BALVEER SINGH,JAIPUR vs. ITO WARD 3(3) JAIPUR, INCOME TAX DEPARTMENT

fu/kZkj.k o"kZ@Assessment Years : 2012-13 Sh. Balveer Singh cuke The ITO, Plot No. 50 51 Shri Ram Nagar, Vs. Ward-3(3), Jhotwara, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AGSPP2824M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Naresh Gupta (Adv.) jktLo dh vksj ls@ Revenue by : Shri Sanjay Nargas (JCIT) a lquokbZ dh rkjh[k@ Date of Hearing : 18/09/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 30/10/2024 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.

This appeal is filed by the assessee aggrieved from the order of the CIT(A), National Faceless Appeal Centre, Delhi dated 19.12.2023 [Here in after referred as “CIT(A)/NFAC”] for the assessment year 2012-13, which in turn arise from the order dated 11.12.2019 passed under section 143(3)/147 of the Income Tax Act, [Here in after referred as “Act” ] by the ITO, Ward-3(3), Jaipur.

Sh. Balveer Singh vs.ITO 2. The assessee has raised following grounds:- “

1. That the ld. CIT(A) has grossly erred in having sustained the re- assessment proceedings u/s. 147 /148 of the Income Tax Act, 1961 for the A-Y 2012-13 in case of the appellant-assessee. 1.1 That the Id. CIT(A) has grossly erred in sustaining the re-assessment proceedings... case of the appellant-assessee for the A-Y 2012-13 initiated by the AO on false assumption that the assessee has not filed his return of income for the A- Y 2012-13 while the assessee apparently and admittedly has already filed his original return of income on 30-09-2012 declaring income at Rs. 53,78,510/-. 1.2 That the Id. CIT(A) has committed gross illegality in upholding the re- assessment of the appellant without recording reasons of 'escaped assessment' on the issues wholly uncounted with the issue on which the re-assessment proceedings were initiated. 1.3 That the ld. CIT(A) has grossly erred in sustaining the additions beyond the reasons recorded u/s. 147 separately for the issues which allegedly came to AO's notice subsequently during assessment.

2. That the sustenance of the best judgment assessment passed u/s. 144 of the Income Tax Act by the Id. CIT(A) is bad in law in view of the fact that after issuance of notice u/s. 143(2) of the Act, the AO has not issued any notice u/s. 144 providing opportunity of hearing to appellant-assessee.

3. That the Id. CIT(A) has committed gross illegality in making a trading addition of Rs.33,94,084/- against the appellant-assessee.

4. That the Id. CIT (A) has committed gross illegality in upholding the addition of Rs. 11,04,606/-on account of Short Term Capital Gain on sale of immovable property. 4.1 That the CIT(A) has grossly erred in sustaining the addition of Rs. 11,04,606/- on account of sale of immovable property as short term capital gain ignoring the fact the appellant deals in real estate business too and such transactions has already been taken care of in such business of real estate. 4.2 That otherwise also, the Id. CIT(A) has committed grave illegality in having ignored that utmost only Rs. 1,04,606/- being differential value between the value adopted by the stamp authorities and the value declared by the appellant in his sale deed in respect of the immovable property sold could be assessed; and not the entire value of Rs. 11,04,606/-, as valued by the stamp authorities; as such, the assessment in this regard being bad is liable to the quashed.

5. That alternatively, the ld. CIT (A) has grossly erred both on facts and law in sustaining the addition of entire value of Rs. 11,04,606/-, i.e. the value adopted by the Stamp Authorities, as Short Term Capital Gain on sale of property in Sh. Balveer Singh vs.ITO violation of the relevant provisions contained in the Income Tax Act, 1961 and in not deducting the cost of acquisition of such property.

3.1 In response to above notices and show cause notice, Ld. A/R of the assessee attended filed a POA and made submission along with ITR for A.Y. 2012-13 on 30.09.2012 and on 19.11.2019 and filed audit report, P&L account and Balance Sheet, Bank Statement etc. Notice u/s 143(2) issued on 20.11.2019. During the course of assessment proceedings the Ld. A/R of the assessee has furnished his submission that the assessee was running business in the financial year 2012-13.

3.2 Further, during the course of assessment proceedings the assessee was asked to furnish the complete details of turnover, sales, ledger account of purchase and expenditures also asked to produce books of Sh. Balveer Singh vs.ITO accounts along with bills and vouchers the sufficient opportunities were provided to the assessee, but assessee has failed to furnish the required details as well as books accounts along with bills & vouchers for verification, therefore AO have no option but to complete the assessment proceedings on the basis of material available on record.

3.3 Further, the Ld. AO noted that assessee is not interested to furnish the details & documents as required vide notice u/s 142(1). On perusal of details filed by the assessee it is noticed that assessee has got audited books of accounts only for his business activity of M/S B.R. Enterprises & M/s Balveer Detective Service. He has failed to got audit his books of accounts of real estate business activity. Assessee has also failed to produce books of accounts alongwith bills & vouchers of his all business concerns, therefore Ld. AO rejected the books of accounts u/s 145(3) of the I. T. Act and applied the 8% N.P on total turnover (including all business activity) which resulted of addition of Rs. 33,93,084/- on account of trading addition. The calculation made by Ld. AO is reproduced as under:-

1 Proprietor Turnover Net profit as Net profit Addition applied 8% shown 2. M/s B.R. Enterprises 5,86,31,258 46,90,500/- 23,21,201 23,69,299 3. Balveer Detective 3,93,97,609 31,51,808 24,94,637 6,57,171 Service 3.4 Further the Ld. AO noted that the assessee has sold an immoveable property for a sales consideration of Rs. Rs. 11,04,606/-. On perusal of ITR assessee has not shown STCG/LTCG on that transaction. During the course of assessment proceeding the assessee was asked to furnish the complete details of this property i.e. computation of capital gain, cost of acquisition etc, but assessee has failed to furnish the same. Therefore, in absence of cost of acquisition no deduction was considered as allowable on account cost of acquisition. Considering this facts, the total sale consideration amounting to Rs. 11,04,606/- adopted by the Sub Registrar was treated as short term capital gain of the assessee and added to the total income.

“In view of the facts of the appellant case it is beyond doubt that the appellant is not bothered for the fate of appeal. The appellant has filed the present appeal merely to file an appeal. Thus, it is obvious that the appellant is not interested Sh. Balveer Singh vs.ITO in disposal of appeal, since the appellant has nothing to say in regard to addition made by the AO and merely filing of appeal is not enough, the appellant is expected to reply to opportunity granted during appeal but the appellant did not do so. In this scenario, the appeal is being decided on the basis of material on record and merit. Ground no. 1 1. On the facts and circumstances of the case, the order passed by the learned Assessing Officer (AO) under section 143(3)/147 is bad both in the eye of law and on facts by Assessing the income of the appellant at RS. 9877200/- as against returned income of Rs. 5378510/- The above ground is unsubstantiated and vague. The order has been passed as per procedure prescribed in the Act, hence the ground of the appellant is hereby dismissed. Ground no. 2 2. (i) on the facts and circumstances of the case, the leamed AO has erred, both on facts and in law, in initiating proceedings under section 147, read with section 148, of the Act, without considering the Return of Income filled by the Assessee. ii) On the facts and circumstances of the case, the reasons recorded for reopening of Assessment are bad as the proceedings initiated without considering one of the business of the assessee as a builder and consequently the assessment proceedings are null and void. iii) On the facts and circumstances of the case, the Id. AQ has erred both on facts and in law by assessing the income of appellant beyond the reasons recorded. In the instant case prima facie material was available on record before the assessing officer that "As per information with the Department, that the assessee has sold immovable property le F.No. F-3, First Floor P. No. 92 Vijay Singh Pathik Nagar, Jhotwara, Jaipur amounting to R. 10,00,000/- in F.Y. 2011-12 relevant to AY 2012-13. The sub- registrar has adopted the value of sale consideration for stamp duty purpose at Ris 11,04,606/ In this regard a notice u/s 133(6) was issued to the assessee on 15.02.2019 to furnish necessary information regarding capital gain arise on the sale of the property. But no compliance was made by the assessee. Affer examine the record, it reveals that assessee has not Sh. Balveer Singh vs.ITO filled his retum of income for the A.Y 2012-13 nor filed his reply in compliance to notice u's 133(6). It is evident from the above facts that the assessee has not truly & fully disclose material facts, necessary for year under consideration. Capital gain arise on the sale of the property has not been shown by the assessee. Thus, I have reason that income of Rs. 11,04,606/- for the year under consideration has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Accordingly a notice u/s 148 was issued on 29/03/201,9 which was duly served upon the assessee." There was enough material to validate that the reassessment proceedings are valid. Since in this case there is a clear link between information available with AO and his formation of belief that income chargeable to tax had escaped assessment, reopening of assessment is justified. Therefore the ground of the appellant assessee is dismissed. Reliance is placed on the following case laws- 1. [2021] 129 taxmann.com 327 (Madras) HIGH COURT OF MADRAS Cognizant Technology Solutions India (P.) Ltd. v. Assistant Commissioner of Income-tax, Large Taxpayer Unit, Chennai 2. [2021] 129 taxmann.com 376 (Madras) HIGH COURT OF MADRAS Deputy Commissioner of Income-tax, Corporate Circle-1(1), Chennai v. Daimler India Commercial Vehicles (P.) Ltd. 3. [2021] 130 taxmann.com 111 (Madras) HIGH COURT OF MADRAS Dr. Sajan Hedge v. Assistant Commissioner of income-tax 4. [2021] 130 taxmann.com 157 (Madras) HIGH COURT OF MADRAS SL Lumax Ltd. v Deputy Commissioner of income-tax, Corporate Circle VI-2, Chennai 5. [2021] 130 taxmann.com 356 (Madras) HIGH COURT OF MADRAS Consolidated Construction Consortium Ltd. v. Commissioner of Income-tax, Chennai. 6. [2022] 137 taxmann.com 256 (Bombay) HIGH COURT OF BOMBAY Farmacia Molio v. Income-tax Officer. 7. [2022] 137 taxmann.com 445 (Bombay) HIGH COURT OF BOMBAY Shrikant Phulchand Bhakkad (HUF) v. Joint Commissioner of Income-tax 8. [2022] 138 taxmann.com 69 (SC) SUPREME COURT OF INDIA Priya Blue Industries (P) Ltd. v. Assistant Commissioner of Income-tax.

Sh. Balveer Singh vs.ITO 9. [2022] 138 taxmann.com 207 (SC) SUPREME COURT OF INDIA Sanjay Kapur v Assistant Commissioner of Income-tax 10. (2022) 130 taxmann.com 120 (Delhi) HIGH COURT OF DELHI Kedar Nath Babbar v Assistant Commissioner of Income-tax. 11. [2022] 139 taxmann.com 198 (Gujarat) HIGH COURT OF GUJARAT Amar Jewellers Ltd. v. Assistant Commissioner of Income-tax. 12. [2022] 139 taxmann.com 404 (Allahabad) HIGH COURT OF ALLAHABAD Ambuj Foods (P.) Ltd. v. Principal Commissioner of Income- tax. "Section 69A, read with sections 147 and 148, of the Income-tax Act, 1961 Unexplained money (Share application money) Assessment year 2013-14 Assessing Officer issued notice to reopen assessment in case of assessee stating that he had reasons to believe that assessee's income chargeable to tax had escaped assessment within meaning of section 147 It was found that pursuant to information received from ADIT, Kolkata ACIT, Delhi and ITO, Kolkata, Assessing Officer examined records and found that assessee had received funds to tune of Rs. 95 lakhs by way of routing funds materialized by 'R' & others, which were found to be merely paper concerns having no real business and in this way, unaccounted money of assessee amounting to Rs. 95 lakhs was routed to its books of account - Said facts had not been examined by Assessing Officers during original assessment for want of full and true disclosure of facts by assessee Whether there being prima facie material available on record before Assessing Officer to establish that assessee had routed its own money in garb of share application money and share premium through a number of shell companies operating from Kolkata, issue of reassessment notice was justified Held, yes Whether thus, notice under section 148, rejecting assessee's objections against issuance of notice, did not suffer from any illegality as to warrant interference by Court in exercise of its Writ Jurisdiction - Held, yes [Paras 29 and 30] [In favour of revenue]." 13. [2022] 139 taxmann.com 406 (Rajasthan) HIGH COURT OF RAJASTHAN Jawari Lal Lunia v. Union Of India. "Section 69A, read with section 147, of the Income-tax Act, 1961 Unexplained moneys (Shares) Assessment year 2015-2016 Assessing Officer was having information indicating that certain operators, syndicate members and brokers were indulging in providing accommodation entries, often times creating penny stock companies and using them as conduit for converting untaxed income by bringing them on record by paying no tax claiming it to be long Sh. Balveer Singh vs.ITO term capital gain tax on sale of shares which was at relevant time exempted One such company found to be indulging in such activities was LLDPL Assessing Officer sought to reopen assessment in case of assessee on ground that assessee, during relevant period had purchased shares in said company LLDPL at very low price and after that, price of these shares had risen phenomenally and they were sold at high price and in process, assessee had claimed long term capital gains Assessing Officer formed belief that there had been price rigging and manipulation in trading of scrip of LLDPL and assessee not being a regular investor had earned bogus long term capital gains by investing in an unknown company Whether there being a clear link between information available with Assessing Officer and his formation of belief that Income chargeable to tax had escaped assessment, reopening of assessment was justified - Held, yes [Paras 7 and 8] [In favour of revenue." 14. [2022] 140 taxmann.com 15 (Calcutta) HIGH COURT OF CALCUTTA Lakshman Prasad Agarwal v. Union of India. "Section 148, read with sections 143 and 147, of the Income-tax Act, 1961- Income escaping assessment Issue of notice for (Others) Assessment year 2017-18 - Assessing Officer issued on assessee a notice under section 148 seeking to reopen assessment for assessment year 2017-18 and passed final assessment order under section 147/143(3) raising a certain demand - Assessee filed writ petition challenging notice under section 148 and final assessment order It was noted that assessee after receiving recorded reasons did not file any objection or reply and complied with several notices issued under section 142(1) and made repeated request to Assessing Officer to complete reassessment proceedings without drawing any adverse inference - Whether Assessing Officer had rightly proceeded with reassessment proceedings and passed assessment order Held, yes [Paras 12, 13 and 15] [In favour of revenue]." 15. [2022] 140 taxmann.com 154 (Madras) HIGH COURT OF MADRAS Harita Housing Construction Ltd. v. Additional/Joint/Deputy/Assistant Commissioner of Incometax/Income-tax Officer, National e-Assessment Centre, Delhi. "Section 147 of the Income-tax Act, 1961 Income escaping assessment General (Speaking order) - Assessment year 2013-14-Assessee-company purchased a land for consideration of certain amount and had filed return of income as NIL Assessment in case of assessee was completed Subsequently, Assessing Officer issued a reopening notice on ground that source of said amount of consideration paid by assessee was not verified and further passed a reassessment order making an addition to income of assessee - Assessee filed Sh. Balveer Singh vs.ITO an instant writ petition on ground that impugned order was passed without disposing of objections raised by it against reopening of assessment by passing a speaking order It was noted that assesseee had participated in reassessment proceedings pursuant to reopening notice issued against it knowing well about reasons for reopening of assessment - Assessee had replied to proceedings initiated under section 148 Assessee also gave detailed history of transactions of sale and purchase of land by it Thus, it could not be said that assessee was not aware of reasons for reopening of assessment Further, assessee himself had not asked for speaking order - Whether having given up right to ask for a speaking order, assessee could not now turn around and question impugned reassessment order Held, yes Whether, therefore, impugned writ petition was to be dismissed - Held, yes [Paras 21 and 22] [In favour of revenue]." 