ANIL GUPTA, JAIPUR V. I.T.O. Ward 6(1), Jaipur, Rajasthan

ITA 12/JPR/2023

AI Insights

The case involves Anil Gupta, an employee of the Police Department of Rajasthan, who appealed against the order of the National Faceless Appeal Centre (NFAC) which sustained additions made by the Income Tax Officer (ITO), Ward 6(1), Jaipur, for the assessment year 2007-08. The additions included unexplained cash deposits, loans, and advances received, as well as deemed rent from properties. The CIT(A) upheld these additions, leading to Gupta's appeal to the Tribunal. The Tribunal found that the CIT(A) had not properly considered the assessee's submissions and evidence, leading to a decision to set aside the CIT(A)'s order and remand the case for a fresh decision on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132259 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-05-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 11-01-2023
• Other Referred Cases: CIT v. Rai Bahadur Hardutroy Motilal Chamaria
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Salary income; Set aside
• Section: 147; 148; 80C; 142(1)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 12/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2007-08 Anil Gupta C/o G. Mehta & Co. Paras, 127 Hari Marg Civil Lines, Jaipur cuke Vs. Income Tax Officer Ward 6(1), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AANPG 0024 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. G. M. Mehta (CA) jktLo dh vksj ls@ Revenue by : Smt Monisha Choudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 31/05/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 05/07/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 20/12/2022 [here in after (NFAC)/ ld. CIT(A) ] for assessment year 2007-08 which in turn arise from the order dated 27.03.2015 passed under section 148/143(3) of the Income Tax Act, by ITO, Ward-6(1), Jaipur. 2 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur 2. In this appeal, the assessee has raised following grounds: - “1. Ld. CIT(A) (NFAC) has decided the appeal against the principles of natural justice wherein submissions made before ld. CTT(A)-2, Jaipur on 26.09.2017 though repeated in appeal order but were fully ignored, without providing any fresh opportunity to the Assessee exclusively relying on the order of the ld. AO, thereby sustaining addition of Rs.26,32,160/-, detailed as under: S.No. Advance/loan from Amount Remarks 1. Sh. Balbir Saharan 6,00,000/- Adv. Against land sale 2. Sh. Rakesh Pareek 5,00,000/- Loan - by cheque (NRI) 3. Sh. Balbir Saharan 3,85,000/- Adv. Against land sale 4. Sh. Dinesh Kumar 1,45,200/- Loan- a/c. payee cheque 5. Sh. Subhash Chandra 1,50,000/- Loan- a/c. payee cheque 6. Sh Vijay Golani 1,51,960/- Loan- a/c. payee cheque 7. Sh. Anil Kumar Gupta 6,00,000/- Loan- a/c. payee cheque Total additions sustained 26,32,160/-. 2. Avoiding the facts of the case & evidence produced, Id. CIT(A) was not justified in sustaining addition of following under sec. 23(4)(b)of Act: S.No. Relating to house/residential flat Amount 1. Single house at plot A-7&A-8 Malviya Nagar Jaipur 42,763/-2. 205, Central Spine, Vidyadhar nagar, Jpr 67,200/- 3. Ld. CIT(A) has erred in sustaining addition of Rs.1,00,000/-out of 6217 cash balance of Rs.1,53,268/- which was accumulation amount in 26 years of service period. 4. Ld. CIT(A) was not justified allowing short deduction by Rs.84,555/-(99,129/- 14,574) under chapter VIA for LIC premium and repayment of housing loan duly claimed in Return of income.” 3. Succinctly, the fact as culled out from the records is that in the assessee’s case the AO noticed that the assessee has deposited Rs. 20,09,000/- in cash in his savings bank and made payment for credit card bills of Rs. 2,58,639/- during the F.Y 2006-07 relevant for AY 2007-08 and no return of income for the relevant assessment year was filed. Therefore, proceedings u/s 147 were initiated after prior approval of the Addl. CIT, Range-6, Jaipur and notice u/s 148 was issued on 21.03.2014. The 3 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur assessee was also issued notice u/s 142(1) of the IT Act, 1961 along with query letter on 16.12.2014 and the same was duly served. In compliance to notice u/s 148, the assessee filed Return of Income declaring income of Rs. 77,570/- for the A.Y 2007-08 on 20 th March, 2015. In the year under consideration the assessee employed in the Police Department of Government of Rajasthan. The assessee while filing the return of income for the A.Y 2007-08 on 20.03.2015 has shown salary Income of Rs. 77,570. The assessee has also declared Income from other sources of Rs. 1,854/- being interest from bank account. The assessment in this case was completed deterring total income at Rs. 27,78,020/- by making addition of Rs. 1,854 being interest received on saving bank account, Rs, 26,32,160/- the amount of loan or credit from various persons and Rs. 81,013/- under the head income from house property. The ld. AO allowed the deduction u/s. 80C of the Act for an amount of Rs. 14,574/-. 4. Aggrieved from the order of the assessment the assessee has preferred an appeal before the ld CIT(A). Apropos to the grounds so raised the finding of the ld. CIT(A) is reproduced here in below: “4. Decision: I have carefully considered the facts on record, the assessment order, Grounds of appeal and statement of facts furnished by the appellant with the appeal memo. 4 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur During the appellate proceedings, the appellant furnished ground-wise written submission on the same line of argument, which was made before the AO. The appellant didn’t furnished any specific submission pointing out the defects in the assessment order. Perusal of the assessment order reveals that the AO had dealt with all the issues in details after considering the submission of the appellant. Thus, I don’t find any infirmity in the order of the AO. 5. In the result, the appeal of the appellant is dismissed.” 5. As the assessee did not find any favour from the order of the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the assessee the ld. AR of the assessee filed the written submissions and the same is reproduced herein below. For higher education of both children, the Assessee had raised funds either advance on sale of immovable property or through account payee cheques from his relatives/known persons but were treated by both lower authorities as unexplained u/s,. 68 of I.T. Act. Cheque received by assessee from three friends in his name which were repaid to Builder for the properties purchased by them too was treated as Assessee’s income. Out of cash balance as on Rs.1,26,268/- on 01.04.2006, Rs.1,00,000/- was treated as unexplained after adding Rs.27,000/-, which was b/f. balance of loan from one Mr. Rakesh Pareek. (Cash book P.B. page 5 to 10 and bank book P.B. page 11 to 25). Deemed rent under sec. 23(4)(b) was estimated at very high side without any basis or considering the facts of case. Deduction u/s. 80C claimed in Return of income was allowed in part only. Ld. CIT(A) NFAC, though by repeating but avoiding old submission as well as documentary evidence like bank statements etc, submitted to ld. CIT(A), Jaipur more than 5 years ago, without providing fresh opportunity to assessee, exclusively relied on order of ld. AO which resulted in dismissal of appeal. With the above brief facts, the grounds of appeal are discussed hereunder: GROUNDS OF APPEAL : GROUND No. (1) Ld. CIT(A) (NFAC) has decided the appeal against the principles of natural justice wherein submissions made before ld. CIT(A)-2, Jaipur on 26.09.2017 though repeated in appeal order but were fully ignored, without 5 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur providing any fresh opportunity to the Assessee exclusively relying on the order of the ld. AO, thereby sustaining addition of Rs.26,32,160/-, detailed as under: S.No. Advance/loan from Amount Remarks 1. Sh. Balbir Saharan 6,00,000/- Adv. Against land sale 2. Sh. Rakesh Pareek 5,00,000/- Loan - by cheque from NRI 3. Sh. Devesh Kumar Sharma 3,85,000/- Repaid to builder for flat purchased 4. Sh. Dinesh Kumar 1,45,200/- Repaid to builder for flat purchased 5. Sh. Vijay Golani 1,51,960/- Repaid to builder for flat purchased Sh. Subhash Chandra 1,50,000/- Cheque issued at his direction 7. Sh. Anil Kumar Gupta 6,00,000/- Loan- a/c. payee cheque Total additions sustained by CIT(A) 26,32,160/- (1) Ground(1)(1) Rs.6,00,000/- advance from Sh. Balbir Saharan against sale of land: On security of plot of land, by agreement dated 10.04.2006 (P.B. page 26 to 28),assessee had received advance of Rs.6,00,000/- from one Mr. Balbir Saharan as under: S.No. Date of receipt Amount received 1. 10 th April 2006 2,50,000 2. 10 th July 2006 3,50,000 Advance received (31.03.2007) 6,00,000 For confirming the transaction, the buyer Shri Balbir Saharan came to Shriganganar and attended before the ld. AO on 25 th March 2015 but ld. AO did not record his presence for which reason appears that it would have adversely affected her predetermined mind of making unjustified. The action of the ld. AO was confirmed by ld. CIT (NFAC). Ground No. (1) (2) Addition of Rs.5,00,000/- for loan received by a/c payee cheque from NRI Shri Rajesh Pareek: Rajesh Pareek, a close friend of the assessee, resides in Dubai for last more than 15 years. From his NRE bank account, he issued two cheques of Rs.4,73,000/- to the assessee (P.B. Page 29 & 30 ) as under: Date Particulars Amount Bank S. No. 01.04.2006 Balance b/f. 27,000 B/f. 6 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur 18.01.2007 Cheque No. 595944 2,00,000 A 25.01.2007 Cheque No. 595945 2,73,000 B Total loan from Shri Rajesh Pareek (NRI) 5,00,000 - The B/f. balance of loan of Rs.27,000/- was treated by ld. AO as cash loan taken during the year itself and added to opening cash balance of Rs.1,26,268/-. The total amount treated as unexplained. Ground No. (1) (3 to 5) Addition of Rs.3,85,000/- from Devesh Kumar Sharma, Rs.1,45,200/- from Dinesh Kumar and Rs1,51,960/- from Vijay Golani received by a/c. payee cheques and repaid to Builder on their behalf- treated as unexplained credit u/s. 68: The account of amount received from Devesh Kumar, Dinesh Kumar and Vijay Golani were for repayment to Builder (Lotus Prime Estate)for residential flats purchased by them (on the recommendation of the assessee) are as under: Devesh Kumar Sharma (P.B. page 31): Date Amount repaid * Amount S.No. Date Cheques (received)Amount S.No. 17.04.2006 21.04.2006 30.08.2006 To Lotus P.Estate To Lotus P.Estate To Lotus P.Estate 2,00,000 60,000 1,25,000 F G H 12.04.2006 19.04.2006 30.08.2006 By Ch. No.00 2131 By Ch. No. 002134 By Ch.No. 957394 2,00,000 60,000 1,25,000 C D E 3,85,000 3,85,000 Dinesh Kumar (P.B. Page 32) Date Amount repaid * Amount S.No. Date Cheques (received)Amount S.No. 27.06.2006 Ch. No. 85034 1,45,200 J 24.06.2006 Ch. No. 543472 1,45,200 I Vijay Golani (P.B. Page 32) Date Cheque (repaid)Amount Date Cheque (received) Amount 27.06.2006 Ch. No.850351,51,960 L 26.06.2006By Ch. No248466 & 671,51,960 K The above were cross transactions routed through bank account(s) of the Assessee. Both lower authorities were, therefore, not justified treating 7 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur Rs.6,82,160/- (Rs.3,85,000 + Rs.1,45,200/- + Rs.1,51,960/-) as unexplained u/s. 68 of I.T. Act of assessee himself. Ground No. (1) (5) (Addition of Rs.1,50,000/, amount received from Subhash Chandra)-: A/c. payee cheque received from Subhash Chandra on 16.01.2007, out of which expenses of Rs.25,000/- incurred and remaining amount of Rs.1,25,000/- was repaid to Shri Naveen Temani on 06.03.2007 as per his instructions detailed hereunder: Subhash Chandra (P. B. Page 33) Date Cheque Amount S.No. Date Cheque Amount S.No 29.01.2007 05.03.2007 To Exp. incurred To Cheque (Temani) 25,000 1,25,000 - N 16.01.2007By Ch. No.278401 1,50,000M 1,50,000 1,50,000 Ground No. (1) (7) (Addition of Rs.6,00,000/)-: Rs.6,00,000/- thr. RTGS was received on 8.11.2006 and Rs.21,000/- on 27.11.2006 from NRE bank a/c. of assessee’s cousin Shri Anil Kumar Gupta who is now in Russia (P.B. page 34 & 35). Out of Rs.6,21,000/- - Rs.6,00,000/- made/sustained. GROUND No. (2) Avoiding the facts of the case & evidence produced, ld. CIT(A) was not justified in sustaining following addition under sec. 23(4)(b)of Act: S.No. Relating to house/residential flat Amount * 1. Single house at plot A-7/A-8 Malviya Nagar Jaipur 42,763/- 2. 