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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 30.08.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 26.03.2022 passed by learned DCIT, Assessment Unit, Delhi [“AO”] u/s 147 r.w.s. 144/144B of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on following grounds:
“(1) On the facts and circumstances of the case, the Hon'ble CIT(A) has erred in holding the order passed by Ld. AO u/s 143(3) of the Income- tax Act, 1961 dated 26.03.2022.”
Shri Anil Firojiya, Ujjain AY 2015-16
The assessee also filed following additional ground:
“In the facts and circumstances of the case and in law, the ld. ITO, National Faceless Assessment Centre (NFAC).Delhi has erred in passing the order u/s 147 r.w.s. 144 r.w.s. 144B of the Income-tax Act, 1961, without obtaining prior approval u/s 151 of the Act, as is evidenced from para 9 on page no. 3 and 4 of the said order wherein it is stated that “necessary sanction to issue notice u/s 148 of the Income-tax Act, 1961, has been requested separately from the Hon'ble Principal Commissioner of Income-tax-I, Indore as per the provision of section 151 of the Income-tax Act, 1961.”
However, after seeing the response filed by Ld. DR, the Ld. AR was satisfied and chose not to press this ground. Accordingly, this ground is treated as non-pressed and dismissed.
The background facts leading to present appeal are such that the assessee-individual filed his return of income for AY 2015-16 declaring a total income of Rs. 4,98,330/- u/s 139. Subsequently, the case of assessee was re-opened for assessment u/s 147 by issuing a notice u/s 148 and the AO completed re-opened assessment vide order dated 26.03.2022 after making an addition of Rs. 16,59,500/- on account of unexplained investment in purchase of properties. Aggrieved by such order, the assessee carried matter in first-appeal before CIT(A) but did not get any relief. Still aggrieved, the assessee has come before us in next appeal.
At first, we would like to re-produce the orders passed by lower- authorities reading as under:
AO’s order:
Shri Anil Firojiya, Ujjain AY 2015-16 “4. The submission of the assessee was perused but not acceptable. Therefore, show cause notice issued to the assessee on 20.03.2022. In reply to the show cause the assessee submitted reply dated 22.03.2022 basically reiterated the facts already submitted during the course of assessment proceedings. Cash book of the assessee was also perused. The assessee has furnished cash flow statement of the year. However, narration and reason of cash received is not mentioned. Therefore, sources of cash paid to the tune of Rs. 16,59,500/-. 4.1 The assessee was also sent link for e-hearing. However, the assessee did not opt for the same. Accordingly, assessment is completed as under: 5. During the financial year 14-15 relevant to the assessment year 2015-6, the assessee has purchased 2 property jointly with his wife details are as under : i) Plot at C-13/7, HIG Kshipra Vihar, Ujjain and paid Rs. 17,64,000/- in cash. ii) Plot at A-5/2, Triveni Vihar, Ujjain, on 28.03.2015 for Rs. 15,55,000/- paid in cash. Out of total cash paid, the assessee has paid cash to the tune of Rs. 16,59,500/- for purchase of both the properties. The assessee was requested to explain the sources of cash with documentary evidences. The assessee filed written submission but did not file any explanation on the sources of cash of cash paid to the tune of Rs. 16,59,500/- for purchase of both the properties.
6. In the absence of any explanation or evidence to prove otherwise, it is considered that the ass has no explanation for the source of cash paid to the tune of Rs. 16,59,500/- for purchase of both the properties. Accordingly, the amount of Rs. 16,59,500/- paid in cash for purchase of property is treated as unexplained investments of the assessee and added to the income of the assessee u/s 69 r.w.s. 115BBE of the Income-tax Act, 1961. Penalty proceedings u/s 271(1)(c) are separately initiated for concealing the particulars of income.” [Emphasis supplied] CIT(A)’s order: “6. Apropos the above, the Ground no. 1 is owing to challenging the addition of Rs. 16,59,500/- on account of unexplained investment. A plain of assessment order reveals that, the case of the assessee is reopened u/s 147 of the Act, as the appellant assessee was involved in cash transaction of Rs. 16,59,500/- towards the purchase of two immovable properties at Plot No. C- 13/7, HIG, Kshipra Vihar, Ujjain and Plot No. A-5/2, Triveni Vihar, Ujjain.
Shri Anil Firojiya, Ujjain AY 2015-16
6.1 It is observed from the assessment order that the appellant assessee had furnished copy of ITR-V, computation of total income, copy of balance sheet, copy of capital account, copy of bank statement, copy of cash book etc. However, it was observed by the AO that the narration and reason of cash received was not mentioned in the documents furnished by the appellant assessee during the course of assessment proceedings. The AO had further observed that the appellant assessee had filed written submissions but did not file any explanation in regards of cash paid to the tune of Rs. 16,59,500/- for purchase of immovable properties. In this context, Section 69 of the Act has been reproduced for the sake of convenience as under :- “Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and soured of the investments may be deemed to be the income of the assessee of such financial year.” From the above it is observed that section 69 of the Act is the weapon in the armory of the revenue department to detect the tax evasion in respect of clandestine investments made by the assessee as many times investments are being made out of unaccounted funds and black moneys are being settled in such investments. Section 69 of the Act also gives power to AO to treat the value of investments as the income of the assessee if the assessee does not offer any explanation or the explanation offered by him is not satisfactory to the AO. 6.2 During the course of appellate proceedings, it is observed that the appellant assessee has failed to file any cogent explanation alongwith corroborative evidences in support of cash payment of Rs. 16,59,500/- by acquiring two immovable properties at Ujjain alongwith his wife during the financial year 2014-15 relevant to assessment year 2015-16. The appellant assessee had furnished the balance sheet for the year under consideration wherein the said immovable properties were reflected. However, the narration and reason of cash received were not mentioned in the cash flow statement as well as in cash book, thus, the appellant assessee has failed to substantiate his claim as well as has failed to discharge his onus as initial burden lies on the appellant assessee after availing sufficient opportunity. It has been observed that, the evidences filed by the assessee did no remotely support the case of the assessee. Nothing has been placed to explain the source of investment to the present matters, the nature of investment has not been satisfactorily explained. On the contrary, inconsistent explanations were given which were not found satisfactory. As the same was unexplained investments, the AO was right in deeming the same to be the income of the assessee. 6.3 For what has been outlined above and for the reasons stated above, it is held that on the pertaining facts and circumstances of the case, I have not found any error in the assessment order of the AO with regard to addition
Shri Anil Firojiya, Ujjain AY 2015-16 made on account of unexplained investment of Rs. 16,59,500/- towards the purchase of the immovable property under consideration for the financial year 2014-15 relevant to assessment year 2015-16. Accordingly, the addition of Rs. 16,59,500/- on account of unexplained investment u/s 69 of the Act is hereby confirmed. 8. Ground No.2 is consequential in nature and does not require any adjudication.” [Emphasis supplied]
Ld. AR for assessee drew our attention to the above orders passed by lower-authorities and submitted that the assessee filed copy of ITR-V, Computation of total income, Balance-Sheet, Capital A/c, Bank statement, Cash-Book, etc. during assessment-proceeding to substantiate the source of investment but the AO has noted that the ‘narration and reason’ of ‘cash received’ was not mentioned in the Cash-Book. Ultimately, the AO has concluded that the assessee has not furnished any explanation on the sources of cash paid for purchase of properties and accordingly made addition. During first appeal, the CIT(A) has merely repeated the observations made by AO and cited section 69 to uphold AO’s action.
However, the position of assessee’s case is such that when the AO show- caused assessee qua this issue, the assessee filed 1st reply dated 11.03.2022 (Page 9-12 of Paper-Book) clearly mentioning in Para 5 thereof about the sources available to assessee for making impugned investment and the fact that the investment made by assessee in properties is duly appearing in the Balance-Sheet as on 31.03.2015. The assessee also filed copy of Balance- Sheet for AO’s reference (Page 17 of Paper-Book) and Cash-Book for the year 2014-15 (Page 29-32 of Paper-Book). The AO also re-produced assessee’s
Shri Anil Firojiya, Ujjain AY 2015-16 reply in show-cause notice issued u/s 144 (Page 74-81 of Paper-Book). In response to show-cause notice, the assessee again filed 2nd reply (Page 83-88 of Paper-Book) repeating not only earlier submission but also giving details of sources available to assessee in Para 5 thereof. Therefore, when the impugned investment stands included in Balance-Sheet and the assessee has filed complete explanation as to the sources, the investment made by assessee cannot be treated as unexplained. Ld. AR contended that the assessee’s submission has not been properly considered by AO and the addition has been made which ought to be deleted having regard to the documents filed by assessee.
Ld. DR for revenue firstly carried us to the highlighted portions of the orders of both of lower-authorities (re-produced above) wherein it has been categorically mentioned that the cash-book filed by assessee did not contain ‘narrations and reasons’ of ‘cash received’ to explain the sources of impugned investment. To demonstrate this, Ld. DR carried us to Page 32 of Paper-Book where the relevant portion of ‘cash-book’ showing only heads of accounts are appearing but the narrations are absent. Ld. DR illustrated this state taking example of one entry of cash-receipt of Rs. 10,41,127/- recorded in cash-book with the head “Cr Ramji Lal Rajput” which was source of payment made by assessee. This entry does not contain any narration to show as to on what account and for what reason, the assessee received amount from Shri Ramji Lal Rajput. Then, the Ld. DR carried us to the 2nd reply filed by assessee to AO wherein the assessee is claiming to Shri Anil Firojiya, Ujjain AY 2015-16 have reported the sources available for making impugned investment to AO.
Referring to same, Ld. DR pointed out that those details filed by assessee are in the nature of a fund-flow statement for whole year showing ‘the funds received from various sources of incomes such as rent, business, other sources, remuneration from Parliament, loans taken from bank’ and ‘funds applied to various purposes like investment in plots, RD A/c, loans and advances, sundry debtors, repayment of loan, etc.’ These details filed by assessee are not only details of cash receipts and application but also includes bank transactions. Further, these details show the overall financials of assessee for the year but do not show the exact data/details required by AO of cash payments made by assessee towards purchase of properties. Therefore, the AO is very much correct in observing that the assessee has not submitted full particulars and from the documents filed by assessee, the AO was not in a position to get satisfaction regarding source of investment. Therefore, the AO has rightly invoked section 69 and made addition. However, for the sake of justice, the case may be remanded back to the AO so that the assessee can file better particulars and the AO can decide the issue more aptly.
In rejoinder, Ld. AR opposed the proposal of Ld. DR for remanding this matter back to AO. He submitted that the addition made by AO is wrong in as much as the AO has not considered the evidences submitted by AO, therefore the addition made by AO has to be deleted instantly without remanding back.
Shri Anil Firojiya, Ujjain AY 2015-16
We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. Undisputably, the case of assessee was re- opened to examine and assess the unexplained investment made by assessee in properties and the AO raised specific query to the assessee to explain the sources of investment. In response, the assessee filed Balance- Sheet, Capital A/c, Cash-book, etc. but from those documents, the AO could not get the exact details required by him i.e. the details of sources from which the impugned investment was made by assessee. The Cash-Book filed by assessee does not contain any narration to show the nature/reason of receipt, this clinching aspect is successfully demonstrated by Ld. DR. Further, the details filed by assessee to the AO in his 2nd reply (discussed above) with regard to the sources and applications of funds are showing an overall picture of assessee’s financials but still do not provide the precise details to satisfy the AO regarding impugned investment and that is why the AO has invoked section 69 and made addition. In that view of matter, we are in agreement with Ld. DR’s proposal that the present matter needs to be remitted back to the file of AO to enable the assessee to furnish full particulars for AO’s consideration and adjudication. Accordingly, we restore this matter back to the AO who shall pass order afresh after giving necessary opportunities to the assessee. Needless to mention that the assessee shall avail the opportunities granted by AO and make adequate
Shri Anil Firojiya, Ujjain AY 2015-16 submissions and the AO shall also pass order afresh without being influenced by his previous order.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 12.07.2024.