SUMERCHAND T. AGARWAL,PUNE V. ITO WARD 8(1), PUNE, PUNE

ITA 632/PUN/2025

AI Insights

The case revolves around the reassessment of Sumerchand T. Agarwal for the Assessment Year 2008-09, where the Income Tax Officer alleged that Agarwal had made an unexplained cash payment of Rs. 50,00,000 to Rajkumar Agarwal for a land deal, which was not materialized. The reassessment was based on documents seized during a search at Rajkumar Agarwal's premises. The Tribunal examined the evidence, including affidavits and statements from Rajkumar Agarwal and Subhash Agarwal, who claimed ownership of the money and denied any transaction with Sumerchand T. Agarwal. The Tribunal referenced a similar case (ITA No.504/PUN/2020) where a similar addition was deleted, leading to the decision to allow Agarwal's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 653233 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Other Referred Cases: ITA No.504/PUN/2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH SRIVASTVA
• Assessee Lawyers: NIKHIL S PATHAK
• Keywords: Unexplained investment; Income from undisclosed sources; Principle of natural justice; Source of fund; Loose papers
• Section: 148; 69

Judgement Text

" आयकर अपीलीय अिधकरण ”बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE MS.ASTHA CHANDRA, JUDICIAL MEMBER AND DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.632/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year: 2008-09 Sumerchand T. Agarwal, Jai Bajarang Chowk, Pune Nashik Road, Near Marut Mandir, Pune – 411039. Maharashtra. V s. The Income Tax Officer, Ward-8(1), Pune. PAN: AAYPA0214E Appellant/ Assessee Respondent / Revenue Assessee by Shri Nikhil S Pathak – AR Revenue by Shri Akhilesh Srivastva –Addl.CIT(DR) Date of hearing 16/06/2025 Date of pronouncement 20/06/2025 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal is filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Income Tax Act, 1961 for A.Y.2008-09, dated 10.01.2025 emanating from Assessment Order u/s.143(3) r.w.s 147 dated 28.01.2016. The assessee has raised following grounds of appeal : ITA No.632/PUN/2025 [A] 2 “1] The assessee submits that the reopening u/s. 148 is bad in law and the consequential reassessment order passed u/s. 147 be declared null and void. 2] The Id. CIT(A) erred in confirming the addition made of Rs.50,00,000/- u/s. 69 of the Act on the ground that the assessee had paid the said amount in cash to Shri Rajkumar Agarwal and the assessee had failed to prove the sources of the said amount. 3] The Id. CIT(A) failed to appreciate that the assessee had not paid any such amount of Rs. 50,00,000/- to Shri Rajkumar Agarwal and hence, the question of making any addition simply did not arise and thus, the addition made may kindly be deleted. 4] The Id. CIT(A) erred in not appreciating that Shri Ajay Kumar Goyal and Shri Subhash R. Agarwal had owned up the amount of Rs. 50,00,000/-considered in the hands of the assessee as their own money and hence, there was no reason to make any addition of Rs. 50,00,000/- in the hands of the assessee. 5] The Id. CIT(A) failed to appreciate that no opportunity to cross examine Shri Rajkumar Agarwal was provided and hence, the addition made without following the principles of natural justice is not justified and the same may kindly be deleted. 6] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.” Submission of ld.AR : 2. Ld.AR for the Assessee filed a paper book containing 79 pages. Ld.AR took us through the assessment order to explain the nature of addition. As per the Paragraph 6 of the assessment order, during the Search in the case Rajkumar Agarwal certain documents were seized. The page no.27 and 28 of Bundle No.1 has certain ITA No.632/PUN/2025 [A] 3 entries and names mentioned. It is mentioned in the assessment order that Mr.Rajkumar Agarwal in his statement recorded during the search on 15.04.2015 submitted that the figure 68000 means Rs.68,00,000/- and Sumer means Mr. Sumer Tilakchand Agarwal. Mr.Rajkumar Agarwal in the statement submitted that Mr.Sumer Tilakchand Agarwal gave Rs.68,00,000/- to him for a proposed sale of piece of land. However, the transaction did not materialise, hence the amount was refunded. Based on this information, Assessing Officer reopened the assessment. The Assessee before the Assessing Officer and also before the Deputy Director of Income Tax-Investigation has categorically submitted that he had not made any payments to Mr.Rajkumar Agarwal. Ld.AR invited our attention to Affidavit of Mr.Rajkumar Agarwal dated 23.12.2014 which is at page no.66 and 67 of the paper book wherein, Mr.Rajkumar Agarwal has admitted the money belongs to Rajkumar Agarwal and Subhash Agarwal. Mr.Subhash Agarwal in his Affidavit submitted that Mr.Rajkumar Agarwal has never received Rs.68 lacs from Mr.Sumerchand T. Agarwal. Mr.Subhash Agarwal in the Affidavit submitted that he has filed a petition before the Settlement Commission and admitted the undisclosed income. ITA No.632/PUN/2025 [A] 4 Ld.AR then took us through the order of the Hon’ble Settlement Commission in the case of Mr.Subhash Agarwal, Rajkumar Agarwal and Ajay Goyal. 