BABULAL GIRIDHARLAL JAIN,HOSPET vs. INCOME TAX OFFICER, WARD-1 & TPS, HOSPET

ITA 227/BANG/2025Status: DisposedITAT Bangalore30 September 2026AY 2012-137 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment orders and the consequent additions were unsustainable. The Tribunal found that the survey report from the Deputy Director of Income Tax (Investigation) merely stated that certain persons appeared to have made donations and requested verification. It did not conclude that the assessee had made the donations, that the amounts were unaccounted for, or that additions could be made without verification. The Tribunal noted that neither the alleged donor (assessee) nor the recipient (trust) confirmed the transactions. The trust's denial was rejected by the Assessing Officer solely because the assessee was the trust's vice-president, a reasoning the Tribunal found insufficient. The Tribunal also noted that no statement from the trust's treasurer admitting receipt of unaccounted cash donations was recorded or sought. In the absence of evidence establishing the date, mode of payment, or receipt of the alleged donations, the Tribunal reversed the orders of the lower authorities and directed the deletion of the additions of ₹10,00,000 for both assessment years. The ratio decidendi is that additions based on investigation reports suggesting potential transactions require concrete evidence of the transaction itself and its unaccounted nature, and a denial by the recipient, coupled with the assessee's position in the recipient entity, is not sufficient to disregard the denial without further corroboration.

What were the facts?

The assessee, Babulal Giridharilal Jain, filed appeals for assessment years 2012-13 and 2013-14 against orders of the Joint Commissioner of Income Tax (Appeals)-6, Delhi, which upheld reassessment orders passed by the Income Tax Officer, Ward-1, Hospet, under Section 143(3) read with Section 147 of the Income Tax Act. The reassessment orders were dated December 20, 2019, for AY 2012-13 and a similar date for AY 2013-14. The appeals arise from the initiation of reassessment proceedings based on information from the Investigation Wing, Ahmedabad, suggesting the assessee had donated ₹10,00,000 to a trust during FY 2011-12. The assessee denied making the donation, and the trust also denied receiving it. Despite this, the Assessing Officer made additions of ₹10,00,000 for each assessment year, treating it as unexplained expenditure. The CIT(A) confirmed these additions.

What were the issues?

1. Whether the reassessment orders passed under Section 143(3) read with Section 147 of the Income Tax Act are void ab initio due to haste and violation of natural justice, and whether the notice under Section 148 was invalid as it was based solely on investigation wing information without material indicating income escapement? (Mixed law and fact) 2. Whether the reassessment orders are invalid for being passed without first disposing of the assessee's objections against the reasons recorded under Section 148? (Mixed law and fact) 3. Whether the CIT(A) erred in not appreciating that there was no documentary evidence to confirm the assessee made an undisclosed donation of ₹10,00,000 to the trust, and that the trust denied receiving such a donation? (Mixed law and fact) Assessee's contentions: - The reassessment orders were passed in haste, violating principles of natural justice and facts, making them void ab initio. - The notice under Section 148 was invalid as it was based only on investigation wing information without evidence of income escapement. - The assessment orders were invalid as objections against reasons recorded under Section 148 were not disposed of first. - There was no evidence of the alleged ₹10,00,000 donation, and the trust denied receiving it, making the addition unsustainable. Revenue's contentions: - The revenue relied on the investigation report and the assessee's position as vice-president of the trust to justify the addition, considering the denial by the trust as potentially influenced. The CIT(A) confirmed the addition based on the survey report.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT

1.

These two appeals were filed by the same assessee, Shri Babulal Giridharlal Jain, for assessment years 2012–13 and 2013–14. They arise from the appellate orders dated 11 December 2024 and 8 July 2025, respectively, passed by the Joint Commissioner of Income Tax (Appeals)-6, Delhi, dismissing the assessee’s appeals against the reassessment

The order continues below.

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