16. [2022] 140 taxmann.com 338 (Allahabad) HIGH COURT OF ALLAHABAD Distributors India C and F v. Union of India. "Section 28(1), read with sections 147 and 148, of the Income-tax Act, 1961- Business income Chargeable as (Reassessment) Assessment year 2013-14 Assessing Officer issued on assessee a notice under section 148 seeking to reopen assessment for reasons that as per Form No. 26AS assessee's total receipt under sections 1944, 194C and 194J was of Rs. 5.23 crores, whereas in profit and loss account it had shown total receipts at Rs. 2.61 crores which was short by 2.62 crores and this gave rise to a reason to believe that assessee did not truly and fully disclose all material facts because of which income amounting to Rs. 2.62 had escaped assessment - Whether as notice under section 148 had been issued after conducting an investigation and after recording a reason to believe that assessee did not truly and fully disclose all material facts, impugned notice did not suffer from any illegality - Held, yes [Para 35] [In favour of revenue)." Ground no. 3 (1) On the facts and circumstances of the case, the learned AO has erred, both on facts and in Law, in making an addition of Rs. 3393084/- as trading addition. ii) the Id AO has erred in assessing the income of B.R Enterprises at Rs. 4690500/- as against declared profit as per Audited Profit and Loss Account of Rs. 2321201/- by making tradition addition of Rs, 2369299/- iii) the Id AO has erred in assessing the income of Balveer Detective Services at Rs. 3151808/- as against declared profit as per Audited Profit and Loss Account of Rs. 2494637/- by making tradition addition of Rs. 657171/- Sh. Balveer Singh vs.ITO iv) the Id AO has erred in assessing the income of Balveer Singh Palawat (Real Estate Business) at Rs. 1021920/- as against declared profit of Rs. 655306/- by making tradition addition of Rs. 366614/- On this ground the AO's observations are as under: "During the course of assessment proceedings the A/R of the assessee has furnished his submission that the assessee was running business in the following names during F.Y. 2012- 13 B. R. Enterprises Contract Work Balveer Detective Service Contract Work Balveer Singh Real Estate On perusal of details & and reports a is noticed that:- ……………………………. I have carefully considered the fact of the case and found that there is no need to interfere the addition made by AO, total amounting to Rs. 33,93,084/- (by estimating net profit rate @ 8% on the turnover of Rs. 11,08,02,867/-) During the assessment proceedings the appellant was provided ample opportunity to submit the details to substantiate its claim. However, in spite of extending sufficient opportunities the appellant failed to furnish evidences to substantiate the claims made during the appellate proceedings. As such these can best be considered as unsubstantiated averments. Considering the entirety of facts, circumstances and material on record and looking into preponderance of probabilities here the appellant has miserably failed to substantiate its claim, therefore, the AO is justified in making the addition by estimating the net profit of the appellant amounting to Rs. 33,93,084/-. The addition made by AO is conservative & reasonable and is upheld the plea of the appellant on this issue is dismissed. Therefore this ground is hereby dismissed. Ground No. 4 (i) The Id AO erred by adding an Rs. 1104606/-on account of Short Term Capital Gain inspite of the facts that sale of property was credited to Profit and Loss Account Sh. Balveer Singh vs.ITO The earned AO has erred on facts and in law by not considering the replies filled by the assesse. On this ground the AO observed that "During the year the assessee has sold an immoveable property for a sales consideration of Rs. 11,04,606 On perusal of ITR assessee has not shown STCG/LTCG on this transaction. During the course of assessment proceeding the assessee was asked to furnish the complete details of this property. i.e. computation of capital gain, cost of acquisition etc. But assessee has failed to furnish the same. Therefore, in absence of cost of acquisition no deduction is allowable on account cost of acquisition. Considering the above, the total sale consideration amounting to Rs. 11,04,606/- adopted by the Sub Registrar is treated as short term capital gain of the assessee and added to the total income." During the course of assessment proceedings opportunities were provided to furnish the complete details of this property but the appellant assessee had not produced the documentary evidences for claiming cost of acquisition of the property and computation of capital gains thereon. The appellant had not filed any documents to substantiate its claim and no further details were furnished by the appellant assessee Also during the appellate proceedings opportunities were allowed to the appellant assessee, Notices were issued to the appellant fixing the appeal for hearing as per provisions of sec 250 of the Act. There was no compliance on part of the appellant assessee till date. The details regarding opportunities for hearing are mentioned above. The aforesaid non-compliance on part of appellant assessee reveals beyond doubt that appellant has nothing to say in the matter of this appeal. It can be concluded that appellant is not interested in prosecution of the present appeal and same is liable to be dismissed as appellant has nothing to substantiate its grounds. Accordingly I have no reasons to interfere with the assessment order passed by the AO. The action of the AO is upheld. Hence, ground of appeal is dismissed Ground No. 5

