9911796707
TMI Blog2024 (3) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... way of cash also. Since, facts are contradictory from both the sides, issue needs to be re-examined by the Assessing Officer, in light of averments of the assessee that loans given to M/s. Kangaroo Impex is through bank account only and source for said loan is explained. Additions towards interest income from loans given to M/s. Kangaroo Impex - Since, we set aside the issue of addition towards unexplained loan given to M/s. Kangaroo Impex, consequent addition towards interest on said loan also needs to go back to the file of the Assessing Officer. Thus, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to re-verify the additions made towards interest on loan. Addition towards investment in M/s. Mars Exports - It is very difficult to ascertain whether the appellant has discharged Rs. 11 crores to creditors of M/s. Mars Exports or not. The Assessing Officer, refers to three cash receipts dated 08.06.2010, 12.06.2010 18.06.2010, given by the creditors through five representatives as per mortgage deed and claimed that the appellant has settled Rs. 11 crores to creditors. The facts are contradictory. The assessee claims that he has settled ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search, which clearly shows that these are loan transactions, but not for purchase of property. Further, the payments made for purchase of property are altogether different from reference to in seized material found during the course of search. From the above, it is abundantly clear that, the assessee could not explain source for cash loans given to Shri. C. Giridharan. Therefore, there is no error in the reasons given by the ld. CIT(A) to sustain additions made towards cash loans of Rs. 3.96 crores given to Shri. C. Giridharan and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the assessee. Unaccounted cash loans to Shri C. Hariharan - Incriminating material found during the course of search reveals that the appellant had given cash loans to Shri C. Hariharan, but the assessee could not explain source for cash loans - HELD THAT:- The assessee could not file any evidence to prove source for said loans. Even before us, except oral statement no evidence has been filed to justify source for cash loans to above party. Therefore, there is no error in the reasons given by the ld. CIT(A) to sustain additions made towards unaccounted cash loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pan for Rs. 15 lakhs and thus, we uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee. Unaccounted cash loan to Dr. S. Ramesh Kumar - The assessee could not file any evidence to negate the documents found during the course of search coupled with statement from Dr. S. Ramesh Kumar, except making an oral statement that loan given to Dr. S. Ramesh Kumar has been accounted in the books of accounts. Therefore, no error in the reasons given by the ld. CIT(A) to sustain addition towards unaccounted cash loan given to Dr. S. Ramesh Kumar and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject arguments of the assessee. Unaccounted cash loan to Shri. Thangavel - Although, the assessee claims that loans given to Shri. Thangavel has been accounted in the books of accounts, but the details filed by the assessee did not refute the evidence in the form of seized material found during the course of search which clearly shows unaccounted cash loan of Rs. 55 lakhs to Shri. Thangavel on behalf of Amala Jothi Co., Coimbatore. Therefore, assessee could not explain source of unaccounted cash loan given to Shri. Thangavel and thus, we uphold the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee could not satisfactorily explain reduction in income declared in the return of income filed u/s. 153A of the Act, when compared to income admitted in the return of income filed u/s. 139 of the Act. Therefore, we are of the considered view that there is no error in the reasons given by the Assessing Officer to make additions towards difference in income returned and admitted for assessment year 2009-10 to 2011-12 and thus, we uphold the additions made by the Assessing Officer. Addition towards unaccounted sales - Since, there is no clear finding from the AO with regard to the said addition, except so called sales abstract found in the computer of the assessee and also it was the claim of the assessee that said transaction pertains to M/s. Arputharaj Associates, a partnership firm, we are of the considered view, that the issue needs to go back to the file of the AO for further verification. Thus, we set aside the orders of the lower authorities on this issue and restore the issue to the file of the AO for further verification. The Assessing Officer is directed to examine the issue in light of relevant material and ascertain the real beneficiary of said transactions. - Shri V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153A of the Act, within the due date prescribed under said notice. The Assessing Officer, has initiated penalty proceedings u/s. 271F r.w.s. 274 of the Act, for non-filing of return of income, and a show cause notice u/s. 276CC of the Act was issued for proposed prosecution. Finally, the assessee has filed return of income for assessment years 2009-10 to 2015-16 on different dates and the details of date of filing of original return of income and dates of filing of return of income in response to 153A notice is tabulated below: AY Date of filing original R/I Income originally returned Date of filing R/I u/s. 153A/142(1) Income returned u/s. 153A Date of Notice u/s. 143(2) 2009-10 28/08/2010 (Revised return) 3424530 29/06/2016 1400740 15/07/2016 2010-11 14/10/2010 19933740 10/08/2016 1026110 11/08/2016 2011-12 30/09/2011 141230 13/08/2016 -9778276 08/09/2016 2012-13 30/09/2012 0 18/08/2016 106050 08/09/2016 2013-14 25/10/2013 -56,11,600 19/08/2016 -1,05,62,962 08/09/2016 2014-15 29/11/2014 1159470 14/09/2016 -1,76,16,113 19/09/2016 2015-16 - - 18/09/2016 -92,45,237 19/09/2016 5. The assessment has been completed u/s. 143(3) r.w.s. 153A of the Act, on 30.12.2016 and made various a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and discharged its liabilities. The Hon ble High Court of Madras, vide its order dated 06.01.2020, remitted the issue to the Tribunal to consider the matter afresh after hearing both the parties. Therefore, the present appeals have been posted for hearing in pursuant to directions of the Hon ble High Court of Madras in their order dated 10.12.2018 and 06.01.2020. 7. The first issue that came up for our consideration from grounds of appeal filed by the assessee for assessment years 2009-10 2010-11 is addition towards loans to M/s. Kangaroo Impex and interest thereon. The facts with regard to the impugned dispute are that, during the course of earlier survey conducted in the case of assessee on 10.12.2013, while answering the question no. 25 of the statement recorded during the course of survey, the assessee has stated that he had advanced loan amounting to Rs. 16.28 crores to M/s. Kangaroo Impex and received back Rs. 7.68 crores as on 19.05.2009. During post-survey enquiry, a specific question was asked to the assessee to explain ledger account of M/s. Kangaroo Impex in the books of the assessee, which shows cash transactions. The statement of the partners of M/s. Kangaroo Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions on the basis of statement of Shri. A. Paneerselvam. In this regard, he relied upon the decision of ITAT, Delhi Benches in the case of B.R. Associates Pvt Ltd vs ACIT, in ITA No. 4964/Del/2012 dated 10.01.2019. The Ld. Counsel for the assessee, had also relied upon the decision of Hon ble Madras High Court in the case of CIT vs S. Khader Khan Son [2008] SCC Online Mad 1198. 9. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, supporting the order of the CIT(A) submitted that, sworn statement recorded from the parties revealed that the assessee had advanced huge loans by way of cheque and cash to M/s. Kangaroo Impex for assessment year 2009-10 2010- 11. The assessee did not explain source for the loans. In absence of any documentary evidence, the Assessing Officer has rightly treated the loans given to M/s. Kangaroo Impex as unexplained investment taxable u/s. 69 of the Act. 10. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the appellant has advanced huge loans through bank and in cash to M/s. Kangaroo Impex. In fact the appellant had admitted loan given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards unexplained loan given to M/s. Kangaroo Impex, consequent addition towards interest on said loan also needs to go back to the file of the Assessing Officer. Thus, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to re-verify the additions made towards interest on loan from M/s. Kangaroo Impex, in light of evidence found during the course of search and statement recorded from the parties. 12. The next issue that came up for our consideration for assessment year 2010-11 2011-12 is addition towards investment in M/s. Mars Exports. The fact with regard to the impugned dispute are that the assessee had entered into sale agreement with R. Manickavasagam, proprietor of M/s. Mars Export on 12.11.2009, for purchase of property for a consideration of Rs. 3 crores, wherein, the assessee has also undertaken to settle the liabilities of M/s. Mars Exports towards its creditors amounting to Rs. 11 crores, in addition to Karur Vysya Bank loan liability of Rs. 5.5 crores. The Assessing Officer, further stated that the appellant had purchased a property from M/s. Mars Exports for a consideration of Rs. 3 crores, after settling liabilities to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has assessed a sum of Rs. 16 crores being difference between consideration received for sale of property to M/s. Maartin Fabrics Pvt Ltd., vide sale deed dated 12.11.2019, on the ground that the market value of the property sold by the appellant was at Rs. 20 crores as evident from mortgage deed dated 30.10.2019 and further the said property has been mortgaged for an outstanding loan of Rs. 11 crores. Therefore, the Assessing Officer assessed difference of Rs. 16 crores, as unaccounted income for assessment year 2011-12. 14. The Ld. Counsel for the assessee, submitted that the ld. Assessing Officer is erred in making additions of Rs. 16.5 crores towards settlement of creditors and re-payment of outstanding loan to the Karur Vysya Bank, without there being any evidence to suggest that the assessee has settled outstanding liability of M/s. Mars Exports, before purchase of property. The Ld. Counsel for the assessee, further submitted that although the Assessing Officer refers to receipts executed dated 15.04.2010, in favour of the appellant Shri. Arputharaj and others. But on perusal of said cash receipts, it was also stated that the mortgage deed has been registered for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as addition of Rs. 16 crores for assessment year 2011-12, it is evident from the mortgage deed that the value of the property was estimated at Rs. 20 crores. However, the assessee has registered sale deed for Rs. 4 crores. Therefore, the Assessing Officer has rightly assessed difference as unexplained income for assessment year 2011-12. 16. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the fact that the appellant has purchased a property from M/s. Mars Export for a consideration of Rs. 3 crores as per sale deed dated 12.11.2009. It is also not in dispute that, during the course of search certain signed cash receipts were seized from the premises of the assessee which shows settlement of Rs. 11 crores to creditors. As per the mortgage deed one Mr. J. Vijaya Kumar, Power of Attorney of Shri. R. Manickavasagam, proprietor of M/s. Mars Exports executed a mortgage deed in favour of the creditors for repayment of outstanding loan of Rs. 11 crores, but said receipt is in the language of Tamil. Since, the assessee has filed a translated cash receipts as per which the property has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso directed to obtain necessary information from the Karur Vysya Bank Limited to ascertain repayment of loan and the mode of repayment. 18. Coming back to the addition of Rs. 16 crores as unaccounted income for assessment year 2011-12, being difference between estimated value of the property of Rs. 20 crores and sale consideration of Rs. 4 crores received by the assessee for sale of property to M/s. Martin Fabrics Pvt Ltd., the Assessing Officer has made additions of Rs. 16 crores on the basis of mortgage deed and as per said mortgage deed, the property value has been estimated at Rs. 20 crores, including land and building and other assets. The said property has been purchased by the assessee for Rs. 3 crores and the same has been sold for Rs. 4 crores in immediate next year to M/s. Martin Fabrics P Ltd. As per registered deed, the fair market value of the property has been fixed at Rs. 4 crores for the purpose of assessment and stamp duty and this fact has been confirmed by the office of Sub-Registrar. Except mortgage deed, there is no evidence with the Assessing Officer to allege that the assessee has received a sum of Rs. 20 crores for sale of property. In absence of any eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, at the premises of the assessee original signed cash receipts, cheque leafs and promissory notes were found. On verification of seized material reveals that, the assessee had given cash loans to various persons during the financial year relevant to assessment year 2009-10 2010-11. The details of party wise cash loans given for the assessment year 2009-10 2010-11 are as under: 2009-10: Sl. No. Asst. Year Name of Party Loan Amount (Rs.) 1. 2009-10 C. Giridharan 3,96,00,000 2. 2009-10 Hariharan 26,00,000 3. 2009-10 CR Narayansamy 3,95,00,000 4. 2009-10 N Venkataraman 40,00,000 5. 2009-10 Ponnappan 3,00,000 6. 2009-10 Dr. S. Ramesh Kumar 15,00,000 7. 2009-10 Thangavel 34,50,000 2010-11: Sl. No. Asst. Year Name of Party Loan Amount (Rs.) 1. 2010-11 Paulraj 20,00,000 2. 2010-11 Ponnappan 25,00,000 3. 2010-11 P. Selvakumar 40,00,000 4. 2010-11 S. Muruganathan 25,00,000 19.1 The Assessing Officer has discussed loans given to each party in light of relevant materials found and seized during the course of search and concluded that unaccounted cash loans represents undisclosed income of the assessee. Therefore, we find it appropriate to discuss cash loans to various persons separately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be upheld. 19.5. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. During the course of search u/s. 132 of the Act, various incriminating materials was found and seized vide annexure SA/12, which contains details of cash loans given to Shri. C. Giridharan. As per seized documents, the appellant had given Rs. 5.06 crores loans to above party which consists of cash loan and loan through cheque and bank transfer. The Assessing Officer, has not made addition towards loans given through bank because source for said loans has been explained. However, addition has been made towards cash loans for Rs. 3.96 crores, because the assessee could not explain source for cash loans. Although, the assessee claims to have made payment for purchase of property, but it is evident from the receipts seized during the course of search, which clearly shows that these are loan transactions, but not for purchase of property. Further, the payments made for purchase of property are altogether different from reference to in seized material found during the course of search. From the above, it is abundantly clear that, the assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made towards unaccounted cash loan of Rs. 26 lakhs given to Shri C. Hariharan. 19.10. The next item of addition is unaccounted cash loan to Shri. C. R. Narayanasamy, amounting to Rs. 3.95 crores. The Ld. Counsel for the assessee, submitted that payment made to Shri. C. R. Narayanasamy is towards purchase of two properties, but not as loan. The appellant has purchased a residential property at Peelamedu (Bharathi Colony) and paid Rs. 2 crores through IDBI Bank vide pay order and source for said payment is loan taken from IDBI Bank, for which necessary evidences including loan sanction letter has been filed before the Assessing Officer. The appellant had also purchased office building at Singanallur, Ramanuja Nagar, for a consideration of Rs.1.60 crores and paid advance of Rs. 1.50 crores through RTGS. The balance amount of Rs. 10 lakhs is due and payable, for which evidences are found during the course of search. But, the Assessing Officer has made additions towards payment made to Shri. C. R. Narayanasamy as unaccounted loans. Further, the Assessing Officer himself in Para 4.2.3.3 of assessment order stated that the appellant had purchased two properties from Shri. C. R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r claims that the appellant has paid a sum of Rs. 1.50 crores in cash on 18.11.2008 and also a sum of Rs. 1.50 crores through RTGS on 18.11.2008. However, the documents furnished by the assessee shows that payment by cheque only. The facts are not clear which needs further verification from the Assessing Officer to ascertain, is there any cash payment for purchase of property or not. Therefore, we are of the considered view that, this issue needs to go back to the file of the Assessing Officer for further verification. Thus, we set aside the addition made towards cash payment for purchase of property from Shri. C. R. Narayanasamy, to the file of the Assessing Officer and direct the Assessing Officer to reexamine the claim of the assessee in light of various evidences filed to justify source for payment for purchase of property, in light of incriminating material found during the course of search. The Assessing Officer is directed to reconsider the issue in accordance with law. 19.13. The next item of addition is unaccounted cash loans of Rs. 40 lakhs to Shri. N. Venkataraman. The Assessing Officer noticed that the assessee has paid unaccounted cash loan of Rs. 40 lakhs against sure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not explain source for cash loans. Therefore, the AO has rightly made additions and their order should be upheld. 19.17. We have heard both the parties and considered relevant material available on record. During the course of search u/s. 132 of the Act, original signed receipts cum undertaking in the official letter head of M/s. Sakthivel Casting Private Ltd, Coimbatore jointly signed by Shri. Ponnappan and Shri. K. Durairaj, Director of the company, have been seized which clearly shows that the assessee has advanced loan of Rs. 40 lakhs on various dates and out of which Rs. 31.75 lakhs has been paid in cash. From the above details, it is noticed that the assessee has paid a sum of Rs. 15 lakhs in cash for the assessment year 2009-10, but could not explain source for said loan. Even before us, except making a general statement no evidence has been filed to explain source for said loans. Therefore, we are of the considered view that there is no error in the reasons given by the AO to make additions towards unaccounted cash loans to Shri. Ponnappan for Rs. 15 lakhs and thus, we uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee. 19.18. The next item of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t loan given to Dr. S. Ramesh Kumar has been accounted in the books of accounts. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to sustain addition towards unaccounted cash loan at Rs. 15 lakhs given to Dr. S. Ramesh Kumar and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject arguments of the assessee. 19.22. The next item of addition is unaccounted cash loan of Rs. 55 lakhs to Shri. Thangavel. The ld. Counsel for the assessee submitted that, the appellant has paid a sum of Rs. 55 lakhs loan to Shri. Thangavel, through bank account and same has been accounted in the books of accounts. One Shri. Thangavel on behalf of Amala Jothi Co., accepted payment of loan and the same has been reflected in the balance sheet. The Assessing Officer, has made addition without considering the balance sheet filed by the assessee and attested by CA. Further, no confirmation has been obtained from Amala Jothi Co., to confirm the mode of payment. Therefore, he submitted that addition made by the AO should be deleted. 19.23. The ld. CIT-DR, Shri. R. Clement Ramesh Kumar, on the other hand supporting order of the ld. CIT(A) su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has paid a sum of Rs. 15 lakhs through Kotak Mahindra Bank account. The balance amount of Rs. 5 lakhs has been paid in cash, and source for said loan has been explained. The Assessing Officer, ignored all evidence and made additions only on the basis of documents found during the course of search. 19.26. We have heard both the parties and considered relevant material available on record. There is no dispute with regard to the payment made to Shri. Paulraj. In fact, the assessee himself admitted that he has paid a sum of Rs. 20 lakhs to Shri. Paulraj and he did not refund the loan amount. Further, he has entered into sale agreement with Shri. Paulraj for purchase of property and same is still pending. The addition made by the AO is towards loan, on the ground that the assessee could not explain source for cash loans. The fact remains that, as admitted by the AO himself, out of Rs. 20 lakhs a sum of Rs. 15 lakhs has been paid through Kotak Mahindra Bank for which the AO did not verify the source. In respect of balance of Rs. 5 lakhs, said loan has been paid in cash and there is no dispute. The assessee could not explain source. Since, there is no clear finding with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A holder of Shr. K. Palaniappan of Maruvoor Arasi Textiles India (P) Ltd., which is evident from necessary documents filed by the assessee. Since, additions has already been made for assessment year 2009-10, further addition of Rs. 40 lakhs for assessment year 2010-11 in the name of Shri. P. Selva Kumar amounts to double addition on very same loan amount. After going through relevant materials considered by the Assessing Officer, it is very clear that there is no separate loan to Shri. P. Selva Kumar. Therefore, we are of the considered view that the addition made by the AO towards unaccounted cash loan to Shri. P. Selva Kumar, deserves to be deleted and thus, we direct the AO to delete the addition. 19.30. The next item of addition is unaccounted cash loan of Rs. 25 lakhs to Shri. S. Muruganathan. The ld. Counsel for the assessee submitted that, the payment to the said party was towards the purchase of property, but not loan. The assessee has entered into a sale agreement with Shri. S. Muruganathan for a purchase of property for a consideration at Rs. 27 lakhs and paid advance of Rs. 25 lakhs and the balance amount of Rs. 2 lakhs is due and payable to the seller. But the AO has tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further contended that the criminal case has been filed against Smt. Dhanalakshmi, which is pending for adjudication in the court of law. Further, said transaction is pertains to M/s. Millennium Motors, a unit of Miracle Cars India Pvt Ltd, a private company and thus, same cannot be considered in is assessment. The Assessing Officer, after considering relevant submissions has made protective addition in the hands of the assessee for assessment year 2011-12 to 2015-16 for an amount of Rs. 8,30,67,068/-, on the ground that since, the case filed against swindling of money by Smt. Dhanalakshmi is pending, to protect the interest of the revenue, addition is required to be made in the hands of the assessee. 21. The Ld. Counsel for the assessee, submitted that the Assessing Officer and CIT(A) are erred in making additions towards money swindled by erstwhile employee of M/s. Millennium Motors, in the hands of the assessee on protective basis, even though the documents found during the course of search clearly shows that said transaction does not belongs to assessee and his business. The Ld. Counsel for the assessee, further submitted that Smt. Dhanalakshmi joined a company in the year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illennium Motors only. In fact, the Assessing Officer never disputed the fact that money swindled by Smt. Dhanalakshmi is from M/s. Millennium Motors and transaction is between M/s. Millennium Motors and Smt. Dhanalakshmi. Even the criminal complaint lodged before the police is also in the name of the company. The investigation carried out by the police and charge sheet filed in this respect is also on the basis of complaint filed by M/s. Millennium Motors. Even the case is pending before the Judicial Magistrate Court, Coimbatore is on the basis of complaint filed by managing director of M/s. Millennium Motors. Thus, all evidences found during the course of search clearly shows that transaction does not relates/pertains to the assessee. Further, the company M/s. Miracle Cars India Pvt Ltd (earlier knows as M/s. Millennium Motors) accounted the money swindled by Smt. Dhanalakshmi in their books of accounts and shown as amount receivable from her. The amount swindled by Smt. Dhanalakshmi has already been assessed in the hands of M/s. Miracle Cars India Pvt Ltd., on substantiate basis. Therefore, in our considered view additions made in the hands of the assessee towards money swindled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges etc., were maintained by M/s. Arputharaj Associates. As per said sales abstract, sales for the period from 01.04.2013 to 31.03.2014 shows net sales of Rs. 12,12,92,100/-, whereas sales as per profit and loss filed for the above period shows net sales of Rs. 1,00,30,100/-. The assessee was called upon to explain the difference, for which the assessee submitted that said documents is only estimated sales abstract provided for the purpose of bank loan only. However, the regular return filed with VAT authorities clearly shows sales as per profit and loss account. The Assessing Officer, however was not satisfied with the explanation of the assessee and according to the Assessing Officer, the assessee could not substantiate difference in sales as per seized documents and sales admitted in his books of accounts. Therefore, made additions of Rs. 11,12,62,000/- as unaccounted sales of the assessee for assessment year 2014- 15. 27. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The Assessing Officer has made additions towards unaccounted sales on the basis of one seized documents, which shows sales abstract for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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