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Facts
The assessee purchased an immovable property for Rs. 60,00,000/-. The Assessing Officer (AO) made an addition of this amount to the assessee's total income as unexplained investment. The assessee contended that the property was purchased by a company in which he is a director, and the company has accounted for the asset and made the payment from its bank account.
Held
The Tribunal noted that the CIT(A) had not appreciated the facts that the company, where the assessee is a director, made the payment and the property is reflected in the company's balance sheet. The Tribunal deemed it fit to set aside the matter to the file of the AO for fresh adjudication.
Key Issues
Whether the addition of Rs. 60,00,000/- for unexplained investment in immovable property is justified, when the assessee claims it was purchased by a company where he is a director.
Sections Cited
144, 147, 139(1), 142(1), 148, 234A, 234B, 234C, 271(1)(c), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 319/JP/2024
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 319/JP/2024 fu/kZkj.k o"kZ@Assessment Years : 2014-15 cuke Rajesh Kumar Meena ITO, Vs. G-2, Plot No. 123, A-ACME Ward 2(3), Jaipur Residency Vishveshriya Nagar, Gopalpura Bye Pass, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ALBPM 6775 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Anil Kumar Sharma, CA jktLo dh vksj ls@ Revenue by : Sh. A. S. Nehra, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 18/06/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 01/07/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM
This appeal filed by assessee is arising out of the order of the National Faceless Appeal Centre, Delhi dated 17/01/2024 [here in after ‘NFAC’] for assessment year 2014-15 which in turn arise from the order dated 29th November, 2019 passed under section 144 r.w.s. 147 of the Income Tax Act, by ITO, Ward 2(3), Jaipur.
“1. Under the facts and circumstances of the case the ld. CIT(A) is not justified in sustaining the Addition of Rs. 6000000/- made to returned as Income from other sources towards alleged unexplained investment in immovable property.
Succinctly, the fact as culled out from the records is that the assessee has filed its return of income for the year under consideration u/s 139(1) of the I.T. Act, 1961 on 25.06.2015 declaring his total income of Rs. 3,25,250/- Further, the information was received from the office of the DIT(I&CI), Jaipur that the assessee has purchased immovable property from Sh. Ram Karan Meena & others for Rs. 60,00,000/- during the year under consideration.
3.1 During the course of enquiry before the I&Cl wing of the Department assessee failed to furnish any reply regarding the source of investment in the above property. On perusal of ITR of the assessee, it is seen that investment in immovable property of Rs. 60,00,000/- during the F.Y. 2013- 14 does not commensurate with the income particulars of the assessee.
Hence, the income of the assessee to the extent of Rs. 60,00,000/- has escaped assessment for the A.Y. 2014-15. Consequently, notice u/s 148 of from the competent authority and served upon the assessee by post and by e-mail. In response to the above notice, the assessee has not filed his return of income for the A.Y. 2014-15. Thereafter notices u/s 142(1) was issued on 12.09.2019. Further, again notice U/s 142(1) was issued on 07.11.2019 requesting the assessee to file all the details regarding source of above investment of Rs. 60,00,000/- and it was also informed that in case of non submission of reply the assessment will be completed on the basis of material available on record. In compliance to these notices the assessee has not furnished any submission. Further it was clearly mentioned in the notice u/s 142(1) of the Act dated 07.11.2019 by the AO that in case of non submission of details assessment order will be passed u/s 144 of the IT. Act, 1961 and the case was fixed for hearing on 14.11.2019. However no response was received from the assessee. In the absence of any submission, the amount of investment of Rs. 60,00,000/- remained unexplained. Since the assessee has not filed any submission / computation in respect of source of investment made addition of Rs. 60,00,000/- under the head income from other sources to the total income of the assessee. appeal before the NFAC/CIT(A). Apropos to the grounds so raised the relevant finding of the NFAC/CIT(A) is reiterated here in below:
“6. Findings & Decision 6.1 I have gone through the Assessment Order and submissions of the appellant. The AO has carried out additions of Rs. 60,00,000/- under the head of Income from other sources for the year under consideration. Grounds No. 2,3 and 7 6.2 These grounds are general in nature. Therefore, the adjudication is not required on these grounds. Accordingly, Grounds No. 2, 3 and 7 are dismissed. Ground No. 1 and 4 6.3 These grounds are regards to addition of Rs. 60,00,000/- under the head of Income from Other Sources for the year under consideration. 6.4 During the course of the assessment proceedings, it was noted by the AO that the appellant has invested in an immovable property to tune of Rs. 60,00,000/-. The appellant was asked to furnish the explanation for the same. However, the appellant was failed to do so. Accordingly, the assessment proceedings were concluded after making an addition of Rs. 60,00,000/- under the head of Income from Other Sources for the year under consideration. 6.5 It is noted from the submissions furnished by the appellant during the course of the appellate proceedings that there is nowhere mentioned in sale deed dated 18.09.2013 that the appellant has purchased an immovable property in the status of director on behalf of "Khushi Sansar Real Estate Pvt. Ltd." Further it is noted from the sale deed dated 18.09.2013 that it is nowhere mentioned about Khushi Sansar Real Estate Pvt. Ltd. in the said sale deed. The appellant has not furnished any documentary evidences to substantiate his claim. Therefore, the contention of the appellant is not found to be acceptable. 6.6 In view of the above, I am of considerate view that the observations and findings of the AO is correct. Therefore, addition made by the AO of Rs. 60,00,000/- under the head of Income from Other Sources for the year under consideration is upheld. 6.7 Accordingly, Ground No. 1 and 4 are dismissed. Ground No. 5 5 Rajesh Kumar Meena vs. ITO 6.8 This ground is regards to charging of interest under section 234A, 234B and 234C of the Income Tax Act, 1961. 6.9 In this regard, it is pertinent to mention that levy of interest on any demand is consequential in nature and therefore, Ground No. 5 is dismissed. Ground No. 6 6.10 This ground is regards to initiating of penalty u/s 271(1)(c) of the Income Tax Act, 1961. 6.11 In this regard, it is pertinent to mention that initiating of penalty u/s 271(1)(c) of the Income Tax Act, 1961 on any conceal income is consequential in nature and therefore, Ground No. 6 is dismissed.
