KHUZEMA ISMAIL ADAMJI,DUBAI vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD 1(1), BANGALORE

Facts

The assessee, Khuzema Ismail Adamji, an Individual NRI, failed to file a return of income for Assessment Year 2016-17. Information received through the insight portal indicated an investment in immovable property of Rs. 1,28,46,750/- during the financial year 2015-16. The Assessing Officer (AO) issued notices and show cause notices, but the assessee made no compliance on six occasions and did not reply to the show cause notices. The assessee filed objections before the Dispute Resolution Panel (DRP) with additional evidence regarding additions made under Section 69 of the Income Tax Act, 1961. Both the DRP and AO confirmed the addition of Rs. 1,28,46,750/-, and the assessment was completed at this total income under Section 147 read with Section 144 of the Act. The assessee appealed this order to the Income Tax Appellate Tribunal (ITAT).

Held

The Tribunal noted that both parties conceded that the assessee could not effectively represent his case before the Assessing Officer (AO). The Dispute Resolution Panel (DRP) had also observed the assessee's failure to provide explanations and supporting evidence for the investment. Furthermore, the DRP did not consider the additional evidence filed by the assessee. In the interest of justice and fair play, and as requested by the assessee's A.R., the Tribunal decided to remit the entire issue in dispute back to the file of the AO for a fresh decision in accordance with the law. The assessee was directed to produce all relevant documents and information required by the AO. A reasonable opportunity of being heard was to be granted to the assessee. The Tribunal did not decide the merits of the addition but remanded the matter for fresh consideration.

Key Issues

1. Whether the addition of Rs. 1,28,46,750/- as unexplained investment in immovable property under Section 69 of the Income Tax Act, 1961, is justified, considering the assessee's non-compliance before the Assessing Officer and the Dispute Resolution Panel. Assessee's contentions: The assessee's authorized representative (A.R.) conceded that the assessee could not represent his case effectively before the AO. The A.R. requested the Tribunal to remit the issue to the AO for fresh adjudication. Revenue's contentions: The Dispute Resolution Panel (DRP) observed that the assessee failed to provide requisite explanations and supporting evidence for the investment made in the property. The DRP also noted that the additional evidence filed by the assessee was not considered.