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Facts
The assessee's appeal is against an ex-parte order by the CIT(A) for AY 2013-14. The primary contention is that the return of income was incorrectly prepared by a tax preparer, Mr. Mukesh Sharma, who has since been accused of furnishing wrong figures. The assessee claims to have taken legal action against the preparer and filed an affidavit.
Held
The Tribunal noted that the original appeal was dismissed ex-parte by the CIT(A) as the assessee failed to provide adequate submissions and evidence. The Tribunal restored the appeal to the file of the AO, providing the assessee with one more opportunity to present their case.
Key Issues
Whether the CIT(A) was justified in passing an ex-parte order without deciding the ground related to the alleged incorrect preparation of the return of income by a third-party tax preparer.
Sections Cited
145(3), 271(1)(c), 50C, 2(14)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,’’B” JAIPUR
fu/kZkj.ko"kZ@AssessmentYear : 2013-14 cuke Shri Ram Babu Sharma The ITO 381, Mahal Tiba, Goner Road, Vs. Ward -6(1) Jagapura, Jaipur - 302025 Jaipur LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: BOMPS 9154 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Tarun Mittal, CA jktLo dh vksjls@Revenue by: Mrs. Alka Gautam, CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 17/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 08 /09 /2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax, National Faceless Appeal Centre, Delhi [ for short ld. CIT(A) ] dated 20-02-2025, for the assessment year 2013-14 raising therein following grounds of appeal. ‘’1. On the facts and in the circumstances of the case, Id. CIT(A) has grossly erred in not deciding the "Ground of appeal No.1 raised by assessee before Id.CIT(A)", on the observation that though this ground of appeal was part of Form 35 filed in physical form, however, due to technical glitch the relevant ground was missing in the Form 35 electronically filed. However, appellant prays that such ground of appeal were duly filed as attachment alongwith Form 35 filed electronically which was omitted to be typed in "Form of Appeal" inadvertently.
SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR thus observation of ld.CIT(A) are contrary to facts and deserve to be ignored and excluded. 1.1 That, Id.CIT(A) has erred in not deciding the "ground of appeal no. I" as stated above, on the issue that figures disclosed in return of income were incorrect and the return of income of the appellant was prepared by Mr. Mukesh Sharma (Tax preparer) by entering erroneous and wrong figures and by ignoring the fact that assessee had taken legal action against Shri Mukesh Sharma for deliberately furnishing the wrong figure in the return of income and thus an affidavit was filed by assessee in this regard. 1.2 On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in confirming the action of the Id.AO in completing the assessment proceedings, without considering the explanation given by the appellant that the figures disclosed in return of income were incorrect, which came to the knowledge of appellant only after commencement of assessment proceedings, by when due date of filing revised return had expired. Thus the additions deserve to be deleted. 1.3 That the Ld. CIT(A) had failed to consider the fact that Shri Mukesh Sharma (tax preparer) prepared the return of income of the appellant on arbitrary basis and as soon as appellant received notice for assessment proceedings, he tried his best to approach Mr. Mukesh Sharma, but he was not traceable and as soon as appellant came to know about the said erroneous disclosure in his return of income, an FIR was lodged by him against Sh. Mukesh Sharma for deliberately furnishing wrong figures in the return of income. An affidavit was also filed by appellant in this regard. Appellant prays the return of income filed by appellant be held as bad in facts.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) had erred in confirming the action of Id.AO in making a trading addition of Rs.83,358/- to the business income by invoking provisions of section 145(3), and applying N.P. rate of 8% arbitrarily. Appellant prays that addition so confirmed may please be deleted.
3. On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in confirming the action of Id.AO in making an addition of Rs 3,01,02,909/- on account of unexplained unsecured loans on the basis of details filed via return of income, which itself was not correct. Thus, appellant prays the said addition my please be deleted.
4. On the facts and in the circumstances of the case and in law, Id. CIT(A) has erred in confirming the action of the Id.AO in making addition of Rs.3,06,77,950/- on account of unexplained investment in capital. Again the addition was made on the basis of facts disclosed in return of income and the manner of deriving those SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR figure was beyond the knowledge of appellant. Hence, appellant prays the said addition may please be deleted.
5. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in confirming the action of the Id.AO in treating agriculture income of Rs. 1.64.75.894/-declared by appellant in his return of income as "Income from other sources. Firstly. Appellant states that agriculture income declared of Rs.1.64,75,894/- was not correct and moreover, since all the documentary evidences of income were in possession of Sh. Mukesh Sharma, the same could not be furnished during the course of assessment proceedings. Appellant prays said addition may please be deleted.
