NITESH AGARWAL,JAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR

4. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 1,00,00,000/- u/s 69B of the Income Tax Act, 1961 on account alleged unexplained investment in land.

5. In the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 21,91,651/- applying NP rate at 9.33% which is highest NP rate in preceding three years.

6. In the facts and circumstances of the case the learned CIT(A) has erred in not considering this that as no other addition can be made after applying the NP rate and rejecting the books of accounts u/s 143(3) of the Income Tax Act, 1961.

7. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.”

2.1 In this appeal, the assessee has raised additional grounds: -

Thereafter the assessment order was passed by the then AO on 30.03.2015 thereby determining the income at Rs. 5,71,47,499/-. That assessment order was challenged by the assessee and ultimately it has reached to this tribunal and while disposing the appeal of the assessee tribunal held as under :

“Considering the totality of facts and circumstances of the case, we deem it fit and proper to restore the matter to the file of the Assessing Officer for deciding all the issues again after considering the material placed on record. The Assessing Officer is at liberty to call any information and documents in support of assessee’s claim. The assessee is also directed to fully cooperate with the Assessing Officer by placing all the information and documents as desired by the Assessing Officer. The assessee is further directed to appear before the Assessing Officer within a period of one month from the date of passing of this order i.e. latest by 06.04.2019 with all the documents supporting his claim. Otherwise the Assessing Officer is at liberty to pass order as per the material placed on record. We direct accordingly.” done in the original order. While doing so the ld. AO observed as under :

“5. During the assessment proceedings in compliance to the order of Hon’ble ITAT the assessee was given sufficient time to prove his case and furnish the correct accounts but he has failed to avail this opportunity. On perusal of the account statement submitted by the assessee is noted that the figures mentioned by the assessee is without any basis or any evidentiary proof hence, cannot be relied upon. The assessee has shown purchases of Rs. 4050352/- but neither the purchase bills were submitted nor the payments made has been verified by the assessee. Similarly, the sale has been shown at Rs. 1,52,73,500/- in the P&L account but the sale bills or the details of payment received against the sale has not been produced hence, could not be verified.

5.1 The submission of the assessee about the incorrect audited financial accounts during the assessment proceedings before the AO is nothing but just to avoid the tax liability by taking the plea that the previous CA has forged the financial accounts and put his bogus signature. This fact remained unverified during this assessment proceedings as the assessee has neither produced the true financial accounts submitted before Hon'ble ITAT and the chief judicial magistrate In view of the above facts and in the circumstance the submission of the assessee cannot be accepted.

5.2 During the assessment proceedings the assessee was given opportunity as directed by Hon'ble ITAT prove the genuineness of the sundry creditors of Rs. 2,64.82,736/-, unventiel loans and deposited of Rs. 1,84,73,112/-, unverified investment in land of Rs. 1,00,00,000/- and addition on account of estimated NP of Rs. 21,91,651/-. However, except taking the plea that these are the forged figures in the financial accounts prepared by the CA the assessee failed to prove the case. Moreover, he also failed to submit any evidentiary proof/evidences relating to the financial accounts which is true as per him and which he claimed submitted before Hon'ble ITAT and the CJM, Jaipur during the proceedings before the CA.”

“Ground No. 1 5.1 The appellant has made an extraordinary claim that the financial data duly audited and certified by the chartered accountant is false and fake. This is a self- serving statement and the appellant has not proved the same with sterling evidences.

Inaccuracies in the financial data could be easily proved by the appellant with the help of the original documents and original evidences of the correct and true data. However the appellant has not done so. Further reference is made to the original assessment order and the order of the Ld. CIT Appeal on the original assessment order as it is stated in the assessment order under appeal that the initial/original assessment order was upheld by the Ld. CIT Appeal.

Further, the assessee has not Siled any complaint with the Institute of Chartered Accountant of India with regard to forgery done by the C.A. by putting his signature on the balance sheets and other financial statements filed with the department, if any.

It is held by the Hon'ble Supreme Court in the case of CIT vs Durga Prasad Morc ) 1971(01)0872(SC), AIR 1971 SUPREME [AIR1971SC2439, [1971]82ITR540(SC), 1971(III)UJ872(SC), AIR COURT 2439, 1971 TAX. L. R. 1622] that a party who relies on a recital in a deed has to establish the truth of those recitals otherwise it will be very easy to make self- serving statements in documents either executed or taken by a party and rely on those recitals.

If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were As per the order dated 08.03.2019 of the Hon'ble ITAT, the appellant was to appear TRUE COfore the Id. AO within one month ie, on or before 08.04.2019. However the appellant did comply with the order of the Hon'ble ITAT. The details not as directed by the honourable ITAT and as called for by the learned AO during the set aside assessment proceedings were not submitted by the appellant and only limited documents without any supportings which were also not verifiable were submitted.

During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. There is evidence on record in the assessment order. Based on the material available on file and in absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities, I do not find any infirmity in the action of the Id. AO. Accordingly, this Ground of Appeal is dismissed.

