The DCIT, Central Circle-1(1), Ahmedabad V. Dipakkumar Nanchand shah, Ahmedabad

ITSSA 484/AHD/2019

AI Insights

The case involves multiple appeals related to the income tax assessments of Dipakkumar N Shah for the Assessment Years 2014-15, 2015-16, and 2016-17. The appeals were filed by both the assessee and the Revenue against the orders of the CIT(A)-11, Ahmedabad. The primary issues revolved around the additions made by the Assessing Officer following a search and seizure operation, which included unaccounted income and investments. The Tribunal examined the evidences, including Excel sheets and affidavits, and the arguments presented by both parties. The Tribunal's decision focused on the interpretation of the evidences and the application of relevant tax laws, leading to the dismissal of all appeals.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 129761 (ITAT-AHMEDABAD)
• Duration Of Justice: 1626 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-11-2022
• Assessment Year: misc
• Appeal Filed On: 03-01-0396
• Other Referred Cases: Kamal Goyal vs. DCIT, Gaurav Kumar Sharma vs. ACIT, Biren V. Savla vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Set aside
• Section: 68; 69; 132; 142(1); 153A; 143(2)

Judgement Text

ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 1 of 10 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER IT(SS)A No.396/Ahd/2019 Assessment Year: 2015-16 Dipakkumar N Shah, vs. Asstt. Commissioner of Income Tax F-401, Arihant Nagar, Central Circle – 1(1), Ahmedabad. Camp Road, Shahibaug, Ahmedabad. [PAN – AKRPS 3559 D] IT(SS)A No.484/Ahd/2019 Assessment Year: 2015-16 Dy. Commissioner of Income Tax vs. Dipakkumar Nanchand Shah, Central Circle – 1(1), Ahmedabad. F-401, Arihant Nagar, Camp Road, B/h. Gandhi Vidhyalay, Shahibaug, Ahmedabad. [PAN – AKRPS 3559 D IT(SS)A No.395/Ahd/2019 Assessment Year: 2014-15 Dipakkumar N Shah, vs. Asstt. Commissioner of Income Tax F-401, Arihant Nagar, Central Circle – 1(1), Ahmedabad. Camp Road, Shahibaug, Ahmedabad. [PAN – AKRPS 3559 D] IT(SS)A No.485/Ahd/2019 Assessment Year: 2016-17 Dy. Commissioner of Income Tax vs. Dipakkumar Nanchand Shah, Central Circle – 1(1), Ahmedabad. F-401, Arihant Nagar, Camp Road, B/h. Gandhi Vidhyalay, Shahibaug, Ahmedabad. [PAN – AKRPS 3559 D (Appellants) (Respondents) ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 2 of 10 Assessee by : Ms. Astha Maniar, AR Revenue by : Shri Prathvi Raj Meena, CIT DR Date of hearing : 01.12.2022 Date of pronouncement : 23.12.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : Out of these four appeals, first two appeals i.e. IT(SS)A Nos.396 & 484/Ahd/2019 are cross appeals filed by the Assessee & Revenue against the order dated 3 rd July, 2019 passed by the CIT(A)-11, Ahmedabad for the Assessment Year 2015-16, IT(SS)A No.395/Ahd/2019 is an appeal filed by the assessee against the order dated 14 th June, 2019 passed by the CIT(A)-11, Ahmedabad for the Assessment Year 2014-15 & IT(SS)A No.485/Ahd/2019 is an appeal filed by the Revenue against the order dated 3 rd July, 2019 passed by the CIT(A)-11, Ahmedabad for the Assessment Year 2016-17. 2. The grounds of appeals are as under: IT(SS)A No.396/Ahd/2019 by the Assessee for A.Y. 2015-16 “1. The Ld. CIT(A)-11 has erred in facts and on law in partly confirming action of the AO in making addition of Rs.2,05,50,000/- on substantive basis treating the same as unaccounted income of the appellant without there being any corroborative seized material and further erred in rejecting the claim of the appellant interalia to the effect that he acted as a middleman only.” IT(SS)A No.484/Ahd/2019 by the Revenue for A.Y. 2015-16 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.35,00,000/- on account of cash payment for land purchase. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,19,50,000/- out of Rs.3,25,00,000/- on account of receipt of cash. 2.1 The observation of the Ld. CIT(A) that name of the client is mentioned from whom/to whom cash is received/paid and should be treated as such without insisting on identification/confirmation ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 3 of 10 of the parties as it is unnecessary and impossible burden for the appellant to discharge, is against the set principles of Income Tax Law that in respect of any credit entry the primary onus is on the assessee to prove the identity and creditworthiness of such entities. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,15,00,000/- made on protective basis on account of receipt of cash. The observation of the Ld. CIT(A) that neither any proceeding have been initiated/pending against Shri Kartiak Patel nor any substantive additions made in his hand is wrong to the extent that information has already been sent to ITO, Ward1(2)(2), Surat for initiating proceedings in the case of Shri Kartik Patel. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.74,50,000/- on account of unexplained cash loan, without considering the facts that the assessee ha never submitted confirmation from any of the person to whom such amounts advanced, details of properties in respect of which the transactions were made or the final outcome of the transactions and his actual income as he claimed to be the middleman in these transactions. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 6. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent.” IT(SS)A No.395/Ahd/2019 by the Assessee for A.Y. 2014-15 “1. The Ld. CIT(A)-11 has erred in facts and on law in confirming action of the AO in making addition of Rs.67,50,000/- on substantive basis treating the same as unexplained investment of the appellant without there being any corroborative seized material and further erred in rejecting the claim of the appellant interalia to the effect that he acted as a middleman only.” IT(SS)A No.485/Ahd/2019 by the Revenue for A.Y. 2016-17 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.9,81,000/- on account of cash payment for land purchase. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.33,49,000/- on account of receipt of cash. ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 4 of 10 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in allowing set off of unaccounted expenses of Rs.13,98,770/- against unaccounted income declared under PMGKY, 2016 because para no.3 of Circular No.43 of 2016 does not allow any expenses or allowance or set off of any loss against any income declared under PMGKY, 2016. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,33,00,000/- made on protective basis on account of receipt of cash. The observation of the Ld. CIT(A) that neither any proceeding have been initiated/pending against Shri Kartik Patel nor any substantive additions made in his hand is wrong to the extent that information has already been sent to ITO, Ward 1(2)(2), Surat for initiating proceedings in the case of Shri Kartik Patel. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.2,50,00,000/- on account of undisclosed income on account of advance received for sale of land, admitting the additional evidence during the appellate proceedings which was neither forwarded to this office nor any report called for which is violation of Rule 46A. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 7. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent.” 3. We are taking first Assessment Year 2015-16 on the request of the Ld. AR as this Assessment Year is the lead Assessment Year. 4. The assessee is an individual and engaged as an Estate Broker and Property Consultant. The assessee filed original return of income on 29.01.2016 declaring total income at Rs.9,46,830/-. A search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted in the case of Sethna Group on 29.11.2016 and subsequent dates. A warrant of authorisation was also issued in the name of the assessee and search was conducted at his residential premises from where several incriminating documents were found and seized and the same were inventoried as per Annexure A/1 (Sl. Nos.1 to 4) of Panchnama dated 30.11./2016. Further a search was also conducted at the office premises of M/s. Shanti Realty from where several ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 5 of 10 incriminating documents were found and seized and inventoried as Annexure-A (Sl. Nos.1 to 10) of Panchnama dated 30.11.2016. Thereafter, search assessment proceedings in the case of the assessee were initiated by issue of notice under Section 153A of the Act dated 12.05.2017. in response to the aforesaid notice , the assessee submitted copy of return of income filed on 22.01.2018 declaring total income of Rs.9,99,090/-. Thereafter, notice under Section 143(2) of the Act dated 11.06.2018 was issued along with notice under Section 142(1) of the Act and served on the assessee. Further, a notice under Section 142(1) of the Act dated 25.09.2018 was issued to the assessee to furnish page-wise explanation of material seized during search. A notice under Section 132(1) of the Act was issued on 21.10.2018 along with questionnaire emanating from incrementing material seized during the search from his residence. The assessee has filed submissions and the details before the Assessing Officer. After verifying the details, the Assessing Officer made addition of Rs.27,10,135/- as unaccounted income of the assessee, addition of Rs.35,00,000/- as unaccounted investment of the assessee under Section 69 of the Act, addition of Rs.4,40,00,000/- as unaccounted income which was on substantive basis (Rs.3,25,00,000/-) and on protective basis (Rs.1,15,00,000/-) in the hands of the assessee. The Assessing Officer also made addition of Rs.74,50,000/- as unaccounted income under Section 69 of the Act. 5. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 6. The Ld. AR submitted that the sole issue in the present appeal is related to addition of Rs.2,05,50,000/- on substantive basis treating the same as unaccounted income of the assessee without there being any corroborative seized material and further rejected the claim of the assessee that he has acted as Middleman only. The Ld. AR submitted the Excel File retrieved from the computers used by its staff members cannot be the sole criteria for making the addition. The Ld. AR further submitted that except for one tab named as Ajay 379, rest of all the 7 tabs contain transactions wherein his role was that of a broker only. These excel tags were prepared by his staff members under the supervision of his Manager Shri Kartik Patel. The assessee furnished an affidavit of the same Manager confirming that the ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 6 of 10 assessee informed the Manager about the receipts and payments in relation to property dealings where he acted as a Broker and the Manager used to maintain records about cash/cheque received/paid either directly by the assessee or by the Manager. The Ld. AR submitted that such excel sheet contains inherent possibility of error in communication resulting into error in making data entries and, therefore, such excel sheets have little sanctity and are thus dump documents. Thus, the Ld. AR submitted that since the correctness of excel sheet is doubted and there is no material to corroborate the same, the addition made under Section 68 of the Act which is not in the books of account cannot be treated as undisclosed income of the assessee. The Ld. AR further submitted that the same excel sheet contains both receipts and payments and the Assessing Officer in case relies on the same, the assessee’s contention should have been taken into account that he acted as a Middleman only. This is alternative argument made by the assessee. Ld. AR further submitted that no substantive addition was made in the hands of Kartik Patel (Manager) and since the substantive addition is not made in his case, the protective addition does not survive. Ld. AR relied upon the decision of the Tribunal as under:- 1) Kamal Goyal vs. DCIT 2021 (8) TMI 364 – ITAT, Indore. 2) Gaurav Kumar Sharma vs. ACIT (2014) 49 taxmann.com 189 (Jaipur Tribunal) 3) Biren V. Savla vs. ACIT (2006) 155 taxman 270 (Mumbai Tribunal) 7. The Ld. AR further submitted that the affidavit presented by the Manager Shri Kartik Patel was not taken on record by the CIT(A) and the same was wrongly rejected. 8. The Ld. DR submitted that the CIT(A) has categorically observed that the submissions of the assessee relates to broker and its brokerage does not have any basis as no evidence to that extent has been filed by the assessee. The Ld. DR further submitted that no identity, genuineness or creditworthiness of these related parties have been established by the assessee. Promissory note which are quoted by the CIT(A) at page no.41 has been taken into account by the CIT(A) and, therefore, restricted the confirmation of addition to the extent of Rs.2,05,50,000/- only. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 7 of 10 9. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the affidavit filed by the Manager of the assessee though was rejected has been taken into account by the CIT(A) in consonance that the excel sheet found and seized from the office premises of the assessee and thus the data shown in the said computer belongs to the assessee. The Assessee at no point of time has proved that the excel sheet was not of assessee’s and the staff is also not aware of the said excel sheet. The theory of assessee that he is a middleman acting in real estate in certain transactions and earns brokerage also is not been established by the assessee through any documents. It is only oral submissions of the assessee before the CIT(A). The CIT(A) has categorically mentioned in para 7.6 that only real income has to be taxed and not the gross income of the assessee and, therefore, addition to the extent of Rs.74,50,000/- was taken into consideration on the basis of promissory note. The CIT(A) further observed that all the payments as per the promissory notes are made after the date of receipts as reflected in P3 tab, therefore, accepted the assessee’s contention. The CIT(A) has given a table on page no.41, calculating the cash to the extent of Rs.2,05,50,000/- which was received in cash. Thus, the addition made by the CIT(A) is justifiable. There is no need to interfere with the same. 10. In the result, appeal filed by the Assessee for A.Y. 2015-16 is dismissed. 