TaxTMI 
TaxTMI 
2025 (2) TMI 1238
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....he assessee without providing the reasonable opportunity to the assessee to submit his submission. Ground No. 2: - On the facts, in the circumstances of the case and in law, the Ld. CIT (A) erred in not annulling the assessment order more so when the assessment proceeding completed u/s 153A of the Act was bad in law, void-ab-initio, and deserves to be annulled for the reasons that (i) The Assessment order passed by the ld. Assessing Officer is arbitrary, whimsical, capricious, perverse, against the provisions of law and facts of the case, (ii) the assessment is based on surmises and conjectures, without having any positive material and/or on irrelevant material. Ground No. 3: - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 15,00,000/- made by Ld. A.O. by alleging that in the year under consideration the assessee earned this much of undisclosed business income and the utilized the same for giving advance/loan to various parties. Ground No. 4: - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in holding that the assessee has not explained the source of the unexplained mone....
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....aring of appeal. A.Y. 2016-17 (ITA No 1420/JPR/2024): - Ground No. 1: - On the facts and in the circumstances of the case, the Ld. CIT(A) erred in dismissing the appeal filed by the assessee without providing the reasonable opportunity to the assessee to submit his submission. Ground No. 2: - On the facts, in the circumstances of the case and in law, the Ld. CIT (A) erred in not annulling the assessment order more so when the assessment proceeding completed u/s 153A of the Act was bad in law, void-ab-initio, and deserves to be annulled for the reasons that (i) The Assessment order passed by the ld. Assessing Officer is arbitrary, whimsical, capricious, perverse, against the provisions of law and facts of the case, (ii) the assessment is based on surmises and conjectures, without having any positive material and/or on irrelevant material. Ground No. 3: - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 23,25,000/- made by Ld. A.O. by alleging that in the year under consideration the assessee earned this much of undisclosed business income and the utilized the same for giving advance/loan to....
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....pportunity to the assessee before holding the same. Ground No. 5: - The appellant prays for leave to Add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. A.Y. 2018-19 (ITA No 1422/JPR/2024): - Ground No. 1: - On the facts and in the circumstances of the case, the Ld. CIT(A) erred in dismissing the appeal filed by the assessee without providing the reasonable opportunity to the assessee to submit his submission. Ground No. 2: - On the facts, in the circumstances of the case and in law, the Ld. CIT (A) erred in not annulling the assessment order more so when the assessment proceeding completed u/s 153A of the Act was bad in law, void-ab-initio, and deserves to be annulled for the reasons that (i) The Assessment order passed by the ld. Assessing Officer is arbitrary, whimsical, capricious, perverse, against the provisions of law and facts of the case, (ii) the assessment is based on surmises and conjectures, without having any positive material and/or on irrelevant material. Ground No. 3: - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition ....
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....e utilized the same for giving advance/loan to Shri Lal Chand Ground No. 5: - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 15,00,000/- made by Ld. A.O. by alleging that in the year under consideration the assessee earned this much of undisclosed business income and the utilized the same for giving loan to Shri Banwari Lal Kumawat. Ground No. 6: - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 40,00,000/- made by Ld. A.O. by alleging that in the year under consideration the assessee earned this much of undisclosed business income and the utilized the same for giving loan to Shri Malik Khan. Ground No. 7 : - On the facts and in the circumstances of the case, the Ld. CIT (A) erred in holding that the assessee has not explained the source of the unexplained money, which was used for giving the loan and also erred in holding that such unexplained money is taxable u/s 69A of the Act and should be taxed the same as per section 115BBE of the Act, This is more so when the Ld. A.O. assessed the income as business income of the appellant and Ld. ....
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....ct. The detail of year wise income returned income viz a viz assessed income and the nature of additions made are as under: - A.Y. Returned income Assessed Income Addition made Nature of addition Finding of Ld. A.O. at Page No. of assessment order 2014-15 41,78,900 56,78,900 15,00,000 Alleged undisclosed business income utilized for giving advance/loan to various parties as found noted in the excel sheet named "Court Cases Party's Status" seized during the course of search. Page 3 to 12 (Para 5.2 to 5.4) 2015-16 57,33,940 62,83,940 5,50,000 Alleged undisclosed business income utilized for giving advance/loan to various parties as found noted in the excel sheet named "Court Cases Party's Status" seized during the course of search. Page 3 to 12 (Para 5.2 to 5.4) 2016-17 33,43,630 56,68,630 23,25,000 Alleged undisclosed business income utilized for giving advance/loan to various parties as found noted in the excel sheet named "Court Cases Party's Status" seized during the course of search. Page 3 to 12 (Para 5.2 to 5.4) 2017-18 2,56,95,010 3,19,45,010 62,50,000 Alleged undisclosed business ....
