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TMI Blog2025 (2) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... was under the impression that NBFCs are not Banks or that the addition be deleted. As a result, the impugned orders upholding the additions for the two Assessment Years under consideration are upheld. Lump sum disallowances as regards certain expenses - AO called upon the assessee to produce record to explain as to whether the subject expenses were incurred for business purposes, but the assessee was found to have not been maintaining any details or log book of the running vehicle and about use of telephone. Assessing Officer specifically observed that the assessee did not produce any evidence in support of the reply to the query raised i.e. to establish that the expenditures were incurred for business purposes. In absence of any such evidence, it can safely be said that the assessee failed to prove the version put forth for the purposes of deletion of the disallowances. CIT(A) was justified in sustaining the orders passed by the AO whereby disallowances were made. Penalty order u/s 271AAB - The appeal filed qua the quantum assessment stands dismissed. In view of the above findings and having regard to the provisions of section 271AAB(1)(c) of the Act, no fault can be found with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha Damodar Ki Gali, Choura Rasta, Jaipur, i.e. of the assessee was also covered by said search and seizure operation. The assessee runs a proprietorship concern, under the name and style of M/s D.K. & Company , while engaged in the business of trading of TT bars and also manufacturing gold and silver jewellery items. 4. In the course of search, two documents, the incriminating material, ( page No. 38 and 39 of the seized papers) are stated to have been recovered from the said residential premises. For the purpose of identification, during search, said documents were marked as Annexure-A, Exhibit-1. 5. In his statement u/s 132(4) of the Act, recorded during search, the assessee displayed ignorance about the said two incriminating documents. Even in his statement recorded u/s 131(1) of the Act, the assessee displayed ignorance about, and denied any connection of the said documents with his business, but, admitted discovery and seizure of the said documents from his residential premises. Consequently, notice u/s 153A of the Act was issued to the assessee on 11.07.2014. The assessee furnished his return of income, in response to the said notice, declaring total income of Rs. 7,47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntains details of amounts given on loan to various persons on Interest. Detail of the page is as under :- 1. Sheela Devi 2500 1/4/13 2. Ajayji Agarwal 1000 20/03/13 3. Arpit Ji 1000 16/03/13 4. Sunilji Jain 500 7/3/13 5. Dinesh Ji Matani 500 2/3/13 On perusal of this page, it appears that the digits against the names represent amount of loan given by the assessee and are written in coded form. For example figure of 2500/- represents amount of Rs. 25 lacs and figure of 1000/- represents amount of Rs. 10 lacs. The total of these figures comes to Rs. 55 lacs which is the total loan given by the assessee to the parties mentioned therein. All these names and figures are repetition of entries mentioned at page no. 38. 8.7 However, in his statement, the assessee disowned the transactions mentioned in these pages and stated that these were not related to his business. This claim of the assessee cannot be accepted. It can be seen that this paper has been recovered from the premises of Shri Rajendra Agarwal. The entries in this page are very clear and their nature gets clarified by the calculations of interest made on page no. 38 which have been discussed above. Partially, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had not deducted TDS. Said payments were found to have been made to Non Banking Finance Company (NBFC). In the assessment order, said payments have been described as under:- S. No. Name of the NBFC Interest paid 1. Magma Ginance Corp 8519 2. City financial Finances Ltd. 842.76 3. HDB Finance 20329 Total 29690.76 In the assessment order, the Assessing Officer observed that instead of opportunity, the assessee had failed to furnish any reply to the notice. Hence, said disallowance of payment of interest, u/s 40A(ia) of the Act. ITA No. 572/JPR/2024 9. In view of the above facts and circumstances, penalty proceedings were initiated and same led to passing of a penalty order. The other appeal i.e. ITA No.572/JPR/2024 relates to said penalty order and same AY i.e. 2013-14. 10. As noticed above, vide assessment order dated 31.03.2016 (referred to while narrating facts of ITA No. 558/JPR/2024 above), the Assessing Officer made addition of Rs. 1,18,83,333/-, while calculating total income of assessee for the assessment year 2013-14. On the same date i.e. 31.03.2016, the Assessing Officer levied penalty of Rs. 35,65,000/-, on the above said said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Din 1342 500 Ka 8 Din 1533 500 Ka 1 maha 7 Din 7092 2000 Ka 1 maha 9 Din 29900 1000 Ka 1 maha 11500 1000 Ka 26 Din 9966 5 sunilji 5 Dinshji 25 Sheela Devi 10 Arpitji 10 Ajayji 25 Sanjayji 1/3 25 Satyanarainji 15/3 35 Sureshji 26/3 3,22,000 On perusal of fist half of above table, it seems that these transactions are related to money lending. For example in the first column, principle amount is written with omitting three zeros, in second column period for which amount was given on interest and in third column indicate interest amount. Interest amount has been calculated @ 1.15% per month. For example:- 5,00,000 x 1.15% = 5750 (interest of 30 days) (5750/30) x 7 1341.66 r.o. 1342 (interest of 7 days) In the second half of the above entries, it appears that the digits against the names represent amount of loan given by the assessee and are written in coded form. For example figure of 5 represents amount of Rs. 5 lacs and figure of 25 represents amount of Rs. 25 lacs. The total of these figures comes to Rs. 1.40 crore which is the total loan given by the assessee to the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the total income of the assessee as his undisclosed advances an interest. This is added to his total income in AY 2013-14 and AY 2014-15 as per the date mentioned in these papers. Total loan is of Rs. 1,40,00,000/- as per the discussion above and interest is of Rs. 3,83,333. The detail is as under:- 5,00,000 Sunilji 7/3/13 5,00,000 Dineshji 2/3/13 25,00,000 Sheela Devi 1/4/13 10,00,000 Arpitji 16/3/13 10,00,000 Ajayji 20/3/13 25,00,000 Sanjayji 1/3 25,00,000 Satyanarainji 15/3 35,00,000 Sureshji 26/3 1,40,00,000 The amount of Rs. 25,00,000/- advanced to Sheela Devi pertains to AY 2014-15 and the balance amount of Rs. 1,15,00,000/- pertains to AY 2013-14. The interest amount of Rs. 3,83,333/- also pertains to AY 2013-14. Therefore addition of Rs. 1,18,83,333/- is hereby made in the total income of AY 2013-14 and addition of Rs. 25,00,000/- is hereby made in AY 2014-15. Therefore penalty proceedings u/s 271AAB of the Act are being initiated separately. Addition of Rs. 25,00,000/-" The assessment order relating to AY 2014-15 also dealt with following two other issues: (a) Disallowance of interest payment of Rs. 10,305/- u/s 40A(ia) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k in the total income of the assessee accordingly." Consequently, the Assessing Officer assessed total income of the assessee at Rs. 56,11,560/-, having record to the above mentioned disallowance of interest payment, part disallowance of expenses having personal element and undisclosed income. The above facts and circumstances also led to penalty proceedings and passing of penalty order as regards same AY 2014-15. ITA No. 573/JPR/2024 14. As noticed above, vide assessment order dated 31.03.2016 under challenge by way of ITA No. 559/JPR/2024), the Assessing Officer made addition of Rs. 25,00,000/-, while calculating total income of the assessment year 2014-15. As regards the said amount, the Assessing Officer also passed penalty order on the same date i.e. 26.03.2019 and levied penalty of Rs. 13,95,000/-, on the said undisclosed income of Rs. 46,50,000/- as per provisions of clause (c) of section 271AAB(1) of the Act. 15. Feeling dissatisfied by the said penalty order, the assessee preferred appeal before Ld. CIT(A). 16. The appeal preferred by the assessee against said penalty order came to be dismissed by Learned CIT(A) vide order dated 29.02.2024, thereby upholding the lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen in his statements, the assessee pleaded ignorance about said two papers by stating that the same did not belong to him and were also not in his hand writing. 20. Ld. Counsel for the appellant has contended that in the given situation, it was for the Assessing Officer to collect convincing evidence so as to link the assessee with to the said transactions, instead of drawing presumption against the assessee by relying on the provisions of section 292C and 132 of the Act. In support of his submission, Ld. Counsel for the appellant has relied on following decisions: * Principal Commissioner of Income-tax, Central-3 vs. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC) * Ajay Gupta vs. Commissioner of Income-tax [2020] 114 taxmann.com 577 ( Hon'ble Allahabad High Court) * Principal Commissioner of Income Tax, Central-2 vs. Umesh Ishrani [2019] 108 taxmann.com 437 (Hon'ble High Court of Bombay) * Navneet Jhamb v. ACIT [2023] 156 taxmann.com 345 (Hon'ble High Court of Punjab and Haryana) It may be mentioned here that with the written submissions, ld. Counsel for the appellant has also submitted copies of said decisions. 21. Ld. DR for the department has reclined a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had no knowledge about the said transactions. 25. When above said incriminating material was admittedly recovered from the residential premises of the assessee, it was for the assessee to explain as to how the said documents were found lying at his residential premises and as to who was the author of the contents thereof. However, the assessee failed to explain possession of the said two incriminating documents recovered on search of his residential premises. The simple ignorance displayed by the assessee, in the manner indicated above, does not come to the aid of the assessee in shifting onus to the Assessing Officer. 26. In the given situation, presumption has been rightly drawn against the assessee, by Learned CIT(A), in view of the provisions of section 292C and 132(4)(A) of the Act, by observing in the manner as: "The specific provisions in the Income Tax Act are very much specific to the income tax proceedings and are not mentioned in other laws like the Evidence Act and the judgements relied upon by the appellant in the context of other laws and in different facts are not applicable to the present controversy. As per the specific presumption provided in the law it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the circumstantial factors. The seized documents are very much legible and found to have been written in a very clear manner and the assessing authority has also decoded the same with clear mathematical formulas. It can be seen that these paper have been recovered from the premises of Shri Rajendra Agarwal. The entries in this page are very clear and their nature gets clarified by the calculations of interest made on page no. 38 which have been discussed in the assessment order. Partially, the dates are also mentioned which show that these are related to the month of March. The search was conducted on 03.04.13 and hence the reasonable view is that these entries relates to March/April, 2013. The dates are further confirmed by the clear dates which have been mentioned on page no. 39 discussed in the assessment order wherein some of these entries are appearing with the same amounts. The names of the parties are given and amount are mentioned against them. The appellant is not prepared to give any explanation about these entries. However a wholistic construction of the entries on page no. 38 and 39 suggests that these entries are relegated to the money which has been advanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 7/3/13 5. Dinesh Ji Natani 500 2/3/13 On perusal of this page, it appears that the digits against the names represent amount of loan given by the assessee and are written in coded form. For example figure of 2500/- represents amount of Rs. 25 lacs and figure of 1000/- represents amount of Rs. 10 lacs. The total of these figures comes to Rs. 55 lacs which is the total loan given by the assessee to the parties mentioned therein. All these names and figures are repetition of entries mentioned at page no. 38. 8.7 However, in his statement, the assessee disowned the transactions mentioned in these pages and stated that these were not related to his business. This claim of the assessee cannot be accepted. It can be seen that this paper has been recovered from the premises of Shri Rajendra Agarwal. The entries in this page are very clear and their nature gets clarified by the calculations of interest made on page no. 38 which have been discussed above. Partially, the dates are also mentioned which show that these are related to the month of March. The search was conducted on 03.04.13 and hence these entries appear to be related to March/April, 2013. The dates are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in Ajay Gupta's case (supra), does not come to the aid to the appellant. 30. As regards the other 2 decisions on the point of enquiry to be conducted by the Assessing Officer, suffice it to state that despite opportunity the Assessee did not disclose any details as regards the contents of the two incriminating documents. Had the assessee given details of the persons named in the documents, the Assessing Officer would have taken steps to associate said persons in the enquiry or assessment proceedings. Since, no detail was provided by the assessee, and rather, he opted to display ignorance simplicitor, the Assessing Officer could not associate any such person for the purposes of enquiry. Accordingly, said two decisions do not come to the aid of the assessee. Additions under section 40(a)(ia) of the Act. 31. While assailing the impugned orders and said additions, learned counsel for the appellant has contended that the assessee was under the impression that NBFC is also a Bank, and as such he was under bona fide belief that no TDS for said payments was required to be deducted. At the same time, learned counsel has submitted that matter be remanded to Assessing Officer for fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowances were made. Result 38. In view of the above discussion and findings, we are of the considered opinion that there is no illegality or irregularity in the assessment orders relating to the two assessment years under consideration i.e. 2013-14 and 2014-15, or in the impugned orders passed by Learned CIT(A). Consequently, both the appeals ITA No.558/JP/2024 and ITA No.559/JP/2024 as regards the quantum assessments are hereby dismissed. ITA No.572/JP/2024 and ITA No.573/JP/2024 39. First mentioned appeal been filed, while challenging order dated 29.02.2024 passed by the Learned CIT(A), Jaipur, whereby penalty order u/s 271AAB of the Act, has been upheld. Vide penalty order, pertaining to the aforesaid assessment year i.e. AY 2013-14, the Assessing Officer levied penalty of Rs. 35,65,000/- ( i.e. @ of 30% of the abovementioned undisclosed income of Rs. 1,18,83,333/-). As noticed above, the appeal filed qua the quantum assessment stands dismissed. In view of the above findings and having regard to the provisions of section 271AAB(1)(c) of the Act, no fault can be found with the penalty order. Consequently, this appeal is hereby dismissed. ITA No. 573/JPR/2024 40. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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