2.1 Further, ld.AR submitted that the Assessing Officer had made addition in the case of Assessee for A.Y.2011-12 and A.Y.2008-09. Ld.AR invited our attention to ITAT’s order in the case of assessee in ITA No.504/PUN/2020 wherein ITAT has directed to delete the addition. Ld.AR submitted that therefore, addition is not maintainable. 2.2 Mr.Subhash Ramdhari Agarwal filed an Affidavit(paper book, page no.10 and 11) and in that he submitted he has never received Rs.50 lakhs from Mr.Sumerchand Tilakchand Agarwal as under : “5) 1 say that on 27/10/2014 I have filed an Application with the Settlement Commission in which at page 47, Sr. No. (c) \"Investors' money owned up (shown in cash flow but offered as Income) is Rs.82,50,000. The said sum is half of Rs.1,65,00,000 as this amount was owned up equally by myself and by Ajay Goel. This fact is further mentioned at page 80 at Sr. No. 1. 6) I say that Rajkumar H. Agarwal never received Rs 50 lakhs from Mr. Sumerchand Tilakchand Agarwal, PCNDTA, Bhosari Pradhikaran, PCMC. I also say that Rajkumar H. Agarwal never paid Rs 18 lakhs profit to Mr. Sumerchand Tilakchand Agarwal, PCNDTA, Bhosari Pradhikaran, PCMC.” ITA No.632/PUN/2025 [A] 5 Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A). Ld.DR specifically submitted that the acceptance made by Subhash Agarwal, Rajkumar Agarwal in their settlement orders has got no relevance to the Assessee’s case. Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, assessee had filed Return of Income for A.Y.2008-09 disclosing total income of Rs.29,06,170/-. The Assessee’s case was reopened u/s.147 of the Act, based on the information received from Dy.Director of Income Tax-Investigation. The Assessing Officer received information from Dy.Director of Income Tax-Investigation that assessee has paid Rs.50 lakhs to Mr.Rajkumar Agarwal against the proposed land deal. During the assessment proceedings, assessee has categorically denied any such payment. During the Assessment Proceedings, Assessee also submitted that his statement was recorded by the Dy.Director of Income Tax-Investigation and in the statement, he has denied any such transaction. ITA No.632/PUN/2025 [A] 6 4.1 The paragraph no.9 and 10 of the Assessment Order are reproduced here as under: “09. The submission of the assessee is not acceptable for the reason that during the course of search action in the office premises of Shri. Rajkumar Agarwal, a bundle of loose papers were found. In bundle no.1 on paper no.27 & 28 there are entries which are related to the assessee. On page No. 27 some cash entries have been made. There are some cash amounts have been mentioned & against these cash amounts some names have been mentioned in these entries one entry has been mentioned as \"68000.00\" & against this amount name has been written as \"Sumer\" Further on page No. 28 again some amounts and names has been mentioned under the heading \"Total Amount Reecived\". Under this heading one of the entry of \"68000-00\" of \"Sumer\" has been mentioned once again. When the entries of these amounts/ names were questioned by the Investigation wing to Shri. Rajkumar Agarwal, it has been clarified by him that these entries mentioned on page No.27/28 are in respect of cash amount of Rs.50,00,000/- received in F.Y.2007-08 from Shri. Sumerchand T Agarwal regarding some proposed land deal out of Gat No. 148,149 & 150. Shri. Rajkumar Agarwal further clarified that since this deal could not be materialized the said cash amount of Rs.50,00,000/- alongwith profit of Rs. 18,00,000/- i.e. total of Rs.68,00,000/- has been repaid in cash to the assessee in F.Y.2010-11. 10. Therefore it is clear that not only the concerned paper has been found from Shri. Rajkumar Agarwal but also he has explained the paper in detail & admitted in the statement recorded on oath by the Investigation wing that the assessee has paid Rs.50,00,000/- in cash in F.Y.2007-08 & the same was repaid in F.Y.2010-11 at Rs.68,00,000/- i.e. with profit of Rs. 18 lakhs. The assessee has merely denied any transaction with Shri. Rajkumar Agarwal, which is not sufficient. The ITA No.632/PUN/2025 [A] 7 assessee has not asked even any cross verification with Shri. Rajkumar Agarwal. Therefore considering all the facts of the case it is clear that the assessee has not shown any such investment of Rs 50,00,000/-, made with Shri. Rajkumar Agarwal, in his books/ return of income of A.Y.2008-09. Hence it is crystal clear that the cash of Rs.50,00,000/- has been given to Shri. Rajkumar Agarwal out of the assessee's undisclosed sources of Income. Accordingly addition of Rs. 50,00,000/- has been made into the assessee's total income u/s 69 of the I.T.Act on account of unexplained investment made by the assessee for purchase of proposed land property through Shri Rajkumar Agarwal.” 