6. Ground No. 2

6.1 As noted in the assessment order under appeal, in this case, initially/originally an exparte assessment order u/s 143(3)/144 was passed by the AO on 30.03.2015 for AY 2012-13 and the following additions/disallowances were made:-

(i) Unverified Sundry Creditors 2,64,82,736/- (ii) Unverified Loan and deposits 1,84,73,112/- (iii) Unverified investment and Land 1,00,00,000/- (iv) Addition on account of estimated NP 21,91,651/- Total 5,71,47,499/-

In the set aside proceedings also the appellant has not placed on record the evidences before the learned AO during the set aside assessment proceedings to substantiate and prove that the figure of the sundry creditors as taken in the original assessment proceedings is not correct and as well as the appellant has not placed on record the evidences to prove that the amount of sundry creditors as 7 Nitesh Agarwal vs. DCIT reflected in the so-called balance sheet submitted during the set aside proceedings are correct. The appellant has not discharged the onus placed on him.

The appellant, if wanted, could have easily substantiated the correct amount of sundry creditors by producing the evidences and by proving the amounts of purchases and sales along with quantitative reconciliations and along with the purchase and sales invoices and the reconciliation of the same along with the bank statement for the paid amounts and the balance getting reflected in the debtors and creditors. The onus is on the appellant to prove what is being claimed by him. The appellant has made an extraordinary claim that the financial data duly audited and certified by the chartered accountant is false and fake. This is a self-serving statement and the appellant has not proved the same with sterling evidences.

As per the ratio of the judgement of the Hon'ble Supreme Court in the case of CIT vs Durga Prasad More [AIR1971SC2439, [1971]82ITR540(SC), 1971 (III)UJ872(SC), AIR 1971 SUPREME COURT 2439, 1971 TAX, L. R. 1622] that a party who relies on a recital has to establish the truth of those recitals otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals.

At the same time the conduct of the appellant also needs, attention as in the set aside proceedings also the appellant has been non-responsive and non- cooperative before the assessing authority as well as in the present appeal proceedings. In the present appeal proceedings the appellant has not filed the documents. The totality of the facts and circumstances of the case clearly shows that the appellant has been making excuses and is trying to delay and evade the rightful taxes. The story of the appellant is baseless and bald and not acceptable. The audit report is on record of the assessment. The balance sheet (contradictory to the audit report) claimed to have been submitted by the assessee along with reply dated 04.07.2019 before the learned AO is definitely bound to be false and baseless and is rejected.

During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. There is substantial evidence circumstantial as well as documentary in support of the assessment order. Based on the material available on file and in absence of any new submission finding and any other material for which the appellant was

7. Ground No. 3

7.1 The facts of the case have been discussed in adjudication of the ground number 1 and 2 of the present appeal in the earlier paragraphs. The findings in those para are referred to. The so-called balance sheet submitted by the appellant before the learned AO has already been rejected. The story of the appellant regarding the falsification and fake audit report is also found to be a mere excuse to delay and evade the rightful taxes. The appellant did in submit the complete details even during the set aside proceedings before the assessing authority.

As noted in the assessment order under appeal, in this case, initially/originally an exparte assessment order u/s 143(3)/144 was passed by the AO on 30.03.2015 for AY 2012-13 and the following additions/disallowances were made:-

(i) Unverified Sundry Creditors 2,64,82,736/- (ii) Unverified Loan and deposits 1,84,73,112/-

(iii) Unverified investment and Land 1,00,00,000/- (iv) Addition on account of estimated NP 21,91,651/- Total 5,71,47,499/-

In the set aside assessment proceedings also the appellant has not placed on record the evidences before the learned AO to substantiate and prove that the figure of the loans and deposits as taken in the original assessment proceedings is not correct and as well as the appellant has not placed on record the evidences to prove that the amount of loans and deposits as reflected in the so-called balance sheet submitted during the set aside proceedings are correct. The appellant has not discharged the onus placed on him. The amount of the loans and deposits as at the end of the year under appeal could be substantiated by the appellant through the balance she et of the immediately preceding year and along with substantiation of the each entry in the bank account along with the narration etc. However the appellant did not produce the original documentary evidences before the learned AO and even in the present appeal proceedings the appellant has remained silent.

During the appellate proceedings, the appellant has not furnished any information/evidences to rebut tia findings of the AO. It is specifically observed

9 Nitesh Agarwal vs. DCIT here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. There is evidence and legal inferences in support of the assessment order. Based on the material available on file and in absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities, I do not find any infirmity in the action of the Id. AO. Accordingly, this Ground of Appeal is dismissed.

8. Ground No. 4

8.1 The facts of the case have been discussed in adjudication of the ground number 1 and 2 of the present appeal in the earlier paragraphs. The findings in those para are referred to. The so-called balance sheet submitted by the appellant before the learned AO has already been rejected. The story of the appellant regarding the falsification and fake audit report is also found to be a mere excuse to delay and evade the rightful taxes. The appellant did not submit the complete details even during the set aside proceedings before the assessing authority.

As noted in the assessment order under appeal, in this case, initially/originally an exparte assessment order u/s 143(3)/144 was passed by the AO on 30.03.2015 for AY 2012-13 and the following additions/disallowances were made:-

(i) Unverified Sundry Creditors 2,64,82,736/- (ii) Unverified Loan and deposits 1,84,73,112/- (iii) Unverified investment and Land 1,00,00,000/- (iv) Addition on account of estimated NP 21,91,651/- Total 5,71,47,499/-

In the set aside assessment proceedings also the appellant has not placed on record the evidences before the learned AO to substantiate and prove that the figure of the investment in land taken in the original assessment proceedings is not correct and as well as the appellant has not placed on record the evidences to prove that the amount of figure of the investment in land as reflected in the so- called balance sheet submitted during the set aside proceedings are correct. The appellant has not discharged the onus placed on him. The figure ci the investment in land as at the end of the year under appeal could be substantiated by the appellant through the balance sheet of the immediately preceding year and along with substantiation of the each entry in the bank account along with the narration etc, and cash book and documents of all transactions in immovable properties, and 10 Nitesh Agarwal vs. DCIT other documents etc. However the appellant did not produce the original documentary evidences before the learned AO and even in the present appeal proceedings the appellant has remained silent. The onus is on the appellant to disprove the findings in the original/initial assessment order.

During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. There is evidence and legal inferences in support of the assessment order. Based on the material available on file and in absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities, I do not find any infirmity in the action of the Id. AO. Accordingly, this Ground of Appeal is dismissed.

9. Ground No. 9

9.1 The facts of the case have been discussed in adjudication of the ground number 1 and 2 of the present appeal in the earlier paragraphs. The findings in those para are referred to. The so-called balance sheet submitted by the appellant before the learned AO has already been rejected. The story of the appellant regarding the falsification and fake audit report is also found to be a mere excuse to delay and evade the rightful taxes. The appellant did not submit the complete details even during the set aside proceedings before the assessing authority. The appellant has not discharged the onus placed on him. The appellant has not filed the documentary evidences regarding day to day stock register, keeping all purchase and sales invoices and getting confirmations from the parties. The onus was on the appellant in the set aside assessment proceedings to disprove and prove wrong the findings and the facts in the original of the initial assessment order.

During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chos en not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. There is substantial evidence on record in support of the assessment order. Based on the material available on file and in absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities, I do not 10.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off.

In this result, the appeal of the appellant is dismissed.”

The assessee is an individual. Return was filed on 30.09.2012 declaring income at Rs. 22,02,430/-. Originally the Learned Assessing Officer completed the assessment u/s 144 of the IT Act on 30.03.2015 determining total income at Rs. 5,93,479,930/- by making the following additions – (i) Addition of Rs. 2,64,82,736/- u/s 68 of the Income Tax Act, 1961 on account of alleged unverified sundry creditors outstanding as on 31.03.2012 in the balance sheet of the assessee. (ii) Addition of Rs. 1,84,73,112/- u/s 68 of the Income Tax Act, 1961 on account of alleged unverified Loans and deposits outstanding on as 31.03.2012 in the balance sheet of the assessee. (iii) Addition of Rs. 1,00,00,000/- u/s 69B of the Income Tax Act, 1961 on account alleged unexplained investment in land. (iv) Addition of Rs. 21,91,651/- applying NP rate at 9.33%. (Copy of assessment order dated 30.03.2015 is available on paper book page no. 1 to 13)

12 Nitesh Agarwal vs. DCIT Aggrieved with the order of the Learned Assessing Officer dated 30.03.2015 the assessee preferred appeal before the Learned CIT(A). The Learned CIT(A) dismissed the appeal of the assessee by passing order in appeal no 238/2015-16 dated 13.02.2017. The Learned CIT(A) also passed ex-parte order. A copy of the appellate order passed by the Learned CIT(A) dated 13.02.2027 is available on paper book page no. 14 to 17. Against the order of the Learned CIT(A) the assessee approachd the Hon'ble ITAT. The Hon'ble ITAT vide order dated 08.03.2019 set aside the Assessment Order to the stage of the Learned Assessing Officer for passing a fresh Assessment Order considering the material on record. The Hon'ble ITAT further directed the assessee to place all the documents and information before the Learned Assessing Officer and cooperate with him in the matter of assessment proceedings. A copy of the order of the Hon'ble ITAT is available on paper book page no. 18 to 24.

In support of the above the assessee furnished the following documents:-

13 Nitesh Agarwal vs. DCIT 1. Copy of Balance Sheet as on 31.03.2012. 2. Copy of Profit & Loss A/c as on 31.03.2012. 3. Copy of Trial Balance as on 31.03.2012. 4. Details of Secured and Unsecured Loans. 5. Copy of Account of Religare Loan. 6. Copy of Account of Shri Ravindra Agrawal. 7. Copy of Account of Sanjeev Lashkri. 8. Copy of Account of S.S. Diam Pvt. Ltd. 9. Copy of Cash Book. 10. Copy of Balance Sheet as on 31.03.2011.

It was submitted before the Learned Assessing Officer that in the original Assessment Order addition was wrongly made in respect of unsecured loan of Rs. 1,84,73,112/- on the basis of manipulated accounts submitted by the then C.A. Anurag Kumar Agarwal. The actual and truth-full position of unsecured loans is as submitted now of Rs. 85,74,589/- as detailed above. The perusal of the copy of account of unsecured loans further revealed as under:- (i) Ravindra Agarwal - The entire amount of Rs. 4,95,571/- is Opening Balance. There is no fresh deposit during the year. The closing balance and the account is only of Rs. 35,571/-. (ii) Sanjeev Lashkri – The deposit of Rs. 5,00,000/- is confirmed along with PAN No. These are available on Paper Book Page No. 43. (iii) S.S. Diam Pvt Ltd. – The perusal of the accounts reveals that Opening Balance is of Rs. 62,71,887.26. Copy of confirmation along with PAN No. is furnished. These are available on Paper Book Page No.

