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Facts
The assessee purchased immovable properties and received bank interest but did not file a return of income. The AO issued notices, but the assessee's consultant failed to respond appropriately, leading to an ex-parte assessment order treating the entire property sale value as unexplained investment and bank interest as income from other sources. The CIT(A) upheld the AO's order.
Held
The Tribunal condoned the delay in filing the appeal due to sufficient cause. While acknowledging the assessee's failure to respond properly, the Tribunal noted that the sale deed indicated joint purchase with his mother, making the assessment of the entire receipt as the assessee's income incorrect.
Key Issues
Whether the lower authorities erred in treating the entire sale proceeds of property and bank interest as income of the assessee without proper consideration of documents and opportunity to be heard?
Sections Cited
148A, 148, 142(1), 144, 69, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 08/07/2024 in respect of the A.Y. 2016-17.
The brief facts of the case are that during the year, the assessee had effected purchase of immovable properties and also received interest from banks. Since no return of income was filed by the assessee, the case of the assessee was selected from the information flagged from the Insight Portal under the NMS category. Thereafter, the AO had issued a notice u/s. 148A(1)(b) of the Act. But the assessee had not responded to the said notice and therefore an order u/s. 148A(1)(d) of the Act was passed on 23/03/2023. Subsequently notice u/s. 148 was issued on 25/03/2023. The assessee had not filed their return of income by stating that the taxable income is less than Rs. 2,50,000/-. Again notices u/s. 142(1) were issued on 16/08/2023, 07/09/2023, 16/11/2023 and 20/12/2023.
The assessee filed its response to the notice dated 07/09/2023 and submitted the very same documents. The AO had finally issued a show cause notice u/s. 144 on 05/01/2024. The assessee submitted that out of the sale value of Rs. 1,50,00,000/-, he has paid only Rs. 75 Lakhs and the balance amount of Rs. 75 Lakhs was paid by his mother Smt. Sharada. In support of the said claim, the assessee had not submitted any documents and therefore the AO had not accepted the said claim and assessed the entire value as unexplained investments u/s. 69 of the Act. Insofar as the interest income received from the banks, the AO had treated the said income as income from other sources because the assessee had failed to file the return of income u/s. 139(1) of the Act and not offered the said amount for taxation and no explanation about the nature and source of income has been offered.
As against the said order, the assessee filed an appeal before the Ld.CIT(A). The assessee contended that the source for the investment made in the immovable property is from the funds received by way of sale of agricultural lands and therefore there is no escapement of any income in the hands of the assessee. The Ld.CIT(A) had issued five hearing notices on various dates but the assessee filed an adjournment petition to the notice dated 30/04/2024 and therefore the Ld CIT(A) decided the appeal ex-parte based on the documents available on record. The Ld.CIT(A) had considered the grounds raised by the assessee on merits also and arrived a conclusion that the order of the AO is correct.
As against the said order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.
6. The appeal was filed with a delay of 108 days and the assessee filed an application to condone the said delay. In the said application, the assessee submitted that the consultant who has filed the appeal had not informed the various dates of hearing to the assessee except filed an adjournment petition on 10/05/2024. Thereafter the assessee met his regular auditor for getting the update about his mother’s ITR filing and at that time only, the said auditor informed the assessee about the ex-parte order passed by the Ld.CIT(A). The consultant also expressed his inability to continue the work and thereafter the assessee through his auditor met an advocate for filing the second appeal before this Tribunal. Unfortunately, the advocate had also fell sick from the first week of December, 2024 and in fact he was hospitalised during the said period. Later on, the advocate’s wife also had some serious health problems and therefore the advocate could not attend the office and the appeal papers were finally made ready on 10/01/2025 and the appeal was filed on 16/01/2025.
We have considered the reasons stated by the assessee in support of the said delay and we are satisfied that the assessee is having sufficient cause for not filing the appeal in time and we therefore condone the delay in filing the appeal and proceeded to decide the appeal on merits.
At the time of hearing, the Ld.AR submitted that the assessee was not able to file the supporting documents before the AO and produced the supplementary sale agreement dated 08/11/2017 and the sale deed dated 24/12/2020 and prayed that an opportunity to appear before the AO and substantiate his case. The Ld.AR further submitted that the consultant who has received the notices from the AO as well as from the Ld.CIT(A) had not informed about the hearings and therefore prayed that one more opportunity may be granted to place all the documents before the AO.
The Ld.DR submitted that several notices were given by the AO as well as by the Ld.CIT(A) but the assessee had not responded to the said notices and therefore the orders of the authorities below are in order and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the assessment order as well as the appeal order and from the findings given by both the authorities, we came to know that the assessee had not responded properly and furnished the required documents. It is seen that the assessee had provided all the details to the consultant but unfortunately, the consultant had not uploaded the details before the authorities. We have also considered the sale deed from which it is evident that the assessee as well as his mother had purchased the property and therefore treating the entire receipts as income of the assessee is also not correct. Considering the above said facts and circumstances, we are inclined to grant an opportunity to the assessee to place all the materials before the AO and satisfy himself that the assessment requires reconsideration. We, therefore, set aside the order of the lower authorities and remit the issue to the file of the AO for making the assessment afresh after hearing the assessee as well as after considering the documents filed by the assessee in support of his claim.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 30th July, 2025.