RAM RAJ CHOUDHARY,JAIPUR vs. ITO, WARD-1(3), JAIPUR

. Hence, grounds raised are rejected.

6. In the result, the appeal is dismissed.

2.3 During the course of hearing, the ld. AR of the assessee has filed following written submission mentioning therein that the ld. CIT(A) has no power to dismiss an appeal on account of non-prosecution as held by Hon’ble Bombay High Court in CIT vs Premkumar Arjundas Luthra, HUF (2017), 291 CTR 614 and the addition made by the AO amounting to Rs.30,10,374/- u/s 56(2)(vii)(b) is incorrect and unwarranted on account of difference between the value of property as per stamp valuation and value as per purchase deed of the property under consideration which deserves to be deleted. Apropos to the fact that assessee was not responded to the RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR notice issued by the ld. CIT(A), the ld. AR of the assessee invited our attention to the page 2 to 6 showing the screen shot of the reply submitted before the ld. CIT(A) which was not considered while deciding the appeal of the assessee. The ld. AR thus relied upon the following written submission; ‘’RAM RAJ CHOUDHARY vs. ITO, W-1(3) JAIPUR in Appeal for A.Y. 2021-22 MAY IT PLEASE YOUR HONOUR, The appellant respectfully begs to submit following facts and details for your honor’s kind consideration in support of grounds of appeal already submitted :

Background and action of the Ld. Assessing Officer and CIT(A) - The  appellant had filed his return for AY 2021-22 disclosing a total income of Rs.3,63,010/-. His case was selected for scrutiny for examination of “Cash Deposits” (Large cash deposits in bank account and assessee has also purchased/sold one or more property (ies) during the year (Both buying and selling transaction are to be considered) Assessee replied from time to time along with supporting evidence. The AO did not consider the reply in the right perspective and ignoring the evidence filed, arbitrarily made an addition of Rs.2,42,96,812/- raising a huge demand of Rs. 2,23,49,721/- The Ld.CIT(A) sustained the addition dismissing the appeal of the assessee on account of non-compliance to the notices issued during appellate proceedings and ignoring the submission made and the evidence filed before him.

Facts of the case- The appellantis a farmer. During the year under  consideration, the assessee derived income from sale of Milk and letting of properties. He had purchased two properties during the year, by raising loans from banks. On one hand the AO made addition of all the credits appearing in the bank accounts, ignoring the fact that the source of the same was loans raised, while on the other hand made addition presuming the payment made for purchase of properties as unexplained. Apart from that, he also added the difference between the DLC value and the actual consideration paid for purchasing the properties as Income from other sources u/s 56(2)(vii)(b).

Submission on the grounds of appeal -  RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR Ground No.1- The Ld CIT(A) has erred on facts and in law in dismissing the appeal of the assessee for non-prosecution notwithstanding the fact that none of the notices of hearing were served on the assessee, as provided by law – Not pressed Ground No.2 - The Ld. CIT(A) has erred on facts and in law in dismissing the appeal of the assessee for non-prosecution, whereas in view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution, as held by Hon’ble Bombay High Court in CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.) 2.1 The Ld. CIT(A) has made the non-compliance of the notices issued by NFAC, as the basis for dismissal of appeal. For better understanding of the sequence of events, in particular, the issue of notices, a chronological chart is appended below- S.N Date of Complian Remarks o. Notice ce date 1. 01.03.20 Not This notice was not a notice of 23 applicabl hearing but was an Intimation of e Enablement of Communication window. It was only for assessee’s information and no compliance was required to be made on the part of the assessee. 2. 07.06.20 13.06.202 The assessee did not come to know 24 4 about this notice as the said notice was sent on the mail id provided in the ITBA portal, i.ebackofficedudu24@gmail.comw hereas while filing Form-35, it had been clearly mentioned that the electronic communication be sent to kcconstruction.6200@gmail.com 3. 11.07.20 16.07.202 In response to the said notice, 24 4 detailed reply along with supporting evidence was furnished. Acknowledgement of the reply is attached and forms part of Paper book. 4. 18.07.20 24.07.202 As evidence had already been adduced in compliance to notice 24 4 dated 11.07.2024 and the said hearing notice did not require any specific document to be furnished, RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR the assessee had nothing to add. Moreover, the said notice explicitly stated that the appeal will be decided on the basis of material available on record.

2.2 The remarks given against each notice, clearly show the compliance made by the assessee. The Ld.CIT(A) has misrepresented the facts by mentioning against each notice that – Notice was sent through ITBA but proceedings remained un-complied with. It would be pertinent to mention that the Ld.CIT(A) has reproduced the entire order of the AO (From page-4 to page-22) in his appellate order which also has mention of the assessee’s submission. As an eyewash, he has tried to show that he is disposing off the appeal on merits as well. He has completely ignored the evidence which clearly substantiated the source of deposits in the bank account, and which clearly evidenced the payment made towards purchase of the impugned properties. The appellate order passed by the CIT(A) is non-speaking and arbitrary. The Ld.CIT(A), in utter disregard of his rightful duty to adjudicate the appeal, misrepresenting the facts, ignoring the glaring evidence, dismissed the appeal, for non-prosecution. A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in non appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Under the guise of deciding the appeal on merits, he has reproduced the order of the AO and not even bothered to see that the AO had not given cognizance to the credits in the bank account of the assessee, the narration of which clearly showed that the credits are out of loans taken from bank. Also the debits clearly showed payment having been made to the sellers of the property. Thus, the CIT(A) could not have shunned the appeal for noncompliance without addressing the issue on merits. 2.3 The Hon’ble Bombay High Court in the case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.) has observed - We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. Ground No.3The Ld CIT(A) has erred on facts and in law in confirming the addition made by the AO, without deciding the case on merits and arbitrarily rejecting the appeal for non-prosecution. 3.1 The Ld.AO made the following additions – (a) Unexplained investment in purchase of property Rs.61,76,844/- RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR (b) Unexplained investment in purchase of property (wife’s name) Rs.41,70,244/- (c) Deposits with HDFC Bank Rs.78,73,028/- (d) Deposits with CBI Bank Rs. 3,45,656/- (e) Deposits with ICICI Rs.27,20,669/ (f) Difference in Stamp duty for the purchase of both plots Rs.30,10,374/- TOTAL ADDITIONS MADE Rs.2,42,96,815/- 3.2 The Ld.AO has erred in comprehending the basic principle of Accountancy that once he has held the receipts (Deposits in banks in this case) to be unexplained and made addition for the same, he can not again go on to add the expenditure (Investment in purchase of plots in this case) made out of the same income. The Ld.CIT(A) also ignored this vital issue and went on to confirm the addition made by the AO on both counts. 3.3 Coming to the factual position, the assessee and his wife purchased two properties during the year, viz. Plot No.125, Vaishali Nagar, Jaipur and Plot No.169, Sirsi Road, Jaipur, by making a total investment of Rs.1,03,47,088/- One half of Plot No.169 and Plot No.125 were purchased and registered in the name of the assessee while the other half of Plot No.169 was purchased and registered in the name of Smt. Santosh Choudhary, wife of the assessee. This payment of consideration has been paid through cheques/RTGS/NEFT, which is being reflected in the bank statement. This is cross verified from the registered conveyance deeds of the impugned properties, which contains a recital to this effect. So, the investment for purchase of the impugned properties stands duly explained as the payments being made out of the HDFC bank account(s) of the assessee. 3.4 Now coming to the source of deposits made in these bank accounts, it was out of loans taken jointly by the assessee and his wife, as submitted before the AO as well as before the CIT(A). The assessee along with his wife had taken the following loans from HDFC Bank, which have been credited to their Joint Account No.501000354407054, with HDFC Bank, Bhankrota Branch, Jaipur – Date Amount Nature of Amount Ref. No. Remarks Cr. 29/08/2020 1380000/- KCC overdraft 84442762 29/08/2020 500000/- Term Loan KCC 84442762 30/08/2020 2925028/- KCC Retail Crop 84442762 Production 10/09/2020 3000000/- KCC Retail Working 84442762 Capital Apart from the above loan availed jointly by the assessee along with his wife, he had also taken loans from ICICI Bank, the details of which are as under- Date Amount Nature of Amount 25/08/2020 14,09,200/- Gold Loan 02/03/2021 12,58,700/- Gold Loan 3.5 Apart from the above, the assessee has two OD Accounts (No.50200049067019 & 50200049067210) with HDFC, with OD limits of Rs.1,48,80,000/- and Rs.46,80,000/- respectively. As and when funds are needed, the same is withdrawn from these accounts. The assessee also had cash inflow from sale of milk, rental receipts and agricultural receipts to the tune of Rs.8,86,303/- The wife of the assessee, Smt. Santosh Choudhary, also has an OD A/c with Central Bank of India (No.3242662128) from where she has withdrawn cash of Rs.60,21,000/- during the year and has deposited back Rs.42,55,000/-, meaning thereby that she had cash availability of Rs.17,66,000/- for making investments. 3.6 So, as a matter of fact, the assessee had availability of funds to the extent of Rs.1,31,90,231/-, which includes cash availability to the extent of Rs.26,52,303/- These funds were deposited into the bank accounts of the assessee. As per the Ld.AO, total deposits in various bank accounts have been worked out by the assessee to be Rs.1,09,39,353/-, whereas the assessee has availability of funds to the extent of Rs.1,31,90,231/-, as stated supra. The assessee has deposited these funds in his bank accounts out of which he has made investment in the purchase of plots as worked out by the Ld.AO is Rs.1,03,47,088/- The availability of funds far exceeds the investment made for purchase of the impugned plots, therefore no addition on this score, too, was warranted. The AO erred in making the addition and the CIT(A) further erred in upholding the same, ignoring all the documents before them [ITR, Loan sanction letters, Copies of bank account(s), copy of sale deeds] 3.7 As regards addition of Rs.30,10,374/- made by the AO u/s 56(2)(vii)(b), the assessee during the course of assessment has submitted that both properties purchased by him were disputed properties and therefore, the consideration paid by him was below the DLC rate. He submitted that the value assessed by the Stamp valuation Authority exceeds the FMV of the property on the date of transfer. In support of his claim, the assessee filed duly sworn affidavits by the sellers of the impugned properties, affirming the stand of the assessee. It would be pertinent to mention that both the affidavits were dated 25.08.2020, i.e. the date on which the impugned properties had been purchased by the assessee. It is not a case that the RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR affidavits have been obtained for the purpose of Income tax assessment. The assessee had also filed papers to substantiate that there were disputes with regard to the property and the matter was sub-judice before the Hon’ble Rajasthan High Court and was the reason for being purchased for a consideration below the DLC. The Ld.AO asked no further questions or sought clarification from the assessee. He brushed aside the affidavits stating - The affidavit filed by the assessee has not been entered in the register of Notary Public, without entry in the register of Notary has no legal value. Secondly, the assessee has not filed any document that the part of the land was in adverse position of the public before the sale of this property. 3.8 The Notaries Act, 1952 or the Notary Rules, 1956, for that matter, nowhere state that an Affidavitnotarised by the Notary has to be entered in the Notaries Register. The relevant Notary Rule in this regard is reproduced below for ready reference – Rule 11.Transaction of business by a notary.- (1) A notary in transacting the business under the Act, shall use the Forms set forth in the Appendix to these rules. (2) Besides recording declaration of payment for honour, a notary shall also register notings and protests made. Every notary shall maintain a notarial register in the prescribed Form XV. (3) Where any demand of acceptance or payment or better security has been made by a clerk, a notary shall, after examination of the entry in the Register relating to such demand, affix his signature thereto, and cause the clerk to affix his signature also to the entry. (4) Each notary shall, before bringing the Notarial Register into use, add a certificate on the title page specifying the number of pages it contains. Such certificate shall be signed and dated by the notary. (5) Every notary shall permit the District Judge or such officer as the appropriate Government from time to time appoint in this behalf to inspect his register at such times, not often than twice a year, as the District Judge or officer may fix. District Judge or officer appointed by the State Government will have power to lodge a report to the appropriate Government for taking action against a notary. (6) When the original instrument is in a language other than English, any noting or protest or entry in his register which has to be made in respect of the instrument by a notary may be made either in that language or in English. (7) In making presentment of bills or notes, a notary shall observe the provisions of Chapter V of the Negotiable Instruments Act,1881 (26 of 1881). (8) The notary may- (1) draw, attest or certify documents under his official seal including conveyance of properties; (2) note and certify the general transactions relating to negotiable instruments; (3) prepare a Will or other testamentary documents; and RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR (4) prepare and take affidavits for various purposes for his notarial acts. 3.9 The above Rules, mandatorily require only three items to be registered in the Notarial Register maintained by him in Form-XV, and they are (i) for recording a declaration of payment for honour (ii) for noting an instrument (iii) for protesting an instrument. So, the observation of the AO that the affidavit has no legal value is incorrect. As regards the second observation of the AO, the affidavit of the sellers accompanied by the documents of ongoing litigation in Court negates his stand.The Ld.AO asked no further questions or sought clarification from the assessee. He did not even cross-examine the sellers for ascertaining the facts stated by the assessee, but drew an adverse inference. 3.10 It is submitted that according to the decision of the Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC), if there is no material whatsoever on record for doubting the veracity of the statements made in the affidavits and if the deponents have also not been subjected to cross-examination for bringing out the falsity of their statements, then the Tribunal would not be justified in doubting the correctness of the statements made by the deponents in the affidavits. 3.11 In the present case, apart from raising his doubts, the Assessing Officer has not placed any material on record for doubting the veracity of the statements made in the affidavit. Further, in the written submission filed to the AO, the assessee had specifically requested the AO to refer the valuation of the impugned properties to the Valuation Officer. The Ld.AO, instead of referring the matter to the Valuation Officer, pointed out irrelevant flaws in the affidavits as pointed out above, and went on to add the difference between the DLC and the actual consideration received by the aseessee. The AO mechanically applied provisions of section 56(2) to difference between stamp duty value and actual sale consideration paid by assessee and made additions, without making any efforts to find out actual cost of property. If the AO was not convinced with the submissions made by the assessee and not happy with the recitals in the sale deeds, he could have at least referred the matter to Department Valuation Officer. Without considering the merits on record, he had rejected the submissions of the assessee and even not bothered to refer the same to the Department Valuation Officer. 3.12 It would be pertinent to reproduce the proviso to Section 56(2)(vii) which reads as under - Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections: 3.13 In the present case the Assessing Officer has made addition under section 56(2)(vii)(b) without making reference to the Valuation officer as required by the RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR above proviso. In the case of ITO vs. Aastha Goel the Hon'ble ITAT, Delhi bench held the addition made u/s 56(2)(vii)(b) to be invalid in the absence of the reference to the valuation officer. Further, the Hon'ble ITAT also rejected the request of the Department to set aside the matter to the file of the Assessing Officer for referring the case to the Valuation Officer. 3.14 In the case of Sunil Kumar Agarwal vs. CIT (2014) 372 ITR 83 (Cal. HC), the assessee sold a piece of land for Rs.10 lakhs and offered capital gains. However, the AO, CIT(A) & Tribunal held that as the market value of the land was assessed by the District Sub Registrar at Rs.35 lakhs for stamp duty purposes, which was duly paid by the buyer, the consideration had to be taken at that figure u/s 50C. On appeal by the assessee to the High Court HELD allowing the appeal: No inference can be made that the assessee has accepted the price fixed by the District Sub Registrar for stamp duty purposes as the fair market value of the property because the assessee has nothing to do in the matter. Stamp duty is payable by the purchaser & it is for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the AO should, in fairness, have given an option to the assessee to have the valuation made by the Departmental Valuation Officer (DVO) contemplated u/s 50C. As a matter of course, in all such cases the AO should give an option to the assessee to have the valuation made by the DVO. The valuation by the DVO is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer, the AO, discharging a quasi judicial function, has the bounden duty to act fairlyand to give a fair treatment by giving him an option to follow the course provided by law. 3.15 The assessee places reliance on the following judicial decisions in support of his case- CIT vs. Smt. Raj Kumari Vimla Devi (2005) 279 ITR 360 (All HC).  Dr. Sanjay Chobey HUF vs. ACIT (2018) 65 ITR 68 (SN)  K.K. Nag Ltd. Vs. Addl CIT [2012] 52 SOT 381/22 taxmann.com 37 (Pune)   Anil Kumar Jain Vs. ITO (2013) 143 ITD 0659 Tata Skyline And Health Farms Ltd. vs. ACIT, 70 ITD 387   ITO vs. Pawan Kumar Gupta (2011) 43 SOT 32 Mohd. Iliyas Ansari vs. ITO [2021] 123 taxmann.com 122 (Mumbai - Trib.)  RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR 3.16 Thus, in view of the above referred judicial pronouncements and under the factual matrix, it can be said that the Ld. AO has completely overlooked the Proviso to section 56(2)(vii) which is incorrect and unwarranted and hence the addition of Rs.30,10,374/- u/s 56(2)(vii)(b) of the Act on account of difference between value of property as per stamp valuation and value as per purchase deed of the property under consideration deserves to be deleted. In view of the facts of the case, the submission filed and the supporting case laws, the addition made by the AO and sustained by the CIT(A) may kindly be deleted and the returned income be accepted.’’ 2.4 On the other hand, the ld.DR supported the order of the ld CIT(A).However ld. DR did not dispute the submission made by the assessee before the ld. CIT(A). He based on that contention submitted that the matter be thus remanded back to the file of the ld. AO instead of ld. CIT(A). 2.5 We have heard both the parties and perused the materials available on record. It is noted that the assessee had filed his return for the A.Y. 2021-22 on 19-12-2021 declaring income amounting to Rs.3,63,010/-. The same was processed u/s 143(1) by CPC. During the year under consideration, the assessee derived income from letting properties and income from sale of milk. Subsequently, the case of the assessee was selected for scrutiny for the examination of cash ‘’Cash Deposits (large cash deposits in bank account and assessee has also purchased / sold one or more property (ies) during the year (both buying and selling transactions are to be considered.) Accordingly, statutory notice u/s 143(2) of the Act was issued on 28-06-2021 and served on the assessee through registered RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR e-mail. Subsequently, notice u/s 142(1) of the Act was issued on 7-10-2022 alongwith questionnaire on specific point. It is noted that the assessee could not provide the information as required by the AO. Hence, the AO made total addition of Rs.2,46,59,822/- in the hands of the assessee. The ld. CIT(A) has confirmed the action of the AO by holding that the assessee was unable to substantiate his claim and was not able to controvert the assessment order. The Bench noticed that it is an admitted fact that the assessee is ex-parte before the AO and also before the ld. CIT(A). Though the assessee filed the written submission and the evidence but the same was not considered by the ld. CIT(A) while dealing with the appeal of the assessee on any reasons. Looking to that non disputed fact that the assessee filed the evidence and submission before the ld. CIT(A) which was not discussed in the order and therefore, we are of the considered 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 ld. 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 while remand proceedings. Thus, the appeal of the assessee is allowed for statistical purposes.

RAM RAJ CHOUDHARY VS ITO, WARD 1(3), JAIPUR 2.6 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 3.0 In the result, the appeal of the assessee is allowed for statistical purposes Order pronounced in the open court on 04 /06/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04 /06/2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Ram Raj Choudhary, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Warde 1(3), Jaipur 3. vk;djvk;qDr@ Theld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File (ITA No.48/JP/2025) vkns'kkuqlkj@ By order,

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