Accordingly, the appeal of the appellant is dismissed.
As the assessee did not find any favor from the finding of the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, he has filed the written submissions and the same is reproduced herein below:
“The humble appellant in respect of solitary Ground of Appeal most respectfully bag to submit:
1. The AO initiated the assessment proceedings u/s 147/148 of IT Act 1961.
2. The assessee unfortunately due to an oversight could not participated in assessment proceedings.
3. The AO observed that the assessee during the relevant previous year has purchased an immovable property for Rs.6000000-.
4. The AO held the relevant Investment of Rs.6000000- as unexplained and made addition of the same to returned Income.
5. The assessee filed written submission before ld. CIT(A) and explained that : 5.1 The Appellant is Director in the company "Khushi Sansar Real Estate Pvt. Ltd.' engaged in the business of development of real estate projects for the last several years.(PB No.6) 5.2 The Appellant had purchased the relevant land vide Registered Sale Deed dated 18.09.2013 in the status of director on behalf of "Khushi Sansar Real Estate Pvt. Ltd.".(PB No.11-16) 5.3. The entire purchase cost of Rs. 60,00,000/- on such purchase of land was paid by the company to the seller from its accounts/ sources (PB No.17-21) (reproduced at Page No.2-4 of the Order of CIT(A).) 6.It is apparent from the registered Sale Deed dated 18.09.2013 that the Payment to the Sellers has been made through Banking Account by way of different Cheques mentioned therein. 7. It is also apparent from the Ledger Accounts of the Sellers in the Books of Accounts of M/s "Khushi Sansar Real Estate Pvt. Ltd.' that the relevant payment has been made out of Banking Account of that company duly accounted for in Books of Accounts. 8.The Books of Accounts of M/s "Khushi Sansar Real Estate Pvt. Ltd are duly audited and relevant return of Income and Financial Statements are available on record.(PB 22-32). 9.The relevant land has been utilized by M/s "Khushi Sansar Real Estate Pvt. Ltd for it’s Real Estate Project “ Khushi Sandar-V”.(PB No.34) 10.The assessment of M/s "Khushi Sansar Real Estate Pvt. Ltd for the relevant A.Y.2014-15 has been completed u/s 143(3) of IT Act 1961and returned Income has been accepted.(PB No.33) 11.Thus the Source of Investment for purchase of relevant Land vide Registered Sale Deed 18.09.2013 by the assessee/ M/s "Khushi Sansar Real Estate Pvt. Ltd is duly explained. 12.It is also drawn to kind notice of Hon. Bench that the Original Assessment of the assessee for the relevant A.Y. has also been completed u/s 143(3) of the Act and return Income has bee accepted.(Copy of Assessment Order dated 18..11.2016 attached herewith.)
Therefore ld. CIT(A) is not justified in sustaining the relevant addition of Rs.6000000/-made by the AO holding the same as unexplained. 14.Your Honour is requested to delete the relevant addition of Rs.6000000/- made to returned Income or issue any other directions to the AO/assessee as deemed fit in the interest of justice..”
The ld. AR of the assessee in addition to the above written submission vehemently argued that the assessee has submitted all the details that has been repeated at page No. 3 of the ld. CIT(A). Even though all these details placed on record before the ld. CIT(A), he did not deem it fit to call for the remand report of ld. Assessing Officer in the interest of justice.
