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Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI
Before: SH. M. BALAGANESH & SH. SUDHIR KUMAR
PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of the National Faceless Appeal Centre Delhi [hereinafter referred to as “Ld. NFAC)”] vide order dated 31.10.2023 pertaining to A.Y.2012-13 arising out the assessment order dated 18.09.2021 u/s. 144 of the Income Tax Act, 1961, (in short ‘the Act’) on the following grounds:-
1. The order of AO has erred in law and on facts both while making the addition of Rs. 27,54,640/- to total income of the assessee.
2. The AO has erred in law and highly unjustified in rejecting the for the source of payments made by the Assessee for purchasing the new residential house property at the cost of Rs. 35,00,000/- since the same were evidenced by the relevant supporting documents and bank statements.
3. The AO has erred in law and highly unjustified in rejecting the loans taken by the assessee from his mother and sister to make the payment for the new residential house property despite producing the bank statements of the lenders and the assessee to substantiate the loan.
The AO is against the law and facts and circumstances of the case for making an addition in the business income of the assessee by applying the presumptive rate of net profit at the rate of 8 per cent of the turnover since the assessee has correctly shown the business income in the income tax return of the assessee.
At the time of hearing, none appeared on behalf of the assessee, despite issue of notice, hence, we are proceeding exparte qua the assessee. It is also noted that there is a delay of 234 days in filing the appeal before the Tribunal. After perusing the application for condonation and its supporting affidavit filed by the assessee, we are of the considered view that reasonable cause has been attributed to the assessee in filing the belated appeal, hence, the delay in dispute is hereby condoned.
Brief facts of the case are that the assessee is an individual and filed his return of income for AY 2012-13 on 31.03.2013 declaring total income at Rs. 3,47,870/-. In this case an information was received through Annual Information Return (AIR) that the assessee sold immovable property value at Rs. 32,66,000/-. The AO enquired the information and he reopened the case u/s. 147 of the Act after recording reasons. Thereafter, notice u/s. 148 of the Act was issued on 31.03.2015. The assessee did not file his return of income in response to the notice u/s. 148 of the Act. Further, other statutory notices were issued to assessee and thereafter assessment was completed u/s. 144 of the Act and the income of the assessee was determined at Rs. 31,02,520/-, as against returned income at Rs. 3,47,870/-.
4. Against the order of the AO the assessee preferred an appeal before the Ld. NFAC who vide its order dated 31.10.2023 dismissed the appeal. Being aggrieved the order of the Ld. NFAC the assessee is in appeal before the Tribunal.
We have heard the Ld. DR and perused the records. We note that the AO has observed that during the assessment proceedings the assessee disclosed profit by opting the provisions of section 44AD of the Act. The balance sheet, P & L A/c and Trading A/c obtained from State Bank Patiala, the AO found that the sales of the assessee for the year under consideration was Rs. 63,35,586/- and net profit was shown at Rs. 3,08,060/-. Thus, the AO calculated the income of the appellant @8% of total sales and determined the business income of the assessee at Rs. 5,22,847/-.
Under the facts and circumstances of the case, the Ld. CIT(A) rightly inclined to agree with the business income calculated by the AO, thus, the addition made by the AO was upheld, which in our considered opinion is a correct finding of the Ld. CIT(A) and hence, the same does not require any interference on our part, therefore, we affirm the same and accordingly, reject the ground raised by the assessee.
As regards addition of Rs. 25,00,000/- on account of investment of purchase of new house is concerned, it is noted that during the year under consideration the assessee sold a plot on 18.10.2011 on the consideration of Rs. 12,00,000/- and the valuation of the plot u/s. 50C of the Act was at Rs. 32,66,000/-. Prior to the sale of the said plot, the assessee purchased a residential house on 04.10.2011 on the consideration of Rs. 35,00,000/-. Therefore, the claim of the assessee that the capital gain arising out of the sale of the said plot is exempted u/s. 54 of the Act was accepted by the AO. The dispute arose in the instant case that this immovable asset was not appearing in the balance sheet of the assessee, therefore, the AO asked the source of the balance sum for purchasing of new residential house amounting to the tune of Rs. 25,35,000/-. It reveals from the records, that the assessee failed to submit the source of sum before the AO and the source of sum invested in new residential house is was also not appeared in the balance sheet, therefore, the AO added the difference of Rs. 25,35,000/- as unexplained investment to the total income of the assessee. However, during the appellate proceedings, the Ld. CIT(A) accepted the additional evidences u/R 46A and sent the same to the AO for his comments. Remand Report was received through ITBA on 26.04.2023 and the copy of the remand report was also forwarded to the assessee on the same date and thereafter also sent to the assessee on 23.10.2023 to submit his comments on or before 30.10.2023, but the assessee did not submit any comment with regard to the remand report nor requested for adjournment. On account of non- submission of comments on the Remand Report, on the part of the assessee, the Ld. CIT(A) proceeded further. Ld. CIT(A) observed that during the assessment proceedings the AO asked for the source of balance investment for purchasing new house property.
As the assessee was failed to submit the query raised during the assessment proceedings, the AO added the same to the total income of the assessee company.
Further, the assessee during the appellate proceedings submitted the details of payment which was sent to the AO for remand report. The AO, after verification of details submitted by the assessee sent the remand report. As noted earlier that the transaction part of the bank statement of Kavya Saurabh Rastogi was hid from the above view and the bank statement of Smt. Asha Lata was not annexed with the details. Similar comments were also produced by the AO in his remand report. The AO observed from the SB bank statement of Vivek Rastogi account no. 155501000000611 maintained at IOB that there was no significant balance as on 17.6.2011. The funds of Rs. 9,00,000/- are arranged from other bank account no. SB 9636 before making payment of Rs. 9,00,000/-, therefore, the source of funds in the bank account no. 9636 remained unexplained. In order to substantiate the sum received from her mother and sister, which re-invested for purchasing new residential house, the assessee was liable to submit the following details: i) Identity and address of mother and sisters. ii) PAN number and IT returns filed by mother and sisters. iii) Copy of confirmation for AY 2012-13 from mother and sisters. iv) Copy of bank statement of the assessee showing the receipt of money. v) Copy of bank statement of the mother and sisters showing the amount debited. vi) Copy of bank statement showing the repayment of money, if any. vii) Copy of balance sheets and other financial statement to show creditworthiness. In the instant case it is abundantly clear that the creditworthiness of the mother and sisters are not established by the assessee by filing above documents. Under the circumstances, it cannot be said that the assessee had discharged the initial onus cast upon him to establish the creditworthiness of the mother and sisters. Hence, the AO has rightly disallowed the unexplained investment of Rs. 25,35,000/- which has correctly been affirmed by the Ld. CIT(A). In view of above, we do not 6 find any infirmity in the Order of the Ld. CIT(A), hence, we affirm the same and reject the grounds raised by the assessee.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open court 28.10.2025.