Income Tax Appellate Tribunal - Chandigarh
Income Tax Officer, Ward -5, Panchkula, ... vs Navdesh Infratech, Panchkula on 29 October, 2024
आयकर अपीलीय अिधकरण,च डीगढ़ यायपीठ,च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH
BENCH'B' CHANDIGARH
BEFORE: SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER,
आयकर अपील सं./ITA No. 124/CHD/2024
िनधारण वष /Assessment Year : 2018-19
Income Tax Officer, Ward- बनाम Navdesh Infratech SCF No. 11, New
5, Panchkula, Aayakar VS Grain Market Sec. 20, Panchkula,
Bhawan, Sector, 134117, Haryana
Panchkula
थायीलेखासं./PAN /TAN No: AAOFN9989K
अपीलाथ /Appellant यथ /Respondent
िनधा रती क ओर से/Assessee by : Shri Dhruv Goel, C. A.
राज व क ओर से/Revenue by : Smt. Kusum Bansal, CIT-DR
तारीख/Date of Hearing : 04.09.2024
उदघोषणा क तारीख/Date of Pronouncement : 29.10.2024
PHYSICAL HEARING
आदेश/ORDER
PER PARESH M. JOSHI, JM
This is an appe al filed by the revenue under Section 253 of the Income Tax Act, 1961 befor e this Tribunal as and by way of second appeal under the Income Tax Ac t, 1961. The relevant As sessment Year is AY 2018-19. The corresponding previous year period is from 01.04.2017 to 31.03.2018. The Revenue is aggr ieved by order bearing No. I TBA/NFAC/S/ 250/2023-24/1058998764 (1) ITA 124/CHD/2024 A.Y. 2018-19 2 dated 22.12.2023 which is h erein af ter referred to as the "I mpug ned order" passed in the first appeal under Section 250 of the Income Tax Act, 1961.
Fact ual Ma trix
2. The asse ssee is a Firm. The assesse e filed the original return of the Income [RoI] on 24.07.2018 for ASSESSMEN T YE AR 2018-19 and had declare d to tal income NIL.
3. The return of Income was processed u/ s 143(1 ) of the Ac t and the case was se lected for co mplete scrutiny in CASS and notice u/s 143(2) dated 2 2.09.2019 was issue d to the Asse ssee for the verification of:
(1 ) In v e s t m en ts /A dv an ce s /l oan s (2 ) S har e c ap i t al / o th er c api t al
4. That the case of the assessee was transfe rre d to facele ss As sessment Sche me 2019 and that the assessee was informed about the same by le tter dated 15.10.2020.
5. That the no tice u/s 142(1) dated 14. 12.2020 w as iss ued to the assessee calling for certain det ails whi ch was r eq uired to be replied t o by the asse sse e by 29.1 2.2020, howe ver assessee failed to do so.
ITA 124/CHD/2024 A.Y. 2018-19 3
6. That due to the non-compliance of th e not ice dat ed 14.12.2020, the asse ssee was reminde d to file su bmission for the notice u/s 142 (1) on 12.01.2021, 20.01 .2021, 25.01.2021 and 15.03.2021. However the assesse e has not replie d the same even after providing so many oppo rtunit ies.
7. Upon verific ation of ITR for AY 2018-19 it i s noticed that asse ssee have reported Partner's/ Member's Capital Fund Rs.5,01,8,500/- and un secured loan of Rs.9,70,1300/ -. Moreover as per return of income, there is no revenu e generati on during the year un der co nsideration .
8. The assessee has shown Rs.9,58,546/- as o ther current assets and Rs.14,62,3000/- as loans and advances.
9. It was ass essee's first return of i ncome.
10. That under notic e u/s 142(1 ) dated 14.12.2020 at questio n no. 5, the assessee was spec ific ally asked to provide the name, Pan, address, le dger s, confirmation and o ther related details. The assessee was r emi nded multiple times b y o the r notice(s) supra to sub mit reply, but no reply was sub mitted by t he assessee.
11. It is required to be noted and appreciated that onus is o n the assessee to prove ide ntify, ge nuineness and creditworthiness of the lender. But the as sessee has faile d to d ischarge this burde n ITA 124/CHD/2024 A.Y. 2018-19 4 of pro of despite oppo rt unities a fte r oppo rt unities for reasons best know n to them.
12. That th e so urce of unsec ured loan amountin g to Rs.9,70,13000/- as appearing the assessee's retur n of income, remains /remaine d unverifiable/unverified.
13. That under notic e u/s 142(1 ) dated 14.12.2020 at questio n no. 7, the asse ssee was also specifically asked to provide the ledge r of partners, source of funds with evidenc es an d last thr ee years balance sheet inc lu ding the ITR's of the partner s's by who m capital was intro duced in t he assessee's firm. That on t his score too, the assessee firm was re min de d mul tiple ti me to submit reply, but not reply was ever s ubmitted b y the as sessee firm for reasons best known to the m. In this regar d, it is also require d to be no te d and appreciated that the onus t o prove/b urd en of proof is on the asse ssee firm to prove an d discharge onus with regard to "sources"of the capital introduced in the Entity. But even on this count- the assessee failed to discharge the bur de n of proof or onus, for the reasons best known to them. The so urce of capital introduced by partner or partners amounting to Rs.5,01,08,500/- as per return of income re main s/re mained unverifiable/unverified .
14. That a S how Cause Notice dated 12.04.2 021 was issued to the asse ssee's firm to provide to the assessee's firm a final ITA 124/CHD/2024 A.Y. 2018-19 5 opportunities in view o f principle s of na tur al justice, the contents of which are reproduced below:-
"A s y o u are a ware t h at y o u r ca se was s e le ct e d f o r s c rut i n y u n d e r CA S S an d n ot i ce u / s 1 43 (2 ) d a t e d 2 2 . 0 9 .20 1 9 was i ss u e d t o y ou f or t he ve ri f i cat i on of f ol lo wi n g i s su e s : 1 . I n v e s t m en t s / A d van c es / Lo an s ii . Sh are Capi t al / Ot h e r C api t al.
2. T h e n o ti ce u/ s . 1 42 (1 ) dat e d 14 . 1 2 .2 0 2 0 , i s su e d t o y o u c all in g f o r ce rt ai n de t ai l s whi c h was re qui re d t o be re pli e d by y o u by 29 .12 .2 02 0, h o we v e r y o u f ail e d t o do s o. D ue t o n on co m pl i an ce o f n ot ic e dat e d 14 .12 .2 02 0, y o u we r e re m i n de d to fi l e su bm i s si o n f or t he n ot i ce u /s 14 2 ( 1 ) o n 1 2 .0 1. 202 1 . 2 0 .01 .20 21 , 2 5 . 01 .2 0 2 1 & 1 5 .03 .2 021 . Ho we ve r y ou h ave n ot re pli e d t h e s am e t i ll dat e, e ve n af te r p rovi d in g s o m an y o ppo rt un it i e s.
3. O n ve ri f i c at i on o f I T R f o r t h e A .Y. 2 0 1 8 - 19 i t i s n ot i ce d th at y o u h a ve re p ort e d p art n e r s /m e m be rs ' c api t al f un d R s . 5, 01, 0 8 , 5 00 /- an d un se cu re d l o an of R s . 9 , 7 0, 1 3 , 00 0/ - . Mor e ov e r as pe r re t u rn of t he i n com e , t h e re i s n o re ve n ue ge ne rat i o n du ri n g t he y e a r. Yo u h av e sh o wn Rs . 9, 5 8 , 54 6 /- a s ot h e r c urre nt as se t s an d Rs . 14, 6 2, 3 0 , 000 /- as Lo an a n d A dv an ce s . I t i s i m port an t t o m e n t i o n h e re t h at th i s i s y o ur f i rs t ret urn o f in c om e .
4. I n t h e n ot i c e u / s 142 (1 ) da te d 1 4 . 1 2 .2 02 0 at qu e st i on n o- 5 , yo u are s pe ci f i call y a s ke d t o pro vi d e t he n am e, PA N , add re ss , le dge r, con f i rm a ti on an d ot h e r r e l at e d det ai ls . You h a v e re mi n d e d m ult ip le t i me , a s s t at e d i n pa ra 2 a bov e, t o s u bm i t y ou r re ply , b ut n o re pl y s u bm i t t ed b y y o u t i ll da te . O n u s i s on a s se s se e t o p ro ve i de n t i ty , gen ui ne ne s s an d c re di t wo rt hi n e s s of t h e l en de r. B u t y o u f a il e d t o s e rv e t o t h e on u s, p ut o n y o u . U n d e r t h e c i rc um st an ce s a n d a s pe r t he re a s on s m e nt i on e d abo ve , s o urc e of t h e un se cu re d l o an am ou nt i n g t o R s . 9, 7 0, 13, 00 0/-, as a ppe ari n g i n y o u r re t u rn of i n c om e , re m ain s un ve ri f i ed an d h e n c e sa m e i s t re at e d un e xp lai n e d m on ey u/s 6 9A o f t h e I T act . Yo u a re r e q ue s t e d t o s h o w ca u s e wh y n ot t h e a m oun t of R s . 14, 71 , 2 1, 50 0/ - m ay b e tre at e d as un e x p l ai n e d m o n e y u /s 6 9 A of t h e IT act an d a d de d t o i n co m e re t u rn e d by yo u .
5. I n t h e n ot i c e u / s 142 (1 ) da te d 1 4 . 1 2 .2 02 0 at qu e st i on n o- 7 , yo u are s pe ci f i call y as ke d t o pro vi de t he le dg e r of p art n e rs , s ou rce s of fu n ds, wi t h e vi d en c e s an d l as t t h r e e y e ars b al an ce s h e e t an d I T Rs of t he part ne rs by wh o m c api t al i s in t r od u c e d i n t he f i rm . Y ou h av e re m i n de d m ul t i ple t im e , as st at ed i n p ara 2 a bo ve , t o s u bm i t y ou r re pl y , b ut n o re pl y s u bm i tt e d by y ou t il l dat e . On u s i s o n as se s se e t o pro ve s ou r ce o f t h e c api t al i n tro du c e d in t he en t it y . B u t y o u f ai le d t o se rve t o t h e on us , put o n y o u . Un de r th e ci rc um st an c e s an d as pe r t h e re as on s ITA 124/CHD/2024 A.Y. 2018-19 6 m en t i on e d ab ov e , s ou rce o f t h e c api t al i n t rod u c e d by t h e p art ne r o r part ne rs am o un t i n g t o Rs . 5, 0 1, 0 8, 5 0 0/ - , as ap pe ari n g i n ret u rn o f i n com e , re m ai ns un ve ri fi ed an d h e n ce s am e i s t re at e d u n e x pl ai n e d m on e y u / s 69A of t h e IT act . Yo u are re q ue st e d t o s h o w c au s e wh y n o t t h e am o un t of Rs . 5 , 0 1, 0 8, 5 00 /- m ay be t re at e d as u n e xpl ai n e d m on e y u /s 6 9A of t h e I T a ct an d ad d e d t o i n c om e ret u rn e d by y o u.
6. Yo u are re q ui re d t o f u rn i sh y o ur s u bm i ss i on / e x pl an at i on wi t h i n t h re e day s o f r e ce i pt o f n ot i ce . Pl e as e n o t e t h at i f no t h i n g i s s ub m it t ed f ro m yo ur s i de wit h i n t h e s t i pul at e d ti m e , i t sh al l b e pre s um e d t h at y ou h av e n ot h in g t o s a y i n t h e m at t e r a n d a cco r di n gly t h e as se s sm e n t wi ll be fi n ali ze d af t e r con s ide ri n g t h e i nf orm at i on av ai l a ble on t h e re c o rd."
15. That assessee firm even failed to submit reply wit h regard to the above S how Cause Notice dated 12.04.2021 within the stipulated time provided for.
16. That in ultimate analysis kee ping th e afor esaid book ground the assessee's fir m miser ably failed to repl y above notice(s) bo th u/s 143 (3) an d 142(1 ) (su pra), failed to provid e any reason and failed also to given any justification for not treatin g the amount of Rs.9,70,13,000/ - and Rs.5,01,08,500/- appearing as unsecure d loans and partner's fund r espective ly in return of inc ome , to treat the same as unexplained inco me as per section 69A of the Income Tax Act, 1961.
17. That in the premise s as set ou t hereinabove the ld. AO was lef t with no other option but to carry out the asse ssment in a n ex - part e manner and followed sec tion 144 r.w.s . 144B of the I. T. Act, 1961 by considering all th e information available on reco rd. The ld. AO after con sidering all the fac ts of the case (supr a) and ITA 124/CHD/2024 A.Y. 2018-19 7 basic information available on r ecord treated th e amounts of Rs.9,70,13,000/- as unsec ure d loans not e xplained at all by assessee's fir m as unexplained income und er Sec tion 69A r .w.s. 115BBE of t he Act (supra) and so also the amount of Rs.5,01,08,500/- as unexplained partner 's f und not explained at all by t he assess ee's firm as unexplained inco me under Sec tion 69A r.w.s. 115BBE of t he Act. Total income assesse d under Sec tion 144 r.w.s. 144B worked ou t to Rs.14,71,21,500/-.
18. That th e aforesaid Assessmen t Or der under Section 144 r .w.s. 144B be ars No. ITBA/ ASR/S/ 144/2021-22/1032528268(1) and is dated 19.04.2021.
Proceeding s b efore C IT(A)
19. That assessee be ing aggrieved by the afore said Assessment Order dated 19.04.2021 prefers first appeal befor e ld. CI T(A) in terms of section 2 46A of the Income Tax Act, 1961 and in Form No. 35 which is form of appeal to the CIT(A) in teralia r ai ses following groun ds of appeal against the afore said Assessment Orde r dated 19.04.2021 which are enu mer ated as below:
"1 . T h at l e a rn e d A O h as e rre d i n la w an d o n f act s i n c om pl e ti n g t h e as s e ss m en t e x - part e u / s 1 4 4 r. w. se ct i on 14 4B of th e A ct .
2. T h at l e a rn e d A O h as e r re d i n la w an d o n f act s i n c om pl e ti n g t h e as s e ss m en t u/ s 14 4 r . w . s e ct i on 1 44 B wit h o ut s e rvi ce o f no t ic e u / s 14 3( 2 ) .
ITA 124/CHD/2024 A.Y. 2018-19 8
3. T h at l e a rn e d A O h as e r re d i n la w an d o n f act s i n c om pl e ti n g t h e as s e ss m en t u/ s 14 4 r . w . s e ct i on 1 44 B wit h o ut s e rvi ce o f no t ic e u / s 14 3( 2 ) .
4. T h at l e a rn e d A O h as e r re d i n la w an d o n f act s i n c om pl e ti n g t h e as s e ss m en t u /s 1 44 r. w. se ct i on 1 44B wi th o ut s e rv i ce of s h o w ca us e n ot i c e m a n d a t e d u /s 1 4 4B .
5. T h at l e a rn e d A O h as e rre d in la w an d on f act s i n as se s si ng ca pi t al bal an c e as o f 3 1 .3 .2 01 8 am ou n t i ng R s .5, 01, 08 , 5 0 0 / - as u n e x pl ai n e d m o n e y u /s 6 9A r. w. s e c ti on 11 5B B E .
6. E rre d i n l a w an d on f act s t h at l d . A O h a s i n as s e s s in g u n s e c u re d l oan s of Rs . 9, 70 , 1 3, 00 0/- as u ne x pl ai n e d m on ey u /s 6 9A r. w.s 11 5BB E .
7. T h at t h e l d . A O h a s e rr e d i n l a w an d o n f ac t s i n a ppl y in g an ef f e ct iv e t a x rat e of 7 7 .5 pe r c en t (60 pc t ax + 25 p c s u rch a rge + 3 p c e d uc at i on ce ss ) on t h e a ddi t ion of R s .1 4, 71 , 2 1, 50 0 /- u /s 11 5BB E . "
20. The ld. CI T(A) in the impugne d order has hel d as un de r:
"5 . 1 I h ave c o n si de re d t h e f act s o f t h e c a s e an d m at e ri al av ai lab le on r e co rd. T h e i s su e i s be in g e x am in e d o n me ri t . Th e ap p ell an t is a f i rm wh o f i l e d t he ir f i rst e ve r re t u rn o f i nco m e d at e d 2 4 .07 . 20 1 8 an d de cl are d t o t al i n co m e a s N i l . Th e c as e wa s s el e ct e d f o r com pl et e s c rut i n y u n de r CA S S t o ve ri f y t h e ge n ui n en e s s of t h e p art n e r's capi t al an d un se c u r e d l o a n s . T h e app e ll an t f ai le d t o co m pl y wi t h a n y o f n ot i ce s is s u e d by t h e as s es si n g of f i ce r an d t h e as s e s s me n t wa s co m pl et e d o n e x- pa rt e ba si s by N FA C D e lh i wh e re i n en t ire cap it al an d un se cu re d l oa n t o t ali ng t o Rs . 1 4, 7 1 , 21 , 5 00 / - we re t re at e d as un e x pl ai ne d an d we r e a d de d t o a ppe ll an t i n com e u/ s 6 9 of t h e A ct . In t h e I T R t h e ap pe ll an t re po rt e d p art n e r' s c api ta l f u n d of Rs . 5, 0 1, 08 , 50 0 /- an d u n se c ur e d l o an of R s 9 , 7 0, 13, 0 00 / - . Th e app e ll an t h as s h o wn 9, 58, 54 6 /- as ot h e r c u rr e n t as s et an d 1 4, 6 2 , 30, 00 0 /- as l oa n a n d adv an ce s . Sou r ce o f t h e c a pi t al i n t ro du ce d by t h e part n e r a mo u nt i n g t o R s .5, 01, 08 , 5 00 /- an d un se cu re d l o an o f R s. 9, 70, 13, 0 0 0 /- h a s n ot be en pro vi d e d by t h e a ppel l an t t o t h e A s s e ss i n g Of f i ce r an d t h e sa me h as be e n t re a t e d as u n e xpl ai n e d i n com e as p e r 6 9A o f t h e i n com e t a x A c t . Ag gri e v e d wi t h t h e addi t i on , t h e as s e s se e f i le d t h e p re se nt appe al . Al l t h e g ro u n d s ar e be in g d e alt t o get h e r.
5. 2 T h e a ppe l l ant al so f i l e d ad dit i on al gr ou n d an d ev i den c e u / s 4 6A of t h e A ct . wh i c h are ac c e pt e d . T h e s a me al on g wi t h all t h e s u bm i s s io n we re se n t t o A s se ss i n g O ff i c e r f o r rem a n d o n 1 7 .0 7 .20 23. Re m an d re po rt wa s re c ei ve d o n 0 6 .1 1 .2 0 23 a n d was s h are d wi t h t he ITA 124/CHD/2024 A.Y. 2018-19 9 app e ll ant . Th e app e ll ant s u b mi t t e d t h e i r r e j oi n de r on 0 1 .12 .20 2 3 . A vi de o co n f e re n ci n g we re r e q ue st e d b y t h e ap pel l an t on 01 .1 2 .2 02 3. t h e s am e was c on d u c te d on 2 1 .12 .2 02 3 .
5. 3 G ro un d N o .1 t o 4 are gen e ral i n n at u re an d n e e d n o s e par at e adj u di c at i on . A ppel l an t h as s u bm i t t ed hi s o bj e ct i o n b y s t at i n g t h at t he Ld . A .O e rre d i n l aw an d o n f act i n com p le t in g t h e a ss e s s m en t e x - part e u /s 1 4 4 r . w. se ct io n 1 44 B of t he A ct an d t h at th e a s se s s me n t was co m pl et e d wi t h ou t s e rvi ce o f n ot i ce s u / s 1 42 (1 ) a n d 1 43 (2 ). Th i s con t e n ti on i s no t a cc e pt a ble as it i s ev i den t f rom t he a s s e ss m en t re c o rd s av ai l a bl e on IT BA t h at v ari o us n o t i ce s as p e r t h e ab o ve t ab le we re s e rve d u po n t h e as se s s ee wh i ch r e m ai n un c om p i le d wi t h . Ho we ve r t h e a ppe l la nt i n V C h as c on t e n de d t h at t h e n ot i ce s s e rv e d t h ro u gh e m ai l / po rt al a re n ot vi si ble o n t h e e - p o rt al of t he de part m e nt . Th e r ef or e t h e n ot i ce s re m ai n e d un co m pli e d wi th . T h e con t e n ti on of t h e app e ll an t n ot wi t h s t an din g, I t i s se e n t h at t he As s e ssi n g Of f i ce r h as se n t n ot ic es o n va ri o u s da t e s . T h e re f o re as s e s s m en t is as p e r du e p ro c e du re o f la w. He n ce t h i s gr o un d o f app e al i s di s m i sse d.
5. 4 I h av e pu r s ue d t h e as s es s m e n t or de r of th e A .O . an d t he e xpl an at i on gi ve n b y hi m f o r ad di n g t h e am o un t o f Rs . 5, 0 1, 0 0, 00 0 /- i n t h e t ot al i n co m e o f t h e a ppe l la nt u /s 6 8 of t h e I . T A ct 1 9 6 1 . T h e f i rm h ad 2 pa rt n e rs : Vi sh n u P ark as h G oy al an d N av raj Mi t t al a n d bot h h ad dul y f i le d t h ei r I T Rs f or A Y 20 18 - 1 9 an d e n t i re c api t al wa s c on t ri b ut e d vi a re gul ar ba n ki n g ch a nn e ls (R s 4 .6 cr Vi sh n u Goy al an d Rs . 4 1, 08 , 50 0 /- Na vr aj Mi t t al ). In s u p po rt of so urc e of part n e rs f o r c o n t ri but i n g t he ca pi t al, d e t ai le d con f i rm at ion s , b an k s t at e m e nt s an d s u ppo rt i n g do cu m en t s we r e f i l ed bef o re t h i s o f f i c e a n d e x am i n e d b y A O un de r rem an d p ro c e e di n g s. T he ap pel l ant h as s u bm i t t e d c om p re h e ns i ve do cu m en t s f rom s al e de e ds , r e c e i pt s f ro m s al e o f pr o pe rt i e s, ban k st at e m e n t s , OD a d v an c e d a gai n s t FD R 's , b al an ce sh e e t , capi t al st at e m e n t an d I T R of e a ch o f t he s ou r ce s wh i ch we re d ul y sh a re d wi t h t h e A s se s s i n g Of f i ce r . T h e A s s e s si ng Of f ic e r n ot d o n e an y i nqu i ry o r e xa mi n e d an y of t h e evi d en c e s . A ll t h e p ay m e n t s a re du ly ac c o un t e d fo r wi t h re s pe ct t o t h ei r s o urc e an d t h o s e f i n d m en t i on i n t he det ai le d pap e r bo o k f i le d by t h e app el l an t . T h e A ss e s si n g O f f i ce r c on t en t i on i s n ot ac ce pt e d si n ce it s n ot bas e d on an y e x am i n at i o n of evi d en ce wh e re i n t h e ap p el l an t h as s u bmi t t e d c o m ple t e d o cum e n t s e s t a bl i s hi n g t h e s o u rce of d e po si t . H en ce t h i s gro u n d of ap p e al i s all o we d.
5. 6 T h e app el l an t we re re c ei v e d of R s . 9, 70, 1 3, 0 0 0 /- f ro m v ar i ou s pe rs on s a n d in su pp o rt of t h e s am e , de t ai le d c on fi rm at i on s f ro m t he le n de r s al on g wi t h e x pl an a ti on o f s o ur ce s , t h ei r I T R s an d B an k st at e m e n t s we r e p ro du ce d bef o re t h i s of f i ce .
D e s pi t e h avi n g s i gni f ic ant t i me of 5 m on t h s at h an d a n d h av i n g all co nt a ct de t ai ls an d P AN n um b e rs o f al l p art i e s i n vo l ve d, A O h as ch o se n to n ot co n d u ct an y i n d e pe n d e nt e n qui ry f rom an y o f t he ITA 124/CHD/2024 A.Y. 2018-19 10 part ie s . I n f a ct , no t e ve n a ss e ss e e o r i t s part n e rs we re c all e d u p on t o pro vi d e an y f urt h e r c l ar if ic at i on s du rin g re m an d pro c e e di n gs, Si mi lar app ro ac h wa s t ak e n by A O i n as se s s m en t pro c ee di n gs al s o wh e re by AO rel i e d on ass e s se e' s n on re s po n s e an d di d n ot con d u ct an y e n q ui ry be f ore m aki n g a ddi t i on s . In s uc h a f a ct u al p os i ti on, t he c api t al an d un se cu re d l o an s c a n n o t b e u ph e l d t o be un e x pl ai n e d in c om e as as s e s s ee h a d di s ch ar ge d i t s on us o f p rov in g t he ge n ui n en e s s, cre di t wo rt h i ne s s a n d i de n ti t y o f t h e re ce i pt s wh i le n o ve ri f i cati on wa s don e b y A O .
R el i an ce i s pla ce d o n S u pr e me Co u rt de c i si o n i n c as e o f CI T vs O ri s s a C o rp o ra t i on P vt Lt d, (19 8 6 ) 1 5 9 I T R 00 78 wh e re i t was h el d t h at wh en A O di d n ot ma k e an y e n q ui ry f r om t he cre di t o r s de s pi t e t h ei r de t ai ls b e i n g pro du ce d by as se ss e e , n o ad di t i o n s c o ul d b e m a de . Re li a n c e i s al s o pl a c e d o n d e ci si on of Ho n bl e Ju ri s di ct i on al Hig h Co u rt (P u n j a b & H ary an a ) i n c ase o f CI T v s Ja wa h a r Lal O s wal [ 20 16] 38 2 I TR 45 3 wh e re i t wa s h el d t h at o n ce a s s e s se e h a d p ro du ce d e vi de n c e s t o pro v e t h e s o urc e of t he cre d i t s , on us sh i f t e d on A O t o r ej e ct t h e s am e on l y b y wa y o f f u rth e r ev i den c e s . A ddi ti on s un de r de e m i n g p ro vi s i on s co ul d n ot be m ade s o le ly on s us pi ci on s an d do u bt s whe n as s e s s ee pro du ce d su f f i c ie nt e vi de n ce s . N o ef f ort h as b een m ade at en d of t he AO t o ei t he r co ll e c t an y i n cri m i n at in g m at e ri al o r t o c o n d u ct an y i n de pe n de nt e n qui ry e i t h e r i n as s e s s m e n t o r i n re m an d p ro c ee di n gs . Th e obj ect i on s m a d e by A O a re on ly of n at u re of s u s pi ci on s wh i ch ca n n o t be m a de bas i s of ad di t i o ns i n i n c o m e t ax pro ce e din gs . He n ce t h i s g ro un d of appe a l i s all o we d .
6. 1 I n vi e w of argu m e n t s gi ve n abo v e, i t di f fi cu l t t o s us t ai n wi t h t he addi t i on s m a de by A ss e ss i n g Of f i ce r.
6. 2 I n v ie w of t h e s e f act s, I am o f t h e o pi ni on t h at t h e ad di t i on m a d e b y t h e A O of R s .4 , 6 0, 0 0, 0 0 0/ - an d Rs .9 , 70 , 1 3, 00 0 / - to t he t ot al i n com e of t he ap p e ll an t i s un cal le d f o r an d t h e re f o re de le t e d . Th e se grou n ds o f appe als ar e al l o we d .
7. I n t h e re su lt t h e ap pe al i s p ar t ly all o we d. "
21. The revenue being aggrieved by the impu gne d orde r in Form 36 which is form of appe al to th is Tribunal h as raised the following groun ds of appeal before us:-
"1 . W h e t he r o n t h e f a ct s an d i n t h e ci rcu m s t an c e s of t h e c ase , t he Ld CI T (A ) i s ri gh t i n la w i n h ol di n g t h at t h e i de n t i ty, cre di t wo rt h i n es s an d g e n ui ne n e s s of t h e cre di to rs an d o t he r ITA 124/CHD/2024 A.Y. 2018-19 11 part i e s wh o h av e adv an ce d u n se c u re d l o an s of R s 9, 7 0 , 13 , 0 00 / - t o t h e as s es s e e i s we ll e s t abli s h e d?
T ax e ff e ct- 10 , 26, 71 , 26 9 /-
2. W h e t he r o n t h e f ac t s an d ci rcu m st an ce s of t h e c as e th e Ld. CI T (A ) h as e rr e d t o al l o w t he ap pe al of t he as se s s e e an d de l et e t he ad di t i on s of Rs 9 , 70 , 1 3, 00 0 /-m a de u/ s 69 A o f t h e I n co m e Tax A ct , 1 96 1 wh en th e cr e di t wo rt h i n e s s of t h e pa rt ie s wh o h av e e xt e n d e d t h e s e un s e c u re d lo an s i s n o t we ll e s t a bl is h e d .
3. W h e t he r o n t h e f a ct s an d i n t h e ci rcu m s t an c e s of t h e c ase , t he Ld . CI T( A ) i s ri gh t i n l aw in h o l di n g t h at t h e id e n t i ty, cre di t wo rt h i n es s an d gen ui ne n e s s of t h e en ti t i e s f ro m wh om t h e as s e ss ee h a s s o u rc e d Rs 5 , 0 1, 0 8, 50 0/ - as part n e r' s f un d s i s we ll es t abl i s h e d?
5 ,30 ,3 10 7 1 /-
4. W h e t he r o n t h e f ac t s an d ci rcu m st an ce s of t h e c as e th e Ld. CI T (A ) h as e rr e d t o al l o w t he a ppe al of t he as se s s e e an d de l et e t he add it i o n s of R s 5 , 0 1, 08, 5 00/ - m ad e u /s 69A of t he In co m e Tax A ct , 19 61 wh e n t he c re d it wo rt h i ne ss of t h e parti e s f rom wh o m t he a s se ss e e h a s s o u rce d R s 5, 01, 0 8 , 5 0 0 / - as pa rt n e r' s f u n ds is n o t we ll e s t abl i sh e d?
5. I t i s pra y e d t h at t h e o rde r of t h e L d . C I T (A ) be se t - asi de an d t ha t of t h e A .O . be r es t o re d. "
T ot al T ax Ef f ec t Rs . 1 5,5 7 ,0 2,3 4 0 /-
Record of Hearing
22. The he aring in the matter took plac e before us on 04.09.2024 when ld. DR contended before us that it is an admitted position that assessee has shown total non-co mpliance i n the o riginal asse ssment proceedings invited our attention to para 5.3 of the orde r of ld. CI T(A) which we re produce once again for sake of convenience an d ease .
ITA 124/CHD/2024 A.Y. 2018-19 12 " 5 .3 G ro un d N o . 1 t o 4 are ge n e r al i n nat u r e an d n e e d n o s e par at e adj u di c at i on . A ppel l an t h as s u bm i t t ed hi s o bj e ct i o n b y s t at i n g t h at t he Ld . A .O e rre d i n l aw an d o n f act i n com p le t in g t h e a ss e s s m en t e x - part e u /s 1 4 4 r . w. se c t io n 1 44 B of t he A ct an d t h at th e a s se s s me n t was co m pl et e d wi t h ou t s e rvi ce o f n ot i ce s u / s 1 42 (1 ) a n d 1 43 (2 ). Th i s con t e n ti on i s no t a cc e pt a ble as it i s ev i den t f rom t he a s s e ss m en t re c o rd s av ai l a bl e on IT BA t h at v ari o us n o t i ce s as p e r t h e ab o ve t ab le we re s e rve d u po n t h e as se s s ee wh i ch r e m ai n un c om p i le d wi t h . Ho we ve r t h e a ppe l la nt i n V C h as c on t e n de d t h at t h e n ot i ce s s e rv e d t h ro u gh e m ai l / po rt al a re n ot vi si ble o n t h e e - p o rt al of t he de part m e nt . Th e r ef or e t h e n ot i ce s re m ai n e d un co m pli e d wi th . T h e con t e n ti on of t h e app el l an t n ot - wi t h st an di n g, I t i s s ee n t h at t he As s e ssi n g Of f i ce r h as se n t n ot ic es o n va ri o u s da t e s . T h e re f o re as s e s s m en t is as p e r du e p ro c e du re o f la w. He n ce t h i s gr o un d o f app e al i s di s m i sse d. "
It was conte nded that once ld. CI T(A) has held that asse ssment is as per due procedure of law and has dismi ssed groun ds of appe al 1 to 4 of the asse sse e, the ld. CIT(A) ought to have dismi sse d the appeal of the asse sse e and has wron gly partly allowed the assessee appeal further no coun ter appeal has been filed by the assessee nor any thing is urged in res pect of these groun ds by the assessee 's fir m anywhere in the pleadings and paper book/grou nds of appeal before th is Tr i bun al hence these findings have attaine d finality. Unde r these circumstances order of ld. CI T(A) shou ld be se t aside and or de r of ld. AO should be restored. Th e issue raised by revenue goe s to the root of the matter herein. Hence their co ntenti on should be upheld.
22.1 It was next- contende d by l d. DR that amount of Rs.5,01,08,500/ - as partn er's capital par takes the character of unexplained mon ey within the hearing of sectio n 69A of the ITA 124/CHD/2024 A.Y. 2018-19 13 Income Tax Act, 1961 as nothing is explained wi th regar d to it's source s by the assessee 's fir m despite opportunitie s after opportunitie s which action of ld. AO is even uph el d by ld. CI T(A) (supra). The ld. CI T(A) erred in del eting the additio n of afore said amoun t by having he ld:
"Th e fi rm h ad 2 p a rt n e rs : Vi sh n u Par k ash G oy al an d N av raj Mi t tal a n d bot h h ad d ul y f i le d t h e i r I T R s f o r A Y 2 0 1 8- 19 an d en t i re c a pi t al was con t ri bu t e d v ia r e gul ar ban ki n g c h an n e ls ( R s 4. 6c r Vi sh n u Go y al a n d R s . 4 1, 0 8, 500 / - N a v r aj Mi t t al ). In su pp o rt of s ou rce of pa r t n e rs f o r con t ri bu t i n g t he ca p i t al , de t ai le d c on f i r m at i on s , ba n k st at e m en ts an d s u p po rt i n g do c um e n t s we re f i le d b ef o r e t hi s of f i ce an d e xa m i n e d by AO u n de r rem a n d pro ce e din gs . Th e ap pe ll an t h as s u bm it t ed co m pre he n si ve do cu m en t s f ro m s al e de e ds, re c e i pt s f ro m s al e o f pro pe rt i e s, b an k st at e m en t s , O D a dv an c e d a gai n s t FD R 's , bal an ce sh e et , capi t al st at e m en t an d I T R of e ac h o f t h e s o urc e s wh i c h we re dul y sh a re d wi t h t he A s se s si n g Of f i ce r. T he A s se ss i n g Of f ic e r n o t do ne any i n q ui ry o r e x am i n e d an y of t h e e vi de n c e s . A ll t h e pay me n t s are dul y acc ou n t e d f or wi t h r es pe ct t o t he i r s o u rce a n d t h o se f i nd me n t i on i n t he de t ai le d pap e r bo o k f i le d by t h e ap p el l ant . T he A ss e s s in g O f f i ce r con t e n ti on i s n ot ac c e pt e d si nc e i t s n ot bas e d o n an y e x am i n at i on o f ev id e n c e wh e r e i n th e ap pe ll an t h as su bm i t t e d co m pl e te do c um e nt s es t a bli s hi n g t h e s o u rce of de p os i t . Hen c e t h i s gro un d o f ap pe al i s all o we d.
It i s a wrong finding of fac t as l d. AO has followed due process which fact is eve n admitted by ld. CIT(A)in par a 5.3 (supra) and any failure , non e nquiry , no examinati on canno t be attribu ted to the ld. AO . Merely becau se additional paper so filed by the asse sse e's firm for the fir st in form of sale deeds, rece ipt from sale of proper ties, bank statements, and advanced against FDR's, balance sheet, capital statemen ts, I TR of each of sources which were simply shared with ld. AO in re mand proceedings ipso ITA 124/CHD/2024 A.Y. 2018-19 14 facto an d ld. AO has not examined the evidence by no str etch of imagination could le ad to conclusion by way of an inference that amoun t of Rs.5,01,08,500/- is properly explained and it's sources stand disclosed which ar e all legitimate . Wh at is r equired in law is detai led and in depth inquiry , examination , verification of docu ments placed on r ecord by t he assessee fir m which was so placed for t he first time and mere non ex amin ation of i t by conducting no inquiry and verification by ld. AO in r emand proceeding cannot be lead to assu mptions of fact th at sources stands explaine d. It was then ve hemently contended that the en tire approach and course fol lowed by ld. CI T(A) i s unique as nothing preven ted him/he r to ex amine, conduct in quiry and due verific ation of material placed o n record by asse ssee's firm with regard to "source s" of aforesaid amount of R s.5,01,08,500/-.
Nothing preve nte d ld. CI T(A) to have called both the par tne r's bank officials, examine details of confirmation, sale dee ds, receipts of sale of properties e tc . Nothing was don e by ld. CI T(A) despite powers with him. Hence, deletion is wrong an d should be set aside.
22.2 It was next con tended by ld. DR that the assessee had receiv ed un secur ed loan of Rs.9,71,13,000/- fro m various persons and in suppor t of the same, de tailed confirmations from l ende rs along with explanation of sou rce s, their ITR 's and ban k state ments ITA 124/CHD/2024 A.Y. 2018-19 15 were pro duc ed before office of ld. CIT(A) despite furnishing these paper s ld. AO in remand proceedings have not conducted any due diligence and verific ation of these paper s so placed on record by assessee firm for the first time. Th e ld. CI T(A) ther efore ought not to have held:
"I n s u ch a f a ct u al p os i t ion , t h e c a pi t al a n d u n s e c ure d lo an s ca nn ot be u ph e l d t o be u n e xpl ai n e d i n c o m e a s as s e ss e e h ad di s ch arge d i t s o n u s of pr ovi n g th e ge n ui n en e ss , cre di t wo rt hi n e ss a n d i den t i ty of t he re c e i pt s whi le n o v e ri fi cat i on was do n e b y A O . "
22.3 Concluding the argument- ld. DR has finally conte nded that- ld. CI T(A)impugned order by def ault on par t of ld. AO in remand proceedings to the mate rials so placed for the f ir st time has deleted the addition of Rs.5,01,08,500/- and R s. 9,70,13,000/- aggregating to R s.14,71,21,500/-and such an exe rcise in law is not permissible as source of inco me/money must be establi shed by due process of actual inquir ie s, verification, cro ss-ver ification, examination of both the perso ns as well as paper s etc . I t should be done logically and empirically. Th ere is no role of default determination and/or adverse inference or inferences. The determination of amoun t/money should be on real ti me b asis.
23. Per contra, ld. AR has supported the impugned orde r of ld. CIT(A) the ld. AR has placed on record a PB from pages 1 to 234 enclosing copy of written submission s before CI T(A), copy of paper book and docu ments filed before CI T(A), copy of ITA 124/CHD/2024 A.Y. 2018-19 16 application under 46A file d be for e CIT(A), copy of remand report filed by AO and copy of r eply to r emand repor t filed by assessee firm. We have perused the same , in all, carefully.
Findings and conclusions
24. We now have to examine legality, validity and proprietary of impugned order in light of premises which has been drawn up (supra). We hold that in the impugned order ld. CIT(A) in para 5.3 by having held that-assessment is as per due procedure of law ought not to have set aside the impugned assessment order dated 19.04.2021. We hold that-provisions of section 142(1) and 143(2) are mandatory provisions of law and no one can escape this rigorous of law be it assessee or Dept. officials. These are not general provisions of law but are mandatory provisions of law. We therefore hold that it was but incumbent upon the assessee firm to have gone through rigorous of law as no one can escape especially at the original stage of the assessment that to when case is selected for complete scrutiny in CASS for verification of investments/Advances/loans and share capital/other capital. 24.1 We also hold that in guise of rule 46A a clever attempt has been made to escape this rigorous of law which is not permissible in law. We hold that rule 46A of Income Tax Rules deals with production of additional evidence before the CIT(A). It says expressly that-appellant shall not be entitled to produce before CIT(A) any evidence, whether ITA 124/CHD/2024 A.Y. 2018-19 17 oral or documentary other than evidence produced by him during the course of proceedings before the Assessing Officer except in the following circumstances namely:
"(a) Where the [Assessing Officer] has refused to admit evidence which ought to have been admitted or;
(b) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer]; or (c Where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any round of appeal ; or
(d) Where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal."
A bare and simple perusal of aforesaid means those evidence whether oral or documentary other than evidence produced by him during the course of proceedings before Assessing Officer. In the instant case nothing was produced before ld. AO as evidence in original assessment proceedings. The ld. CIT(A) ought to have also followed due process in this regard which has not happened which is contemplated under Rule 46A (1) (2) (3) & (4) of Income Tax Rules, 1962 which are statutorily framed under Income Tax Act, 1961. Admission of additional evidence is thus not an empty formality. We exercise restrain from further observing under rule 46A.
24.2 Be that as it may, we are of the considered view that the ld. CIT(A) ought not to have partly allowed the assessee's firm appeal by deleting the amounts of Rs.5,01,08,500/- and Rs.9,70,13,000/-
ITA 124/CHD/2024 A.Y. 2018-19 18 aggregating to Rs.14,71,21,500/- merely because in remand proceedings pursuant to additional evidence under Rule 46A he the ld. AO failed to carry out any inquiries, examination, verification etc. on material so placed, as we are of the considered view that nothing prevents the ld. CIT(A) to carry out such exercise all by himself as he has all the powers including coercive powers at his commands. Needless to state that the powers of ld. CIT(A) are co-terminus with that of ld. AO upon cumulative reading of all the provisions of the Income Tax Act and rules. The ld. CIT(A) ought not have found fault on part of ld. AO but ought to exercise his persuasive mind on ld. AO officially in order to meet his requirements in order to achieve the ends of justice. In result of blame culture; the income/money/amount has come to be deleted on other parameters/ considerations short of meritorious grounds. Income computation and its sources must be determined meritoriously and not by drawing adverse inferences.
ORDE R In result, we set aside the impu gned orde r and remit back the matter bac k to the file of CIT(A) to pass an order afre sh on denovo basis after making all due diligence , verification, checks, examination of persons/documents by himself or through ld. AO or both so that amounts (supra) sources are clearly examine d in a me ritorious way and no t as and by way of default as dispo sal of ITA 124/CHD/2024 A.Y. 2018-19 19 appeal should be fair , logical, and meritoriou s. I t should no t be decided in a shor t-cut manner or in summary manner as is sought to be done. We h ope and trust-assessee fir m too wo uld cooperate with Dept. in disposing off the appeal in meritorious way. We hope and trust that appeal would be dec ide d as ex pe ditiously as possible probably within six mo nths from date of receipt of this orde r.
25. Revenue 's appe al is allowed as and by way of remand.
26. Appeal allowe d for statistical pu rposes.
Order pronounce d as on 29.10.2024.
Sd/ - Sd/ - (VIKRAM SINGH YADAV) (PARESH M. JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER "GP, Sr. PS"
आदेशक ितिलिपअ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु / CIT
4. िवभागीय ितिनिध, आयकरअपीलीयआिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
5. गाडफाईल/ Guard File आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar