Loading judgment…

JHUTHA RAM MEENA,JAIPUR vs INCOME TAX OFFICER, JAIPUR | BharatTax

JHUTHA RAM MEENA,JAIPUR vs. INCOME TAX OFFICER, JAIPUR

ITA 523/JPR/2025Status: DisposedITAT Jaipur08 September 2025AY 2016-17Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)1 pages

AI SummaryPartly Allowed

Facts

The assessee purchased two agricultural properties for a total consideration of Rs. 1,05,54,525/- and Rs. 35,18,175/- respectively. A significant portion of these payments was made in cash, and the assessee failed to provide satisfactory explanations regarding the source of these funds. The Assessing Officer (AO) made an addition of Rs. 1,13,88,440/- under Section 69 of the Income Tax Act.

Held

The Tribunal held that the assessee failed to discharge the primary onus of proving the source of investment with cogent evidence. The lower appellate authority (CIT(A)) also confirmed the AO's order ex-parte. However, to ensure natural justice, the matter was restored to the AO for a fresh decision, giving the assessee one more opportunity to present their case.

Key Issues

Whether the addition made by the AO under Section 69 for unexplained cash payments for property purchase is justified and whether the assessee had a reasonable opportunity to present their case before the lower authorities.

Sections Cited

147, 144, 69, 148, 142(1), 156, 271(1)(c), 271(1)(b), 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES,’’B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihyla-@ITA No. 523/JPR/2025

Hearing: 15/07/2025

fu/kZkj.ko"kZ@Assessment Year : 2016-17 Shri Jhutha Ram Meena cuke The ITO Vs. 171, Bada Tiba, Siroli, Sanganer Ward- 7(2) Jaipur – 302 012 Jaipur LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: AIBPM 9059 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri S.K. Gogra, CA jktLo dh vksjls@Revenue by: Shri Gorav Avasthi, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 15/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: : 08 /09/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax, National Faceless Appeal Centre, Delhi[ for short CIT(A)] dated 24.01.2025 for the assessment year 2016-17 raising therein following grounds of appeal.

1. That assessment order passed by Ld AO is perverse, illegal, unjustified and bad in law and deserve to be quashed. Ld AO has grosslyerred in appreciating facts as well as in law while passing the assessment order u/s.147 r.w.s. section 144 of IT Act which may please be declared as illegal and be set aside.

JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR 2. That Ld AO has grossly erred in doing addition u/s.69 of IT Act of entire sum of purchase made of agricultural land at Dausa, Jaipur whereas appellant has purchased land alongwith other four co-owners, therefore appellant’s share is limited to his 1/5thshare only. Thereforedoing addition of entire sum in hands of appellant is absolutely illegal and unjustified in the facts & circumstances of the case which may please be deleted.

3.

That Ld AO has erred in stating fact appellant is not able to justify about investment made in purchase of agricultural land whereas fact of the case is that appellant is having business income and other source of funds from which he has made investment in doing purchase of agricultural Land and therefore such finding of Ld AO may please be declared illegal and set aside.

4.

5.

That Id CIT(A) has erred in confirming the order of assessing officer mechanically and without proper appreciating facts and legality of case and therefore same may be please be declared as illegal & be quashed. ‘’ 2.1 At the outset of the hearing of the appeal, it is noticed that the ld.CIT(A) passed an ex-parte order by dismissing the appeal of the assessee on the ground that the assessee failed to furnish any reply/documentary evidences in respect of its appeal filed before him and thus he confirmed the action of the AO. The narration so made by the ld.CIT(A) in his appeal order is reproduced as under:- ‘’6. The ground of appeal is against act action of the AO in making addition of Rs. 1,13,88,440/- under section 69 of the IT Act. 6.1 I have considered the facts of the case and reassessment order. The facts of the case, as perused from the assessment order of the AO are that the appellant had filed his original return of Income for the relevant Financial Year on 26.11.2016 declaring income of Rs 2,67,510/-. As per AIR information, the appellant along with others had purchased immovable property on 01.07.2015 for a consideration JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR of Rs 1,05,54,525/- and the source of the same had not been explained by the appellant. Therefore, the case of the appellant was selected for reassessment and reopened by AO by issuing notice u/s.148 of the Act on 26.07.2022 after taking due approval from the competent authority, which was served upon the appellant. 6.2 In response to notice u/s. 148 of the Act, the appellant had filed his return of income only on 23.01.2023 declaring income of Rs 3,27,710/During the reassessment proceedings, the AO had issued various notices u/s 142(1) of the IT Act to the appellant. In response to these notices, the appellant submitted that he is running a proprietorship concern in the name of M/s Shree Balaji Contractor which is engaged in trading in stone light used for construction work. The appellant also submitted the copy of Bank Account statement maintained by him in his individual capacity and in the name of the proprietary concern, copy of sale deed etc. On perusal of the sale deed, the AO observed that the appellant had purchased two properties on 01.07.2015, one property for a consideration of Rs 1,05,54,525/- for which a consideration of Rs 16,00,0,00/- was paid by Cheque and balance Rs 69,54,525/- (Rs 1,05,54,525/- Rs 16,00,000/-) was paid by cash. The registration fees of Rs 6,86,650/- was also paid in cash. Thus, altogether a cash payment of Rs 76,41,175/-(Rs 69,54,525/-+ Rs6,86,650/-) was paid in cash towards this property. 6.3 Further, the AO also observed that the appellant had purchased another property for a consideration of Rs 35,18,175/- which was paid by cash. The registration fees of Rs 2,29,090/- was also paid in cash. Thus, altogether a cash payment of Rs 37,47,265/-(Rs 35,18,175/-+ Rs2,29,090/-) was paid in cash towards this property. Since, during the course of assessment proceedings, the appellant could not explain the source of the payments made in cash for investment in these properties, the AO held that the source of these investments remained unexplained. Thus, an addition of Rs 1,13,88,440/- (Rs 76,41,175/-+ Rs 37,47,265/-) was made by the AO u/s 69 of IT Act.

JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR 6.4 In the statement of facts, the appellant has raised the plea that the notice u/s 148 is invalid in view of the fact that the amount of investment was less than Rs 50 lacs. The appellant also pleaded that the entire investment was made by him along with his brothers who are separate legal entity and therefore the entire amount cannot be taxed in his hands. 6.5 Both these pleas of the appellant are not acceptable. Merely stating the shareholding in the property are of three brothers are alleged to be equal does not discharge the primary onus cast on the appellant. In the first place, the appellant has not been able to demonstrate with evidences the proportion of cash deposit made by each of the co-owner. Secondly, the appellant had also not demonstrated with evidences that the balance amount of cash, which the appellant states to be that of co-owners had been sourced from their declared income in their ROI. Thirdly, the appellant was asked by the AO vide letter dated 21/03/2023 to submit certain details including the source of payment made by each shareholder for purchase of the properties along with the documentary evidences. Despite giving number of opportunities, the appellant conveniently did not submit these documents during reassessment proceedings. Such documents have also not been submitted during the appellate proceedings. Without such corroborative evidences, the plea of the appellant to tax only to the extent of his share is not acceptable. Section 69 of the Income Tax Act states as under "Where in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any maintained by him, 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 Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 6.6 The onus lies on the appellant to explain the source of the investment The appellant's mere assertion of the fact that it had submitted the bank statement fails to meet this burden. The appellanthas not demonstrated the source of cash with corresponding JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR withdrawals being reflected in the bank statement. The appellant has not submitted any evidence of savings or prior accumulations. The appellant has also not been able to prove that the other alleged co- owners have also paid cash. The appellant has merely made assertions without any cogent evidences which cannot discharge the onus placed on the appellant to prove the source of investment. 6.7 In a recent judgement in the case of KPS Enterprises Vs PCIT [ 2024] 167 taxmann.com 498 (Madras), the Hon'ble High Court of Madras held as under, Where assessee-firm was issued notice under section 148 in respect of unexplained investment in property, onus was on assessee to show that amount which was sought to be treated as unexplained investment of assessee was that of partners and since assessee failed to discharge said onus, addition under section 69 was proper 6.8 In the case of Sumati Dayal v. CIT ((1995) 214 ITR 801 (SC)] the Apex Court held that evidence or surrounding circumstances must substantiate claims made by the assessee by holding as under- The transaction about purchase of winning ticket took place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase had to be drawnon the basis of the circumstances available on the record. Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record, an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. The majority opinion after considering surrounding circumstances and applying the test of human probabilities had rightly concluded that the appellant's claim about the amount being her winning fromraces, was not genuine. It could not be said that the explanation offered by the appellant in respect of the said amounts had been rejected unreasonably and that the finding that the said amounts were income of the appellant from other sources was not based on evidence.

JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR 8. Family settlement deed dt. 18.11.2014 and death certificate of mother 64-65 (Smt. Bhori Devi) 9. Affidavit from co-owners (brothers) with their aadhar card 66-81 10. Saving bank a/c (Bank of India a/c no.667210110000326) 82-85 11. Current bank a/c of Balaji Contractor (Bank of India a/c 86-93 667220110000014) 12. VAT Registration Certificate 94 13. Submissions filed before AO (two replies) with documents therein 95-97 14. Cash account summary for f/year 2014-15 and 2015-16 98-101 15. Notice of demand dt. 17.05.2023 at NIL demand 102 16. Income Tax Login file 103-104 He further submitted that the ld. CIT(A) also confirmed the action of the AO ex-parte holding therein that ‘’the appellant has not submitted any evidence of savings or prior accumulations. The appellant has also not been able to prove that the other alleged co-owners have also paid the cash.’’ Thus the ld. CIT(A) dismissed the appeal of the assessee. 2.3 On the other hand, the ld. DR supported the orders of the lower authorities. 2.4 We have heard both the parties and perused the materials available on record. In this case, it is noted that the Income Tax Department had passed an ex-parte order dated 17-05-2023 u/s 147 r.w.s. 144 read with Section 144B of the Act and made total additions of Rs.1,13,88,440/- by observing as under:- ‘’4. On perusal of documents furnished by the assessee, it has been found that the assessee along with four others has purchased a property/land on 01.07.2015 for consideration of Rs. 1,05,54,525/- The payments made for purchasing property of Rs. 36,00,000/- and Rs. 69,54,525/- were through cheque JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR and cash respectively. Further, registration fee of property was paid at Rs. 6,86,650/- Meaning thereby, source of total payment including registration of Rs. 76,41,175/-16954525+686650] has not been explained by the assessee. Further, nowhere is mentioned in the sale deed itself who had made payments in cash and how much. Further, the assessee has also not provided requisite information/documents called for vide notice u/s 142(1) dated 21.03.2023. Therefore, in the absence of any concrete documentary evidence regarding source of cash payment and registration fee payment, addition of Rs. 76,41,175/- [6954525+686650] on account of unexplained investment u/s 69 of the Act shall is being made to the returned income for the year under consideration. (Addition of Rs. 76,41,175/-) 4.1 Further, it has also been observed that the assessee along with four others has purchased another property/land during FY 2015-16 for consideration of Rs. 35,18,175/-. As per sale deed, all payments were made in cash. In this regard, registration fee was paid at Rs. 2,29,090/- Meaning thereby, source of total payment including registration fee of Rs. 37,47,265/-13518175+229090] has not been explained by the assessee. Further, nowhere is mentioned in the sale deed itself who had made payments in cash and how much. Further, the assessee has also not provided requisite information/documents called for vide notice u/s 142(1) dated 21.03.2023. Therefore, in the absence of any concrete documentary evidence regarding source of cash payment and registration fee payment, addition of Rs. 37,47,265/- [3518175+229090] on account of unexplained investment u/s 69 of the Act shall is being made to the returned income for the year under consideration. (Addition of Rs. 37,47,265/-) 2 Further it has been found that the assessee had declared total income in his original ITR at Rs. 2,67,510/- whereas in ITR filed u/s 148, the assessee declared total income at Rs. 3,27,710/-. Meaning thereby, the assessee has concealed his income to the tune of Rs. 60,200/- [327710-267510]. Therefore, I am satisfied that the assessee has concealed his income to the extent of Rs. 1,14,48,640/-[7641175+3747265+60200) Hence, penalty proceedings u/s 271(1)(c) of the Act are initiated separately for concealment of income. Further, penalty proceedings u/s 271(1)(b) for non-compliance to the notice u/s 142(1) of the Act shall also be initiated separately.’’ In first appeal, theld.CIT(A) has also pased an ex-parte order confirming the action of the AO as the appellant has also not been able to prove that JHUTHA RAM MEENA VS ITO, WARD 7(2), JAIPUR the other alleged co-owners have also paid the cash.Since it is an admitted fact that the assessee is ex-parte before the AO and also before the ld. CIT(A). Therefore, he could not put forth his defence. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue but the assessee remained lethargic and unserious in pursuing his case However, we are of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, and the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings. Thus the appeal of the assessee is allowed for statistical purposes. 2.5 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 reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law.