5. On the facts and circumstances of the case, the learned AO has erred both on facts and in Law in charging Interest under Sections 2348, 234D and withdrawn interest u/s 244A of the Act Sh. Balveer Singh vs.ITO Since the ground relating to charging of interest is consequential to the addition made, therefore the same does not need any adjudication and is accordingly disposed. Ground No. 6 6. On the facts and circumstances of the case, the learned AO has erred both on facts and in law in by initiating penalty u/s 271(1)(c), 271(1)(b) and 271B read with section 274 of the Act. Since the ground relating to initiation of penalty is consequential to the assessment, therefore the same does not need any adjudication and is accordingly disposed. Ground No. 7 7. The appellant craves leave to add, amend, alter grounds of appeal. The above ground is general in nature which does not require separate adjudication. In the result, the appeal is therefore, dismissed.”

5. Aggrieved from the order of the ld. CIT (A) the assessee has preferred the present appeal before us on the grounds as reiterated in para 2 above. The ld. AR of the assessee filed a detailed paper book in support of the contentions raised in this appeal. The index of the document submitted by the ld. AR of the assessee are as under:-

S. No. Particulars Page No. 1. 39-48 Copy of sale deed Registered on 24-09-2010 vide which assessee purchased plot of land 2. 49-63 Copy of sale deed registered on 29-05-2012 vide which assessee sold flat No. G-1 3. 64-79 Copy of sale deed registered on 22-07-2011 vide which assessee Sh. Balveer Singh vs.ITO sold flat No. G-2 4. 80-93 Copy of sale deed registered on 23-02-2012 vide which assessee sold flat No. G-3 5. 94-107 Copy of sale deed registered on 29-04-2015 vide which assessee sold flat No. F-1 6. 108-121 Copy of sale deed registered on 08-07-2011 vide which assessee sold flat No.F-2 7. 122-131 Copy of sale deed registered on 13-07-2011 vide which assessee sold flat No. F-3 8. 132-143 Copy of sale deed registered on 13-03-2012 vide which assessee sold flat No. S-1 9. 144-157 Copy of sale deed registered on 16-06-2011 vide which assessee sold flat No. S-2 10. 158-172 Copy of sale deed registered on 22-02-2012 vide which assessee sold flat No. S-3 11. 173-184 Copy of Form No. 3CB of Balveer Detective Services Prop. Balveer Singh Palawat 12. 185-198 Copy of Form No. 3CB of B. R. Enterprises Prop. Balveer Singh Palawat 6. During the course of hearing, the Ld. AR for the assessee prayed that the Ld. CIT(A) has passed an ex-parte order and the Ld. CIT(A) has passed only four line order and upheld the AO orders. The Ld. AR for the assessee prayed that the matter be remanded back to the file of the Ld. CIT(A) to decide all the issues that are raised.

Sh. Balveer Singh vs.ITO 7. Per contra, Ld. DR relied on the orders of the lower authorities and contended that the assessee has not produced any complete details of turnover, sale, ledger account of purchase and expenditure and also produce documents on account along with bills and vouchers even in the appellate proceedings before the Ld. CIT(A). The Ld. CIT(A) has issued notice of hearing on 27.01.2021 and 13.12.2023 which were remained uncompiled or forwarded any submission and even not sought for any adjournment.

Order pronounced in the open Court on 30/10/2024.