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TMI Blog2024 (2) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 68 of the Act for making the impugned addition. In our humble opinion, the Ld. CIT(A) misdirected himself in relying on the decision (supra) of the Hon ble Supreme Court. The same issue namely whether the first appellate authority has power to take into account a new source of income came up for consideration again for fresh adjudication before the full bench in CIT vs. Sardari Lal Co. [ 2001 (9) TMI 1130 - DELHI HIGH COURT] wherein Hon ble Delhi High Court gave its verdict in favour of the assessee observing that it is unconceivable that in the presence of specific provision u/s 147/148 and 263 of the Act, a similar power is available to the first appellate authority. Decided in favour of assessee. - Shri M. Balaganesh, Accountant Member And Ms. Astha Chandra, Judicial Member For the Assessee : Shri Nirbhay Mehta, Adv. And Shri Anoop Mehta, CA For the Department : Shri P N Barnwal, CIT (DR) ORDER PER ASTHA CHANDRA, JM This appeal filed by the assessee is directed against the order dated 28.10.2022 of the Ld. Commissioner of Income Tax (Appeals)-23, New Delhi, ( CIT(A) ) pertaining to Assessment year ( AY ) 2016-17. 2. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer ( AO ) completed the assessment on 25.12.2019 on total income of Rs. 34,88,790/- u/s 153A read with section 143(3) of the Act including therein an addition of Rs. 30,00,000/- u/s 68 of the Act, observing as under in para 5 of assessment order: 5. Addition of Rs. 30,00,000/- u/s 68 of the IT Act: During the search and seizure proceedings, assessee was found using these three mail Ids i.e. [email protected]. [email protected] and [email protected] of assessee group. The domain name easemytrip.com was on Google account. The contents of the mail are reproduced as under: Send cash of 30 to ajay ji today, he will give 20 entry in Nishant Pati [email protected] To PRASHANT PITTI Cc Ajay Jain, Malini Jain Prashant Pitti A/c No.-00531000143427 IFSC: HDFC0000053 Bank Name HDFC Karamangla, Bangalore Statement of Mr. Nishant Pitti was recorded on oath u/s 131(1A) of the IT ACL 1961. In a mail dated 01.07.2015 send by Nishant Piti to his brother Prashant Pitti, Mr. Nishant Pitti is instruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - received in your bank account against cash payment should not be treated as accommodation entries in guise of unexplained sources and Rs 30,00,000- should not be added back to your total income w/s 68 of the I.T. Act, during the year under consideration. In this regard it is submitted that the assessee has taken loan of Rs. 15,00,000/- each from M/s Influence Software Architect and M/s Ezbeeibe Travel Solutions instead of Rs 16,00,000/- and 14,00,000/- as mentioned in the notice. The assessee has taken loan in the following manner: Party Amount (in Rs.) Date M/s Influence Software Architect 8,00,000/- 07.07.2015 M/s Influence Software Architect 7,00,000/- 09.07.2015 Total Rs. 15,00,000/- M/s Ezbeeibe Travel Solutions 7,00,000/- 07.07.2015 M/s Ezbeeibe Travel Solutions 8,00,000/- 09.07.2015 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain declared only Rs. 7,86,080/- as a total income in his ITR. Similarly, Smt Malini Jain declared income only Rs. 9,33,570/- in her ITR for AY. 2016-17. Thus, it is quiet impractical that the aforesaid persons provided interest free loan to the assessee out of his earnings. Thus, the reasonableness of the fact in this issue is very much lacking in this case. 6. Accordingly, the Ld. AO made the impugned addition u/s 68 of the Act against which the assessee filed appeal before Ld. CIT(A). 7. The Ld. CIT(A) confirmed the addition u/s 69A of the Act instead of section 68 by holding and observing as under: 27. The appellant is an individual and not required to maintain books of accounts. Therefore, the Assessing Officer was incorrect in applying the provisions of section 68 in the case of the appellant. 28. However, during the course of search on the basis of document in the form of email, the appellant was found to be owner of Rs.30,00,000/-. The amount of cash remained unexplained by the appellant. The appellant could not explain the source of acquisition of such unexplained cash. In this regard, the provision of section 69A is reproduced as under:- Where in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect him to do what he has failed to do. Keeping in view the above facts and discussion and in order to remove any ambiguity, it is held that the addition of Rs. 30,00,000/- made by the A.O. under section 68 of the Act on account of unexplained money is treated as unexplained money of the appellant u/s 69A of the Act. 8. The assessee is dissatisfied and is before the Tribunal and all the grounds relate thereto. 9. The Ld. AR submitted that the Ld. CIT(A) has applied and confirmed the impugned addition u/s 69A as against section 68 under which the Ld. AO made the addition. He contended that change of section for the purpose of confirming addition is not in accordance with law. The Ld. CIT(A) is not legally competent to do so. If the Ld. CIT(A) wished to change the section from 68 to 69A for the impugned addition, he should have issued notice of enhancement which he has not done. He emphatically submitted that confirmation of the impugned addition by the Ld. CIT(A) under different section of the Act is not sustainable. He placed reliance on the following judgements: (i) Toffee Agricultural Farms (P) Ltd. (2022) 141 taxmann.com 429 (Del-Trib) (ii) Hari Mohan Sharma vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 68 of the Act. The assessee challenged the addition before the Ld. CIT(A). 11.1 The Ld. CIT(A) accepted that the e-mail which establishes that the assessee received money in the form of loan through cheque with the addendum after giving cash for which there is no evidence at all. The objection raised by the assessee that the creditors have not been examined in this regard has been over ruled by the Ld. CIT(A) by stating it to be baseless . The Ld. CIT(A) while approving the impugned addition made by the Ld. AO u/s 68 of the Act was of the opinion that the correct section for making the impugned addition should be section 69A of the Act. 12. The issue for consideration before us is whether the CIT(A) is within his powers under the Act to confirm the addition u/s 69A of the Act as against the addition made by the Ld. AO u/s 68 of the Act. 13. Before we proceed further, it may be noticed that sections 68, 69 and 69A to 69D fall in Chapter VI under the heading Aggregation of Income and deem certain items of income of a particular previous year to be aggregated in arriving at the total income. However, there is difference in the language employed in section 68 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to that effect. The decision of Hon ble Andhra Pradesh is in support of this view expressed in Brahmiah(y) vs. ITO (2015) 229 Taxman 558 (AP). The Delhi Bench of the Tribunal has taken a similar view in Roshan Motors vs. ITO (2015) 64 taxmann.com 381 (Del-Trib). 16. In Toffee Agricultural Farms (P) Ltd. (supra), Ld. CIT(A) treated addition made by the Ld. AO u/s 69C as had been made u/s 69B and dismissed the appeal of the assessee. When the matter came for consideration before the Delhi Bench of the Tribunal, it was held that in the absence of any power provided u/s 250 and 251 of the Act the Ld. CIT(A) could not have treated addition made by the Ld. AO u/s 69C as addition made under section 69B and that action of Ld. CIT(A) in treating addition made under section 69C as had been made under section 69B was contrary to law. 17. The Delhi Bench of the Tribunal had occasion to consider whether enhancement by the Ld. CIT(A) u/s 251(1)(a) of the Act is prohibited on issues which have not at all been considered by the Ld. AO during assessment proceedings in the case of Hari Mohan Sharma vs. ACIT (2019) 179 ITD 310 (Del-Trib) and the Tribunal held that the CIT(A) is not compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to those items of income which were the subject of matter of original assessment. 21. The same issue namely whether the first appellate authority has power to take into account a new source of income came up for consideration again for fresh adjudication before the full bench of Hon ble Delhi High Court in CIT vs. Sardari Lal Co. (2001) 251 ITR 864 (Del)(FB). The Revenue contended that proceedings before the first appellate authority cannot be restricted to only those matters considered and decided by the Ld. AO. The first appellate authority has the power to adjudicate and decide everything necessary to ascertain the true and correct income of the assessee. The assessee, on the other hand contended that if such a view was taken, the provision u/s 147/148 and 263 of the Act would become meaningless and purposeless. The Hon ble Delhi High Court gave its verdict in favour of the assessee observing that it is unconceivable that in the presence of specific provision u/s 147/148 and 263 of the Act, a similar power is available to the first appellate authority. 22. Accordingly, in the light of the decisions (supra) and on the facts and in the circumstances of case, we decide th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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