INCOME TAX OFFICER EXEMPTION , AGRA vs. PYARE LAL SHARMA TRUST, AGRA

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ITA 603/AGR/2025Status: DisposedITAT Agra21 April 2026AY 2016-178 pages
AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) correctly held that the reassessment proceedings were invalid due to the AO's reasons amounting to 'reason to suspect' rather than 'reason to believe' and violation of natural justice by not providing the DIT report. The tribunal found no error in the CIT(A)'s order.

What were the facts?

The assessee trust purchased an immovable property for Rs. 1,97,16,060, but declared a total income of only Rs. 2,10,000 for AY 2016-17. The Assessing Officer reopened the case and added the investment amount under Section 69B, stating the source was unexplained.

What were the issues?

Whether the reassessment proceedings initiated under Section 147 were valid, and whether the addition under Section 69B was justified given the timing and source of payments for the property.

Which sections of the Income-tax Act were involved?

Section 69B,Section 147,Section 151,Section 148,Section 143(1),Section 143(3),Section 115BBE,Section 135

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA (DB

Before: SHRI S RIFAUR RAHMAN & SHRI SUNIL KUMAR SINGH

For Appellant: Dr. Rakesh Gupta, Adv
For Respondent: Shri Anil Kumar Jain, Sr DR
Hearing: 19.02.2026Pronounced: 21.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (DB) BENCH, AGRA BEFORE: SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 603/Agr/2025 Assessment Year: 2016-17 ITO, Exemption, Vs. Pyare Lal Sharma Trust, Aaykar Bhawan, Sanjay 31 Ashok Nagar, Place, Agra-282002 Agra-282002 PAN : AABTP7912R (Appellant) (Respondent) Assessee by Dr. Rakesh Gupta, Adv. Department by Shri Anil Kumar Jain, Sr DR Date of hearing 19.02.2026 Date of pronouncement 21.04.2026 ORDER

PER: SUNIL KUMAR SINGH, JM. This appeal has been preferred by the appellant revenue against the impugned order dated 08.10.2025 passed in Appeal No NFAC/2015- 16/10141616 by the Ld Commissioner of Income Tax/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act), for the A.Y. 2016-17, wherein Ld CIT(A) has allowed assessee’s appeal and deleted the addition of Rs. 2,06,86,000/- made u/s. 69B of the Act, vide assessment order dated 31.03.2022.

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2.

Brief facts relating to the appeal state that the assessee is a trust and filed return of income for the A.Y. 2016-17 on 09.11.2016, declaring total income of Rs. 2,10,000/-. The return was processed u/s. 143(1) of the Act. Thereafter the case was reopened after obtaining approval of the sanctioning authority u/s. 151 of the Act on account of assessing officer’s recorded reasons which are as under: “1. The assessee has filed ITR for the year under consideration declaring total income of Rs. 2,10,000/-. 2. An Information has been received from the DIT (I & CI), Kanpur that the assessee has purchased an Immovable property, Le. Plot No.023, Valencia Villas Jaypee Greens Wish Town Sec-128, Noida for Rs.1,97,16,060/. The assesse has filed ITR for the year under consideration declaring total income of Rs.2.10,000/- 3. The undersigned has gone through the above information and also looking to the fact of the case that the assessee has purchased an Immovable property i.e. Plot No.-023, Valencia Villas Jaypee Greens Wish Town Sec-128, Noida for Rs.1,97,16,060/- and filed ITR, declaring total income of Rs.2,10,000/- The amount of Investment is very huge which does not commensurate with the declared total income of Rs.2,10,000/-, as such it is clear that the source of investment for purchase of the immovable property is unexplained and therefore, it is sufficient to believe that the assessee has concealed his particular of income for Rs.1,97,16,060/-, therefore, in this situation, the escapement of income is hereby treated at Rs.1,97,16,060/-and reopening of case u/s 147 is necessary at this stage. 4. In view of aforementioned facts, I have reason to believe that an income chargeable to tax amounting to Rs.1,97,16,060/-has escaped assessment in the hands of the assessee for the year under consideration within the meaning of section 147 of the income Tax Act, 1961. 5. In this case return of income was filed for the year under consideration but no assessment u/s 143(3) of the Income Tax Act, 1961 was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above. 6. It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 2 | P a g e

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to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. 7. This case is within four years from the end of the assessment year under consideration. Hence, necessary sanction to issue the notice u/s 148 has been obtained separately from the Joint Commissioner of Income Tax as per the Provisions of section 151 of the Act.”

3.

The assessing officer, accordingly, re-opened the case by issuance of notice u/s. 148 of the Act dated 30.03.2021 to assessee. Assessee filed return u/s. 148 of the Act on 24.04.2021, declaring the same income at Rs. 2,10,000/- as declared in the original return. Statutory notices u/s. 143(2) r.w.s 142(1) and show cause notices were issued and served upon the assessee. Assessee submitted before the Ld. A.O. that the said property was registered in F.Y. 2015-16 for the consideration of Rs. 1,97,16,060/-. However, the said entire purchase consideration was not paid in F.Y. 2015- 16. The payment of Rs. 2,42,36,568/- was made to the seller and Rs. 9,88,268/- was made towards stamp duty through banking channels from F.Y. 2010-11, F.Y. 2013-14 and F.Y. 2015-16. Assessee submitted the details of payment in a tabulated form, which is depicted at page 4 to 5 of the assessment order, showing payments through cheques only. Assessee submitted before the Ld. AO that the payment of Rs. 22,28,739/- was only made during the year under consideration. Ld. assessing officer observed that the bank statement submitted by the assessee from 03.08.2013 to

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17.02.2017, the details of sources of investment were not available. The assessing officer was not satisfied with the assessee’s response and thus added Rs. 2,06,86,000 (Rs. 1,97,00,000 + Rs. 9,86,000) u/s. 69B of the Act and taxed at special rate of 30% u/s. 115BBE of the Act. 4. Assessee preferred an appeal before Ld. CIT(A), who allowed assessee’s appeal, deleting the said additions. Ld. CIT(A) found that the reasons recorded by the assessing officer, merely stated that the investment was disproportionate to declared income without any independent verification and treated such reasons as “reason to suspect” rather than “reason to believe”. Ld. CIT(A) also observed that the non- supply of approval u/s. 151 and DIT(I&CI) report, despite assessee’s request, violated the principles of natural justice. Ld. CIT(A), taking strength from the decision of Supreme Court in CIT v. Kelvinator of India Ltd, (2010) 320 ITR 561(SC) and GKN Driveshaft (India) Ltd v. DCIT, (2003) 259 ITR 19 SC, held that the reassessment proceedings-initiated u/s147 of the Act as invalid. 5. Appellant revenue has raised following grounds under appeal: “i. The Ld. CIT (A), NFAC has held that the re-assessment proceedings- initiated u/s 147 are held to be invalid as the reasons recorded by the assessing officer merely states that the investments was disproportionate to declare income, without any independent verification. This amounts to "reason to suspect" rather than "reason to believe". The Ld. CIT(A), NFAC has ignored the very fact that as per section 135 of the I. T Act 1961 the Director of Income Tax shall be competent to make any enquiry under this Act, and for this purpose shall have all the powers that an Assessing Officer has under this Act in relation to the 4 | P a g e

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making of enquiries. Therefore, any independent verification by the Assessing Officer, as Quoted by the Ld. CIT(A), NFAC is not required as per section 135 of the Act. ii. The Ld. CIT(A), NFAC has also observed that further, non- supply of approval u/s 151 and DIT(I&CI) report despite requests, violates principles of natural justice. Following Kelvinator of India Ltd. (SC) and GKN Driveshafts (SC), the reassessment proceeding are vitiated. The Ld. CIT(A), NFAC has not appreciated the facts that the reasons to believe had already been supplied to assessee and was communicated to him during the proceedings. Therefore, the cases quoted above are not relevant in this case and the Assessing Officer gave ample opportunity to protect the principle of natural justice. iii. The Ld. CIT(A), NFAC has deleted the addition of Rs. 2,06,86,000/- made u/s 69B without appreciating the facts that the submission made and the bank statement provided form 03.08.2013 to 17.02.2017 in support of the investments were not sufficient to explain the source of fund invested. Further, beneficiaries of the trust were also not provided in the return of income filed and therefore the source of investment remained unverified and not substantiated. iv. Ld. CIT (A), NFAC in Para 7.3 of the order has stated that section 115BBE as amended applies only from A.Y. 2017-18. Here it is important to mention that section 115BBE was introduced by the Finance Act, 2012, and became effective from April 1, 2013, applying to the Assessment Year 2013-14 onwards. Before the said amendment as mentioned by the Ld. CIT(A), the rate applicable under this section was 30% which has correctly been applied by the A.O while passing assessment order. v. That the order of the Ld. CIT(A), NFAC being erroneous in law and on fact be set aside and order of the AO be restored.” 6. Perused the records and heard Ld. Sr DR for the appellant revenue and Ld. representative for the respondent assessee. 7. The main point for determination under appeal is as to whether Ld. CIT(A), has erred in deleting the said addition of Rs. 2,06,86,000/- by concluding that the reasons recorded amounted only to “reasons to suspect” rather than “reasons to believe” as alleged in the appeal grounds? 8. Ld. Sr DR for the appellant revenue has submitted that Ld. A.O. has recorded reasons at page 2 of the assessment order in detail. Ld. Sr DR, 5 | P a g e

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fairly admits that the only payment of Rs. 22,28,739/- was made in respect of the said property during the year under consideration. Sr. DR, however supports the assessment order and prays to set aside the impugned order and allow the revenue’s appeal. 9. Ld. representative for the assessee has submitted that the reasons recorded by the Ld. Assessing Officer are factually wrong as the said property was purchased for a base price of Rs. 1,97,16,060/-, including stamp duty and incidental charges. The property was registered in F.Y. 2015-16. The payments were made over three different financial years through banking channels only. The part consideration of Rs. 22,28,739/- only was made in the A.Y. 2016-17. The remaining payments of Rs. 1.77 crore was made in A.Y. 2011-12 and Rs.43.07 lakhs was made in A.Y. 2014-15. Ld. AR has further submitted that AO has wrongly taxed the entire consideration in the A.Y. 2016-17 u/s 69B of the Act, which cannot be made applicable to assessee’s recorded investments. Ld. AR supported the impugned order and prayed to dismiss revenue’s appeal. 10. We have gone through the impugned order dated 08.10.2025 passed by the Ld. CIT(A) in first appeal. We notice that Ld. CIT(A) has depicted the payments made by the assessee in three different F. Ys for the purchase of the said property in the tabular form as under:

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Assessment Financial Amount Mode/ Source Year Year Paid (Rs.) A.Y. 2011-12 F.Y. 2010-11 1,77,00,000 Account payee cheques from trust corpus and accumulated funds A.Y. 2014-15 F.Y. 2013-14 43,07,829 Loan from M/s Elate India Pvt. Ltd. (Rs. 38,50,000) and recovery from Veda Charitable Trust (Rs. 19,00,000) A.Y. 2016-17 F.Y. 2015-16 22,28,739 Recovery of capital from Vivek Family Trust, Shyam Sunder Family Trust, and earlier deposits Total Investment: Rs. 2,42,36,568/- 11. It is pertinent to mention that the investigation report of DIT (I&CI) Kanpur was admittedly not given to the assessee, which was the basis for reopening of assessee’s case. This fact is easily ascertainable from para 4.1 of the assessment order dated 31.03.2022, wherein Ld. Assessing officer has declined to accept assessee’s request for furnishing the report of DIT(I&CI) Kanpur, merely by stating that the request cannot be acceded to, in view of the assessment proceedings getting barred by limitation in a few days time. This observation of the Ld. Assessing officer is sufficient to indicate that there has been a substantial violation of the principles of natural justice during the assessment proceedings.

12.

Ld. CIT(A), after examining the entire records, rightly found that all the payments were made through banking channel and duly recorded in books supported by receipts and confirmations. It was further found that there existed no unrecorded investment. The conclusion arrived at by Ld. CIT(A), is also supported by relevant documentary evidence, such as bank

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statements and copy of ledger accounts from seller (Jaiprakash associates ltd.). Since, no recorded investment could be added u/s 69B of the Act, revenue’s remaining arguments raised under appeal grounds are incidental and consequential there to and fetch no benefit to the revenue. We do not find any error of law or fact in the impugned order. The same is sustained. The aforesaid question is accordingly determined in negative against the appellant revenue and in favour of the respondent assessee. The appeal is liable to be dismissed.

12.

in the result, the revenue’s is dismissed.

Order pronounced on 21.04.2026 Sd- Sd- (S RIFAUR RAHMAN) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 21.04.2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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