AERLY YESUDIAN,CHENNAI vs. ITO, NCW-19(3), CHENNAI

The Assessee raised the following grounds of appeal : “1.1 The CIT(A) erred in upholding the reopening of assessment u/s.147 without appreciating that there was no escapement of income for A.Y. 2014-15.

Briefly, the facts of the case are that the assessee are that the appellant is an Individual. No regular Return of Income under the provisions of section 139 of the Income Tax Act, 1961 was filed by the appellant for the Assessment Year 2014-15. However, based on the information that the appellant undertook high value bank transactions including deposits of Rs.56,25,00,000/- and sale of property for consideration of Rs.45,63,000/-. The Jurisdictional Assessing Officer(JAO) formed an opinion that income got escaped assessment from tax, accordingly, a notice u/s.148 of the Act was issued on 25.03.2019 calling upon the appellant to file the Return of Income. The appellant neither complied with the notice u/s.148 of the Act, nor the notices issued u/s.142(1) of the Act. In the circumstances, e-Assessment Unit of the Department(hereinafter called ‘AO’) had proceeded with framing the best judgment assessment vide order dated 09.12.2019 passed u/s.144 r.w.s 147 of the Act at a total income of Rs.45,63,000/-.

Being aggrieved by the above assessment order, an appeal was filed and subsequently migrated to NFAC, who vide order dated 17.02.2025 had set-aside the assessment order to the file of Assessing Officer for the purpose of making of fresh assessment order in accordance with law after affording an opportunity of being heard to the appellant, pursuant to the order of remand passed by the Learned CIT(A), the Assessing Officer had issued notices issued u/s.142(1) of the Income Tax Act, calling upon the appellant to file the evidence and explanation regarding sale of immovable property transactions etc. The appellant had filed the requisite information on 08.07.2025. On consideration of the information and explanation filed by the appellant, the Assessing Officer had completed, the assessment vide order dated 28.07.2025 passed u/s.144 r.w.s 250 r.w.s 144B of the Income Tax Act, at total income of Rs.27,87,778/-. While doing so, the Assessing Officer made addition under head ‘Capital Gains’ on the sale of immovable property of Rs.25,73,160/-. The factual background leading to the above additions is as under :

The appellant was owning an open land bearing plot no.11A, Lakshmi Nagar comprised in part of Old Survey No.25/6, New Survey No.25/6B of Seevaram Village previously Tambaram Taluk, and now Sholinganallur Taluk, Kancheepuram District admeasuring an extent of 3042 sq.ft.

The appellant had executed general power of attorney in favour of one Mr.P.Ambika on 01.10.2013 it was registered as document no.6817/2013 authorising the said Ms.P.Ambika to sell property on behalf of the appellant and execute the sale deed.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A), contending that the gains arising on sale of immovable property was already offered to tax in the year of execution of power of attorney .e. A.Y.2013-14 and the issue was settled under Vivad se Vishwas Scheme and the question of further addition does not arise for the year under consideration. However, the Learned CIT(A) on consideration of the material on record had proceeded to hold that the issue of short term capital gains on sale of the plot was not examined in the earlier assessment proceedings i.e. A.Y.2013-14. The addition made in that year was on account of unexplained investment, not on account of capital gains on sale of property and also taken into consideration the fact that the appellant had conceded before the Assessing Officer for addition of short term capital gains, accordingly, dismissed the appeal.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. The Learned Counsel submits that the Assessing Officer while making assessment for the A.Y.2013-14 u/s.144 r.w.s 147 of the Act made addition of Rs.62,54,11/- as unexplained investment u/s.69 of the Act. The addition made in the assessment was settled under Direct Tax Vivad se Vishwas Scheme(DTVSV). He submits that the addition made for the assessment year under consideration under head ‘Short Term Capital Gains’ of Rs.45,63,000/- in included under unexplained investment is a part of addition made under unexplained investment for the Assessment Year 2013-14 and therefore, the question of further addition for the year under consideration does not arise. In support of this, he has filed a copy of Form No.5 DTVSV Scheme vide Acknowledgement Number 277838240020321 dated 023.03.2021

On the other hand, the Learned Sr.DR opposed the above submissions and submits that the addition was made based on the concession made by the assessee during the course of remand assessment proceedings and there is no evidence to show that the same income was taxed again for the A.Y.2014- 15.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the Learned CIT(A) was correct in law in upholding the addition of short term capital gains of Rs.25,73,160/- having regard to the facts of the case. Admittedly, during the course of original assessment proceedings, the appellant had not responded to the notice issued by the Assessing Officer u/s.148/142(1) of the Act. In the circumstances, the Assessing Officer was constrained to pass ex parte assessment after making addition of Rs.45,63,000/- as a short term capital gain on sale of plot. ON appeal before the Learned CIT(A), the assessment order was set-aside to the file for Assessing Officer de novo assessment pursuant to the order of remand made by the Learned CIT(A), the Assessing Officer had completed the assessment after making addition under head ‘Short Term Capital Gains’ on sale of plot of Rs.25,73,160/- based on the concession made by the appellant himself. However, the appellant had preferred an appeal against the assessment order before the Learned CIT(A) contending that the gains arising on sale of immovable property were already taxed in the preceding Assessment Year 2013-14 as a part of undisclosed investment which was settled under Vivad se Vishwas Scheme. However, on examination of the material on record, the Learned CIT(A) concluded that the nexus between the addition made in the A.Y.2013-14 and 2014-15 was not established by the appellant. The appellant is in appeal challenging the correctness of its findings of the Learned CIT(A). The Learned Counsel reiterated the same submissions as made before the Learned CIT(A). We have carefully perused the paper book filed by the appellant and also the copies of the Form No.5 issued under VSVS Scheme. On mere perusal of the above, it is not evident that the gains arising on the sale of plot were already taxed as a part of the undisclosed investment in the A.Y.2013-14. Moreover, it is crystal clear that sale deed was executed on 25th day of October 2013 in favour of the S.Panduranga for a consideration of Rs.45,63,000/-. Therefore, transfer of the property took place during the previous year relevant to assessment year under consideration. Even assuming for a moment that the addition made on account of unexplained investments for the A.Y.2013-14 is nothing but sale consideration received on account of sale of immovable property i.e. the plot. Still the gains arising on the sale of plot are taxable in the assessment year 2014-15 in view of the well settled principle of law that the income should be taxed in the right year irrespective of the fact that the appellant offered to tax in the wrong assessment year.

In this connection, reference can be placed on the decision of Hon’ble Supreme Court in the case of ITO Vs. Ch.Atchaiah [1996] 218 ITR 239 wherein it was held as under : “7. In our opinion, the contention urged by Dr. Gauri Shanker merits acceptance. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By 'right person', we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression 'wrong person' is obviously used as the opposite of the expression 'right person'. Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the revenue. In our opinion, the language of the relevant provisions of the present Act is quite clear and unambiguous. Section 183 of the Act shows that where the Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is, no doubt, entitled to be relieved of it in accordance with law but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the Assessing Officer[Income Tax Officer] has taxed the said income in the hands of another person contrary to law. We may proceed to elaborate.”

In view of the above discussion, we do not find any merit in the appeal filed by the assessee, accordingly, grounds of appeal raised by the assessee are dismissed.

In the result, appeal filed by the assessee stands dismissed. Order pronounced in the open Court on 26th October, 2026.