PRAMOD RAMABHAI TANDEL,DAMAN V. ACIT, CENTRAL CIRCLE-1, VAPI

ITA 579/SRT/2024

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The case involves Pramod Ramabhai Tandel, the appellant, contesting the additions made by the Assessing Officer following a survey under section 133A of the Income Tax Act, 1961. The additions pertained to alleged unexplained cash payments and unaccounted commission income, both of which were taxed under section 115BBE at an enhanced rate. The Commissioner of Income Tax (Appeals) upheld these additions, leading to the present appeal before the Tribunal. The Tribunal's decision to delete the additions was based on the lack of corroborative evidence and the findings from the assessments of related parties, particularly Harshadbhai Kantilal Sagar, the property seller, and S. K. Enterprise, the firm associated with the alleged commission income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33913 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Next Hearing Date: 15-10-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 16-05-2024
• Other Referred Cases: CBI Vs V.C. Shukla (1998) xxxx taxnmann.com 2155 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Corroborative evidences
• Section: 147; 143(1); 131; 69; 69A; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT (SMC) BENCH BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 579/SRT/2024 for AY: 2016-17 (Physical hearing) Pramod Ramabhai Tandel, 0 Kusum Niwas, Sarvodaya Society, Tin Batti, Nani Daman, Daman – 396210, Daman and Diu (UT), India PAN : AARPT2989E Vs The ACIT, Central Circle – 1, Vapi APPELLANT RESPONDEDNT Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Institution 16/05/2024 Date of hearing 15/10/2024 Date of pronouncement 23/10/2024 Order under Section 254(1) of Income tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat dated 22.03.2024 for Assessment Year (AY) 2016-17. The assessee has raised following grounds of appeal: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in re-opening the assessment u/s.147 of the Act and issuing notice u/s.148 of the Act. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.6,08,000/- on account of alleged cash payment to Shri Harshadbhai Kantilal Sagar for purchase of property treated as alleged Unexplained money u/s.69 of the Income Tax Act,1961. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.12,86,771/- on account of alleged commission received from M/s. S.K. Enterprise treated as alleged un accounted income. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 2 confirming the action of the Assessing Officer in invoking the provisions of section 69 and 69A of the Act and taxed on income assessed u/s.H5BBE of the Act. 5. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in initiating penalty proceedings u/s.271(1)(c) of the Income Tax Act, 1961. 6. On the facts and in the circumstances of the case as well as the law on the subject the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunity to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO. 7. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 2. At the outset of hearing, learned Authorized Representative (ld. AR) of the assessee submits that that assessee has not pressing the Ground No.1 of appeal which relates to validity of reopening and issuing notice u/s 148. Considering the contention of ld. AR of the assessee, the Ground No.1 is treated dismissed as not pressed. 3. Brief facts of the case qua remaining grounds of appeal are that assessee is an individual, filed his return of income for AY.2016-17, declaring total income of Rs.15,52,000/-. The return of income was processed under section 143(1) and was accepted. Later on, case was reopened under section 147 of the Act. The case was reopened on the basis of survey under section 133A on 03.05.2017 and 04.05.2017, wherein various incriminating documents were found and seized. During the assessment / reassessment, the Assessing Officer noted that on verification of incriminating material, it was found that assessee has made cash payment of Rs.6,08,000/- to Harshadbhai Kantilal Sagar for purchase of property. However, the assessee has not shown such cash transaction in his return of income. The assessee was asked as to why cash payment of Rs.6,08,000/- be not treated as ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 3 unexplained income, and added to the total income of the assessee. The assessee filed his reply dated 08.12.2021. The contents of reply are recorded by Assessing Officer in para 5.1 of his order. The assessee in his reply stated that he has not paid any cash amount to Harshadbhai Kantilal Sagar for purchase of property. The assessee furnished ledger account of Harshadbhai Kantilal Sagar to substantiate his contention. The assessee also stated that there is no evidence to show that assessee made any cash payment and / or there no corroborative evidence. The assessee also stated that loose paper found during survey has no evidentiary value. The assessee also relied on the decision of Hon’ble Apex Court in CBI Vs V.C. Shukla (1998) xxxx taxnmann.com 2155 (SC). The reply of assessee was not accepted by