PARV BANSAL L/H OF LATE SH. ANIL KUMAR BANSAL,NEW DELHI V. DCIT CENTRAL CIRCLE 31, NEW DELHI

ITA 1057/DEL/2023

AI Insights

The case involves appeals by both the assessee, Parv Bansal, and the Revenue against the order of the Commissioner of Income Tax (Appeals) - 30, New Delhi. The appeals arose from an assessment order pertaining to the Assessment Year 2012-13, which included substantial additions under section 68 of the Income Tax Act, 1961, due to unexplained cash credits. The ITAT had previously directed the AO to recompute the income based on seized documents, leading to further disputes over the additions made. The Tribunal's decision addressed the computation of undisclosed income and the applicable commission rate on transactions facilitated by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781245 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP; RAJESH KUMAR DHANESTA
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Opportunity of being heard; Peak credit; Loose papers
• Section: 143(3); 154; 68; 133A

Judgement Text

"ITA No.1057 & 1739/Del/2023 Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI “B” BENCH: NEW DELHI BEFORE SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1057/Del/2023 [Assessment Year : 2012-13] Parv Bansal L/H of Late Shri Anil Kumar Bansal, 208, 2nd Floor, S-524 Vikas Marg Shakarpur, New Delhi-110092. PAN-AAFPB2542K vs DCIT Central Circle-31 New Delhi APPELLANT RESPONDENT ITA No.1739/Del/2023 [Assessment Year : 2012-13] DCIT Central Circle-31 New Delhi vs Parv Bansal L/H of Late Shri Anil Kumar Bansal, 208, 2nd Floor, S-524 Vikas Marg Shakarpur, New Delhi-110092. PAN-AAFPB2542K APPELLANT RESPONDENT Assessee by Dr. Rakesh Gupta, Adv, Shri Deepesh Garg, Adv. Shri Shrey Jain, Adv. & Shri Saksham Agarwal, CA Revenue by Ms. Pooja Swaroop, CIT DR & Shri Rajesh Kumar Dhanesta, Sr.DR Date of Hearing 30.07.2025 Date of Pronouncement 24.10.2025 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by the assessee as well by the Revenue against the order dated 17.03.2023 by Ld. Commissioner of Income Tax (A)-30, New Delhi [“Ld. CIT(A)”] in Appeal No. 10325/2018-19 passed u/s 250 of the Income Tax Act, 1961 [“the Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 2 Act”] arising from the assessment order dated 24.12.2018 passed u/s 254/143(3) of the Act pertaining to Assessment Year 2012-13. 2. Brief facts of the case are that a survey action under section 133A was carried out at the business premises of assessee on 11.04.2011. During the survey proceedings, certain documents were impounded. Later on, assessee filed his return of income on 30.03.2013. Thereafter, case was selected for scrutiny and notice under section 143(2) of the Act issued on 30.09.2013. Then, Ld. AO completed assessment under section 143(3) on 17.03.2015 by making additions of Rs. 126,58,85,990 u/s 68 of the Act. Aggrieved by the order of the AO, assessee filed appeal before the Ld. CIT(A)- 30 who dismissed the appeal of the assessee and upheld the additions made by then AO. Aggrieved by order of the Ld. CIT(A), the assessee filed second appeal before the ITAT, New Delhi Benches. The tribunal in ITA Nos. 590 & 591/Del/2017 dated 25.10.2017 confirmed the addition of INR 30,00,000/- made u/s 68 of the Act and restored back the remaining issues to the file of AO where the additions were made towards the entries found noted in the seized material. The ITAT also issued certain directions to the AO for the computation of income based on the entries in the seized material. Thereafter the AO proceeded to recompute the income of the assessee as per the directions of the Tribunal. The assessee filed detailed replies on 26.10.2018 and 19.11.2018 alongwith necessary details. The AO passed the order u/s 254/143(3) of the Act on 24.12.2018 making total addition of INR 18,85,89,909/- under section 68 of the Act. Thereafter, the assessee filed rectification Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 3 application u/s 154 of the Act before the AO who vide order dated 15.02.2019 has rectified the order where he reduced the addition from 16,91,51,351/- to INR 10,08,34,389/- on account of inflow of funds as per fund flow statement filed by the assessee and further reduced the corresponding commission amount of INR 1,94,38,558/- to INR 14,16,608/-. Accordingly, the total income of the assessee was rectified and reduced at INR 10,54,30,600/- in the order passed u/s 154 r.w.s. 254 r.w.s. 143(3) of the Act dated 15.02.2019. 3. Aggrieved by the order of AO, assessee filed appeal before the Ld. CIT(A) who vide impugned order dated 17.03.2023, partly allowed the appeal of the assessee. 4. Aggrieved by order of the Ld. CIT(A), both the assessee and revenue filed appeal before Tribunal. The assessee has taken following grounds of appeal in his appeal:- 1. “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition of Rs. 10,08,34,389/- made by Ld. AO. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not accepting the transactions pertaining to 'Common Code parties established as third parties and has thus erred in not excluding an aggregate sum of Rs.5,34,60,686/- being inflow of cash funds and Rs.2,58,81,550/- being out flow of cash funds from such parties and thus Ld. CIT(A) has erred in not excluding the above amount from the addition of Rs. 10,08,34,389/-. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not computing the peak of Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 4 Rs.1,30,27,000/- being the sum of positive peak of Rs. 97,42,100/- and the negative peak of Rs. 32,84,900/-. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition made by Ld. AO by disregarding the order of Hon'ble Tribunal in its order dated 25- 10-2017. 5. That in any case and in any view of the matter, action of Ld. CIT(A) in sustaining the addition made by Ld. AO to the extent of Rs.8,11,75,286/-, is bad in law and against the facts and circumstances of the case. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in estimating the commission @3% and has thus erred in confirming the addition to the extent of Rs. 14,16,608/-. 7. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 5. The Revenue has raised following grounds of appeal:- 1. “Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition u/s 68 amounting to Rs. 1,96,59,103/-, in respect of unexplained transactions, without verification of the claim of the assessee. 2. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in not providing the Assessing Officer with an opportunity of being heard, on the additional submission made by the appellant. 3. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in ignoring the fact that there is no entry amounting to Rs. 54,50,031/- in computation of inflow of funds and the submissions of the appellant was factually incorrect. 4. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in concluding that there is a duplicate entry of Rs. 25,00,000/- against SKJ on 08.04.2011, ignoring the fact that there have been multiple entries against SKJ on the same date on the other dates as well. Reference is invited to Page 35, entries dated 04.04.2011 of Annexure A-1 impounded from 208, S-524, Vikas Marg. Shakarpur, Delhi (copy enclosed). Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 5 5. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in concluding that entries amounting to Rs. 58,31,414/- dated 04.04.2011 and Rs. 58,77,658/- dated 08.04.2011 are cheque deposits in absence of any documentary evidence. 6. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 7. The grounds of appeal are without prejudice to each other. 8. The appellant craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.” 6. Since all the grounds taken by the assessee and the revenue are interlinked and inter-connected, thus all the grounds of appeals in both the appeals are taken together for consideration and both the appeals are decided by a common order. 7. Before us, ld.AR argued that in the instant case, in first round of proceedings, the Co-ordinate Bench of ITAT vide its order in ITA Nos. 590 & 591/Del/2017 dated 25.10.2017 directed the AO to re- compute the income of the assessee based on the documents found and seized during search. The hon’ble bench further directed to restrict the addition only to the extent of entries of cash transactions found noted in the loose papers and diaries and further directed the AO to prepare a fund flow statement and take one side of the same i.e. incoming of funds and wherever the incoming of funds were short, the amounts of outgoing be also considered as undisclosed income. 8. As per Ld. AR, these directions clearly indicate that income of the assessee should be computed only to the extent of the cash Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 6 advances found noted in the seized material by preparing a fund flow statement where the peak balance be taken as the income. The assessee in this regard filed peak working alongwith written submissions before us, according to which after claiming certain deductions, additional income of Rs. 1,30,27,000/- is computed by taking positive and negative peak balances of the fund flow statement. The assessee claimed that the entries contained in loose papers/diaries found and seized had two types of transactions first, the cash transactions with the same code which was for a party for transactions carried out through cheques also and second, the remaining transactions in cash in different codes i.e. different parties, for which no entries were noted of any transaction through cheque. 9. It was the claim since beginning that the assessee was a practicing Chartered Accountant and was mediating to provide the funds to various persons who approached him where the assessee arranged cheques as well as cash to the needy persons by arranging the funds from the persons who are having funds after charging commission for the services rendered. For his own memoranda purposes, he jotted down these transactions in the diaries where transactions in cheque as well as cash received from the parties and paid subsequently were noted under coded form. Likewise where only cash transactions were done, they were also noted in coded form. Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 7 10. Ld. AR argued that where both the cash and cheques were recorded, Revenue has allowed deduction on account of cheque transactions however, treated the cash transactions under the same code as undisclosed income of the assessee by ignoring the fact that the code used against both of the transactions i.e. in cheque and cash both was the same and all the particulars of such persons were available with the Revenue and necessary action could be taken against those persons for such cash payments. The assessee claimed that it had received commission only on this category of cash transaction. 11. As per Annexure-1 filed by ld. AR, which contained the entries of cash transactions of same codes for which transactions were also carried through cheques and for which the AO himself has allowed deduction by holding the same as not relatable to assessee. As per the said working, the cash of INR 5,34,60,686/- was received and 2,58,81,550/- were paid by the assessee. Annexure-1 alongwith date-wise summary of these transactions is available at page 350 & 351 of the Paper Book. It is the claim of the assessee that when the deduction towards the transactions in cheques carried out under the same code is allowed, corresponding deduction of the cash transactions on the same code needs to be further allowed and accordingly total addition made for cash transactions of INR 10,08,34,389/- should be reduced by the amount of total inflow fund of INR 5,34,60,686/- being made under the same code. He further submits that with respect to this amount of INR Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 8 5,34,60,686/- transacted through assessee in cash, only commission could be added in the hands of the assessee. 12. With regard to the remaining amount, Ld.AR submits that in terms of the directions given by the Co-ordinate Bench, only peak balance is to be considered for the addition. For this, he prepared a peak working of the transactions related to cash only and filed before us in paper book pages 352 and also filed a copy of the same alongwith the written submission made before us. According to the said working, as per assessee, the positive peak amount was of INR 97,42,100/- and negative peak balance was of INR 32,84,900/- and therefore, he requested for the confirmation of total addition of INR 1,30,27,000/- being the sum of positive and negative peak amounts. 13. On the other hand, ld. CIT DR vehemently supported the orders of the lower authorities and submits that Ld. CIT(A) has discussed this issue in detail in its order where Ld. CIT(A) has clearly observed that the Hon’ble Tribunal in its order has directed to take one side of the fund flow statement i.e. the inflow of funds which has been done by the AO and thus, there is no error in the order of Ld. CIT(A) to this extent. Regarding the claim of the assessee for deduction of cash transactions under the same code, he submits that these were made by the assessee himself out of his undisclosed income and therefore, no deduction is to be allowed on this score. Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 9 14. With respect to the Revenue’s appeal, Ld.CIT DR submits that Ld. CIT(A) has reduced the additions on account of errors and duplicate entries without considering the true nature of transaction and therefore, he submits that the same deserves to be restored. 15. Heard the contentions of both the parties and perused the material available on record. With respect to the claim of the assessee for deduction of INR 5,34,60,686/- towards cash transactions with the parties having common code, we find that these transactions were carried out with the same entry code as was appearing against the corresponding entries of transactions through cheques. Both the entries of cheques and cash with common code were found noted in the same diary. Once the Revenue has accepted the contention that the code appearing against the cheque transaction is related to the persons who had issued the cheque, same analogy should be adopted for cash transactions found noted under same code and it must be presumed that the cash appearing against the same code be also related to such person. It is settled law that paper has to be read as a whole and parties are not allowed to consider that part of the paper which suits them. The details of such transactions as tabulated by the assessee in Annexure A-1 at page 350 and 351 of the paper book is reproduced as under:- Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 10 Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 11 16. In the instant case, admittedly the common code is appearing against both the cheque as well as cash transactions. Once the Revenue has accepted cheque entries, the corresponding entries in cash under same code should also be considered as pertaining to such party. Further, AO had the information about the person who had issued the cheques, therefore, adverse inference in respect of the cash entries, could be taken against those persons to examine the source of such cash. As against this, AO proceeded to treat the said cash as belonged to the assessee which is not permitted under the circumstances of the case. Accordingly, we direct the AO to reduce the amount of INR 5,34,60,686/- related to common code entries found noted for cheques and cash. 17. With respect to the remaining entries, as per the directions of the Co-ordinate Bench of the Tribunal, we find that AO has taken one side of the fund flow statement as unexplained income of the Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 12 assessee. Once fund flow statement is prepared where inflow fund is taken as source and outflow fund is taken as the application only the peak balance available could be treated as undisclosed income of the assessee by treating the amount received subsequently as source. However, this theory could be applied where the name/ particulars of persons from whom receipts and payments were claimed as source and application in fund flow statements are not known. In the instant case, from the perusal of the fund flow statement we find that inflow and outflow of funds are from different persons i.e. the code are different. This fact is further established from the peak working filed by the assessee where on 05.04.2011, INR 36 Lakhs were taken as out flow under the name of “MKS” and on 07.04.2011, a sum of INR 15 Lakhs and INR 20 Lakhs were taken as inflow of funds i.e. “MKS” thus these can be treated as from the same party and necessary deduction could be allowed. 18. It is further seen from the peak working filed by the assessee that the amounts appearing as inflow of funds being the source are from under different code whereas the outflow of funds are under different code. This, it cannot be accepted that the funds given to one party appearing under different code is received back from the same party as the same were found noted under different code. Therefore, the claim of the assessee of taking peak balance of the transactions cannot be accepted in whole which is applicable where the recipient and Pyer are the same or unknown. Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 13 19. As observed above in the instant case, from the perusal of working of peak credit filed by the assessee, it is clear that the recipients of outflow of funds as well as the person who gave the funds are not the same person as they are having different code, except with regard to the inflow and outflow of funds under the code “MKS” where entries are appearing both for inflow and outflow of funds. Therefore, in our considered opinion, only the inflow of funds is to be taken the undisclosed income of the assessee. 20. As per the peak working filed by the assessee in Annexure A-2 before us, total inflow was of INR 2,57,67,300/- which can be at most could be held as unexplained income of the assessee however, it includes INR 35.00 Lakhs on 07.04.2011 under the code “MKS” to whom funds of more than INR 1 crore were given prior to such date. Therefore, credit to this extent should be given and accordingly, out of total inflow of funds of INR 2,57,67,300/- , credit of INR 35 Lakhs is to be given and balance amount of INR 2,22,67,300/- is held as unexplained income of the assessee. 21. In view of the above discussion as against total addition of INR 10,08,34,389/- we uphold the addition of INR 2,22,67,300/-. 22. Regarding the deletion of addition by ld.CIT(A) by allowing deduction for duplicate entries, we find no error in the observations of Ld. CIT(A) who after making necessary verification of the seized Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 14 documents allowed deduction for those duplicate entries. Before us, revenue has failed to controvert the finding given by the ld. CIT(A) which are as under : Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 15 23. As the aforesaid findings of ld. CIT(A) were given after due consideration of the facts and verification form the seized material thus we find no infirmity in the order of ld. CIT(A) which is hereby upheld on this issue. 24. In the result, Ground of appeal Nos. 1 to 4 of the assessee are partly allowed and Ground of appeal Nos. 1 to 5 raised by the Revenue are dismissed. 25. Now coming to Ground of appeal No.6 raised by the assessee wherein the assessee has challenged the application of estimation of commission income @ 3 %. 26. Before us, Ld.AR submits that commission rate of 3% is exorbitant high and AO has not brought on record any comparable case for applying such high rate of commission on the money lending services provided by the assessee. He, therefore, requested to reduce the same at a reasonable rate. 27. On the other hand, Ld. CIT DR supported the rate applied by AO and submits that the rate is quite reasonable and therefore, the same deserves to be upheld. Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 16 28. Heard the contentions of both the parties and perused the material available on record. The assessee was admittedly providing entries to various persons of mediating in arranging the finance and charged commission for such services. Since beginning of the proceedings, it was claim of the assessee that only commission would be added on such transactions. The Revenue also accepted the contentions of the assessee and hold that the transactions found noted in cheques in seized material were actually pertained to the other persons who had issued cheques and assessee had received only commission. While deciding other grounds of appeal of the assessee, we hold that in addition to the cheque entries, cash entries of INR 5,34,60,686/- under the same code were also provided by assessee in the capacity of inter-mediatory for which the assessee had earned income in the shape of commission only. 29. Therefore, as against the gross value of INR 4,72,20,275/- on which commission is applied by the AO, same should be increased by the figure of INR 5,34,60,686/- being the amount of cash transaction and thus total amount of INR 10,06,80,961/- would be considered as the funds provided by the assessee on which it had earned the commission income only. Now coming to the question of reasonable rate of commission, in our considered opinion in these type of transactions, One [01] % commission would be fair and reasonable to meet the end of justice. Accordingly, we direct the AO to apply One [01] % commission on such transaction of INR Printed from counselvise.com ITA No.1057 & 1739/Del/2023 Page | 17 10,06,80,961/-. Accordingly, Ground of appeal No.6 raised by the assessee is partly allowed. 30. In the final result, appeal of the assessee in ITA No.1057/Del/2023 [AY 2012-13] is partly allowed and appeal of the Revenue in ITA No.1739/Del/2023 [AY 2012-13] are dismissed. Order pronounced in the open Court on 24.10.2025. Sd/- Sd/- (YOGESH KUMAR U.S) JUDICIAL MEMBER Date:-24.10.2025 *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "