JAGMEET SINGH,JAIPUR V. .ITO, WARD-1, HANUMANGRH

ITA 118/JODH/2022

AI Insights

The case involves Shri Jagmeet Singh, who appealed against the order of the National Faceless Appeal Centre (CIT(A)/NFAC) which upheld the addition of Rs. 15,54,750 as undisclosed income under section 69A of the Income Tax Act, 1961. The addition was based on cash deposits in the assessee's bank account during the assessment year 2016-17, which were allegedly reimbursements for expenses incurred on behalf of M/s. Mahindra Infra LLP. The Tribunal found that the assessee had not substantiated his claims with adequate evidence during the lower proceedings and thus remanded the case for further investigation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31828 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 05-09-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN
• Assessee Lawyers: RAKSHA BIRLA
• Keywords: Business income; Additional evidence; Salary income; Principle of natural justice; TDS
• Section: 143(3); 142(1); 143(2); 250; 131; 133(6); 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 118/Jodh/2022 Assessment Year: 2016-17 Shri Jagmeet Singh 14/1, Giridhar Marg, Jaipur. [PAN: FFPPS0489A] (Appellant) Vs. The ITO, Ward-1, Hanumangarh. (Respondent) Appellant by Mrs. Raksha Birla Respondent by Sh. Karni Dan, Addl.CIT Date of Hearing 21.10.2024 Date of Pronouncement 09.12.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of this appeal the assessee challenges the finding of the order of National Faceless Appeal Centre, Delhi [ for short CIT(A)/NFAC ] dated 06.07.2022. The dispute relates to the assessment year 2016- 17. That order was passed by the ld. CIT(A) because the assessee challenged the order passed under section 143(3) of the Income Tax Act,1961 [ for short “Act” ] by the ITO, Ward-1, Hanumangarh. 2. The assessee challenges that order of the ld. CIT(A) on the I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 2 following grounds:- “I. That on the facts and in the circumstances of the case, the CIT(A) NFAC grossly erred in upholding the validity of order passed by ld. AO. 2. That on the facts and in the circumstances of the case, the CIT(A) NFAC grossly erred in without appreciating the facts in the correct perspective and has strongly proceeded by arbitrarily assuming the case deposits in bank account as undisclosed income. 3. That on the facts and in the circumstances of the case, the CIT(A) NFAC grossly erred in sustaining addition of Rs. 15,54,750/- in respect of cash deposits in bank account u/s 69A of the Act. 4. That on the facts and in the circumstances of the case, the CIT(A) NFAC grossly erred in recording the observation while upholding the action of Ld. AO was arbitrary and in flagrant violation of the provisions of law. 5. That on the facts and in the circumstances of the case, the CIT(A) NFAC ought to have deleted the addition made by ld. AO. 6. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 7. The petitioner prays for justice & relief.” 3. The assessee has also raised following additional grounds of appeal:- “a] That on the facts and in the circumstances of the case, the addition made by the ld. AO and confirmed by Ld. CIT(A) beyond as issue which is not subject matter for limited scrutiny. b] That on the facts and in the circumstances of the case the Ld. Cit(A) grossly erred in upholding the addition made by the ld. AO which is in violation of the binding decisions and CBDT circular/instructions.” 4. The brief fact of the case is that the assessee filed his return of income for the relevant A.Y. 2016-17 on 20.09.2017 declaring total income at Rs. 2,72,150/-. The case was selected for limited scrutiny of CASS. A notice u/s 143(2) of the Act was issued on 21.09.2018 to I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 3 submit the response of the assessee on or before 09.10.2018 through e- proceeding facility. In response thereof, the assessee submitted his return of income for A.Y. 2016-17 along with one affidavit regarding deposits during demonetization period. Further, a notice u/s 142(1) was issued to the assessee on 10.10.2018 and 23.10.2018 fixing the date of hearing on 17.10.2018 and 26.10.2018 respectively. In compliance to the notices, assessee filed an adjournment application on dated 25.10.2018. 