OM PRAKASH GIRGAONKAR,BIJAPUR vs. INCOME TAX OFFICER, WARD 1 & TPS, BIJAPUR, BIJAPUR

The assessee, after issuing several notices, was issued a show cause notice on 9.8.2023 which was replied on 18.8.2023 seeking adjournment only. No supporting evidences were filed. However, subsequently it was stated that assessee has purchased immovable property in the form of residential flat at Pune for Rs.145,09,600. The source of the investment is that partnership firm in which assessee is a partner has declared income of Rs.966,11,300 under IDS Scheme, 2016 on 30.9.2016. Therefore, source of purchase of flat is out of IDS Declaration of Rs.1,14,07,153 as share of the assessee from that partnership firm and balance sum of Rs.37,50,000 is paid from the bank account of Arun Girgaonkar, son of the assessee from IDBI Bank SB A/c No.170. TDS is also made on purchase of this property.

Based on this information, the AO further issued a show cause notice on 15.9.2023 which was not at all replied to. Subsequently on 30.10.2023 the assessee submitted copy of the purchase deed along with submissions. It was the claim of the assessee that assessee has purchased only 1 Flat at Pune and therefore the proposed addition on account of TDS made for purchase of property u/s. 194IA and also once again on account of purchase of property is improper. With respect to the amount deposited in the bank account, assessee has furnished the bank statement with ICICI Bank and Corporation Bank. From the above, the AO noted that assessee has deposited cash of Rs.117,29,000 in ICICI Bank A/c of Rs.13,05,000 in Corporation Bank for which no documentary evidences are provided.

Based on this, the order u/s. 144 of the Act was passed wherein the AO made an addition of Rs.130,34,000 being amount deposited in the Bank account a/c and also made an addition of Rs.265,59,308 on account of TDS statement for payment in consideration for purchase of immovable property and also purchased immovable property of Rs.145,09,600. Accordingly assessment order was passed at a total income of Rs.399,49,308 u/s. 147 r.w.s. 144B of the Act on 29.1.2024.

The assessee aggrieved with the assessment order preferred appeal before the CIT(Appeals) on 28.2.2024. The ld. CIT(A) issued 5 notices to the assessee at the email address mentioned in Form 35. However,

The assessee aggrieved with the appellate order is in appeal.

The ld. AR submitted that the assessee could not respond to the notices as in Form 35 email id was mentioned of Mr. Arun, son of assessee, but could not locate the emails received from the CIT(A) and therefore assessee did not receive any opportunity of hearing before the ld. CIT(A). The ld. AR submitted that given an opportunity of hearing before the ld. CIT(A), the assessee would ensure that he may be heard. Further it was stated that the blatant error made by the ld. AO is that for one transaction he has made two additions in the hands of assessee. He submitted that assessee has deducted tax on the purchase of property wherein the amount stated to be Rs.124,05,708 and same transaction for purchase of property through Sub-Registrar reported at RS.145,09,600 was also added. He therefore submitted that addition of Rs.269,15,300 is double addition on account of single transaction. With respect to the deposit in the bank account, he submitted that there is no unaccounted money deposited by the assessee in any of the bank account,. Source of which is explained as IDS disclosure of partnership firm where assessee is a partner. He submitted that given an opportunity, assessee would be able to explain the same before the lower authorities.

The ld. DR vehemently submitted that assessee has been granted 5 opportunities by the ld. CIT(A) and further several show cause notices by the AO, but the assessee has not availed any of the opportunity. Therefore, the orders of the ld. lower authorities cannot be interfered.

We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. It is the claim of the assessee that he has purchased one property. Assessee has deducted tax at source on purchase consideration u/s. 194IA of the Act. Therefore, there is only one transaction of purchase of immovable property reported in TDS return as well as the Sub Registrar’s return. The same transaction is also reported by the return filed by the Sub-Registrar for the reason that the property purchased is more than Rs.30 lakhs. Therefore, assessee claims that he has purchased only one property. The ld. AO has made addition on both the amounts reported in these two different returns concerning purchase of one property. Therefore the claim of the assessee is that there is a double addition.

The assessee also submitted that the amount deposited in the bank account is not unaccounted income of the assessee. The source of the transaction is the amount declared by a partnership firm under IDS, 2016 wherefrom the partners are allotted money. The same is source of cash deposit in the bank account as well as from the bank account the funds for purchase of the property were used.

It is also true that assessee was given many opportunities before the ld. AO as well as the ld. CIT(A). However, the assessee failed to respond to the many of such opportunities. Failure on the part of assessee for default, despite service of proper notices has resulted into substantial addition in the hands of assessee. Had the assessee availed of the opportunities, perhaps the assessment order and the appellate order would not have been passed without assessee being heard. There is no default on the part of the Assessing Officer as well as the ld. CIT(A), but it is the fault of the assessee who did not avail the opportunities granted to him. It is also true that if the contention of the assessee is accepted, perhaps atleast the double addition on purchase of property would not survive, but the same is a matter of examination.

In view of the above facts and failure on the part of the assessee in availing of the opportunities granted, we restore the whole matter back to the file of the ld. AO with a direction to the assessee to deposit a sum of Rs.2,000/- [Rupees Two Thousand Only] to the Prime Minister’s National Relief Fund within 90 days from the date of this order as costs and thereafter the assessee is required to submit details before the jurisdictional AO who has passed the order u/s. 144 of the Act. The ld. AO may examine the detail, grant opportunity of hearing to the assessee and then decide the issue on merits of the case.

Accordingly ground Nos.1 & 3 of the appeal are allowed with the above directions and other grounds on merits of the addition are restored back to the file of the ld. AO.

Accordingly appeal of the assessee is partly allowed for statistical purposes.