Copies of the affidavit in support of the above submissions are available on paper book page no 52.

14 Nitesh Agarwal vs. DCIT Although the assessee fully cooperated with the learned Assessing Officer during the course of fresh assessment proceedings and also furnished all the required information. However, the learned Assessing Officer failed to appreciate the documents submitted by the assessee. The learned Assessing Officer has observed that assessee failed to prove the truthfulness of the accounts now submitted. The learned Assessing Officer did not point out as what more was required and why the documents submitted by the assessee were not true. Without appreciating the submissions of the assessee the learned Assessing Officer just repeated the additions made earlier and passed Assessment Order on 19.12.2019 determining total income of Rs. 5,93,53,720/-. It is submitted that the order passed by the learned Assessing Officer is contrary to the position of law. The assessment order has been passed u/s 144 of the IT Act. It is settled position of law that books of accounts have to be necessarily rejected before passing the order u/s 144. In this case the learned Assessing Officer has not rejected the books of accounts before passing the order u/s 144. There are numerous judicial decisions in support of this position of law which are quoted in later paras. The fact of passing order u/s 144 is apparent from the first page of the assessment order as well as from the Income Tax Computation Form where the section 144 has been quoted. Aggrieved with the order of the learned Assessing Officer the assessee preferred appeal before the learned CIT(A). The learned CIT(A) has just repeated and reproduced the order of the learned Assessing Officer and dismissed the appeal of the assessee. Copy of the order passed by the learned CIT(A) under Appeal No. CIT (A)-2, Jaipur/11578/2019-20 dated 29.07.2024 is has been submitted along with appeal memo. It is submitted that in the case of the assessee while filing appeal before the Hon'ble ITAT on account of inadvertence following ground of appeal could not be taken. The ground now been taken is purely of legal nature and does not need any fresh evidence to substantiate. The facts on record already establish the legality of this ground. The admission of the ground is imperative for imparting justice in the case. The Hon'ble ITAT is humbly requested to admit the additional ground raised now. The addition ground is as under – In the facts and circumstances of the case the Learned CIT(A) has erred in not quashing the assessment order passed by the Learned Assessing Officer u/s 144 of the Income Tax Act, 1961 without first rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961. A separate application has also been moved before the Hon'ble ITAT for the admission of the additional ground. Aggrieved with the order of the learned CIT(A) the assessee is in appeal before the Hon'ble Tribunal and the individual grounds of appeal are discussed hereunder, however, the additional grounds is being discussed first. Additional Ground–

15 Nitesh Agarwal vs. DCIT In the facts and circumstances of the case the Learned CIT(A) has erred in not quashing the assessment order passed by the Learned Assessing Officer u/s 144 of the Income Tax Act, 1961 without first rejecting the books of accounts u/s 145(3) of the Income Tax Act, 1961. In this case the fresh assessment order has been completed on 19.12.2019 u/s 144 of the Income Tax Act, 1961. The provisions of section 144 are noted on the first page of the assessment order as well as on the income tax computation form. A copy of the assessment order as well as copy of the income tax computation form are available on paper book page no.55 to 61. It is submitted that it is established position of law that the Learned Assessing Officer is under a bounden duty first to reject the books of accounts u/s 145(3) before completing the assessment u/s 144 of the Income Tax Act, 1961. The relevant provisions of section 145(3) are quoted below – Method of accounting. 145. (1) Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub- section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144.

