SH. TRILOK CHAND SAIN,DAUSA vs. ITO, WARD-1(2), ALWAR, ALWAR

In ITA No. 1265/JP/2024, the assessee has taken the following grounds; “The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.42,50,250/- made by AO on account of unexplained investment in purchase of land by not appreciating that the land under consideration is owned by Sh. Purushottam Bairwa, investment was made by him from his own sources, assessee acted only as broker between the transaction whereby Sh. Mangal Ram, Kanhiya Ram and Raju sold said land to Sh. Purushottam Bairwa, not properly appreciating the statement of Kanhiya Lal, not controverting the affidavit of assessee and by making various incorrect & irrelevant observations.

The assessee craves to amend, alter and modify any of the grounds of appeal. 3. The appropriate cost be awarded to the assessee.”

2 In ITA No. 1266/JP/2024, the assessee has taken following grounds of appeal: “The Ld. CIT(A), NFAC has erred on facts & in law in confirming the levy of penalty of Rs. 13,13,327/- u/s 271(1)(c) of IT Act, 1961. 2. The assessee craves to amend, alter and modify any of the grounds of appeal.

The appropriate cost be awarded to the assessee.”

Since both the appeal is of the same assessee and related to same assessment year and argued on the same day we are deciding these two appeal by common order. First, we take up the appeal of the assessee in ITA No. 1265/JP/2024. Sh. Trilok Chand Sain vs. ITO

1 The fact as culled out from the records is that assessee is an individual had filed his ITR for the relevant year declaring total income of Rs. 7,21,050/- on 18.05.2017. As per information available with the ld. AO that the assessee has purchased immovable property in the name of other persons and made the payment of Rs. 42,50,250/- during the F.Y. 2015-16 relevant to AY 2016-17. Ld. AO noted from the perusal of the ITR that the tax liability on immovable property transaction is not reflected in his return of Income. Therefore, source of purchase of this immovable property remains unexplained which also required to be taxed. Based on that reasons ld. AO believed that income to the extent of Rs. 42,50,250/- chargeable to tax has escaped assessment. Accordingly, notice u/s 148 of the I.T. Act, 1961 was issued on 23-06-2021. In compliance to the decision of Hon'ble Supreme Court dated 04-05-2022 in the case of UOI vs Ashish Agarwal and consequent CBDT instruction No. 01/2022 F.No. 279/ Misc/ M- 21/2022-ITJ dated 11-05-2022, information and material relied upon for initiating reassessment proceedings was provided to the assessee vide letter dated 20-05-2022 and the assessee was requested to submit explanation along with supporting documents on or before 09-06-2022 as to why an order u/s 148A(d) of the I.T. Act, 1961 should not be passed in the case of the assessee and notice u/s 148 should not be issued. AO noted the reply submitted by the assessee which was perused by him but was not acceptable because the DDIT(Inv.) in his report itself stated that the property has been purchased in some other person's name, so, the question of his purchase is not in existence. In the statement of Shri Kanhaiya recorded on oath on 07-03-2019 it is clearly stated by him (in Q. No. 10) that he had sold that land to Shri Trilok Chand Sain and the amount received against such sale of land was given by Shri Trilok Chand Sain and the amount received against such sale of land was given by Shri Trilok Chand Sain only. Further, on the saying of Trilok Chand Sain he made the registry in the name Shri Purushottam Bairwa, therefore, it is clear that Shri Trilok Chand Sain has made unexplained investment in this land. Further, Shri Trilok Chand Sain has said in his reply that he has purchased the land in his personal capacity and the same transaction is duly recorded in the account of firm owned by him in the name of Panchayat Stationers, whereas no documentary evidence in respect of Panchayat Stationers have been given, no status of income tax paid by such firm namely panchayat stationers has been given. Assessee has merely given the capital A/c which clearly does not suggest the actual capital holdings of the assessee and how such capital accounts has been declared by the Sh. Trilok Chand Sain vs. ITO assessee in his return of income. Therefore, the reply in that respect was not accepted. The Capital account submitted by the assessee merely seems an afterthought and made up ledger just to show the availability of funds. Assessee has claimed to run a firm namely Panchayat Stationers whereas no documentary evidence in respect of such firm has been submitted by the assessee. Neither he has submitted any P&L account or trading out, Capital A/c cash book etc nor has he given any details with respect of ITR, total income of such firm. As on careful perusal of all the registries submitted by the assessee ld. AO noticed that all the payments have been made in cash by the assessee. It is a matter of investigation that whether the firm run by the assessee in the name of Panchayat Stationers was having such cash balance with it and why such payments were made in cash by the assessee. Further, as per the report/ information in possession of the department the assessee has been alleged of the benami transactions and hence it is a subject matter of deep investigation. In light of the above facts and on the basis of material available on record, ld. AO noted that the assessee has not been able to give enough evidences and proves his contention with respect to the information in possession of ld. AO. Hence, the assessment was reopened under section 147 of the Act by issuing notice u/s 148 of the Act dated 29.07.2022 The Sh. Trilok Chand Sain vs. ITO notice was duly served on the assessee on 29.07.2022 through e-mail. The assessee was requested to furnish his return of income within 30 days of service of the above notice. However, the assessee failed to comply with the above notice. In this connection notice u/s 142(1) dated 05.01.2023 and 07.02.2023 were issued to the assessee to file the Return of Income. However, the assessee failed to respond to the above notice. The assessee was also intimated that failure to file complete reply shall lead to passing of ex-parte assessment order u/s 144 of the Act vide the above letter. The assessee failed to respond to this letter also. Again a Show cause notice dated 06.04.2023 was issued to assessee to show cause as to why the assessment should not be completed under section 144 of the Income-tax Act, 1961. in view of the above facts and circumstances of the case. Ld. AO based on the details available on record, noted that the assessee had purchased property and its value is Rs.42,50,250/- during the year under consideration. However, the assessee has not filed his return of income in response to notice u/s 148 and has not offered any income to tax. In the absence of any response from the assessee, the entire purchase value of Rs.42,50,250/- was treated as the assessee's unexplained investment u/s 69 of the Act and brought to tax u/s 115BBE of Sh. Trilok Chand Sain vs. ITO the Act. The purchase value of Rs.42,50,250/- was added to the assessee's total income under the head "Income from Other sources”.

Aggrieved from the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: “7. Finding and decision:- 7.1 Ground No. 01 & 02 7.1.1 During the assessment proceedings, the appellant filed submission before AO and stated that “Your kind self has stated that the assessee has purchased immovable property in the name of other person and payment of Rs. 42,50,250/- made by the assessee, but it is absolutely incorrect as I have not purchased any property in the name of other person. Affidavit in this regard is enclosed and is being reproduced as under i). a). I have purchased the following agriculture land ”

1.2 Submission made by the appellant was not accepted by the AO and accordingly addition of Rs. 42,50,250/- was made on account of unexplained investment u/s 69 of the Act. The relevant extract of the said assessment order is as below-

1.3 During the appellate proceedings the appellant has filed submission and stated that 1. While completing the assessment, the A.O. has not considered the following facts a. The assessee is engaged in two business namely:-

Trading in stationary in the name of M/S Panchayat Stationers

Real Estate (Trading of Plots in the name of Trilok Chand Sain).