SANJAI KUMAR GUPTA,GORAKHPUR vs. ITO, WARD - 2(2), GORAKHPUR

PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER:

This appeal, filed by assessee, being ITA No. 59/Vns/2019, is directed against an appellateorder dated 21.12.2018 in Appeal No. CIT(A)/GKP/2018-19, passed by learned Commissioner of Income Tax (Appeals), Gorakhpur (hereinafter called "the CIT(A)") partly allowing the appeal filed by the assessee, the appellate proceedings had arisen before ld.

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta CIT(A) from the assessment order dated 21.12.2017 passed by ld. Assessing Officer(hereinafter called “the AO”) u/s. 144/147 of the Income- tax Act, 1961( hereinafter called “ the Act”). We have heard both the parties in Open Court through physical hearing mode. 2. The grounds of appeal raised by the assesseein memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called “ the tribunal”) , reads as under : “1. Because the learned Assessing Officer has erred and acted illegally in adding back the deposit of Rs. 5,00,000/- &Rs. 5,00,000/- received from ShriZahagirAlam (since deceased) &ShriJitendra Kumar respectively. The ld. CIT(A) has erred and acted illegally in confirming the same. 2. Because the notice u/s 148 of the I.T.Act, 1961 is barred by limitation. 3. Because the order is bad both on facts and law and not maintainable.”

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta competent authority, the case of the assessee was selected by Revenue for reopening of concluded assessment u/s 147/148 of the 1961 Act, and a notice u/s 148, dated 28.03.2017 was issued by the AO to the assessee , which as per AO was served upon the assessee through registered post. In response thereof, none appeared on behalf of the assessee nor any reply was filed by the assessee. Thereafter, the AO issued to the assessee, a notice dated 16.08.2017 u/s 142(1) of the 1961 Act along with questionnaire , fixing the date of hearing on 29.09.2017, but no compliance was made by the assessee. Thereafter , a show cause notice was issued by the AO for completion of assessment u/s 144 along with notice dated 29.11.2018 u/s 142(1) of the 1961 Act , giving to the assesseelast opportunity for hearing on 06.12.2017, but again notices remained un-complied with. Since there was no compliances from the side of the assessee, andthe matter was getting time barred on 31.12.2017, the AO completed assessment wherein additions to the income of the assessee to the tune of Rs. 51 lacs were made by the AO being unexplained investment u/s 69 of the 1961 Act, as the assessee despite being asked by the AO did not submitted sources of making investment with supporting documents, vide assessment order dated 21.12.2018 passed by the AO u/s 144/147 of the 1961 Act. Further, the AO assumed other income of the assessee to be Rs. 1,60,000/- , and accordingly total income of the assessee was assessed at Rs. 52,60,000/- by the AO.

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta 3. Aggrieved by assessment framed by the AO, the assessee filed first appeal with ld. CIT(A), which appeal was partly allowed by ld. CIT(A) . The assessee raised first grievance with ld. CIT(A) that statutory notices issued by the AO u/s 143(2), 148 and 144 of the 1961 Act were not served upon the assessee. The ld. CIT(A) observed from the assessment order, that notice u/s 148 was issued by the AO vide registered post and the assessee has not submitted any evidences to substantiate its contentions that notices were not served upon the assessee , and hence this contention raised by the assessee as to non serving of notices was rejected by ld. CIT(A) as devoid of any merit. The second grievance of the assessee was that the assessee had filed return of income for the impugned assessment year, declaring income of Rs. 1,55,235/- on 27.09.2010 , but the AO did not consider the said income declared in return of income ,while passing assessment order . The ld. CIT(A) observed that the assessee did not made any compliances before the AO during the reassessment proceedings conducted by the AO u/s 147/148 of the 1961 Act, and hence the question of non consideration of return of income filed by the assessee does not arise. The ld. CIT(A) further observed that the AO has not given any reason for assuming the returned income of the assessee and hence ld. CIT(A) held that the additions made on pure assumption and guess work are not sustainable, and accordingly ld. CIT(A) directed AO to consider the returned income of the assessee at Rs. 1,55,235/- . The third grievance of the assesseebefore ld. CIT(A) was with respect to merits of the additions made by the AO. The assessee submitted before ld. CIT(A) that the 4

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta assesseepurchased a plot of land from Smt. Ranjana Singh for total consideration of Rs. 21,00,000/- . The value of the said plot as adopted by stamp valuation authorities for the purpose of levying stamp duty on registration of property , was Rs. 51,00,000/-. The assessee submitted that stamp duty of Rs. 3,57,000/- was paid by the assessee on purchase of the plot of land. The assessee explained sources of purchase of plot , and copy of purchase deed was filed was filed by the assessee before ld. CIT(A) during appellate proceedings . The ld. CIT(A) sought remand report from AO on the details submitted by the assessee. The AO submitted its remand report vide letter dated 08.10.2018, in which the AO observed that two deposits of Rs. 4,00,000/- and Rs. 4,22,800/- received from Shri K P Gupta, Advocate and ShriPradeep Kumar Agarwal respectively, which are claimed to be utilized for purchasing the above plot of land , stood explained and justified. The AO further observed that the deposits of Rs. 7,50,000/- , Rs. 5,00,000 and Rs. 5,00,000/- taken from Mr. Rajkumar, JanhagirAlam and Jitendra Kumar respectively could not be explained by the assessee and not justified due to following reasons: 1. The assessee did not prove the credit worthiness and genuineness as well capacity of depositors with documentary evidences. 2. The assessee failed to submit documentary evidences to prove the deposit made by the depositors such as PAN, Bank statement, confirmation as well as proof of filing of ITR.

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta 3. The assessee also fails to prove the source of income of the depositors. The AO further observed that the assessee purchased stamp worth Rs. 3,67,000/- , but the assessee failed to prove the source of purchase of stamp, and hence the cost of stamp purchased was also treated as unexplained by the AO, vide his remand report submitted to ld. CIT(A). The ld. CIT(A) forwarded remand report to the assessee seeking his comments. The ld. CIT(A) after considering remand report, comments received from the assessee , observed that the assessee could not explain the amount received from his brother in law, Mr. Jitender Kumar(Rs. 5,00,000/-) and his friend, Mr. Jehangir Alam (since dead)(Rs. 5,00,000/-) , for which the assessee has only submitted copies of cheques issued by them and death certificate of Mr. Jehangir Alam. The ld. CIT(A) observed that cheques issued by them are not reflecting in the bank statement of the assessee. The ld. CIT(A) further observed that the assessee had failed to establish the creditworthiness of the lender and genuineness of the transaction in this regard. Thus , ld. CIT(A) held that the assessee has made total investment in the purchase of property to the tune of Rs. 24,67,000/- , out of which the assesse is able to explain the sources of funds to the tune of Rs. 15,72,000/- ( Rs. 4,00,000/- from Shri K.P. Gupta , Rs. 4,22,000/- from Shri Pradeep Agarwal , Rs. 7,50,000/- from Shri Raj Kumar Gupta), and for the remaining amount the ld. CIT(A) upheld the additions to the tune of Rs.

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta 8,95,000/-, vide appellate order dated 21.12.2018 , granting partial relief to the assessee. 4. Still aggrieved, the assessee has filed second appeal with the tribunal. The ld. Counsel for the assessee opened arguments before the Bench, and submitted that the assessee purchased property for Rs. 21 lacs, of whose circle value was Rs. 51 lacs. It was submitted that the AO made additions to the income of the assessee, to the tune of Rs. 51 lacs , by invoking provisions of Section 69 of the 1961 Act. It was submitted by ld. Counsel for the assesse that ld. CIT(A) restored the purchase value of the property to Rs.21 lacs which is the actual consideration paid by assessee for the purchase of property , as against Rs. 51 lacs determined by the AO based on circle rate adopted by stamp valuation authorities . It was submitted that additionally , the assessee paid stamp duty of Rs. 3.67 lacs for registration of the said plot of land in favour of the assessee. The ld. Counsel for the assessee submitted that the ld. CIT(A) sustained the additions to the tune of Rs. 8,95,000/- , mainly because the assessee could not explain the sources of the investments in the aforesaid property, to the tune of Rs. 10 lacs, which was raised by assessee from his brother in law, Mr. Jitender Kumar(Rs. 5,00,000/- ) and his friend, Mr. Jehangir Alam(since dead)(Rs. 5,00,000/-), through cheques. It was submitted that there is an error in the appellate order passed by ld. CIT(A) , wherein the ld. CIT(A) has erroneously held that the cheques issued by these two lenders were not reflecting in the bank statement of the assessee. The ld. Counsel for the assessee drew our attention to the

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta paper book filed by the assessee, and submitted that these aforestated loans were availed by the assessee through cheque(s) of Rs. 5 lacs each issued by these two lenders namely Mr. Jitender Kumar and Mr. Jehangir Alam respectively , in favour of the assessee , and these cheques are reflecting in the bank statement of the assessee. It was submitted that both these cheques of Rs. 5 lacs each, are dated 09.12.2009(copies placed in paper book/page 6-7), which stood credited in bank account (current account) of the assessee maintained with SBI, Khoonipur, Ismailpur, Arya Samaj Mandir, Buxipur, Bank account number 30395286235 , on 14.12.2009 , the bank statement of which is placed in paper book /page 2 filed by the assessee with tribunal. On being asked by the Bench, the assessee submitted that bank statement of the lenders could not be filed. It was submitted that the matter is old , it is difficult to obtain bank statements of the lender now , and department may be directed/requested to obtain the bank statements directly. The ld. Counsel for the assessee also submitted that ld. CIT(A) has also held that the assessee is not able to prove the creditworthiness of the lender and genuineness of the transaction, and hence ingredients of Section 68 of the 1961 Act are not fulfilled/complied with. The ld. Counsel for the assessee submitted that the assessee is now filing notorised copy of affidavit(18.4.2022) of son of Mr. Jahangir Alam(since deceased) averring that he is son of Late Mr. Jahangir Alam and his father gave cheque of Rs. 5 lacs to brother-in-law of his friend , namely Shri Sanjay Kumar in the year 2009. This notorized affidavit is an additional evidence filed before the tribunal. Thus, prayers were made to delete the 8

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta additions, or the matter may be restored back to the file of ld. CIT(A) for denovo adjudication on merits. 4.2 The ld. Sr. DR would submit that the assessee has not filed bank statements of lenders , and further that ingredients of Section 68 were not fulfilled by the assessee as the assessee could not prove creditworthiness of the lenders as well genuineness of the transaction. The ld. Sr. DR would rely on the appellate order passed by ld. CIT(A). 5. We have considered rival contentions and perused the material on record. The brief facts of the case are that the case of the assessee was reopened by Revenue forframing reassessment u/s 147/148 of the 1961 Act, based on information received by department that the assessee has made investment of Rs. 51,00,000/- in the property during the year under consideration . The assessee did not participated in the re-assessment proceedings , despite being given several opportunities by the AO , which led AO to invoke provisions of Section 69 of the 1961 Act , and made additions to the tune of Rs. 51 lacs in the hands of the assessee, vide reassessment order dated 21.12.2017 passed by AO u/s 144/147 of the 1961 Act. The assessee filed first appeal, wherein the assessee explained that it purchased property consisting of plot of land for Rs. 21 lacs, and further additionally Rs. 3.67 lacs was paid towards the stamp duty for registering of plot in favour of the assessee. It was explained that circle rate adopted by stamp valuation authorities for registering the said plot of land was Rs. 51 lacs, but the assessee purchased the said plot of land for Rs. 21 lacs, of which the assessee duly

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta filed the sale deed of the property before ld. CIT(A). The sources were explained to be loans raised from several persons. The ld. CIT(A) called for remand report from the AO, which was duly submitted by the AO. The said remand report was forwarded by ld. CIT(A) to the assessee for his rebuttal. After considering the submissions made by the assessee, remand report, rejoinder to remand report filed by the assessee and material on record, the ld. CIT(A) sustained additions to the income of the assessee to the tune of Rs. 8,95,000/- , mainly for the reasons that the assessee could not prove the credit worthiness of the lenders and genuineness of transaction with respect to the loans raised by the assessee from his brother in law, Mr. Jitender Kumar(Rs. 5,00,000/-) and his friend, Mr. Jehangir Alam(since dead)(Rs. 5,00,000/-) . The ld. CIT(A) also observed that the assessee has claimed that these loans were raised through cheques, but the said cheques are not reflecting in the bank statement of the assessee. The ld. Counsel for the assessee has submitted before the Bench that this finding of the ld. CIT(A) that the cheques were not reflecting in the bank statement of the assessee, is erroneous. Our attentions were drawn by ld. Counsel for the assessee to the copies of cheques claimed to be received by the assessee from Mr. Jeetender Kumar (Rs. 5,00,000) and from his friend, Mr. Jehangir Alam(Rs. 5,00,000/-)and it is stated that copies of these cheques are placed in paper book/page 6-7. It is also claimed that these two cheques are dated 09.12.2009 ,and the same got credited to the assessee’s bank account with SBI, on 14.12.2009, the said bank statement is placed in paper book at page 2. The facts remains that the assessee never filed 10

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta rectification petition u/s 154 with the ld. CIT(A) , for correcting these mistakes, and further while crediting cheques to the bank account on 14.12.2009, the banker did not mention the cheque numbers/remitter name in the bank statement of the assessee. It could have been cross verified with the bank statements of the lender, which the assessee never filed , till date. As per ld. CIT(A), the assessee was also not able to prove creditworthiness of the lenders and the genuineness of these loan transactions, with respect to these two loans aggregating to Rs. 10 lacs claimed to have been raised by the assessee, from Mr. Jitender Kumar(Rs. 5 lacs) and Mr. Jehangir Alam(since deceased) (Rs. 5 lacs) respectively . Even the bank statements of the lender are not filed. The assessee has stated that department can obtain bank statement of these lenders directly from the bank, as due to passage of time the assessee is not able to obtain these bank statements. One of the purposesof Public Authorities is to assist Public in their genuine and bonafide difficulties, as Public Authorities are meant to serve public. The assessee has also produced notorized affidavit dated 18.04.2022 , of son of Mr. Jehangir Alam(since deceased) , wherein it is averred by son of Mr. Jehangir Alam (since deceased) that his father has given cheque of Rs. 5 lacs to his friend’s brother-in-law, namely Shri Sanjay Kumar, in the year 2009. This is an additional evidence filed by the assessee before the tribunal which requires verification by authorities below. Thus keeping in view the entire facts and circumstances of the case as discussed above and in fairness to both the parties with a view to grant justice, we are inclined to restore the matter back to the file of ld. CIT(A) for fresh adjudication on merits of the

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta issuesconcerning loans aggregating to Rs. 10 lacs raised from Mr. Jeetender Kumar (Rs. 5,00,000) and from Mr. Jehangir Alam(Rs. 5,00,000/-) respectively ,in accordance with law. Needless to say that ld. CIT(A) will give proper and adequate opportunity of hearing to the assessee in set aside remand proceeding in accordance with the principle of natural justice and in accordance with law.The ld. CIT(A) is directed to pass reasoned and speaking order. The evidences /explanations submitted by the assessee shall be admitted by ld. CIT(A) in accordance with law and be adjudicated on merits in accordance with law. We clarify that we have not commented on the merits of the issue and all the contentions are kept open. The appeal of the assessee is allowed for statistical purposes. We order accordingly. 6. In the result, the appeal filed by the assessee in ITA no.59/Vns/2019 for assessment year 2010-11is allowed for statistical purposes. Order pronounced on 21.04.2022at Varanasi, U.P.

Sd/- Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21/04/2022

ITA No.59/Vns/2019 Assessment Year: 2010-11 Sanjai Kumar Gupta Copy forwarded to: 1. Appellant –Sanjai Kumar Gupta , 386, In front of SheetalaMandir, Gita Press, Ismailpur , Gorakhpur-273005 U.P. 2. Respondent–ITO, Ward 2(2), Gorakhpur, U.P. 3. The Sr. DR, ITAT, Varanasi, U.P. 4. The CIT, Varanasi/Gorakhpur

Sr. Private Secretary