TMI Blog2020 (12) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... was also admitted by him (the AO) in his order AO was under the obligation to reduce the sum of 81 lakhs from the income of the director in the situation where he proposed to add the same in the hands of the assessee. But the AO has not done so despite having sufficient information in his hand. As such the action of the AO has resulted the double addition of the same income. In the case on hand, the assessee has claimed that receipt of ₹81 lakhs has already been considered in the hands of the director which was not disputed by the authorities below. It implies that owner of the receipt of ₹81 lakhs was the director of the company and not the assessee. Accordingly, the assessee cannot be held the owner of the receipts of ₹81 lakhs and consequently the impugned receipt cannot be made subject to tax in the hands of the assessee under the provisions of section 69A of the Act. - Decided in favour of assessee. - IT(SS)A No. 187/AHD/2015 - - - Dated:- 3-12-2020 - Shri Rapal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Vartik Chokshi with Shri Biren Shah, A.Rs For the Revenue : Shri M.S.A Khan, CIT.D.R ORD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Sanghvi Group including the residence of the directors. During the search certain loose papers belonging to the assessee were found including the annexure A-29. The assessee during the year has purchased a plot at Vadaj Ahmadabad for development of commercial complex namely Shree Ratna Complex . On scrutiny of the loose papers bearing page Nos. 9, 11 and 18 of Annexure A-29, the AO found that a sum of ₹ 81 lakh was received by the assessee in cash against the sale of the new shop of its commercial project. Accordingly, the AO was of the opinion that the impugned receipt of ₹ 81 lacs belongs to the assessee against the project initiated and conceptualized by it. Thus the AO issued show caused notice proposing addition of the same as unaccounted income of the assessee company. 3.1 The assessee in response to the show cause notice submitted that it was the first year of its existence as it was incorporated as on 19-06-2010. The land for project Shree Ratna complex was purchased as on 21-09-2010 and plan for the project was approved vide Raja chitthi dated 27-02-2012. Hence it has not started any commercial activity or construction till the date of search i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is undesirable. 5.2 The assessee also contended, without prejudice to the above that the income against project should be incorporated only it starts its project commercially. As such it started its project by making first sale deed which was executed in the A.Y. 2013-14. Hence on this ground there cannot be any addition in the year under consideration. The assessee in this respect relied on the judgment of the Hon ble jurisdictional HC in case of Motilal C Patel reported in 176 ITR 666 and in case CIT v Shivalik Buildwell (P) ltd. reported in 40 taxmann.com 2019. 6. However, the ld. CIT-A rejected the contention of the assessee by observing as under: 7.1 It is seen from the seized document that diary/letter pad-A- 29 page number 9,11 and 18 shows cash receipts pertaining to various shops. During the assessment proceeding Shri Dhirajlal Sanghvi, the main person of the group, admitted in statement recorded under section 131 on 26.05.2011 that the above cash receipt pertains to new project of the appellant company. Shri Dhirajlal Sanghvi also submitted that ₹ 81 Lacs cash was received by the appellant company and the properties are registered in the name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... okilaben Sanghvi in Appeal No. CIT(A)-12/210/CC-2(4}/13-14 for A,Y. 2011-12. Thus it can be seen that there is no merit in the contention of the appellant that this amount has already been offered for taxation. 7.8. During the search proceedings u/s 132 of the Act either the appellant or Sh. Shri Dhfrajlal Sanghvi never claimed that the cash receipt of Rs, 81 Lacs belong to Shrf Dhirajfal Sanghvi. However, first time during the assessment proceeding u/s 153A cash flow statement of Shri Dhirajlal Sanghvi was submitted before the AO and ₹ 81 lakhs was included in that which was rejected by the AO. Therefore it would be logically and factually incorrect to interpret that the above cash receipt belongs to Sh. Dhirajlal V Sanghvi and addition in the hand of the appellant will amount to be double addition. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 7. The learned AR before us filed a paper book running from pages 1 to 475 and reiterated the submissions made before the authorities below. 8. On the contrary, the learned DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer, then the possibility of manipulation, diversion of income reduced significantly for the reason that the officer in charge has complete control on the income of the group. In the case on hand, there is no dispute to the fact that the assessment was framed by one officer. Thus we are of the view that the AO, among other rights and responsibilities, was to ensure that any income of the group should not be taxed twice in the hands of different assessee. 9.3 In the case on hand, the assessee indeed at the time of assessment has contended that the receipt of ₹81 lakhs against the sale of shops has already been offered to tax in the hands of the director namely Shri Dhirajlal Sanghvi and therefore if such addition is sustained in the hands of the assessee, then it would lead to the double addition. However, in this regard we note that the AO in the assessment of the director Shri Dhirajlal Sanghvi did not accept the cash flow statement, wherein receipt of ₹81 lakhs was shown, on the reasoning that the impugned receipt belongs to the assessee which is a separate and independent entity in the eyes of law. As such, the AO in the case of Shri Dhirajlal Sanghvi foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot over-write the applicability of law when the family members have been filing their returns of income and also have independent source of income is not accepted for the reason that the Appellant is the key person of the Group and carries out all the financial transactions and has also owned cash payments including payments made for purchase of property made by the wife and son. This was also endorsed in. the statement recorded before the Departmental authorities. The extract pf the statement along with the rebuttal to the Assessing Officer's contention for rejection of the cash flow statement has been narrated by the Appellant in his SOF and is the same is reproduced herein above. I intend to agree with the stand taken by the AR that wherever the income is specific and belonging to the specific member of the Group the same has been shown in his/her, return of income but since the Appellant was undertaking all the financial transactions, 'the Appellant was correct in incorporating the same in the cash flow statement and telescoping the same against the payments/application. 9.4 The above finding of the ld. CIT-A was subsequently confirmed by the ITAT in ITA No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the AO has resulted the double addition of the same income. 9.7 Without prejudice to the above, we also note that in the present case, the addition has been made by the AO which was subsequently sustained by the learned CIT (A) under the provisions of section 69A of the Act. The provisions of section 69A of the Act reads as under: [ Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income72, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the 69[Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income72 of the assessee for such financial year.] The following are the ingredients of section 69A of the Act: (i ) In any financial year the assessee is found to be the owner of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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