GAJANAN MOTIRAM PATIL,THANE vs. INCOME TAX OFFICER WARD 3(1), KALYAN, KALYAN

The present appeal preferred by the Assessee is directed against the Order, dated 07/10/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 14/12/2018, passed under Section 144 r.w.s 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’],for the Assessment year 2011-2012. 2. The Assessee has raised the following grounds of appeal:- “1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO in initiating reassessment proceedings under section 147 of the Income Tax Act, 1961 which is bad in law and required to quashed.

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO in issuing notice under section 148 of the Income Tax Act, 1961. 3. On the facts and circumstances of the case and law, the Ld CIT(A) erred in confirming the action of Ld AO in making addition of Rs.77,00,000/- on account of purchase of immovable property as unexplained investments under section 69 of the Income Tax Act, 1961 despite the said was purchased in the name of M/s Shakuntala Developers, partnership firm where the appellant was a partner.

On the facts and circumstances of the case and law, the Ld CIT(A) erred in confirming the action of Ld AO in making addition of Rs. 77,00,000 under section 69 of the Income Tax Act, 1961 even though the property was shown in the balance sheet of the partnership firm.

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in charging interest u/s 234A, 234B and 234C of Income Tax Act, 1961.”

We have heard both the sides and perused the material on record.

It emerges that Assessee, a resident individual, did not file return of income for the Assessment Year 2011-2012. The Assessing Officer received information that the Assessee had entered into transaction for purchase of immovable property for a consideration of INR.77,00,000/- and had entered into registered agreement on 29/10/2010. However, no return of income for the relevant Assessment Year 2011-2012 was filed by the Assessee. The source of funds utilized for the purchase of immovable property had remained unexplained. Therefore, reassessment proceedings were initiated in the case of the Assessee by issuing of notice, dated 26/03/2018, under Section 148 of the Act. During the reassessment proceedings show-cause notice dated 20/10/2018 was issued to the Assessee asking the Assessee to show-cause as to why the consideration amount of INR.77,00,000/- should not be added in the hands of the Assessee as unexplained investment. Since the Assessee failed to respond of the show-cause notice, a final show-cause notice was issued to the Assessee. As the Assessee failed to respond to the final show-cause notice, the Assessing Officer proceeded to pass Assessment Order dated, 14/12/2018 under Section 144 read with Section 147 of the Act. The Assessing Officer assessed the income at INR.77,00,000/- after making an addition of the same amount under Section 69 of the Act.

Being aggrieved the Assessee preferred appeal before Learned CIT(A) challenging the above addition of INR.77,00,000/- under Section 69 of the Act. During the appellate proceeding it was contended on behalf of the Assessee that the immovable property under consideration was actually purchased by the partnership firm - M/s. Shakuntala Builders and Developers. Since the Assessee was the partners in the aforesaid partnership firm, the registered agreement was entered between the seller and the Assessee. In support of the same the Assessee placed before the Learned CIT(A) copy of books of accounts of the partnership firm showing the immovable property in the Balance Sheet of the aforesaid partnership firm drawn on 31/03/2011, and copy of bank statement reflecting payments made by the Assessee by the partnership firm to the seller. It was contended on behalf of the Assessee that out of total consideration of INR.77,00,000/- only consideration of INR.1,00,000/- was paid during the relevant previous year. However, the aforesaid submissions did not find favour with the Learned CIT(A) who dismissed the appeal preferred by the Assessee observing that there was no mention of the partnership firm (i.e M/s. Shakuntala Builders & Developers) in the registered agreement, dated, 29/10/2010. The said agreement was executed by the Assessee and the copy of the Permanent Account Number attached with the said agreement also belonged to the Assessee. In view of the aforesaid, Learned CIT(A) concluded that the property was purchased in the name of the Assessee and there was no indication of involvement of the partnership firm in the final transaction. Therefore, the Learned CIT(A) declined to interfere of the order passed by the Assessing Officer and confirmed the addition of INR.77,00,000/- made by the Assessing Officer under Section 69 of the Act.

Being aggrieved the Assessee has now filed the present appeal before the Tribunal on the ground of appeal reproduced in paragraph 2 above.

By way of Ground No.1 and 2, the Assessee has challenged the validity of the reassessment proceedings. It is admitted position that the Assessee did not file return of income for the relevant assessment year. It is admitted position that Assessee had entered into registered agreement, dated 29/10/2010, for purchase of immovable property for a consideration of INR.77,00,000/-. On the basis of the aforesaid information, reassessment proceedings were initiated by the Assessing Officer. We note that before the Learned CIT(A), the Assessee did not challenge the validity of the reassessment proceedings. Further, we note that during the assessment proceedings the Assessee was non-compliant and did not file response to notice issued during the assessment proceedings. In view of the aforesaid, the contentions now being raised by the Assessee challenging the validity of reassessment proceedings cannot be accepted. Accordingly Ground No.1 and 2 raised by the Assessee is dismissed.

We now proceed to adjudicate Ground No.3 and 4 raised by the Assessee challenging the merits of addition of INR.77,00,000/- made by the Assessing Officer holding the same to be unexplained investment invoking the provisions of Section 69 of the Act. In this regard, we note that the stand taken by the Assessee is that the immovable property was not purchased by the Assessee and therefore, the same was not recorded in his books of account. It has been contended by the Assessee that the immovable property was purchased by the partnership firm and the same has been duly recorded by the partnership firm in his books of accounts. We find that the Learned CIT(A) had rejected the aforesaid contentions of the Assessee observing that the registered agreement was in the name of the Assessee and that the said agreement did not contain reference to partnership firm. At the same time, we note in paragraph 7.2 the Learned CIT(A) has recorded that the Assessee had furnished copy of financial statements of the partnership firm (i.e. M/s. Shakuntala Builders & Developers) wherein the immovable property under consideration was shown as asset purchase by the partnership firm. We note that Assessee had also furnished bank statement of the partnership firm to establish the source of funds utilized for making purchase of immovable property. Further, we note that as per the receipt attached to the registered agreement, dated 29/10/2010 (placed at page 13 of the paper book filed by the Assessee) only payment of INR.1,00,000/- was made during the relevant previous year. Given the aforesaid, we are of the view that addition of INR.77,00,000/- made by the Assessing Officer in the hands of the Assessee invoking the provisions contained in Section 69 of the Act cannot be sustained and is hereby set-aside. The issue relating to the ownership of immovable property and the source of funds utilized for purchasing the same is restored back to the file of the Assessing Officer. The Assessee is directed to place before the Assessing Officer of the relevant documents/details in support of his contention. The Assessing Officer is directed to consider the evidence/additional evidence furnished by the Assessee while adjudicating the issue afresh. It is clarified that the Assessee would be granted reasonable opportunity of being heard. In terms of the aforesaid, Ground Nos. 3 & 4 raised in the present appeal are allowed for statistical purposes.

Ground No.5 raised by the Assesse pertaining to levy of interest under Section 234A/B/C of the Act is disposed off as being consequential in nature.

In result, the present appeal preferred by the Assessee is partly allowed.

""थ"/ The Respondent. 3. आयकरआयु"/ The CIT

"धान आयकर आयु"/ Pr.CIT 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 6. गाड"फाईल / Guard file.