On the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in confirming an action of ld. AO in making an addition of Rs.1,27,83,078/- under the head "Short Term Capital gain" ignoring the fact that the land sold by appellant was "Agriculture Land" and used for the purposes of agriculture activities, which doesn't fulfill the criteria of "Capital asset". Appellant prays addition so confirmed may please be deleted.’’ 2.1 Apropos to the grounds of appeal of the assessee,it is noticed that the ld.CIT(A) has passed an ex-parte order in spite of providing multiple opportunities to the assessee to comply with issuance of notices. Hence, the ld. CIT(A) had no option but to decide the appeal of the assessee on the basis of the material available on record. It is pertinent to note that the assessee had not furnished the documents before the ld.CIT(A) in support of the grounds of appeal raised before him and thus the ld.CIT(A) dismissed the appeal of the assessee by observing as under:- ‘’11. It is observed that appellant has submitted 8 grounds of appeal in Form no.35 filed physically before the CIT(A)-II, Jaipur on 27/4/2016. In this appeal, appellant claimed in Gr. No.1 that figures disclosed in return of income were incorrect and the return of income of the appellant was prepared by Mr. Mukesh Sharma (Tax preparer) by entering erroneous and wrong figures. The appellant mentioned that he has filed FIR against Shri Mukesh Sharma for deliberately furnishing the wrong figure in the return of income and claimed to have filed an SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR affidavit in this regard. Hence, the appellant prayed for deletion of the additions made by AO based on erroneous and wrong figures entered by Mr. Mukesh Sharma. However, it is conspicuous and more highlighting on verification of grounds of appeal
filed by the appellant in Form no.35 filed electronically on 7/6/2016 before CIT(A), Jaipur-2 where this ground of appeal mentioning that Mr. Mukesh Sharma has entered erroneous figure in his return of income was missing In the electronically filed Form no.35 the appellant challenged only the 5 additions made by the AO. The same are adjudicated in the following paragraphs.
12. In Ground no.1, appellant challenged the addition made by the AO of Rs.83,358/- to the business income by invoking the provisions of sec. 145(3) of the Act and applying NP rate of 8% arbitrarily. The appellant's contention is that actual turnover of the appellant for the year was Rs.9,12,500/- and however, AO has adopted the turnover as Rs.32,84,859/- as mentioned erroneously in the return of income. The contention of the appellant is not supported by any documentary evidence and appellant failed to produce any documents to prove his contention that his turnover was Rs.9,12,500/- only Therefore, the addition made by the AO of Rs.83,358/- by applying NP rate of 8% on total turnover of Rs 32,84,859/- declared in the return of income is confirmed. Ground of appeal no.1 is dismissed.
13. In Ground of appeal no.2, the appellant challenged the AO's action of making addition of Rs 3,01,02,909/- on account of unexplained unsecured loans. During the appellate proceedings, appellant submitted same version as that submitted before the AO stating that the figure mentioned in ITR was erroneously mentioned by Mr. Mukesh Sharma and the same cannot be considered as appellant's income. He further submitted that there was no further evidences available on record which prove that appellant had actually taken any unsecured loan of Rs.3,01,02,909/- However, the appellant has not submitted any of the details pertaining to bank accounts held by him and also the relevant statements proving his contentions that no unsecured loans were obtained by him during the year under consideration. Whatever stated by the appellant is on paper only not supported/authenticated by bank details and bank statements to prove his contention. Therefore, the addition made by the AO of Rs 3.01.02 909/- on account of unexplained unsecured loans is hereby confirmed Ground no 2 of the appellant is dismissed.
14. Ground of appeal no.3 is against the action of the AO in making addition of Rs.3,06,77,950/- on account of unexplained investment in capital. The appellant has submitted similar submission like that of earlier ground that the figures were erroneously entered by Mr. Mukesh Sharma and they are absolutely fictitious However, appellant has not submitted any documents in the form of his balance sheet and P&L account for the earlier years and subsequent years prepared by him or furnished to the department along with the return of income to prove his contention. Since the source was not explained by the appellant with respect to SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR capital account, same was rightly added by the AO as unexplained investment in capital and addition made by the AO of Rs.3,06,77,950/- is confirmed. Ground no.3 of the appellant is dismissed
15. In Ground of appeal no.4the appellant challenged the action of the AO in treating agricultural income of Rs. 1,64,75,894/- shown by the appellant as income from other sources. During the appellate proceedings, appellant has claimed that Mr. Mukesh Sharma has erroneously entered the wrong figure and claimed that no such income ever accrued to the appellant at any point of time. However, he further submitted that agricultural income is exempted and same cannot form part of total income of the appellant. He further claimed that he was in possession and ownership of good area of agricultural land holding and therefore, he was very much in a position to earn substantial income from that and stated that he was submitting copies of jamabandhi in the paper book. However, no such documents were furnished by the appellant during the appellate proceedings before the undersigned. It is also not out of context to mention that submitting only jamabandhi documents cannot prove the agricultural income of Rs 1,64.75,894/- shown by the appellant in the return of income as genuine. The appellant failed to produce any evidences of sale proceeds or purchase receipts for pesticides, seeds etc. and alsodetails of the crops he has sown during the year under consideration. Without that the claim of the appellant is only on the paper not supported by any document/evidence Therefore, the addition made by the AO of Rs. 1,64,75,894/- treating the agricultural income as income from other sources is hereby confirmed. Ground no.4 of the appellant is dismissed
16. In Ground of Appeal no.5, the appellant challenges the action of the AO in making addition of Rs.1,27,83,078/- under the head "Short Term Capital Gain (STCG) ignoring the fact that the land sold by the appellant was agricultural land used for the purpose of agricultural activities which does not fulfill the criteria of capital asset. However, during the appellate proceedings appellant claimed that the land sold by him was situated at a distance more than 8 kms from the local limits of Jaipur Municipal Corporation as per the limits of Municipal Corporation which were published through notification dtd. 6/1/1994 in the official Gazette and thus same cannot be classified as capital asset u/s 2(14) of the Act. The claim of the appellant is not supported by any document and however, the appellant has submitted a case law of Hon'ble Jaipur Bench of Tribunal in the case of Khetilal Sharma, HUF vs ITO in ITA No. 103/Jp/2012. However, the facts in the said case law are different from the appellant's case and hence same is not applicable in this case. The limits of the municipal corporation will be considered based on current published limit as on date not the limits as published in the notification dtd. 6/1/1994. If the claim of the appellant is followed it will lead to anarchy as no asset will be treated as a capital asset even though the said asset falling within center of the city. This is not the intention on the legislature for classifying the asset as agricultural land or capital asset as per the provisions of section 2(14) of the IT Act Therefore, the appellant's contention is rejected and addition of Rs.
SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR 1,27,83,078/-treating the stamp duty value of the asset as deemed sale consideration and taxing the same under Short Term Capital Gains is hereby confirmed. Ground no.5 of the appellant is dismissed.
In the result, appeal is dismissed.’’ 2.2 During the course of hearing, the ld.AR of the assessee prayed that he may be provided one more chance to contest the case before AO as the adequate reply before the AO could not be filed or substantiated and thus the AO made additions in the hands of the assessee by observing as under:- ‘’3. The assessee submitted his reply through A/R on 18.03.2016, placed on record. The assessee in his reply mainly has stated that the figures entered in the return of income are not correct. The return was prepared by one Shri Mukesh Sharma on arbitrarily basis and he was not having knowledge of the same.
The reply of the assessee has been gone through carefully but not acceptable. Firstly the verification on return of income has been signed by the assessee and also not denied by the assessee. The assessee can understand very clearly the figures mentioned in return of columns. If figures reported were not actual/correct, the objection should have been raised to the preparer of return at the time of filing itself. Further after issuance of notice u/s 144 only the assessee has lodged FIR against Shri Mukesh Sharma, the person who has prepared his return. As on date byGling of FIR, complaint has been lodged but the case has not reached its final conclusion. Therefore the plea of the assessee is not tenable &acceptable and the income of the assessee is assessed as under: 5 Income from business:- The assessee has declared net profit of Rs 1,79,430/- on sale of Rs.32,84,859/- giving a N.P rate of 5.46%. The assessee has not given produced any supporting evidences therefore in absence of the same net profit is estimated at Rs.2,62,788/- by applying N.P rate of 8%. Accordingly a addition of Rs 83,358/- is made to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the IT Act, 1961 for concealment and filing of inaccurate particulars is being initiated separately. 5.1 Unsecured loans:- On examination of return of income and B/sheet of the assessee, it is seen that the assessee has shown unsecured loans of Rs.3,01,02,909/-The assessee was required to file confirmation, details of persons from whom loans taken. The assessee during the assessment SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR proceedings has not furnished any details, confirmation/evidence etc regarding unsecured loans taken. Therefore the genuineness, identity and creditworthiness remained unproved and unexplained. The explanation offered was not found acceptable and satisfactory. Therefore sum of Rs 3,01,02,909/- is hereby treated as unexplained and added back to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the IT Act, 1961 for concealment and filing of inaccurate particulars is being initiated separately. 5.2 Capital shown in Balance Sheet:- The assessee has declared capital of Rs.3,06,77,950/- in Balance sheet of return of income filed. The assessee was required to explain the sources of the same with complete details. The assessee has not furnished any detail and source thereof during the assessment proceedings. Further the explanation offered is not found acceptable and to satisfaction. In such circumstances the sources of capital declared/shown remained unexplained and thus added back to the income of the assessee. Penalty proceedings u/s 271(1)(c) of the IT Act, 1961 for concealment and filing of inaccurate particulars is being initiated separately 5.3 Agriculture Income:- During the year under consideration the assessee has shown agriculture income of Rs. 1,64,75,894/- and claimed same as exempt. The assessee was required to file documentary evidences in support. The assessee has not filed any documentary evidences to substantiate his claim. Therefore in absence of any documentary evidence and satisfactory explanation, the agriculture income shown at Rs 1,64,75,894/- is treated as "income from other sources" and taxed accordingly Penalty proceedings u/s 271(1)(c) of the IT Act, 1961 for concealment and filing of inaccurate particulars is being initiated separately. With above remarks the total income of the assessee is computed as under: 5.4 Short term capital gain:- On examination of details and bank account furnished it was gathered that the assessee has received a sum of 10,00,000/- and Rs 30,00,000/- on 17.07.2012. The assessee was asked to explain the sources of deposit of Rs 40,00,000/- in his bank account. The assessee vide his reply submitted on 23.03.2016 has submitted that a agricultural land has been sold during the year. Copy of sale deed was also filed. On examination of registered sale deed it was seen that the assessee has sold agricultural land situated at Khasra No 176, Village Mangarh, Patwar Area Manser Khedi, Tehsil Bassi, Dist. Jaipur for sale consideration of Rs. 60,00,000/-, Out of Rs 60 lacs, Rs 40 lacs were received by Cheques as appeating in bank account and balance Rs. 10 lacs were received in cash. The sale value of the land has been adopted at Rs.1,27,83,078/-by the Sub Registrar, Bassi, Jaipur. Further it was gathered that the distance of the sold out land from the last municipal limit( i.eBagrana, Jaipur) was less than 8 Km and therefore the assessee was liable for capital gain on sale of the said land. The assessee has not shown any capital gain in his return of income and also only copy of sale deed has been filed, no evidence in respect of SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR cost of acquisition of land is filed. However on perusal of sale deed it is seen that the assessee has purchased the Land on 20.08.2009. The land was sold out on 25.06.2012, therefore the period of holding is less than 36 months and thus is treated as short term capital gain. In view of above facts the assessee is liable for short term capital gain on Rs 1.27,83,078/-i.e. the value as adopted by stamp authorities within the meaning and purview of Section 50C of the I.T.Act. Hence short term capital gain is calculated and worked out at Rs.1,,7,83,078/- and taxed accordingly. With above remarks the total income of the assessee is computed as under:- Income as declared by the assessee Rs.1,79,430/- Add:- 1.On a/c of trading addition Rs.83,358/- 2.On a/c of unexplained unsecured loansRs.3,01,02909/- 3. On a/c of unexplained capital Rs.3,06,77,950/- 4. Income fromother sources (Para 5.3) Rs.1,64,75,894/- 5. Short term capital gain Rs.1,27,83,078/- Rs.9,01,23,189/- Total Income Rs.9,03,02,619/- R/o Rs.9,03,02,620/- ‘’ 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. From the orders of the lower authorities, it is noticed that both the orders were passed ex-parte as the assessee neither adequately submitted the written submission nor pursed the case to counter the reply before the authorities. It emerges from the submissions of the assessee that the figures entered in the return of income are not correct and the return was prepared by one Shri Mukesh Kumar Sharma on arbitrarily basis as he was not having knowledge of the same. To this effect, the SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR assesse had lodged FIR against Shri Mukesh Sharma, who had prepared this return. The Bench notices that this dispute has no end unless the assessee be provided one more opportunity to contest the case before the AO and also to settle the dispute once for all. Hence, the Bench opines that the assessee should be provided one more opportunity to advance the documents / written submission / arguments before the AO. Thus the appeal of the assessee is restored to the file of the AO to decide the lis between the parties 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, however, 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.
SHRI BABU RAM SHARMA VS ITO, WARD 6(1), JAIPUR 3.0 In the result, the appeal of the assessee is allowed for statistical purposes Order pronounced in the open court on 08 /09/2025.