SMT. DHARMISHTHABEN MADHUSUDANBHAI PATEL,AHMEDABAD vs. THE ITO, SK WARD-1, HIMATNAGAR

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ITA 608/AHD/2016Status: DisposedITAT Ahmedabad10 January 2019AY 2007-084 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal upheld the reopening of assessment, stating it was necessary for the AO to verify investments in the absence of a filed return. However, the Tribunal found that the AO had not conducted sufficient investigation regarding the source of the assessee's investment in property.

What were the facts?

The assessee did not file a return of income for AY 2007-08. The AO initiated reassessment proceedings upon learning of the assessee's property purchases, believing income might have escaped assessment.

What were the issues?

Whether the reopening of assessment was valid, and whether the AO conducted adequate investigation into the source of unexplained investment in property.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD - BENCH ‘D’

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Appellant: Shri T.P. Hemani, AR
For Respondent: Shri Ranjan
Hearing: 09/01/2019Pronounced: 10/01/2019

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH ‘D’

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.608/Ahd/2016 �नधा�रण वष�/Asstt. Year: 2007-2008

Smt.Dharmishthaben Vs. ITO, S.K. Ward-1 Himatnagar. Madhusudanbhai Patel B-103, Himalaya Zicron In front of IIT Eng. College Ahmedabad. PAN : AACCC 2531 M

अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)

Assessee by : Shri T.P. Hemani, AR Revenue by : Shri Ranjan Kumar, Singh, Sr.DR

सुनवाई क� तार�ख/Date of Hearing : 09/01/2019 घोषणा क� तार�ख /Date of Pronouncement: 10/01/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:

Assessee is in appeal before the Tribunal against order of ld.CIT(A)-2, Ahmedabad dated 22.1.2016 passed for the Astt.Year 2007-08.

2.

In the first ground of appeal, the assessee has challenged reopening of the assessment by issuance of notice under section 148 of the Income Tax Act.

ITA No.608/Ahd/2016 2 3. Brief facts of the case are that the assessee did not file return of income for the Asstt.Year 2007-08. The AO came to know from verification of data that the assessee had purchased five properties during the year. He took note of these details in reasons recorded for reopening of the assessment. He, thereafter, observed that since the assessee has not filed details, therefore, it is not ascertainable what are the source for purchases of such properties, hence, in order to verify these transactions, he recorded reasons and reopened the assessment. The ld.counsel for the assessee contended that in the reasons, the AO has no where observed that income has escaped assessment. The investment in property cannot be construed as escapement of income, and therefore, reopening cannot be made.

4.

On due consideration of the above submissions and the reasons recorded by the AO, we are of the view that since the assessee has not filed return of income, it was not possible for the AO to form a belief that income has escaped assessment unless details are cross-verified. Had the assessee has filed copy of balance sheet, and other documents, he could have make out funds available with the assessee at the opening of the year vis-à-vis at the closing of the year. In the absence of these details, he has to make a mention that verification of these investments is required, which could be done by reopening of the assessment. Therefore, we do not find any error in the reopening of the assessment. This ground of appeal is rejected.

5.

In the next ground of appeal, grievance of the assessee is that the ld.CIT(A) has erred in confirming addition of Rs.21,19,500/- which was added by the AO on account of alleged unexplained investment.

6.

With the assistance of the ld.representatives, we have gone through the record. There is no dispute with regard to the fact that five properties have been purchased by the assessee along with co-owners. Investment in the property is also not in dispute. The ld.counsel for the

ITA No.608/Ahd/2016 3 assessee at very outset submitted that share of the assessee was one- fourth, and the AO should have inquired source of this one-fourth amount of the total investment. He further drew our attention towards copy of the assessment order passed in the case of Kapilaben V. Oad who is stated to be other co-owner. In her case also total of this investment has been added as unexplained investment. The ld.DR, on the other hand pointed out that assessee neither produced copy of the sale deed nor produced source of investment i.e. how much fund was contributed by her.

7.

On due consideration of the above facts, we are of the view that ld.AO has not carried out investigation. He should have called for copies of sale deed from the Registrar’s office where sale deeds were registered. He could find out who are the vendees and to what extent they have the shares. Once the assessee has raised a specific plea, and on such plea a remand report was called for by the ld.CIT(A), then by exercising of statutory power, the ld.AO should have ascertained complete facts. The ld.CIT(A) has also committed an error by simply observing that the assessee should have submitted copies of sale deed. This fact can be verified from the office of Registrar only. The quasi judicial authorities are being respected not on account of their power to legalise the injustice on technical ground but because, they are capable of removing injustice and is expected to do so. It is the AO who has alleged a charge against the assessee on account of unexplained investment. He has to work out exact amount. He could not expect the assessee to prove how much investment she has made. Once she has alleged that her share was only one-fourth, then it was for the Revenue to prove that she has made investment of more than one-fourth. High- handedness and lackadaisical attitude at the end of the Revenue are appearing from the fact that same amount has been added in the hands of other co-owners also. Copy of the assessment of order of Smt. Kapilaben V. Oad is placed at page nos.18 to 26 of the paper book.

ITA No.608/Ahd/2016 4 Such type of things would give rise unnecessary litigation. The ld.CI(A) ought to have looked into this aspect before confirming the addition. Considering all these aspects, we set aside both orders of the ld.CIT(A) as well as AO and remit this issue to the file of AO. The ld.AO shall call for the copies of the sale deed from the office of Sub-Registrar where these sale deeds were registered, and then identify exact share of the assessee and thereafter confront the assessee to explain the source of a particular amount. He could not expect that the assessee should prove negative. This exercise be carried out after giving due opportunity of hearing to the assessee. In view of the above, the appeal of the assessee is partly allowed for statistical purpose.

8.

In the result, appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the Court on 10th January, 2019 at Ahmedabad.

Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER

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