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....his contention the CIT (A) relied on several decisions. Page 9 to 19 (Para ii) 2. In support of the claim of the assessee that the loans balance includes the accrued interest and that such interest and the loans has become bad and allowable to assessee as business loss, the assessee did not file any evidence and supporting in this regard. It is also held by CIT (A) that the assessee has lodged the court cases thus it cannot be accepted that debt has become bad. Page 19 to 20 (Para iii to v) 3. the alleged business advances are unexplained money of the assessee and the same is taxable u/s 69A of the Act and accordingly taxable u/s 115BBE of the Act without allowing any deduction. The CIT (A) relied upon several decisions. However, the notice u/s 251 (2) as required to be given for enhancement of tax liability has not been issued, thus this finding is not valid in the eyes of the law as the same has given without providing the opportunity to the assessee Page 21 to 37 (Para vi to ix) 4. The LD. CIT (A) held that the additions were made on the basis of noting of seized record, therefore relying on the presumption laid down u/s 132(4A) and u/s 292C h....
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....rvice the notice physically through speed post. Hon'ble Kolkata High court in the case of Rameshwar Sirkar V/S I.T.O. (1973) 88 ITR 374 has held that in the interest of justice reasonable attempt should be made to serve the notice. The ld AR submitted that ld CIT (A) passed the order without according the reasonable opportunity to the assessee. 6.2 Per Contra, ld DR vehemently submitted that the ld. CIT(A) provided various opportunities to the assessee by issuing several notices to the assessee but the assessee did not avail of the opportunity. The department cannot be made liable for the mistake of the assessee or his accountant. The ld DR justified the order of ld CIT(A), who has decided the appeals on merit by elaborately discussing the issues. 6.3 We have heard the rival contentions and perused the material available on record. We noted that the ld CIT(A) has issued notices on 14.10.2023, 03.11.2023, 08.10.2024 and 16.10.2024. In response to notice issued on 03.11.2023 the adjournment requested was filed. Thereafter, two notices were issued in the month of October-2024, which also remained un-complied by the assessee and for this reason, the ld CIT (A) passed the Ex-Parte....
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.... the course of assessment proceeding the assessee filed the detailed submission wherein the facts of the case were elaborated. Along with such submission the evidences, in the form of affidavit, evidence of court cases, FIR filed against the defaulter parties, settlement agreement etc. were filed. However, no heed was given to such and without making any inquiry and without making any attempt to find out the truth, the same were brushed aside by holding that the same is after though cooked story. This clearly shows that the assessment was made with the pre-set mind for adding the undue and unwarranted sum as income of the assessee, which actually never been the income of the assessee and the assessee was never been in such a position the he could have earned so much income. In this regard we would like to draw your kind attention towards the provisions of section 143(3) of the Act, which provides that "...... after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into consideration into account all relevant material which he has gathered, the Assessing Officer shall, by an order in w....
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....axing authority should not act in a manner as might indicate that scales are weighted against the assessee CIT Vs Simon Carves Ltd (1976) 105 ITR 212,218 (SC). But in the case of the assessee, the Ld. A.O. has brushed aside all the principles of law and framed a high-pitched assessment purely based on presumption and assumption 4. In view of above submission, it is submitted that the Ld. A.O. completed the assessment proceeding by brushing aside all the evidences, facts of the case, legal position and submission of the assessee. The ld. AO by rejecting the submission filed by the assessee made the addition on the basis of surmises and conjectures. Hon'ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee Vs CIT [1963] 49 ITR 112 (SC); 120 observed that the Income Tax Department cannot by merely rejecting unreasonably a good explanation, convert good "proof into no proof". Hon'ble Supreme Court in the case of Uma Charan Shaw & Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and the conclusion is the result of suspicion which cannot take the place of proof. Hon'ble Punjab & Haryana High Court in the case of CIT Vs Anupam Kapoor....
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....of search and such statement was recorded just to sought the explanation on the seized document, while the written explanation on such documents was already filed by the assessee group to ADIT and thereafter noting specific was informed to the assessee group for which further explanation was to be sought from the assessee group. Thus, the summon issued and statement so recorded was not for obtaining any information or for making any pending verification but the same was used as a weapon just for obtaining the desired surrender by extracting the pressure. As stated earlier, the assessee was in business of Financing and several documents relating to disclosed business like Hundies, Promissory Notes, Property papers of borrowers which were lying with the assessee as security etc were under seizure of the department. The assessee vide his letter dated 25.04.2019 (filed on 26.04.2019 to DIT-Investigation, Jaipur under copy of ADIT-1, Jaipur), 19.06.2019 (filed on 20.06.2019 to PDIT-Investigation, Jaipur under copy of ADIT-1, Jaipur), 06.08.2019 (filed on 07.08.2019 to PCIT-Central, Jaipur) requested to PDIT/PCIT Jaipur, to release some of these seized security documents as the same were....
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....nly if proceedings are pending before the authority concerned under the Income Tax Act. iii) In Jagir Singh v. Ranbir Singh, AIR 1979 SC 381, the apex court has observed that an authority cannot be permitted to evade a law by "shift or contrivance". While deciding the said case, the Supreme Court placed reliance on the judgment in Fox v. Bishop of Chester [1824] 2 B and C 635, wherein it has been observed as under: "'To carry out effectually the object of a statute, it must be construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited or enjoined'." iv) Andhra Pradesh High Court in the case of K. Rudra Rao v. ITO [1958] 34 ITR 216 at page 220 which are as follows : " In administering a tax law, irritations to the assessees are inevitable; an officer is bound to do his duty irrespective of the susceptibilities of the assessees or even at the risk of hurting their amour propre. But this would not justify the officers functioning under the Act doing things in an unreasonable way. As has been pointed out by Maxwell on the Interpretation of Statutes, at page 123, tenth edition, a....
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....ly be filed upon receiving the copies of statements. Therefore, till the copies of statements not provided to me the same are not binding on me and the same are subject of further clarification by way of filing of certificatory affidavit." The copies of the statements were finally provided to the on 31.08.2021. Therefore, as soon as the copy of statement provided Shri Laxmikant Biyani filed a retraction affidavit to Ld. A.O. on 03.09.2021 (Copy of which is being submitted herewith) and in such affidavit, he narrated all the circumstances under which this income was surrendered. c) Since, Shri Laxmikant Biyani retracted from the statement, therefore the same loose its legal sanctity and hence relying on such statement no addition can be made in the hands of the assessee. The law relating to retraction is well-settled by Supreme Court in Sri Krishna V. Kurukshetra University, AIR 1976 SC 376, wherein it is held that if the original statement suffers from any defects, the person is entitled to go back on the statement already made by making correct statement. The Supreme Court have laid down the ratio, after considering S. 18 of the Evidence Act, 1872 that any admiss....
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....ng upon them. Hence the surrender obtained from Shri Laxmikant Biyani was illegal and thus no addition can be made by relying to such statement. b) In the case of CWT vs. Sanwarmal Shivkumar 171 ITR 337 the Jurisdictional High Court of Rajasthan held that the officers of the Department are bound by the circulars of the board. The Hon'ble Supreme Court in case of Tanna and Modi vs. CIT, 292 ITR 209 (SC) has held that a fortiori, clarificatory circulars issued by the Central Board of Direct Taxes may also be taken into consideration for the purpose of construction of the statute. The Hon'ble Supreme Court in case of Kerala State Industrial Dev. Corporation Ltd., 259 ITR 51 (SC) has also held that Finance Minister's speech before Parliament while introducing bill can be relied on to throw light on object and purpose of provisions. In case of Durgesh Oil Mills, 273 ITR 305 (All.), the Hon'ble Allahabad High Court has held that it is well settled that the circular issued by the Central Board of Direct Taxes is binding on authorities. c) The reliance is also placed on following judgement wherein it was held that circulars issued by the Board are binding:....
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....7 (Cal) x) CIT V/s Naresh Kumar Aggarwal (2014) 369 ITR 171 (T&AP) 6. The addition by brushing aside the documents/evidences filed by the assessee, cannot be solely on the basis of statement recorded a) The Ld. A.O. for making the addition heavily relied on the statement of the assessee recorded during post search investigation. The Ld. A.O. brushed aside all the submission and evidences filed by the assessee and instead applying his own independent mind and making the independent inquiry to controvert the evidence filed by the assessee proceed to make the assessment by blindly relying on the statement of the assessee. b) It is now an admitted position of law that no addition can be made on the basis of search statement by brushing aside the submission and evidences filed by assessee during the course of assessment proceeding can be made we place reliance on following judgements: - 1. Sh. Rajendra Kumar Jain vs. ACIT, ITA No. 378/JP/2017 dated 27.04.2018 for the AY 2014-15. 2. Basant Bansal vs. ACIT [2015] 63 taxmann.com 199 (JaipurTrib.)/[2015] 171 TTJ 603 (Jaipur-Trib.) 3. Pullangode Rubber Products Co. Ltd. V/s State....
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....T., Agra Bench, Agra (3rd Member) in appeal Not. ITA No. 145/AGR/2006 judgment dated 26-12-2008 27. The Mumbai Tribunal in an unreported judgment (Shri Suresh Chandra Agarwal, ITA No. 7900/Bom./92, order dated 12-8-1996) c) Therefore, in view of the aforesaid orders, the addition made by the ld AO in the case of this assessee, on the basis of the statement recorded u/s 131, and on the same facts and circumstances, deserves to be deleted. Hon'ble MP High Court in the case of Agarwal Warehousing & Leasing Limited Vs CIT (2002) 257 ITR 235 (MP) has held that the orders passed by the Tribunal are binding on all revenue authorities functioning under the jurisdiction of the Tribunal. Perverse finding of Ld. CIT(A) 1. The CIT (A) wrongly considered the statement of the assessee as recorded u/s 132(4) of the Act, while the same were recorded u/s 131 of the Act The Ld. CIT (A) at page 9 to 19 of his order cited several case laws to support the evidentiary value of the statements but he wrongly treated the statement of the assessee, as recorded u/s 132(4) of the Act, while such statement was recorded u/s 131 of the Act. The statement recorded u/s ....
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....n the findings made by ld CIT(A). 7.4 We have heard the rival contentions and perused the material available on record. We noted that main contention of appellant is that the AO is quasi judicial authority, he should act honestly considering all the material and documents available before him, he has not made any further inquiry on the evidences and affidavits filed by the assessee, and brushed aside all the material, evidences, documents furnished by the assessee without making inquiry or controverting the same. Further, he made the addition relying on the statements recorded by DDIT u/s 131 which were without jurisdiction as the ADIT/DDIT is not empowered to record the statements u/s 131 of the Act. We noted that these statements are not u/s 132(4) or 131(1A) of the Act as no notice u/s 131(1A) of the Act was issued to the assessee and the statements were recorded u/s 131 of the Act. The ld. A/R submitted that the assessee has retracted the statements recorded by ADIT u/s 131 of the Act by filing affidavit before the ld AO and therefore, the statements recorded u/s 131 of the Act has lost its evidentiary value on this ground also. We noted that ld CIT(A) has discussed the evid....
