DCIT-42(3)(1), MUMBAI, MUMBAI vs. ZAITOON FAROUQ ESMAIL, MUMBAI

Brief facts of the case are that the assessee is an individual and no return of income was filed by the assessee. The assessing officer (AO) was having information in Network Management System (NMS) on Income Tax Business Application (ITBA) portal that the assessee has purchased immovable property of more than Rs. 30.00 lakhs during the relevant financial year. The assessee has purchased property worth Rs. 2.53 crore. The AO, on the basis such information available with him, recorded the reasons and reopened the case of assessee under section 147 of Income Tax Act (Act). Notice under section 148 dated 15-04-2021 was issued to the assessee. In response to notice under section 148, the assessee filed return of income on 30-11-2021 declaring income of Rs. 27,66,080/-. The AO, after serving notice under section 143(2), proceeded with the assessment. The AO noted that, in response to the aforesaid notice, the assessee failed to furnish the requisite details and reply, including the sale deed, purchase deed, and source of income with documentary evidence. The AO issued final show-cause notice dated 27-03-2023.In the notice dated 27-03-2023, the AO confronted the assessee that, as per the information, she has purchased immovable property aggregating to Rs. 3.82 crore, i.e., Rs. 2.53 crore plus Rs. 1.29 crore. The assessee was asked to furnish the source of income with documentary evidence. In response to notice under section 144, the assessee filed reply and furnished a copy of the sale deed (purchase deed) dated 30-03-2015, and submitted that she has purchased the said property for Rs. 1.29 crore. A copy of the loan sanction from ICICI Bank along with Form 26-AS was also furnished. The assessee specifically stated that she has purchased property at Rustomjee Azziano, Thane, for Rs. 1.29 crore. She has not purchased any other propertyThe AO reiterated that the assessee failed to furnish documentary evidence about another property purchased worth Rs. 2.53 crore. The AO, by referring to the details as per the information, issued the final show-cause notice. The AO recorded that the assessee failed to furnish documentary evidence about the purchase of another property. The AO finally added Rs. 2.53 crore to the income of the assessee in the assessment order dated 23-05-2023. 3. Aggrieved by the additions, the assessee filed an appeal before the learned CIT(A). Before the learned CIT(A), the assessee, in her submission, reiterated that no such property has been purchased by the assessee. The assessee, while explaining the details shown in the AIR information, explained that, as per the AIR data, the name of the purchaser of the property worth Rs. 1.00 crore was Mrs. Smita Ganesh Hazare. As per another entry for purchase of immovable property for Rs. 1.53 crore, the name of the purchaser was Neerja Bharat Sachdev. Thus, the names of such two persons did not match with that of the assessee, though the PAN mentioned against the purchaser transaction was that of the assessee. Such fact indicated that the transactions has been inadvertently reflected in the AIR data and, by mistake, the PAN of the assessee has been wrongly uploaded. The addition under section 68 is contrary to the facts. The assessment order is passed without application of mind and without making any independent inquiry. The assessee also relied on certain case laws. 4. The learned CIT(A), after considering the submission of the assessee, deleted the addition by holding that during the assessment, the assessee vehemently denied having purchased the two properties. The assessee clarified that she has purchased only one property at Rustomjee Azziano, Thane, for Rs. 1.29 crore, which was financed by ICICI Bank. The assessee explained that the addition is purely based on incorrect data entry by the Sub-Registrar. The assessee drew attention to the AIR statement relied upon by the AO, wherein the PAN of the assessee was mentioned, but the names of the purchasers were recorded in the AIR data, Mrs. Smita Ganesh Hajare of Rs. 1.00 crore and Sau. Neerja Bharat Sachdev for the transaction of Rs. 1.53 crore. The AIR data specifically stated “not matched”. The AO failed to appreciate that the PAN of the assessee was inadvertently linked by the reporting authority, transaction of purchase of such properties clearly belonged to a third partiesThe learned CIT(A) held that the role of the AO is not merely to mathematically add the amounts appearing in Annual Information System (AIS) to the returned income. When the assessee specifically denied the transaction and pointed out the specific discrepancy, the names of the purchasers are completely different. The AO failed to obtain information by exercising his power under section 133(6), such as obtaining a report from the Sub-Registrar or certified copies of the sale deeds of such properties. The AO mechanically relied on computer-generated data and failed to link the assessee with the material on record and deleted the addition of Rs. 2.53 crore.Aggrieved by the order of the learned CIT(A), the Revenue has filed the present appeal before the Tribunal. 5. We have heard the submissions of the learned senior departmental representative (Sr. DR) for the Revenue and the learned authorised representative (AR) of the assessee. The learned Sr. DR for the Revenue supported the order of the AO. 6. On the other hand, the learned AR of the assessee submitted that the AO made the addition simply on the basis of AIR information without verifying such information. The AO held that, as per the AIR information, the assessee has purchased various immovable properties. Despite the assessee denying having purchased any other property except one property worth Rs. 1.29 crore, the AO added Rs. 2.53 crore simply on the basis of the AIR information. The learned CIT(A), on appreciation of the AIR information, found that the purchaser as per the information was a different person and only the PAN of the assessee was mentioned against the name of such person and deleted the addition. The learned AR of the assessee prayed that the appeal of the Revenue may be dismissed with costs. 7. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. The treatment and the basis of the addition by the AO have been discussed in the preceding paras.