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Facts
The assessee filed an appeal against the order of CIT(A) which confirmed an addition of Rs. 66.95 Lakhs for the purchase of immovable property, the source of which was unexplained. The assessment was reopened under Section 148 after the AO received information that the assessee purchased property and was a non-filer.
Held
The Tribunal restored the matter back to the AO, directing him to give the assessee an opportunity of hearing and to adjudicate the issue afresh. The Tribunal considered that the assessee had a valid reason for not participating earlier due to being a US citizen and NRI, and needing to procure documents from India.
Key Issues
Whether the assessee's failure to participate in assessment and appellate proceedings due to being an NRI and needing to obtain documents from India constitutes a sufficient cause for restoring the matter for fresh adjudication.
Sections Cited
250, 148, 69A, 271(1)(c), 234A, 234B, 234C, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 15.04.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2015-16.
2. The grounds of appeal raised by the assessee are as under:
“1. The order passed by lower authorities are invalid, bad in law and required to be quashed.
The reopening of assessment u/s 148 of the Act is bad in law and required to be quashed.
3. Ld. NFAC erred in law and on facts in confirming addition of Rs. 6695000/- u/s 69A of the Act.
Ld. NFAC ought to have passed order as per the provision of section 250(6) of the Act.
5. Appellant prays that appeal may be set aside to file of AO OR CIT (A) for adjudication on merits.
6. Initiation of penalty proceedings u/s 271(1)(c) of the Act is unjustified.
7. Charging of interest u/s 234A, 234B, 234C of the Act are unjustified.”
The solitary issue in the present appeal relates to addition made to the income of the assessee on account of investment made in a property purchased in the impugned year amounting to Rs.66.95 Lakhs, the source of which remained unexplained. The orders of the authorities below reveal that the case of the assessee was reopened by issuing notice u/s.148 of the Act on the information in the possession of the AO that the assessee had purchased an immovable property during the impugned year amounting to Rs.66.95 Lakhs and was a non-filer of return of Natvarlal Patel vs. ITO] A.Y. 2015-16 - 3 – income. Accordingly, the AO was of the belief that the income, to the extent of investment made in the impugned property by the assessee, had escaped assessment and therefore re-assessment proceedings were initiated on the assessee. The assessment order subsequently was passed ex parte in the absence of any cooperation from the assessee during assessment proceedings, notices being issued to him remaining completely uncomplied with. The order of AO reveals that in response to one notice, the assessee, vide his reply dated 27.10.2023, submitted that he was a Non-resident and was unaware of the notices being issued to him. He got information from his Tax Consultant about the issuance of notices and he further informed the AO that he had purchased property during the impugned year on which TDS had been deducted. That he needed time to compile and collect all documents to prove the genuineness of the transaction. However, since, the subsequent notices issued also remained uncomplied with, the AO passed the order making an ex parte assessment adding the entire amount of investment made by the assessee in immovable property amounting to Rs.66.95 Lakhs u/s.69A of the Act to the income of the assessee.
4. The assessee carried the matter in appeal before the Ld. CIT(A) though with a delay of 312 days. The assessee sought condonation of the delay submitting that he had permanently shifted to Florida, USA in 2001 and he was running a convenience store at a gas station. That he had become an American citizen in Natvarlal Patel vs. ITO] A.Y. 2015-16 - 4 – 2009 and as per the Indian Taxation Laws, he was an NRI since then. That currently also he was settled in USA. That he was unaware of the notices issued to him of the assessment proceedings and only when he was informed by his Consultant of the same, that he requested the AO seeking time to file reply since he was not in possession of his old bank statement for the impugned year or of the purchase deeds as they were in India and he could access them only by personally visiting India. That before he could collect these documents, the AO passed the order of which he got information from his Consultant, but, was unable to file an appeal against the same, since, he was a alone responsible for running his convenience store and could not manage to leave it immediately. As and when he managed to come to India in January 2024, he prepared the necessary documents for filing the appeal before the Ld. CIT(A).
The Ld. CIT(A), however, dismissed the appeal noting that the assessee did not participate in the appellate proceedings despite three notices being issued to it.
Before us, Ld. Counsel for the assessee contended that the assessee had good case in his favour since the documents relating to the impugned transaction of purchase of property itself revealed that the entire amount was paid in the preceding year by the assessee and not in the impugned year. He contended that the assessee was in possession of copy of bank statements and he Natvarlal Patel vs. ITO] A.Y. 2015-16 - 5 – pleaded that if given an opportunity, he was ready to cooperate with the Revenue authorities and bring all facts on record for fair adjudication of the issue. Before us, copy of the purchase deed of the impugned property was placed.
The Ld. DR objected to the assessee being granted fresh opportunity of hearing.
We have gone through the orders of the authorities below and though it is true that the assessee did not participate in the assessment proceedings or even in the appellate proceedings, but the fact remains that the assessee had adduced sufficient cause for the same before the Revenue authorities. He had stated to be a US citizen and an NRI and had given reasons for not submitting relevant details of purchase of property during the assessment proceedings stating that the documents needed to be procured from India for which he needed to physically visit which he was unable to manage till the assessment order was passed. These facts have not been found to be untrue by any of the Revenue authorities. Even the Ld. CIT(A), we have noted, has given only three opportunities of hearing to the assessee. Considering the entire facts and circumstances, therefore, we are of the view that in the interest of justice, the assessee should be granted an opportunity of hearing and opportunity to place all documents relevant to the impugned transaction to establish his case of the property being purchased by him from disclosed sources of income. Accordingly, we consider it fit to restore the matter back to the AO to directing him to give the assessee due opportunity of hearing and to adjudicate the issue afresh in accordance with law.
In the result, appeal filed by the assessee is allowed for statistical purposes.
This Order pronounced on 07/11/2025
Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 07/11/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,