2019 (3) TMI 1733 - AT - Income Tax

Unaccounted sales - Addition on the basis of contents of the documents impounded during the course of survey - HELD THAT - Since the premises where the loose sheets were impounded belong to M/s Intime Promoters Pvt Ltd the CIT(A) has rightly considered the same in the hands of the right person. Therefore there is no occasion to make addition in the hands of M/s Taneja Developers Infrastructure Ltd. In the hands of M/s Intime Promoters Pvt Ltd. the Assessing Officer himself has verified the entries in the books of account and since the entries were found recorded in the regular books of account there is no reason why the addition could be made. The addition has been rightly deleted by the CIT(A) and therefore no interference is called for. Accordingly the common grievance raised in both the appeals is dismissed. Unexplained credits u/s 68 - investigation made in respect of accommodation entry provider and oaon receiving no plausible reply AO made the addition - HELD THAT - No doubt the initial onus is upon the assessee to explain the credit transaction in its books of account in the light of provisions of section 68 of the Act. However this burden of proof is not permanent but keeps oscillating meaning thereby that once the initial burden has been discharged by the assessee the burden shifts upon the revenue to make further enquiry. The letter written by the CIT(A) to the Assessing Officer which is exhibited elsewhere clearly shows that the CIT(A) has directed the Assessing Officer to make necessary enquiry from the two creditors. The remand report of the Assessing Officer clearly reveals that he did make enquiry from M/s Rangoli Buildtech Pvt Ltd and came to the conclusion that M/s Rangoli Buildtech vpt Ltd is in fact a debtor of the assessee and not a creditor. In so far as M/s Epic Developers Pvt Ltd is concerned the bank statements clearly show that there was no cash found to be deposited before issuing cheque to the assessee company. Moreover the balance sheet of M/s Epic Developers Pvt Ltd clearly shows that they have received Rs. 17.35 crores from Benda Amtek Ltd and Amtek Auto Ltd and from this Rs. 17.35 crores have lended Rs. 14.50 crores to the assessee. If the CIT(A) has exercised his power vested upon him by provisions of section 250(4) of the Act the same cannot be faulted with. The CIT(A) has gone one step further in examining the availability of funds with M/s Epic Developers Pvt Ltd and subsequently found that M/s Epic Developers Pvt Ltd had sufficient available funds to lend money to the assessee. No adverse inference can be drawn from such findings of the CIT(A). The contention of the ld. DR that the first appellate authority has admitted some additional evidences is without any basis. Assessee has successfully explained the transaction with M/s Epic Developers Pvt Ltd and in so far as M/s Rangoli Buildtech Pvt. Ltd is concerned it being a debtor of the assessee section 68 of the Act is clearly not applicable. We therefore do not find any merit in the grievance of the revenue. The findings of the CIT(A) are upheld. This ground of the revenue is dismissed.

Summary

Issues Involved:
1. Deletion of addition of Rs. 1,46,55,94,222/- on account of unaccounted sales.
2. Deletion of addition of Rs. 20 crores on account of unexplained credits under Section 68 of the Income-tax Act, 1961.

Detailed Analysis:

1. Deletion of Addition of Rs. 1,46,55,94,222/- on Account of Unaccounted Sales:

Facts:
- A survey under Section 133A of the Income-tax Act, 1961, was conducted on 20.02.2007 at the premises of the assessee, where three loose papers were found and impounded. These papers revealed broker-wise dues totaling Rs. 1,46,55,94,222/- as of 12.01.2005.
- The assessee explained that these documents pertained to M/s TDI Infrastructure Pvt Ltd (formerly known as Intime Promoters Pvt Ltd).

Assessing Officer's Action:
- The Assessing Officer (AO) made a substantive addition of Rs. 1,46,55,94,222/- in the hands of M/s Taneja Developers and Infrastructure Ltd. and a protective addition in the hands of M/s Intime Promoters Pvt Ltd.

CIT(A)'s Decision:
- The CIT(A) deleted the addition in the hands of M/s Taneja Developers and Infrastructure Ltd. after being convinced that the impounded documents belonged to M/s Intime Promoters Pvt Ltd.
- The protective addition in the hands of M/s Intime Promoters Pvt Ltd became substantive.

Remand Report:
- The AO confirmed that the documents belonged to M/s Intime Promoters Pvt Ltd and pertained to the assessment year 2005-06.
- The AO verified the entries and found that the correct amount was Rs. 1,42,48,36,949/- after eliminating double entries. The entries were found to be recorded in the books of M/s Intime Promoters Pvt Ltd, and the amount received was Rs. 1,34,59,86,447/- with a balance of Rs. 7,88,50,502/- outstanding.

Tribunal's Decision:
- The Tribunal upheld the CIT(A)'s decision, noting that the premises where the documents were found belonged to M/s Intime Promoters Pvt Ltd and the entries were duly recorded in their books of account. Therefore, no addition was warranted in the hands of M/s Taneja Developers and Infrastructure Ltd.

2. Deletion of Addition of Rs. 20 Crores on Account of Unexplained Credits Under Section 68:

Facts:
- The AO added Rs. 20 crores as unexplained credits under Section 68 of the Act, based on credit entries in the names of M/s Rangoli Buildtech Pvt Ltd and M/s Epic Developers Pvt Ltd.

CIT(A)'s Decision:
- The CIT(A) called for a remand report and found that M/s Rangoli Buildtech Pvt Ltd was a debtor, not a creditor, and therefore, no addition could be made under Section 68.
- Regarding M/s Epic Developers Pvt Ltd, the CIT(A) found that the company had sufficient sources of funds, having borrowed Rs. 17.35 crores from other entities, and thus deleted the addition.

Remand Report:
- The AO confirmed that M/s Rangoli Buildtech Pvt Ltd was a debtor of the assessee.
- For M/s Epic Developers Pvt Ltd, the AO found that the company had received Rs. 17.35 crores from other sources, which was sufficient to lend Rs. 14.50 crores to the assessee.

Tribunal's Decision:
- The Tribunal upheld the CIT(A)'s findings, stating that the assessee had successfully explained the transactions with M/s Epic Developers Pvt Ltd and that Section 68 was not applicable to M/s Rangoli Buildtech Pvt Ltd as it was a debtor.
- The Tribunal found no merit in the revenue's grievance and dismissed the appeals.

Conclusion:
Both appeals filed by the revenue were dismissed, and the additions made by the AO were deleted by the CIT(A) and upheld by the Tribunal. The Tribunal confirmed that the documents and transactions were correctly attributed and recorded by the respective entities, and no further additions were warranted.