11. As regards to Revenue’s appeal, being ITA No.484/Ahd/2019 for A.Y. 2015-16, ground nos.1, 2 & 3 relate to protective addition which was rightly deleted by the CIT(A). Thus, Ground nos.1, 2 & 3 of Revenue’s appeal are dismissed. 12. As regards ground no.4 related to unexplained cash loan, the same has been properly adjudicated and the observations made herein above in respect of assessee’s appeal be taken into consideration. Hence, ground no.4 of Revenue’s appeal is dismissed. 13. In the result, appeal filed by the Revenue for A.Y. 2015-16 is dismissed. ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 8 of 10 14. As relates to ITA No.395/Ahd/2019 filed by the assessee for A.Y. 2014-15, the same is on identical issues for A.Y. 2015-16 where additions are made on substantive basis. Here also the CIT(A) has given detailed finding in paragraph nos.6.3 & 6.4 wherein the CIT(A) observed that the aggregate of all transactions, whether debit or credit, were unexplained income of the assessee and no supporting documents of assessee’s contention were filed during the assessment proceedings as well as during the appellate proceedings. Hence, appeal filed by the assessee for A.Y. 2014-15 is dismissed. 15. In the result, appeal filed by the Assessee for A.Y. 2014-15 is dismissed. 16. As regards ITA No.485/Ahd/2019 filed by the Revenue for A.Y. 2016-17, ground no.1 is related to addition of Rs.9,81,000/- on account of cash payments for land purchases. 17. The Ld. DR submitted that the Assessing Officer has rightly made addition as the assessee has not given details of the said land purchase. 18. Ld. AR submitted that this ground is similar to A.Y. 2015-16. 19. We have heard both the parties and perused all the relevant material available on record. Here also the cash payments were made and the details were filed. In fact, the CIT(A) given a categorical finding similar to A.Y. 2015-16 and hence ground no.1 of Revenue’s appeal is dismissed. 20. As regards ground no.2, the same is in continuation to ground no.1 of assessee’s appeal for A.Y. 2015-16 and hence the same is dismissed. 21. As regards ground no.3 related to unaccounted expenses of Rs.13,98,770/- against unaccounted income declared under PMGKY 2016, the Ld. DR submitted that the CIT(A) erred in allowing asset off of unaccounted expenses because paragraph no.3 of Circular No.43 of 2016 does not allow any expenses or licences or set off of any loss or any income declared by PMGKY 2016. ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 9 of 10 22. The Ld. AR relied upon the order of the CIT(A) 23. We have heard both the parties and perused all the relevant material available on record. The CIT(A) has taken cognisance of Circular No.43 of 2016 dated 27.12.2016, the same declaration of set off was already filed and taxes were paid. The Assessing Officer cannot tax the same amount by invoking provisions of Section 69A of the Act. Thus, the CIT(A) was correct in deleting the said addition. Ground no.3 of Revenue’s appeal is dismissed. 24. As regards ground no.4, the same is identical to A.Y. 2015-16 and hence dismissed. 25. As regards ground no.5 relating to addition of Rs.2,50,00,000/- on account of undisclosed income, the Ld. DR submitted that the CIT(A) erred in admitting additional evidences during appellate proceedings and never called for remand report which is violation of Rule 46A of the Income Tax Rules. 26. The Ld, AR submitted that these documents were very well before the Assessing Officer and was not additional evidence. Ld. AR relied upon the order of CIT(A). 27. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that from the perusal of the Assessment Order, it can be seen that the said Banakat deed and relevant documents were before the Assessing Officer during the assessment proceedings. Thus, the CIT(A) has rightly taken cognisance of these documents and the same cannot be treated as additional evidences on merit. The CIT(A) has categorically mentioned that the assessee sold certain lands and the sum of Rs.1 crore was already given to the assessee and the balance was to be given as per the schedule in Banakat/agreement. Thus, the transaction was declared as genuine transaction by the CIT(A). There is no need to interfere with the same and hence ground no.5 of Revenue’s appeal is dismissed. 28. In the result, appeal filed by the Revenue for A.Y. 2016-17 is dismissed. ITA Nos.396, 484, 395 & 485/Ahd/2019 Assessment Years: 2015-16, 2014-15 & 2016-17 Page 10 of 10 29. In the result, assessee’s two appeals are dismissed and Revenue’s two appeals are dismissed. Order pronounced in the open Court on this 23 rd day of December, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 23 rd day of December, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad