TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1238
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.... 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 money, which was used for giving the loan and also erred in holding that such une....
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....e, 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 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 explai....
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....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 of Rs. 73,80,000/- 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: - ....
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....ed 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. CIT(A) not provided opportunity to the assessee before holding the same. Ground No. 8: - 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.'' 2. Since the issues involved in these appeals are almost identical on f....
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....d 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 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) 2018-19 32,89,400 1,06,69,400 73,80,000 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" seize....
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....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 he confirmed the additions. Page 37 to 42 (Para x to xiv) Similar findings, were given while rejecting the appeals of A.Y. 2014-15 to A.Y. 2018-19. 5. Aggrieved from the order of the ld. CIT(A), the assessee preferred the present bunch of six appeals on the various grounds raised in the respect appeal memos filed for each year. The ld. AR of the assessee also filed written submission. Since the dispute is similar for all these years the same is decided all together based on the gro....
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....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 order and decided the appeal of the assessee on merit. In view of the above facts and circumstances of the case, we hold that the ld CIT(A) has provided proper opportunity to the assessee to submit his contentions before the ld CIT(A) but the same were not availed of by the assessee. In the result ground No. 1 in ITA No. 1418/JPR/2024, ITA No. 1419/JPR/2024, ITA No. 1420/JPR/2024, ITA No. 1421/JPR/2024, ITA No. 1422/JPR/2024, ITA No. 1423/JPR/2024 of A.Y. 2014-15, A.Y. 2015-16, A.Y. 2016-17, A.Y. 20....
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....e 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 writing, make as assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment" In this case, the assessment is not made in accordance of this provision of the Act. Before completing the assessment order, the Ld. A.O. in order to strengthen his suspicion with sound evidences, neither made any attempt to disprove the submission of the assessee nor brought any positive evidence on record. She simply proceeded to make the arbitrar....
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....d. 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 (2008) 299 ITR 179 (P&H) also held that suspicion, howsoever strong cannot take the place of legal proof. 5. Thus, the assessment proceeding completed u/s 153A of the Act is 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. The ad....
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.... 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 required to return back on realization of the loan or for taking legal action against the defaulter parties/ borrowers. However, the same were not release to him and ADIT insisted/pressured to him to make the surrender of undisclosed income. It was threaten to him that in case of non surrender of income as per wish of the department the seized documents would not be released to me. Therefore, in such circumstances the assessee did not having any remedy except to make the surrender of income in the statement recorded u/s 131 on 09/08/2019 as desired and directed by department.....
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....rohibited 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, all public officers in whom powers are vested by statutes must exercise those powers " within the limits to which an honest man competent to the discharge of his office ought to confine himself, that is, within the limits and for the objects intended by the Legislature." d) In view if above submission it is submitted that the summon issued under section 131 of the Act without jurisdiction and the statement recorded in consequence to that is not valid and bad in law, therefore no reliance can be placed on such invalid statement and thus the same cannot be used as evidence. 2. As soon as the copies of the statement were pro....
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....me 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 admission made in the ignorance of the legal rights or under duress, cannot bind the maker of the admission. This right has been tested under Income-tax Act and the same has been upheld by Punjab & Haryana High Court in Kisan Lal Shivchand Rai v. CIT, (88 ITR 293). 3. The retraction affidavit remained uncontroverted and thus no addition can be made on the basis of such retracted statement a) After the affidavit was filed before the assessing authority, he remained silent on the face of it and carried out no enquiry thereon to verify the correctness thereof. The assessee was not examined on the point of retraction and on the point of the giving of loan to various parties. Ass....
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....ent 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: - (i) NavnitLal C Javeri Vs. Sen (1965) 56 ITR 198 (SC) (ii) K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) (iii) UCO Bank vs. CIT (1999) 237 ITR 889 (SC) (iv) Union of India vs. Azadi Bachoo Andolan (2003) 263 ITR 706 (SC) 5. Addition cannot be made on the basis of statement retracted by the assessee as the same loose its legal sanctity a) After search the statement of the assessee was recorded u/s 131 of the Income Tax by the ADIT on 09.08.2019. In such statement, the assessee surrendered the undisclosed income of Rs. 4 Crore. However, this surrender was not at will of the assessee. This income was surrendered because of pressure, psychological torture, mentally disturbance, fear and threats of the department, so forcibly Shri Laxmikant Biyani made....
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....wing 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 of Kerala & Anr. (1973) 91 ITR 18 (SC). 4. Hon'ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) 5. CIT vs. Bhanwar Lal Murwatiya (Rajasthan High Court, Jodhpur) 39 TW 214. 6. Hon'ble ITAT Jaipur Bench in the case of Shri Pawan Lashkary ITA No 808/JP/2011 dated 06.01.2012 7. M/s Suresh Medical Agency ITA No 443/JP/2012 dated 21.08.2013, Shri Radhey Shyam Mittal ITA No 420/JP/2012 dated 26.08.2013, Shri Suresh Kumar Mittal ITA No 947/JP/2013 dated 24.09.2015 and Shri Madan lal Mittal ITA No 948/JP/2013 dated 24.09.2015. 8. Hon'ble ITAT Jaipur Bench in the case of DCIT Vs Ashok Kumar Agarwal in ITA No 847/JP/ 2015 order dated 3/10/2016. 9. Chitra Devi v/s ACIT (2002) 28 Tax-world 454 (ITAT JP) 10. Jagdish Narain Ratan Kumar V/s ACIT 22 TW 209 (JP) 11. CIT Vs. Kader Khan Son 300 ITR 157 (Mad) 12. Paul Mathews 263 ITR 101 (Ker) 13. CIT V/S M/s Dhingra Metal Works Delhi ....
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....h statement was recorded u/s 131 of the Act. The statement recorded u/s 131 alone cannot be considered as evidence like to statement recorded u/s 132(4) of the Act. The Ld. CIT (A) relied on several judgments, which are applicable in case where the statement recorded during search u/s 132(4) and whereas in the case of the assessee statements were recorded by ADIT u/s 131 and also without jurisdiction, so the same cannot be equated with statements recorded u/s 132(4). 2. The presumption laid down u/s 132(4A) and u/s 292C of the Act, relying on which the CIT (A) confirmed the addition is a rebuttable presumption. The CIT (A), while confirming the addition placed reliance on the provisions of section 132(4A) and 292C of the Act. However, he ignored the legal position that the same is a rebuttable presumption and once the assessee with documentary evidence has proved his contention, then in such a case in absence of anything contra such evidences would be prevailed over seized records. 3. No evidence that loans became bad was filed The Ld. CIT (A), wrongly held that the assessee did not file any supporting and evidence to prove that the loans became bad. However, the Ld. CIT ....
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....s discussed the evidentiary value of the statements recorded u/s 132(4) of Income Tax Act but the fact remains that in the case of the assessee the surrender of income as well as retraction of statement is not of the statements recorded u/s 132(4) but of the statements recorded u/s 131 of I.T. Act, 1961 which too recorded without authority of law. The ld CIT(A) discussed the provisions of section 132(4A) and 292C of Income Tax Act to emphasized the evidentiary value of seized documents but the fact remains the presumption u/s 132(4A) and 292C is rebuttable presumption and the assessee has rebutted the same by filing several affidavits which have not been controverted by AO. The ld CIT(A) mentioned that no evidence has been filed before the AO to show that the loans have become bad and non- recoverable but the fact remains that the AO was in possession of several materials like papers relating of court cases, FIR etc which clearly proves that the loans were not recoverable in normal course of business. However, all the above said defects and deficiency on the part of AO may have bearing on the additions made in the assessment order which we will consider appropriately while disposin....
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....disclosed business income and given loan of Rs. 15,00,000/- to Shri Ramji Lal Sharma. Hence, the addition of Rs. 15,00,000/- is being made to the total income of the assessee for A.Y. 2019-20. Proceedings for penalty u/s 271AAB(1A)(b) of the Act is being initiated separately." The ld CIT(A) confirmed the addition so made by giving his findings in para (x) as under:- "As noted by the ld. AO, during the search proceedings, a loose paper file was found & seized as per exibhit-63 of annexure AS. As per this exhibit, the assessee has given cash loan of Rs. 15,00,000/- to Shri Ramji Lai Sharma on 08.03.2019. 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 during the assessment was rejected as nothing but story cooked afterthought. The appellant has claimed that the paper which showed that the cash loan was given by the appellant in which was found during the search and seizure action was executed to act as a security for the loan of....