205, Central Spine, Vidyadhar Nagar, Jpr 38,113/- 81,013/- Ground No. 2(1): Addition was made by ld. AO for individual house properties as under: Particulars A-7/A-8, Malviya nagar 205,Central Spine Notional rent estimated by AO Less: deduction u/s. 24(a) @ 30% 1,44,000 43,200 1,00,800 96,000 28,800 67,200 8 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur Less: Interest payment on loans 57,900 29,087 Taxable notional rent u/s. 23(4)(b) 42,900 38,113 Plot No. A-7 & A-8, (of 216.66 Sq. yards each): Single house was got constructed with single electricity and single water connection. No specific query was raised by the ld. AO for the proposed treatment of one residence as two different residential units. No such addition could have been made. Flat No. 205, Central Spine, Vidhyadhar Nagar, Jaipur: It is a single roomed flat purchased for Rs.4,00,000/-, (major source loan from HDFC Housing loan of Rs.3,60,000/-). On loan from HDFC Housing loan, appellant had made payment of interest of Rs.29,087/-. The notional rent of one room flat in the F.Y. 2006-07 in no case could have been more than Rs.4,000/- p.m. under section 23 (4)(b) of IT Act. GROUND No. (3) Ld. CIT(A) has erred in sustaining addition of Rs.1,00,000/- out of cash balance of Rs.1,26,268/- which was accumulated amount in 26 years of service period as per cash book maintained. Last salary drawn at the time of retirement was around Rs.64,000/- per month. Cash book, though not required, was prepared (P.B. page 5 to 10) in which opening cash balance was Rs1,26,268/- (Rs.27,000/- was added by ld. AO herself which was opening balance from one Mr. Rajesh Pareek {ground No. (1)(2) above} . Rs.26,268/- was treated as explained and remaining Rs.1,00,000/- was added to his taxable income. Even in case of Central Govt. employees, the Central Bureau of Investigation (CBI) and in case of State Government employees, the ACB is treating saving of 30% of total salary received. In total 26 years of service (up to 2007), the total salary drawn by the appellant was more than Rs.20,00,000/- and therefore the saving should be more than 6,00,000/- whereas the appellant had opening capital of Rs.2,02,132/- only. GROUND No. (4) Ld. CIT(A) was not justified allowing short deduction by Rs.84,555/- {99,129/ (-)14,574} under chapter VIA for LIC premium and repayment of housing loan duly claimed in Return of income. The allowable deduction under section 80C of I.T. Act and allowed by the ld. AO is as under: S.No. Head of payment Amount P.B. Page No. 1. LIC Premium 35,432 36 & 37 2. Priciple. Amount of repayment of Housing loan (A-8/A-7 Malviya Nagar, Jaipur ) 29,148 38 & 39 3. Pr. Amount of repayment of Housing loan (B-5, Central Spine, Vidyadharnagar, 32,377 40 9 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur Jaipur ) 4. Total allowable deduction u/s. 80C 96,957 14,574 - 5. Less Deduction allowed by ld. AO - 6. Short deduction allowed than allowable 82,383* (*Correct figure of deduction u/s. 80C is Rs.82,383/- and not 84,555/- as per ground of appeal) 6. The ld. AR of the assessee in addition to the written submission also submitted that the assessment was reopened for deposit of cash and credit card payment. While completing the assessment there is no such addition made by the assessing officer and thus the assessment order is bad in law and in facts. The ld. AO added advance money and money received from friend as income of the assessee. The assessee has given the cash book which has been accepted as an evidence. The ld. AO has also made the addition for notion rent of the property is in fact not in a position to be given on rent. The cash book submitted has not been questioned. In the case of the Shri Balbir Saharan even the advance received for sale of plot of land is added as income. The affidavit for this advance for plot of land was submitted even though all these facts available on record the ld. CIT(A) has not passed the detailed on merits considering the evidence so filed by the assessee. As regards the amount 10 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur of Rs. 26,32,160/- ld. AR relied upon the chart that has been submitted in his written submission and the same is reproduced for the sake of convenience: S.No. Advance/loan from Amount Remarks 1. Sh. Balbir Saharan 6,00,000/- Adv. Against land sale 2. Sh. Rakesh Pareek 5,00,000/- Loan - by cheque from NRI 3. Sh. Devesh Kumar Sharma 3,85,000/- Repaid to builder for flat purchased 4. Sh. Dinesh Kumar 1,45,200/- Repaid to builder for flat purchased 5. Sh. Vijay Golani 1,51,960/- Repaid to builder for flat purchased Sh. Subhash Chandra 1,50,000/- Cheque issued at his direction 7. Sh. Anil Kumar Gupta 6,00,000/- Loan- a/c. payee cheque Total additions sustained by CIT(A) 26,32,160/- Based on the above arguments the ld. AR of the assessee submitted the decision given by the ld. CIT(A) is without considering the merits of the case and the order of the ld. CIT(A) is not speaking order. 7. The ld DR is heard who has relied on the findings of the lower authorities. The ld. DR also submitted that the assessee has undertaken huge financial transaction even though he has not considered it appropriate to file the income tax return. All the advance or loan are on 11 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur account of the assessee on hand and therefore, the source is taxed by the ld. AO as the assessee failed to prove the identity, genuineness and capacity of the depositor and therefore, he supported the order of the lower authority. 8. In the rejoinder the ld. AR of the assessee submitted that even the money received by an account payee cheque or RTGS is added as income and the order of the ld. CIT(A) is silent on the evidences so filed. Even the deemed rent issue is not considered by the ld. CIT(A). 9. We have heard both the parties and perused the material available on record. It is well settled that the power of the ld. CIT(A) are co-terminus with that of the ITO, the ld. CIT(A) can do what the ITO can do and also direct him to do what he felt to do so. In this context, useful reference is made to the Hon’ble Apex Court decision in the case of CIT v. Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 wherein the proposition has dealt by the court that the assessee having once filed an appeal, cannot withdraw it and even if the assessee has reduced to appear at the hearing, first the appellate authority can proceed with the enquiry and if he finds that there is under assessment, he can enhance the assessment just as, once the assessment proceedings are set in motion, it is not open to the AO to not 12 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur complete the assessment proceedings by allowing the assessee to withdraw the return of income, it is similarly not opened for ld. CIT(A) to not pass an order on merits by dismissing the appeal merely reproduced the finding of ld. AO and cannot ignore the material placed before him. We observe that as in this case that ld. CIT(A) has not given any finding on the written submission filed by the assessee and has simply confirmed the finding of ld. Assessing Officer without dealing in on merits the fact of the case of the assessee. In light of these facts and circumstances before us, we direct the ld. CIT(A) to decide the case of the assessee on merits. As bench has observed that the ld. CIT(A) has not dealt with the evidence placed on record by the assessee. As regards to the addition made u/s 68 and has also not commented upon as to how deem rent added by the AO is to be sustained. In light of these cases, we set aside the matter before the ld. CIT(A) and direct assessee to appear and present case before him and assessee is also directed not to take adjustment adjournment previous reason and participated in the set aside proceedings before ld. CIT(A). In terms of these observations of the assessee is allowed for statistical purposes. 13 ITA No. 12/JP/2023 Anil Gupta vs. ITO, Ward 6(1), Jaipur Order pronounced in the open court on 05/07/2023. Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05/07/2023 *Ganesh Kumar vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Anil Gupta, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 6(1), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 12/JP/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar