ACIT Vs Harvansh P. Chawla (ITAT Delhi)
Facts- Based on the email from Mr. Michael Boettcher, AO alleged undisclosed income of $7,000,000 (i.e., INR 28,00,00,000. Unsecured loan was received by the Assessee from various parties and the addition was made by the AO treating the same as unexplained income.
Conclusion-
Undisclosed income – it is concluded that there is no liabilities on the part of the assessee and the revenue could not bring about any cogent material to prove the allegations.
Unsecured loan– It is seen that merely because the Lender Company had substantial funds through borrowings, AO suspected the Assessee to have created layers of intermediaries to bring in Unaccounted money, and on the basis of such suspicion, drew adverse conclusion against the genuineness of the Unsecured Loan and treated it as Unexplained merely on the basis of such suspicion. In fact, though the Confirmation from that party was filed, the Assessment Order has not acknowledged the same. No doubt, AO can have suspicion regarding a particular transaction or group of transactions, but such suspicion can only be a ground for further Investigation to determine the true facts, but it cannot be a ground for adverse conclusion against the Assessee. In view of the entire facts of the case, there is no justification to treat the Unsecured Loan as Unexplained, and hence the addition made by the AO treating this Loan as Unexplained is hereby deleted.
Section 14A will not apply if no exempt income is received or receivable during the relevant previous year.
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeals have been filed by the revenue against the orders of the ld. CIT(A)-25, New Delhi dated 31.05.2017.
2. In the ITA No.5857/Del/2017, following grounds have been raised by the revenue:
“1. That the order of the ld. CIT (A) is not correct in law and on facts.
2. On the facts and circumstances of the case, the ld. CIT (A) has erred in deleting the addition of Rs.28,00,00,000/- made on account of undisclosed income and has failed to appreciate the fact that the addition was made on the basis of the documentary evidence.
3. On the facts and circumstances of the case, the ld. CIT (A) has erred in allowing deduction u/s 24 of Rs. 37,59,156/-.
4. On the facts and circumstances of the case, the ld. CIT (A) has erred in deleting the addition of Rs.10,91,67,051/- made on account of unexplained unsecured loans.”
3. In the ITA No.5858/Del/2017, following grounds have been raised by the revenue:
“1. That the order of the ld. CIT (A) is not correct in law and on facts.
2. On the facts and circumstances of the case, the ld. CIT (A) has erred in deleting the addition of Rs.46,00,17,516/- made on account of unexplained credits in the books.
3. On the facts and circumstances of the case, the ld. CIT (A) has erred in deleting the addition of Rs.4,15,141/- made u/s 14A r.w. Rule 8D.”
4. The Appellant is a practicing Lawyer running a Law Firm by the name of M/s K.R. Chawla and Co. As against the returned Income of Rs.89,58,460/- as per the return for A.Y. 08-09 filed on 29.09.08, the income was assessed u/s 143(3) at Rs.40,36,1 1,984/-.
5. Information has been received by the Assessing Officer from the Deputy Director of Income tax (Inv.) Unit-II(3) New Delhi containing the details pertaining to RC-21 & 22/2008/SVPS/365 dated 17.08.2009 from the office of the Director-Cum-Commissioner, Vigilance Gangtok Sikkim.
6. Among the documents seized was a printout of e-mail conversations between the assessee. Sh. Harvansh Chawla (e-mail [email protected]), Michael Boettcher of Storm International. Narinder Grover (e-mail: [email protected]) and one Sh. Ivo Muijser. The subject of these e-mails is “payment for 2 licenses” and they seem to be related to getting licenses for casino in Sikkim. The e-mails have been exchanged in the month of November and December 2007. In the e-mail conversation there is a mention of remittance of $7,000,000. Sh. Narinder Grover also acknowledges the receipt of this money in his e-mail, further Mr. Michael in his e-mail to Sh. Harvansh Chawla mentions about the refund of the money paid to Sh. Chawla in the situation that the licenses for casino are withdrawn.
7. During the course of assessment proceedings for assessment year 2008-09 summons n/s 131 were issued to the following parties on 12.07.2010:
