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Facts
The Revenue appealed against the CIT(A)'s order deleting an addition made for unexplained investment in a property. The assessee, a housewife, did not file an income tax return. The AO reopened the assessment under Section 147/148 and added the entire consideration for the property purchase as unexplained investment.
Held
The Tribunal found merit in the Revenue's contention that the CIT(A) had allowed the appeal based on additional evidence without providing the AO an opportunity to examine it as per Rule 46A(3). Therefore, the Tribunal remitted the issue back to the AO for proper examination of the evidence.
Key Issues
Whether the CIT(A) erred in admitting and deciding on additional evidence without allowing the AO to examine it, violating Rule 46A(3).
Sections Cited
147, 148, 144, 69, 46A(3)
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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI ANIKESH BANERJEE, JM &
(Assessment Year: 2018-19) Income Tax Officer, Hemlata Sunil Phopalkar Room No. 23, 6th Floor, New Hanuman Mandir Chawl, Ashar IT Park, Vs. Siddhart Nagar, Kopri Colony, Thane –West-400604. Thane-East-400603. PAN : BVKPP1953R Appellant) : Respondent) Appellant /Assessee by : Smt. Hemlata Sunil Phopalkar, AR Revenue / Respondent by : Shri Hemanshu Joshi, Sr. DR : 02.01.2025 Date of Hearing : 07.01.2025 Date of Pronouncement O R D E R
Per Padmavathy S, AM:
This appeal by the Revenue is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi (in short "the CIT(A)" dated 09.08.2024 for Assessment Year (AY) 2018-19. The Revenue raised the following grounds of appeal – “a. The order of the Ld. CIT (A) is erroneous in law and on the facts of the case. b. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not allowing the A.O. to examine the additional evidence admitted by him as per the provisions u/s. 46A(3) of the I. T. Rules, 1962.
c. On the facts and in circumstances of the case, the Ld. CIT (A) erred in accepting the additional evidences which had not stood the test of enquiries in assessment proceedings. d. The appellant craves leave to add, alter, amend and modify any of the above grounds of appeal either before or at the time of hearing of the appeal, if considered necessary.”
The assessee is an individual and did not file the return of income for the AY 2018-19. The AO has received an information that the assessee has purchased an immovable property for a consideration of Rs. 1,16,00,000/- during the financial year 2017-18. Therefore, the AO issued a notice under section 148 of the Income Tax Act, 1961 (the Act) reopening the assessment of the assessee. Since the assessee did not respond to the notices issued by the AO and did not file the return of income, the AO proceeded to complete the assessment under section 147 r.w.s. 144 wherein he has added the entire consideration towards purchase of property under section 69 of the Act.
Aggrieved, the assessee filed further appeal before the CIT(A). The assessee submitted before the CITI(A) that she is the housewife not having any source of income and hence did not file the return of income. The assessee further submitted that she is not aware of the Income tax proceedings and the notices issued by the AO and hence, could not respond. The assessee also submitted that she is the second owner of the property and that the entire consideration towards purchase of the property was made out of income sources of assessee's husband Shri Sunil Phopalkar. It is also submitted before the CIT(A) that assessee's husband is assessed to income tax and is regularly filing the return of income. The assessee also filed the additional details in support of the claim that the funds for the purchase of the house property are sourced from assessee's husband. The CIT(A)
“5. I have carefully gone through the assessment order and the grounds of appeal submitted by the appellant. I have considered the statement of facts submitted by the appellant. As per facts of the case, the appellant being one of the co-owner purchased residential property from Savita Homemakers LLP for Rs.1,16,00,000/-. The appellant has submitted documents obtained from the Sub Registrar, Thane, loan sanction letter of M/s. Indiabulls, ICICI bank statement etc. After going through the documents submitted, it is understood that the property was purchased in the joint names of Sri Sunil Keshav Phopalkar (husband of the appellant) and Smt. Hemlata Sunil Phopalkar (appellant). The sources for the purchase are loan from M/s. Indiabulls Home Loans for an amount of Rs. 1,10,00,000/-. Further, Sri Sunil Keshav Phopalkar, paid an amount of Rs.24,76,740/- towards balance payment and for registration and stamp duty from his ICICI Bank and Union Bank of India bank accounts and furnished necessary bank statements and other supportings. Under the facts and circumstances, the impugned assessment assessing the investment of Rs.1.16 crores as the unexplained investment in the hands of the appellant is not in accordance with law and is liable to be deleted. Therefore, the addition made in the hands of the appellant amounting to Rs.1.16 crores is hereby deleted.”
The ld. DR submitted that the CIT(A) has allowed the appeal based on additional evidences filed by the assessee but did not call for any remand report from the AO in this regard. The ld. DR further submitted that the provisions under Rule 46A have been violated and therefore the relief given by the CIT(A) is not tenable.
We heard the parties and perused the material on record. The assessee before us furnished the copy of the loan granted by Indiabulls to the husband of the assessee to the tune of Rs. 1,10,00,000/- and the details of disbursement of the same. Further, the assessee also furnished the bank statements of the husband Hemlata Sunil Phopalkar wherein the payments made to the Builder Savita Homemakers LLP is reflected to the tune of Rs. 24,76,740/-. The assessee also furnished the copy of the property registration letter issued by the Sub-Registrar, Thane wherein it is mentioned that the property is registered in the name of the assessee and her husband and the name of the husband is mentioned as first owner of the property. From the perusal of these documentary evidences, it is evident that the property is purchased by the husband of the assessee Shri Sunil Phopalkar out of loan obtained from Indiabulls and out of his own source of income. It is also clear that the assessee's name has been included as a second owner and that the assessee has not paid any amount towards purchase of the property. Having held so from the perusal of the CIT(A) order, we see merit in the contention of the revenue that CIT(A) has given relief to the assessee based on evidence without allowing the AO to examine the additional evidence admitted by him as per the provisions u/s. 46A(3) of the Rules. Therefore we are remitting the issue back to the AO for the limited purpose of examining the documents as submitted by the assessee before the CIT(A) based on which the CIT(A) has granted relief to the assessee. The AO is further directed to keep in mind, the view expressed by us with regard to the impugned issue as elaborated herein above. It is ordered accordingly.
In result, appeal of the revenue is allowed for statistical purposes.