Leela Ram Methani, Bhilwara V. ITO, Ward-1, Bhilwara

ITA 170/JODH/2019

AI Insights

The case involves Shri Leela Ram Methani, an individual engaged in the wholesale business of eggs, who appealed against the order of the CIT(A), Ajmer, confirming the addition of Rs.25.25 lacs to his income for the assessment year 2011-12. The addition was based on a statement made during a survey in 2018, where the assessee inadvertently stated the purchase cost of a plot as Rs.24 lacs, whereas the registered sale deed showed it as Rs.14 lacs. The Tribunal found that the addition was not supported by any incriminating material and was solely based on the statement made during the survey, which is not considered to have evidentiary value under Indian law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122747 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 21-03-2023
• Assessment Year: misc
• Appeal Filed On: 12-05-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Reassessment proceedings
• Section: 147; 148; 143(3); 133A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER 170/Jodh/2019 (ASSESSMENT YEAR- 2011-12) Shri Leela Ram Methani, Near Bank of Baroda, Gulabpura, Bhilwara Vs The ITO Ward-1, Bhilwara (Appellant) (Respondent) PAN NO. AKRPM2107M Assessee By Shri Hemant Chhajed, CA Revenue By Shri S.M. Joshi, JCIT-DR Date of hearing 22/03/2023 Date of Pronouncement 24/03/2023 O R D E R PER: SHRI MANISH BORAD, AM This is an appeal filed by the assessee against the order of the ld. CIT(A), Ajmer dated 22-02-2019 for the assessment year 2011-12 raising therein following grounds of appeal:- 2 ITA170/JODH/2019 SHRI LEELA RAM METHANI VS ITO, WARD-1, BHILWARA ‘’1. The impugned additions of Rs.25,25,000 made in the order u/s 143(3)/147 dated 20.12.2018 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. The Ld.AO erred in law as well as on the facts of the case in charging interest u/s 234B of the Act. The appellant totally denies it liability of charging of any such interest. Te interest, so charged, being contrary to the provisions of law and facts, kindly be deleted in full. 3. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.” 2.1 Brief facts of the case are that the assessee is an individual and engaged wholesale business of eggs. The income of Rs.1.90 lacs declared in the return filed for the assessment year 2011-12 on 02-05-2012. A survey was carried out in the case of the assessee on 23-01-2018 and during the course of survey the assessee accepted in the statement that he purchased Plot No.32, Krishna Nagar, Malola Road, Bhilwara for an amount of Rs.24.00 lacs but the sale deed was registered with sales consideration of Rs.14.00 lacs . Based on this statement, the AO issued notice u/s 148 of the Act and carried out reassessment proceedings. The AO show caused the 3 ITA170/JODH/2019 SHRI LEELA RAM METHANI VS ITO, WARD-1, BHILWARA assessee about the alleged transaction for investment of Rs.24 lacs and registration expenses paid at Rs.1.25 lacs but on account of non- compliance by the assessee, an addition for undisclosed investment was made at Rs.25.25 lacs and income assessed at Rs.27.15 lacs vide order dated 20-12-2018. 2.2 Being aggrieved, the assessee carried the matter before the ld CIT(A) who confirmed the action of the AO 2.3 Aggrieved assessee is now in appeal before this Tribunal. The ld. Counsel for the assessee submitted that survey proceedings took placed in the year 2018 and the transaction of purchase of plot was almost 8 years old and the assessee was not aware of actual purchase consideration at that point of time and inadvertently stated the purchase cost at Rs.24 lacs. He submitted that there was no incriminating material to support the said addition and, therefore, addition should not have been made merely based on the statement given in the course of survey. 2.4 On the other hand, the ld. DR supported the orders of the lower authorities. 4 ITA170/JODH/2019 SHRI LEELA RAM METHANI VS ITO, WARD-1, BHILWARA 2.5 We have heard the rival contentions and perused the materials available on record. The sole grievance of the assessee is that the ld. CIT(A) erred in confirming the addition for undisclosed investment of Rs.25.25 lacs made by the AO in reassessment proceedings carried out u/s 143(3) read with section 147 of the Act and taking the basis of statement given by the assessee during the course of survey carried out on 23-01-2018 u/s 133A of the Act. We notice that the alleged addition is based on the statement given during the course of survey. It has been judicially settled by the Hon’ble Courts time and again that statement given during the course of survey do not have any evidentiary value and for making addition reference has to be made to incriminating material unearthed during the course of survey and nexus should be established for making such addition. In the instant case, transaction is regarding purchase of Plot No. 32, Krishna Nagar, Malola Road, Bhilwara. The registered sale deed shows the purchase consideration was Rs.14 lacs. However, in the statement given during the course of survey, the assessee has stated the purchase consideration at Rs.24 lacs. There is no evidence with the Revenue which could indicate that the assessee had paid purchase 5 ITA170/JODH/2019 SHRI LEELA RAM METHANI VS ITO, WARD-1, BHILWARA consideration of Rs.24 lacs. It is also evident that alleged statement was taken almost after 8 years of the date of transaction. It is also noticed that on one hand the AO observed in the assessment order that purchase consideration as per sale deed is Rs.14 lacs but he made the addition on the total amount of undisclosed investment at Rs.25.25 lacs. 2.5.1 Under the given facts and circumstances of the case, we are of the considered view that in the absence of any incriminating material, the addition cannot be made on the basis of the statement given during the course of survey which has no evidentiary value as they are not given under oath. Assessee has not disputed that he made investment of Rs.14.70 lacs out of accumulated unaccounted income and loan from friends which he failed to explain at any stage. Therefore, we sustain the addition to Rs.14.70 lacs and partly allow Ground No. 1 raised by the assessee. 3.1 The Ground No. 2 and 3 are general and consequential in nature which do not require any adjudication. 6 ITA170/JODH/2019 SHRI LEELA RAM METHANI VS ITO, WARD-1, BHILWARA 4.0 In the result, the appeal of the assessee is partly allowed Order pronounced in the open Court on 24 /03/2023. Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 24/03/2023 *Mishra Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The DR 5. Guard File Assistant Registrar Jodhpur Bench