RAJESH KUMAR JALAN,HOOGHLY V. I.T.O., WARD - 44(2), KOLKATA

ITA 2218/KOL/2024

AI Insights

The case involves an appeal by Rajesh Kumar Jalan against the order of the National Faceless Appeal Centre, Delhi, which confirmed the addition of \\u20b941,21,145 made by the AO under section 69 of the Income Tax Act for the Assessment Year 2015-16. The AO had added this amount as unexplained investment in a property purchased by the assessee. The CIT (A) upheld this addition, but the Tribunal found that the assessee had provided sufficient evidence to substantiate the source of the investment, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25026 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHRO DAS
• Assessee Lawyers: S. K. TULSIYAN
• Keywords: Unexplained investment
• Section: 147; 144; 142(1); 69; 44AD; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 2218/KOL/2024 (Assessment Year:2015-16) Rajesh Kumar Jalan 138/A, G.T. Road (West) Konngar, Hooghy-712235 West Bengal Vs. ITO, Ward 44(2) Income Tax Office, 3, Government Place (West), Kolkata-700 001, West Bengal (Appellant) (Respondent) PAN No. AMKPJ4084B Assessee by : Shri S.K. Tulsiyan, AR Revenue by : Shri Subhro Das, DR Date of hearing: 12.02.2025 Date of pronouncement : 11.03.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 02.08.2024 for the AY 2015-16. 02. The only issue raised by the assessee is against the order of ld. CIT (A) confirming the addition of ₹41,21,145/- made by the ld. AO u/s 69 of the Act. 03. The facts in brief are that the assessee field the return of income on 28th August, 2015, declaring total income of ₹3,41,700/-, after claiming deduction under Chapter VIA of ₹1,11,708/-. Thereafter the AO received information from Bureau of Investigation, Commercial Page | 2 ITA No.2218/KOL/2024 Rrajesh Kumar Jalan; A.Y. 2015-16 Tax, West Bengal that Shri Rajesh Kumar Jalan has received the payments to the tune of ₹112,41,47,898/- through seven bank accounts in the name of 6 traders during the period commencing from 2012-13 to 2015-16. The ld. AO also noted that assessee has purchased one immovable property for a consideration of ₹41,21,145/- which registered before Registrar of Assurances on 04.07.2014. According to the ld. AO, the assessee has not responded to the notice issued on 06.09.2021, calling for explanation from the assessee. The said amount was added as unexplained investment u/s 69 of the Act in the assessment framed u/s 147 read with section 144 of the Act read with 144B of the Act dated 28.09.2021, beside making one more addition of ₹2,39,49,389/- on account of shortfall of profit. The said short fall was computed by the AO by applying 8% on total turnover of Rs. 30,03,78,690 on presumptive basis u/s 44AD of the Act based on the deposits in the assessee bank account which comes to Rs. 2,40,30,295/- and after adjustment of suo-motto profit returned u/s 44AD of Rs. 4,29,475/= an addition of Rs. 2,39,49,389/- was made. 04. In the appellate proceedings, the ld. CIT (A) deleted the addition in respect of shortfall of profit, however, the addition u/s 69 of the Act of ₹49,21,145/- was confirmed by the ld. CIT (A) by observing and holding as under: “9. Decision on unexplained investment of Rs. 41,21,145/- 9.1 During the course of assessment proceedings, it is noticed that the appellant purchased one immovable property for a consideration of Rs. 41,21,145/- and that was registered on 04.07.2014. The AO has called for the sources of investment. As the appellant failed to furnish any reply, the entire sum was treated as unexplained investment. The appellant raised specific ground in ground no. 13 against this addition. During the course of appeal proceedings, the appellant filed only cryptic reply as under: Page | 3 ITA No.2218/KOL/2024 Rrajesh Kumar Jalan; A.Y. 2015-16 \"On Addition of unexplained Investment u/s 69 of Rs. 41,21,145/-, the factual matrix is as follows:- That assessee purchased a disputed and disturb property (uncleared title) at Rs. 15,00,000/-(Rupees Fifteen Lakhs) but the same was valued by registrar at Rs. 41,21,145/- in a casual manner. Assessee paid the consideration amount by cheque during the year and paid the Stamp Duty and Registration Fees on Rs. 41,21,145/-. Hence, NO circumstances the same is unexplained investment, A.O notice u/s 142(1) should be specific and transparent manner. Section 115BBE not attracted in this case. Additions in this regard is bad in law.\" 9.2 However, this reply is not acceptable as the appellant failed to substantiate the source of investment with supporting documents. Hence the addition made by the AO is upheld and ground no. 13 is dismissed.” 05. After hearing the rival contentions and perusing the materials available on record, we note that the assessee has purchased a property which was duly registered in the name of the assessee vide deed of conveyance dated 4th July, 2014, a copy of which is available from page no. 9 to 18 of the PB. At page no. 4, the total consideration paid for purchase of property was Rs. 15.00 lacs and at page no.12 of the deed of conveyance, the complete details of payments of ₹15.00 lacs were given. We observe after examination of the said details that the assessee has paid three account payee cheques drawn on 3 banks namely; HDFC bank, IndusInd Bank and State Bank of India. We note that the assessee filed all the details comprising the bank statements of all these three banks with the ld. AO which has been dealt with by the ld. AO at page no.5 and 6 of the assessment order. The gross turnover of the assessee was shown at ₹39,48,887/- and the source of investment was out of receipts from business which were duly reported by the assessee in the ITR. During the year, the assessee has returned the income on presumptive basis at 8% on the total turnover u/s 44AD of the Act. Therefore, in our opinion, the addition made by the ld. AO u/s 69 of the Act is wrong and cannot be sustained as this is not unexplained investment u/s 69 of the Act. We would like to refer to provisions of Section 69 of the Act which deals Page | 4 ITA No.2218/KOL/2024 Rrajesh Kumar Jalan; A.Y. 2015-16 with unexplained investments and it is stated in the section that in the financial year immediately preceding assessment year, if the assessee has made investments which are not recorded in the books of account ,if any, maintained by the assessee for any source of income and the assessee offers no explanation about the nature and source of investments or explanation offered by him is not in the opinion of the ld. AO satisfactory, then value of investments may be deemed to be income of the assessee of such financial year. However, in the present case, it is undisputed that the payments were made from the bank accounts of the assessee which were before the ld. AO and even the ld. AO has extracted the details of the bank accounts at page no.5 and 6 of the assessment order. Therefore, no addition can be made u/s 69 of the Act. Pertinent to state that the ld. AO has not invoked the provisions of Section 56(2)(vii) of the Act. The ld. CIT (A) simply upheld the order on the ground that the assessee has failed to substantiate the sources of investment with supporting documents, however, we find that all these documents including bank statements of three banks were before the ld. Assessing Officer. Therefore, the order passed by the ld. CIT (A) on this issue appears to be incorrect and cannot be sustained. Consequently, the order of ld. CIT (A) is set aside on this issue and AO is directed to delete the addition. 06. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11.03.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 11.03.2025 Sudip Sarkar, Sr.PS Page | 5 ITA No.2218/KOL/2024 Rrajesh Kumar Jalan; A.Y. 2015-16 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "