Shri Alok Kumar Jain, Guwahati V. Assistant Commissioner of Income Tax, Circle-1, Guwahati

ITA 115/GTY/2012

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0951 (ITAT-GUWAHATI)
• Duration Of Justice: 9 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 08-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Documents seized
• Section: 68; 132; 139; 153A; 69B; 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “GUWAHATI BENCH, GAUHATI VIRTUAL HEARING AT KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Manish Borad, Accountant Member I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain ............................................................Appellant Amin Building, MS Road, Athgaon, Guwahati [PAN:ACTPJ0806G] vs. ACIT, Circle-1, Guwahati...............................................................Respondent Appearances by: None appeared on behalf of the appellant. Shri I. Ganeshori Devi, JCIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : May 23, 2022 Date of pronouncing the order : May 27, 2022 ORDER Per Sanjay Garg, Judicial Member: The captioned appeals have been preferred by the assessee against the separate order all dated 03.02.2012 of the Commissioner of Income Tax (Appeals), Guwahati [hereinafter referred to as ‘CIT(A)’] for assessment year 2004-05, 2005-06 & 2006-07 respectively passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). Since the facts and issues are identical, hence the same are taken together for disposal by this common order. 2. No one has put an appearance on behalf of the assessee despite notice. Even on earlier occasions no one has put in appearance on behalf of the assessee, therefore, we proceed to decide the present appeals on merits after going through the records and after hearing the ld. DR. 3. First we take assessee’s appeal in ITA No.114/GTY/2012 for assessment year 2004-05. The assessee in this appeal has taken the following grounds of appeal: “1. For that the Assessment order is not based on correct facts and findings and is erroneous on points of law I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 2 2. For that on the facts and circumstances of the case as well as on the points of law, the Assessing Officer erred in treating an amount of Rs 95600/- being sundry creditors, as concealed income of the appellant and making addition u/s 68 of the Income Tax Act and the Learned CIT(A) also erred in confirming the same 3. For that on the facts and circumstances of the case as well as on the points of law, the Assessing Officer erred in making an addition of Rs 1,33,280/- as deemed income u/s 69A of the Income Tax Act. 4.For that, any other ground/grounds may kindly be allowed to be urged at the time of hearing. 4. Ground No.1 is general in nature. 5. Ground No.2 – The assessee vide Ground No.2 agitated against the action of the ld. CIT(A) in confirming the addition made by the Assessing Officer of Rs.95,600/- rejecting the sundry creditors and treating the same amount as unexplained income of the assessee. The brief facts of the case are that the assessee filed his original return of income on 31.03.2005 showing total income of Rs.1,05,800/-. Thereafter, a search action was carried out at the premise of the assessee u/s 132 of the Act. After the search, in response to the notice issued u/s 153A of the Act, the assessee filed his return of income on 21.10.2009 showing total income of Rs.1,61,350/- with a disclosure of Rs.44,550/- from other income, Rs.1364/- from bank interest, Rs.11,000/- from interest from deposits. During the assessment proceedings, the Assessing Officer noticed that in the subsequent return filed u/s 139 r.w. section 153A of the Act, the assessee had claimed liability of Rs.95,600/- towards sundry creditors, however, as per the balance sheet filed along with original return, there was shown no such liability of sundry creditors. The Assessing Officer further observed that the assessee failed to prove the identity of the creditors, genuineness of the transaction and the creditworthiness of the creditors. The Assessing Officer, therefore, held the liability as bogus and added a sum of Rs.95,600/- to the assessee’s total income. In appeal before the ld. CIT(A), the assessee did not advance any arguments , therefore, the ld. CIT(A) confirmed the addition so made by the Assessing Officer observing as under: I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 3 “4.6 I find that in the original balance sheet filed, the assessee did not claim any liability towards sundry creditors. In the new balance sheet filed in support of the return of income filed in response to notice u/s. 153A, the assessee has made a claim of liability of Rs. 95,600/- which did not appear in the original balance sheet. I also find that the assessee could not prove the authenticity of the claim by furnishing the basic details such as address of the persons, the transaction which gave rise to the liability etc. I, therefore, hold that the Assessing Officer was fully justified in making the addition. Therefore, the ground of appeal is dismissed.” After hearing the ld. DR and going through the record, we do not find any reason to interfere with the order of the ld. CIT(A) on this issue. The order of the ld. CIT(A) on this issue is accordingly upheld. 6. Ground No.3 – The assessee through Ground No.3 has agitated the action of the ld. CIT(A) in confirming the addition of Rs.1,33,280/- as deemed income u/s 69A of the Act. A Search & seizure operation was conducted on 17/01/2008 in the residential premises of Smt. Manju Devi Jain (mother of the assessee) at Telia Building, M.S. Road, Athgaon, Guwahati-781001. In the course of the search, jewellery valued at Rs. 8,00,713/- was found but not seized. Smt. Manju Devi Jain claimed that out of the jewellery found, jewellery valued at Rs. 2,55,362/- represented securities kept by Shri Alok Kumar Jain in his pawn broking business. The Assessing Officer found that no income was shown in the return for assessment year 2004-05 from pawn broking business and that interest income from the said business was shown by the assessee in his returns from the assessment year 2005-06 onwards. The Assessing Officer observed that the security in the form of items of jewellery for the loans given is normally obtained prior to advancing the money. He, therefore, assumed that the items of jewellery which were kept as security were deposited with the assessee by the borrowers sometime during the previous year 2003-04. The Assessing Officer came to the conclusion that these items of jewellery were kept as security in the pawn broking business since the previous year 2003-04. He then inferred that the assessee became owner of the jewellery in the previous year 2003-04. He came to this conclusion because the assessee could not produce any documentary evidence regarding the items of jewellery. The Assessing I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 4 Officer observed that the assessee could not furnish any evidence to show that the borrowers of the money (i.e. the original owners of the jewellery) still had the rights to get back the jewellery. He held that the ownership of the items of jewellery came to tbe vested on the assessee over time. Therefore, he deemed Rs.1,33,280/- being the value of the said jewellery to be the income of the assessee of the previous year 2003-04 u/s 69A of the I.T. Act 1961. In appeal, the ld. CIT(A) confirmed the addition, however on different footing, observing as under: “5.7 I find that there is no reasonable basis for the assumptions made above. I, therefore, do not agree with the finding of the Assessing Officer that the items of jewellery came to be vested on the assessee on or before 31/03/2004, i.e., sometime during the previous year 2003-04. 5.8 I find that the Assessing Officer has not disputed assessee's claim that the items of jewellery under consideration were kept with him as security for money borrowed by the borrowers. This implies that the assessee gave as loan certain amount to the borrowers against the items of jewellery. In absence of any details in this regard, I estimate the amount lent as Rs. 1,33,280/- 5.9 I find that the assessee has not disclosed any investment in his pawn broking business in his balance sheet as at 31/03/2004 filed in support of the return filed u/s. 153A. I, therefore, hold that the sum of Rs. 1,33,280/- represents assessee's unexplained investment in business. Therefore, I hold that the sum of Rs. 1,33,280/- is to be included in the total income of the assessee. I, therefore, confirm the addition made by the Assessing Officer though for a different reason. Therefore, this ground of appeal is dismissed.” We have heard the ld. DR on this issue and gone through the records. Since the assessee could not prove the source of investment in pawn broking business, therefore, the ld. CIT(A) rightly confirmed the addition on this account. We find no infirmity in the order of the ld. CIT(A) on this issue also. In view of our observation made above, this appeal of the assessee is hereby dismissed. 7. ITA 115/GTY/2012 – The assessee in this appeal has taken the following grounds of appeal: “1.For that , the Assessment order is not based on correct facts and findings and is erroneous on points of law I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 5 2. For that on the facts and circumstances of the case as well as on the points of law, the Assessing Officer erred in treating an amount of Rs 21,78,259/- being sundry creditors , as concealed income of the appellant and making addition u/s 68 of the Income Tax Act and the Learned CIT(A) also erred in confirming the same . 3. For that on the facts and circumstances of the case as well as on the points of law, the Assessing Officer erred in making an addition of Rs 29,80,041/- as interest income from money lending business and the Learned CIT(A) also erred in confirming the same 4.For that, any other ground/grounds may kindly be allowed to be urged at the time of hearing.” 8. Ground No.1 is general in nature. 9. Ground no.2 – The assessee vide Ground no.2 has agitated the action of the CIT(A) in confirming the addition of Rs.21,78,259/- on account of sundry creditors. The facts relating to the issue are identical to that have been discussed vide Ground no.2 in assessee’s appeal in ITA No.114/GTY/2012 for assessment year 2004-05. In view of our observation made above, we do not find any infirmity in the order of the CIT(A) on this issue and the same is upheld. 10. Ground No.3 – Vide Ground No.3, the assessee has agitated the action of the CIT(A) in confirming the addition of Rs.29,80,041/- as interest income from money lending business. Documents seized in the course of the search in the residence of Smt. Rekha Jain, wife of the assessee, included documents marked as AKJ-1 to AKJ-35. It was explained by the assessee to the A.O that AKJ-06, AKJ-04 and DS-15 were part and parcel of money lending business and spread over the period of several years starting from 01/08/2004 only. It was also stated that assessee's money lending business started on 01/08/2004. The Assessing Officer, however, found that that these were the ledger accounts of various parties to whom the loan has been advanced by the assessee and interest had been charged thereof. The Assessing Officer found from analysis of various seized materials that the amounts recorded in the ledgers were 1/100 th of the actual amounts as recorded in original agreements made between the assessee and the borrowers and Trial Balances which were part of seized documents. The Assessing Officer found that as per AKJ-06, the interest accrued for this year was at Rs. 37,82,187/- whereas received amount of interest against the same was at Rs.30.62.273/-. He noted that the assessee had disclosed Rs. 82,232/- only from money lending business which I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 6 was owned by him. Considering the fact that part of the interest accrued may not have been recovered, the Assessing Officer treated the amount actually received (Rs. 30,62,273/-) by the assessee as his income from the money lending business. He added a sum of Rs.29,80,041/- (Rs. 30,62,273/- minus Rs. 82,232/-) to the returned income of the assessee. In the appellate proceedings, the counsel for the assessee did not advance any argument, the ld. CIT(A) therefore, confirmed the addition so made by the Assessing Officer observing as under: “5.6 I find from the assessment order that the seized materials contains ledger relating to money lending business of the assessee. The Assessing Officer found from these ledgers that the assessee received Rs.30,62,273/- towards interest during the previous year 2004-05. The assessee has not pointed out any specific error in the assessment order. Thus, he has failed to rebut the findings of the Assessing Officer. That being the case, I do not see any reason to interfere with the order of the Assessing Officer on this point. I, therefore, confirm the addition made by the Assessing Officer. Thus, the ground of appeal is dismissed.” After hearing the ld. DR and going through the records, we do not find any infirmity in the order of the ld. CIT(A) on this issue also and the same is upheld. In the result, the appeal of the assessee is hereby dismissed. 11. ITA 116/GTY/2017 – The assessee in this appeal has taken the following grounds of appeal: “1. For that, the Assessment order is not based on correct facts and findings and is erroneous on points of law 2. For that on the facts and circumstances of the case as well as on the points of law, the Assessing Officer erred in treating an amount of Rs 43,66,100/- being sundry creditors, as concealed income of the appellant and making addition /s 68 of the Income Tax Act and the Learned CIT(A) also erred in confirming the same . 3. For that on the facts and Circumstances of the case as well as on the points of law, the Assessing Officer erred in making an addition of Rs.5560872/- as deemed income Ws 69B of the Income Tax Act 1961 and the Learned CIT(A) also erred in confirming the same. 4.For that, any other ground/grounds may kindly be allowed to be urged at the time of hearing. I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 7 12. Ground No.1 is general in nature. 13. Ground No.2 – The assessee vide Ground No.2 has agitated against the action of the ld. CIT(A) in confirming the addition of Rs.43,66,100/- made on account of sundry creditors. The issue involved in this appeal is identical to that have been discussed vide Ground No.2 of assessee’s appeal in ITA No.114/GTY/2012 for assessment year 2004-05. The facts being identical, in view of our observations made above, this ground of the assessee’s appeal is hereby dismissed. 14. Ground No.3 – Vide Ground No.3 the assessee has agitated the action of the ld. CIT(A) in confirming addition of Rs.5560872/- as deemed income u/s 69B of the Act. The Assessing Officer found from the seized materials that the assessee engaged in money lending business. This fact was not disclosed in the original return of income filed by the assessee. The Assessing Officer found that the business of money lending was going on since 01/04/2005. He also found from the seized material that the peak investment of the assessee in his money lending business during the previous year 2005- 06 was Rs. 55,60,872/-. In the Course of the assessment proceedings, the assessee claimed that no regular books of accounts had been maintained for his money lending business. The investment of Rs. 55,60,872/- (peak investment) in money lending business as recorded in the seized materials is not reflected in the balance sheet filed by the assessee. The assessee could not furnish any satisfactory explanation regarding the source of the money. Therefore, the Assessing Officer deemed the sum of Rs. 55,60,872/- as assessee's income for the assessment year 2006-07 u/s. 69B of the I.T. Act, 1961. In the appellate proceedings, the assessee did not advance any argument, therefore, the ld. CIT(A) confirmed the addition observing as under: “5.5 In the course of appeal proceedings, the assessee was given several opportunity of being heard. But, he did not avail any of the opportunities. Therefore, it can be reasonably assumed that the assessee has nothing to say on this point. I find that the assessee has not pointed out any specific error in the assessment order. Thus, he has failed to rebut the findings of the Assessing Officer. That being the case, I do not see any I.T.A. No.114,115&116/GTY/2012 Assessment Year: 2004-05, 2005-06 & 2006-07 Shri Alok Kumar Jain 8 reason to interfere with the order of the Assessing Officer on this point. I, therefore, confirm the addition made by the Assessing Officer. Thus, the ground of appeal is dismissed.” 15. Since neither anyone has put in appearance on behalf of the assessee nor there is no document on the file warranting our interference with the order of the CIT(A), we, therefore, uphold the order of the CIT(A) on this issue. The appeal of the assessee is hereby dismissed. 16. In the result, all the three appeals of the assessee are hereby dismissed. Kolkata, the 27 th May, 2022. Sd/- Sd/- [Manish Borad] [Sanjay Garg] Accountant Member Judicial Member Dated:27.05.2022. RS Copy of the order forwarded to: 1. Shri Alok Kumar Jain 2. ACIT, Circle-1, Guwahati 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches