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Facts
The assessee, part of the Genex Group, was subject to a search and seizure operation under Section 132 of the Income Tax Act, 1961. The Assessing Officer completed the assessment under Section 143(3) making various additions including unexplained investment in shares, inadequate household withdrawals, unexplained cash, unexplained jewellery, and undisclosed income. The CIT(A) largely confirmed these additions. The assessee failed to appear before the Tribunal despite multiple opportunities, and their counsels withdrew their powers of attorney, leading to the case being heard ex-parte.
Held
The Tribunal found that both the Assessing Officer and the Ld. CIT(A) had passed speaking orders after considering all relevant documents and submissions, adhering to principles of natural justice. Since the assessee failed to pursue the appeal despite 50 opportunities and was deemed absconding, the Tribunal sustained the findings of the Ld. CIT(A) on all issues.
Key Issues
1. Whether the various additions made by the Assessing Officer, confirmed by the CIT(A), for unexplained investment, household withdrawals, cash, jewellery, and undisclosed income were justified. 2. Whether the Tribunal could dismiss the appeal due to the assessee's non-appearance and non-prosecution of the appeal.
Sections Cited
132, 127, 142(1), 143(2), 143(3)
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
�नधा�रती क� ओर से/Assessee by : None राज�व क� ओर से/ Revenue by : Shri Rohit Sharma, CIT DR (Virtual) सुनवाई क� तार�ख/Date of Hearing : 06.02.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 25.02.2025 आदेश/Order Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 02.08.2018 of ld. Commissioner of Income Tax (Appeals)-2, Jalandhar [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2014-15.
The Assessee has raised following grounds of appeal:
1358-Chd-2018 Kailash Aggarwal, Ludhiana 2 That on the facts and in the circumstances of the case and in law, the learned AO (ACIT Central Circle -1 Ludhiana) erred in making assessment u/s 143(3) of the Act, making addition of Rs 90,27,050 /- to returned income of Rs. 22,40,420 /- while CIT (Appeals) Jalandhar confirmed the addition to Rs. 7567050/-.
1. Addition of Rs 100,000/- That on the facts and in the circumstances of the case and in law Ld. AO and CIT (Appeals) erred in making addition of Rs 100,000/- as alleged share worth Rs. 100000/- gifted by wife to her husband without execution of gift deed.
2. Addition of Rs. 200,000/- That on the facts and in the circumstances of the case and in law Ld AO erred in making adhoc & estimated addition of Rs 660,000 on account of alleged low household withdrawal whereas the CIT(Appeals) confirmed the household addition to Rs.200000/- Without considering the fact that the assessee has already shown household expenses of Rs. 780000/- for a family member of two persons.
3. Addition of Rs 35,41,050/- That on the facts and in the circumstances of the case and in law Ld AO and CIT Appeals erred in making addition of Rs 35,41,050 on a/c of alleged cash found at residential premises of the assessee without considering the fact:- a) Rs. 1541050/- Cash in hand of M/s Genex Industries Ltd at the time of Search. b) Rs. 2000000/- Cash received on Sale of Audi A6 Car.
1358-Chd-2018 Kailash Aggarwal, Ludhiana
3 4. Addition of Rs 37,26,000/- That on the facts and in the circumstances of the case and in law Ld AO and erred in making addition of Rs 37,26,000/- on account of alleged unexplained jewellery found in the residential premises of the assessee at the time of search. The Ld. CIT Appeal has directed the AO to re compute the value of Jewellery but the AO has not acted upon till date.
It emerges out from the record that and other cases of this group are on Board since 29th March 2017. From the Note Sheet entry, it is seen that Shri Tej Mohan Singh, Shri Jasleen Khera and others have appeared from time to time and thereafter all the Counsels have withdrawn their power of attorney and pleaded no instructions. On 26.9.2024, Shri Tej Mohan Singh, Advocate and Shri Sanjay Sood, CA also withdrew their power of attorney. It is pertinent to note that as and when a counsel withdrew his power of attorney, it is a duty cast upon him to serve a notice through registered post upon the Assessee informing that he is withdrawing his power of attorney so that Assessee can make alternative arrangement thereafter. The Tribunal is not required to serve a fresh notice. But in the interest of justice and for abundant caution, Tribunal issued 1358-Chd-2018 Kailash Aggarwal, Ludhiana
4 fresh notice for hearing to the Assessee for 20.11.2024. But none appeared on behalf of the Assessee. It is 50th occasion that this group has been listed for hearing. The notice was issued through the A.O. and the A.O. has informed that notice has been sent on the last e.mail available with the Department. It is further observed that DCIT, Central Circle, Ludhiana vide his letter dated 7.1.2025 informed the Tribunal that officials from the Range visited the premises of the Assessee which was found locked.
During proceedings before us, the ld. DR informed the Bench that he has been intimated by the Assessing Officer that the Assessee is absconding. We have been apprised that there are large number of cases pending against the head of the group with different investigating agencies. Looking to all these cumulative setting of circumstances would suggest that the Assessee is not very much interested in persecuting this appeal. Even otherwise, it is trite (‘S. Velu Palandar Vs. DCIT’, 83 ITR 686 (Mad.)] and incumbent on the authority to decide an appeal on merit in accordance with the principles of natural justice.
1358-Chd-2018 Kailash Aggarwal, Ludhiana
5 5. Now coming on merits of the case, the brief facts are that the Assessee belongs to Genex Group of cases, Ludhiana where search and seizure operation u/s 132 of the Income Tax Act, 1961 (in short 'the Act') was conducted on 23.05.2013. Further, the facts, as enumerated in the assessment order are as under:
During the search operation, various documents were found and seized from the various business and residential premises of the group. Accordingly, the case was centralized u/s 127 of Income Tax Act, 1961 vide order F.No. CIT-l/LDH/TFXH/127/2013-14/606 dated 11.06.2013 and a notice u/s 142(1) of the I.T. Act requiring the assessee to file her return of income was issued on 24.03.2014. 1.2 In response thereto, a return declaring income of Rs. 8,63,410/- was filed by the assessee on 21.05.2015. The case was taken up for scrutiny and statutory notice u/s 142(1) along with questionnaire was issued on 13.05.2015 and the same was duly served on the assessee. Subsequently, notices u/s 143(2) & 142(1) issued and complied with. In response to the notices, Sh. Gaurav Gupta, C.A. and Sh. Gaurav Sharma, C.A., authorized representatives of the assessee attended the proceedings and furnished the requisite information/details/explanation etc., with whom the case was also discussed.
1358-Chd-2018 Kailash Aggarwal, Ludhiana
2. The assessee is an individual and having income from salary being employed with M/s Genex Industries Ltd & M/s ARK Imports Pvt Ltd. Beside this, the assessee has also earned Interest income under the head Income from other sources. 2.1 As per information received the assessee during the year under consideration has purchased 10000 shares of M/s ARK Imports Pvt. Ltd. at Rs. 1,00,000/- @ 10/- per share. In the course of assessment proceedings, the assessee was asked to explain the source of investment towards the purchase of these shares and furnish documentary evidence in support thereof. However, no explanation supported with documentary evidence was field despite repeated opportunities. Thus, the source of investment towards purchase of shares amounting to Rs. 1,00,000/- remained unexplained and is, therefore, added to the income returned. Accordingly, an addition of Rs. 1,00000/- is made to the income returned. 2.2 In the course of assessment proceedings, the adequacy for household expenses examined. As per information received, the assessee is residing with his family consisting of self, wife and son and the total household withdrawals has been declared at Rs.6,00,449/- including the electricity expenses of Rs. 3,60,449/-. Thus the balance amount of Rs. 2,40,000/- has been utilized for other household 1358-Chd-2018 Kailash Aggarwal, Ludhiana
7 expenses. The average monthly expenses comes to Rs.20,000/- approx. Looking to the size and status of the family, the withdrawals for household is considered to be inadequate. After discussion, an adhoc addition of Rs.6,60,000/- to cover up low withdrawal for household expenses is being made. Accordingly, an addition of Rs. 6,60,000/- is made to the income returned. 2.3 During search operation, at the residential premises of the assessee cash amounting to Rs. 35,41,050/- was found. In the course of assessment proceedings, the assessee was asked to explain the source acquisition of such cash. However, no such explanation has been received despite allowing of repeated opportunities. Thus, the amount of cash of Rs. 35,41,050/- found during the course of search operation remained unexplained and is added to the income returned. Accordingly, an addition of Rs.35,41,050/- is made to the income returned. 2.4 During search operation, at the residential premises of the assessee Jewellery Weighing 613 gms was found. Besides, this Jewellery Weighing 1202 gms was also found from the locker. Thus, the total jewellery found comes to 1815 gms. In the course of assessment proceedings, the assessee was asked to explain the source of acquisition of jewellery. However, no such explanation has been received despite allowing of repeated opportunities. The assesses 1358-Chd-2018 Kailash Aggarwal, Ludhiana 8 family consists of three members including a married lady. As per Boards instruction the jewellery weighing 700 gms is exempt. Therefore, the source of acquisition of balance jewellery found during search operation remained unexplained the value of which comes to Rs. 37,26,000/- and is therefore, added to the income returned. Accordingly, an addition of Rs. 37,26,000/- is made to the income returned.
3. In the course of search operation, the assessee has made disclosure of undisclosed income of Rs. 10,00,000/- over and above the normal income earned during the year. The assessee has not disclosed the undisclosed income of Rs. 10,00,000/- in his return which was disclosed in the course of search. Therefore, the same is added. Accordingly, ant-addition of Rs. 10,00,000/- is made to the income returned.
4. With the above observations, the total income of the assessee is computed at Rs. 1,12,67,470/-
We have gone through the assessment order passed by the Assessing Officer and the appellate order passed by the ld. CIT(A). We find that the Assessing Officer has passed a speaking order based on various incriminating documents found and seized from various business and residential premise of the group. Against the order of the Assessing Officer, the Assessee filed an appeal before the ld. CIT(A) on 1358-Chd-2018 Kailash Aggarwal, Ludhiana
9 different grounds. The ld. CIT(A), in our view, has passed a speaking order on merit on each and every issue / ground raised by the Assessee in the appeal. The Assessee dissatisfied with the order of the ld. CIT(A) has filed this appeal before the Tribunal but despite giving fifty opportunities to the Assessee, the Assessee has not complied with and further that all the Counsels and C.A. who had filed their Power of Attorney have also withdrawn in the absence of any instruction from the Assessee.
The ld. DR relied on the order of the CIT(A) and prayed that the appeal of the Assessee deserves to be dismissed.
In our view, both the Assessing Officer and the ld. CIT(A) have passed the assessment order and the appellate order keeping in view the aspect of natural justice. They have considered all the necessary documents, statements and submissions filed by the Assessee. Since the order passed by the ld. CIT(A) is a speaking order on each issue, therefore, in our considered opinion, there is no need to interfere in the findings given by the ld. CIT(A). Thus, findings given by the ld. CIT(A) on different issues in his Appeal Order are hereby 1358-Chd-2018 Kailash Aggarwal, Ludhiana
10 sustained. Accordingly, appeal filed by the Assessee on different grounds are hereby dismissed
In the result, appeal of the assessee is dismissed.
Order pronounced on 25.02.2025.