Even the ld. CIT(A) without doing any enquiry on facts taken a stand that in the sale deed dated 18.09.2013 assessee has purchased an immovable property in the status of director on behalf of "Khushi Sansar Real Estate Pvt. Ltd." Further he noted from the sale deed dated 18.09.2013 that it is nowhere mentioned about Khushi Sansar Real Estate Pvt. Ltd., in the said sale deed. This observation is without conducting any factual verification and without appreciating the evidence placed on record and therefore, the ld. AR of the assessee prayed to set a side the matter before the ld. AO. order of the ld. CIT(A). The ld. DR vehemently argued that the assessee has not submitted any details before ld. Assessing Officer and the order of ld. Assessing Officer is ex-parte. Before ld. CIT(A), the assessee has not preferred the petition to bring the additional evidence on record and based on that even the ld. AR of the assessee has not filed the full details relating to the transactions before ITAT also. He also submitted that the ld. CIT(A) appreciated the evidence and noted that there is nowhere mentioned in sale deed dated 18.09.2013 that the appellant has purchased an immovable property in the status of director on behalf of "Khushi Sansar Real Estate Pvt. Ltd." The ld. CIT(A) also noted that the sale deed dated 18.09.2013 did not mention about Khushi Sansar Real Estate Pvt. Ltd. Thus, there is no fault in the finding of the ld. CIT(A) and the appeal of the assessee is required to be dismissed. As regards the prayer of the assessee to set aside the matter to the file of the ld. AO the ld. DR objected that the assessee has already remained non-compliant before the ld. AO.
The transaction is done by the assessee but blamed to have of the company and therefore, there is no meaning to set aside the matter to the file of the ld. AO. payment details relating to the transaction are already placed on record and therefore, since the details are already on record there is sufficient material which has not been appreciated by ld. CIT(A) is required to be verified by the ld. AO. Though, the assessee has not placed on record any separate petition before ITAT and since all the records were already placed on record before the ld. CIT(A) and same has been appreciated and commented upon no separate application is required. Therefore, the prayer of the assessee be considered for giving one more chance to be heard on merits. The ld. AR of the assessee has also filed and undertaking that he will submit all the details though related to the case of the company and the content of undertaking supplied reads as under :
To support the contention so raised in the written submission or in the arguments advanced, reliance was placed on the following evidence / records / decisions:
S.No. Paper/document Page No. 1. Written Submission dated 22.11.2021 before ld. CIT(A) 1-5 12 Rajesh Kumar Meena vs. ITO 2. Master Data of the Company, Khusi Sansar Real Estate Pvt. Ltd. 6-6 ( Proof of Directorship of the assessee of that Company) 3. Return of Income of the assessee for the relevant A.Y.2014-15 7-10 4. Registered Sale Deed dated 18.09.2013 in the name of the assessee 11-16 held by the AO as un explained Investment 5. Ledger Accounts of sellers of the relevant Land in the Books of the 17-21 Company Khusi Sansar Real Estate Pvt. Ltd. (Proof of Source of Payment for purchase of the relevant land) 6. Income Tax return and Audited Balance Sheet/P&L Account of the 22-32 Company Khusi Sansar Real Estate Pvt. Ltd 7. Assessment Order dated 18.11.2016 of the Company Khusi Sansar 33-33 Real Estate Pvt. Ltd. for the relevant A.Y.2014-15.
Project/Development Plan on the relevant Land in the name of of the 34-34 Company Khusi Sansar Real Estate Pvt. Ltd.
We have heard the rival contentions and perused the material placed on record. In this case the solitary ground raised by the assessee is in relation to the addition made by the ld. AO and sustained by the ld. CIT(A) for the alleged purchase of property for an amount of Rs. 60 lacs. The assessee’s contention is that the property has been purchased by the company in the name of the assessee where he is director. The company has accounted that asset and all the payment is also recorded in the books of the company where he is director. Though, unintentionally the assessee’s case assessment order is passed u/s. 144 r.w.s. 147 of the Act.
But before the ld. CIT(A) remained attended and has filed the details related the Act voluntarily. The ld. CIT(A) while dealing with the transaction has not appreciated the fact that the company where the assessee is director has made the payment and that property is already reflected in the balance sheet of the company named Khushi Sansar Real Estate Private Limited.
Considering the facts placed on record in the paper book at Sr. no. 1 to 8 which were placed before the ld. CIT(A) are required to be tested and that will affect the taxable income of the assessee substantially. The assessee also filed the undertaking that if he is given a chance will submit all the details to prove the otherwise of what is held so far. Based on that aspect of the matter we deem it fit in the interest of the justice to set aside the matter to the file of the ld. AO who will decide the issue afresh by providing one more opportunity of hearing to the assessee. Thus, the matter is restored back to the file of the ld. AO who will decide the issue based on evidence and submission of the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO.
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having adjudicated by the ld. AO independently in accordance with law.
In the result, the four appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 01/07/2024.
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 01/07/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Rajesh Kumar Meena, Jaipur izR;FkhZ@ The Respondent- ITO, Ward-2(3), Jaipur, Jaipur 2. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 319/JP/2024) 6. vkns'kkuqlkj@ By order,
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