9911796707
TMI Blog2024 (11) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... of ledger account, ITR, ROC particulars and also stated that said entity was having substantial long term borrowings as well as advances given and only on the basis of such financial statement it would be inappropriate to hold that loan amount was not genuine - HELD THAT:- AO has not brought any material on record to disprove the genuineness of the loan amount. Further, on the basis of submission of the ld. Counsel, we consider that the impugned addition was made in nonabated assessment year on the basis of financial statement of the assessee without demonstrating any incriminating document found and seized during the course of search. Therefore, such addition is not sustainable following the decision of Abhisar Buildwell Private Limited [2023 (4) TMI 1056 - SUPREME COURT]. No infirmity in the decision of ld. CIT(A) in deleting the addition. Disallowance of interest on loan amount is not sustainable and we have sustained the action of ld. CIT(A) in deleting the impugned quantum addition of loan. Addition u/s 37(1) - HELD THAT:- AO had made disallowance of purchase expenses on estimation basis and the AO had not brought any relevant material on record to prove that in fact the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we consider that ld. CIT(A) has rightly allowed the set off after co-relating the transactions as discussed. Treating expenses as non-genuine and disallowed the same u/s 37(1) - HELD THAT:- We find that the assessing officer had not brought any material on record to substantiate that in fact the aforesaid expenditure was non-genuine expenditure. Further, the AO has not carried out any enquiry with any of the party to controvert the submission of the assessee and to disprove the genuineness of the transactions. Addition on the basis of statement of Shri Jiten Pujari - assessee pointed out that all the third parties have retracted their statement after the search therefore the same have no evidential value unless based on seized document co-related with the assessee - HELD THAT:- We have discussed the nature of additions and the relevant seized documents showing systematic maintaining of ledger account along with journal entries recorded with narrations as per annexure A-39, A41 and A-42 of the seized documents before arriving at the conclusion on the different issues therefore we do not find any merit in this ground of appeal of assessee since we have considered the sustainabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was issued and served upon the assessee. In response, the assessee filed the return of income on 08.11.2021 declaring total income at Rs. Nil. The assessee was engaged in the business of hospitality segment. During the course of search operations, cash amounting to Rs. 12,35,30,000/- was found and seized. Also various incriminating documents in the form of note books/diaries have been seized vide Annexure A-38 to A-47 from the residence of Shri Jiten Pujari, who was one of the key employee of the Triton Group, drawing salary from the account of M/s. Noble India Construction Company (proprietary concern of Shri Shivshankar Sharma.The AO has reproduced the extract of some of the statements of Sh.Jitin Pujari in respect of cash transaction carried out on the instruction of Sjivshankar sharma and Ratnakar Sharma. The assessment u/s 153C of the Act was finalized on 29.03.2022 after making various additions u/s 69C, 68 and u/s 37 of the Act. Further facts of the cases are discussed while adjudicating the various grounds of appeal filed by the revenue and by the assessee. 3. Ground No. 1: Deleting addition of Rs. 3,00,000/- out of the addition of Rs. 6,00,000/- made u/s 69C of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding on perusal of the audited financial statement of the assessee for the year under consideration it was found that assessee had taken loan of Rs. 55,00,000/- from M/s. Malvika Herbo Pharma Pvt. Ltd. On query, the assessee submitted detail of unsecured loan along with address of the party, PAN, amount received, interest paid, bank account statement, confirmation of account, ITR Form etc. as required by the assessing officer. However, the AO has not agreed on the basis of the financial of the above mentioned lender and concluded that the assessee failed to establish the creditworthiness of the lendor. Therefore, the loan amount was added to the total income of the assessee as unexplained cash credit u/s 68 of the Act. 7. The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) deleted the impugned addition holding that assessee has submitted confirmation of ledger account, ITR, ROC particulars and also stated that said entity was having substantial long term borrowings as well as advances given and only on the basis of such financial statement it would be inappropriate to hold that loan amount was not genuine. 8. Heard both the sides and perused the material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is undisputed fact that AO had made disallowance of purchase expenses on estimation basis and the AO had not brought any relevant material on record to prove that in fact the expenditure claimed were nongenuine. Further, on the submission of the assessee, we find that the impugned assessment was non-abated assessment and no incriminating material was found and seized on the impugned issue of disallowance of expenditure. Therefore, the same is not sustainable as held by the Hon'ble Supreme Court in the case of Abhisar Buildwell Private Limited (293 taxman 141). Considering the aforesaid facts and finding, we do not find any error in the decision of ld. CIT(A) therefore this ground of appeal of revenue is dismissed. 13. Ground No. 5: Deleting addition of Rs. 5,74,451/- u/s 69C of the Act: The assessing officer was of the view that assessee had also paid commission on the disallowed 2% of purchases as discussed above in ground no. 4 of appeal of the Revenue. Therefore, the AO has also estimated commission @ 2% to the amount of Rs. 5,74,451/- and added u/s 69C of the Act to the total income of the assessee. The ld. CIT(A) has deleted the estimated addition of commission amount ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repeated on page nos. 19, 27 of the Annexure 39 and diary page no. 8 of Annexure 41. Thus, the said entry was a repeated entry which was already taxed in the hands of the appellant in para 21 of the Assessment Year. 4.6 The appellant has also drawn my attention to the rectification application filed before the AO on 26.04.2022. On a perusal of the said pages, it is seen that these entries are repetitive in nature. They appear to be in the nature of ledger and journal type where one entry is posted from one annexure to another in some kind of double entry system. While I agree with the AO on the merits of these additions, they can be made only once and cannot result in double addition. For the reason that the said addition gets covered by the larger addition made by the AO in para 21 of assessment order, this addition stands deleted. Hence, this part of the claim of the appellant stand allowed." 16. After perusal of the material before us and on perusal of the finding of the ld. CIT(A), it is clear that the AO has made the double addition on the basis of similar entries appearing in the journal of entries and also appearing in the ledger account of the S.B. International. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt there were two entries of Rs. 12,00,000/- and Rs. 20,00,000/- in respect of aforesaid party. The assessee has recorded the same entries with narration in the general ledger as found and seized vide annexure A-39. This fact shows that actually there was double addition made by the AO of the same amount therefore we do not find any mistake in the decision of ld. CIT(A). This ground of revenue is dismissed. 21. Ground No. 4: Addition amounting to Rs. 112,04,750/- on the basis of titled 'Sameer/Orise/Ankit China' as found in Annexure A42. However, the ld. CIT(A) has deleted the same as double addition: During the course of assessment on the basis of page no. 57 of Annexure A - 42, the assessing officer had added back the payment made to 'Sameer/Orise/Ankit China'. However, the ld. CIT(A) has deleted the same as double addition. On perusal of the material on record, we find that the similar amount was also mentioned in the journal entries of the transaction as per Annexure 41 wherein this amount was mentioned as Rs. 37,37,500/-, 37,50,000/-, 37,17,250 aggregating to Rs. 112,04,750/- therefore, we find that there is repetitive addition of the same transaction which were reported o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO found that payment has been made to 'Jaipur Lights Mahima Ent' of Rs. 30,00,000/- on 11.11.2019, the ld. CIT(A) deleted the same as duplicate addition. In this regard, we find that same amount has been mentioned in the record of journal entries mentioned in Annexure A-39 wherein on 11.11.2019 amount of Rs. 30,00,000/- was posted with the narration of the transactions matching with the entry posted in the ledger account maintained in annexure A42. Therefore, this ground of the revenue is dismissed because of repetitive additions. 26. Ground No. 8: Addition of Rs. 1,10,00,000/-: During the course of assessment on perusal of Annexure A-42 page 73 the AO noticed that in the ledger account 'Udaipur Construction A/c' an amount of Rs. 50,00,000/- on 07.11.2019 Rs. 30,00,000/- on 07.02.2020 and Rs. 31,00,000/- on 03.03.2020 aggregating to Rs. 1,10,00,000/- were mentioned and the assessing officer treated the same as unexplained expenditure u/s 69C of the act. The ld. CIT(A) deleted the same as double addition as the same was also reflected in the journal entries posted in the annexure 39 and annexure 41. We find similar to the transaction reflected in the ledger account were als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure. We find that assessing officer has not brought any material on record to substantiate that M/s. Warden Baker has made payment to Randolph Gray Design Company Ltd. on behalf of the assessee company and nowhere in the entries it is mentioned that such payment had been made on behalf of the assessee. Therefore, this ground of appeal of the Revenue is dismissed. 29. Ground No. 11: Addition of Rs. 3,12,88,054/- u/s 69C of the Act: The assessing officer has made addition of Rs. 3,12,88,054/- on the basis of entries found in the annexure containing ledger account stating that M/s. Warden Baker has made payment to Shri Ashok Ummat on behalf of the assessee. However, the ld. CIT(A) has deleted the addition on the ground that transactions were pertained to two foreign entities and AO has failed to substantiate with any evidence that the said payment has been done on behalf of the assessee. We find that these were the transaction between two foreign entities and there was no linking of such transaction with the assessee-company. Even these transactions were not connected with journals like other transctions as discussed in this order. The AO has not brought any material on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t note issued by AI Garhoud General Trading LLC, UAE to M/s. Warden Baker. The AO was of the view that such payment has been made by M/s. Warden Baker to various entities on behalf of the assessee therefore same was added u/s 69C of the Act. The ld. CIT(A) deleted the addition holding that AO could not link the same as unexplained expenditure incurred by the assessee. Similar to the findings as discussed supra while adjudicating the identical issues we consider that AO has not brought on record any relevant evidence to demonstrate that actually such foreign payments have been made on behalf of the assessee. Therefore, this ground of revenue is dismissed. 33. Ground No. 15: Deleting addition of Rs. 3,85,66,850/- made u/s 69C of the Act: During the course of assessment, the assessing officer made addition on the basis of debit note and invoice raised by M/s. Biosilk International Pte. Ltd. on M/s. Warden Baker as retrieved from the phone of Shri Ratankant Sharma. The AO was of the view that payment to Biosilk International Pte. Ltd. of Rs. 3,85,66,850/- in the form of $135000 was made by M/s. Warden Baker to M/s. Biosilk International Pte. Ltd. on the behalf of the assessee The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d we find that there is clear entries of receipt appeared on the left side and entries of payment reflected on the right side of the journal in Annexure A-39. Therefore, we consider that ld. CIT(A) has rightly allowed the set off of Rs. 4,66,00,000/- after co-relating the transactions as discussed. Therefore, looking to the facts and material placed on record, we do not find any reason to interfere in the decision of ld. CIT(A). Accordingly, this ground of appeal of revenue is dismissed. ITA 3141/Mum/2023 (Revenue Appeal) 36. Ground No. 1: deleting addition of Rs. 8,00,000/- made u/s 69C of the Act by treating the addition as duplicate addition. Actually we find that the assessee has contested before CIT(A) deleting of addition of Rs. 40,00,000/- not Rs. 8,00,000/- as per ground no. 1 of appeal filed before the ld. CIT(A). During the course of assessment, the assessing officer noticed in the ledger account titled 'Sameer/Orise/Ankit China' as per note book found/seized vide Annexure A-42 transaction of Rs. 37,50,000/- was found. In the whatsapp conversation between Shri Jiten Pujari and Ankit Pujari revealed that Shri Jiten Pujari has given Rs. 37,50,000/- to certain persons. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be considered as unexplained expenditure u/s 69C of the Act. The assessee submitted that the said diaries were maintained by Shri Jiten Pujari without their knowledge and they were not able to comment upon the contents of the same. It is also submitted that nowhere in the diary, the name of the assessee was mentioned. The AO has not agreed with the submission of the assessee and treated the amount of Rs. 10,00,000/- as unexplained expenditure u/s 69C of the Act. 39. In the appeal, the ld. CIT(A) has deleted the addition holding that there was repetitive addition therefore same was deleted. Similar to the finding given while adjudicating ground no. 1 of the appeal of the assessee as above in the order, we find that there was double addition of same amount made by the assessing officer on the basis of transaction reported in the ledger account and the similar transaction mentioned in the journal entry. Therefore, this ground of appeal of revenue is dismissed. 40. Ground No. 3: Erred in deleting addition of Rs. 1,42,589/- (interest of Rs. 85,289/- paid to M/s. Malvika Herbo Pharma Pvt. Ltd. and Rs. 57,300/- paid to M/s. Niyati Ventures Pvt. Ltd. The assessing officer noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not agreed with the submission of the assessee and treated the impugned expenses amounting to Rs. 561,47,010/- as non-genuine and disallowed the same u/s 37(1) of the Act. 44. In the appeal, the ld. CIT(A) has deleted the impugned addition holding that assessing officer has neither made any examination nor made any independent enquiry to demonstrate that such expenditure was non-genuine expenditure. 45. Heard both the sides and also perused the material on record. We find that the assessing officer had not brought any material on record to substantiate that in fact the aforesaid expenditure was non-genuine expenditure. Further, the AO has not carried out any enquiry with any of the party to controvert the submission of the assessee and to disprove the genuineness of the transactions. In view of the aforesaid material facts and circumstances we do not find any infirmity in the decision of ld. CIT(A) in deleting the impugned addition made on presumption basis. 