In view of the above the Learned Assessing Officer was first required to reject the books of accounts u/s 145(3) which has not been done in this case. In view of this the assessment completed u/s 144 is illegal, unlawful and deserves to be quashed. The following case laws are quoted in support – (i) COMMISSIONER OF INCOME TAX vs. ANIL KUMAR AND CO. HIGH COURT OF KARNATAKA (2016) 386 ITR 0702 (Karn), "11. Insofar as the estimation of gross profit made by the Assessing Officer modified by the CIT(Appeals), tribunal has rightly held that when the books of accounts of the assessee had not been rejected and assessment having not been framed under section 144 of the Income Tax Act the said authorities were in error in resorting to an estimation of income and such exercise undertaken by them was not sustainable. Section 145(3) of the Act lays down that the Assessing Officer can proceed to make assessment to the best of his judgment under section 144 of 16 Nitesh Agarwal vs. DCIT the Act only in the event of not being satisfied with the correctness of the accounts produced by the assessee. In the instant case the Assessing Officer has not rejected the books of accounts of the assessee. To put it differently the Assessing Officer has not made out a case that conditions laid down in Section 145(3) of the Act are satisfied for rejection of the books of accounts. Thus, when the books of accounts are maintained by the assessee in accordance with the system of accounting, in the regular course of his business, same would form the basis for computation of income, in the instant case it is noticed that neither the Assessing Officer nor CIT(Appeals) have rejected the books of accounts maintained by the assessee in the course of the business. As such tribunal has rightly rejected or set aside the partial addition made by Assessing Officer for arriving at gross profit and sustained by the CIT(Appeals) and rightly held that entire addition made by the Assessing Officer was liable to be deleted. The said finding is based on sound appreciation of facts and it does not give rise for framing substantial question of law." (ii) PRINCIPAL COMMISSIONER OF INCOME TAX vs. MARG LIMITED HIGH COURT OF MADRAS (2017) 396 ITR 0580 (Mad), (2017) 249 TAXMAN 0521 (Madras) "4(c) Therefore, it is sine qua non that the AO to come to a conclusion that the Books of Accounts maintained by the Assessee are incorrect, incomplete or unreliable and reject the Books of Accounts before the proceeding to make his own assessment. In the instant case, there is no reference in the Assessment Order of the AO regarding rejection of Books of Accounts." (iii) PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S. SWANANDA PROPERTIES PVT. LTD. HIGH COURT OF MUMBAI(2019) 267 TAXMAN 0429 (Bombay) "11. We note that the books of accounts of the Respondent were rejected by the CIT(A) under section 145(3) of the Act. However, the Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of accounts to disregard the same. We note that CIT (A) in his order while rejecting the Books of Account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the Respondent's records which would warrant rejection of books and making a Best Judgment Assessment. Thus, on facts the view taken by the Tribunal is possible view. Therefore, no substantial question of law arises. Thus not entertained." (iv) COMMISSIONER OF INCOME TAX vs. GIAN CHAND LABOUR CONTRACTORS (HIGH COURT OF PUNJAB AND HARYANA) 0149, (2009) 316 ITR 0127, 7. "Sec. 29 of the Act prescribes that the income referred to in s. 28 which is assessable under the head ‘Profits and gains of business or profession’ shall be 17 Nitesh Agarwal vs. DCIT computed in accordance with the provisions contained in ss. 30 to 43A of the Act. Sec. 145 of the Act provides for computation of income under s. 29 on the basis of books of account and method of accounting regularly followed by the assessee. However, where the AO is not satisfied with the correctness or completeness of said books, he may reject the same and estimate the income to the best of his judgment in accordance with the provisions of s. 144 of the Act. When an estimate is made to the best judgment of an AO, he substitutes the income that is to be computed under s. 29 of the Act. Once best judgment assessment is made by fixing a rate of net profit, the assessee’s claim for deduction on account of expenses cannot be deemed to have been ignored. The net profit rate is applied after taking into consideration all factors and it accounts for all the deductions which are referred to under s. 29 and are deemed to have been taken into consideration while making such an estimate." (v) PRINCIPAL COMMISSIONER OF INCOME TAX vs. FORUM SALES PVT. LTD. (HIGH COURT OF DELHI) (2024) 468 ITR 0392 (Delhi), (2024) 298 TAXMAN 0533 (Delhi) "24. The series of judgments referred to hereinabove clearly allude to the settled position of law that the books of account have to be necessarily rejected before the AO proceeds to the best judgment assessment upon fulfilment of conditions mentioned in the Act. The underlying rationale behind such an action is to meet the standards of correct computation of accounts for the purpose of a more transparent and precise assessment of income. Therefore, any pick and choose method of rejecting certain entries from the books of account while accepting other, without an appropriate justification, is arbitrary and may lead to an incomplete, unreasonable and erroneous computation of income of an assessee." The ratio of the aforesaid case laws is squarely applicable to the facts of the case. In view of this legal position the Honb'le ITAT is humbly requested to quash the assessment order. The regular grounds of appeal are now discussed as under: - Ground No.1 to 4–

(1) In the facts and circumstances of the case the learned CIT(A) has erred in confirming the additions made by the Learned AO on the basis of financials/audit report prepared by CA Anurag Kumar Agarwal.

(2) In the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 2,64,82,736/- (Rs. 3,31,35,158/- closing balance as on 31.03.2012 minus Rs. 66,52,422/- opening balance as on 01.04.2011) u/s 68 of the Income Tax Act, 1961 on account of allegedly unverified sundry creditors outstanding on as 31.03.2012 in the balance sheet of the assessee.

(3) In the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 1,84,73,112/- (Rs. 1,98,96,112/- closing balance as on 31.03.2012 minus Rs. 14,13,000/- opening balance as on 01.04.2011) u/s 68 of the Income Tax Act, 1961 on account of allegedly unverified Loans and deposits outstanding on as 31.03.2012 in the balance sheet of the assessee.

(4) In the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 1,00,00,000/- u/s 69B of the Income Tax Act, 1961 on account alleged unexplained investment in land.

It is submitted that consequent to the order dated 07.03.2019 of the Hon'ble ITAT the Learned Assessing Officer commenced fresh Assessment Proceedings. During the course of these fresh assessment proceedings the assessee furnished information under letter dated 09.12.2019 and 18.12.2019. Copies of these letters are available on paper book page no. cited supra. It was submitted by the assessee under letter dated 09.12.2019 that the sundry creditors are only of Rs. 1,75,000/- and not of Rs. 2,64,82,736/- as per original assessment order. It was therefore pleaded that the addition was wrongly made. A copy of the balance sheet as on 31.03.2012 was also submitted in support of the above fact of sundry creditors. (d) Secured Loan – The assessee also submitted that secured loan was of Rs. 88,68,523/- from Religare. Copy of confirmation was also furnished along with PAN No. of Religare. Copy of the same is available on paper book page cited supra. (e) Unsecured Loan – It was also submitted that unsecured loans were only of Rs. 85,74,589/- the details of which are as under:- Sr. Particulars Amount No. (i) Ravinder Agrawal (old balance no new credit in the year under 35,571 consideration) C-54, Sangram Colony, C-Scheme, Jaipur (ii) Sanjeev Lashkri (copy of confirmation is enclosed with name, address 5,00,000 and PAN) (iii) S.S. Diam Pvt. Ltd. (copy of confirmation & the documents are enclosed 80,39,018 herewith) Total 85,74,589

In support of the above the assessee furnished the following documents:- 1. 1. Copy of Balance Sheet as on 31.03.2012. 2. Copy of Profit & Loss A/c as on 31.03.2012. 3. Copy of Trial Balance as on 31.03.2012. 4. Details of Secured and Unsecured Loans. 5. Copy of Account of Religare Loan. 6. Copy of Account of Shri Ravindra Agrawal.

It was submitted before the Learned Assessing Officer that in the original Assessment Order addition was wrongly made in respect of unsecured loan of Rs. 1,84,73,112/- on the basis of manipulated accounts submitted by the then C.A. Anurag Kumar Agarwal. The actual and truth-full position of unsecured loans is as submitted now of Rs. 85,74,589/- as detailed above. The perusal of the copy of account of unsecured loans further revealed as under:- (i) Ravindra Agarwal - The entire amount of Rs. 4,95,571/- is Opening Balance. There is no fresh deposit during the year. The closing balance and the account is only of Rs. 35,571/-. (ii) Sanjeev Lashkri – The deposit of Rs. 5,00,000/- is confirmed along with PAN No. These are available on Paper Book Page cited supra. (iii) S.S. Diam – The perusal of the accounts reveals that Opening Balance is of Rs. 62,71,887.26. Copy of confirmation along with PAN No. is furnished. These are available on Paper Book Page cited supra. In view of the aforesaid position it was submitted before the learned Assessing Officer that the unsecured loans were fully explained. No addition was required on this account. ALLEGED INVESTMENT OF RS. 1,00,00,000/- IN LAND – In the original assessment order the learned Assessing Officer has made addition of Rs. 1,00,00,000/- on account of addition in assets. This was based on the manipulated accounts submitted by the then C.A. Shri Anurag Kumar Agarwal. Now the assessee has furnished updated Balance Sheet where in there is no addition in assets. Further the assessee has also furnished affidavit dated 09.12.2019 deposing that there was no investment in land during the year under consideration. Hence, the addition made earlier did not require any more. Copies of the documents in support of the above submissions are available on paper book page cited supra. In view of the aforesaid facts and documents submitted before the Learned Assessing Officer during the course of fresh assessment proceedings, no additions were called for. However, the Learned Assessing Officer without appreciating the submission of the assessee and the documents submitted before him repeated the same additions as made in the original assessment order

20 Nitesh Agarwal vs. DCIT Nitesh Agarwal vs. DCIT completed on 30.03.2015. The Learned Assessing Officer has observed in the 2015. The Learned Assessing Officer has observed in the 2015. The Learned Assessing Officer has observed in the assessment order that although the assessee furnished statement of accounts, assessment order that although the assessee furnished statement of accounts, assessment order that although the assessee furnished statement of accounts, details of sales and purchases etc. But the Learned Assessing Officer did not details of sales and purchases etc. But the Learned Assessing Officer did not details of sales and purchases etc. But the Learned Assessing Officer did not accepted the same on the ground that these we accepted the same on the ground that these were supported by any evidence and re supported by any evidence and proof. The Learned Assessing Officer did not specify as what sort of evidence and proof. The Learned Assessing Officer did not specify as what sort of evidence and proof. The Learned Assessing Officer did not specify as what sort of evidence and proof was required for establishing the truthfulness and authenticity of the proof was required for establishing the truthfulness and authenticity of the proof was required for establishing the truthfulness and authenticity of the documents submitted before him. No opportunity was granted befor documents submitted before him. No opportunity was granted befor documents submitted before him. No opportunity was granted before rejecting the documents submitted before him. Same was the position before the Learned documents submitted before him. Same was the position before the Learned documents submitted before him. Same was the position before the Learned CIT(A). In view of these facts the Hon'ble ITAT is requested to consider and CIT(A). In view of these facts the Hon'ble ITAT is requested to consider and CIT(A). In view of these facts the Hon'ble ITAT is requested to consider and appreciate the documents furnished and delete the additions made by the appreciate the documents furnished and delete the additions made by the appreciate the documents furnished and delete the additions made by the Learned Assessing Officer and Officer and so confirmed by the Learned CIT(A). Learned CIT(A). Ground No.5 & 6 – In the facts and circumstances of the case the learned CIT(A) has erred in In the facts and circumstances of the case the learned CIT(A) has erred in In the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 21,91,651/ confirming the addition of Rs. 21,91,651/- applying NP rate at 9.33% which is applying NP rate at 9.33% which is highest NP rate in preceding three highest NP rate in preceding three years. In the re-assessment order passed on 19.12.2019 the Learned Assessing Officer assessment order passed on 19.12.2019 the Learned Assessing Officer assessment order passed on 19.12.2019 the Learned Assessing Officer has not discussed the issue of making trading addition. In fact all the additions has not discussed the issue of making trading addition. In fact all the additions has not discussed the issue of making trading addition. In fact all the additions have just been repeated as made in the earlier order passed on 30.03.2015. The have just been repeated as made in the earlier order passed on 30.03.2015. The have just been repeated as made in the earlier order passed on 30.03.2015. The relevant para of making the additions is quoted below para of making the additions is quoted below –

In the above para the Learned Assessing Officer has not discussed as why the In the above para the Learned Assessing Officer has not discussed as why the In the above para the Learned Assessing Officer has not discussed as why the addition of Rs. 21,91,651/ addition of Rs. 21,91,651/- has been repeated by estimating the NP rate. In the has been repeated by estimating the NP rate. In the entire assessment order the Learned Assessing Of entire assessment order the Learned Assessing Officer did not discuss about the ficer did not discuss about the estimation of NP rate or rejection of books of accounts. He has made the trading estimation of NP rate or rejection of books of accounts. He has made the trading estimation of NP rate or rejection of books of accounts. He has made the trading addition mechanically on the basis of earlier assessment order passed on addition mechanically on the basis of earlier assessment order passed on addition mechanically on the basis of earlier assessment order passed on 30.03.2015. Therefore, the addition being without any basis deserves t 30.03.2015. Therefore, the addition being without any basis deserves t 30.03.2015. Therefore, the addition being without any basis deserves to be knocked down.

CONCLUSION It is submitted that notwithstanding the regular grounds, the assessee pleads that It is submitted that notwithstanding the regular grounds, the assessee pleads that It is submitted that notwithstanding the regular grounds, the assessee pleads that the additional ground purely of legal nature and duly supported by various the additional ground purely of legal nature and duly supported by various the additional ground purely of legal nature and duly supported by various decisions of the court deserves to be allowed. The assessment has wrongly been decisions of the court deserves to be allowed. The assessment has wrongly been decisions of the court deserves to be allowed. The assessment has wrongly been completed u/s 144 as the books of accounts have not been rejected u/s 145(3). as the books of accounts have not been rejected u/s 145(3). as the books of accounts have not been rejected u/s 145(3). The assessment so completed is illegal and deserves to be quashed. The assessment so completed is illegal and deserves to be quashed. The assessment so completed is illegal and deserves to be quashed.

Ground No.6 –

In the facts and circumstances of the case the learned CIT(A) has erred in not considering this that as no other addition can be made after applying the NP rate and rejecting the books of accounts u/s 143(3) of the Income Tax Act, 1961.

Not pressed.

Ground No.7 – The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing. Additional grounds has been taken.

The Hon'ble Tribunal is requested to consider the submissions and case laws cited by the assessee and decide the appeal in favour of the assessee by deleting the additions made by the Learned Assessing Officer.”

6. Further, the ld. AR has filed the written submissions in respect of the additional ground raised by the assessee and the same is reproduced herein below: “It is submitted that at the time of filling of appeal before your honor due to inadvertence we could not take the grounds of appeal required in the case, hence additional ground of appeal has been taken which deal with the crux of the matter. The additional ground has been taken before the Hon'ble Bench as the same goes to the root of the case. The assessee has taken the additional ground the same may kindly be accepted. The issue raised in the additional ground is legal. It goes to the root of the matter. Hence the same deserves to be admitted by the Hon'ble Bench. The following decisions are quoted in support – (i) National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) The view that the Tribunal is confined only to issues arising out of appeal before the CIT(A) takes too narrow a view of the powers of the Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings such a question should be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. (ii) Ravindra Arora vs. Assistant Commissioner of Income Tax (2018) 404 ITR 452 (Rajasthan High Court) ITAT is bound to accept additional ground if facts are on record.

22 Nitesh Agarwal vs. DCIT (iii) Sharwan Beniwal Vs. Income Tax Officer Bikaner ITA No. 292/JU/2008 dated 14.01.2009 ITAT can admit additional ground of appeal later on in case the issue raised is legal and goes to the root of the matter. (vi) Jora Singh Vs. ITO (2010)

42. DTR 409 (Lucknow) Admissibility of additional ground …….. validity of assessment. Notice u/s 148 issued even when lime limit of issuing notice u/s 143(2) was available. A pure question of law – additional ground is admitted. (v) CIT Vs. Kerala State Co-operative Marketing Federation Learned. (1992) 193 ITR 624 (Ker) An appellant before the Tribunal can raise any new or additional point for the first time in appeal before the Tribunal. (vi) Mahindra & Mahindra Ltd. Dy. CIT (2009) 122 TTJ 577 (Mub)(SB) Appeal (Tribunal)-Additional ground-Question of limitation-Special Bench having been constituted for deciding the question of limitation on the request of Revenue, the objection as to raising of additional ground by assessee is not maintainable now Further, there can be no embargo on any party to raise a legal ground for the first time before the Tribunal provided the relevant material for deciding that question already exists on record and no further investigation of facts is required- Question of limitation goes to the very jurisdiction of the matter-It is not only the right of the parties but also the duty of the Tribunal to consider the question of limitation notwithstanding the fact that it is not raised before it-Additional ground admitted. (vii) Sunil Kumar Pugalia (HUF) Vs. ITO (2009) 120 TTJ 1001 (Jodh) Appeal (Tribunal)- Additional ground-Admissibility-Ground challenging jurisdiction of AO to initiate reassessment proceedings not raised before AO or CIT(A)-Being a pure question of law can be raised before the Tribunal for the first time. You are requested to admit the above additional ground as the same is necessary for deciding the appeal and oblige.”