Assessing Officer, the Assessing Officer held that assessee made cash payment as has been found in impounded material. The Assessing Officer held that seller (Harshadbhai Kantilal Sagar) has admitted in his statement recorded under section 131 about such cash payment. The Assessing Officer thus made addition under section 69 of Rs.6,08,000/- and taxed the same under section 115BBE. The Assessing Officer further noted that as per the record available with his office, the assessee has received commission income of Rs.12,66,771/- from S. K. Enterprise which is not shown by assessee in his return of income. The assessee was issued show cause notice as to why such commission income should not be treated as unexplained income. The assessee filed his reply dated 08.12.2021. The content of such reply is recorded in para 6.1 of the assessment order. The assessee in his reply denied any commission income. The assessee further ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 4 stated that if S. K. Enterprise paid any commission, they must have claimed this amount as an expense in his books of account, but the firm has not shown any such expenses in its books of account. The assesse furnished profit and loss account of S. K. Enterprise. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer held that in incriminating document found during survey, it reveals that assessee has received such commission income from S. K. Enterprise, which remained unaccounted. The Assessing Officer accordingly added such amount as unexplained income and taxed under section 115BBE in the assessment order dated 15.02.2022. 4. Aggrieved by the addition made by the Assessing Officer, the assessee filed appeal before ld. CIT(A) in challenging both the additions as well as in taking the addition at enhanced rate of taxed under section 115BBE of the Act. The ld. CIT(A) confirmed both the additions. On addition of Rs.6,08,000/-, the ld. CIT(A) held that in the statement recorded during survey, the seller has admitted such cash payment. On the addition of commission income, ld. CIT(A) held that in the incriminating document impounding during survey, it was revealed that assessee received commission income during year under consideration. The assessee failed to file any supporting evidence to substantiate the contention against the ground of appeal. Further, agrrieved the assessee has filed present appeal before the Tribunal. 5. I have heard the submission of ld. AR of the assessee and ld. Sr. DR for the revenue and have gone through the orders of lower authorities. Ground ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 5 No.2 of the appeal relates to addition of 6.08 lacs on account of cash payment against purchased of property. The ld. AR of the assessee submits that there is no evidence on record that assessee made any cash payment in excess to sale consideration paid to seller of property namely Harshadbhai Kantilal Sagar. The Assessing Officer made addition by taking view that during survey action, the seller of property has accepted cash payment was received such payment. Neither, there is any corroborative evidence nor the seller ever accepted such fact in his statement. The copy of statement of Harshadbhai K. Sagar recorded on 26.09.2017 in post- survey investigation is filed on record. Further, copy of assessment of Harshadbhai K. Sagar asked under section 147 on 19.03.2022 is also placed on record. The ld AR of the assessee submits that during assessment of seller despite raising similar query about in his alleged statement under section 131, no addition in his case was made on account unaccounted investment. Copy of assessment order dated 29.12.2022 passed under section 147 rws 144B for AY 2016-17 is placed on record. There is no corroborative evidence for making such addition. Against the addition on account of commission received from S. K. Enterprise, which is challenged in Ground No.3, the ld. AR of the assessee submits that no commission was received by the assessee. There is no evidence of such commission payment, the assessee in response to show cause notice clearly explained before the Assessing Officer that no such commission income was received by assessee. The Assessing Officer made addition by taking view that on analyzing the incriminating material, it was found that assessee received ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 6 such commission income. The assessee is a partner in the S. K. Enterprise and having majority stake in such firm. No such commission expenses is claimed by S. K. Enterprise. Copy of profit and loss account of S. K. Enterprise is placed also on record. Statement of Sushil Prajapati who was maintaining books of account of S. K. Enterprise was recorded in post survey proceedings, copy of which is filed on record. In his entire statement, he nowhere accepted about payment of commission to the assessee. The Assessing Officer has not referred any document, which is the basis of such commission payment. There is no evidence on record to suggest that assessee was paid commission by S. K. Enterprise. Against Ground No.4, which relates to taxing the addition under section 115BBE, the ld. AR of the assessee submits that enhanced rate of tax is not applicable for AY.2016-17, thus, taxing such addition at the enhanced rate is unjustified. The ld AR of the assessee has filed following documents on record.  Copy of statement of Harshadbhai K Sagar recorded under section 131(1A),  Copy of statement of Sushil C Parajapati recorded under section 132(4)/131(1A),  Copy of assessment order passed under section 147rws 144B dated 29.12.2022 passes in case of Harshadbhai K Sagar,  Reconstituted partnership deed of SK. Enterprises,  Audited accounts of SK Enterprises,  Acknowledgement of e-filing about filing of partnership deed on portal. 6. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities on all the grounds of appeals. The ld. Sr. DR submits that Assessing Officer in his finding has categorically recorded that both the additions i.e. payment of ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 7 cash of Rs.6.08 lacs, paid in cash against purchased of property and commission payment, which is not offered for taxation, is based on incriminating material and the statement of assessee and seller recorded during the survey and post-survey investigation. He may be allowed to file such material on record. On considering the submissions of ld Sr DR of revenue, he is allowed seven working days to file copy of incriminating evidence and corroborative material, which was the basis for making such additions. No such corroborative evidence/ material is placed on record by ld Sr DR of revenue, till today. 7. I have considered the rival submissions of both the parties and have gone through the lower authorities. I have also gone through the statement of Harshadbhai Kantilal Sagar recorded during post-survey investigation, copy of assessment order passed in his case, copy of reconstituted partnership deed of S. K. Enterprise with profit and loss account, balance sheet with all schedule attached with it. Ground No.2 relates to addition of Rs. 6,08,000/- on account of cash paid to Harshadbhai Kantilal Sagar. The Assessing Officer while making addition and the ld CIT(A) while confirming such addition held that the seller / Harshadbhai Kantilal Sagar in his statement recorded under section 131 admitted of receiving such payment. The copy of statement of Harshadbhai Kantilal Sagar is placed on record. On careful reading of such statement, I do not find any assertion (admission) in his entire statement, he nowhere accepted of having received any such cash payment, either of his own or on behalf of other person. I also find that case of Harshadbhai Kantilal Sagar was also reopened on the issue of same ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 8 cash receipt of Rs. 6,08,000/- on account of alleged unexplained money, however after making necessary investigation on the issue no addition was made in the assessment order passed on 19.03.2022, copy of which is available on record. Thus, I do not find any supportive evidence or material on record to substantiate the finding of the Assessing Officer. Hence, in absence of any corroborative evidence, there is justification of making such addition. Thus, the Assessing Officer is directed to delete the addition. 8. So far as addition of commission payment of Rs. 12,86,771/-, which is the subject matter or Ground No.3, I find that the Assessing Officer made such addition by holding that in record available with his office, the assessee has received commission income of Rs.12,66,771/- from S. K. Enterprise which is not shown by assessee in his return of income. I find that right from the beginning the stand of the assessee is that there is no evidence of receipt of such commission income. I find that statement of Sushil C Prajapati, who is maintaining books of SK Enterprises, was recorded by investigation team of survey, wherein he not been asked any question about the alleged commission payment no he anywhere accepted payment of such commission to assessee. Audited statement of SK Enterprises is also placed on record, wherein they have not debited any such expenses. Moreover, the assessee is 95% of shareholder in SK Enterprises, and 5% share is owned by his wife. Thus, in absence of any evidence, I do not find any justification of making such addition of commission income. I addition to I find that while making both the aforesaid additions, the Assessing Officer nowhere has specified the basis of addition except casually mentioning that ITA No.579/SRT/2024/AY.2016-17 Pramod Ramabhai Tandel 9 on verification of impounded material, which is not sufficient for making such addition unless such additions are corroborative material. In the result, ground No. 3 & 4 are allowed. 9. Considering the facts that I have deleted both the addition, thus, adjudication of ground No.5 which relate to taxing the addition at higher rate of tax under section 115BBE has become academic. 10. In the result, the appeal of the assessee is partly allowed. Order pronounced on 23/10/2024 in the open court. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 23/10/2024 SAMANTA Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Assistant Registrar/Sr.PS/PS, ITAT, Surat "