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....ed to be given as security. This created a doubt in mind of assessee that the party may have had bad intention. In absence of these documents of plot the assessee group refused to disburse the loan to the party, therefore the loan amount noted in the seize record actually was not given to party and the transaction finally did not materialize. 4. This fact is also verifiable from the seized record itself which shows that the security documents prepared in favor of Sumita Biyani were not signed by Smt. Sunita Biyani because the party did not hand over the documents of underlying property agreed to be mortgaged against loan. Further page 56 to 59 and page 53 to 55 of seized annexure is agreement of sale of plot No. 46 Choudhary Colony-I, Village Bilwa, Teh. Sanganer, Jaipur in favor of Shri Laxmikant Biyani and Plot No. 47, Choudhary Colony-I, Village Bilwa, Teh. Sanganer, Jaipur in favor of Smt. Sunita Biyani. In such agreement in payment detail the mode of payment is written as cheque but since the loan actually was not disbursed, therefore detail of cheque left blank. 5. Evidence submitted by the assessee during assessment proceedings to prove his contention During the course o....
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....not fulfil the agreed conditions and such circumstantial evidences are as under: - i) From verification of seized record, it is apparent that the security documents prepared in favour of the assessee are not singed by the wife of assessee It is an admitted position that if the agreement is not signed by the either of the party of the agreement, then the same cannot be treated as really executed. In this regard the reliance is placed in the case of Anil Bala Goyal, v/s DCIT ITA No. 1533/Del/2021 order dated 19.01.2023, Hon'ble Delhi ITAT. ii) As per the seized documents, it is apparent that as a security the original documents of the Plot No. 47, Choudhary Colony-I, Village Bilwa, Teh. Sanganer, Jaipur was to be handed over by Shri Ram Ji Lal Sharma to the assessee group. During the course of search, the papers of this property were not find to the search party as the same were never handed over by Shri Ramji Lal Sharma to the assessee group, which also shows that the conditions on which the loan to be given could not be fulfilled and therefore actually the loan could not be disbursed. iii) In agreement to sale in payment detail the mode of payment is written as cheque but sin....
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.... of these plots, and would handover the original papers of these two plots to assessee. Shri Ramji Lal Sharma did not handover the original papers of plot No 47, which is apparent from the fact that original papers relating to plot No 46 are in seizure and no paper relating to plot no 47 are under seizure, which clearly shows that the terms and conditions for disbursement of loan were not fulfilled by Shri Ramji Lal Sharma and in such situation, the loan cannot be disbursed to the borrower. The assessee has filed affidavit of Shri Ramji Lal Sharma, legal notice sent by Shri Ramji Lal Sharma for return of original documents and notarized settlement agreement before the AO and the AO has not made any further inquiry to controvert the evidence and explanation filed by the assessee. It is usual practice of finance business to prepare the documents in advance before disbursement of the loan and disbursement of loan is made after fulfilment of all the conditions of loan sanctioned. Further, the ld AR stated that the department has no material to show that loan was given in cash. The presumption u/s 132(4A) and 292C is rebuttable presumption and the assessee has rebutted the same by filin....
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....per wish of the department the seized documents would not be released to me. Therefore, in such circumstances I did not having any remedy except to make the surrender of income as desired and directed by department. Therefore, whatever income has been surrendered by me in my statement dated 09.08.2019 was not surrender of actual but forcibly agreed to surrender the same in pressure, psychological torture, mental disturbance, fear, threat, coercion and in order to get rid of the prolonged and harassing actions such as not release of documents, interrogation etc. It is pertinent to mention here that after making the surrender I again requested to PCIT-Central, Jaipur to release of original documents vide my letter dated 16.08.2019, however on 18.09.2019 some part papers/documents were released. Therefore, on 14.10.2019 and 28.01.2020 (filed on 30.01.2020), I again requested to PCIT-Central, Jaipur for release of some original documents and the same were released to me on 20.07.2020 i.e. almost after one and half years from the date of search. Vide my letter dated 24.03.2021 (filed on 25.03.2021) I further requested to PCIT, central, Jaipur for release of some more original documents,....
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....he ld AO. Further Jaipur ITAT in the case of Shri Nirmal Kumar Kedia ITA Nos. 124 to 126/JP/2019 And 286 to 288/JP/2019 order dated 06-06-2018 has held that sworn affidavit should be accepted as evidence. The findings of ITAT in para 31 was as under:- "31. From the record we found that the assessee had submitted the affidavit of several parties, wherein they confirmed the payments made against purchases of plots. In case of any doubt the AO could have made the direct verification from parties but the same has not been made. The AO did not issue any summon to any of these party, therefore the sworn affidavit submitted by the parties confirming the amount paid to the assessee group for purchases of plot should be accepted as admissible evidence. The impounded material does not show that the plots were actually sold at the same rate as mentioned in the impounded material. The AO/ld CIT(A) has not rebutted the contents of the affidavits." 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/- made by him on account of loan to Shri Ramji Lal Sharma is not sustainable and hence the sam....
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....the evidences gathered as a result of search it is proved that the assessee earned undisclosed business income and out of that given loan of Rs. 1,25,00,000/- to Shri Lal Chand Sharma. Hence, the addition of Rs. 1,25,00,000/- is being made to the total income of the assessee for A.Y. 2019-20. Proceedings for penalty u/s 271AAB(1A)(b) of the Act is being initiated separately." Ld CIT(A) confirmed the addition on the basis of his following findings in para (xi) of his order:- "As noted in the assessment order, during the course of search proceedings, the part of notarized settlement agreement dated 14:06.2018 executed between Shri Lalchand Sharma, S/o Shri Hanuman Sahay and Shri Laxmikant Biyani 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. 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 ....
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....d in between assessee and Shri Lal Chand for sale of Reservation letter or say Arakshan Patra of plot. The copy of such agreement was filed before A.O. However, after the great pursuance Shri Lal Chand neither repaid the amount taken from assessee nor got transferred the property to assessee which agreed vide agreement dated 30.08.2016. Thus, to recover the amount, which was not intended to be repay back by Shri Lal Chand the assessee lodged a FIR on 05.05.2017 in Police Station Gandhi Nagar, Jaipur. Such FIR is lodged for forgery of Rs. 23,51,000/- which was actual amount involved in dispute with this party. The copy of such FIR was also filed to A.O. Upon filing the FIR Shri Lal Chand came into the pressure and requested to assessee to allow him some time to repay back the money or in case nonrepayment of money he proposed to transfer of captioned property to assessee. He further requested that mean time the FIR lodge against him may be withdrawn. As a security of his commitment Shri Lal Chand also give to assessee the papers of other properties and assured to assessee to settled his commitment within 10 months. At the assurance given by some common known person and relying on ....
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....ly given by the assessee or receivable to the assessee or received by the assessee. From these seized papers no conclusion can be drawn and the same is just only a rough deaf and dumb document. The seized document does not reflect that the assessee gave cash loan of Rs. 2.75 crore to Shri Lal Chand Sharma. There is no such reference in seized documents and from the seized documents this presumption cannot be drawn. As per the noting of seized document it can only be presumed that certain amount agreed to be paid by Lal Chand Sharma in settlement of certain dispute. However, from the seized records it is not apparent that what was such dispute and how much quantum involved when the dispute arose. 3. Evidence submitted by the assessee during assessment proceedings to prove his contention In view of above submission, it is well evident that from the seized record it is evident that the assessee has not given amount of Rs. 2.75 Crore to Shri Lal Chand and on the other hand from following evidence submitted during the course of assessment it is well evident that only Rs. 23,51,000/- was given to this person and the entire dispute with this person arose with respect to this amount....
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.... credited as income, are being submitted herewith." The ld AR further submitted that documents seized by the department does not reflect giving of loan of Rs. 1,25,00,000/- and the entire addition was made on the basis of statement of the assessee recorded by ADIT u/s 131 on 09-08-2019, and in view of his detailed submission and case laws submitted in Ground No 2, the statement recorded by the ADIT on 09-08-2019 u/s 131 of the Act, which too retracted also, cannot be accepted as evidence and on the basis of these statements no addition can be made. He further submitted that presumption u/s 132(4A) and 292C is rebuttable presumption. The assessee filed affidavit of Shri Lal Chand before the AO affirming that he was given loan of Rs. 23,51,000/- by the assessee. The copy of FIR also supports the figure of Rs. 23,51,000/- of the loan given by the assessee to Shri Lal Chand. The AO has not made any further inquiry or recorded statement of Shri Lal Chand to controvert the contents of the affidavit. The ld A/R submitted that the AO himself has rejected the seized documents as the addition was not made on the basis of seized documents but he made the addition of Rs. 1,25,00,000 on the ba....
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.... 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 in para 8.4 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. 1,25,00,000/- made by him on account of loan to Shri Lal Chand is not sustainable and hence the same stands deleted. Ground No. 4 in ITA No. 1423/JPR/2014 for A.Y. 2019-20 is allowed. 10. Ground No. 5 (ITA No. 1423/JPR/2014 of A.Y. 2019-20) :- is regarding the addition against loan of Rs. 15,00,000/- to Shri Banwari Lal Kumawat 10.1 During the course of search proceedings 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. The AO made the addition on the basis of following findings in Para 7.2 of assessment order as under:- "7.2 The reply filed by the assessee has be....
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.... Rs. 15,00,000/- to Shri Banwari Lal Kumawat and the Ld. A.O. blindly relying on the 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 the amount of Rs. 20,00,000/- was paid to this party as loan though cheque and the same is duly recorded in books of accounts. The payment of Rs. 15,00,000/- mentioned at Page 25 of the seizure annexure was actually did not made to the party but the same only mentioned in the documents just to cover & secure the interest portion if the party get default in future and to keep the pressure over the party for timely repayment of loan. It is relevant to mention here that to secured the loan and as per practice of trade of the assessee generally the assessee provides the loan after taking the similar documents of guarantor of borrower. In this case there was no guarantor, therefore the agreement of loan was prepared with higher amount to keep the pressure on the party if it defaults in making the repayment. 3. During the course of assessment proceeding of the assessee, to prove his contention the assessee submitted the original sworn affidavit of Sh....
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....the AO has not made any inquiry to controvert the contents of the affidavit. In ground No 3 above in para 8.4 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. Further the assessee has filed affidavit of Shri Banwari Lal Kumawat and the AO has not made any inquiry to controvert the contents of the affidavit and in ground No 3 we have held that the affidavit which have not been controverted by the AO should be accepted as evidence. The findings made in this regard in ground No 3 in para 8.4 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/- made by him on account of loan to Shri Banwari Lal Kumawat is not sustainable and hence the same stands deleted. Ground No. 5 in ITA No. 1423/JPR/2014 for A.Y. 2019-20 is allowed. 11. Ground No. 6 (ITA No. 1423/JPR/2014 of A.Y. 2019-20) :- is regarding the addition against loan of Rs. 40,00,000/- to Shri Malik Khan. 11.1 During the course of....
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....oceedings, 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 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. 11.2 The ld AR argue....
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....levant to mention here that had loan of Rs. 50 lacs were given to the assessee then court case was to be filed for Rs. 50 lacs not for 10 lacs. 4. As apparent from the above submission, during the course of assessment proceeding, the assessee filed the admissible evidences to prove his contention but no heed was given by Ld. A.O. on such evidence and the same were overlooked. Even in the assessment order also no discussion has been made to controverted to such evidences. The ld AR further submitted the assessee has filed sworn affidavit of Malik Khan which has not been controverted by the AO and he made no further inquiry. He further submitted that the assessee gave Rs. 10 lacs to Shri Malik Khan by cheque which is not recoverable in normal course of the business and the assessee has given legal notice to Shri Malik Khan and also filed court case for recovery of the loan amount of Rs. 10 lacs only which shows that the assessee gave the loan of Rs. 10 lacs only and this loan is also not recoverable in normal course of the business and has become business loss to the assessee. The ld AR submitted that the ld AO has not justified in making unwarranted addition and ld CIT(A) has als....
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....24, ITA No. 1419/JPR/2024, ITA No. 1420/JPR/2024, ITA No. 1421/JPR/2024, and ITA No 1422/JPR/2024 of A.Y. 2014-15, A.Y. 2015-16, A.Y. 2016-17, A.Y. 2017-18 and A.Y. 2018-19 respectively) is regarding the addition of Rs. 15,00,000/- (A.Y. 2014-15) Rs. 5,50,000/- (A.Y. 2015-16) Rs. 23,25,000/- (A.Y. 2016-17) Rs. 62,50,000/- (A.Y. 2017-18) and Rs. 73,80,000/- (A.Y. 2018-19) is on account of loan/advance given to various parries. 12.1 During the search proceedings 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 and these files show the status of court cases against such parties. The AO mentioned that during the course of post search enquiries, statement of Shri Laxmikant Biyani, the assessee, was recorded u/s 131 of the IT Act on 09.08.2019, in which he was asked to verify the loans related to court cases (party status) and court cases-Manish Patni with the regular books of accounts. The assessee, in reply to question No. 16, has stated that these loans, cases have been filled before the Hon'ble Court to re....
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.... the timely manner giving the justification along with the supporting evidences. The ld CIT(A) cited several case laws to substantiate the evidentiary value of statements recorded under section 132(4) of Income Tax Act. The ld CIT(A) held that the appellant has made a claim of bad debts or business loss without any supporting. First of all, the appellant has not shown that what is the amount of interest included in such balances for each of such party and for this the appellant was also required to show that the interest was not received earlier etc. The appellant has also not shown that the same actually became bad. There is no evidence and no entry for the same in the books of accounts. Also it is seen that the appellant has lodged court case thus it cannot be accepted that the debt had become bad. The claim of the appellant is not bona fide and not genuine and is merely an attempt to not to pay the taxes. The ld CIT(A) held that in the assessment order another contention of the appellant is mentioned that advance/loans were business loans or advances. As the above mention amount was not paid by the parties, thus the same became bad and is allowable to the assessee as business lo....
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....uted fact that lending of funds was part of the business of the assessee and the loan/advance, as found noted in seized record, were business assets and part of the business activities of the assessee. since, these loans/advances were not paid by the parties, thus the same became business loss/bad and is allowable to the assessee as business loss, therefore eventually the taxable income would be Nil, because on the credit side the it will be income of the assessee and on debit side the same will be allowed as business loss. 4. It is an undisputed fact that the loan/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) 5. It is open to department to treated such loan/advance as income of the assessee as and when the same are....
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....residuary and general provision. A business trading loss is deductible in computing the profit earned by a business if the following conditions are satisfied: (i) The loss should be a real loss and not notional or fictitious. (ii) The loss should be a loss on revenue account and not on the capital account. (iii) The loss must have actually arisen and been incurred, not merely anticipated or certain to occur in the future. (iv) The loss should be one that is incidental to the carrying on of the business and must arise or spring directly from or be incidental to the carrying out of the operation of the assessee's business. v) There should be no prohibition mentioned in the provisions of the Income Tax Act, against its deductibility. The claim of assessee is business loss as opposed to a business expenditure which is allowable u/s 28/ 37 of I.T. Act as the assessee satisfies all the above mentioned conditions. Therefore, if income is taken on credit side against the loan, then simultaneously loss is to be allowed as the loans are not recoverable and the net result would be zero. Hon'ble Gujarat High Court in the case of CIT Vs Abdul Razak & Co (1982) 136 ITR 825 (Gu....
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.... Mohmad Peer Mohmad of Nasik for paying off their debt to M/s. Gokaldas Virjibhai of Sangli with whom the said principal had independent dealings. It is also an admitted position that the trading account of M/s. Mohmad Peer Mohmad of Nasik in the books of the assessee-firm was settled and there was no outstanding which had been carried to the sarafi account of the said party. These facts, however, in our opinion, are not sufficient to necessarily reach the conclusion as has been done by the Tribunal that the lending was not a part of the general commission agency business. The general lien granted, inter alia, to the factors who are the commission agents for sale of goods under s. 171 and of agents under s. 221 of the Indian Contract Act extends to the general balance of account of their principal which would, therefore, necessarily include the advances made apart from strictly in the course of the business as factors or commission agents for purchase and supply of goods. It is a matter of surprise how the Tribunal lost sight of the finding made by the ITO that in the course of the business of commission agency, the assessee-firm had advanced money to the constituents who were requ....
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....than 30 years, and they enjoyed greater credit facility with them which was not available from M/s. Gokaldas Virjibhai of Sangli. The Tribunal has overlooked these statements of the assessee and the debtor-firm where it has been clearly stated that these advances were asked for and made in fact having regard to the commercial relations between the parties and the commercial relations were admittedly of principal and commission agents. In our opinion, therefore, the Tribunal was not justified on the facts and in the circumstances of the case to hold that the advance to M/s. Mohmad Peer Mohmad of Nasik was not in the ordinary course of business of the assessee-firm and merely incidental to it. As held by this court in CIT v. Equitorial Pvt. Ltd. [1974] Taxation 37(3)-82, the debt owed by M/s. Mohmad Peer Mohmad of Nasik was one which sprang directly from the business, of the assessee and was allowable as a bad debt, and, consequently, therefore, a trading loss under section 28(1). It is no doubt true that every loss is not so deductible unless it is incurred in carrying out the operation of the business. [vide CIT v. Nainital Bank Ltd. [1965] 55 ITR 707 (SC)]. In that view of the mat....
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.... and A.Y. 2018-19 respectively and Ground No 7 in ITA No. ITA No. 1423/JPR/2024 for AY 2019-20. In this ground of appeal, the assessee challenged the finding of Ld. CIT (A), wherein he held 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. 13.1 The AO taxed the loans as business income by relaying the statement of the assessee u/s 131 of the Act recorded by ADIT on 09-08-2019. The ld CIT(A) relying on several case laws held that these loans should be taxed u/s 69A and provisions of section 115BBE should be applied and no deduction of set off of business loss should be given to the assessee against the Income against loans and advances. 13.2 The ld AR argued the case and submitted written submission as under:- 1. The ld AO considering the material available on record, considering the fact that the assessee was in Finance Business since long before the search and even loan documents were found from AY 2007-08 and also considering the statements recorded u/s 131 of Income Tax Act....
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....nd loan documents were found as the result of search since AY 2007-08. The department has carried out intensive search operation and no material/documentation on record which even remotely demonstrated that assessee had any other source of income other than the business. The only source of income of the appellant is business income from advancing of loans etc. The revenue was not able to advance any evidence during assessment proceeding that the said income is not connected with the business income of the assessee, hence all the income earned by the assessee relate to business income only. The ld AO made the addition by holding that:- "Hence, in the light of clear admission of the assessee during 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...." Contrary to the above findings of AO, the ld CIT(A) made the following findings in para (vi) of his order:- "(vi) Further alternatively, it is important that the appellant has not explained the source of the unexplained money which was used in giving the loan. Such unexplained m....
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....vision of this Act, and the 33[Additional Commissioner or] 34[Additional Director or] 35[Joint Commissioner or Joint Director] who is directed under clause (b) of subsection (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;]" In view of the specific definition of assessing officer in section 2(7A) of I.T. Act, ld. CIT(A) is not assessing officer so he cannot invoke the provisions of section 69A for making the addition particularly when the Assessing Officer has satisfied about the ingredients of section 69A of Income Tax Act. In the case of the assessee the AO has not framed an opinion that the explanation given by the assessee was not satisfactory but he framed an opinion after examining the facts, documents and explanation that the additions cannot be made u/s 69A but it should have been made as business income of the assessee. On the contrary, ld CIT(A) has not brought on record any inquiry made by him in the appellant proceedings to justify his findings in this regard. In the appellate proceeding the addition cannot be confirmed by applying altogether different section by invoki....
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....d to change section under which AO made an addition during assessment. The relevant finding is reproduced as under:- "In this case, the Assessing Officer made addition of Rs. 6,00,000/- as unexplained credit. However, the Assessing Officer has not mentioned the relevant section under which, the addition was made, but "unexplained credit" comes under section 68 of the Act. In the appellate order, in page No. 7, para (v), the ld. CIT(A) has noted that "However, I am also in agreement with the appellant that the provisions of section 68 are not applicable to the appellant". Therefore, the ld. CIT(A) treated the addition of Rs. 6,00,000/- as unexplained money under section 69A of the Act and confirmed the addition. Section 68 of the Act deals with "unexplained Credit" in the books of the assessee and section 69A of the Act deals with "unexplained money, bullion, jewellery or other valuable article". Both are entirely different. Though the Assessing Officer has not mentioned the section 68 in his order, the very fact that he calls it "unexplained credit" and not "unexplained money" as done by the ld. CIT(A), while he invoked section 69A of the Act, it proves that the Assessing Officer....
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....ction 68 of the Act does not empower the ld. CIT(A) to make addition under this Act. Thus the addition u/s 68 can only be made by the Assessing Officer. The definition of the Assessing Officer has been provided in Section 2(7A) of the Act which reads as under:- [(7A) "Assessing Officer" means the Assistant Commissioner [or Deputy Commissioner] [or Assistant Director] [or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under subsection (1) or sub-section (2) of section 120 or any other provision of this Act, and the [Additional Commissioner or] [Additional Director or] [Joint Commissioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act ;] Thus the ld. CIT(A) is not the Assessing Officer as per Income-Tax Act. Therefore, the ld. CIT(A) does not have any legal sanction to make the addition u/s 68 of the Act. " To attract deeming provision of sections 69A of the Act the foremost requirements that is to be followed is that the income should....