SMT MANJULA NARAYANA REDDY vs. THE COMMISSIONER OF INCOME-TAX (APPEALS)

The proceedings are commenced against the petitioner on the ground that she has not filed Returns despite purchase of an immovable property under the Sale Deed dated 24.03.2016 and that an income chargeable to tax has escaped assessment. It is alleged that consideration paid by the petitioner and her son for the purchase of an immovable property is income that has escaped assessment. The petitioner, when served with the notice under 142(1) of the IT Act on 10.10.2023, has filed a response stating that: [a] she is a homemaker and she has joined her son in the purchase of the property only because her son wanted her to be part of the ownership for emotional reasons; [b] she did not even have a bank account in her name until the year 2021 and her son has availed a loan of HC-KAR Rs.50,00,000/- based on his salary for the purchase of the property which is transferred directly to the seller; [c] the balance amount of Rs.10,00,000/- is a family saving over a period of time.

It is seen from the records that the petitioner has thereafter not filed any documents to substantiate the saving of Rs.10,00,000/- and the payment thereof to the vendor as part of the agreed consideration. The Assessment Order dated 12.03.2024 is not on the ground that the entire sale consideration, which is about Rs.60,00,000/-, as escaped income and it is only insofar as Rs.10,00,000/- for which the petitioner has not produced documents to substantiate a case that it was paid out of the family savings.

The petitioner has filed an appeal under Section 250 of the Act pleading ill-health as the HC-KAR reason to justify the delay of 189 days in filing the appeal. The appellate authority has observed thus to reject the petitioner's appeal on the ground of delay. “Notwithstanding the existence of the aforesaid delay, the appellant has indicated “NO” against column 14 of Form-35, which specifically requires disclosure of any delay in the filing of the appeal. Such a response constitutes a misrepresentation of the factual position and demonstrates a complete absence of due diligence. By failing to acknowledge the delay, the appellant has also deprived this authority of any opportunity to examine whether sufficient cause existed for condonation u/s.249(3) of the Act.”

Sri Arunachalam Shivakumar, the learned counsel for the petitioner, and Sri. Nirmal Mathew, who appears on behalf of Sri M. Tirumalesh, a learned senior standing counsel for the respondents, and who is permitted to take notice for the respondents, are heard on whether this Court must intervene with the appellate Authority's order dated 07.08.2025 and the penalty order dated 29.09.2025 and restore the appeal for reconsideration or interfere with the very assessment order dated 12.03.2024 under Section 147 read with 144/144B of the Act in the following indisputable circumstances.  The proceedings are begun on the ground that a sum of Rs.60,00,000/-, beyond the threshold that is contemplated under Section 149 of the Act, which is chargeable to taxes has escaped assessment with the HC-KAR petitioner filing responds to the notice under Section 142(1) of the Act.  The assessment is completed only for a sum of Rs.10,00,000/- accepting the petitioner's case that the Rs.50,00,000/- is paid from the loan availed by the petitioner's son, a co- purchaser, based on his salary.

The best judgment assessment under Section 144 read with 144B and Section 147 of the Act is not for the entire Rs.60,00,000/- which is initially alleged to be the income chargeable to tax but has escaped assessment and it is only for Rs.10,00,000/-. This would be far below the threshold which would permit reassessment under Section 147 of the Act after the lapse of 3 years from the end of the relevant assessment. These circumstances persuade this Court to opine that complete adjudication without protraction would be when this Court intervenes not to restore the HC-KAR proceedings but with a very assessment order dated 12.03.2024.

This Court, in arriving at this conclusion, has also considered the details placed before the appellate Authority on the payment of Rs.10,00,000/- as part of the total consideration paid to the seller. The petitioner, while asserting that Rs.10,00,000/- was an amount that is family saving for a period of time, has furnished joint bank account statement held by her spouse and her son furnishing the details of the cheques under which the amount of Rs.10,00,000/- is paid. The petitioner has stated that if Rs.60,000/- is remitted towards TDS on 23.03.2016, a day before the execution of the sale deed dated 24.03.2016, and she has also furnished the details of the cheques under which a sum of Rs.2,50,000/- is paid to the seller on 23.01.2016 and a sum of Rs.6,90,000/- is paid to HC-KAR the seller on 24.03.2016. In the light of this Court's conclusion as afore, the following: ORDER