2019 (5) TMI 338 - AT - Income Tax

Assessment order barred by limitation u/s 153A - Search and Seizure operations u/s 132 - matter travelled to settlement commission which was rejected - period of limitation u/s 153B read with Explanation thereto would be 60 days from the end of the month in which the said order was received - amendment to section 153B vide Finance Act,2017 - 60 days OR 1 year - ground taken first time before Tribunal - HELD THAT - We find that issues raised in Grounds is a legal issue and has been raised for the first time before the Tribunal. There was no occasion with the Ld. CIT(A) to adjudicate this issue. Therefore in light of judgment of Hon'ble High Court in the case of CIT V/s Tolaram Hossomal 2006 (3) TMI 136 - MADHYA PRADESH HIGH COURT we set aside legal issue raised by the assessee for Assessment Year 2012-13 relating to the validity of the impugned assessment order whether being valid or invalid considering the limitation period provided under provisions of law for the completion of assessment proceedings. Ld. CIT(A) should accordingly decide the issue in light of the principle laid down by the Hon'ble Court. Loan received assessed as income u/s 68 - loan received from companies - accommodation entries from paper companies - taken for two months and interest was paid and TDS deducted - HELD THAT - The assessee has been successful to prove the genuineness, creditworthiness and identity of the alleged cash creditors on account of the fact that all the relevant details and supporting documents are placed on record. Further no incriminating material was found during the course of search which could clearly prove that the alleged transaction of receiving loan was an accommodation entry. The assessee s case further finds support the fact that the alleged loans were taken for a period of two months and have been repaid back with interest. Tax has also been deducted at source on the interest paid. The alleged transaction of receiving loan and being repaid back has been duly acknowledged by the cash creditors in the affidavit. The documents filed in support of identity, creditworthiness and genuineness i.e. Profit loss accounts, income tax returns, audit reports, affidavit of the cash creditors and identity proof have not been disputed by the revenue authorities at any stage. Ld. A.O seems to have made the addition without making any investigation after the loan was taken. The finding given in the impugned assessment order about the investment is during the period prior to taking the loan. We therefore in the given facts and circumstances of the case and respectfully following the judgments in the preceding paragraphs are of the considered view that the addition for unexplained cash credit of ₹ 1,80,00,000/- needs to be deleted. As regards the applicability of recent judgement of Hon ble Supreme Court in the case of PCIT vs. NRA IRON STEEL PVT. LTD. 2019 (3) TMI 323 - SUPREME COURT heavily relied by Learned Departmental Representative, we observe the Principles laid down in para 11 of the said judgment are not applicable to the facts of the case at hand. Undisclosed Income received in cash by Sumati Kumar Kasliwal - HELD THAT - Assessee had not pressed because himself offered this amount before Income Tax Settlement Commission. Our this finding of confirming the addition in the hands of Shri Sumati Kumar Kasliwal for Assessment Year 2013-14 will be for consideration while deciding the issue of unexplained share capital in the case of M/s. Pumarth Infrastructure Pvt. Ltd for Assessment Year 2012-13 in the subsequent adjudication of the remaining issues. - dismissed as not pressed Sale of shares assessed as income u/s 68 - addition was based on seized documents - sale of shares duly reflected in the books - purchases were not doubted - HELD THAT - Ld. A.O has not doubted the genuineness of the purchase of the equity shares made by the assessee in the preceding financial year. It is established principle of law that if the purchases are genuine then only the difference between the sale and purchase amount can be subjected to tax. In the instant case the assessee has offered Short Term Capital Gain of ₹ 6,33,325/- for tax being the difference between the sale consideration of ₹ 3,06,32,825/- and the purchase/cost price of the equity shares sale of ₹ 2,99,99,500/-. Further all the necessary details about the identity and genuineness of the concern purchasing the shares from the assessee have been placed on record. Merely for not producing the directors of the alleged companies buying the equity shares cannot make the transaction in genuine. We therefore in the given facts and circumstances of the case are of the considered opinion that the assessee has successfully explained the amount of ₹ 3,61,22,825/- which includes ₹ 54,90,000/- being the amount received against sale of equity shares but returned back to the purchaser as the transaction could not be finalized and remaining amount of ₹ 3,06,32,825/- represents the sale consideration of sale of equity shares held by the assessee since last financial year and the amount of capital gain from sale thereof is duly offered to tax. We accordingly set aside the findings of lower authorities and delete the addition. - Ground of assessee is allowed Telescoping of additions sustained vis- - vis income surrendered - HELD THAT - We set aside this issue to the file of the AO with a direction to verify the income surrendered by the various assesses as stated in the declaration dated 18.03.13 filed at the time of search and also the income tax returns of the various assesses mentioned there in settlement commission. The AO will verify whether credit of such income surrendered has been taken by the respective assessee or not and in case no credit has been taken then set-off of such income will be given in the hands of Sumati Kumar Kasliwal. With the aforesaid direction this ground of appeal is allowed for statistical purposes. Addition of Share Capital - treated as unexplained by the AO and confirmed by the CIT(A) - since identical addition arising out of the same loose paper has already been made in the hands of the appellants director Sumati Kumar Kasliwal and in the submission filed before this Hon ble Tribunal the said addition has already been accepted no addition need here - HELD THAT - it will not be fair to make the addition of the same amount of ₹ 13,60,00,000/- in the hands of two assessee s in the same group concern even when one of the assessee Shri Sumati Kumar Kasliwal has already accepted the addition of ₹ 13,61,94,600/- being part of the total additions not pressed of ₹ 14,57,12,069/- and therefore the revenue authorities are free to collect the tax on the addition confirmed by us in the case of Shri Sumati Kumar Kasliwal even though the year of taxability of Shri Sumati Kumar Kasliwal is Assessment Year 2013-14 whereas the addition made in the case of instant appeal of M/s. Pumarth Infrastructure Pvt. Ltd is for Assessment Year 2012-13. We are conscious of the fact that the taxability of the year is different but looking to the connective transactions which very well speak by itself that the unaccounted income of Shri Sumati Kumar Kasliwal of ₹ 13.60 crores took shape of share capital and share premium of ₹ 13.60 crores in the hands of M/s. Pumarth Infrastructure Ltd. Even the Ld. A.O assessing the case of Shri Sumati Kumar Kasliwal while examining the seized paper at Page 61 63 of LPS B-1/5 made such observations. The observation of Ld. A.O supports our view that an unexplained income of ₹ 14,57,12,069/- inter alia including the amount of ₹ 13,61,94,600/- admitted as undisclosed income and offered to tax by Shri Sumati Kumar Kasliwal has its direct nexus with the addition of unexplained share capital of ₹ 13.60 crores in the case of M/s. Pumarth Infrastructure Pvt. Ltd. As we have already confirmed the addition in the hands of Shri Sumati Kumar Kasliwal it will not be justified to sustain the addition of ₹ 13.60 crores in the case of M/s. Pumarth Infrastructure Pvt. Ltd and the same deserves to be deleted. We accordingly orders and delete the addition of ₹ 13.60 crores made by the Ld. A.O u/s 68 of the Act on the basis of our finding that the addition for similar amount has already been confirmed by us in the hands of Shri Sumati Kumar Kasliwal. - Assessee ground allowed On money on sales of plots - HELD THAT - The aforesaid issue has already been decided by this tribunal 2019 (3) TMI 631 - ITAT INDORE confirming addition @ 25% of On-Money . From perusal of the above judgments common view has been taken thereby confirming the addition only for the profit element in On-Money . Respectfully following the above judgment and examining facts of the instances case we find that the On- Money has been received by the assessee company from its business activity of developing various projects. Undoubtedly against unaccounted On- Money there is also an element of unaccounted expenditure which cannot be brushed aside and further looking to the fact that in the very same Group concern addition confirmed by the ITSC is @ 25% of On-Money . Addition u/s 40A(3) - various expenses in cash, above ₹ 20,000/- - HELD THAT - he assessing Officer alleged that the assessee has incurred cash expenses over and above ₹ 20,000/- and therefore is liable for disallowance u/s 40A(3) of the Act. Looking to the request of Ld. counsel for the assessee for setting aside the issue which goes opposed by the revenue authorities. We direct the Ld. AO to examine this issue of disallowance u/s 40A(3) of the Act for various expenses incurred in cash afresh after providing necessary opportunity to the assessee for filing documents and evidence in support of its claim that no disallowance is called for. Accordingly this issue for disallowance u/s 40A(3) of the Act is allowed for statistical purposes.

Summary

Issues Involved:
1. Assessment order barred by limitation.
2. Loan received assessed as income u/s 68.
3. Sale of shares assessed as income u/s 68.
4. Income received in cash by Sumati Kumar Kasliwal.
5. Share Capital.
6. On money on sales of plots.
7. Addition u/s 40A(3).
8. Telescoping of additions sustained vis-à-vis income surrendered.

Issue-Wise Detailed Analysis:

1. Assessment Order Barred by Limitation:
The assessee argued that the assessment orders were passed beyond the period of limitation prescribed under section 153B of the Income Tax Act. The Settlement Commission rejected the application on 08/05/2015, received by the Principal Commissioner on 18/05/2015, and the assessment order was passed on 29/01/2016, which is beyond the period of limitation. The Tribunal remanded the issue back to the CIT(A) to determine the validity of the assessment order considering the limitation period.

2. Loan Received Assessed as Income u/s 68:
The Tribunal found that the assessee successfully proved the genuineness, creditworthiness, and identity of the creditors. The loans were taken for a short period of two months and repaid with interest. No incriminating material was found during the search to prove the loans were accommodation entries. The Tribunal deleted the additions made by the AO under section 68 in the cases of Sumati Kumar Kasliwal, Parth Kasliwal, Sharda Kasliwal, and Nishant Finance Pvt. Ltd.

3. Sale of Shares Assessed as Income u/s 68:
The Tribunal noted that the sale of shares was recorded in the regular books of accounts, and the purchases were not doubted by the AO. Only the profit element should be taxed, not the entire sale consideration. The Tribunal deleted the additions made under section 68 in the cases of Sumati Kumar Kasliwal, Parth Kasliwal, Sharda Kasliwal, Nishant Finance Pvt. Ltd., and Pumarth Infrastructure Pvt. Ltd.

4. Income Received in Cash by Sumati Kumar Kasliwal:
Sumati Kumar Kasliwal admitted to receiving cash income of ?13,61,94,600, which was routed through the books of Pumarth Infrastructure Pvt. Ltd. The Tribunal confirmed the addition of ?14,57,12,069 in the hands of Sumati Kumar Kasliwal, including the cash income and other amounts, as the grounds were not pressed by the assessee.

5. Share Capital:
The Tribunal found that the addition of ?13.60 crores as unexplained share capital in the hands of Pumarth Infrastructure Pvt. Ltd. was not justified since the same amount was already taxed in the hands of Sumati Kumar Kasliwal. The Tribunal deleted the addition in the case of Pumarth Infrastructure Pvt. Ltd.

6. On Money on Sales of Plots:
The Tribunal followed the precedent set in the group’s other cases, where only the profit element of the 'on-money' received was taxed. The Tribunal restricted the addition to 25% of the undisclosed receipts, amounting to ?35,42,575 for AY 2012-13 and ?32,84,188 for AY 2013-14 in the case of Pumarth Infrastructure Pvt. Ltd.

7. Addition u/s 40A(3):
The Tribunal remanded the issue of disallowance under section 40A(3) back to the AO for verification, allowing the assessee to provide necessary evidence to support its claim that no disallowance was warranted.

8. Telescoping of Additions Sustained vis-à-vis Income Surrendered:
The Tribunal directed the AO to verify the income surrendered by various assessees and ensure that credit for such income was given to Sumati Kumar Kasliwal if not already accounted for by the respective assessees.

Conclusion:
The Tribunal allowed the appeals in part, remanding certain issues for further verification and deleting several additions made by the AO. The Tribunal emphasized the importance of verifying the genuineness, creditworthiness, and identity of transactions and creditors, and ensuring that additions are not duplicated across different assessees.