SHARDA SHUKLA,BHARATPUR vs. ITO WD 1, BHARATPUR/, BHARATPUR

PDF · subscribers
ITA 1230/JPR/2025Status: DisposedITAT Jaipur26 October 2026AY 2016-1713 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were not challenged on the grounds of lack of reasons or approval under Section 151, and the issue regarding Section 143(3A) and the Faceless Scheme was not pressed. The Tribunal found that the CIT(A) had no jurisdiction to enhance the assessment by introducing new sources of income that were not considered by the Assessing Officer (AO). Relying on Supreme Court decisions in CIT v. Shapoorji Pallonji Mistry and Rai Bahadur Hardutroy Motilal Chamaria, the Tribunal stated that an appellate authority cannot enhance an assessment by discovering new sources of income not mentioned in the return or considered by the AO. The enhancement of Rs 10,00,000 (bank credits), Rs 8,25,000 (sale consideration of plots), and Rs 1,34,813 (pension income) were held to be beyond the CIT(A)'s jurisdiction. The Tribunal deleted these enhancements. The Tribunal expressed no opinion on the taxability of these items, leaving it open for the Revenue to pursue under other provisions. Grounds related to the adequacy of opportunity and merits of enhanced items were left undecided. General grounds were not adjudicated separately. The appeal was partly allowed.

What were the facts?

The assessee, Sharda Shukla, an individual and pensioner, did not file a return for AY 2016-17. The AO initiated reassessment proceedings under Section 147 based on information about the purchase of an immovable property for Rs 7,50,000 plus Rs 40,800 in stamp duty, paid entirely in cash. The AO completed the assessment ex parte under Section 144, treating Rs 7,90,800 as unexplained investment under Section 69, taxable under Section 115BBE. The assessee appealed to the CIT(A), claiming the new plot was funded by selling two other plots. The CIT(A) admitted this material, called for a remand report, and confirmed the addition. The CIT(A) also enhanced the assessed income by Rs 10,00,000 (bank credits), Rs 1,34,813 (pension income), and Rs 8,25,000 (sale consideration of plots). The assessee appealed to the ITAT.

What were the issues?

1. Whether the reassessment proceedings initiated by the AO were bad in law due to the absence of recorded 'reasons to believe' and proper approval under Section 151 of the Income Tax Act, 1961? (Mixed law and fact) 2. Whether the assessment order passed by the AO was invalid and bad in law for violating Section 143(3A) and the Faceless Assessment Scheme, 2019? (Mixed law and fact) 3. Whether the CIT(A) erred in confirming the addition of Rs 7,90,800 as unexplained investment, ignoring the assessee's submissions regarding the sale of other plots? (Mixed law and fact) 4. Whether the CIT(A) erred in enhancing the assessed income by Rs 10,00,000 (bank credits), Rs 1,34,813 (pension income), and Rs 8,25,000 (sale consideration of plots) without proper jurisdiction and opportunity? (Mixed law and fact) Assessee's contentions: - Reassessment proceedings were bad in law due to lack of recorded reasons and approval. - Assessment order violated Section 143(3A) and the Faceless Assessment Scheme. - The new plot was funded by the sale of two other plots. - The CIT(A) exceeded its jurisdiction in enhancing the income by bringing in new sources not considered by the AO. Revenue's contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 69,Section 115BBE,Section 151,Section 143(3A),Section 54F,Section 251(2),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, JAIPUR

Before: Shri Kuldip Singh & Shri Prakash

IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, JAIPUR (PHYSICAL HEARING) Before: Shri Kuldip Singh, Judicial Member And Shri Prakash, Accountant Member

ITA No: 1230/JPR/2025 Assessment Year: 2016-17

Sharda Shukla ITO, C/o Gautam Emitra Ward-01, W/o Rajendra Prasad Vs Bharatpur (Respondent) Jaswant Nagar Near Heeradas Bharatpur PAN: KVEPSO306E (Appellant) Assessee Represented: Sh. Rajesh Malhotra, CA (Thr. VC) Revenue Represented: Ms. Arti Rawat, JCIT Date of hearing : 06-10-2026 Date of pronouncement : 26-10-2026 आदेश/ORDER

PER : PRAKASH, ACCOUNTANT MEMBER:-

1.

This appeal by the Assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the learned CIT(A)”] dated 10.06.2025 arising out of the assessment order dated 24.09.2021 passed by the Income Tax Officer, Ward 1, Bharatpur (hereinafter referred to as “the AO”) under section 147 read with section 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

ITA No. 1230/JPR/2025 Sharda Shukla 2. There is a delay of 3 days in filing this appeal before us. The assessee has filed a condonation application supported by an affidavit explaining the reasons for the delay. Having considered the same, we are satisfied that there was sufficient cause for the delay. Accordingly, the delay is condoned and the appeal is admitted for hearing.

3.

The grounds of appeal raised by the Assessee before us in the memorandum of appeal in Form No. 36 read as under:

1.

Because upon the facts and in overall circumstances of the case, the impugned order passed by the Ld JAO and confirmed by the Ld CIT(A), NFAC is bad in law and not sustainable. 2. Because upon the facts and in overall circumstances of the case, the reassessment proceedings initiated by the Ld AO is bad in law as there were no ‘reasons to believe’, being recorded by the Ld JAO before initiation of reassessment proceedings. 3. Because upon the facts and in overall circumstances of the case, the so called reasons to believe are no reasons in the eyes of law, consequently proceedings have been vitiated in the absence of reasons to believe. 4. Because upon the facts and in overall circumstances of the case, the reassessment proceedings are bad in law, as the approval, if any obtained under section 151 of the Act, was not provided to the Appellant. 5. Because, upon the facts and in overall circumstances of the case, the order dated 24.09.2021 passed by the Ld JAO (ITO Ward 1, Bharatpur) is invalid and bad in law and is in gross violation of provisions of section 143(3A) of the Income Tax Act and Faceless Assessment Scheme, 2019 issued vide Notification Number S.O. 3264(E) dated 12th September 2019 by the Central Government in exercise of the powers conferred by sub section (3A) of section 143 of the Income Tax Act. 6. Because upon the facts and in overall circumstances of the case, the Ld CIT(A) has erred in facts and in law in confirming the addition of Rs. 790800/-, being the

ITA No. 1230/JPR/2025 Sharda Shukla amount invested in purchase of immovable property ignoring the submission made by the Appellant during the course of Appellate proceedings. 7. Because upon the facts and in overall circumstances of the case, the Ld CIT(A) has erred in making enhancement in order dated 10.06.2025. The enhancement made by the Ld CIT(A) is beyond its jurisdiction and the same has been done without providing proper opportunity of being heard. This is also relevant that the issues on which additions have been made by the ld CIT(A) were not the subject matter of appeal. The impugned order passed by the Ld CIT (A) is patently illegal and without jurisdiction. 8. Because upon the facts and in overall circumstances of the case, the Ld CIT(A) has erred in making enhancement of assessed income by Rs. 1000000/- (Rs. 600000 + Rs. 400000) being the amount of other credits in bank account of the appellant without appreciating the correct facts of the case. 9. Because upon the facts and in overall circumstances of the case, the Ld CIT(A) has erred in making an addition of Rs. 825000/-, being the total amount of sale consideration of Plot, ignoring the computation of LTCG submitted by the Appellant during the course of appellate proceedings. The Ld CIT(A) also failed to give the credit of indexed cost of acquisition of Plots. 10. Because upon the facts and in overall circumstances of the case, the Ld CIT(A) has erred in not allowing the benefit of section 54F of the Act, being the amount of investment made by the Appellant in residential house property, which is eligible under section 54F of the Act. 11. The Appellant craves leave, add, amend, alter, and delete any ground of appeal before or at the time of hearing.

4.

Briefly stated, the facts of the case are that the assessee is an individual and a pensioner who did not file a return of income for the year under consideration. On information that she had purchased an immovable property on 08.07.2015 for Rs 7,50,000 and had paid Rs 40,800 towards stamp duty and other charges, entirely in cash, the AO issued a notice 3

ITA No. 1230/JPR/2025 Sharda Shukla under section 148 of the Act dated 16.01.2020. The assessment order records that reasons were recorded and that approval under section 151(2) of the Act was obtained. The notice under section 148 of the Act and the later notices under section 142(1) of the Act remained uncomplied with. The AO, therefore, completed the assessment ex parte on 24.09.2021 by treating Rs 7,90,800 as unexplained investment under section 69 of the Act, to be taxed under section 115BBE of the Act.

5.

Before the learned CIT(A), the assessee explained that she had sold two plots during the year for Rs 6,80,000 and Rs 1,30,000 and had used the proceeds to buy the new plot. She filed the sale deeds, the purchase deed, her bank statement and a computation showing long term capital gain of Rs 28,703 after a deduction of Rs 6,63,682 under section 54F of the Act. The learned CIT(A) admitted this material under Rule 46A of the Income Tax Rules, 1962 and called for a remand report. In the remand report dated 12.08.2022, the AO pointed out that the plots were sold on 14.07.2015 and 03.08.2015 against cheques, whereas the new plot was paid for in cash on 08.07.2015 without any earlier withdrawal from the bank. The AO also noticed two credits of Rs 4,00,000 and Rs 6,00,000 dated 05.09.2015 in the bank account. The assessee did not comment on the remand report and only refiled the same documents. The learned CIT(A) confirmed the addition, holding at paragraph 6.4 of the impugned order as under:

“On going through the facts of the case, it is seen that the appellant sold 2 properties dated 14.07.2015 & 03.08.2015 for sale consideration of Rs. 6,80,000/- & 1,30,000/- respectively and the payment was received through cheques. Further, the appellant bought an immovable property on 08.07.2015 for a total consideration of Rs.7,90,800/- which was paid in cash. The appellant claimed that the amount received from the sale of the properties was utilized for the purchase of the property. However, as seen from the records, the property purchased was before the sale of the properties. Further, the appellant purchased 4

ITA No. 1230/JPR/2025 Sharda Shukla the property with cash and on perusal of the bank statement there was no prior withdrawal of cash from its bank account. Therefore, the contention of the appellant is false and the cash amount utilized for the purchase of the property remained unexplained.”

6.

The learned CIT(A) also declined the claim under section 54F of the Act, as no return had been filed, relying on Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC). Thereafter, by a notice under section 251(2) of the Act dated 15.05.2025, the learned CIT(A) asked the assessee to show cause why the assessed income should not be enhanced. As no reply was received by the due date of 28.05.2025, the learned CIT(A) enhanced the income as under:

Particulars Amount (Rs) Para of the impugned order 6.4 7,90,800 Addition by the AO under section 69 of the Act (confirmed) 8.1 10,00,000 Enhancement: credits dated 05.09.2015 in the bank account treated as unexplained money under section 69A of the Act Enhancement: pension income 8.1 1,34,813 8.2 8,25,000 Enhancement: entire sale consideration of the two plots treated as long term capital gain, no cost of acquisition allowed Total income as per the learned CIT(A) 27,50,613

7.

At the hearing, the learned Authorised Representative (hereinafter referred to as “the learned AR”) relied on the paper book filed and submitted that the assessee, a widow and a pensioner, had no taxable income and that the notices were only uploaded on the portal. On merits, it was submitted that the new plot was funded from the sale of two plots, as borne out by the sale deeds and the bank statement at pages 1 to 40 of the paper book. On the enhancement, it was submitted that the learned CIT(A) brought to tax the

ITA No. 1230/JPR/2025 Sharda Shukla bank credits, the capital gain and the pension, none of which was the subject matter of the assessment, and reliance was placed on CIT v. Shapoorji Pallonji Mistry, placed at pages 54 to 59 of the paper book. Alternatively, it was urged that the indexed cost of acquisition and the deduction under section 54F of the Act ought to have been allowed.

8.

The learned Departmental Representative (hereinafter referred to as “the learned DR”) relied on the orders of the lower authorities.

9.

We have heard the rival submissions and perused the material on record, including the paper book. Grounds 1 and 11 are general. The remaining grounds raise three questions: the validity of the reassessment and of the assessment order (grounds 2 to 5), the addition of Rs 7,90,800 under section 69 of the Act (ground 6), and the enhancement made by the learned CIT(A) (grounds 7 to 10). We take them in that order.

10.

Grounds 2 to 5 were not raised before the learned CIT(A). Being legal grounds, they may be raised before us, but only if the facts needed to decide them are on the record. They are not. Neither the reasons recorded, nor the approval under section 151 of the Act, nor any order transferring the case from the faceless set up to the AO has been placed before us. The assessment order records that reasons were recorded in writing, that approval under section 151(2) of the Act was obtained and that the case was later transferred to the AO. Nothing has been brought on record to show otherwise. The assessee did not file a return in response to the notice under section 148 of the Act, and there is nothing to show that she asked for the reasons or the approval at any stage. The complaint that the approval “if any” was not provided to her has, therefore, no foundation in the record.

11.

We have noticed that the assessment order mentions the income escaping assessment in the reasons as Rs 52,06,000, whereas the information 6

ITA No. 1230/JPR/2025 Sharda Shukla related to an investment of Rs 7,90,800. In the absence of the reasons themselves, this variance alone does not permit us to hold that there were no reasons, or that they were no reasons in the eye of law. The same is true of ground 5, which rests on a bare assertion that the order passed by the AO violates section 143(3A) of the Act and the Faceless Assessment Scheme, 2019. A legal ground which depends on facts cannot be decided on assumptions. Grounds 2 to 5 are dismissed.

12.

Under section 69 of the Act, where the assessee has made an investment which is not recorded in the books and offers no explanation about its nature and source, or the explanation is not satisfactory in the opinion of the AO, the value of the investment may be deemed to be the income of the assessee. The burden of explaining the source is on the assessee. The relevant dates and amounts, as they emerge from the deeds and the bank statement in the paper book, are as under:

Date Event Amount (Rs) 08.07.2015 7,90,800 Purchase of the new plot; the deed records that the entire consideration was received in cash; stamp duty and other charges 14.07.2015 Sale of the first plot against two cheques 6,80,000 20.07.2015 Two cheques of Rs 3,40,000 each credited in the 6,80,000 bank account 23.07.2015 Cash withdrawn from the bank account 6,80,000 03.08.2015 Sale of the second plot 1,30,000 06.08.2015 1,30,000 Two cheques of Rs 65,000 each credited in the bank account 17.08.2015 Cash withdrawn from the bank account 1,35,000

13.

The purchase deed dated 08.07.2015 records that the seller had received the entire consideration of Rs 7,50,000 in cash and that nothing remained payable. The sale proceeds reached the bank account of the assessee only

ITA No. 1230/JPR/2025 Sharda Shukla on 20.07.2015 and 06.08.2015. Money received later cannot be the source of a payment made earlier. The bank statement does show cash withdrawals of Rs 6,80,000 on 23.07.2015 and Rs 1,35,000 on 17.08.2015. But the assessee has not said, at any stage, from where the cash of Rs 7,90,800 came on 08.07.2015, or to whom the later withdrawals were paid. On the date of purchase, the account held a balance of about Rs 12,500, and the regular credits and withdrawals were of the order of Rs 11,000 a month, being the pension. The remand report pointed out this very gap, and the assessee chose not to answer it. On these facts, the explanation does not discharge the burden placed on the assessee by section 69 of the Act. The finding of the learned CIT(A) is based on the record and calls for no interference. Ground 6 is dismissed.

14.

