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Facts
The assessee's appeal for AY 2013-14 challenged the CIT(A)'s order sustaining an addition of Rs. 29,37,700/- as unexplained investment under Section 69A, arising from a reopened assessment under Section 147/148. The reopening was based on information about the purchase of immovable property by the assessee, who had not filed an income tax return for the relevant year and failed to explain the source of investment during assessment.
Held
The Tribunal upheld the validity of the assessment reopening, noting that the assessee had not filed a return of income. However, regarding the addition under Section 69A, the Tribunal acknowledged the assessee's application to admit additional evidence (confirmation and identity proof of loan creditors) and, with the DR's consent, remanded the matter to the Assessing Officer for verification of this new evidence and a fresh decision after providing the assessee an opportunity of hearing.
Key Issues
Whether the reopening of assessment under Sections 147 and 148 was valid given the non-filing of income return, and whether the addition under Section 69A for unexplained investment was justified, considering the assessee's new additional evidence.
Sections Cited
147, 148, 69A, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ SM-A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
(िनधा�रण वष�/Assessment Year: 2013-14) Shri Venkata Reddy Aavula Vs. Income Tax Officer PRAKASAM Distt Ward – 1 PAN:AUPPA0619Q ONGOLE (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: C.A Akshay Surana राज� व �ारा/Revenue by:: Shri Mookambikeyan, S, DR सुनवाई की तारीख/Date of hearing: 16/06/2025 घोषणा की तारीख/Pronouncement: 19/06/2025 आदेश/ORDER
Per Vijay Pal Rao, Vice President
This appeal filed by the assessee is directed against the order dated 15/10/2024 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2013-014.
The assessee has raised the following grounds of appeal:
3. Ground Nos. 2, 8 and 9 are regarding validity of the reopening of the assessment on the based on the information for the transactions of purchase and sale of immovable propertuies to the tune of Rs.1 crore. The learned AR has referred to the reasons recorded by the Assessing Officer placed at page No.43 of the paper book and submitted that the Assessing Officer has reopened the assessment without application of mind and merely reproduced the information received from the Income Tax Officer (Inv.) Visakhapatnam about the alleged purchase and sale of immovable property. Therefore, there is no reason to believe that the income assessable to tax to the tune of Rs.1 crore has escaped the assessment. Further, the Assessing Officer has not recorded the reasons by examining the relevant record independently, but it is a case of reopening of the assessment based on borrowed satisfaction. He has further submitted that during the year under consideration, there is only one transaction of purchase of immovable property to the tune of Rs.31,11,500/- and therefore, the reasons recorded by the Assessing Officer are not based on the correct facts. In support of his contention he has relied upon the following judgments:
Page 3 of 8 i) Hon'ble Supreme Court of India in the case of Manzil Dinesh Kumar Shah (101 Taxmann.com 259) ii) Hon'ble High Court of Bombay in the case of Chandni J .Ahuja (160 Taxmann.com 404) iii) Hon'ble High Court of Jharkhand in the case of Maheshwari Devi (146 Taxmann.com 550) iv) ITAT Agra Bench in the case of Premwati Suman (ITA No.393/Agra/2018) v) ITAT Delhi in the case of JHM Developers Pvt Ltd (ITA No.1470/Del/2024) 4. Thus, he contended that the Assessing Officer was not having a reson to believe that the income assessable to tax has escaped assessment, but he has only suspected that the income assessable to tax has escaped the assessment. As per the reasons recorded by the Assessing Officer, it it stated that the source for transaction in purchase and sale of various immovable properties during the year need further verification and therefore, the Assessing Officer was not sure about the income assessable to tax has escaped the assessment but wanted to verify the fact whether the income assessable to tax has escaped the assessment or not. He has referred to the judgment of the Hon'ble High Court of Jharkhand in the case of Pr. CIT vs. Maheshwari Devi (Supra) and submitted that the Hon'ble High Court has held that there is a difference between the reasons to believe and reason to suspect and reopening is permitted only when the Assessing Officer has reason to believe and not reason to suspect. He has also relied upon the decision of the Coordinate Bench of the Tribunal in the case of Shri Krishna Murthy Ella v. Dy. CIT in dated 14/08/2024.
On the other hand, the learned DR has submitted that it is a case of non-filer of return of income, as the assessee has not filed any return of income for the year under consideration. Therefore, at the time of reopening of the assessment, the Assessing Officer is not required to establish the correctness of the reasons recorded but what is required prima facie, the Assessing Officer has the reason to believe that the income assessable to tax has escaped the assessment. Thus, when there was no return of income filed by the assessee and the Assessing Officer has received information about the purchase and sale of immovable property by the assessee, then the reopening of the assessment based on the transaction of purchase and sale of the immovable property by the assessee is valid. He has further contended that the assessee has neither participated during the assessement proceedings, nor during the appellate proceedings before the learned CIT (A) and therefore, the assessee has failed to produce any record to explain the source of the investment made for purchase of immovable property.
We have considered the rival contentions as well as the relevant material available on record. There is no dispute that the assessee has not filed any return of income for the year under consideration. The assessment was reopened by the Assessing Officer by issuance of notice u/s 148 of the I.T. Act, 1961 on 31/03/2021 based on the information about the transaction of purchase and sale of immovable property. It is also a matter of fact that during the year under consideration, the assessee has Page 5 of 8 purchased an immovable property to the tune of Rs.31,11,500/-. Therefore, in the absence of any return of income or otherwise declaration of this transaction by the assessee, there is a tangible material to form the belief that the income assessable to tax to the extent of investment of Rs.31,11,500/- in purchase of immovable property has escaped the assessment. Moreover, in the course of assessement proceedings, if the assessee is able to explain the source of investment, then no addition was required to be made. Hence in the peculiar facts and circumstances of the case, we do not find any merits in the grounds challenging the validity of the reopening of the assessment. The decisions relied upon by the assessee cannot apply to the facts of the assessee’s case when the assessee has not filed any return of income and also not produced any supporting evidence to explain the source of the said investment.
Ground Nos. 2 to 7 are regarding the merits of the additions made by the Assessing Officer. The assessee has filed an application for admission of the additional evidence to explain the source of the investment. The additional evidence is consists of various information regarding the funds arranged by the assessee from the persons. The learned AR of the assessee has submitted that the additional evidence filed by the assessee may be admitted and the matter may be remanded to the record of the Assessing Officer for verification of the same and then decide the issue after giving an opportunity of hearing to the assessee.
On the other hand, the learned DR has raised no serious objection, if the matter is remanded to the record of the Assessing Officer for verification and examination of the additional evidence filed by the assessee at this stage. The learned DR has submitted that the assessee has failed to produce any supporting details or evidence either before the Assessing Officer or before the learned CIT (A) to explain the source of the investment made for purchase of the immovable property in question. Thus, the additional evidence filed by the assessee required a proper verification.
Having considered the rival submissions and careful perusal of the orders of the authorities below, at the outset we note that the Assessing Officer has made the addition of Rs.29,37,700/- as unexplained investment when the assessee failed to furnish the creditworthiness of the persons from whom the assessee claimed to have borrowed the amounts as well as the genuineness of the transactions. The learned CIT (A) has confirmed the addition made by the Assessing Officer after considering the remand report of the Assessing Officer on the point that most of the Bank Accounts of the creditors were having the cash deposits prior to the payment made to the assessee. Now the assessee has filed additional evidence in the shape of confirmation as well as the identity proof of the loan creditors which needs to be examined and verified at the level of the Assessing Officer. Accordingly, in the facts and circumstances of the case and in the interest of the justice, we set aside the matter
Page 7 of 8 to the record of the Assessing Officer for proper verification and examination of the additional evidence filed by the assessee and then decide the issue as per law after giving an opportunity of hearing to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.