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TMI Blog2021 (4) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the buyer on substantive basis and at the same time if the receipt of consideration is not disclosed by the seller, the amount has to be added as undisclosed income to the total income of the seller on the substantive basis only. As undisputed fact that Shri Mehul Mehta in whose hands the addition was made on substantive basis had made relevant disclosure in the application for settlement which has been considered by the settlement commission in the order dated 17th Nov, 2017 u/s. 245D(iv) as elaborated in the finding of ld. CIT(A). In view of the above fact and circumstances, we do not find any infirmity in the decision of ld. CIT(A) in deleting the similar addition made in the hands of the assessee on protective basis. Therefore, this ground of appeal of the revenue stands dismissed. Addition u/s 68 - assessee has received unsecured loan - AO held that assessee has failed to establish the identity and creditworthiness of the lender and genuineness of the transaction - CIT-A deleted the addition - HELD THAT:- During the course of appellate proceedings before ld. CIT(A) the assessee has filed additional evidences which were admitted by the ld. CIT(A) and remand rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. be restored to the above extent. 3. The fact in brief is that assessment u/s. 153A r.w.s. 143(3) of the Act was finalized on 29th Feb, 2016 and total income was assessed at ₹ 3,59,30,822/- after making addition of ₹ 3,52,93,962/- on protective basis u/s. 69 of the Act and other addition of ₹ 4 lacs on account of unexplained credits as per the provisions of section 68 of the Act. Further facts of the case are discussed while adjudicating two grounds of appeal filed by the revenue as follows:- Ground No. 1( Addition of ₹ 3,52,93,962/- on protective basis u/s. 69A of the Act) 4. During the course of search at the resident of Shri Sohit Mehta on 19th July, 2013 signed a banakhat dated 28th March, 2012 was found and seized. The banakhat was signed between Shri Mehulbhai Lavjibhai Mehta (buyer of Mehta Group) and Shri Mansukhlal Amrutlal Modi, Goswami Karsangiri Budhigiri and Smt. Patel Atithiben Navinchandra (seller) of land admearsuring 46378 sq. mt. at village Chadotar, Sub-District Palanpur, Banaskanta. The sale consideration of the land was fixed at ₹ 23,29,36,385/- against which payment of ₹ 5,82,34,906/- was made by the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is correct as per the record. 9.2 During the appellate proceedings a letter elated 09/09/2017 was written to the OCIT, CC-2fl), Ahmedabad to know the status of substantial addition made in the case of Shri Mehul Mchta with a request to furnish the relevant extract of the order of the Hon'ble Settlement Commission in the case of Shri Mehta. The AO's Remand Report dated 09/02/2018 was received on 20/02/2013 which was made available to the appellant for his comments. Vide submission dated 06/06/2018 the appellant made a request for admission of additional evidences in connection with unsecured loan from Shri Amritlal Chhaganlal Joshi which was forwarded to the ACIT, CC-2(1) vide letter dated 08/06/2018 for his comments on the evidences filed and on their admissibility. The AO's Remand Report dated 10/08/2018 was received on 16/08/2018 and was made available to the appellant who filed the rebuttal /rejoinder to the Remand Report on 05/09/2018. The Remand Reports and the Rebuttal/Rejoinder are already produced as part of appellant's submission before. 9.3 At the outset it can be said that as the addition in the hand of the appellant has been made on protecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale consideration of ₹ 23,29,36,385/- between Shri Mehul L Mehta (the buyer) and the sellers being the appellant along with other two (2) co-owners and showing payment of ₹ 5,82,34,906/- by Shri Mehul Mehta was found at the residence of Shri Sohit MehLa. In the statement Shri Mehul Mehta admitted to have signed the Baiiakhat .and to have made the said payments. Also during the course of consequent search carried out at the residences of the appellant and other co-owner and seller, Smt. Atithiben Deep Shah, their statements were recorded u/s 132(4] on 20/07/2013 and while the appellant Shri Karsangiri Goswami had admitted the receipt of amount of ₹ 5,82,34,906/-, Smt. Atithiben Shah had admitted receipt of additional ₹ 3,00,00,000/- over and above receipt of ₹ 5,82,34,906/- (i.e. receipt of Ks.8,82,34,906/- i.e. around ₹ 9,00,00,000/-). No basis for stating additional receipt of ₹ 3,00,00,000/- by the appellant appears to have been recorded by the ITD search team and brought out by the AO. However, it will be seen later that this aspect/fact is not material for the purpose of deciding the appeal under consideration. 9.6 From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 5,82,34,906/-. There is no mention of the third coowner in the assessment order. It is also seen that neither Shri Karsangiri Goswami nor Smt. Atithiben Shah admitted the amount received to be their undisclosed income and made any disclosure u/s 132(4). They also did not declare the amount in the books of accounts and in their returns of income. During the assessment proceedings and in response to notice u/s 142(1) both Shri Karsangiri Goswami and Smt. Atithiben Shah stated that the land was not transferred at the time of Banakhat and on receipt of ₹ 5,82,34,906/-, that the amount received was returned and that the land was still with them. Thus as per the AO the appellant had retracted from the statement u/s 132(4). Accordingly, it is the case of the AO that no evidence/material was brought by the appellant to corroborate and justify the retraction of statement u/s 132(4). Hence the AO chose to make addition of the proportionate share of ₹ 8,82,34.906/- in their hands in proportion to their shares of 40% and 15% on protective basis. The approach of the AO in making addition on protective basis was apparently not technically correct, it being case of sale purchase wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into. It would suffice to note that as per the submission by Shri Mehta before the Hon'ble ITSC total payment of ₹ 11,64,68,192/- was made and the said payment was adjusted with various persons for purchase of various lands. However, the AO has mentioned in the Remand Report that neither any corroborative evidence to controvert the contents of Banakhat nor the material changes of circumstances for retraction of statements u/s 132(4) by both Smt. Atithiben Deep Shah and Shri Karsangiri B Goswami was produced by Shri Mehul Mehta before the ITSC but Shri Mehul Mehta submitted Cash Flow Statement to explain the source of investment to various properties and that no adverse view was taken by the Hon'ble ITSC in its order dated 17/11/201? passed u/s 245D(4) of the Act covering the period from A.Y. 2008-09 to A.Y. 2014-15 so far as investment made in Manan Farm is concerned. 10.2 The present AO in his Remand Report appears to be harping on sustaining the impugned addition in the hands of the appellant as if the retraction of the statement u/s 132(4) had occurred which could not be allowed. It has already held been before that in the statements u/s 132(4) there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of Shri Menul Mehta, for the purpose of comprehensiveness the same is included here. It has been seen that Shri Mehul Mehta in whose hands there was case of substantive addition has made appropriate disclosure in the application for settlement and that the Settlement Commission has not made any adverse comments in connection with the said land which was subject matter of the relied upon seized Banakhat and the basis uf protective addition in the hands of Shii Karwangiri Goswaini and Suit. Atithiben Shah. Having ensured that the to be made substantive addition in, the hands of Shri Mehul Mehta has been taken care in the settlement application and in the order dated 17/11/2017 u/s 245D(4), the AO is directed to delete the addition of ₹ 3,52,93.962/- in the case of the appellant. The appeal succeeds on this ground. 6. Heard both the sides and perused the material on record. On the basis of statement of the assessee and co-owner Smt. Atithiben Shah 40% of ₹ 8,82,34,906/- which comes to ₹ 3,52,93,962/- was added to the total income of the assessee on protective basis and assessment on substantive basis was made in the hand of Shri Mehul L Mehta buyer of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled confirmation of the lender, bank passbook but did not file copy of return of income. On perusal of the detail filed, the Assessing Officer obverted that confirmation of the lender was unsigned and assessee had filed copy of his own bank account instead copy of bank account of the lender. Consequently, the Assessing Officer held that assessee has failed to establish the identity and creditworthiness of the lender and genuineness of the transaction. Therefore, an amount of ₹ 4 lacs was treated as undisclosed income u/s. 68 of the act and added to the total income of the assessee. The assessee has preferred appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee. The relevant part of the decision is as under:- 12. From the assessment order it is seen that unsecured loan of ₹ 4,00,000/-taken by the appellant from one Shri Amratlal Chhaganlal Joshi was added as unexplained income because the appellant had not discharged the onus of establishing the identity and creditworthiness of the lender and genuineness of the transaction. During the appeal proceedings the appellant furnished additional evidences with the prayer that they may be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- given as loan to Shri Karsangiri Goswami is not any cash deposit and not a cheque deposit of comparable amount. The deposits in the bank account arc various clearances of various sums and the balances in the bank are not meager. The confirmation of accounts filed during the appeal proceedings is signed. Under the circumstances it will not be proper to hold that the appellant has nor established the identity and creditworthiness of the lender and the genuineness of the transaction. Therefore the AO is directed to delete the addition of ₹ 4,00,000/-. The appeal succeeds on this ground. 8. Heard both the sides and perused the material on record. Because of non-availability of return of income and copy of bank account of the lender the Assessing Officer has treated the unsecured loan amount of ₹ 4 lacs as unexplained and added to the total income of the assessee u/s. 68 of the act. During the course of appellate proceedings before ld. CIT(A) the assessee has filed additional evidences which were admitted by the ld. CIT(A) and remand report was also called from the Assessing Officer. The Assessee explained that confirmation of the lender could not be obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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