We now turn to the enhancement. Section 251(1)(a) of the Act empowers the learned CIT(A), in an appeal against an order of assessment, to confirm, reduce, enhance or annul the assessment, and section 251(2) of the Act requires that the assessee be given a reasonable opportunity before the assessment is enhanced. The scope of this power is settled by the Hon’ble Supreme Court in CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC), a judgment relied upon by the assessee. The Hon’ble Supreme Court, after noting that the controversy was about the Appellate Assistant Commissioner discovering “new sources, not mentioned in the return and not considered by the Income-tax Officer”, concluded as under:

“In this view, it is said that the words "enhance the assessment" are not confined to the assessment reached through a particular process but the amount which ought to have been computed if the true total income had been found. There is no doubt that this view is also possible. On the other hand, it must not be over looked that there are other provisions like sections 34 and 33B, which enable escaped income from new sources to be brought to tax after following a special procedure.

ITA No. 1230/JPR/2025 Sharda Shukla The assessee contends that the powers of the Appellate Assistant Commissioner extend to matters considered by the Income-tax Officer, and if a new source is to be considered, then the power of remand should be exercised. By the exercise of the power to assess fresh sources of income, the assessee is deprived of a finding by two tribunals and one right of appeal.

The question is whether we should accept the interpretation suggested by the Commissioner in preference to the one, which has held the field for nearly 37 years. In view of the provisions of sections 34 and 33B by which escaped income can be brought to tax, there is reason to think that the view expressed uniformly about the limits of the powers of the Appellate Assistant Commissioner to enhance the assessment has been accepted by the legislature as the true exposition of the words of the section. If it were not, one would expect that the legislature would have amended section 31 and specified the other intention in express words. The Income-tax Act was amended several times in the last 37 years, but no amendment of section 31(3) was undertaken to nullify the rulings, to which we have referred. In view of this, we do not think that we should interpret section 31 differently from what has been accepted in India as its true import, particularly as that view is also reasonably possible.”

15.

The Hon’ble Rajasthan High Court, after considering the Explanation to section 251 of the Act, applied this principle in CIT v. Associated Garments Makers [1992] 64 Taxman 215 (Raj.). The Hon’ble High Court held at paragraphs 7 and 8 as under:

“7. Appeals are provided under section 246 of the Act before the AAC and the Commissioner (Appeals). These appeals are by the assessee aggrieved by the orders mentioned therein. Any order made under section 143(3) is appealable and the powers of the appellate court are provided in section 251 of the Act wherein appellate authority has power to confirm, reduce, enhance or annul the assessment or he may set aside the assessment and refer the case back to the ITO for making fresh assessment in accordance with directions given in appeal and

ITA No. 1230/JPR/2025 Sharda Shukla after making such further enquiry as may be necessary. These powers are, inter alia, mentioned in the other powers. According to sub-section (2) of section 251, the AAC has no power to enhance assessment or a penalty, or reduce the amount or refund unless the appellant has a reasonable opportunity for showing cause against such enhancement or reduction. An explanation has been provided according to which the AAC may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding the fact that such matter was not raised before him. A perusal of sections 246 to 251 of the Act makes it clear that any questions arising out of the assessment orders in an appeal by the assessee can be possible and wide powers are given to the appellate authority, but these powers are circumscribed by the assessment order in the matters arising thereof or a matter arising out of the proceedings. Even the appellate authority has suo motu power to consider the questions arising thereof but there is no provision to go beyond the matter arising out of the proceedings before the assessing authority, more particularly as separate provisions for that are made in the Act. The Tribunal has elaborately discussed the provisions of the Act and the case law on the subject and has rightly come to the conclusion that new sources not mentioned in the return or considered by the ITO are beyond the scope of powers of the AAC. The case relied on by the learned counsel for the petitioner about the power of setting aside the assessment order remanding the case for re-consideration of the whole matter including the evasion by the assessee, is not applicable to the facts of the present case because the matter arising in that case was one which arose out of the proceedings before the ITO. The question was not about new and fresh material for the purposes of enhancement. On the contrary, the case is clearly covered by the decisions of the Supreme Court in CIT v. Shapoorji Pallonji Mistry's case (supra) wherein it has been held that, "In an appeal filed by the assessee the Appellate Assistant Commissioner has no power to enhance the assessment by discovering new sources of income not mentioned in the return of the assessee or considered by the Income-tax Officer in the order appealed against", and in the case of Rai Bahadur Hardutroy Motilal Chamaria (supra) wherein it has been held that, "It is

ITA No. 1230/JPR/2025 Sharda Shukla not therefore open to the Appellate Assistant Commissioner to travel outside the record, i.e., the return made by the assessee or the assessment order of the Income-tax Officer, with a view to finding out new sources of income and the power of enhancement under section 31(3) is restricted to the sources of income which have been the subject-matter of consideration by the Income-tax Officer from the point of view of taxability". Their Lordships considered the meaning of the word 'consideration' and held that, " 'consideration' does not mean 'incidental' or 'collateral' examination of any matter by the Income-tax Officer in the process of assessment. There must be something in the assessment order to show that the Income-tax Officer applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non- taxability and not to any incidental connection". In the instant case, the AAC had himself, after issuing notice, considered the new material and had gone into new sources of income for the consideration of which he had no jurisdiction. 8. In fact, we fail to understand as to why when the order was brought to the notice of the Commissioner he proceeded into wrong direction when he had ample powers under other provisions of this Act. There are various other provisions under the Act which can be invoked in cases of escaped income or such situation where the new sources had been left to be considered, but that would not give powers to the AAC to transgress his jurisdiction.”

16.

The test, therefore, is whether the AO applied his mind to the particular source of income from the point of view of its taxability. An incidental or collateral examination of a matter is not enough. An appeal by the assessee is a shield against an erroneous assessment; it is not a net to bring in income which the AO never looked at. If such income has escaped assessment, the Act provides other routes to reach it.

17.

Judged by this test, each of the three items brought to tax by the learned CIT(A) is a new source:

ITA No. 1230/JPR/2025 Sharda Shukla (a) The credits of Rs 4,00,000 and Rs 6,00,000 dated 05.09.2015 find no mention in the assessment order. They came to light only from the bank statement filed in appeal and from the remand report.

(b) The AO did not consider any capital gain. The sale of the two plots came up before the learned CIT(A) only as the explanation offered for the source of the investment. To examine an explanation for the source of an investment is incidental to the addition under section 69 of the Act; it is not a consideration of the capital gain from the point of view of its taxability.

(c) The assessee filed no return, and the AO did not consider her pension at all. It surfaced only in the computation filed in appeal.

18.

The learned CIT(A) did issue a notice under section 251(2) of the Act. Compliance with that procedure, however, cannot enlarge a power which the section does not confer. The amount disputed in Form No. 36 does not include the pension, but ground 7 challenges the enhancement as a whole as being without jurisdiction, and an assessee cannot confer on an appellate authority, by not objecting, a jurisdiction which the statute withholds. We, therefore, hold that the enhancement of Rs 10,00,000, Rs 8,25,000 and Rs 1,34,813, aggregating to Rs 19,59,813, was beyond the jurisdiction of the learned CIT(A) and delete it. Ground 7 is allowed to this extent.

19.

In view of this, the complaint about the adequacy of the opportunity in ground 7, and grounds 8, 9 and 10 on the merits of the enhanced items, including the indexed cost of acquisition and the deduction under section 54F of the Act, do not survive for adjudication and are left open. We make it clear that we have expressed no opinion on the taxability of these items,

ITA No. 1230/JPR/2025 Sharda Shukla which the Revenue may pursue, if at all, under the other provisions of the Act and in accordance with law. 20. Grounds 1 and 11 are general in nature and call for no separate adjudication. 21. In the result, the appeal filed by the Assessee is partly allowed. Order pronounced in the open court on 26.10.2026

Sd/- Sd/- (KULDIP SINGH) (PRAKASH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 26/10/2026 *Ganesh Kr., Sr. PS आदेशक���त�ल�पअ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue Ganesh 3. Concerned CIT Digitally signed by 4. CIT (A) Ganesh Kumar Kumar 5. DR, ITAT Date: 2026.11.02 6. Guard file. 11:34:56 +05'30' By order/आदेश से, सहायक पंजीकार आयकर अपील�य अ�धकरण, t;iqj

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →