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Facts
The assessee's case was reopened under Section 147 on the basis of information that she was a non-filer who had purchased immovable property. The Assessing Officer (AO) made an addition of Rs. 1.36 Cr as income from undisclosed sources due to her alleged non-response to notices. The assessee claimed the property was purchased by her son, and she was added as a joint purchaser for convenience.
Held
The Tribunal held that the assessee was not aware of the assessment proceedings as notices were sent to an old address, and the assessment was ex-parte. The additional evidence filed before the CIT(A) and subsequently examined in the remand report sufficiently explained the source of investment for the property. The Tribunal found that the assessee had substantiated the sources of investment.
Key Issues
Whether the addition made by the AO on account of purchase of property from undisclosed sources is sustainable when the assessee was not aware of the assessment proceedings and has provided evidence for the source of investment. Also, whether the rejection of additional evidence by the lower authorities was justified.
Sections Cited
147, 148, 144, 69C, 234A, 234B, 234C, 143(2), 142(1), 46A
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Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of Learned Commissioner of Income Tax (Ld. CIT(A)) dated 17.03.2025 for A.Y. 2011-12. The assessee has raised the following grounds of appeal: “
1. On the basis of facts and the circumstances of the case, the Hon'ble CIT(A) has grossly erred in confirming the addition made by the Lrnd. A.O. to the tune of Rs. 1,36,77,000/- u/s 69C of the I.T. Act 1961 towards purchase of Immovable property.
2. On the basis of facts and the circumstances of the case, the Hon'ble CIT(A) has grossly erred in upholding the rejection of additional evidence by the Lrnd A.O in his remand report who has hurriedly passed the remand order without considering /overlooking the detailed submissions made by the Appellant.
3. Hon'ble CIT(A) has grossly erred, on facts and in law, by rejecting the additional evidence inspite of complete and comprehensive details / documents substantiating the assessee's claim, submitted during the remand proceeding and before the hon'ble CIT(A) as /and the submissions Mrs. Roma Prakash Chhugani stating the details of the circumstances. mentioned in the Rule 46A are squarely applicable to the present situation.
4. Hon'ble CIT(A) has grossly erred, on facts and in law by confirming the tax demand of ₹ 1,14,85,060/-.
5. On the basis of facts and the circumstances of the case, the Ld. AO erred in charging interest under section 234A, 2348, & 234C of the Income-tax Act, 1961. The Appellant craves leave to add, amend, modify, or alter any ground or add new ground which may be necessary.”
2. The brief facts of the case are that the case of assessee was reopened under section 147 on 29.03.2018. The case was reopened on the basis of information that assessee is non filer of income tax return and assessee has purchased immovable property. The AO (Assessing Officer) issued notice under section 148 on 29.03.2018, after taking approval from PCIT (Principal Commissioner of Income Tax). During assessment, the AO noted that a number of notices were issued to the assessee which were either return unserved or no reply was filed/not attended by assessee. The AO on the basis of information that assessee has purchased property of Rs. 1.36 Cr, made addition of entire alleged investment as an income from undisclosed source at the time of passing assessment order passed under section 144 r.w.s 147 on 21.12.2018. Aggrieved by the additions in the assessment order, the assessee filed appeal before learned CIT(A) on 07.07.2020.
3. Before CIT(A), the assessee in her statement of fact stated that she is a housewife and was residing at Flat no. 405, Ashiyana, J.P. Road, Andheri (West), Mumbai. The residential address of assessee was changed to B-2604, HDIL Metropolis Residency, J.P. Road, Four Bungalows, Azad Nagar, Andheri (West), Mumbai. The assessee was not aware about the assessment order 2 Mrs. Roma Prakash Chhugani carried out by AO as all the notices were sent at the old address. The assessee has not received any notices or the assessment order. The assessee came to know when his bank account was attached for the recovery of tax amount. On attachment of his bank account the assessee realised about ex-parte order passed by AO. The assessee obtained copy of assessment order in the month of March 2020 and appeal was filed before CIT(A). The assessee sought condonation of delay in filing appeal. On merit the assessee submitted that investment in the property was made by his son. His son purchased the property at Rs. 1.43 Cr. For the purpose of administrative conveniences, the name of assessee being mother was added as a joint purchaser. The agreement of property was registered on 22.12.2010. His son was having taxable income of about Rs. 90 Lakhs in the relevant financial year, as he was working in McKinsey & Company India Pvt. Ltd. and Matrix Asset Advisor Pvt. India Ltd. Her husband was employed with Mahindra & Mahindra in their corporate office from last 30 years. The assessee was also having savings the entire amount was transferred for payment of property through banking channel. Majority of payments were made from the accounts of son or husband or from the past saving, which were in the joint account of assessee and her husband. The assessee furnished complete bifurcation of sale consideration. In addition to, the assessee stated that she and her son also availed housing loan from HDFC which was directly paid to builder/ HDIL. The assessee also filed application for admission of additional evidence in support of her claim about investment for purchase of property.
Mrs. Roma Prakash Chhugani 4. The Ld. CIT(A) forwarded the submission of assessee to the AO for his remand report. The AO vide his remand report dated 11.10.2024 furnished his report. The contents of remand report is recorded on page 8 to 12 of impugned order. The AO in his remand report stated that assessee was served with various notices by speed post as well as by a fixture. No reply was received by from assessee, thus assessment was completed u/s. 144 r.w.s 147 on 21.12.2018 by making addition of Rs. 1.36 Cr, on account of undisclosed source. The AO further submitted that no evidence was furnished during the assessment, the assessee has not given any reason as to why additional evidence to be considered for admission. The assessee has not provided any documentary evidence for verifying her claim. The assessee has no provided any detail of investment so he has no option except to make the addition. The assessee was asked to furnish confirmation from Mahindra & Mahindra and loan approval from HDFC bank. But no reply was received from assessee. The AO submitted that assessee failed to substantiate the source of investment.
The Ld. CIT(A) after considering the submission of assessee and the remand report of AO, held that AO in his remand report submitted that assessee failed to substantiate and explain the source of investment in immovable property. The additional evidence furnished by assessee cannot be accepted as the AO never refused to admit evidences. As the assessee does not fulfil the condition mentioned in Rule 46A. On the basis of aforesaid observation the Ld. CIT(A) held that source of expenditure for source of property has not been explained properly and confirm the action of AO. Further aggrieved, the assessee has filed present appeal before Tribunal.
Mrs. Roma Prakash Chhugani 6. We have heard the submission of Ld. AR (Learned Authorized Representative) of the assessee and the Ld. DR (Learned Senior Departmental Revenue) for the revenue. The ld. AR of the assessee submit that assessee Senior Citizen and is present in the Court. The assessee was not having taxable income during the relevant financial year. Hence, no return of income was filed. The assessee has not received any notice wither under section 148, 143(2) or 142(1) during assessment. Since, no notice was received by assessee, thus the assessee has no opportunity to contest the assessment proceeding. The assessee came to know about passing of the assessment order when his bank account was freeze by Income Tax Authorities. The assessee thereafter on making enquiry came to know about the assessment order. The assessee after obtaining copy of assessment order filed appeal before CIT(A). Before CIT(A) the assessee filed detailed statement of fact along with additional evidence and detail of source of investment. During the relevant financial year the son of assessee Gautam Chhugani purchased a flat for a consideration of Rs. 1.43Cr. wherein the name of the assessee was added due to love and affection and regard with the assessee. The agreement was registered on 22.12.2010 in the joint name of assessee and her son. Copy of purchased agreement in placed on record. The assessee, her husband and his son are regular tax payer and are filing return of income regularly. Majority of the investment were made either from the joint bank account of assessee and her husband and from the bank account of Gautam Chhugani. For the financial year under consideration the assessee was not having any sufficient taxable income so no return of income were filed by assessee. However, the return of income of her husband and her son are placed on 5 Mrs. Roma Prakash Chhugani record. Since, no opportunity to contest before the AO was available to the assessee. Therefore, the assessee filed application for additional evidence. Additional evidence was accepted by Ld. CIT(A). On accepting additional evidence, the evidences was referred to AO for his remand report. Before AO, the assessee furnished complete details of source of investment, date of various payment, bank account and the details of loan disbursement. Entire evidence furnished by assessee were self explanatory. The assessee fully explained the source of investment of Rs. 1.43 Cr. The ld. AR by referring page 49 of paper book would submit that out of total amount of sale consideration of Rs. 1.43 Crore, Rs. 20,27,300/- was made from joint account of assessee with her husband, Rs. 21,60,527/- were made from the account of her son and payment and Rs. 37,61,175/- from the individual bank account of her husband and remaining amount of Rs. 63,94,498/- was made from the bank loan availed from HDFC. The assessee furnished copy of bank statement and loan disbursement certificate. The AO objected about admission of such additional evidence on technical ground that assessee was allowed opportunity. In fact the assessee was not aware about the assessment proceeding so there is no occasion for availing the opportunity. The assessee was prevented by sufficient cause in not furnishing such source of investment during assessment. The Ld. AR by referring one by one entry and carried us through all details which were credited in the bank account of builder/HDIL. The Ld. AR submits that once the assessee has explained all the investment, no addition was liable to be sustained. The ld. AR of the assessee prayed for accepting the appeal of assessee.
Mrs. Roma Prakash Chhugani 7. On the other hand, the Ld. DR for the revenue supported the order of lower authorities. The ld. DR submits that assessee has not furnished any details during assessment despite allowing more than sufficient opportunity. The details shown by Ld. AR at page 49 of paper book, were not verified. There is no such detail, whether these payments were made against the purchase of particular property. The Ld. DR submits that matter may be restored back to the file of AO for fresh verification of fact and passing the order afresh.
We have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. We find that during assessment the assessee was ex-parte. The AO passed a very cryptic order in making huge addition of Rs. 1.36 Cr. The AO has not disclosed the source of information about purchase of property, the detail of Saler and purchase, whether the property was purchased in the name of the individual or in joint name. We find that before Ld. CIT(A), the assessee explained the fact that non-appearance due to change of her address. Before, Ld. CIT(A), the assessee filed additional evidence to substantiate the source of purchases of flat. The assessee also disclosed the fact that property (flat) was purchased in the joint name. The assessee furnished the bank details, and details of loan availed from HDFC bank. The AO instead of verifying such additional evidence objected about admissibility of such additional evidence. In our view, when assessment completed ex-parte and the assessee sufficiently explained the reason of non-appearance before AO, such objection of AO about allowing opportunity to assessee is not tenable. Moreover, once the ld CIT(A) accepted the additional evidence for his consideration and directed the AO to furnish his remand report, the AO was under obligation to examine and Mrs. Roma Prakash Chhugani verify such evidence instead of objecting on technicality, due to peculiar facts of the present case, as the assessee has no occasion to avail the opportunity as claimed by AO. In our view the evidence furnished by assessee is crucial to substantiate the source of investment. The evidence furnished by the assessee consist of registered agreement in the name of assessee and her son and various bank statements, either in the joint bank account of assessee, in the name of her husband and in the name of her son. The assessee also filed copy of Income Tax Return (ITR) of her son and husband. Considering the relevancy of evidence we have considered such evidences.
We find that assessee has claimed payment of Rs. 20,27,300/- from the joint bank account of assessee and her husband, out of which Rs. 13,60,800/- was paid on 17.11.2009 and Rs. 6,66,500/- was paid on 27.11.2010, copy of such bank statement available at page 141 and 193 of paper book. Similarly, the assessee claimed Rs. 21,60,527/- from the bank account of her son. Copy of such bank statement is available from page 197 and 198 of paper book. Similarly, Rs. 37,61,175/- was claimed from the bank statement of her husband, details of which is available at page 201 and 202 of paper book. The assessee also claimed loan from HDFC of Rs. 63,94,498/-, details of which is available at on record. Thus, the assessee has substantiated the sources of investment of Rs. 1.43 Cr for purchase of flat under joint ownership with her son. We find that the AO proceeded on the information of escapement of income/investment of Rs. 1.36 Cr. However, the assessee has substantiated source of investment of Rs. 1.43 Cr.
Mrs. Roma Prakash Chhugani 10. We have also find that assessee has also place on record the copy of registered agreement, which is in the name of Housing Development and Infrastructure Ltd. (HDIL) as a developer and assessee and her son (Roma Chhugani and Gautam Chhugani) as a purchaser of B-2604, HDIL Metropolis Residency, J.P. Road, Four Bungalows, Azad Nagar, Andheri (West), Mumbai. The assessee has also place on record various receipt issued by builder against payment of various instalment made from time to time. We also find that husband of assessee in A.Y. 2009-10 while filing return of income has offered Rs. 27,40,592/- as taxable income. The son of assessee in A.Y. 2011-12 has shown taxable income of Rs. 89,37,576/-. Thus, in our view the assessee has substantiated the source of investment and the capacity of investor. Hence, we accept the plea of assessee about investment with her son in B-2604, HDIL Metropolis Residency, J.P. Road, Four Bungalows, Azad Nagar, Andheri (West), Mumbai. In the result, the grounds of appeal raised by the assessee are allowed.
11. In the result, the appeal of the assessee is allowed. Order pronounced in open court on 27.06.2025.