4.1 Based on information of the assessee filed a reply on dated 22.11.2018. As per the reply of the assessee, he was not carrying any business activity during the year under consideration and he was working as a sales executive in M/s Ashish Infrahomes Pvt. Ltd and earned salary income and bank interest in A.Y. 2016-17. He submitted his ICICI bank account No. 676901527826 statement, Pay Slip for March-2016, LIC Receipts and copy of ITR with computation in corroboration of the same. Further, a show cause notice regarding deposits in his bank accounts and notice u/s 142(1) along with questionnaire was issued to the assessee on 23.11.2018 through e- proceeding facility of ITBA fixing the hearing date on 26.11.2018, but no response was submitted by the assessee on the given date of hearing I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 4 4.2 Further, information was also called for u/s 133(6) of the Act from the Branch Managers of State Bank of India, Punjab National Bank and Bank of India on dated 29.11. 2018 and the account statements received from them are placed on the record As there were noncompliance of the notices issued u/s 142(1), a final show cause notice and a notice u/s 142(1) along with questionnaire was issued through ITBA to the assessee on 30.11.2018 fixing the hearing date on 05.12.2018. In compliance to the said notices, the assessee filed his reply on 01.12.2018 with details of cash deposited, unsecured loan and reimbursement of expenses on behalf of Maninder Infra LLP and submitted his all-bank account statements at ICICI Bank, State Bank of India, PNB Bank & Bank of India for the relevant period. Le. F.Y. 2015- 16, which are placed on the record. A summons u/s 131 of the Income Tax Act, 1961 was issued to the assessee through ITBA on dated 04.12.2018 by fixing hearing date on 06.12.2018 but assessee neither filed a reply nor filed an adjournment application. Notice u/s 133(6) were issued to M/s Ashish Infrahomes Pvt. Ltd. and M/s Maninder Infra LLP on 11.12.2018 and served on their registered e-mail address for copy of account of Shri Jagmeet Singh in their books of account during F.Y. 2015-16. But, no requisite information/document was furnished by them. I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 5 Thereafter, on 13.12.2018 assessee, attended the hearing in compliance of summons u/s 131 and his statements were taken on oath. As per statement of the assessee and as is evident from the computation of income and as per the reply submitted by the assessee it was noticed that during the period under consideration the assessee was earning salary income from M/s. Ashish infrahomes Pvt. Limited and was also having 5 % profit sharing ratio in a limited liability partnership from M/s. Mahindra infra LLP at Jaipur. Further, on perusal of his computation of income for the assessment year 2016-17 it was noticed that he has offered only salary income from M/s. Ashish infrahomes Pvt Limited and has not disclosed any business income from M/s. Mahindra Infra LLP. The ld. AO on perusal of Bank account statement of the assessee of account no. 676901527826 at ICICI Bank, Jaipur for the period from 01.04.2015 to 31.03.2016 it was noticed that the assessee found to be in receipt of money for an amount of Rs. 15,54,750/-. On being further questioned to the assessee about the deduction of TDS on this payment he stated that no TDS was deducted on the salary he has received. As the assessee did not substantiated the nature of income received from M/s. Mahinder Infra LLP all receipts from the firm in his bank account at ICICI Bank was considered as his undisclosed income and added to income as per provision of section 69A of the Act. I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 6 5. Aggrieved from the order of the assessing officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds of the appeal so raised by the assessee, the relevant finding of the ld. CIT(A) is reiterated here in below:- “7. I have carefully considered the facts of the case, the assessment order and the written submission of the assessee. In the assessment order, the AO stated that the assessee admitted salary income from M/s Ashish Infrahomes Pvt Ltd in the return of income. The AO observed that though the assessee is a partner in M/s Maninder Infra LLP, no business income has been shown from the said concem. On perusal of the bank account statement of the Account No.676901527826 held by the assessee in ICICI Bank, Jaipur, the AO noticed that sums aggregating to Rs.15,54,750/- were found credited in the said account on various dates during the year (18 occasions during the year, the details of which are given in the assessment order) by way of transfer from M/s Maninder Infra LLP. The AO observed that the assessee failed to furnish a copy of his account in the books of the said LLP for the previous year and copies of the return of income and computation of income of the LLP for AY 2016-17, in order to explain the nature of the said receipts. Hence, the AO treated the said receipts of Rs.15,54,750/- found credited in the assessee's bank account as unexplained money u/s 69A of the Act and made addition of the same in the assessment order. 8. In the written submission furnished during the appellate proceedings, the assessee explained that he incurred expenses on behalf of the LLP and the firm transferred the amounts to his bank account every month towards reimbursement of the said expenses. The assessee furnished month-wise summary of expenses incurred by him on behalf of the firm and the relevant head of expenses. He stated that the LLP has filed its return for the year and has shown the relevant expenses in its books of account for the purpose of calculating its profit/loss for the year. The assessee accordingly contended that the reimbursement of expenses from the firm is not liable for addition as the income of the assessee. 9. On careful examination, it is considered that the explanation of the assessee is not acceptable as it is bereft of any evidence. The assessee made a claim that the amounts received in his bank account from M/s Maninder Infra LLP are towards reimbursement of expenses incurred by him on behalf of the said firm. However, the assessee failed to furnish a copy of I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 7 his capital account in the books of the said firm either during the assessment proceedings or during the appellate proceedings in support of the said claim. Further, the assessee failed to furnish copy of the return of income of the firm and the copies of ledger accounts of the relevant expenses in the books of the firm, which have been claimed to have been incurred by the assessee on behalf of the firm. In this connection, it is relevant to point out that it was specifically brought to the notice of the assessee in the \"Annexure\" to the notices issued u/s 250 during the appellate proceedings on 11.11.2021, 29.11.2021, 16.12.2021, 10.02.2021, 28.02.2021, 21.03.2022 and 08.04.2022 that in case he wishes to rely on any evidence which was not furnished to the AO during the assessment proceedings, he may do so by filing a petition for admission of additional evidence under Rule 46A of the IT Rules. However, the assessee chose not to furnish any additional evidence by way of copy of his capital account in the books of the LLP, copy of the return of income of the LLP, copies of ledger accounts of the relevant expenses in the books of the LLP etc, in support of his claim. The statement of month wise summary of expenses incurred by him on behalf of the firm furnished by the assessee along with his written submission on 05.07.2022 does not hold any evidentiary value since the same is self serving and it is not supported by any authentication from the LLP. 10. In view of the aforesaid discussion, it is held that the assessee failed to furnish satisfactory explanation regarding the nature and source of credits to the extent of Rs. 15,54,750/- received in his bank account. Hence, the addition of Rs.15,54,750/- made u/s 69A in respect of the said credits is hereby confirmed. This ground of appeal is accordingly dismissed. 11. In the result, the appeal is dismissed.” 6. As the assessee did find any favour on account of the appeal so filed before ld. CIT(A), the present appeal filed against the said order of the ld. CIT(A) before this tribunal on the grounds as reiterated in para 2 & 3 above. I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 8 7. During the course hearing, Ld. AR of the assessee relied upon the submission made before the lower authority and vehemently submitted that he has raised the additional ground wherein the contention raised is that reasons for selection of the cash was different and the addition was made on the different ground and no addition of cash was made in the hands of the assessee. So the addition made is outside the purview of the subject matter of scrutiny. Even on merits of the case the assessee incurs various expenses during the month and at the month end that firm transfer a lump sum amount as reimbursement of the expenses to the assessee. Hence the receipt of amount is against the reimbursement of various expenses incurred for an on behalf of the firm to the assessee. The details of various expenses and amount transferred to the bank were furnished before the ld. CIT(A). Further it was also argued that the firm is already assessed to tax for the year under consideration and has claimed those expenses in the books of accounts while calculating the profit and loss account of the firm. Therefore, adding the same amount of \u000115,54,750 transferred by the firm in the account of the assessee is against the principle of natural justice and the assessing officer has not found anything contrary to the fact placed on record. 8. Per contra, DR relied upon the finding recorded in the order of ld. CIT(A). Ld. DR vehemently argued that the case of the assessee falls I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 9 under the fact that he has not filed his ITR and therefore, the additional ground raised by the assessee has no merits and the case of the assessee is rightly scrutinised by the revenue. As regards the reimbursement of the amount received from the assessee firm the assessee has not discharged it onus. 9. We have heard the rival contentions and perused the material placed on record. The bench noted all the ground no. 1 to 5 are centred on the addition of Rs. 15,54,750/- made by the ld. AO and sustained by the ld. CIT(A). Ground no. 6 being general does not require our finding. Considering that aspect of the matter all the five grounds being related to one issue we considered it to decide together. In this case the assessee was subjected scrutiny based on the CASS criteria on account of deposit of cash into the bank account. Notices as required as per provision of section 143(2) and 142(1) were issued from time to time. As per record the assessee, was not carrying any business activity during the year under consideration and he was working as a sales executive in M/s Ashish Infrahomes Pvt. Ltd and earned salary income and bank interest in A.Y. 2016-17. He submitted his ICICI bank account No. 676901527826 statement, Pay Slip for March-2016, LIC Receipts and copy of ITR with computation in corroboration of the same. The ld. AO noted recorded the statement of the assessee and as is evident from the I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 10 computation of income and as per the reply submitted by the assessee it was noticed that during the period under consideration the assessee was earning salary income from M/s. Ashish infrahomes Pvt. Limited and was also having 5 % profit sharing ratio in a limited liability partnership from M/s. Mahindra infra LLP at Jaipur. Further, on perusal of his computation of income for the assessment year 2016-17 it was noticed that he has offered only salary income from M/s. Ashish infrahomes Pvt Limited and has not disclosed any business income from M/s. Mahindra Infra LLP. The ld. AO on perusal of Bank account statement of the assessee of account no. 676901527826 at ICICI Bank, Jaipur for the period from 01.04.2015 to 31.03.2016 it was noticed that the assessee found to be in receipt of money for an amount of Rs. 15,54,750/-. On being further questioned to the assessee about the deduction of TDS on this payment he stated that no TDS was deducted on the salary he has received. As the assessee did not substantiate the nature of income / credit received from M/s. Mahinder Infra LLP all receipts from the firm in his bank account at ICICI Bank was considered as his undisclosed income and added to income as per provision of section 69A of the Act. When the matter carried before the ld. CIT(A) the addition made was sustained by observing that the assessee failed to furnish the copy of capital account from where the money has been received. The assessee I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 11 has also not placed on record the ITR of the firm. Even the assessee did not consider it deem to file the prayer for additional evidence u/r 46A of IT Rules. Before us the ld. AR of the assessee vehemently submitted that when it was not disputed that the assessee is partner and the cause of re-opening of the cash the assessee explained the cash deposit no further addition can be made. The bench noted the rival contentions and find that the arguments of the ld. AR of the assessee was not disputed merely the assessee could not place on record the evidence in the form of ITR and capital account the addition cannot be sustained. In the light of the facts and circumstances of the case we deem it fit to remand the matter to the file of the ld. AO who will verify the credit in the bank account of the assessee with the capital account of the firm and confirm that the firm has paid the amount as reimbursement of expenses and no element of income arising. In the light of this observation we remand the matter back to the file of the ld. AO. While doing so direct the assessee to provide all the evidence in support of the claim and do not seek unnecessary adjournment and co-operate in arriving the correct conclusions about the chargeability of income in his hands in accordance with law. I.T.A. No. 118/Jodh/2022 Shri Jagmeet Singh vs. ITO 12 In the result the appeal filed by the assessee is allowed for statistical purpose. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Dated 09/12/2024 Ganesh Kumar Sr. Ps. Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "