SH. TRILOK CHAND SAIN,DAUSA V. ITO, WARD-1(2), ALWAR, ALWAR

ITA 1264/JPR/2024

AI Insights

The case revolves around an appeal by Shri Trilok Chand Sain against the order of the CIT(A), National Faceless Appeal Centre, which confirmed the addition of Rs. 1,15,92,040 as unexplained investment in land purchase. The AO had presumed that the investment was made by the assessee, despite the land being registered in the name of Shri Purshottam Bairwa, who had explained the source of investment as proceeds from sold plots and past savings. The Tribunal examined the statements and evidence presented, including the sale deeds and the financial assessments of both Shri Purshottam Bairwa and M/s. Gupteshwar Colonizers Pvt. Ltd., and concluded that the addition in the hands of the assessee was unwarranted.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472755 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Durga Prasad More, CIT vs. P. Mohanakala, Daulat Ram Rawatmull vs. CIT, Sumati Dayal vs. CIT, Shri Satish Chand Katta vs. Deputy Commissioner of Income Tax, M/s. Jet Airways (India) Ltd. vs. Dy. CIT, Circle-5
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEES; ANITA RINES H
• Assessee Lawyers: P.C. PARWAL
• Keywords: Set aside; Business income; Unexplained investment; Salary income; Onus to prove; Revision of order
• Section: 148; 144; 143(3); 142(1); 250; 263; 153A; 131; 69

Judgement Text

" vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh]U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 1264/JP/2024 fu/kZkj.k o\"kZ@Assessment Year :2012-13. Shri Trilok Chand Sain, Panchayat Samiti Ke Pass, Panchayat Samiti Road, Dausa. cuke Vs. Income Tax Officer, Ward 1(2), Alwar. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No. BPYPS6036L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by :Shri P.C. Parwal, CA jktLo dh vksj ls@Revenue by : Mrs. Anita Rinesh, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing: 28/01/2025 ?kks\"k.kk dh rkjh[k@Date of Pronouncement: 04/04/2025 vkns'k@ORDER PER DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of ld. CIT(A), National Faceless Appeal Centre (NFAC) Delhi dated 16.08.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2012-13. The assessee has raised the following grounds of appeal :- 1. The ld. CIT (A), NFAC has erred on facts and in law in confirming the addition of Rs. 1,15,92,040/- made by AO on account of unexplained investment in purchase of land by not appreciating that the land under consideration is owned by Sh. 2 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. Puroushottam Bairwa, investment was made by him from his own sources. Shri Purushottam Bairwa has been assessed u/s 143(3) where this addition is made in his hands and the assessee only acted as facilitator in the said transaction by making various incorrect & irrelevant observations. 2. The assessee craves to amend, alter and modify any of the grounds of appeal 3. The appropriate cost be awarded to the assessee.” 2. The brief facts of the case are that the assesseethe assessee is engaged in retail trade of stationery items. He was also a director in M/s. Gupteshwar Colonizers Pvt.Ltd. engaged in real estate business. ShriPurshottamBairwa was also a director in this company till 2010.The DDIT(Inv.), Alwar on the basis of information that Mr. PurshottamBairwa has purchased certain land amounting to Rs.1,15,92,040/-recorded his statement on 07.03.2019. Further, statement of some of the sellers to whom land was sold by him was also recorded. However, DDIT(Inv.),Alwar was of the opinion that though the land was purchased by Mr. PurshottamBairwa, the investment in purchase of land was made by the assessee. Accordingly, the AO issued notice u/s 148 on 28.03.2019 to the assessee.In course of assessment proceedings, the AOagain recoded the statement of PurshottamBairwa on 11.12.2019 where in reply to Q. No.19 (PB 117) he admitted to have purchased the land and in reply to Q. No.23 &26(PB 118) explained the source of the investment.The AO, however, at para 19 of the order presumed that ShriPurshottamBairwa was not having source to invest in purchase of land and 3 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. therefore it is presumed that investment would have been made by the assessee or M/s Gupteshwar Colonizers Pvt.Ltd. and accordingly made addition of Rs.1,15,92,040/- in the hands of the assessee. On appeal by the assessee before the before the Ld. CIT(A), assessee explained that when sale deed is in the name of PurshottamBairwa, there is no evidence that investment in land was made by the him (assessee),ShriPurshottamBairwa has explained the source of investment in land as out of advance booking receipt from sale of plot and the AO has assessed such amount in the hands of Shri PurshottamBairwa vide order u/s 144 read with section 263 of the IT Act, 1961dated 28.03.2023(PB 43-48) and also in case of Gupteshwar Colonizers Pvt.Ltd. vide order u/s 144r.w.s. 263 of the Act, 1961 dated 27.03.2023 (PB 49-53), no addition can be made in the hands of the assessee. The Ld. CIT(A), however, at para 7.1.5 at page 15 observed that assessee has not furnished any details that how much facilitator charges he received for the said transaction and therefore confirmed the addition made by AO. Now, aggrieved by the order of the ld. CIT (A), the assessee has preferred the present appeal before us. 3. Before us, the ld. A/R of the assessee submitted his written submission which are reproduced as under :- “1. The fact that Shri Purshottam Bairwa purchased the land from various persons is evident from the sale deed placed at PB 70-92.In the sale deed the seller has specifically 4 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. mentioned that he has received the sale consideration from Shri Purshottam Bairwa. Even from para 18 of the assessment order where the gist of his statement recorded by DDIT( Inv.) on 07.03.2019 is summarized, it may be noted that Shri Purshottam Bairwa has stated that he purchased the land out of the sale proceeds of the plot sold and his past savings. There is no reference in this statement that the assessee has provided funds to him to purchase the land. In the statement recorded u/s 131 dt. 03.12.2019 (PB 94-99 and typed copy at PB pages 113-119), Shri Purshottam Bairwa again in reply to Q. No.19, Q. No.23 and Q. No.26 explained the source of purchase of land. In this statement also there is no reference of the assessee. In respect of sale of plot by Shri Purshottam Lal Bairwa, statement of some buyers was also recorded by the AO (PB 100-111)where these buyers of plot accepted that they have purchased land from Purshottam Bairwa. Thus when land was purchased by Purshottam Lal Bairwa, addition made by the AO and confirmed by Ld. CIT(A) in the hands of assessee is unwarranted, unjustified and be deleted. 2. It may also be noted that after passing of assessment order in the case of assessee, the Ld. PCIT-1, Jaipur passed order u/s 263 dt. 27.03.2022 where the order passed by AO in case of PurshottamBairwaand Gupteshwar Colonizers Pvt.Ltd. was set aside. Thereafter the AO,Ward-Dausa passed fresh order dated 28.03.2023 (PB 24-28) in case of PurshottamBairwa where the addition was made of Rs.1,24,12,000/- on substantive basis to be made on protective basis in case of Gupteshwar Colonizers Pvt.Ltd. However, the AO, NFAC in the fresh order dated 27.03.2023 (PB 49-53)also made addition of Rs.1,15,92,040/- in case of Gupteshwar Colonizers Pvt.Ltd. again on substantive basis. Thus when the addition made in the hands of assessee has been added in case of PurshottamBairwa and Gupteshwar Colonizers Pvt.Ltd. in pursuance of the direction given u/s 263 of the Act, addition made in the hands of assessee is illegal and the same be deleted. 3. It is submitted that assessee has filed the original return for the year under consideration on 31.03.2014 (PB 34)declaring total income of Rs.2,56,110/- comprising of salary income of Rs.37,500/-, business income of Rs.1,40,200/- and income from other sources 5 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. of Rs.78,410/-. The income from othersources includes the facilitation charges received by the assessee in respect of land purchased by ShriPurshottamBairwa. Hence only because assessee has not submitted date wise detail of the facilitation charges received from PurshottamBairwa, it was incorrect on part of the Ld. CIT (A) to held that assessee has not substantiated the transaction. In view of above, addition made by the AO and confirmed by Ld. CIT(A) be directed to be deleted.” 4. On the other hand, the ld. D/R submitted the written submissions as under :- “ 1. Introduction and background This submission is being filed in support of the assessment order of Trilok Chand Saini and the determination of benami transactions involving Babulal Bairwa and M/s. Gupteshwar Colonisers Pvt. Ltd. The Revenue submits that the real investor behind the immovable properties purchased was Trilok Chand Saini, and the properties were in the names of other persons to conceal the true ownership and evade tax liabilities. The modus operandi of these assessees was to remain non-cooperative at the assessment stage, thereby preventing the truth from being revealed. Further, the assessment orders of Babulal Bairwa and Gupteshwar Colonisers Pcvt. Ltd. are pending before CIT (A), and the Hon’ble Bench may consider remanding the matter back to the AO with specific directions for the assessees to cooperate. 2. Modus Operandi of the Assessees – Concealment and Non-Cooperation The modus operandi of all three assessees – Trilok Chand Saini, Babulal Bairwa and Gupteshwar Colonisers Pvt. Ltd. – involved the following :- 1. Using Name Lenders to Hide Real Ownership 6 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa.  The real investor (Trilok Chand Saini) purchased land in the names of Babulal Bairwa and M/s. Gupteshwar Colonisers Pvt. Ltd.  The name lenders had no financial capacity to justify these transactions. 2. Non-Cooperation at the AO Level to Suppress Evidence  Repeated notices under Section 142(1), Section 144, and show-cause notices were deliberately ignored.  This tactic was used to avoid furnishing financial documents that could expose the real ownership.  The AO was compelled to complete the assessment based on available material, as the assessees intentionally refused to respond. 3. Diversion of Funds and Unexplained Cash Transactions  Large cash payments were made to purchase properties, and the funds remained unexplained.  No banking trail was provided, and no genuine books of accounts were maintained.  The audit report of Gupteshwar Colonisers Pvt. Ltd. and other financial statements do not substantiate the source of these payments. 4. Deliberate Delay Tactics Before CIT (A)  The assessment orders o Babulal Bairwa and Gupteshwar Colonisers Pvt. Ltd. are pending before CIT (A).  Even at the appellate level, the assessees have not submitted any new evidence justifying their claims.  This further reinforces that the assessee’s conduct is meant to avoid scrutiny and ultimate taxation. 3. Establishing Trilok Chand Saini as the Real Investor (Benami Transaction Analysis) (A) Financial Capacity of Name Lenders – No Justification of Investments 7 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. 1. Babulal Bairwa – A Person of No Means  Income declared for A.Y. 2012-13 Rs. 1,85,903/-  Chand in hand declared in ITR Rs. 20,340/-  No books of accounts, no bank trail for investments worth Rs.1,15,92,040/-.  The only logical conclusion is that he was acting as a benamidar forTrilok Chand Saini. 2. Gupteshwar Colonisers Pvt. Ltd. – Controlled Entity  No satisfactory explanation for conversion charges paid and other real estate transactions.  Repeated non-compliance with summons issued by DDIT (Investigation), Alwar.  Company’s financials do not justify the alleged land purchase. (B) Real Ownership and Section 69 Additions  The real investor must be taxed under Section 69 (Unexplained Investments), which states : “Where an assessee makes investments that are not recorded in books and fails to explain the source satisfactorily, the amount shall be deemed as unexplained income.”  Here, Trilok Chand Saini failed to explain his role in these transactions, and thus, the tax must be levied in his hands. (C) Judicial Precedents Supporting Benami Transactions and Taxability in Real Owner’s Hands 1. CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC)  The Supreme Court held that tax authorities are entitled to look beyond the apparent ownership to determine the real owner. 2. CIT vs. P. Mohanakala (2007) 291 ITR 278 (SC)  The Hon’ble Supreme Court held that where transactions lack credibility, an adverse inference is justified. 8 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. 3. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC)  Burden of proof lies on the assessee to prove that he is not the real owner if found in possession of assets. 4. Non-Cooperation Justifies Adverse Inference – No Protection for Assessee’s Intentional Default (A) Continuous Failure to Comply with Notices Notice Type Date of Issue Due Date Response from Assessee 142(1) Notice 01/03/2023 07/03/2023 No response Reminder 142(1) 09/03/2023 14/03/2023 No response Final Show Cause Notice 23/03/2023 27/03/2023 No response  Despite multiple opportunities, the assessees intentionally refused to cooperate.  The Hon’ble Supreme Court in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) held that the burden of proof shifts to the assessee to establish the genuineness of transactions, failing which the tax authorities are justified in drawing adverse inference.  In tax jurisprudence, courts have consistently held that assessees who exhibit non-cooperation during assessment proceedings cannot later seek remedial relief. Non-compliance with statutory notices and failure to provide requisite information often result in adverse decisions against the assessee Shri Satish Chand Katta, Jaipur vs. Deputy Commissioner of Income Tax, on 30th December, 2024, ITAT Jaipur, the assessee’s case was taken up for scrutiny following a notice issued under Section 153A of the Income-tax Act, 1961, subsequent to a search operation. The assessee failed to cooperate during the assessment proceedings, leading to an unfavorable outcome.  Similarly, in M/s. Jet Airways (India) Ltd. vs. Dy. CIT, Circle-5, the Income Tax Appellate Tribunal (ITAT) imposed costs on the assessee for 9 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. non-cooperation during assessment proceedings. The ITAT emphasized that such behavior hampers the assessment process and cannot be condoned.  These cases underscore the principle that assessee are obligated to cooperate with tax authorities during assessments. Failure to do so not only leads to unfavourable assessments but also diminishes the credibility of any subsequent appeals for relief. 5. Revenue’s Request to the Hon’ble Bench a) The additions made under Section 69 must be upheld in the hands of Trilok Chand Saini, as he is the real investor. b) Since the assessment orders of Babulal Bairwa and Gupteshwar Colonisers Pvt. Ltd. are pending before CIT (A), the Hon’ble Bench must ensure that tax is charged in the proper hands. c) If the Hon’ble Bench is not convinced, the matter may be restored to the AO with specific directions for the assessees to fully cooperate in the proceedings. d) The deliberate non-cooperation by all three assessees without any valid reason must not be appreciated, as it is an attempt to evade tax. 6. Conclusion and Prayer a) The assessment order of Trilok Chand Saini is based on strong evidence of benami transaction and must be upheld. b) All three assessees deliberately refused to cooperate at the AO level to suppress the truth, justifying the adverse inference drawn. c) Tax must be charged in the proper hands- if necessary, the matter may be remanded back with directions for compliance. d) The Hon’ble Bench is requested to dismiss any appeal by the assessee and confirm the addition made under Section 69. Respectfully submitted on behalf of the Revenue.” 10 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. 5. We have heard the rival submissions and perused the material available on record. From the sale deed placed in the paper book we note that Shri PurshottamBairwa purchased the land from various persons and in the sale deed it is stated that the sellers have received sales consideration from Shri PurshottamBairwa. At para 18 of the assessment order, where the relevant part of the statement of Shri PurshottamBairwa recorded by DDIT(Inv.) on 07.03.2019 is summarized, we find that he accepted to have purchased the land out of the sale proceeds of plots sold and his past savings. In this statement there is no reference that assessee has provided funds to him to purchase the land. The AO also recorded the statement of Shri PurshottamBairwa under section 131 on 03.12.2019 where he again explained the source of purchase of land by him. We also note that after the assessment order was passed in case of assessee, ld. PCIT-1, Jaipur vide order under section 263 dated 27.03.2022 in case of PurshottamBairwa and Gupteshwar Colonizers Pvt. Ltd. set aside the assessment order by holding it to be erroneous and prejudicial to the interest of the revenue and thereafter the AO, Ward-Dausa passed fresh order dated 28.03.2023 in case of PurshottamBairwa where the addition was made of Rs.1,24,12,000/- on substantive basis to be made on protective basis in case of Gupteshwar Colonizers Pvt. Ltd. However the AO, NFAC in the fresh order dated 27.03.2023 also made addition of Rs.1,15,92,040/- 11 ITA No. 1264/JP/2024 Shri Trilok Chand Sain, Dausa. in case of Gupteshwar Colonizers Pvt. Ltd. again on substantive basis. Thus when bothPurshottamBairwa and Gupteshwar Colonizers Pvt. Ltd. have been assessed in respect of investment in land purchased by Shri PurshottamBairwa, we find no justification in the order of lower authorities in sustaining the addition in the hands of assessee. Hence the addition made by AO is directed to be deleted.The order of the ld. CIT (A) is set aside. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 04/04/2025. Sd/- Sd/- ¼ jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (Rathod Kamlesh Jayantbhai) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 04/04/2025. *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant-Trilok Chand Sain, Dausa. 2. izR;FkhZ@The Respondent-The ITO Ward 1(2), Alwar. 3. vk;djvk;qDr@CIT 4. vk;djvk;qDr@CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@Guard File {ITA No. 1264/JP/2024} vkns'kkuqlkj@By order, lgk;d iathdkj@Asst. Registrar "