GANGADY VENKATRAM REDDY,GACHIBOWLI, HYDERABAD. vs. INCOME TAX OFFICER, WARD - 42(2)(2), MUMBAI., BANDRA, MUMBAI.

The Id. First Appellate Authority is not justified in confirming the addition of Rs. 74,00,000/- as unexplained investment u/s 69 of the IT Act.

The Ld. First Appellate Authority is not justified in confirming the loan taken from HDFC Bank as unexplained investment u/s 69. 4. The Ld. First Appellate Authority is not justified in confirming the proceedings u/s 148 of the IT Act initiated on wrong facts.”

The Ld. First Appellate Authority is not justified in confirming the levy of penalty u/s. 271(1)(C) where there is no concealment of income.

The Ld. First Appellate Authority is not justified in confirming the levy of penalty u/s. 271(1)(C) amounting to Rs.22,99,557/- levied on improper appreciation of the facts in the assessment order.

The assessee is an individual and filed the return of income for AY 2015-16 on 13.07.2015 declaring a total income of Rs. 20,39,650/-. The AO reopened the assessment under section 148 for the reason that the assessee has purchased immovable properties during the year under consideration and pledged the property with HDFC Bank to take a loan of Rs. 74,00,000/-. The AO issued notice under section 142(1) of the Act calling the assessee to explain the source of investments made towards purchase of immovable property. Since the assessee did not respond to the notices, the AO completed the assessment under section 147

There is delay of 18 days in filing the appeal before the Tribunal and the assessee filed an affidavit along with the petition for condonation of delay. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay of 18 days in filing the appeal and admit the appeal for adjudication.

The ld. AR submitted that the assessee has filed a response to one of the notices issued by the AO with the relevant documents (page 6 of PB). The ld. AR further submitted that the AO did not consider the submissions made by the assessee and has completed the assessment under section 144. The ld AR also submitted that the assessee being a senior citizen was not aware of the notices sent by the CIT(A) through mail and hence did not appear before the CIT(A). On merits, the ld. AR submitted that the properties which the AO has mentioned as purchased during the year under consideration was actually acquired by the assessee way back in 2004-05 and that the assessee has only pledged the said property with HDFC Bank to take a loan of Rs.37,00,000during the year under consideration. The ld AR argued that the AO has added incorrect loan amount

The ld. DR on the other hand vehemently argued that the assessee has been consistently not co-operating with the proceedings which is substantiated by the fact that both the AO's order and the CIT(A) order are ex-parte. The ld. DR further submitted that the reasons submitted by the assessee for non-appearance is not well-substantiated. Accordingly, the ld. DR prayed that the order of the CIT(A) be confirmed.

We heard the parties and perused the material on record. We notice that the AO has reopened the assessment for the reason that the assessee has purchased certain properties during the year under consideration which were pledged with HDFC Bank for an amount of Rs.74,00,000. We further notice that the assessee did not appear before the AO and therefore the AO passed an ex-parte order treating the entire amount as unexplained investment stating that the assessee has not furnished any details. Before the CIT(A), there was a delay which the CIT(A) has condoned considering the affidavit filed by the assessee. However since the assessee did not file any further details pertaining to the impugned additions made by the AO, the CIT(A) confirmed the same. The contention of the assessee is that the details pertaining to the additions made were submitted before the AO which have not been considered. In this regard we notice that the assessee has submitted various details along with documentary evidences through online portal vide Acknowledgement No. 433303061180822 on 18.08.2022 (page 6 to 25 of paper

The assessee through ground no.1 has raised the legal contention pertaining to the order of assessment under section 147 r.w.s. 144 stating that the assessment should have been done by the faceless AO instead of the juri ictional AO. During the course of hearing, the ld. AR submitted that if the appeal is considered on merits and set-aside to the AO the legal ground can be left open. In view of our decision on merits we leave open the legal contentions raised by the assessee.

In result, the appeal of the assessee in ITA No. 5702/Mum/2024 is allowed for statistical purposes and the appeal in ITA No. 5703/Mum/2024 is dismissed.