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Income Tax Appellate Tribunal, [ DELHI BENCH “E”: NEW DELHI ]
Before: SHRI AMIT SHUKLA & DR. B.R.R. KUMAR
O R D E R PER AMIT SHUKLA, J. M.: The aforesaid appeal has been filed by the assessee against the order dated 2.03.2016 passed by the ld. Commissioner of Income Tax (Appeals), Faridabad (hereinafter referred to [CIT(Appeals)] for the quantum of assessment under Section 147/143(3) of the Income Tax Act, 1961 (the Act) for the assessment year 2008-09.
2 2. Facts in brief are that the assessee is an Individual in whose case information was received by the investigation by the ADIT (Inv.), Faridabad, that he has purchased a property at H. No. 864, Sector–14, Faridabad, admeasuring 350 sq. yds. on 18.09.2007 for total consideration of Rs.1,02,00,000/-, which was paid in cash and Stamp Duty at Rs.8,16,000/- was also paid in cash. Accordingly, proceedings under Section 147 of the Act were initiated after by the AO after recording the following reasons as incorporated in the assessment order:-
“During the course of investigation by the ADIT (Inv.), Faridabad in the case of Shri Nihal Singh S/o Shri Ishwar Singh, H.No. 856 Sec. 15-A, Faridabad it was detected that the assessee has made following investments:-
1. 1. Cash payment of Rs.1,02,00,000/- plus stamp duty of Rs.8,16,000/- for purchase of H.No. 846, Sec.14, Faridabad measuring 350 Sq. yards in the name of Shri Pankaj Singh S/o Sh. Nihal Singh on 18.09.2007.
2. During the course of enquiry conducted by the ADIT(Inv.), Faridabad, the assessee could not explain the source of investment as he did not attend the proceedings. Therefore, the source of investment of Rs.1,02,00,000/- plus stamp duty of Rs.8,16,000/- remained unexplained.
3. In view of the above facts, I have reason to believe that the income chargeable to tax to the extent Rs.1,02,00,000/- plus stamp duty of Rs.8,16,000/- has escaped assessment within the meaning of section 147 of the I.T. Act, 1961.
Issue notice u/s 148 of the Income Tax Act, 1961. “ 3 3. The ld. Assessing Officer on perusal of the the Sale Deed dated 18.09.2007 found that the entire sale consideration and Stamp Duty was paid in cash. Accordingly notice under Section 148 of the Act was issued to the assessee on 20.03.2013 requiring the assessee to file Income Tax Return within 30 days from the service of the notice, which was sent through Speed Post. The assessee’s representative raised the objection that, firstly, notice was not served on the assessee; and secondly, it was stated that proceedings have been initiated for making oral enquiries. The objections raised by the assessee are as under:- “ To The Income Tax Officer, Ward : 1 (4) Faridabad. Sir Sub: Notice u/s 148 in the case of Pankaj Singh – A.Y. 2008-09. It may be stated at that the above mentioned notice was not served personally on the assessee nor on a person authorised as he in prison for the last more than, one year. Theservice of notice issued is void &proceedings initiated deserve to be dropped.
It may however be stated that the proceedings initiated are only for making roving inquiries. The same cannot take place of satisfaction to be recorded for reopening an assessment, therefore the reopening is invalid & deserve to be dropped.
However, in respect of investment made in property at sector 14, it may be stated that the documents relating to the investment made are not readily available & efforts are being made to trace the same. As soon as the same are available, reply shall be filed. Yours truly, Sd/- (Omwati) Mother of the assessee. “ 4 4. The ld. Assessing Officer rejected the assessee’s objection holding that notice has been received by the family members of the assessee and the letter was signed by the mother of the assessee. Therefore, objection of the assessee is not acceptable. Apart from that notice has been duly responded by the authorized representative, Shri Rajiv Sharma, who has asked for the copy of the reasons. In so far as on the other point of objection, the observations of the Assessing Officer read as under:- “5. The other plea taken by the assessee is that proceedings initiated are roving inquiries. This plea of the assessee is also factually incorrect. The information in the possession of the department is with evidence in the form of sale-deed, executed on 18.09.2007, between seller Shri Sandeep Garg and buyer Shri Pankaj Singh S/o Shri Nihal Singh, Resident of H. No. 856, Sector - 15A, Faridabad. Hence, both the pleas taken by the assessee through her mother are factually incorrect. The only reason for non- compliance of statutory notices issued by the department is that the assessee has no explanation to offer regarding cash payments of Rs. 1,02,00,000/- towards cost of property and Rs.8,16,000/- as stamp duty and the plea raised is a ploy to subvert the process of law.
6. The assessee was given enough opportunities to submit the Income Tax return and evidence regarding source of investment, and the same was not availed by him. The assessee also did not voluntarily file the Income Tax Return for the assessment year 2008- 09 as in evident from the acceptance of the counsel for the assessee on asked vide order sheet entry dated 28.01.2014. Therefore, there is no option left but to treat the whole of transactions which include cash payments of Rs. 1,02,00,000/- and stamp duty charges of 5 Rs.8,16,000/- as unexplained, being invested from undisclosed sources. Since, the assessee deliberately concealed the particulars of income, penalty proceedings u/s 271(l)(c) for concealment of income are being initiated separately, and net income of the assessee is as under. “
Before us the ld. Senior Counsel submitted that the Assessing Officer has not passed a separate order disposing of the objections which is in violation of the Hon’ble Supreme Court judgement in the case of GKN Driveshafts (India) Ltd, 259 ITR 19. Thus, the entire proceedings were void ab initio. On merits, He submitted that before the ld. CIT (Appeals) the assessee had stated that the property does not belonging to the assessee, but to his father, Shri Nihal Singh and all the funds and the sources for purchase of property have come through him, which was categorically stated before Ld. CIT(A) in the form of an affidavit of assessee’s father, Shri Nihal Singh, wherein he has categorically stated that he has sold various properties and he has sufficient funds available with him for making the investment for the purchase of the property at Rs.1,02,00,000/- and the assessee Shri Pankaj Singh held the property on his behalf. Therefore, it was erroneous on the part of the ld. CIT (Appeals) to treat the source of funds of assessee’s father as undisclosed funds of assessee.
On the other hand, the ld. DR strongly relied upon the order of the Assessing Officer and CIT (Appeals) and submitted that, first of all notice u/s 148 was sent through Registered Post AD in the name of the assessee at the correct address and was served upon the same address and has been duly responded by the family members of the assessee. Thus, it was a valid service notice. Regarding objection of the 6 ld. Senior Counsel he submitted that the Assessing Officer has duly considered the objections of the assessee and has disposed of in the assessment order itself. In fact none of the objections of the assessee are otherwise maintainable under the law, because there was categorical information that assessee had paid huge amount in cash for purchase of property. Not only that, it was also found from the registered sale deed that the assessee had purchased the house on payment of cash for which no source of income was explained and more so, when the assessee has not been filing any return of income. On merits, he submitted that it is an un-disputed fact that the property is registered in the name of Shri Pankaj Singh, the assessee and the same has been bought in cash and at any point of time the assessee has not filed any return of income to show or prove that there was any source of income. Thus, the order of the ld. CIT (Appeals) should be confirmed.
We have heard the rival submissions and perused the material placed on record. On the perusal of the record, we find that notice has been served through Registered Post AD on the address mentioned and the same has been served on the same address. Thus, there is presumption under the law that the notice has been served in accordance with law. Moreover, the family members of the assessee had duly corresponded to the said notice. In so far as the contention that the objections has not been disposed of separately, we find that, first of all, there is not substance in the objection of the assessee and it is not a case of any roving inquiry because it is an admitted fact that the assessee had purchased the land and building at Rs.1,02,00,000/- and Stamp Duty of more than Rs.8,00,000/- in cash and he has not been filing any return of income. Such reason to believe is sufficient to 7 clothe the AO with the jurisdiction u/s 147/148. The Assessing Officer has dealt with such objection in his assessment order. Therefore, on the facts of the case, the requirement of law stands discharged.
Now coming to the merits of the case, it is seen that, though assessee could not furnish any details and documents before the assessment proceedings for the reason that assessee was in prison, however, before the CIT (Appeals) the assessee brought on record that the source of investment for purchase of property was from his father, Shri Nihal Singh. It has been stated before the CIT (Appeals) that Shri Nihal Singh was in the business of sale and purchase of real estate and he has sold properties to various persons, the details of which has been given at page No. 11 of the Paper book. In his sworn affidavit also he has categorically stated that he had purchased a property H. No. 864, Sector–14, Faridabad, for a consideration of Rs.1,02,00,000/-, and Stamp Duty of 8 lakhs and sale was executed on 19.02.2007 in the name of his son, Shri Pankaj Singh. He also affirmed that he had sufficient funds available with him for making the payment and he is actually owner of the property. Once these facts have been brought on record before the CIT (Appeals), then at least the ld. CIT (Appeals) should have examined the sources of funds and the claim of the assessee’s father, Shri Nihal Singh, who has owned the sources of investment in the purchase of the property, even though the property may have been registered in the name of his son, Shri Pankaj Singh. Here in this case, it is also a fact that both Shri Nihal Singh and Shri Pankaj Singh were in prison and could not submit the details of funds available with Shri Nihal Singh during the course of assessment proceedings. Looking to these facts and circumstances that the assessee was not in a position to clarify the availability of funds which 8 have been stated to be from his father and since there is an affidavit of his father, Shri Nihal Singh, therefore, we find that in the interest of justice, the matter should be restored back to the file of the Assessing Officer to examine the sources of fund of Shri Nihal Singh, father of the assessee, who has claimed to have made the payment in cash for purchase of the property from his known sources for which he has given certain details. The assessee is also directed to furnish the details of the sources where from his father, Shri Nihal Singh or by the assessee and the same should be substantiated before the Assessing Officer. Accordingly, the matter is restored back to the file of the Assessing Officer to pass orders afresh, in accordance with law, after giving due opportunity to the assessee.
In the result, the appeal of the assessee is allowed, for statistical purposes.
Order pronounced in the open court on : 31/01/2022.