5. Aggrieved by the assessment order, Assessee had filed appeal before the ld.CIT(A) who confirmed it. 6. It is clear from the assessment order that the page no.27 and 28 refers to a name “Sumer and a figure 68000”. Thus, nowhere assessee’s name appears on the seized papers of page no.27 and 28. Subsequently, Mr.Rajkumar Agarwal, Mr.Subhash Agarwal and Ajay Goyal filed petition before Settlement Commission, wherein, they accepted that the alleged money belongs to them. Copy of the settlement orders are in the paper book. It is noted that Assessing Officer had made addition based on the impugned seized papers in A.Y.2008-09 and A.Y.2011-12. Assessee had filed an appeal for A.Y.2011-12 before ITAT. ITA No.632/PUN/2025 [A] 8 7. ITAT in ITA No.504/PUN/2020 for A.Y.2011-12 held as under : “4. Having heard the rival submissions and perused the relevant material on record, it is seen that the ld. CIT(A) accepted the contention about the assessee not having given a sum of Rs.50.00 lakh to Shri Rajkumar Agarwal and his associates to the extent of declaration filed by Shri Ajay Kumar Goyal (one of the associates) before the Settlement Commission owning up the amount. They allegedly received a sum of Rs.1.65 crore in total from four persons including the assessee paying Rs.50.00 lakh. Detail of such Rs.1.65 crore has been reproduced at page 4 of the impugned order. Shri Ajay Kumar Goyal, one of the alleged recipients, approached the Settlement Commission and offered 50% of the amount, namely, Rs.82,50,000/- shown as Receivable from others. It is for this amount that the ld. CIT(A) got satisfied and deleted the addition of profit pro tanto. The other person, namely, Shri Subhash R. Agarwal also approached the Settlement Commission under similar facts, owning up Rs.82,50,000/-. A copy of the order passed in his case has been placed at page 21 onwards of the paper book. It is, therefore, apparent that both the alleged recipients of money from the assessee accepted that it was, in fact, their own money which was recorded in the name of certain persons including the assessee. The ld. AR fairly submitted that the order by the Settlement Commissioner in the case of Shri Subhash R. Agarwal was not available when the impugned order was passed, whose copy has now been placed on record. When the facts are so, I fail to appreciate as to how the balance addition of Rs.9.00 lakh can be sustained. In view of the foregoing facts, I am satisfied that there is no case for making or sustaining any addition in this regard. The addition so sustained is directed to be deleted. ITA No.632/PUN/2025 [A] 9 5. In the result, the appeal is allowed.” 8. Ld.AR filed copy of Affidavit of Mr.Subhash Agarwal. The relevant paragraphs are reproduced here under : “5) 1 say that on 27/10/2014 I have filed an Application with the Settlement Commission in which at page 47, Sr. No. (c) \"Investors' money owned up (shown in cash flow but offered as Income) is Rs.82,50,000. The said sum is half of Rs.1,65,00,000 as this amount was owned up equally by myself and by Ajay Goel. This fact is further mentioned at page 80 at Sr. No. 1. 6) I say that Rajkumar H. Agarwal never received Rs 50 lakhs from Mr. Sumerchand Tilakchand Agarwal, PCNDTA, Bhosari Pradhikaran, PCMC. I also say that Rajkumar H. Agarwal never paid Rs 18 lakhs profit to Mr. Sumerchand Tilakchand Agarwal, PCNDTA, Bhosari Pradhikaran, PCMC.” 8.1 The Ld.DR or CIT/AO has not rebutted the Affidavit of Mr.Subhash Agarwal. 8.2 It is also observed that impugned amount has been accepted and declared by Subhash Agarwal, Rajkumar Agarwal, Ajay Goyal in their Settlement Commission’s application. They have accepted that money belongs to them and they have shown in the names of various persons. These facts have not been rebutted by ld.CIT(A)/AO/ld.DR. ITA No.632/PUN/2025 [A] 10 9. In these facts and circumstances of the case, respectfully following ITAT in ITA No.504/PUN/2020, for all the reasons discussed, we hold that the alleged money does not belong to assessee. Accordingly, we direct the Assessing Officer to delete the addition of Rs.50 lakhs. Accordingly, grounds of appeal raised by the assessee are allowed. 10. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 20 June, 2025. Sd/- Sd/- ASTHA CHANDRA Dr.DIPAK P.RIPOTE JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 20 June, 2025/ SGR आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. "