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....round No. 3 (ITA No. 1423/JPR/2014 of A.Y. 2019-20) :- is regarding the addition against loan of Rs. 15,00,000/- to Ramji Lal Sharma 8.1 The AO made the addition of Rs. 15,00,000/- on account of loan given by the assessee to Ramji Lal Sharma on the basis of his findings in para 5.2 of assessment order as under:- "The reply filed by the assessee has been examined but not found satisfactory. During the course of post-search proceedings, the assessee categorically admitted that this much amount was given to Shri Ramji Lal Sharma out of undisclosed income. Relevant portion of his statement is reproduced hereunder:- XXXXX Further, seized agreement of loan clearly mentioned that Shri Ramji Lal Sharma had received amount of Rs. 15,00,000/- on 08.03.2019 from Sh. Laxmi Kant Biyani, the assessee. No prudent person would have sign any document without receiving the money. Therefore, the explanation submitted by the assessee is nothing but story cooked afterthought. Hence, in the light of clear admission of Shri Laxmi Kant Biyani, notings of seized record and facts & circumstances of the evidences gathered as a result of search it is proved that the assessee earn....
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....e noting of seized record and not considering the submission and evidence filed by the assessee made the addition. 2. The actual fact of this case is that this party was in need of funds, hence he approached to assessee and requested for loan of Rs. 30,00,000/-. The assessee agreed to lend Rs. 30,00,000/- to him through cheque subject to condition that as a security of such loan the party would mortgage his plot No. 46 and 47, Choudhary Colony-I, Village Bilwa, Teh. Sanganer, Jaipur and execute an agreement to sale of these plots in their favor and would hand over the original papers of these plots to them. Further, in order to secure the accruing interest portion and keep the pressure over the party another condition also imposed that a further agreement, just for security, of equivalent amount of loan would also execute, in which the cash payment equivalent to loan would be shown. 3. The party executed all these documents as per requirement (for Rs. 15,00,000/- in favor of Shri Laxmikant Biyani and for Rs. 15,00,000/- in favor of Smt. Sunita Biyani) but despite of repetitive pursuance the party did not hand over the original documents of the plot No. 47, Choudha....
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....ke the legal action against the assessee. iii) Thereafter, considering the practical difficulties of the assessee group in non-returning of original documents (as the same were under seizure with Income Tax department) Shri Ram Ji La Sharma insisted for a written confirmation regarding not giving of any loan to him and not to misuse the original documents executed for loan. Therefore, on insist of Shri Ram Ji Lal Sharma a notarized settlement confirmation was executed on 27.05.2019. In this, the assessee and her husband Shri Laxmikant Biyani give the confirmation to Shri Ramji Lal that they did not give any loan to him and the original documents executed/taken for giving the loan will return to him as and when the same will receive back from department. iv) The Ld. A.O. could not disprove the correctness of the affidavit and other documents filed by the assessee and without giving any heed on the evidence filed by the assessee, the addition was made. 6. Circumstantial evidences also prove the contention of the assessee to be correct It is submitted that the circumstantial evidences are also in favour of the assessee and the same also proves the contention....
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....rsed to him) and copy of duly notarized settlement agreement to rebut the presumption u/s 132(4A) and 292C of the Act and the ld AO has made no further inquiry and has not controverted the evidences filed by the assessee. The ld AR submitted that the ld AO has not justified in making unwarranted addition and ld CIT(A) has also unjustified in confirming the addition, so the addition deserves to be deleted by Hon'ble ITAT. 8.3 Per contra, ld DR justified the addition made by the AO and relied upon the findings of AO and Ld CIT(A). 8.4 We have heard the rival contentions and perused the material available on record. We noted the Income Tax department during the course of search on 0504-2019 seized exhibit -63 of Annexure AS which shows that Ramji Lal Sharma had received amount of Rs. 15,00,000/- on 08-03-2019 from the assessee. Further, ADIT recorded the statement of assessee u/s 131 of I. Tax Act on 09-08-2019 wherein the assessee admitted giving of loan to Shri Ramji Lal Sharma. But the fact remains that the assessee has filed sworn affidavit of Shri Ramji Lal Sharma wherein he stated on oath that he has not received loan. The assessee explained that Shri Ramji Lal Sharma ....
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.... It is relevant to mention here that my family members and myself are engaged in business of finance, lending of money to needy persons, parties and borrowers on interest basis. As a security of loans given by us, we obtain the several documents from the borrowers as well as in major cases of his guarantors also, which includes original cheques, promissory notes, cheque & promissory notes of guarantors, original property papers, agreements etc. During the course of search, the department seized these security documents taken from lenders most of which were duly recorded in our books of accounts. Vide my letter dated 25.04.2019 (filed on 26.04.2019 to DIT-Investigation, Jaipur under copy of ADIT-1, Jaipur), 19.06.2019 (filed on 20.06.2019 to PDIT Investigation, Jaipur under copy of ADIT-1, Jaipur), 06.08.2019 (filed on 07.08.2019 to PCIT-Central, Jaipur) It was requested to PDIT/PCIT Jaipur, to release some of these seized security documents as the same were required to submit into bank for realization of payment of outstanding loans or to return to the parties for realization of the loan or for taking legal action against the defaulter parties/ borrowers. However, the sam....
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....such incorrectness is require to be file and the same can only be filed upon receiving the copies of statements. Therefore, till the copies of statements not provided to me the same are not binding on me and the same are subject of further clarification by way of filing of certificatory affidavit." The ld CIT(A) cited several decisions in his order to substantiate the evidentiary value of the statements recorded u/s 132(4) of the Act and we carefully gone through these decisions but the fact remains that the ADIT has recorded the statements of the assessee u/s 131 of the Act not u/s 132(4) or 131(1A) of the Act, that too after four months of the search and also after receiving the request from the assessee to release some of the seized security documents which he required to return the borrowers on repayment of outstanding loans or for taking legal action against the defaulter borrowers and in absence of these documents his business would ruined, so he was in pressure. In these facts and circumstances the addition cannot be made on the basis of statements recorded u/s 131 of the Act by ADIT which were also retracted later on by the assessee by filing the sworn affidavit before t....
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.... The reply filed by the assessee has been examined but not found satisfactory. During the course of post-search proceedings, the assessee categorically admitted that the amount of Rs. 1,25,00,000/- was given to Shri Lal Chand Sharma out of undisclosed business income. During the course of post search enquiry, statement of the assessee was recorded u/s 131 of the Income Tax Act, 1961 on 09.08.2019 and he was asked to explain the details of annexure Exhibit-66 of Annezxure-AS, seized from the office premises of M/s Nidhi Financial Services. Shri Laxmikant Biyani. In reply to question No. 13 of his statement stated that cash loan of Rs. 1,25,00,000/- was given to Shri Lalchand Sharma earlier which was not recorded in his regular books of accounts and admitted that he has earned this unaccounted income of Rs. 1,25,00,000/- out of unaccounted business transactions. Relevant portion of his statement is reproduced hereunder:- XXXX 6.3 In view of seized record and in the light of admission of the assessee during the post-search proceedings, it is apparent that the assessee advanced Rs. 1,25,00,000/- to Shri Lal Chand Sharma. Therefore, the explanation submitted by t....
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....sessment order. Based on the material available on file and in absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities, I do not find any infirmity in the action of the ld. AO. Further, in the Income Tax Act the specific legal presumption has been provided under section 132 and 292C of the Act. In view of the above statutory express presumption and in view of the clear cut information in the seized material and in view of the absence of any strong & sterling documentary evidences to the contrary, and in view of the discussion in the applicable legal provisions and the ratio of the judgements as discussed in para (ii) to (ix) above the addition made is hereby confirmed in above terms." 9.2 The ld AR argued the case and submitted written submission as under:- 1. During the course of assessment proceeding the assessee categorically submitted that actually he did not give any cash loan/advance of Rs. 1,25,00,000/- to Shri Lal Chand and the Ld. A.O. blindly relying on the statement recorded u/s 131 and without considering the submission and evidence filed by the assessee, made the addition. ....
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....ed from office of assessee was also got prepared for high pitch amount for above mention reason only and the same have no relevance with actual amount. However, Shri Lal Chand refused to sign such documents as the same were prepared with very high-pitched amount as against actual Rs. 23,51,000/- and only gave verbal assurance to settle the matter very soon. After passing of time when the matter was not resolved the assessee filed a protest petition in court requesting to direct the Police investigation office to re-investigate the matter of my FIR lodged on 05.05.2017. The seized document i.e. Page No. 46 to 48 of exhibit 66, is not completes i.e. all the pages of such proposed agreement are not available. Only few pages are under seizure, which is only a photocopy, which have no evidentiary value. The pages are not signed by the parties and the date of document is also not apparent from the photocopies. Though the seal of notary appearing on such photocopied pages but the same is not signed by notary. It is not in knowledge of the assessee that how the seal of notary affixed on such photocopies. There is nothing in such photocopies from which it can visualized th....
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....ences. 5. Till the date of assessment neither the amount of Rs. 23,51,000/- was received back from Shri Lal Chand nor the agreed property registered in the name of assessee. Thus, actually the amount of Rs. 23,51,000/- was given to Shri Lal Chand for which the dispute was going on with him. Since the amount of Rs. 23,51,000/- given to Shri Lal Chand was not realizable hence became business loss, therefore the same was not offered as income because eventually the taxable income on account of this amount because Nil. It is an undisputed fact that the advances which were claimed as bad debts/business loss were the business advances of the assessee and once it is proven fact that such advances have become unrecoverable, then in such a situation the deduction of such advances should be allowed to assessee as bad debts/business loss. The reliance is placed on following judgements: - a) ACIT vs Shanti Swarup Goyal 27 Taxworld 410 (ITAT Jaipur) b) CIT Vs Abdul Razak & Co. (1982) 136 ITR 825 (Guj) c) CIT Vs Jawala Prasad Radha Kishan (1977) 107 ITR 540 (All) 6. It is also very much relevant to mention here that after great pursuance, finally Shri....
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.... between Shri Lalchand Sharma, S/o Shri Hanuman Sahay and Shri Laxmikant Biyani which was found & seized from the office premises of M/s Nidhi Financial Services as per page No. 46, 47 & 48 of exhibit-66 of the Annexure-AS. As per this agreement, Shri Lalchand, S/o Shri Hanuman Sahay could not repay the amount of loan till 14.09.2018. Further, ADIT recorded the statement of assessee u/s 131 of I. Tax Act on 09-08-2019 wherein the assessee admitted giving of loan of Rs. 1,25,00,000/- to Shri Lal Chand. The AO made the addition of Rs. 1,25,00,000/- relying on this statement of the assessee. We noted that the AO has not brought to notice any seized document to show giving of loan of Rs. 1,25,00,000/- to Shri Lal Chand. The assessee filed copy of FIR against Lal Chand which shows giving of loan of Rs. 23.51 lacs to Shri Lal Chand and the facts and circumstances clearly establish that the loan amount was not recoverable in normal course of the business and it has become business loss to the assessee. Further, the assessee submitted that he recovered Rs. 61 lacs from the assessee by way of purchase of his property by the assessee in Financial Year 2022-23 which the assessee declared as h....
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....e ld CIT(A) confirmed the addition on the basis of his findings in para (xii) as under:- "During the assessment proceedings the appellant made similar baseless contention which has already been adjudicated and rejected in case of loan to Shri Ramji Lal Sharma. During the appellate proceedings, the appellant has not furnished any information/evidences to rebut the findings of the AO. It is specifically observed here that inspite of giving many opportunities of being heard to the appellant, as detailed above the appellant has chosen not to make any submissions or furnish any information to substantiate and plead the grounds of appeal. There is substantial evidence on record in support of the assessment order. Based on the material available on file and in absence of any new submission/ finding and any other material for which the appellant was provided so many opportunities, I do not find any infirmity in the action of the ld. AO. Further, in the Income Tax Act the specific legal presumption has been provided under section 132 and 292C of the Act. In view of the above statutory express presumption and in view of the clear cut information in the sei....
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....ion which he rebutted by filing the affidavit of Shri Banwari Lal Kumawat and the ld AO has not controverted the same by making any further inquiry. Further in view of his detailed submission in ground No 2 and 3 no addition can be made on the basis of statements recorded by ADIT u/s 131 of the Act. The ld AR submitted that the ld AO has not justified in making unwarranted addition and ld CIT(A) has also unjustified in confirming the addition, so the addition deserves to be deleted by ITAT Bench. 10.3 Per contra, ld DR justified the addition made by the AO and relied upon the findings of ld AO and Ld CIT(A). 10.4 We have heard the rival contentions and perused the material available on record. We noted the Income Tax department during the course of search on 0504-2019 at the business premises of M/s Nidhi Financial Services, a loose paper file was found & seized as per exibhit-71 of annexure AS. As per this exhibit, the assessee has given cash loan of Rs. 15,00,000/- to Shri Banwari Lal Kumawat on 09.01.2019. We noted that the assessee explained that he paid Rs. 20,00,000/- to Shri Banwari Lal Kumawat by cheque which is verifiable from books of account and the assessee got si....
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....omissory notes reflecting the details of loans of Rs. 50 lacs are reproduced hereunder xxxxx 8.3 The submission of the assessee that he has given only an amount of Rs. 10 lakh is not acceptable as the promissory notes revealed that the loan of Rs. 50,00,000/- received by Shri Malik Khan. Shri Malik Khan has signed promissory notes as well as receipts in which he has admitted that loan of Rs. 50 Lakh has been received by him. The promissory note is a security for the lendee/lendor issued by the lender. The promissory note generally contains amount advanced/amount due, date of transaction, Name of lender and name & signature of lendee. It is general practice that no one can sign on promissory note as well as receipt without receiving the fund. Thus, it is clear that the assessee has given loan of Rs. 50 lacs to Shri Malik Khan. The ld CIT(A) confirmed the addition on the basis of his findings in para (xiii) as under:- "As noted by the ld. AO, Shri Malik Khan had signed two promissory notes for accepting the loans of Rs. 50 lacs which show complete details of the same. The promissory notes revealed that the loan of Rs. 50,00,000/- received by Shri M....
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....d requested for loan of Rs. 50,00,000/-. The assessee agreed to lend Rs. 50,00,000/- to this party and accordingly the documents for loan of Rs. 50,00,000/- were got prepared and upon completion of formality the amount of Rs. 10,00,000/- immediately disbursed to the party through a/c payee cheque. Since at that point of time the balance payment of Rs. 40 lacs was readily not available with assessee and the assessee was going out of India, therefore, he said to party to disburse the balance amount after coming back to India. Since, meanwhile the Income Tax search was conducted over the office of assessee, which resulted disturbance of business operation for time being and thereafter the party was not interested to take the balance amount, as the same was no more required to him. Thus, the balance amount of Rs. 40 lacs were not given to party till date. 3. During the course of assessment proceeding of the assessee, to prove his contention the assessee submitted the original sworn affidavit of Shri Malik Khan wherein he confirmed the facts of not taking any cash loan of Rs. 40 lacs from the assessee. It is an admitted position of law that the contents of affidavits, which are....