46. Ground No. 5: Deleting addition of Rs. 11,22,940/- u/s 69C of the Act. The assessing officer has also made addition @ 2% on the aforesaid expenses of Rs. 56,47,010/- on the ground that assessee has paid commission @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es related to the assessee. After hearing both the sides and perusal of material on record we find that at page 28 to 29 of the assessment order the assessing officer had reproduced the ledger a/c in the name of "adsure" maintained at page no.87/59 of the ledger found and seized as per annexure A-42. The authenticity and correctness of the transactions made through banking channels were not controverted. Therefore, we consider that it is evident that aforesaid party has been engaged for providing legal professional services to the assessee and only the amount which was reflected in the ledger account as paid in cash to the said party was added to the income of the assessee. Since the source of cash payment was not explained therefore we do not find any infirmity in the decision of ld. CIT(A). Accordingly, this ground of appeal of the assessee is dismissed. 50. Ground No. 3: Addition of Rs. 3,00,000/- u/s 69C of the Act: During the course of assessment, the AO noticed that the ledger account titled 'Sandeep Putambekar' was found in the seized Annexure A-42. The said ledger account contained detail of cheque payment of Rs. 7,00,000/- made to Shri Sandeep Putambekar. The said payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BE of the Act without considering the facts and circumstances of the case: This ground of appeal was not discussed before us therefore same stand dismissed. 55. Ground No. 5: The ld. CIT(A) and assessing officer was erred in making addition on the basis of statement of Shri Jiten Pujari without appreciating that he himself has denied during crossexamination before the assessing officer about authenticity of date in the seized diary: During the course of appellate proceedings before us, the assessee pointed out that all the third parties have retracted their statement after the search therefore the same have no evidential value unless based on seized document co-related with the assessee. Heard both the sides on this issue and perused the material on record. We have discussed the nature of additions and the relevant seized documents showing systematic maintaining of ledger account along with journal entries recorded with narrations as per annexure A-39, A41 and A-42 of the seized documents before arriving at the conclusion on the different issues therefore we do not find any merit in this ground of appeal of assessee since we have considered the sustainability of addition based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of the Ld. Counsel that the said transaction was carried out through banking channel as evident from the details mentioned at page 7A of annexure A-41 with relevant details of amount, cheque no. and submission made on the point that that same was duly recorded in the books of the assessee. Therefore, the action of the assessing officer in treating the same as cash credit is not justified we direct the assessing officer to delete the addition of Rs. Rs. 2,76,018/- made u/s 68 pertaining to Krish Chemicals Pvt. Ltd. Accordingly the ground of appeal of the assessee is partly allowed. 58. Ground No. 2: Addition to the extent of Rs. 6,50,000/- made u/s 69C of the Act in respect of payment made to Shri Rabindra Adsure unexplained expenditure: As discussed during the course of search action on the basis of seized document Annexure A-42 there was ledger account of the aforesaid party wherein the detail of payment made on different dates were reflected in respect of legal professional services availed by the assessee pertaining to Raffles Hotel Udaipur Project. For the same reason and finding as given above on this issue while adjudicating the ground of appeal vide ITA No.2436 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Therefore, the AO opined that M/s. Belt Collings International (Singapore) Pte. Ltd. has been engaged by the assessee for its refers Udaipur Hotel Project. The AO has also referred the contents of the e-mail from the g-mail backup account of Shri Jiten Pujari and Vardha Enterprises Pvt. Ltd. wherein mail from M/s. Belt Collings International (Singapore) Pte. Ltd. was found. The assessing officer further noticed from page 54 of the Annexure A-42 in the name of M/s. Belt Collings International (Singapore) Pte. Ltd. as reproduced at page no. 42 of the assessment order and observed that total amount of USD 165000 has to be paid to M/s. Belt Collings International (Singapore) Pte. Ltd. against which total payment of USD 100000 had been made to M/s. Belt Collings International (Singapore) Pte. Ltd. as per noting recorded on the above referred annexure seized. The AO has also mentioned the year wise paymentin USD made to M/s. Belt Collings International (Singapore) Pte. Ltd. as under: Assessment Year Amount USD Conversion Rate Amount (Rs.) AY 17-18 35,000 Rs. 68.87 per USD 24,10,450 AY 18-19 30,000 Rs. 65.715 per USD 19,71,450 AY 19-20 35,000 Rs. 74.34 per USD 26,01,90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-42 was the unexplained payment made to M/s Belt Collins International Singapore by the assessee. On perusal of material on record it is noticed that the assessing officer has not conducted any enquiry and brought on record any material to substantiate that such amount has been paid by or on behalf of the assessee. Even the email referred by the assessing officer was related to making arrangements of the persons from the Accord Group. The ld. Counsel also submitted that in other cases of foreign payment the CIT(A) has deleted the additions. Nowhere in the referred documents mode of making payment was mentioned. We consider that the case laws referred by the ld. DR are not applicable to the facts and circumstances of the present case as the para material contained in these cases are different from the para material contained in the present case. Similar to the case law referred by the ld. Counsel as mentioned above in this case also the AO had not brought on record any clinching evidence by conducting enquiry to demonstrate that such payment has been made by the assessee or by any foreign party on behalf of the assessee to the other foreign party. Therefore, we consider that the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the assessee, therefore, we consider that ld. CIT(A) is not justified in sustaining the addition in contrary to his findings on the foreign payment issue in other cases as discussed supra in this order without establishing the fact that payment has been made actually on behalf of the assessee by one foreign party to other foreign party. Accordingly, this ground of appeal of the assessee is allowed. 69. Ground No. 7: Addition of Rs. 49,58,640/- u/s 69C of the Act by considering alleged payment made to Randolph Gray Design Company Ltd. as unexplained expenditure: During the course of assessment on perusal of page no. 52, 53 and 55 of the Annexure A-42 seized and page no. 7 of Annexure A-46 seized from the residential premises of Shri Jiten Pujari, the assessing officer noticed payment in the ledger in the name of 'Clive' made in USD. The AO further stated that Randolph Gray Design Company Ltd. (Prop. Mr. Clive Gray) was Bangkok based designing entity which has been engaged by the Triton Group for interior designing of various projects. The AO further stated that it is noticed from the perusal of whatsapp chat between Shri Jiten Pujari and Shri Ratankant Sharma retrieved from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said transaction was carried out in USD between the foreign based entities. The AO has made the impugned addition only on the basis of statement of Shri Ashok Ummat that M/s. Warden Baker was a foreign company known to the assessee. The AO had not examined its veracity by making further inquiries to ascertain the relevant supporting material and evidences to substantiate that foreign party had actually made payment to the other foreign party on behalf of the assessee. Similar to the ground no.5 of the assessee as discussed supra the assessing officer has neither conducted any enquiry with the parties about the involvement of the assessee nor brought any material on record to demonstrate that assessee has actually made any payment in USD to the aforesaid parties. Therefore, applying the findings of ground no.5 of this appeal, this ground of appeal of the assessee is allowed. 72. Ground No. 8: The ld. CIT(A) erred in confirming the action of the assessing officer in invoking the provisions of section 115BBE of the Act: This ground of appeal was not discussed before us therefore same stand dismissed. 73. Ground No. 9: The assessing officer erred in making addition based on stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal noting and repetitive entries. The AO has not agreed with the submission of the assessee and after detailed examination and corelation of the seized note book and other material concluded that these entries contained systematic record of unaccounted transaction carried out by the various Triton Group entities including the assessee. Therefore, the aforesaid payments of Rs. 10,11,20,500/- was considered as unexplained expenditure and added back u/s 69C of the Act. During the course of appellate proceedings, the ld. CIT(A) after considering the submission of the assessee found that there was repetitive entries appeared in Annexure 39 to 41 to the amount of Rs. 10,52,30,750/- as mentioned at page no. 31 of the ld. CIT(A) as under: Gr. No Addition made by AO Addition upheld in principle but deleted on account of being repetitive in nature or pertaining to other year 1 35,00,000 35,00,000 2 1,60,000 1,60,000 3 32,00,000 32,00,000 4 1,12,04,750 1,12,04,750 5 7,11,40,000 5,00,00,000 6 1,80,00,000 1,80,00,000 7 51,66,000 51,66,000 8 30,00,000 30,00,000 9 1,10,00,000 1,10,00,000 Total 12,63,70,750 10,52,30,750 77. After referring the repeated entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- without telescoping appreciating the fact that addition sustained in earlier year is also available for the telescoping: This issue is discussed while adjudicating ground no. 2 of appeal filed by the assessee. Before us, the ld. Counsel submitted that as discussed in para 20 page 15 of the assessment order, assessee has inflated certain expenses debited to work in progress account in F.Y. 2017-18, 2018-19 and 2019-20 and received back cash. It is also submitted that ld. CIT(A) confirmed addition u/s 69C on various issues but granted telescoping benefit to the extent of cash received out of such inflated expenses during the year of Rs. 4.66 crore. The ld. Counsel further submitted that ld. CIT(A) should have considered such cash surplus of F.Y. 2017-18 and F.Y. 2018-19 of Rs. 55 lakh and Rs. 4.86 crore respectively also while granting such telescoping benefit. After hearing both the sides and perusal of material on record we restore the issue of granting telescoping benefit as claimed by the assessee of cash surplus of F.Y. 2017-18 and F.Y. 2018-19 of Rs. 55 lakhs and Rs. 4.86 crore to the file of ld. CIT(A) for deciding on merit after examination of relevant material an ..... 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