Sr. No. Particulars Page No. 1. Copy of assessment order dated 30.03.2015 1-13

2. Copy of the appellate order passed by the Learned CIT(A) dated 14-17 13.02.2027 3. A copy of the order of the Hon'ble ITAT 18-24 4. Copies of letters dated 09.12.2019 and 18.12.2019 along with 25-54 supporting documents submitted during the course of these fresh assessment proceedings 5. Copy of the assessment order as well as copy of the income tax 55-61 computation form dated 19.12.2019

Details of the loan As regards the unverified sundry creditors, the assessee submitted that the correct amount was Rs. 1,75,000/- and not Rs. 2,64,82,736/- and for that he submitted the names and addresses of that creditors. With said explanation, the ld. AR of the assessee submitted that the appeal of the assessee be decided. particularly advanced the similar contentions as stated in the order of the ld. CIT(A). On being asked, in the course of hearing, ld. DR did not object to estimate profit as per provision of the presumptive taxation. So far as the affidavit for investment in land, details of the unsecured loans and sundry credit he did not controvert the facts stated in the letter dated 09.12.2019.

As is evident the assessee filed a case against his CA Shri Anurag Kumar Agarwal before the Chief Judicial Magistrate regarding forgery in the financial accounts prepared by that CA. Thus, the ld. AO looking to that facts placed on record and in the remand proceeding, the assessee vide letter dated 09.12.2019 submitted the revised balance sheet, trading and profit & loss account for the year under consideration and thereby prayed to consider that corrected accounts figure. Ld. AO discussed that submission aside proceeding, assessee did not substantiate that revised accounts as noted by the Ld. AO.

3,31,35,158/- closing balance as on 31.03.2012 minus Rs. 66,52,422/- opening balance as on 01.04.2011) u/s 68 of the Income Tax Act, 1961 on account of alleged unverified sundry creditors outstanding on as 31.03.2012 in the balance sheet of the assessee.

As is evident from the submission so made by the assessee in the remand proceeding vide its letter dated 09.12.2019 he has placed on record the corrected accounts wherein the balance sheet shows sundry creditors for Rs. 1,75,000/- only. The names and addresses of creditors were placed on record and the ld. AO as well as that of the ld. CIT(A) neither considered that submission nor made any verification of the particulars so filed by the assessee. For said addition of sundry creditors was based on the accounts filed which were cooked by his CA. In this regard, the assessee has already filed a case against his CA. Therefore, looking said aspect of the matter ld. AO should have considered the revised accounts by the assessee and discussed the submission filed by the assessee for the best reasons known to him. Now coming to the facts of the case that last year as per the record available sundry creditors balance was for an amount of Rs.66,52,422/- and at the end of the year. It was Rs. 1,75,000/- only. This aspect was already placed on record but the ld. AO did not controvert while hearing of the case, we direct to delete the addition of Rs. 2,64,82,736/- (Rs. 3,31,35,158/- closing balance as on 31.03.2012 minus Rs. 66,52,422/- opening balance as on 01.04.2011) u/s 68 of the Act as that amount of Rs. 2,64,82,736/- was based on the cooked account and assessee filed revised accounts which was not disputed the addition so made is directed to be deleted. Based on this observation ground no. 2 raised by the assessee is allowed.

Now going through the breakup of the loan amount given at page 26 of the submission made before the ld. AO in the remand proceeding, the bench noted that for the loan taken by the assessee he has discharged his burden by filling necessary evidence in the form of statement of loan / confirmation of loan showing name, address and PAN number of the assessee. As noted, by us while deciding ground no. 2, ld. AO or that of the ld. CIT(A) did not deal with the submission and while dealing with the matter, ld. AO did not controvert the submission of the assessee through ld. DR. Thus, we are not inclined to accept the contention of the assessing officer in any manner and hence the addition so made is directed to be deleted. Hence this ground number three raised by the assessee stands allowed.

Ld. DR did not challenge the claim of assessee supported by affidavit so placed on record. As held by the Hon’ble Supreme Court in the case of Mehta Parikh & Co. Vs. CIT [ 30 ITR 181 (SC) ] wherein Hon’ble Apex Court held that the affidavits and the entries as made in the account books not having been controverted, the department could not challenge its nature. Thus, in light of this fact declared by the assessee in an affidavit which had not been disputed the addition cannot be sustained. Hence, we direct the ld. AO to delete said addition of Rs. 1,00,00,000/-.

The bench noted that as per the last year turnover of Rs.

2,55,20,730/- the assessee declared the net profit @ 5.59 % which the ld. AO did not dispute and during the year under consideration the total turnover being less, it would be in the fairness of the justice to estimate the profit @ 6 % on the corrected turnover declared by the assessee. So far as to the confirmation of the revised turnover is concerned, the assessee is directed to support before Ld. AO the turnover of the revised books so submitted either with indirect tax record or with that of the fresh certificate Chartered Accountant to substantiate the turn over at Rs. 1,52,73,500/- [ though the provision of section 44AF prescribed profit rate @ 5 % ]. In the light of this observation Ground No. 5 & 6 are disposed off accordingly.

Resultantly, the appeal filed by the assessee is partly allowed.

Order pronounced in the open court on 28/01/2025.

Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 28/01/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Nitesh Agrawal, Jaipur 2. izR;FkhZ@ The Respondent- Deputy Commissioner of Income Tax, Jaipur vk;djvk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZQkbZy@ Guard File (ITA No. 1214/JP/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत