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Facts
The assessee filed appeals against two orders of the CIT(A) related to assessment years 2018-19 and 2019-20. The appeals involved additions made by the AO for Rs. 10,00,000/- as unexplained money received during a marriage, and Rs. 7,81,979/- as undisclosed interest income.
Held
The Tribunal, considering the complexities and the pleas of the assessee, deemed it fit in the interest of justice to provide one more opportunity to be heard before the AO. Both appeals were disposed of for statistical purposes, with a cost imposed on the appellant.
Key Issues
Whether the additions made by the AO on account of unexplained money and undisclosed interest income are justified. Whether the assessee has been provided adequate opportunity to present their case.
Sections Cited
153A, 144, 69, 131, 133(6), 292C, 132(4), 269SS, 271D, 115BBE, 271AAC, 56(2)(vii), 139(1), 142(1), 143(2), 271AAB(1A)(b)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;djvihyla-@ITA No. 554 & 555/JP/2025 Shri Mahesh Chandra Agarwal cuke
vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Both these appeals have been filed by the assessee against two different orders of the ld. CIT(A), Jaipur-4 dated 24-02-2025 u/s 153A of the Act and u/s 144 of the Act respectively for the assessment year 2018-19 and 2019-20 and thus raising therein following grounds of appeal.
& 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR – A.Y. 2018-19 ‘’1. That the assessment order passed by Ld. AO as well as the appellate order passed by Ld. CIT(A) are bad in law and have been passed in contravention of prevailing law as well as facts of the case, therefore liable to be annulled
That the assessment order passed by the Ld. AO is perverse to law and to the facts of the case and consequentially non-tenable under the law because of being passed making additions without issue of any show cause notices prior proceeding to make additions to the income of the appellant 3. That the Ld. AO as well as Ld. CTT(A) grossly erred in law and in facts of the case because despite applicability of provisions of Sec. 292C of the Act it was held that the appellant could not discharge the onus cast upon him by way of furnishing of confirmation and other relevant documents from his brother-in-law. 4. That Ld AO and Ld. CTT(A) grossly erred in law and in facts of the case in not exercising powers u/s 131 and 133(6) of the Act despite the fact that the case of brother-in-law of the appellant was also being assessed by the L.d. AO only and she possessed seized documents of brother-in-law having transaction of payment to assessee and also possessed assessment his assessments records. 5. That the LdAOgrossly erred in law and in facts of the case in assessing the amount of Rs. 10,00,000/- being amount received from brother-in-law as financial help on the occasion of marriage of his daughter as unexplained money u/s 69 of the Act.
– A.Y. 2018-19 1. That the assessment order passed by Ld. AO as well as the appellate order passed by Ld. CIT(A) are bad in law and have been passed in contravention of prevailing law as well as facts of the case, therefore liable to be annulled.
2. That the assessment order passed by the Ld. AO is perverse to law and to the facts of the case and consequentially non-tenable under the law because of being passed making additions without issue of any show-cause notice prior proceeding to make additions to the income of the appellant.
3. That the Ld. AO as well as Ld. CIT(A) grossly erred in law and in facts of the case because despite applicability of provisions of Sec. 292C of the Act it was held that the appellant has received interest from his brother.
& 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR 4. That the Lf AO grossly erred in law in making addition of Rs. 7,81,979/ on account of presumed interest income from brother on outstanding amount of family settlement despite the fact that it was evident from the seized document that the said amount was outstanding to be received by the appellant and the same was never received by him and it was clarified that these were only notional workings and were not acted upon actually.’’ 2.1 First of all, we take up the appeal for the assessment year 2018-19 for adjudication. Brief facts of the case are that original return of income u/s 139(1) of the Act was filed by the assessee on 17-07-2018, declaring total income at Rs.2,95,350/-. The AO in his assessment order observed that the search and seizure action was carried out on 23-01-2019 in the case of ‘’Agarwal Group’’ of Kotputli, Jaipur, to which the assessee belongs. Various assets/ books of accounts and documents were found and seized, as per annexure prepared in the course of search. Accordingly, notice u/s 153A of the Act for this year was issued on 08-02-2021 and duly served upon the assessee. In compliance with the notice u/s 153A of the Act, return of income was e-filed on 5-03- 2021, declaring total income of Rs.2,95,350/- for the year under consideration. It is pertinent to mention that the AO in the course of assessment proceedings noticed from the seized document i.e. page no 21 of Annexure AS-5 that the assessee had received Rs.10 lacs in cash from Shri Sita Ram Agarwal during the assessment year under consideration. The assessee was required to explain the nature of this receipt of Rs.10 & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR and as to whether said amount was disclosed in the return of income or not. In this connection, the assessee submitted his following reply before the AO. ‘’In respect of receipt of Rs. 10,00,000/- from Sh. Sitaram Aggarwal the following is submitted- 1 That Sh. Sitaram Aggarwal is brother-in-law of the assessee, i.e., he is spouse of sister of assessee.
2. That the stated amount was received by the assessee on the occasion ofmarriage of his daughter 3. Since the stated amount was received from a relative of the assessee as defined in Explanation (e) (G) of Section 56(2)(vii) of the Act, receipt from Sh. Sitaram Aggarwal by the assessee is not chargeable to tax. Further, the stated amount was received on the occasion of marriage of his daughter, thus, on this account also the stated amount cannot be termed as undisclosed income of the assessee because as per Indian traditions entire family makes expenditure on marriage of daughter out of natural love and affection. Thus, this amount do not represent the undisclosed income of the assessee.
1. It is not out of place to mention here that later Sh. Sitaram Aggarwal adjusted the stated amount against the capital of family of assessee in firm M/s Shree Ramji Bricks."
The reply of the assessee was considered, but the AO did not find it tenable for the following reasons:- ‘’1. The assessee has firstly claimed that the said amount was given by Sh. Sitaram Agarwal at the time of marriage of the assessee's daughter out of natural love and affection. However. no documentary evidences deed/confirmation/affidavit was filed i.e. gift deed/ confirmation/ affidavit was filed.
& 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR 2. Further, the assessee claimed that said amount adjusted against the family capital in Firm M/s. Shree Ramji Bricks. Again no evidence has been furnished to substantiate the same.
The above two arguments are itself contradictory and found to be afterthought only.
In absence of any evidencesi.e.confirmation/bank account/ acknowledgement of ITR of Sh. Sitaram Agarwal wsfiled.Thererfore, nature of this amount received from Sh. Sitaram Agarwal remains unverified. Ultimately, the AO made the addition of Rs.10.00 lacs u/s 69 of the Act in the hands of the assessee by observing as under:- ‘’Considering to the above fact, the above amount of Rs.10,00,000/- is treated as undisclosed income u/s 69 of the assessee and the same is hereby added to the total income of the assessee for the year under consideration. This addition is to be taxed @ 60% as per provisions of Section 115BBE of the I.T. Act, 1961. The penalty proceedings u/s 271AAC of the Income Tax Act, 1961 are also initiated for the above income as discussion above.’’ 2.2 In appeal, Ld.CIT(A) has dismissed the appeal of the assessee by observing at page nos.19 & 20 of the impugned order as under:- ‘’The appellant vide written submission in present proceedings submitted that alongwith him search action u/s 132 of the Act was also undertaken in case of Sh Sitaram Aggarwal (PAN-AAQPA8824L) and his AO was also AO of Sh. Sitaram Aggarwal (PAN-AAQPA8824L). He further submitted that in said circumstances, the assertion of Id. AO that the copies of ITR acknowledgement, bank statement and other document being confirmation, etc. was not furnished by assessee is devoid of merits as all such details were duly available with Id. AO. The appellant in respect of applicability of law has submitted that said provisions of law are applicable only to funds source of which is not explained by an assessee However, in his case he has explained the source and even seized material duly substantiated the fact that said amount was received by him from Sh. Sitaram Aggarwal. The assessee relied upon the provisions of Sec. 292C of the Act and submitted that since as per seized document the alleged amount is a receipt from Sh Sitaram Aggarwal, the same cannot be assessed as unexplained money of assessee.
& 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR From the perusal of the facts of the case, it is seen that it is not in dispute that the appellant received Rs. 10 lakhs from Sh. Sitaram Aggarwal. However the nature of the money is not clear and not explained by the appellant at one place it was claimed that it was a gift out of natural love and affection and on the other hand it has been stated that this amount has been reduced from the capital balance in Shri Ram Bricks in which the wife of the appellant is a partner. Neither of the two contentions have been substantiated by the appellant with the supporting documents. There is no confirmation from Sh. Sitaram Aggarwal in this regard. Both the statements are contradictory to each other. The onus cannot be shifted on the assessing authority to have obtained and enquired the documents from the assessment files of Sh. Sitaram Aggarwal as the first onus is on the assessee appellant. In view of the above discussion this ground of appeal is hereby dismissed.’’ 2.3 In the course of hearing, the ld. AR of the assessee submitted that the AO had not brought on record any evidence or document to suggest that the contents of seized material and submissions of assessee as well as that of Shri Sitaram Agarwal are incorrect. He further submitted that the assessee had received the money from the Shri Sitaram Agarwal to meet expenses on the occasion of marriage of his daughter and thus, the addition made by the AO is not justified. To this effect, ld. AR of the assessee has filed following submissions to counter the orders of the lower authorities:- ‘’Facts of the case
1. That a search action was undertakes on 23-01 2019 in the case of "Agarwal Group of Kotputli, Jaipur Sh. Sita Ram Agarwal of "Agarwal Group" is brother-in- law of assessee and thus, the residence of assessee was also covered in sand search action
2. During the course of search action certain documents were found and seized as Exhibit-5 Page 16 to 22 of said annexure contained details of marriage & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR expenses of daughter of assessee and source of funds utilized for said expenses (Pg 25-35, PB) Page 21 to 22 of Exhibit found and seized contained details of money received by assesser from relatives on occasion of marriage of her daughter and Page 16 to 20 contained details of expenses on said marriage. That from perusal of Page 21 of Exhibit 5 evident that the assessee received Rs 10.00.00 from Sh. Sita Ram Ji on occasion of marriage of her daughter (Pg 30. PB) 3. The Ld. AO vide Q No. 10 of Part B of notice issued u/s 142(1) of the Act dated 23/02/2011 asked the assessee to explain the nature of stated transaction and stated that in case of failure of offer explanation said amount will be assessed as undisclosed income of assessee (P 15-16 PB) The assessee vide submission dated 17-03-2021 explained that the stated amount represented financial help received by him from Sh. Sita Ram Aggarwal for meeting out expenses of marriage of his daughter Further, it was alsoclamed that as per provisions of Sec. 56(2)(vn) of the Act stated receipt from relative of assessee is not chargeable to tax (Point No.
10. Page 25-26, PB) It was also explained that the stated amount was to be adjusted with capital of his family in partnership firm, M/s Shree Ramji Bricks in which wife of assessee and wife of Sh. Sita Ram Aggarwal were partners. Same fact was narrated by assessee in reply to Q No. 57 of his statement recorded us 132(4) of the Act. (Pg. 60-61, PB) Thereafter, neither any queries were raised by Ld. AO nor any SCN was issued 4. The Ld AO in Para 5 of assessment order passed u/s 153A of the Act in the case of assessee recorded satisfaction that the impugned receipt of Rs. 10,00,000/- from Sh. Sita Ram Agarwal constituted cash loan availed by assessee in violation of provisions of Sec. 26955 of the Act for which penalty u/s 271D of the Act is leviable. As evident from assessenent order, Ld. AO even sent a reference in this regard to Ld. JCTT. Central Range, Jaipur. It is pertinent to mention here that acting on satisfaction recorded by Ld. AO in assessment order and reference made for invoking provisions of Sec 271D of the Act. Ld JCIT vide order dated 19/06/2023 levied penalty u/s 271D in case of assessee (Pg. 67-72, PB) 5. It is not out of place to mention here that during the course of search action Sh. Sita Ram Agarwal (PAN-AAQPA8824L) was found to be engaged in business of money lending, mining and grit manufacturing. That during post & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR search proceedings, Sh. Sita Ram Agarwal (PANAAQPA8824L) in his statement recorded on 22/03/2019 u's 132(4) of the Act offered Rs. 11 crores as his undisclosed income. It is pertinent to mention here that during search, ledger accounts of persons to whom Sh Sita Ram Agarwal has advanced money were found and seized. The ledger account of assessee maintained by Sh. Sita Ram Agarwal was found and seized as Page 11 of Exhibit No.
109. A copy of said document is enclosed From perusal of said document also it is evident that the assessee has received money from Sh. Sita Ram Agarwal on occasion of marriage of her daughter 6. It is pertinent to mention here that despite holding the stated receipt to cash loan from Sh Sita Ram Agarwal and categorically recording satisfaction regarding violation of provisions of Sec. 269SS and recommendation for invoking of provisions of Sec. 271D of the Act, the Ld. AO in Para 6 of the assessment order held that nature of impugned receipt remained unverified and assessed it as undisclosed income u/s 69 of the Act. The Ld. AO rejected submission of assessee explaining nature of transaction stating that the assessee could not furnish confirmation of gift affidavit/ bank account acknowledgement of ITR ete from Sh. Sita Ram Agarwal and thus, nature of amount recerved remained unexplained and assessed the same as undisclosed income chargeable to tax u/s 69 of the Act 7. Ground No. I Assessment order is bad in law because of granting of approval u/s 153D in mechanical manner a) From perusal of assessment order, it is evident that on one hand, the Ld AO held impugned receipt of Rs. 10,00,000/- to be cash loan availed in violation of provisions of Sec. 269SS of the Act and recorded satisfaction for invoking of penalty provisions of Sec. 271D of the Act and on other hand Ld. AO held that the nature of receipt remained unexplained Thus, the finding of Ld. AO in assessment order is perverse and self- contradictory and causes double jeopardy to assessee as taxes are levied on said receipt, penalty proceedings u/s 271AAC are invoked on said additions and further, penalty proceedings u/s 271D of the Act are invoked. b) That from perusal of seized documents found in case of assessee (Pg. 28-35, PB) as well as document found and seized from residence of Sh. Sita Ram Agarwal (enclosed herewith), it is evident that stated amount was received as financial help by assessee from his brother-in-law on occasion of marriage of his daughter. However, the Ld. AO mechanically held that the nature of receipts remained unverified From perusal of these facts, it is evident that the approval granted u's 153D of the Act is mechanical and said mechanical approval has caused double (jeopardy to assessee. Firstly, the impugned receipt is assessed as unexplained money u/s 69 of the Act and secondly penalty u/s 271D of the Act is levied on assessee. It is pertinent to mention here that Hon'ble ITAT Delhi in case of Sanjay Duggal vs. ACIT, Del/2019 held double triple additions in assessment orders to be one of the reasons for holding the approval granted u/s 153D of the Act is mechanical in nature. It is also evident that while granting approval u/s 153D, approving authority has not taken cognizance of seized material ether of assessee or of Sh. Sita Ram Agarwal from bare perusal of which nature and source of receipt was evident By now it has been judicially settled that grant of approval under Section 153D of the Act cannot be merely a ritualistic formality or rubber stamping by the authority, rather it mast reflect an appropriate and independent application of mind Reliance is placed on judicial pronouncement in case of PCTT vs. Shiv Kumar Nayyar [2024] 163 taxmann.com 9 (Delhi). It is not out of place to mention here that despite requirement of law for grant of individual approval u/s 153D of the Act for each year, consolidated approval u/s 153D of the Act was granted by Ld. JCIT (Pg. 73, PB), Such approval is also in violation of specific provisions and procedure of law and thus, not tenable under the law. (Sanjay Duggal vs. ACIT, That from perusal of facts of the case enumerated supra it is evident that approval u/s 153D in case of assessee is granted in mechanical manner. In view of above, the assessment order passed u/s 153A of the Act deserves to be quashed and may please be squashed 8. Ground No, 2 to 5-Addition of Rs. 10,00,000/- u/s 69 of the Act a) That from perusal of documents found and seized from residence of assessee, it is evident that the assessee on occasion of marriage of his daughter, for meeting out marriage expenses, received Rs 10,00.000- from his brother-in-law, Sh. Sita Ras Aggarwal (Pg. 28-35, PB) b) Same fact was also evident from perasal of document found and seized from residence of Sh. Sita Ram Agarwal (enclosed herewith). c) During the course of assessment proceedings assessee explained to have received stated amount from his brother-in-law as financial help to meet out marriage expenses and submitted that said receipt is not chargeable to tax as per provisions of Sec. 56(2)(vii) of the Act d) However, Ld AO in Para 5 of assessment order held the impugned receipt to be cash loan availed in violation of provisions of Sec. 269SS of the Act on which penalty u/s 271D is leviable. Further, in Para 6 of assessment order it was held that the nature of said receipt is not substantiated and the same was assessed as undisclosed income u/s 69 of the Act. At the very outset it is submitted that from perusal of documents seized from assessee as well as Sh. Sita Ram Agarwal it is evident that the assesser has received money from Sh. Sita Ram Agarwal to meet expenses on occasion of marriage of his daughter Thus, the nature and source of receipt is duly explained and the assertion of Ld AO that assessee could not file any confirmation affidavit from Sh. Sita Ram Agarwal is devoid of merits f. Since addition is made by Ld. AO under the provisions of Sec. 69 of the Act, stated provisions of law are enumerated hereunder "Unexplained investments, 69. Where in the financial your immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account if any maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not in the opinion of the Arresting Officer satisfactory the value of the investments may be deemed to be the income of the assessee of such financial year.’’ From perusal of stated provisions of law, it is evident that an inveinnent whose nature and source remained unexplained is assessable to tax u/s 69 of the Act. However, in the case of assessee nature and source of said receipt is evident from perusal of seized documents and assessee during assessment proceedings has furnished explanation in this regard g) The Ld. AO rejected submission of assessee on pretext that the assessee could not furnish any confirmation bank statements/ ITR acknowledgement of Sh. Sita Ram Agarwal and thus, explanation remained unsubstantiated. In this regard it is pertinent to mention here that Ld. AO possessed seized material both of assessce as well as Sh. Sita Ram Agarwal. It is also not out of place to mention here that the Ld. AO has not brought on record any evidence or & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR document substantiating that the contents of seized material and submissions of assessee as well as that of Sh. Sita Ram Agarwal are incorrect. By now it has been judicially settled that onus of proving what was apparent is not real is on the party who claims it to be so. Reliance is placed on the judicial pronouncement of Hon'ble Apex Court in the case of Commissioner of Income-tax vs. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC) 112-09-1972) It is not out of place to mention here that provisions of Sec. 292C of the Act creates an irrebuttable presumption that the contents of documents found and seized during search is true and correct. Thus, Ld. AO could not have objected to submission of assessee regarding source of said money. Since source of receipt held to be undisclosed is explained and substantiated, the addition made by Ld. AO us 69 of the Act deserves to be deleted and may please be deleted. Without prejudice to the above, it is not out of place to mention here that by now it is judicially settled that action of Ld. AO by assessing an amount as income u/s 69 of the Act and invoking of penalty provisions u/s 271AAC and again invoking penal provisions us 271D of the Act is not acceptable. Reliance is placed on following judicial pronouncements PCIT vs. Aman Sharma [2023] 149 taxmann.com 377 (Punjab &Haryana)[31-01- 2023] CTT v. Standard Brands Ltd. [2006] 285 ITR 295 (Del)(IC) Bhalchandra P. Dalvi vs. ITO [2024] 159 taxmann.com 1526 (Mumbai - Trib.)(17- 01-2024] DIT (Exemptions), Chennai vs Young Men Christian Association [2014] 49 taxmann.com 72 (Madras) Bajrang Textiles vs. Additional Commissioner of Income-tax [2009] 33 SOT S (Jodhpur)(URO)’’ Ld. AR of the assessee in order to support his contentions has filed the following paper book:- S.N. Particulars Page No.
1. Notice dated 08-02-2021 issued u/s 153A of the Act 1 2. ITR Acknowledgment for the year under consideration 2 3. Notice u/s 142(1) of the Act dated 23-02-2021 3-8 & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR 4. Submission dated 08-04-2021 9-10 5. Notice u/s 142(1) of the Act dated23-02-2021 11-16 6. Submission dated 17-03-2021 17-27 7. Relevant documents found and seized from premises of 28-35 assessee 8. Statement of assessee recorded u/s 132(4) of the Act on 23-01- 36-61 2019 9. Written Submission filed before CIT(A) 62-66 10. Penalty order dated 19-06-2023 passed u/s 271D of the Act 67-72 w.r.t. amount assessed as income of assessee 11. Approval granted u/s 153D of the Act in case of assessee 73 company Further, in the course of hearing, ld. AR submitted that the appellant had taken loan of Rs.10.00 lacs from Shri Sitaram Agarwal to meet the marriage expenses of his daughter and this amount is not chargeable to tax as per provisions of Section 56(2)(vii) of the Act. Ld.AR also submitted that appellant had provided all the details desired by the Department but it was not fully taken into consideration by the AO while making addition of Rs.10.00 lacs u/s 69 of the Act in the hands of the assessee. However, he submitted that the issue in question be restored to the file of the AO for afresh adjudication so as to enable the assessee one more opportunity to place on record all the relevant documents on this issue before the AO. He further submitted that because his relative was subject of search proceeding, he did not provide certain details. 2.4 On the other hand, ld. DR objected to the submissions of ld.AR of the assessee on the ground that the stand taken by the assessee is & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR contradictory, because of different pleas put forth i.e. of gift and then of loan and that too from the capital of Smt. Sunita Agarwal, his wife a partner in M/s. Shree Ramji Bricks. 2.5 We have heard both the parties and perused the materials available on record. The AO made addition of Rs.10.00 lacs u/s 69 of the Act in the hands of the assessee as per the seized documents i.e. page no. 21 of Annexure AS-5 as the assessee was found to have received an amount of Rs.10.00 lacs in cash from Shri Sita Ram Agarwal during the year under consideration. Assessee filed reply before the AO but it was not found tenable and the AO made addition of Rs.10.00 lacs. In first appeal, ld. CIT(A) confirmed the action of the AO. 2.5.1 Taking into consideration the issue involved in view of pleas of the assessee, we deem it a fit case of being heard in the interest of justice to give one more chance to the assessee as to the amount of Rs.10 lacs said to have been taken from Shri Sita Ram Agarwal for the marriage of his daughter. Thus the appeal No.554/JP/2025 of the assessee is disposed of, for statistical purposes, in the manner indicated above. 2.6 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 3.1 Now we take up the other appeal of the ITA No.555/JP/2025 for the assessment year 2019-20 wherein the AO made addition of Rs.7,81,979/- in the hands of the assessee by observing in para 4 of his assessment order as under:- ‘’4. Undisclosed interest income:- During the assessment proceedings, it is noticed from the seized document i.e. page no. 2 of Annexure AS-4 that the assessee Sh. Mahesh Chandra Agarwal has received interest amounting to Rs.7,81,979/- from Sh. Ashok Agarwal during F.Y.-2018-19. During the assessment proceedings, the assessee was asked to explain whether these amount are disclosed in the return of income and also recorded in books of account. In response, the assessee filed written submission on 08.04.2021 which is reproduced here under- "In respect of alleged interest receipt, it is clarified that the details found during the course of search action were only the working of interest. No iota of evidence was found substantiating the fact that interest was actually received.’’ The written submission of the assessee has been considered but not found acceptable for the reasons that:-
1. 1. As per seized document, mostly payments was made in cash by the ssessee's brother on account of family settlement which proved the following seized document i.e page 11 of Annexure-AS-2:- 1. From the above page, it is evidenced that the assessee has received interest from his brother but the same was denied to receive.
2. Above facts is confirmed from the noting made at page no.11 above wherein the assessee account (MC A/c) is recorded at 1,05,67,334/-out of which Rs.79,39,507/- including interest from M/s Shree Ramji Bricks has been received and balance of Rs.26,27,827/- is due from Sh. Ashok Agarwal. Thus, the claim of assessee regarding non-receipt of interest from his brother on account of family & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR settlement is an afterthought only so that he tried to escape his income from taxation.
It is also pertinent to mention here that as page No. 11 of annexure-AS-2, the assessee has received amount of Rs.9,43,500/- which has been admitted by the assessee against the investment in purchase of jewellery and repayment of cash loan to Sh. Trilok so that his income could be escaped from taxation otherwise he denied to receive the same.
1. The interest of Rs.7,81,979/- given to Mahesh Agarwal for which the assessee claimed that it was never be received by him, is not found genuine. On perusal of the record and the submission filed by the assessee, it is noticed that the assessee has shown and admitted the amount received from his brother on account of family settlement for the purpose of adjustment of source of investment in jewellery and repayment of loan but at the time of tax liability on such type of receipts i.e. interest he intentionally ignore any type of receipts on that account which clearly evidenced that the assessee has earned interest but the same was not disclosed by him in his return of income by intentionally so that he avoid it from taxation. In view of the above, the interest of Rs.7.81,979/- is hereby added to the total income of the assessee on account of undisclosed interest Income for the year under consideration. Accordingly, the penalty proceedings u/s 271AAB(1A)(b) of the Income tax Act, 1961 are initiated for the above undisclosed income. (Addition of Rs.7,81,979) 3.2 In appeal, the ld.CIT(A), observed that the assessee had not discharged the onus and the AO rightly levied tax on the interest amount in the year under appeal and thus the ld. CIT(A) dismissed the appeal of the assessee by observing as under :- ‘’On perusal of the facts of the case and submission of appellant and from seized documents it is evident that the appellant has been embroiled in family dispute with his brother. From perusal of facts it is evident that the Page 2 of Annexure AS-4 (status as on 31.08.2018) is different from family settlement dated 23 January 2014 and there is no matching in the entries. The opening balance of Rs. 25 lakhs as on 01.04.2012 as per Page 2 of Annexure AS-4 is & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR nowhere mentioned or considered in settlement dated 23 January 2014. The payments of Rs. 5 lakh in Nov. 2013, Rs. 4,27,000 on 22-12-2013 and Rs. 6,500 Hemant Account as mentioned in settlement dated 23 January 2014 are not mentioned in the Page 2 of Annexure AS-4. Similarly two payments of Rs. 5 lakhs (dated 01.01.2015 and 27.01.2015) as mentioned in the Page 2 of Annexure AS-4 are not mentioned in settlement dated 23 January 2014. In reply to question number 52, the appellant has also stated with respect to the amount of Rs. 25 lakhs that it represented the share of the appellant in the family property and the same is not linked by the appellant to other family settlement properties. From the family settlement dated 28/10/2012 there is mentioned in the second line in the settlement that Shri Ashok will vacate the land of Shri Mahesh. There is no mention of this land in future family settlements. However the appellant has not explained regarding Rs. 25 lakhs which is mentioned in Page 2 of Annexure AS-4 This appears to be a completely separate and independent transaction and balance. The appellant has not explained the basis of working of this figure and opening balance of Rs. 25 lakhs as on 01.04.2012. The appellant has relied upon Page 7 &8 of Annexure AS-4 (dated 26.10.2018) which is found to be having the page title "Interest on NFL Deposit and the amount outstanding shown is different which is of Rs. 22 lakhs. There is reference to tax deduction and 26AS for the same. However nowhere else there is reference to this deposit. Thus the interest income of the appellant mentioned in Page 2 of Annexure AS-4 (status as on 31.08.2018) cannot be explained with such other page which is on a different subject. Rs. 25 lakhs which is mentioned in Page 2 of Annexure AS-4 are receivables of the appellant from Shri Ashok and not from some company deposit.
In view of the above discussion, the appellant has not discharged the onus and the learned AO has rightly taxed the interest amount in the year under appeal. Accordingly this ground of appeal is hereby dismissed.’’ & 555/JP/2025 SHRI MAHESH CHANDRA AGARWAL VS CENTRL CIRCLE-3, JAIPUR 3.3 In the course of hearing, even as regard this appeal, ld. AR of the assessee prayed that the assessee may be provided one more opportunity of being heard before the AO and as such restore the matter to the file of the AO for afresh adjudication. To support his submission, ld. AR filed the following documents. S.N. Particulars Page No.
1. ITR acknowledgement for the year under consideration 1 2. Notice u/s 143(2) of the Act dated 09-03-2021 2-5 3. Notice u/s142(1) of the Act dated 09-03-2021 6-11 4. Submission dated 08-04-2021 12-18 5. Notice u/s 142(1) of the Act dated 23-02-2021 19-24 6. Submission dated 17-03-2021 25-35 7. Family settlement dated 29-10-2012 seized from residence of 36 assesee during the search action on23-01-20-19 8. Working of share of assessee and his brother in family assets 37-41 on partition 9. Relevant extracts of bank statement highlighting receipts of 42-43 assessee from his brother 10. Working of interest found and seized from residence of 44 assessee on the basis of which additions were made to the income of the assessee 11 Revised family settlement dated 26-10-2018 45-46 12. Submission dated 20-04-2018 47 13. Statement of assessee recorded u/s 132(4) of the Act on 23-01- 48-73 2019 14. Written submission filed before CIT(A) 74-81 15. Additional written submission filed before CIT(A) on 30-01-2025 82-89 16. Copy of approval obntained u/s 153D of the Act 90 3.4 In the course of hearing, ld. DR has opposed the request of the ld. AR and he relied on the orders of the lower authorities, when the assessee failed to establish his case despite opportunities.