RAJEEV JAISWAL AND OTHERS,BAREILY vs. ASSESSMENT UNIT, NFAC

This appeal has been filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 12.01.2024 for the assessment year 2020-21.

“Ground No. 1 The learned CIT(A), NFAC has grossly erred in confirming the addition of Rs.5,56,88,026/- made by the assessing officer with total disregard to the facts and circumstances of the case. Ground no.2 The learned CIT(A), NFAC further erred in confirming the addition made by the assessing officers without appreciating the facts of the case. Ground no.3 The learned CIT(A), NFAC failed to appreciate that the assessee prevented by a reasonable and sufficient cause in not furnishing the submission in time before the first appellate authority.

Page 2 of 5 Ground no.4 The assessee reserves its right to add, amend, alter or delete any ground of appeal at the time of hearing.”

3. None appeared on behalf of the Assessee. However, finding that the matter can be decided in the absence of the Assessee/on behalf of the assessee, we have decided to dispose of the appeal after hearing the ld. CIT (D.R.) and after perusing the material on record.

“The brief facts of the case are that the assessee is a partnership firm engaged in the business of wholesale trade of liquor for human consumption. For the year under consideration, the assessee filed his return of income on 05/01/2021 declaring total income of Rs.7,43,780/- and claimed refund of Rs.26,15,380/-. Consequently, the case was selected for scrutiny and statutory notices u/s 143(2) as well as section 142(1) of the Income Tax Act, 1961 (hereinafter “the Act”) were issued and served upon the assessee. During the course of assessment proceedings, the assessee had taken loan from M/s. O.P. Associates of Rs.23,00,000/- but made repayment amounting to Rs.2,35,77,000/- to M/s. O.P. Associates which is more than the total loan taken. Further, it was observed that the assessee firm has introduced large capital/share capital during the year under consideration and the amount of capital is Rs.70,85,981/- up from the last year capital of Rs.41,42,288/- and so there is a increase of Rs.29,43,693/-. Accordingly, the increase in capital is treated as his own unaccounted money routed through different channels. Therefore, the difference of Rs.70,85,981 + 41,42,288/- i.e. Rs.29,43,693/- as per section 69A of the Act as unexplained and unsubstantiated amount. According to the Assessing Officer (“AO”), the assessee has made repayment of loan amounting to Rs.2,35,77,000/- which was more than the loan taken by the assessee and so he was asked to explain with complete details but the assessee has not made any response in this regard. Since the assessee has filed to give any justification/explanation regarding sources of loan repayment to M/s. O.P. Associates amounting to Rs.2,35,77,000/-. Therefore, the Assessing Officer made an addition of Rs.2,35,77,000/- added back to the income of the Page 3 of 5 assessee as per section 69A of the Act. Further, perusal of balance-sheet, it was observed that the assessee has taken advance from customers amounting to Rs.2,89,74,373/- but reply dated 21/01/2022, he has submitted that the assessee has not received any advance from the customer during the year under consideration. The question was raised specifically at point no. 3 of notice dated 11/03/2022 but the assessee failed to give any justification/explanation in support of its this regard. Hence, the same is treated as routing his own unaccounted money in the form of advance. Such kind of explanation is baseless and is not acceptable, as it is his own unaccounted money being routed through the other accounts in the form of advance payments. Since, the assessee could not prove the genuineness of advance taken and so the amount totaling to Rs.2,89,74,373/- is disallowed and added back to the total income of the assessee as per section 69A of the Act. Further, during the year under consideration, the assessee has shown expenses towards salary and wages of Rs.9,64,800/- this figure was Rs.4,84,800/- for the AY. 2019-10. The increase in turnover is not in proportion to the increase in salary. As the assessee has failed to give any justification/explanation in support of extra increase in salary expenses. Hence, 20% of this salary expenses is being disallowed on very reasonable basis, accordingly 1,92,960/- is being disallowed and added back to the income of the assessee. According to the AO, the assessee nowhere justify his claim, therefore, the AO raised the addition in sum of Rs.5,64,31,806/- and the total income of the assessee was assessed to the tune of Rs.5,64,31,806/-.”

Page 4 of 5 7. We have heard the Ld. Departmental Representative (“DR”) considered the rival submissions and perused the material available on record. At the outset, the Ld. DR submitted that assessee has not appeared before Ld. CIT(A) as well as the AO at the time of assessment proceedings even several notices were sent to assessee on the given address. Subsequently, assessee filed the appeal before Ld. CIT(A) and even before him, assessee was not appeared before Ld. CIT(A) after sending notices on the given address in Form 36, and the Assessing Officer has passed detailed and speaking order in respect of the various additions made. The assessee has not brought any material during the appellate proceedings in ITAT or, earlier, during appellate proceedings in the order of the Ld. CIT(A). Neither side has brought any materials for our consideration to persuade us to interfere with the orders passed by the Assessing Officer and the Ld. CIT(A), therefore, the orders of Ld. CIT(A)/Assessing Officer is upheld.