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Facts
The assessee filed appeals against two orders of the CIT(A) for assessment years 2017-18 and 2018-19. The appeals were filed with a significant delay, for which the assessee sought condonation citing medical and personal reasons. The Assessing Officer made various additions to the assessee's income, including unsecured loans, sundry creditors, and unexplained cash deposits, largely due to the assessee's failure to provide supporting evidence or respond to notices.
Held
The Tribunal noted the delay in filing the appeals and condoned it due to sufficient cause shown by the assessee. The Tribunal, while not dwelling into the merits of the additions made by the AO and confirmed by the CIT(A), restored the matters to the file of the AO for fresh adjudication. The assessee was directed to appear and cooperate fully, with a cost of Rs. 5,000/- imposed for being lethargic. The Tribunal emphasized that the appeals were allowed for statistical purposes, and the AO should decide the case afresh providing an opportunity of hearing.
Key Issues
1. Whether the assessee's appeals, filed with a significant delay, are to be admitted. 2. Whether the additions made by the AO and confirmed by the CIT(A) on various grounds, including unexplained loans, creditors, cash deposits, and rejection of books, are sustainable. 3. Whether the assessee was provided sufficient opportunity of being heard.
Sections Cited
144, 153A, 68, 145(3), 69A, 115BBE, 271(1)(c), 253(5), 5, 132, 132A, 147, 148, 41(1)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA Nos. 826 & 827/JPR/2025
ORDER PER: DR. S. SEETHALAKSHMI, J.M. The assessee has filed the above mentioned appeals against two different orders of the ld. CIT(A), Udaipur-2 dated 27-09-2024 and 28-09- 2024 for the assessment years 2017-18 and 2018-19 respectively. The grounds of appeal raised by the assessee in above mentioned appeals are reproduced as under:-
1. A.Y. 2017-18 ‘’1. That on the facts and circumstances of the case and in law, the ld. CIT(Appeal) has grossly erred in passing ex-parte assessment order without providing sufficient opportunity of being heard which is against the principal of natural justice and is illegal and bad in law.
2. That on the facts and circumstances of the case and in law, the ld. Assessing Officer has grossly erred in passing ex-parte assessment order under section 144 read with section 153A of the Act without providing sufficient opportunity of being heard which is against the principal of natural justice and is illegal and bad in law.
3. That on the law and in the facts and in the circumstances of the case the learned Assessing Officer grossly erred in making additions in the absence of any incriminating materials found during the course of search and the additions are made beyond the search material which is illegal, bad in law and void ab initio.
4. That on the law and in the facts and in the circumstances of the case the learned lower authorities grossly erred in making an addition under section 68 of the Act on account of unsecured loan of Rs. 2,52,39,151/- by treating the same as unexplained cash credits.
5. That on the law and in the facts and in the circumstances of the case the learned lower authorities grossly erred in making an addition under section 68 of the Act on account of sundry creditors of Rs. 1,25,19,512/- by treating the same as unexplained cash credits. 6 That on the law and in the facts and in the circumstances of the case the learned lower authorities grossly erred in considering provision for duties and taxes of Rs. 6,61,992/- shown by the assessee appellant as unverified and unpaid and added the same in the total income of the assessee appellant.
7. That on the facts and in the circumstances of the case the learned lower authorities grossly erred in rejecting the books of accounts. in invoking the provisions of Section 145(3) of the Act and in assuming the net profit at the rate of 10 percent against the net profit at the rate of 4.74 percent declared by the assessee appellant and in making the differential addition of Rs. 63,38,617/- & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA 8 That on the facts and circumstances of the case and in law, the ld. lower authorities has grossly erred in making addition of Rs. 1,53,76,500/- on account of unexplained cash deposited in bank accounts alleging the same to be income chargeable to tax u/s 69A without appreciating the facts of the case and the scope of provisions of above section.
9. That on the facts and circumstances of the case and in law, the ld. lower authorities has grossly erred in making addition of Rs. 10,00,000/- on account of unexplained cash receipt alleging the same to be income chargeable to tax u/s 69A without appreciating the facts of the case and the scope of provisions of above section.’’ – A.Y. 2018-19 1. That on the facts and circumstances of the case and in law, the Id. CIT(Appeal) has grossly erred in passing ex-parte assessment order without providing sufficient opportunity of being heard which is against the principal of natural justice and is illegal and bad in law
2. That on the facts and circumstances of the case and in law, the Id. Assessing Officer has grossly erred in passing ex-parte assessment order under section 144 read with section 153A of the Act without providing sufficient opportunity of being heard which is against the principal of natural justice and is illegal and bad in law.
3. That on the law and in the facts and in the circumstances of the case the learned Assessing Officer grossly erred in making additions in the absence of any incriminating materials found during the course of search and the additions are made beyond the search material which is illegal, bad in law and void ab initio.
4. That on the law and in the facts and in the circumstances of the case the learned lower authorities grossly erred in making an addition under section 68 of the Act on account of sundry creditors of Rs. 2,23,24,871/- by treating the same as unexplained cash credits.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA 5. That on the facts and in the circumstances of the case the learned lower authorities grossly erred in rejecting the books of accounts, in invoking the provisions of Section 145(3) of the Act and in assuming the net profit at the rate of 10 percent against the net profit at the rate of 8 percent declared by the assessee appellant and in making the differential addition of Rs. 3,63,912/-.
That on the facts and circumstances of the case and in law, the ld. lower authorities has grossly erred in making addition of Rs. 63,43,891/-on account of short cash in hand. 7 That on the facts and circumstances of the case and in law, the ld. lower authorities has grossly erred in making addition of Rs. 85,08,815/ on account of unexplained investment in Jewellery alleging the same to be income chargeable to tax u/s 694 without appreciating the facts of the case and the scope of provisions of above section.
That on the facts and circumstances of the case and in law, the ld. lower authorities has grossly erred in making addition of Rs. 3,55,00,000/- on account of unexplained cash receipt alleging the same to be income chargeable to tax u/s 69A without appreciating the facts of the case and the scope of provisions of above section.’’ 2.1 At the outset of hearing of the appeals, the Bench notices that there is delay of 171 days in filing the each appeals by the assessee for which the assessee has filed different applications dated 30-07-2925 for condonation of delay in respect of each appeals. For the sake of convenience, the submissions in respect of appeals for assessment year 2017-18 and 2018-19 to grant condonation of delay are reproduced as under:- In the matter of appeal of Mr. Upendra Kumar Soni, D- 19, NEW COLONY, GUMANPURA, Kota for the Assessment Year 2017-18 PAN AFFPS21348 Application for condonation of delay u/s 253(5) of the Income Tax Act, 1961 read with section 5 of Limitation Act in filling of appeal & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA Hon'ble Sir(s), The humble assessee appellant applicant respectfully prays for the condonation of delay in the filling of appeal for the following reason 1. That the Id. CIT (Appeals) passed his order on 27.09.2024 and the same was uploaded on the income Tax portal of the assessee appellant and copy of the same was the Email of the assessee. 2 That the assessee appellant humbly submits that although the relevant emails and communications were received within the prescribed time, due to unforeseen and unavoidable health issues, the petitioner was unable to attend to or act upon them promptly. The petitioner was under medical care for a significant duration, which severely restricted regular functioning and correspondence. As a result, the delay in taking necessary legal steps was neither intentional nor due to negligence, but solely due to genuine medical constraints beyond the petitioner's control.
Furthermore, during the said period, the petitioner was also facing significant personal and logistical challenges, including restricted mobility, mental stress, and absence of access to adequate legal assistance. These cumulative factors created practical impediments in reviewing and responding to the communication in a timely manner The petitioner assures this Hon'ble Authority that the delay is neither deliberate nor motivated, and respectfully seeks a condonation of delay in the interest of justice and fair opportunity 4 That subsequently the impugned order came to the knowledge of the assessee appellant. Thereafter, the assessee appellant contacted Shri Siddharth Ranka, & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA Advocate to file appeal against the order dated 27.09.2024. On his opinion, without any further delay, at the first opportunity, the assessee with the help of his counsel has filed this appeal before the Hon'ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur with delay.
An Affidavit duly sworn in this regard is also enclosed herewith. With this background, we request your honour to take stock of the situation in totality, take a lenient and human approach towards the humble assessee appellant as the delay was not intentional and lack of understanding of the income tax proceedings. The assessee appellant applicant shall be more vigilant about is obligation in future. That in these circumstances we request your honour's to kindly condone the delay and oblige.’’ To justify the delay in filing the appeals, the assessee has filed the medical prescription, treatment of disease in Mahatma Gandhi Hospital, Jaipur 15- 06-2024. He also filed the medical prescription and certificate of Dr. Yashasvi Gautam of Sudha Hospital dated 24-02-2025 for taking treatment of the disease. 2.2 On the other hand, the ld.DR did not controvert the facts stated in the affidavit for condonation of delay. 2.3 We have heard both the parties and perused the materials available on record including the affidavit of the assessee. In this case, the Bench in nutshell noted that there is sufficient cause in not timely filing the appeals by the assessee and there is & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA merit in the application of the assessee. Thus, the delays so occurred in respect of both the appeals of the assessee are condoned. 3.1 Now we take up the appeal of the assessee in 2017-18 for adjudication. 4.1 Apropos grounds of appeal of the assessee for the assessment year 2017-18, it is noticed that the ld. CIT(A) has dismissed the appeal of the assessee on the ground that in spite of providing several opportunities the assessee had not furnished any submissions/ arguments during the course of appellate proceedings and thus the ld. CIT(A) confirmed the addition made by the AO. The relevant findings of the ld. CIT(A) as to the respective additions made by the AO are reproduced as under:- Ground No. 1 & 2 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this ground the appellant argued that the order is passed without providing sufficient opportunity of being heard and in the absence of a valid jurisdiction.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA The appellant has not specified how, the opportunities provided by the AO were not sufficient. The AO has noted in the assessment order that notice u/s 143(2) was issued on 15.02.2019. Notice u/s 142(1) was issued on 6.06.2019 along with detailed questionnaire. Notice u/s 142(1) was again issued on 29.08.2019. No response was furnished by the assessee in response to these notices. Finally, show cause notice was issued on 9.12.2019 asking the assessee as to why the order should not be passed u/s 144 of the I. T. Act. No response was furnished in compliance to this notice also. Considering these facts, it is evident that sufficient opportunity was provided to the assessee by the AO. The issue of assumption of jurisdiction is already decided in ground no. 1 of the appeal. The arguments of the appellant raised in this ground are found to be without any merit and rejected. This ground of appeal is treated as dismissed.’’ Ground No. 3 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee.
‘’6.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In ground number 3, the appellant has raised the issue that no incriminating material was found during the search on the basis of which the additions have been made during the year. The issue is raised in ground no. 3.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA In this case as the issue of incriminating material was raised by the appellant, the appellant challenged the assumption of jurisdiction by the AO u/s 153A of the Act, a remand report was called for from the AO with regard to incriminating material found during search. It was also asked to the AO whether any assessment proceedings were pending as on date of search which got abated. The AO reported in the remand report that out of total aggregate addition of Rs.6,11,35,772/-, an addition of Rs. 10,00,000/- on account of unexplained cash receipt was made only on the basis of incriminating documents found and seized during the course of search proceedings at the premises of the assessee. In these circumstances, the contention of the appellant with regard to no incriminating material found during the search proceedings with regard to the additions made for the current Assessment Year is not found to be acceptable. The AO in the remand report confirmed that incriminating documents were seized during the course of search proceedings on the issue of addition made during the course of assessment proceedings. Considering the facts of the case, it is found that there was incriminating material unearthed which is relevant for one of the addition made by the AO during the year. The appellant has not furnished any reply to the remand report. In absence of any reply from the assessee, it is presumed that the assessee has nothing to say in this regard. As noted above, this is an unabated assessment. In case of unabated assessment, the additions can be made if any incriminating material is not found as held by Hon'ble Apex Court held in the Civil Appeal No. 6580 OF 2021 in & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA the case of Principal Commissioner of Income Tax, Central-3 Versus Abhisar Buildwell P. Ltd [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC)/[2023] 454 ITR 212 (SC) (24-04-2023) as under- "14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess on reassess taking into consideration the other material in respect of completec assessments/unabated assessments. Meaning thereby, in respect of completed/unabatec assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re- opened by the AO exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the condition as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answere accordingly in terms of the above and the appeals and review petition preferred by t Revenue are hereby dismissed. No costs."
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA This assessment was an unabated assessment as assessment was ne pending in this case for the current year. In this case incriminating material found/unearthed, therefore, even, in case of unabated/completed assessments, th AO would assume the jurisdiction to assess or reassess the 'total income' taking in consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the return Therefore, the AO was found to be justified in making addition on other mater available with him and when there was incriminating material with him. Following above decision of Hon'ble Apex Court, the additions made by the AO in this year are found to be justified. Since, incriminating material is unearthed during the search, the AO can assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments, therefore the additions made by the AO which the appellant has raised in ground number 3 are not found to be justified. This ground of appeal are treated as dismissed.’’ Ground No. 4 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’7.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case, the AO noted that as per the information available, the assessee has shown unsecured loan at Rs. 2,52,39,151/-. The assessee was asked vide show cause & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA notice dated 09.12.2019 why the unsecured loan of Rs. 2,52,39,151/- should not be added in his total income treating it as unexplained cash credit aspe provisions of section 68 of the IT Act in absence of any detail and documents. In the absence of a response the unsecured loan of Rs. 2,52,39,151/- was added to the total income of the assessee treating the amount as unexplained cash credit u/s 68 of the IT Act and tax is charged as per provisions of section 115BBE of the IT Act. In the absence of any arguments advanced by the appellant in support of this ground of appeal, the same is decided on merits of the case. Hon'ble Delhi High Court in the case of Sanraj Engineering Pvt. Ltd. Vs CIT (2016) 2016-TIOL-316- HC-DEL-IT held that addition made u/s 68 on account of unsecured loans was justified, where initial onus of proving the creditworthiness of the lenders was not discharged by the assessee. In the present case also, initial onus of proving the creditworthiness of the lenders was not discharged by the assessee. The ITAT Mumbai Bench 'G' in the case of Income-tax Officer Vs. Sai Everest Building & Developers [2022] 142 taxmann.com 383 (Mumbai - Trib.) held as under- "Where assessee-firm claimed to have received unsecured loans during relevant years, however, it could not prove genuineness of unsecured loan taken and underneath sources for making these investments, addition made by Assessing Officer under section 68 was justified.’’ In the present case also, the assessee could not prove genuineness of unsecured loan taken and underneath sources for making these investments. Hence, the addition made by the AO is found to be justified.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA Hon'ble Delhi High Court in the case of PCIT Vs Bikram Singh [2017] 85 taxmann.com 104 (Delhi)/[2017] 250 Taxman 273 (Delhi)/[2017] 399 ITR 407 (Delhi) held as under- "Even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy." In the present case the assessee has not even attempted to furnish any evidence for establishing genuineness of transaction and creditworthiness of creditors. Hence, the addition made by the AO is found to be justified. Hon'ble Allahabad High Court in the case of Upendra Singh Raghav Vs CIT [2017] 88 taxmann.com 95 (Allahabad) held as under- "Where AO made addition to assessee's income under sec. 68 in respect of excess loan availed from 'R', since assessee did not file any application before Commissioner (Appeals) to adduce additional evidence in order to prove genuineness of cash credit and, moreover, no prayer was made by assessee with regard to exercise of powers of Commissioner (Appeals) under section 250 (4) read with section 250(5), appellate authorities were justified in confirming said addition." In the present case also, assessee did not file any application before Commissioner (Appeals) to adduce additional evidence in order to prove genuineness of cash credit and, no prayer was made by assessee with regard to & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA exercise of powers of Commissioner (Appeals) under section 250 (4) read with section 250(5). On these facts, the addition made by the AO is found to be justified and confirmed. Hon'ble Supreme Court in the case of C.V Ravi Vs ITO [2021] 129 taxmann.com 44 (SC)/[2021] 281 Taxman 362 (SC) dismissed SLP against High Court ruling that where assessee took loan from an entity, however, failed to produce any confirmation from such entity or produce its owner in person for cross-examination and also failed to produce any document to establish identity of such creditor or genuineness of alleged loan transaction, impugned addition made under section 68 in respect of such loan amount was justified. In the present case also the assessee failed to produce any confirmation from such entity or produce its owner in person for cross-examination and also failed to produce any document to establish identity of such creditor or genuineness of alleged loan transaction. Hence, the addition made by the AO is found to be justified. The contention of the assessee is not found to be correct. The appellant has not furnished any response to the show- cause notice issued to him in respect of proposed addition during the course of assessment proceedings. Further during the course of remand report proceedings, the assessee has not make any compliance. The appellant has not furnished any response when opportunity was provided to the assessee for furnishing rejoinder in response to the remand report. Hence, the contention of the assessee that addition made by the AO is erroneous is not justifiable and addition made by the AO is found to be justified. As discussed above, the addition made by the AO u/s 68 is found to be justified. Section 115BBE provides machinery of taxation on the income added under deeming provisions of section 68 etc. The action of the & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA AO in taxing as per section 115BBE is found to be as per provisions of the IT Act and upheld. This ground of appeal is treated as dismissed.’’ Ground No. 5 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’8.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The assessee had shown sundry creditors amounting to Rs.1,25,19,512/- in his ITR for the year under consideration. The assessee was asked by the AO vide show cause notice dated 09.12.2019 why the unsecured loan of Rs.1,25,19,512/-should not be added in his total income treated as unexplained cash credit as per the provision of section 68 of the Act in absence of any details and documents. No response filed by the assessee. Therefore, the same sundry creditors amount of Rs. 1,25,19,512/- was added to the total income of the assessee treated as unexplained cash credit u/s 68 of the IT Act. In the absence of any arguments advanced by the appellant in support of this ground of appeal, the same is decided on merits of the case. Hon'ble Supreme Court Of India in the case of Ram Chandra Singh Vs. Commissioner of Income-tax [2024] 164 taxmann.com 668 (SC) dismissed SLP against impugned order of High Court that where assessee had & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA shown certain amount as sundry creditors in its books of account but assessee failed to furnish any evidence regarding transactions which led to credit from said creditors, levy of penalty under section 271(1)(c) was justified. The head notes of the decision is as under- "Section 68, read with section 271(1)(c), of the Income- tax Act, 1961 Cash credit (Penalty) Assessment year 2009-10 Assessee had shown certain amount as sundrycreditors in its books of account - Assessing Officer issued a questionnaire asking assessee to produce complete address, PAN and confirmation of creditors - Thereafter, Assessing Officer issued notices to creditors and only one creditor turned up and confirmed balance outstanding Assessing Officer thus, levied penalty under section 271(1)(c) on ground that there was concealment and non-furnishing of particulars of income - It was noted that assessee had not produced and bills/invoices to establish purchases from creditors -Furthermore, certificate from some suppliers was furnished however same did not mention any outstanding liability - High Court held that mere acceptance of entirety of purchases and disclosure of name and address of sundrycreditors would not lead to substantiation of credits claimed; since purchases which led to credit were not established before Assessing Officer -High Court further held that since there was no material available on record before revenue which would have persuaded them to take a contrary decision, levy of penalty was justified -Whether SLP filed by assessee against impugned order of High Court was to be dismissed -Held, yes [Para 2] [In favour of revenue]" In the present case also, the assessee failed to furnish any evidence regarding transactions which led to credit from said creditors, the addition made by the AO is found to be justified. The Itat Chandigarh Bench 'A' in the case of M.C. Puri v. Assistant Commissioner of Income-tax, Central Circle, Chandigarh [2016] 69 taxmann.com 313 (Chandigarh & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA Trib.)/[2015]
39. ITR(T) 433 (Chandigarh Trib.) [28-01- 2015] decided similar issue. The head notes of the decision read as under- "Section 68 of the Income-tax Act, 1961 Cash credit (Sundry Creditors) Block Periods 1-4-1990 to 20-6-2000 - Where assessee had shown bogus creditors, profit of assessee should be estimated at a higher rate or a separate addition for creditors should be made [In favour of revenue] The assessee was engaged in construction business. During course of search, the Assessing Officer found that the assessee had made investment in form of fixed deposits, purchase of machinery, tippers, cars and agricultural land and these amounts were not paid for a long period of time and were shown under sundry creditors. The assessee filed returns on presumption basis under section 44AD. The Assessing Officer held that investments were shown in name of bogus creditors and added all amount as undisclosed income of the assessee. The Commissioner (Appeals) estimated profit at 8.5 per cent allowing partial relief to the assessee. Held that the Commissioner (Appeals) has not given detailed reasons for not finding any merit in the finding of the Assessing Officer that the assessee has shown bogus creditors. It is seen that in the case of 'G' the amounts of Rs. 14,01,013, Rs. 13,28,813, Rs. 17,53,813 and Rs. 14,70,413 during year ending 31-3-1997, 31-3- 1998, 31-3-1999 and 31-3-2000 respectively were shown as sundry creditors. First of all, it is not possible to believe that a labour contractor can extend continuous credit of such huge amounts regularly. Secondly, whatever cheques were issued later on were shown as receipt which means that this is a book entry for sundry creditors. Similarly, in the case of 'M', from the receipt side of the day book, it was found that amount was entered as cash. Therefore, the profit should be estimated in this case at a little higher rate or a separate addition for creditors should have been made. Since the Assessing & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA Officer himself has not made separate addition for creditors, considering the peculiarity of this case the profit should be estimated at 11 per cent." In the present case also, the assessee had shown creditors which are not proved to be genuine during assessment proceedings. No evidence furnished in the appellate proceedings also. Hence, a separate addition for creditors made by the AO is found to be justified. The ITAT Bangalore Bench 'A' in the case of Suresh Kumar T. Jain v. Income-tax Officer, Ward-2(1) [2011] 128 ITD
74. (Bangalore)/[2011] 136 TTJ 247 (Bangalore) [08-01-2010] held as under:- "As could be seen from the assessment order that during the course of proceedings before the Assessing Officer, the assessee had furnished a list of creditors with names and addresses of 39 cases and perhaps in ten cases, there were no addresses. In compliance to the Assessing Officer's communication, 23 creditors had furnished the details. On scrutiny of confirmation letters, the Assessing Officer found that the 23 sundrycreditors had confirmed the outstanding balances only to the extent of Rs. 24,579 as against Rs. 35,57,868 claimed by the assessee. The discrepancy as per the details so arrived at Rs. 35,33,289 [35,57,868 24,579]. With remaining 26 creditors, 4 creditors had confirmed the credit balances at Rs. nil and out of the 22 alleged creditors, some of them had not complied with the queries and in respect of 12 alleged creditors, the notices sent were returned by the postal authorities with remarks 'insufficient address', 'no such person', etc. These amounts were worked out to Rs. 29,75,621. [Para 5] The bone of contention of the assessee before the Commissioner (Appeals) was that sizable amount added by the Assessing Officer related to credit balances brought forward from the earlier years and, therefore, & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA the same could not be added in the year under consideration. Further, argument of the assessee was that there was no remission or cessation of liability as required under section 41(1) and, thus, the Assessing Officer was not justified in adding those amounts. As rightly highlighted by the Commissioner (Appeals), the assessee had provided a balance sheet drawn up based on his books of account in which certain amounts were being claimed as liabilities due to different parties as at the end of the accounting year under dispute. The assessee had, in fact, failed to establish the genuineness of those liabilities by citing credible evidence. Simply the liabilities being reflected against certain names in his books of account would not vouch the genuineness of such liabilities. On the other hand, the Assessing Officer went to the root of the issue, made inquiries [calling for confirmation letters from the alleged creditors and found the discrepancies) and brought on record that the brought forward alleged sundrycreditors and current year's creditors were not genuine. The assessee had neither tried to reconcile the difference of brought forward balances nor produced any bills of purchase, etc., for verification in spite of being provided with ample time to reconcile. The assessee chose to stay indifferent after collecting the sworn statements and also the confirmation obtained by the department from credit parties. This clearly proved that the assessee had no explanation to prove that creditors in his accounts were genuine. To put it differently, the assessee had failed to discharge onus cast on him to substantiate the claim whereas the Assessing Officer had brought on record the documentary evidence that such liabilities did not exist at the end of the accounting year under dispute and rightly added the said liabilities, which had ceased to exit. [Para 7] The assessee's other contention was that the authorities had erred in making addition being 'current year's trade credits' under section 68 as the said section applies to cash credits only. [Para 13] & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA As rightly remarked by the Commissioner (Appeals), the language in the section unequivocally makes it clear that 'where any sum is found credited in the books of ar assessee maintained for any previous year, and the assessee offers no explanatio about the nature and source thereof or the explanation offered by him is not, in th opinion of the Assessing Officer, satisfactory, the sum so credited may be charged income-tax as the income of the assessee of that previous year'. In the instant case the assessee had failed to furnish convincing and documentary explanation with regard to the nature and source thereof and on the other hand, the Assessing Officer had brought on record unflinching documentary proof by way of confirmation alleged sundrycreditors that brought forward sundrycreditors and current year creditors (credits) were not genuine [Para 15] In an overall consideration of the facts and circumstances of the issue, it was to be held that there was no infirmity in the findings of the lower authorities which required interference at this stage. [Para 16)’’ Hon'ble High Court Of Karnataka affirmed this decision in Suresh Kumar T Jain v Income-tax Officer, Ward 2(1), Bengaluru [2019] 101 taxmann.com 164 (Kamataka)/[2019] 260 Taxman 326 (Karnataka) [20-11- 2018] In the present case also, the assessee failed to establish the genuineness of those liabilities by citing credible evidence. Simply the liabilities being reflected against certain names in his books of account would not vouch the genuineness of such liabilities. The language in the section 68 unequivocally makes it clear that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. In the instant case, the assessee had failed to furnish convincing and documentary explanation with regard to the nature and source thereof therefore sundry creditors (credits) were not genuine and addition made by the AO was justified The contention of the assessee is not found to be correct. The appellant has not furnished any response to the show- cause notice issued to him in respect of proposed addition during the course of assessment proceedings. Further during the course of remand report proceedings, the assessee has not make any compliance The appellant has not furnished any response when opportunity was provided to the assessee for furnishing rejoinder in response to the remand report. Hence, the contention of the assessee that addition made by the AO is erroneous is not justifiable and addition made by the AO is found to be justified, As discussed above, the addition made by the AO u/s 68 is found to be Justified Section 115BBE provides machinery of taxation on the income added under deeming provisions of section 68 etc. The action of the AO in taxing as per section 115BBE is found to be as per provisions of the IT Act and upheld This ground of appeal is treated as dismissed.’’ Ground No. 6 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. 9.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA for the ye under consideration. The contentions/submissions of the appellant are bei discussed and decided as under :- The AO asked the assessee as to why the provision of Rs.6,61,992/- should not be added in his total income treated as unverified/unpaid. No response was by the assessee. Therefore, the provisions of Rs. 6,61,992/- is considered unverified/unpaid and added to the total income of the assessee. The appellant has not furnished any reply. The actual expenditure income during the year are only allowed as expenditure. The appellant failed to establish the provisions made were genuine and paid for business purpose. Hence disallowance made by the AO is found to be justified and confirmed. This ground of appeal is treated as dismissed.’’ Ground No. 7 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’10.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that on total turnover of Rs. 12,05,98,298/- the assessee shown net profit of Rs. 57,21,213/-. The rate of NP comes to 4.74%. The assessee has not submitted any financial documents during the assessment proceeding so it is not possible to verify the genuineness of the NP percentage. The assessee was asked vide show cause notice dated 09.12.2019 to explain the method/calculation adopted by him to reach the figure of & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA 4.74% and asking why his books of accounts should not be rejected u/s 145(3) of the IT Act and net profit should not be calculated at the rate of 10% of total receipt/turnover. No response has been furnished by the assessee. Therefore, the books of accounts of the assessee are hereby rejected u/s 143(5) of the IT Act and net profit at the rate of 10% is considered for his total income for the AY 2017-18. Total turnover of the assessee Rs. 12,05,98,298/- Net profit @ 10% Rs. 12,05,98,298/- Net profit already shown Rs. 57,21,213/- Difference Rs. 63,38,617/- Therefore, the difference of Rs. 63,38,617/- is added in assessee's total income as net profit. The appellant has not furnished any argument in support of the ground of appeal. The assessee failed to furnish evidences in support of expenses debited against the sales made during the year. Hence, it was not possible for the AO to verify the expenses. In the absence of supporting bills and vouchers, the books of accounts were not found to be reliable by the AO. On the facts of the case, the AO has rightly rejected the books of accounts of the assessee by invoking section 145(3) of the IT Act. The AO has estimated net profit at the rate of 10 per cent as against the declared net profit of 4.74 per cent by the assessee. The declared net profit of 4.74 per cent is not found to be justified when the assessee himself has offered net profit of 8 per cent during the AY 2018-19. In the absence of the evidences, it is presumed That the books of accounts are not reliable. The appellant has not furnished any evidence to substantiate that the estimate & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA made by the AO is not correct. The estimate made by the AO is found to be reasonable and upheld. This ground of appeal is treated as dismissed.’’ Ground No. 8 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’11.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The assessee has deposited Rs. 1,53,76,500/- in various bank accounts during demonetization period. The assessee was given an opportunity to explain all the details by issuing show cause notice. The assessee could not provide the source of such deposit and no documentary evidence has been provided to the AO. Since, the source of cash deposited cannot be established; therefore the amount of cash deposited during demonetization period at Rs. 1,53,76,500/- is added to total income of the assessee treated as unexplained money u/s 69A and tax is levied as per section 115BBE of the Act. Hon'ble Supreme Court Of India in the case of Sanjay Kapur v. Assistant Commissioner of Income-tax [2022] 138 taxmann.com 207 (SC)/[2022] 287 Taxman 225 (SC)[16-03-2022] decided similar issue. The head notes of the decision are as under- "High Court upheld reassessment in case where assessee had made a deposit of cash in bank during demonetization period, which was reflected in his return of income, but no supporting evidences & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA were available to prove source of such deposit leading to 'reason to believe' that income otherwise chargeable to tax had escaped assessment; SLP filed against High Court's judgment dismissed as withdrawn." In the present case also, the assessee had made deposit of cash in bank during demonetization period, which was reflected in his return of income, but no supporting evidences were available to prove source of such deposit. Hence, the addition made by the AO is found to be justified and upheld. The ITAT Chennai Bench 'A' in the case of Joint Commissioner of Income-tax (OSD) v. G.K. Dairy [2024] 162 taxmann.com 100 (Chennai Trib.) [21-02-2024) held that where assessee-firm could not establish source for cash deposits in old currency notes, same was to be brought to tax under section 69A read with section 115BBE. The facts of the case at hand is similar to the facts of that case. The assessee in the present case could not establish source for cash deposits, same is required to be brought to tax under section 69A read with section 115BBE. The ITAT Raipur Bench in the case of Adim Jati Seva Sahkari Samiti Maryadit v. Income-tax Officer [2024] 159 taxmann.com
8. (Raipur - Trib.)/[2023] 108 ITR(T) 645 (Raipur Trib.) [18-09-2023] decided similar issue. The head notes of the decision are as under- "Section 69A of the Income-tax Act, 1961 Unexplained moneys (Bank deposit) Assessment year 2017-18 During demonetization period, assessee-society deposited certain sum in its bank account Since assessee didn't respond adequately to sever notices issued by AO, said cash deposit was treated as unexplained income under secti 69A On appeal, Commissioner (Appeals) had afforded sufficient opportunities to assess to put up its case on merits before him, but no material/evidence was placed on record. assessee to substantiate sources of credit in its bank account Commissioner (Appeals) sustained addition made by A.O. under section 69A - Held, yes Whether considering of instant case, there was no infirmity in view taken by lower authorities who had ri & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA sustained addition and accordingly, same was to be upheld Held, yes [Paras 15, 18 an [In favour of revenue]" In the present case also the assessee didn't respond to several notices by AO, said cash deposit was treated as unexplained income under section E the appellate proceedings also sufficient opportunities have been provi assessee to put up its case on merits but no material/evidence was placed or by assessee to substantiate sources of credit in its bank account. Thus made by A.O. under section 69A is to be sustained. In view of above discussion, the addition made by the AO is found to be justified and upheld. This ground of appeal is treated as dismissed.’’ Ground No. 9 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’12.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that during the course of search proceedings in the case of assessee some documents were found and seized as per Annexure-A. Page No.41 of Exhibit -A-4 and related to property document (Sale deed or Purchase deed). On top margin of page No. 41 there is an entry written related to cash transaction which is reproduced below:- 30-05-16 को एक करोड पेटे आज �दनाक 02.06.16 को नगद� 1000000) दस लाख �ा�त �कया 2-6-16 & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA The assessee in his statement recorded on 07.09.2017 have admitted that cash of 10,00,000/- was received by him from Mahaveer Jain and was not entered in his books of accounts. He further admitted that deal was cancelled and amount was returned. The reply of assessee is not found acceptable by the AO as he could not produce any proof of cancellation of deal and returning the amount. The assessee was given an opportunity to explain all the details vide show cause notice. No reply/response has been received by the AO. The assessee has accepted that the amount of Rs. 10,00,000/- was received but could not provide any documentary evidence that the same amount was returned back. Therefore, the amount of Rs. 10,00,000/- is added to total income of the assessee treating as undisclosed income u/s 69A and tax is levied as per section 115BBE of the Act. The appellant has not furnished any evidence to advance his arguments in the appellate proceedings also. In the absence of any evidences, the reasoning given by the AO are found without any rebuttal. The ITAT Delhi Bench 'G' in the case of Deputy Commissioner of Income-tax Vs. Shivram Consultants India (P.) Ltd. held that Where during search upon a party, a draft deed for sale of property was recovered which showed cash receipt of Rs. 4 crores by assessee on sale of a property, since details like name of vendor, vendee, and amount of sale considerations, etc. matched with original sale deed executed by assessee, additions made to income of assessee based on said draft deed, was justified. In the present case also deed for sale of property was recovered which showed cash receipt of Rs. 10 lakhs by assessee. The assessee claimed that the amount was & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA returned as deed was cancelled. However, the claim was made without any supporting evidence. Hence, the addition made by the AO is found to be justified. Hon'ble Supreme Court in the case of S. Rudramuniyappa Vs CIT [2016] 75 taxmann.com 241 (SC)/[2016] 243 Taxman 353 (SC) dismissed SLP on ground of delay against order of High Court wherein it was held that since assessee failed to justify his stand that there was no unaccounted sale as indicated in seized documents, addition made on basis of seized documents was justified. In the present case also the assessee failed to justify his stand that case received as indicated in seized documents and as admitted by him was returned addition made on basis of seized documents is justified. In view of above discussion, the addition made by the AO is found to justified and upheld. This ground of appeal is treated as dismissed.’’ 4.2 During the course of hearing the ld. AR of the assessee submitted that the assessee had not received communication from the AO to contest the case before him and he also did not receive any communication from the ld. CIT(A). In nut shell, the ld.AR of the assessee prayed that he may be given one more chance to contest the case before the AO and also to produce the desired information as well as evidence to counter the addition made by the AO in his assessment order dated 27-12-2019. 4.3 On the other hand, the ld.DR supported the orders of the lower authorities.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA 4.4 We have heard both the parties and perused the materials available on record. In this case, it is noted from the assessment order that a search and seizure operation u/s 132(1) of the Act was carried out on 07-09-2017 at the various premises of ‘’Resonance Group Kota’’ to which the assessee belongs and in the search number of persons/ premises were covered u/s 132 of the Act. Cash and Jewellery and other documents found and seized from some persons residence and business premises. The case of the assessee was also covered under search proceedings. The search action was carried out on the assessee on 07-09-2017. It is noted that the assessee is an individual and derives income from business, house property and other sources etc. Notice u/s 153A of the Act was issued to the assessee on 5-07- 2018 which was duly served. In response to notice issued u/s 153A, the assessee furnished his return of income on 20-11-2018 declaring total income of Rs.23,67,710/-.It is also noted that earlier the assessee had not filed his return of income u/s 139 of the Act. It is also noted from the assessment order that finally a show cause notice was issued to the assessee on 9-12-2019 asking him as to why his case should not be finalized u/s 144 of the Act, based on information available on record. However, no response had been received from the assessee. Therefore, the AO had no other option except to pass order u/s 144 of theAct. In short the & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA AO made following additions under different heads in the hands of the assessee as no submission was adduced before the AO. Unsecured Loan -Addition Rs.2,52,39,151/- Sundry Creditors - Addition Rs.1,25,19,512/- Unverified provisions - Addition Rs. 6,61,992/- Net profit – Addition Rs. 63,38,617/- Cash deposited during demonetization - Addition Rs. 1,53,76,500/- Unexplained cash Receipts – addition Rs. 10,00,000/- Thus the total income of the assessee in the status of individual for the assessment year 2017-18 is assessed by the AO at Rs.6,35,03,480/- u/s 144 read with section 153A of the Act. In first appeal, the ld CIT(A) has confirmed the action of the AO as the assessee did not furnish any submission / argument during appellate proceedings in support of the grounds of appeal after providing several opportunities and thus the ld. CIT(A) considering the facts of the case as mentioned in Form 35 decided the case based on the materials available on record. The Bench has taken into consideration the entire facts and circumstances of the case as to the additions confirmed by the ld. CIT(A). It also noted that the addition made by the AO in the case of the assessee is voluminous. 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 & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA noticed that various opportunities were provided to the assessee for settling the issue but the assessee remained lethargic and unserious in pursuing his case for which a cost of Rs.5,000/- is imposed upon the assessee which will be deposited by the assessee in the Prime Minister Relief Fund. 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, 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. 4.5 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. Thus this appeal of the assessee is allowed for statistical purposes. 5.1 As regards the appeal of the assessee for the assessment year 2018-19, it is noted that the AO passed an assessment order on 27-12-2-19 u/s 144 of the Act making following additions in the hands of the assessee being similar situations/ point as mentioned in the assessment order dated 27-12-2019 for the assessment year 2017-18 and the assessee had not responded to the show cause notice issued & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA on 9-12-2019 by the AO. Thus the AO had no other option except to pass the order u/s 144 of the Act. Finally, he made following additions in the hands of the assessee.
Sundry Creditors - Addition Rs.2,23,24,871/- Net profit – Addition Rs. 3,63,912/- Short Cash - Addition Rs. 63,43,819/- Unexplained investment in jewellery –Addition Rs. 85,08,815/- Unexplained Receipt – Addition Rs.3,55,00,000/- Thus the total income of the assessee in the status of individual for the assessment year 2018-19 is assessed by the AO at Rs.7,67,24,350/- u/s 144 read with section 153B(1)(b) of the Act. 5.2 In first appeal, the ld CIT(A) has confirmed the action of the AO with following narrations. Ground No. 1 & 2 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’5.4 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this ground the appellant argued that the order is passed without providing sufficient opportunity of being heard and in the absence of a valid jurisdiction.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA The appellant has not specified how, the opportunities provided by the AO were not sufficient. The AO has noted in the assessment order that notice u/s 143(2) was issued on 06.06.2019. Notice u/s 142(1) was issued on 6.06.2019 along with detailed questionnaire. Notice u/s 142(1) was again issued on 29.08.2019. No response was furnished by the assessee in response to these notices. Finally, show cause notice was issued on 9.12.2019 asking the assessee as to why the order should not be passed u/s 144 of the I. T. Act. No response was furnished in compliance to this notice Considering these facts, it is evident that sufficient opportunity was provided to the assessee by the AO. The issue of assumption of jurisdiction is already decided in ground no. 1 of the appeal. The arguments of the appellant raised in this ground are found to be without any merit and rejected. This ground of appeal is treated as dismissed.’’ Ground No. 3 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’6.4 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case, the AO noted that a search & seizure operation under section 132(1) of the Income-tax Act, 1961 (hereinafter "the Act") was Carried out on 07.09.2017. The case of the appellant was also covered under search proceeding. Appellant had filed his return of & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA income u/s 139 of the Act on 16.11.2018 at the total income of Rs. 36,82,860/-. Notice u/s 143(2) of Act was issued by the AO on 06.06.2019 which was duly served. Hence, as per facts of the case, this year is searched year and notice u/s 153A was not required to be issued for the current year. The notice was issued u/s 143(2) for assuming jurisdiction by the AO. No fault is pointed out by the assessee in issuance of notice u/s 143(2). Hence, the assumption of jurisdiction by the AO is found to be upheld. There is no requirement of incriminating material found during the search in case where the jurisdiction is assumed by issuing notice u/s 143(2). The requirement of the incriminating material is in case where notice is issued u/s 153A of the IT Act. Hence, the arguments of the appellant are not found to be acceptable. The arguments of the appellant raised in this ground are found to be without any merit and rejected. This ground of appeal is treated as dismissed.’’ Ground No. 4 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’7.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The assessee had shown sundry creditors amounting to Rs. 2,23,24,871/- in his ITR for the year under consideration. The assessee was asked by the AO vide show cause notice why the sundry creditors should not be added in his total income treated & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA as unexplained cash credit as per the provision of section 68 of the Act in absence of any details and documents. No response filed by the assessee. Therefore, the same sundry creditors amount of Rs. 2,23,24,871/- was added to the total income of the assessee treated as unexplained cash credit u/s 68 of the IT Act. In the absence of any arguments advanced by the appellant in support of this ground of appeal
, the same is decided on merits of the case. Hon'ble Supreme Court Of India in the case of Ram Chandra Singh Vs. Commissioner of Income-tax [2024] 164 taxmann.com 668 (SC) dismissed SLP against impugned order of High Court that where assessee had shown certain amount as sundry creditors in its books of account but assessee failed to furnish any evidence regarding transactions which led to credit from said creditors, levy of penalty under section 271(1)(c) was justified. The head notes of the decision is as under- "Section 68, read with section 271(1)(c), of the Income-tax Act, 1961 Cash credit (Penalty) Assessment year 2009
10. Assessee had shown certain amount as sundrycreditors in its books of account - Assessing Officer issued a questionnaire asking assessee to produce complete address, PAN and confirmation of creditors - Thereafter, Assessing Officer issued notices to creditors and only one creditor turned up and confirmed balance outstanding Assessing Officer thus, levied penalty under section 271(1)(c) on ground that there was concealment and non-furnishing of particulars of income - It was noted that assessee had not produced and bills/invoices to establish purchases from creditors -Furthermore, certificate from some suppliers was furnished however same did not mention any outstanding liability - High Court held that mere acceptance of entirety of purchases and disclosure of name and address of sundrycreditors would not lead to substantiation of credits claimed; since purchases which led to credit were not established before Assessing Officer -High Court further held that since there was no material available on record before & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA revenue which would have persuaded them to take a contrary decision, levy of penalty was justified -Whether SLP filed by assessee against impugned order of High Court was to be dismissed -Held, yes [Para 2] [In favour of revenue]" In the present case also, the assessee failed to furnish any evidence regarding transactions which led to credit from said creditors, the addition made by the AO is found to be justified. The ITAT Chandigarh Bench 'A' in the case of M.C. Puri v. Assistant Commissioner of Income-tax, Central Circle, Chandigarh [2016] 69 taxmann.com 313 (Chandigarh Trib.)/[2015] 39 ITR(T) 433 (Chandigarh Trib.) [28-01-2015] decided similar issue. The head notes of the decision read as under- "Section 68 of the Income-tax Act, 1961 Cash credit (Sundry Creditors) Periods 1-4-1990 to 20-6-2000 - Where assessee had shown bogus creditors, profit of assessee should be estimated at a higher rate or a separate addition for creditors should be made [In favour of revenue] The assessee was engaged in construction business. During course of search, the Assessing Officer found that the assessee had made investment in form of fixed deposits, purchase of machinery, tippers, cars and agricultural land and these amounts were not paid for a long period of time and were shown under sundrycreditors. The assessee filed returns on presumption basis under section 44AD. The Assessing Officer held that investments were shown in name of bogus creditors and added all amount as undisclosed income of the assessee. The Commissioner (Appeals) estimated profit at 8.5 per cent allowing partial relief to the assessee. Held that the Commissioner (Appeals) has not given detailed reasons for not finding any merit in the finding of the Assessing Officer that the assessee has shown bogus creditors. It is seen that in the case of 'G' the amounts of Rs. 14,01,013, Rs. 13,28,813, Rs. 17,53,813 and Rs. 14,70,413 during year ending 31-3-1997, 31-3-1998, 31-3-1999 and 31-3-2000 respectively & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA were shown as sundrycreditors. First of all, it is not possible to believe that a labour contractor can extend continuous credit of such huge amounts regularly. Secondly, whatever cheques were issued later on were shown as receipt which means that this is a book entry for sundrycreditors. Similarly, in the case of 'M', from the receipt side of the day book, it was found that amount was entered as cash. Therefore, the profit should be estimated in this case at a little higher rate or a separate addition for creditors should have been made. Since the Assessing Officer himself has not made separate addition for creditors, considering the peculiarity of this case the profit should be estimated at 11 per cent."
In the present case also, the assessee had shown creditors which are not proved to be genuine during assessment proceedings. No evidence furnished in the appellate proceedings also. Hence, a separate addition for creditors made by the AO is found to be justified. The ITAT Bangalore Bench 'A' in the case of Suresh Kumar T. Jain v. Income-tax Officer, Ward-2(1) [2011] 128 ITD 74 (Bangalore)/[2011] 136 TTJ 247 (Bangalore) [08-01-2010] held as under- "As could be seen from the assessment order that during the course of proceedings before the Assessing Officer, the assessee had furnished a list of creditors with names and addresses of 39 cases and perhaps in ten cases, there were no addresses. In compliance to the Assessing Officer's communication, 23 creditors had furnished the details. On scrutiny of confirmation letters, the Assessing Officer found that the 23 sundry creditors had confirmed the outstanding balances only to the extent of Rs. 24,579 as against Rs. 35,57,868 claimed by the assessee. The discrepancy as per the details so arrived at Rs. 35.33.289 /35,57,868 24,579]. With remaining 26 creditors, 4 creditors had confirmed the credit balances at Rs. nil and out of the 22 alleged creditors, some of them had not complied with the queries and in respect of 12 alleged creditors, the notices sent & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA were returned by the postal authorities with remarks 'insufficient address', 'no such person', etc. These amounts were worked out to Rs. 29,75,621. [Para 5] The bone of contention of the assessee before the Commissioner (Appeals) was that sizable amount added by the Assessing Officer related to credit balances brought forward from the earlier years and, therefore, the same could not be added in the year under consideration. Further, argument of the assessee was that there was no remission or cessation of liability as required under section 41(1) and, thus, the Assessing Officer was not justified in adding those amounts. As rightly highlighted by the Commissioner (Appeals), the assessee had provided a balance sheet drawn up based on his books of account in which certain amounts were being claimed as liabilities due to different parties as at the end of the accounting year under dispute. The assessee had, in fact, failed to establish the genuineness of those liabilities by citing credible evidence. Simply the liabilities being reflected against certain names in his books of account would not vouch the genuineness of such liabilities. On the other hand, the Assessing Officer went to the root of the issue, made inquiries [calling for confirmation letters from the alleged creditors and found the discrepancies] and brought on record that the brought forward alleged sundrycreditors and current year's creditors were not genuine. The assessee had neither tried to reconcile the difference of brought forward balances nor produced any bills of purchase, etc., for verification in spite of being provided with ample time to reconcile. The assessee chose to stay indifferent after collecting the sworn statements and also the confirmation obtained by the department from credit parties. This clearly proved that the assessee had no explanation to prove that creditors in his accounts were genuine. To put it differently, the assessee had failed to discharge onus cast on him to substantiate the claim whereas the Assessing Officer had brought on record the documentary evidence that such liabilities did not exist at the end of the accounting year under dispute and rightly added the said liabilities, which had ceased to exit. [Para 7] & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA The assessee's other contention was that the authorities had erred in making addition being 'current year's trade credits' under section 68 as the said section applies to cash credits only. [Para 13] As rightly remarked by the Commissioner (Appeals), the language in the section unequivocally makes it clear that 'where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year'. In the instant case, the assessee had failed to furnish convincing and documentary explanation with regard to the nature and source thereof and on the other hand, the Assessing Officer had brought on record unflinching documentary proof by way of confirmation obtained from the alleged sundrycreditors that the brought forward sundry creditors and current year creditors (credits) were not genuine. [Para 15] In an overall consideration of the facts and circumstances of the issue, it was to be held that there was no infirmity in the findings of the lower authorities which required interference at this stage. [Para 16]" Hon'ble High Court Of Karnataka affirmed this decision in Suresh Kumar T. Jain v. Income-tax Officer, Ward 2(1), Bengaluru [2019] 101 taxmann.com 164 (Karnataka)/[2019] 260 Taxman 326 (Karnataka) [20-11-2018]. In the present case also, the assessee failed to establish the genuineness of those liabilities by citing credible evidence. Simply the liabilities being reflected against certain names in his books of account would not vouch the genuineness of such liabilities. The language in the section 68 unequivocally makes it clear that 'where any sum is found credited in the books of an & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year'. In the instant case, the assessee had failed to furnish convincing and documentary explanation with regard to the nature and source thereof therefore sundry creditors (credits) were not genuine and addition made by the AO was justified. The contention of the assessee is not found to be correct. The appellant has not furnished any response to the show-cause notice issued to him in respect of proposed addition during the course of assessment proceedings. Further during the course of remand report proceedings, the assessee has not make any compliance. The appellant has not furnished any response when opportunity was provided to the assessee for furnishing rejoinder in response to the remand report. Hence, the contention of the assessee that addition made by the AO is erroneous is not justifiable and addition made by the AO is found to be justified. As discussed above, the addition made by the AO u/s 68 is found to be justified. Section 115BBE provides machinery of taxation on the income added under deeming provisions of section 68 etc. The action of the AO in taxing as per se 115BBE is found to be as per provisions of the IT Act and upheld. This ground of appeal is treated as dismissed.’’ Ground No. 5 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’8.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that on total turnover of Rs. 1,82,60,433/- the assessee shown net profit of Rs. 14,62,131/-. The rate of NP comes to 8%. The assessee has not submitted any financial documents during the assessment proceeding so it is not possible to verify the genuineness of the NP percentage. The assessee was asked vide show cause notice dated 09.12.2019 to explain the method/calculation adopted by him to reach the figure of 8% and asking why his books of accounts should not be rejected u/s 145(3) of the IT Act and net profit should not be calculated at the rate of 10% of total receipt/turnover. No response has been furnished by the assessee. Therefore, the books of accounts of the assessee are hereby rejected u/s 143(5) of the IT Act and net profit at the rate of 10% is considered for his total income for the AY 2017-18. Total turnover of the assessee Rs. 1,82,60,433/- Net profit @ 10% Rs. 18,26,043/- Net profit already shown Rs. 14,62,131/- Difference Rs. 3,63,912/- Therefore, the difference of Rs. 3,63,912/- is added in assessee's total income as net profit. The appellant has not furnished any argument in support of the ground of appeal. The assessee failed to furnish evidence in support of expenses debited against the sales made during the year. Hence, it was not possible for the AO to verify the expenses. In the absence of supporting bills and vouchers, the books of accounts were not found to be reliable by the & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA AO. On the facts of the case the AO has rightly rejected the books of accounts of the assessee by invoking section 145(3)of the I.T. Act. The AO has estimated net profit at the rate of 10 per cent as against the declared net profit of 8 per cent by the assessee.The appellant has not furnished any evidence to substantiate that the estimate made by the AO is not correct. The estimation made by the AO is found to be reasonable and upheld. This ground of appeal is treated as dismissed.’’ Ground No. 6 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’9.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under- The AO noted that during search at premise of the assessee on physical verification on 07/09/2017 cash of Rs. 2,77,150/- and Rs. 70,000/- was found from residence and showroom respectively whereas according to books of accounts cash balance was of Rs. 64,13.891/. Thus there was short cash of Rs. 63,43,891/- The reasons for difference of cash were asked to Shri Upendra Kumar Soni vide Q.No.20 of statement recorded Shri Upendra Kumar Soni in his statement, stated the difference in physical cash was because books were not complete. He further stated that books of account have not been updated for last six months. Vide Q. No. 22 of statement he was requested to produce the bills and & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA vouchers which were not entered till date and explain the cash in hand position as on 08.09.2017 In response to that Sh. Upendra Kumar Soni stated that after entering the bills and vouchers the position of cash in hand and reason of short cash in hand would be explained by 08.09.2017 During the search proceeding Sh. Upendra Kumar Soni could not explain the reason of short cash. Further during post search proceedings also no explanation or reply has been offered. During assessment proceeding also a opportunity was provided vide show cause notice dated 09.12.2019 to explain the reason for the same. The assessee was asked to submit reply on or before 13.12.2019. However, no response has been received til date and therefore, it is considered that the assessee has nothing to say about this issue. Therefore, it is inferred that there is no explanation to be offered by the assessee and difference value of cash has been expended for non business purposes hence liable to be added to the income of the assessee, Sh. Upendra Kumar Soni. Therefore, the short cash of Rs. 63,43,891/- is added to his total income for the AY 2018-19. In the appellate proceedings also, the appellant has not furnished any evidence with regard to the issue raised in the ground of appeal. In the absence of any explanation and verifiable evidence, the addition made by theAO is found to be justified and confirmed. This ground of appeal is treated as dismissed. Ground No. 7 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA ‘’10.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that during the course of the search proceedings at the residential premises of assessee. Jewellery valued at Rs. 85,08,815/- was found During the course of search proceedings as well as post search proceedings. the assessee was asked to provide the source of jewellery along with supporting evidences/documents and copy of wealth tax return filed by him and his family members. However, the assessee had not provided any details supporting evidences/documents and wealth tax return filed by his family members during search and post search enquiry. During the course of assessment proceeding, an opportunity was provided to the assessee vide show cause notice dated 09.12.2019 to explain the issue. But the assessee had failed to submit his explanation on proposed addition. Therefore, it was considered by the then AD that the assessee had nothing to say about this issue. Therefore, the investment in jewellery at Rs. 85,08,815/- was added to the total income of the assessee treated as unexplained investment u/s 69A of the IT Act The facts of the case are considered. The assessee had not complied to the various notices issued by the AO and the show-cause notice issued to him in respect of proposed addition during the course of assessment proceedings. Further during the course of remand report proceedings, the assessee has not make any compliance. Hence, the contentions of the assessee are not found to be acceptable.
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA In the appellate proceedings also, the appellant has not furnished any evidence with regard to the issue raised in the ground of appeal
. In the absence of any explanation and verifiable evidence, the addition made by the AO is found to be justified and confirmed. This ground of appeal is treated as dismissed.’’ Ground No. 8 of the assessee:- Ld. CIT(A)’s findings in respect of grounds of appeal of the assessee. ‘’11.5 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that during the course of search proceedings in the case of assessee some documents were found and seized. As per page 10 of Exhibit-A-23, there is a transaction on it of Rs. 5,00,000/- in cash with Umesh against agreement found to be recorded on remains of burnt evidence. Further assessee could not satisfactory explain the same, hence it was inferred that receipt of Rs.
5. Lacs is assessee's unaccounted receipt. The assessee did not offer any explanation during post search investigation also. Further, on page 16 of Exhibit-A-23, there was an entry of receipt of Rs.2,50,00,000/- out of Rs. 5,14,50,000/- in pursuant to an agreement done. The assessee did not offer any satisfactory explanation about that. The assessee could not verify the same from his books of account. The & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA assessee did not offer any explanation during post search investigation also. Further, on page 25 of Exhibit-A-23, there was an entry of receipt of Rs. 1,00,00,000/-. During search action Upendra Kumar Soni couldn't explain the source of same. The assessee did not offer any satisfactory explanation about that. Since the assessee could not verify the same from his books of account it is inferred that receipt of Rs. 1,00,00,000 is assessee's unaccounted receipt. The assessee did not offer any explanation during post search investigation also. During assessment proceeding also a opportunity was provided vide show cause notice dated 09.12.2019 to explain the issue. The assessee was asked to submit reply on or before 13.12.2019. However, no response has been received and therefore, it is considered that the assessee has nothing to say about this issue. The assessee could not provide any explanation about the aggregate cash receipts in total of Rs. 3,55,00,000/- therefore, based on the information/documents found during the search action the amount of Rs. 3,55,00,000/- was added to the total income of the assessee treated as unexplained money u/s 69A of the IT Act. The appellant has not furnished any evidence to advance his arguments in the appellate proceedings also. In the absence of any evidences, the reasoning given by the AO are found without any rebuttal. The ITAT Delhi Bench 'G' in the case of Deputy Commissioner of Income-tax Vs. Shivram Consultants India (P.) Ltd. held that Where during search upon a party, a draft deed for sale of property was recovered which showed cash receipt of Rs. 4 crores by assessee on sale of a property, since details like name of vendor, vendee, and amount of sale considerations, etc, matched & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA with original sale deed executed by assessee, additions made to income of assessee based on said draft deed, was justified. In the present case also papers related to transaction of property were recovered which showed cash receipt of Rs. 3,55,00,000/- by assessee. The assessee has not furnished any explanation or any evidence in support of the ground of appeal. Hence, the addition made by the AO is found to be justified. Hon'ble Supreme Court in the case of S. Rudramuniyappa Vs CIT [2016] 75 taxmann.com 241 (SC)/[2016] 243 Taxman 353 (SC) dismissed SLP on ground of delay against order of High Court wherein it was held that since assessee failed to justify his stand that there was no unaccounted sale as indicated in seized documents, addition made on basis of seized documents was justified. In the present case also the assessee failed to justify his stand that cash was not received as indicated in seized documents. Therefore, addition made on basis of seized documents is justified. In view of above discussion, the addition made by the AO is found to be justified and upheld. This ground of appeal is treated as dismissed.’’ 5.3 During the course of hearing the ld. AR of the assessee submitted that the assessee had not received communication from the AO to contest the case before him and he also did not receive any communication from the ld. CIT(A). In nut shell, the ld.AR of the assessee prayed that he may be given one more chance to contest the case before the AO and also to & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA produce the desired information as well as evidence to counter the addition made by the AO in his assessment order dated 27-12-2019. 5.4 On the other hand, the ld.DR supported the orders of the lower authorities. 5.5 We have heard both the parties and perused the materials available on record. In this case, it is noted from the assessment order that a search and seizure operation u/s 132(1) of the Act was carried out on 07-09-2017 at the various premises of ‘’Resonance Group Kota’’ to which the assessee belongs and in the search number of persons/ premises were covered u/s 132 of the Act. Cash and Jewellery and other documents found and seized from some persons residence and business premises. The case of the assessee was also covered under search proceedings. The search action was carried out on the assessee on 07-09-2017. It is noted that the assessee is an individual and derives income from business, house property and other sources etc. It is noted that the assessee had filed his return of income u/s 139 of the Act on 16-11-2018 declaring at the total income of Rs.36,82,860/-. It is also noted from the assessment order that finally a show cause notice was issued to the assessee on 9-12-2019 asking him as to why his case should not be finalized u/s 144 of the Act, based on information available on record. However, no response had been received & 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA from the assessee. Therefore, the AO had no other option except to pass order u/s 144 of theAct. In short the AO made following additions under different heads in the hands of the assessee as no submission was adduced before the AO. Sundry Creditors - Addition Rs.2,23,24,871/- Net profit – Addition Rs. 3,63,912/- Short cash- Addition Rs. 63,43,891/- Unexplained investment in Jewllery-Addition Rs. 85,08,815/- Unexplained Receipts – addition Rs. 3,55,00,000/- Thus the total income of the assessee in the status of individual for the assessment year 2018-19 is assessed by the AO at Rs.7,67,24,350/- u/s 144 read with section 153B(1)(b) of the Act. In first appeal, the ld CIT(A) has confirmed the action of the AO as the assessee did not furnish any submission / argument during appellate proceedings in support of the grounds of appeal after providing several opportunities and thus the ld. CIT(A) considering the facts of the case as mentioned in Form 35 decided the case based on the materials available on record. The Bench has taken into consideration the entire facts and circumstances of the case as to the additions confirmed by the ld. CIT(A). It also noted that the addition made by the AO in the case of the assessee is voluminous. It is an admitted fact that the assessee is ex-parte before the AO and also before the ld. CIT(A).
& 827/JPR/2025 SHRI UPENDRAF KUMAR SONI VS ACIT, CENTRAL CIRCLE-KOTA 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 for which a cost of Rs.5,000/- is imposed upon the assessee which will be deposited by the assessee in the Prime Minister Relief Fund. 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, 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. 5.6 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 reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law.