ITA No. 4602/Del/2011
Asstt. Year: 2008-09
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `E' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
I.T.A.No.4602/Del/2011
Assessment Year : 2008-09
MGF Automobiles Ltd., vs Asstt.Commissioner of Income Tax,
4/17-B, MGF House, Central Circle-7, New Delhi.
Asaf Ali Road,
New Delhi.
(Appellant) (Respondent)
Appellant by: Shri V.K. Aggarwal
Respondent by : Shri Gunjan Prashad, CIT DR
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been preferred by the assessee against the order of
CIT(A)-I, New Delhi dated 0.08.2011 in Appeal No.378/09-10 for AY 2008-09.
2. Ground no. 1, 3 and 4 of the assessee are general in nature which need no
adjudication on merits. The sole ground no. 2 of the assessee reads as under:-
"2. The Ld. CIT (A) has grossly erred on facts as well
as in law in confirming the addition of Rs. 33,90,5501- on
account of cash found during the search especially in view of
the following: -
a) By holding that during the search, neither confirmation
was filed nor books of account of M/s MGF Development Ltd.
were produced.
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Asstt. Year: 2008-09
b) In ignoring the fact that imprest was taken for business
purposes.
c) In holding that the appellant has failed to explain why
imprest was taken without providing any opportunity to
explain the same.
d) In referring to section 269SS and 40A(3) which are not
applicable in respect of imprest."
3. Briefly stated, the fact giving rise to this appeal are that a search and
seizure operation u/s 132 of the Income Tax Act was carried out in the case of
the assessee on 12.09.2007. Subsequently, all related cases of the assessee were
transferred and centralised by the CIT, Delhi-II vide order dated 13.02.2008.
The assessee filed a return for the year under consideration on 29.9.2008
declaring an income of Rs.68,21,192/- showing income from business and
profession. Notices u/s 143(2) and 142(1) along with a questionnaire were
served on the assessee. The AO noticed that during the search and seizure
operation, cash amounting to Rs.48,46,130 was found from the office premises
of the company. The assessee was asked to justify the cash found in its premises
by showing cash in hand in the books. The AO further observed that the books
produced in support of the same were not reflecting cash in hand of Rs.
48,00,000/- despite the fact that assessee was given sufficient opportunity to
explain the existence of above cash in its premises as per the books of accounts.
With these observations, the AO made an addition of Rs. 48 lakh as unexplained
cash found during the search.
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Asstt. Year: 2008-09
4. The aggrieved assessee preferred an appeal before the CIT(A) which was
partly allowed deleting the addition of Rs.14,09,450/- and remaining amount of
addition of Rs.33,90,550/- was upheld and confirmed.
5. Now, the aggrieved assessee is before this Tribunal with the main ground
as reproduced hereinabove.
6. We have heard arguments of both the sides and carefully perused the
record. Ld. Counsel for the assessee submitted that as per remand report dated
06.06.2011 submitted to CIT(A) by the AO, it has been mentioned that
regarding balance cash of Rs.33,90,550/-, the assessee had furnished
confirmation during the course of assessment proceedings to the effect that this
amount belonged to M/s MGF Development Ltd. and the confirmatory letter
dated 13.11.2009 was placed on record. Ld. Counsel vehemently contended that
the AO, despite the confirmation, wrongly held that the alleged confirmation
was furnished more than two years after the date of search and the same appears
to be an afterthought on the part of the assessee to explain the cash found at the
time of search.
7. Ld. counsel submitted that the AO could have verified this very factum
from the assessment record of M/s MGF Development Ltd. who gave
confirmation but without making any exercise, the AO was not justified in
rejecting the explanation and confirmation of the assessee. Ld. Counsel of the
assessee has also drawn our attention towards paper book page no. 3 para 5 and
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Asstt. Year: 2008-09
submitted that the assessee also submitted during the assessment proceedings
that the cash balance of Rs.33,90,550 belonged to MGF Developers Ltd. as the
said cash of the company was found lying in the premises of the assessee
company on the date of search as the same was given to the assessee company
as imprest amount for business purposes. This letter is dated 15.12.09. Ld.
Counsel for the assessee has also drawn our attention towards paper book page
no. 31 and submitted that as per cash in hand account of M/s MGF Developers
Ltd., there was an entry of payment to the assessee on 8.9.2007 which clearly
reflects that the amount of Rs.33,90,450/- was given as imprest to the assessee
company which further gets confirmed from the imprest ledger account of MGF
Automobile Paper book page 33.
8. Ld. Counsel of the assessee has further drawn our attention towards Paper
Book page no. 57 and submitted that on statement recorded on oath on
16.10.2007 u/s 131 of the Act, Shri Shravan Gupta s/o Shri Rajeev Gupta, MD
of MGF Group of Companies stated that the cash withdrawal in the various
companies has been done for meeting the various expenses related to land
acquisition and with land acquisition team as per books of accounts. Ld.
Counsel further stated that the Mr. Shravan Gupta clearly replied to the
questions of the revenue authorities that the relevant details would be provided
for verification. Ld. Counsel has also drawn our attention towards paper book
page 42 and submitted that the same impugned amount has been returned by the
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Asstt. Year: 2008-09
assessee to M/s MGF Developers Ltd. on 15.2.2007 which also fortifies the
explanation of the assessee that the impugned amount of addition upheld and
confirmed by the CIT(A) was returned by the assessee to M/s MGF Developers
Ltd.
9. Ld. Counsel of the assessee submitted that during the course of
assessment proceedings as well as first appellate proceedings, the assessee
clearly submitted a sustainable explanation that the amount of cash seized was
inclusive of imprest amount received from MGF Development Ltd. and this
amount was returned to the respective MGF Development Ltd. 15.2.2007. Ld.
Counsel submitted that the assessee could get an opportunity to submit the
explanation before the authorities when the same was asked for during the
assessment and appellate proceedings. The assessee cannot submit the same on
his own without any proceeding. Ld. counsel has again drawn our attention
towards paper book page no. 57 and submitted that MD of the company Shri
Shravan Gupta clearly replied that relevant detail would be provided for
verification. Ld. Counsel finally prayed that the impugned addition may kindly
be deleted and AO may be directed accordingly.
10. Replying to the above, ld. DR submitted that no books of accounts were
found at the time of search and seizure operation. The DR further submitted that
to verify the justification of cash amount of Rs. 48 lakh, the onus was on the
assessee to submit proper and justified explanation that the impugned amount of
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Asstt. Year: 2008-09
Rs.33,90,450/- was imprest amount given by M/s MGF Development Ltd. Ld.
DR vehemently contended that this kind of explanation requires deep inquiry of
books of accounts and bank statement of both the parties which were not
produced, therefore, addition was justified.
11. On careful consideration of above, we are of the view that during the
statement recorded u/s 131 of the Act, the MD of the company Mr. Shravan
Gupta stated that the required detail and other information will be submitted for
verification as and when the same will be required. During the assessment
proceedings, the assessee stated that the cash amount of Rs.33,90,550 belonged
to M/s MGF Development Ltd. This letter dated 15.12.2009 was submitted to
the AO. Further, during first appellate proceedings, the AO admitted that the
assessee had furnished confirmation during the course of assessment proceeding
to the effect that the impugned amount of cash belonged to M/s MGF
Development Ltd. and the AO also alleged that the confirmation has been
furnished after more than two years of search, therefore, it appears to be an after
thought which cannot be the basis for rejection of confirmation without any
further examination and verification from the assessment records of M/s MGF
Development Ltd.
12. We also note that the DR has not disputed the point that the impugned
amount was returned by the assessee to M/s MGF Development Ltd. on
15.9.2007 which is clearly reflected from the books of accounts of the assessee
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Asstt. Year: 2008-09
as well as cash in hand and assessee's account in the books of M/s MGF
Development Ltd. Under these circumstances, we reach to a conclusion that the
assessee also explained the amount of cash found during the course of search
that an amount of Rs.33,90,450/- belonged to M/s MGF Development Ltd.
which was returned in due course of business. Hence, we are inclined to hold
that the authorities below were not justified in making and confirming the
addition on this amount in the hands of the assessee. Accordingly, sole ground
of the assessee is hereby allowed. Before we part with the order, we also make
it clear that the assessee made a legal objection that referring to section 269SS
and 40A(3) of the Act is wrong as these are not applicable in respect of imprest.
Since we are hearing the appeal regarding quantum proceedings, therefore, we
refuse to comment on the applicability of these provisions and ground no. 2(d)
of the assessee is dismissed as irrelevant and premature. Remaining ground
no.2(a) (b) and (c) are allowed as indicated above.
13. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 14.11.2014.
Sd/- Sd/-
(G.D. AGRAWAL) (CHANDRAMOHAN GARG)
VICE PRESIDENT JUDICIAL MEMBER
DT. 14th NOVEMBER, 2014
`GS'
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ITA No. 4602/Del/2011
Asstt. Year: 2008-09
Copy forwarded to:-
1. Appellant
2. Respondent
3. C.I.T.(A)
4. C.I.T.
5. DR
By Order
Asstt.Registrar
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