the assessment proceedings. The AO after going through the submissions had made the additions of the total amount withdrawn from the account u/s 69B of the IT Act, whereas the CIT(A) has considered the addition u/s 68 of the IT Act, which is totally misplaced. 7.5 Per Contra, Ld. DR argued that, though there is no specific mention of section 68 in the assessment order, the chart given in the assessment 50 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). order mentions about the cash payments made by the assessee and hence, Ld. CIT(A)-2 has not erred in making enhancement as per section 251(1). 7.6 Having heard the rival contentions and perusal of the record, the appellant assessee has challenged the legality of enhancement made by Ld. CIT Appeal with respect to powers of commissioner (Appeals) u/s 251(1) of the Act, by relying upon the decision of “Hari Mohan Sharma vs. ACIT”, (Supra) and “CIT v/s Union Tyres”, (Supra) wherein the Higher judicial forums in their decisions prohibits CIT Appeal from making enhancement under fresh sections which were not considered by the AO in his assessment order. Ld. AR explained that in original assessment order, AO has only made additions u/s 69B, disallowance of interest. Thus, nowhere in the impugned assessment order there is any mention of additions contemplated u/s 68. Hence, Ld. AR contended that, section 251(1) empowers the Ld. CIT Appeal to get into the shoes of the AO but certainly does not empower him to replace the AO and start fresh assessment proceedings. The appeal grounds before CIT Appeal needs to be adjudicated on the basis of issues arising out of the assessment order and so dealt with reference to relevant section of the Act before the AO at the time of assessment proceedings. Thus, in our view, the Ld. CIT Appeal has exceeded the powers given to him under section 251(1) and as such the enhancement is required to be set aside. 7.8 In the above view, we hold that the Ld. CIT(A) has exceed in his jurisdiction u/s 251(1) of the Act and therefore, we accept the grievance of the assessee as legally justified. Accordingly, considering common issue on identical facts, the orders of enhancement proposing addition u/s 68 in 51 IT(SS)A No. 47 to 53/PAN/2018 (Asst. Year: 2009-10 to 2015-16) IT(SS)A No. 33 to 39/PAN/2018 (Asst. Year: 2009-10 & 2015-16). respect of all the appeal in IT(SS)A Nos. 33, 34 and 35/ASR/2018 in respect of the assessment years 2009-10, 2010-11 and 2011-12 respectively are hereby quashed. Thus, the grounds of appeal of the assesse are allowed. 8. In the backdrop of the aforesaid discussion, all the appeals of the department and the assessee are disposed of in the term indicated as above. Order pronounced in the open court on 05.05.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member Date: 05.05.2022 Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order