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....xplained that he has given loan of Rs. 10,00,000/- by cheque and balance of Rs. 40,00,000/- could not be given to Shri Malik Khan as he was expecting to receive the payments in few days from others, which he did not receive. He explained that it is normal practice of the business to get the signature of the borrower on all documents in advance. The assessee also filed sworn affidavit of Shri Malik Khan wherein he affirmed the receiving of loan of Rs. 10.00 lacs by Cheque. We noted that the assessee has also filed copy of legal notice given to Shri Malik Khan and copy of recovery case filed by the assessee in Court against him which was for Rs. 10.00 lacs. The assessee has rebutted the presumption u/s 132(4A) and 292C by filing these documents and the ld AO has not made any inquiry and has not controverted the contents of affidavit. We also noted that recovery court case was filed for recovery of Rs. 10 lacs not for 50 lacs. Had he has given the loan of Rs. 50 lacs then recovery court case must be also for 50 lacs which is not in this case, which clearly shows that the assessee has paid Rs. 10 lacs as loan to Malik Khan which too by cheque. In ground No 3 we have held that the affid....
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....007-08 to AY 2018-19. During the course of post search proceedings, the assessee categorically admitted that this much amount was given out of undisclosed income. Details of assessment year wise cash loans were calculated as under: Amount of cash loans FY Relevant A.Y. 30,000/- FY 2006-07 2007-08 80,000/- FY 2008-09 2009-10 1,00,000/- FY 2010-11 2011-12 4,25,000 /- FY 2011-12 2012-13 26,00,000/- FY 2012-13 2013-14 15,00,000/- FY 2013-14 2014-15 5,50,000/- FY 2014-15 2015-16 23,25,000/- FY 2015-16 2016-17 62,50,000/- FY 2016-17 2017-18 73,80,000/- FY 2017-18 2018-19 The AO found the explanation submitted by the assessee is nothing but story cooked afterthought. The AO held that in the light of clear admission of the assessee during the post-search proceedings, notings of seized record and facts & circumstances of the evidences gathered as a result of search it is proved that the assessee earned undisclosed business income and given loan and made the addition in respective assessment years as under:- Relevant A.Y. Amount of cash loans 2014-15 15,00,000/- 2015-16 5,5....
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.... and not genuine and is merely an attempt to not to pay the taxes. It is also important that no deduction is allowable in the income taxable under section 69 / 69A etc. of the Act as per section 115BBE of the Act. On this ground also the deduction of alleged bad debts is not allowable to the appellant. 12.2 The ld AR argued the case and submitted written submission as under:- 1. During the course of search, the department found an excel sheet in which a list head with "Court Cases Party's Status" was seized. From the heading of the list, it is well apparent that this is with regard to the cases filed against the borrower parties who made the default in repayment of loan/advance given by the assessee and it is also evident that as on the date of search such case was pending as till that the amount could not be recovered from the party. The amount mentioned in the list is entirely not of principal of loans. It also includes the outstanding interest amount, which not realized. The assessee was in Finance business since long period and the documents for loan was found during search since AY 2007-08. The assessee received repayment of loans which were given prior to AY 2014-....
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....oceedings at 607A, Crystal Mall, Bani Park, Jaipur two excel files of headed with Court Cases (party status) and Court Cases -Manish Patni were found in the computer hard disk in which details of loans given by the assessee were mentioned. The ld AR of the assessee explained that from the heading of the list, it is well apparent that this is with regard to the cases filed against the borrower parties who were not re-paying loan/advance given by the assessee and it is also evident that as on the date of search such case was pending as till that the amount could not be recovered from the party and the amount against these loans are not recoverable in normal course of the business. We noted that the assessee submitted before the AO the copies of court cases, legal notice/other documents regarding the ongoing litigation with the borrower parties for recovery of the amount. From the documents filed by the assessee, it conclusively proves that the loan given to those parties are not recoverable and converted into business loss or bad and could not be received till the date of search. The A.O. did not make any further inquiry. We noted that lending of funds was part of the business of the....
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....nt for sales of goods, he advances the amount to his principal and adjusts the sale proceeds against such advances. When he acts as a commission agent for buying the goods, he purchases the goods for supply to his principal from his funds and then he is reimbursed by his principal on supply of such goods. A commission agent, therefore, has got to advance amounts from time to time according to the nature of his business. It may be a short-term advance if he is a commission agent for purchase of goods or it may be a long-term advance if it is for sale of goods. We have, therefore, not been able to appreciate as to how the Tribunal approached the problem as if the financial lending which is involved in the business of commission agency is a separate and exclusive business and not an integral part of the commission agency business. It is an admitted position here before us that the assessee-firm was doing the business as commission agents and dealers in grocery articles. It is also an admitted position that M/s. Mohmad Peer Mohmad of Nasik engaged the assessee-firm as commission agents for purposes of purchase of goods. The one set of account in the trading books of the assessee firm c....
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....We should not be, however, understood to subscribe to the view that if in a given case a trader doing commission agency business makes advances or lends money to an unknown outsider or to a complete stranger, it would be a part of his commission agency business. In the present case, however the ITO has not only found that the assessee-firm was making such advances in the course of commission agency business but the ITO, Rajkot, has also recorded the statement of one of the partners of the assessee-firm where Shri Ahmed Ibrahim Sahigra stated, inter alia, that the firm was carrying on money-lending business at Bombay and no licence was necessary for such business and the transactions were recorded in the common trading books of account of the firm. In answer to question No. 10 he stated that M/s. Mohmad Peer Mohmad of Nasik approached them for loan and requested them to send money on their behalf to M/s. Gokaldas Virjibhai of Sangli and they complied with the request. As a matter of fact, in the question put to the deponent, the ITO suggested that since M/s. Gokaldas Virjibhai of Sangli from whom M/s. Mohmad Peer Mohmad of Nasik had purchased the goods were not prepared to wait for ....
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....ecorded by ADIT on 09-08-2019 u/s 131 of I.Tax Act. The ld AR submitted the copy of notice issued by ADIT dated 06-08-2019 which is u/s 131 of the Income Tax Act. The ld AR filed the copy of statement recorded by ADIT on 09-08-2019 u/s 131 of I.Tax Act. We noted that this notice as well statements are not u/s 131(1A) but u/s 131. Further, the assessee has retracted from the statement recorded by ADIT u/s 131 of the Act by filing an affidavit before the AO as soon as the assessee received the copy of the statement. In ground No 3 for AY 2019-20 (ITA No 1423/JPR/2024) in para 8.4 above, we have elaborately discussed and held that on the basis of statement recorded by ADIT u/s 131 of the Act which also retracted by the assessee addition cannot be made in the hands of the assessee. The findings made in this regard in ground No 3 for AY 2019-20 (ITA No 1423/JPR/2024) in para 8.4 above will hold good mutatis mutandis for this ground as well. In view of the forgoing discussion, facts and circumstances of the case and case relied upon by AR of the assessee, the impugned addition of Rs. 15,00,000/- for A.Y. 2014-15 Rs. 5,50,000/- for A.Y. 2015-16 Rs. 23,25,000/- for A.Y. 2016-17 Rs. 62,50,0....
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.... However, the notice u/s 251 (2) as required to be given for enhancement of tax liability has not been issued, thus this finding is not valid in the eyes of the law as the same has given without providing the opportunity to the assessee. 3. In this regard it is submitted that such advances were business advance and, in the assessment, order the Ld. A.O. after considering the facts of the case, treated the same as business income of the assessee. The assessee was in Finance business since long period and the documents for loan was found during search since AY 2007-08. The assessee earned income from business operation and the same was utilized for giving the business loans/advances. Advances and loans given prior to AY 2014-15 were realized and rotated back in fresh loan and advances during AY 2014-15 to AY 2019-20. The loan/advance given by the assessee was his business assets like stock in trade in the case of traders. It is an admitted position of law that the business assets can always be taxed as business income only. Therefore. the ld. CIT (A) is not correct in holding that such advances should be taxable u/s 69A of the Act. In this regard, the reliance is pl....
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....er, the income added in the assessment order can not be treated as business income of the appellant. On this ground also deduction of the alleged bad-debts is not allowable." The AO assessed the income as business income utilized in giving the loans after considering the admission of the assessee during post search proceedings, notings of seized records and facts & circumstances of the evidences gathered as a result of search and contra to the findings of the AO, ld CIT(A) held that loans are taxable u/s 69A of the Act and provisions of section 115BBE are applicable over the addition so made by the ld AO. However, the ld CIT(A) has not brought on record any inquiry made by him to support his findings. For the sake of clarity, we are reproducing the provisions of section 69A of I. Tax Act as under:- "69A Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bull....
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....sment Year: 2012-13) Smt. Tripat Kaur (Date of pronouncement 09/10/2018 ) held that:- '...If authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorized under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to perform an action on any particular issue, then it is that authority alone who should do that action. We draw support from various decision of Honorable High courts in Ghanshyam K. Khabrani v. ACIT [2012] 346 ITR 443 (Bom), CIT v. SPL'S Siddhartha Ltd. [2012] 345 ITR 223 (delhi ) and also of the Honourable supreme court Anirudhsinhji Karansinhji Jadeja v. State of Gujarat [1995] 5 SCC 302 where in hon. Supreme court held as under :- --13. It has been stated by Wade and Forsyth in 'Administrative Law', 7th Edition at pages 358 and 359 under the heading 'SURRENDER, ABDICATION, DICTATION' and sub- heading "Power in the wrong hands" as below:- "Closely akin to delegation, and scarcely distinguishable from it in some cases, is any arrangement by which a power conferr....
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....tice to the assessee regarding such action. I am of the considered view that law does not permit for such change of provision of law. As per section 250 of the Act, the ld. CIT(A) is empowered to make further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report to the ld. CIT(A). As per section 251(1)(a) of the Act, in appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment, but there is no such power provided by the law that ld. CIT(A) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made under section 69A of the Act. Therefore, the addition made by the ld. CIT(A) under section 69A of the Act is liable to be deleted." It is pertinent to mention here that the similar issue has been dealt with and decided by this Bench of ITAT in the case of Motisons Buildtech Pvt. Ltd vs ACIT, Central Circle-2, Jaipur vide its order dated 30-10-2017 in ITA No. 385/JP/2017 (Assessee's appeal) for the Assessment Year 2012-13 by observing as under:- ''8.4 We have heard the rival co....