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Facts
The assessee's appeal for AY 2014-15 arises against an assessment order that included an addition under Section 69 of the Income Tax Act, pursuant to directions from the Dispute Resolution Panel. The assessee contended that the investment was made from salary income earned outside India, which is not taxable, and that the payment was from an NRE account. The Tribunal considered the documentation provided, including Form 26AS, and the previous year's assessment accepting similar payments.
Held
The Tribunal held that the assessee's payments were largely explained and could be reconciled with documentation, including Form 26AS, and that the total payments exceeded the amount of the addition. Therefore, the addition under Section 69 was deleted.
Key Issues
Whether the addition made under Section 69 for unexplained investment is justified when the source of funds is from salary income earned outside India and payments are substantiated.
Sections Cited
147, 144C(13), 69, 148, 149, 271(1)(c), 271F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman
Asstt. Year: 2014-15 Deep Kothari, Vs ACIT, D-215, NPL Colony, International Taxation, Rajinder Nagar, Circle –2(1)(2), New Delhi-110060 New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AUPPK1183R Assessee by : Sh. Rachesh Sinha, Adv. Revenue by : Ms. Rini Handa, Sr. DR Date of Hearing: 10.03.2025 Date of Pronouncement: 21.03.2025 ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2014-15 arises against the ACIT, Circle International Tax-2(1)(2), Delhi, assessment order dated 13.03.2024 framed in consequence to the Dispute Resolution Panel (“DRP”)-1, New Delhi directions dated 26.02.2024, in proceedings u/s 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
The assessee pleads the following substantive grounds in the instant appeal:
Deep Kothari “1. That on facts and circumstances of the case and in law the impugned order dated 13.03.2024 passed under section 147 read with section 144C(13) of the of the Income-tax Act, 1961 (‘the Act’) by the Assistant Commissioner of Income Tax, Circle International Tax 2(1)(2) [‘AO’] in pursuance of the directions issued by the Dispute Resolution Panel [‘DRP’] making addition under section 69 of the Act is without jurisdiction and bad in law. Re: Reopening of the assessment 2. That on facts and circumstances of the case the reassessment proceedings initiated under section 147/144C of the Act for AY 2014-2015 is without jurisdiction as the notice under section 148 dated 05.04.2021 is time barred in terms of the provisions of section 149 of the Act. 2.1 That on the facts and circumstances of the case, the AO has erred both on facts and in law in reopening the assessment without complying with the statutory conditions prescribed under section 147 r.w.s 148 of the Act. 2.2 That on the facts and circumstances of the case, the AO has erred both on facts and in law that there cannot be any information and/or suggestion in respect of escapement of income of the assessee, which is a sine-qua non for taking an action under Section 148 of the Act. 2.3 That on the facts and circumstances of the case, the AO has erred, both on facts and in law in continuing with the reassessment proceedings initiated under section 148 since the reasons recorded are ambiguous and vague to form a reasonable belief that the income has escaped assessment. 2.4 That on the facts and circumstances of the case, the AO has erred, both on facts and in law in continuing with the reassessment proceedings initiated under section 148 as there is no live nexus between the reasons recorded and the belief formed by the AO. 2.5 That on the facts and circumstances of the case, the AO has erred, both on facts and in law in not appreciating that the reasons recorded for reopening the assessment were just to make roving enquiries, since no independent enquiry was conducted by the AO before issuing notice under section 148 of the Act.
Deep Kothari Re: Addition on merits 3. That on the facts and circumstances of the case the AO erred in applying section 69 of the Act, as unexplained investment in pursuance of the directions of Dispute Resolution Panel despite the undisputed fact that the source of investment in India is from salary income earned and accrued outside India which is not taxable in India.
That on the facts and circumstances of the case, the AO and the DRP erred in not appreciating that the payment of Rs. 98,96,137/- to Jawala Real Estate Pvt. Ltd. is towards the advance for purchase of property made from the NRE Bank account.
5. That on the facts and circumstances of the case, the AO and the DRP erred in not appreciating that the payment of Rs. 98,96,137 to Jawala Real Estate Pvt. Ltd. is part of the total payment of Rs.1,34,36,245/- made during the AY 2014-15.
6. That on the facts and circumstances of the case, the AO and the DRP erred in holding that the payment of Rs. 98,96,137/- remained unsubstantiated despite the adequate documents/ additional evidence furnished by the appellant and the AO observing, in the remand report, that all payments made by the appellant during the relevant assessment year were verified and stood explained.
7. That on the facts and circumstances of the case, the AO and the DRP erred in not appreciating that the payment of Rs. 98,96,137/- to Jawala Real Estate Pvt. Ltd. is apparently reconcilable from Form 26AS, which forms part of the record before AO and DRP.
8. That on the facts and circumstances of the case, the AO and the DRP erred in holding that no rejoinder was filed by the appellant in response to the remand report filed by the AO.
9. That on the facts and circumstances of the case, the AO and the DRP erred in initiating penalty proceedings under section 271(1)(c) and section 271F of the Act.”
Deep Kothari 4. Learned counsel very fairly submits that the assessee does not wish to press for his foregoing legal ground challenging validity of the reopening. Rejected in very terms.
Next comes the sole substantive ground between the parties on merits wherein the learned lower authorities have held that the assessee to have made an unexplained investment amount of Rs.98,97,587/-, in the course of assessment framed on 13.03.2024 and upheld in the lower appellate discussion.
Suffice to say, there is hardly any dispute between the parties as per the learned Assessing Officer’s detailed discussion in para 11 page 9 thereof that he had initially proposed total unexplained investment sum addition amounting to Rs.5,24,44,060/-. His assessment however had added the impugned sum of Rs.98,97,587/- only on the ground that the same could not be substantiated at the assessee’s behest.
It is in this factual backdrop that the learned counsel representing assessee has taken us the assessee’s voluminous paper book running into 289 pages. His first and foremost submission in light thereof is that the assessee had not only made all of his payments through the NRE account maintained as a non-resident Indian but also the very investment stood Deep Kothari duly accepted in the Assessing Officer’s section 147 assessment framed on 08.01.2024 for succeeding assessment year 2016-17 (pages 288 to 289) totaling to Rs.5,61,45,494/-, for purchase the house property(ies) in question. This is indeed coupled with the fact that the assessee has further referred to his Form 26AS “traces” statement at pages 234 to 237 wherein he had deducted TDS of Rs.98,96,112/- and deposited the same, qua the corresponding payments made of Rs.1,34,36,245/-, made to the relater herein. We are of the considered view that given the fact that the assessee’s above payments happens to be much more than the addition amount, the former would indeed include the latter sum as well which has nowhere been disputed. We accordingly delete the impugned section 69 addition of Rs.98,96,137/- in very terms. Necessary computation shall follow as per law.
No other grounds or argument has been pressed before us.
This assessee’s appeal is partly allowed. Order Pronounced in the Open Court on 21/03/2025.