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Facts
The assessee, an 80-year-old NRI residing in USA, failed to file a return for AY 2011-12. The AO, based on information of mutual fund investments, reopened the case under Section 147 and treated an investment of Rs. 1,44,71,816/- as undisclosed income. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal condoned the delay in filing the appeal due to the assessee's circumstances. It noted that the AO's finding of NRI status was correct and that the case was reopened for a specific investment. The Tribunal found that the entire investment was treated as unexplained without examining re-investment nature and that the CIT(A) also did not examine the merits.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex parte and confirming the addition of unexplained investment without proper examination, considering the assessee's NRI status and difficulty in accessing notices.
Sections Cited
147, 144, 68
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
(�नधा�रण वष� / Assessment Year : 2011-12) बनाम/ Nilkanth Raojibhai Patel Income Tax Officer Karmyog 1 Solarhome, Ward (2), International Vs. Opp. Ashweriya Flats, Taxation, Ahmedabad Vegetable Market Road, Ellora Park, Odhavpura, Vadodara, Gujarat - 390007 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : BAPPP3651Q (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Ms. Urvashi Sodhan, AR. ��यथ� क� ओर से/Respondent by : Smt. Trupti Patel, Sr. DR 02/04/2025 Date of Hearing Date of Pronouncement 04/04/2025 O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals), Ahmedabad-13, (in short ‘the CIT(A)’), dated 11.08.2023 for the Assessment Year 2011-12.
As per registry, there was a delay of 39 days in filing of this appeal. The assessee has filed an affidavit explaining the reason for the delay which, according to him, was of 466 days. It has been submitted that the assessee is a super senior citizen aged 80 years, residing in USA and that he only occasionally visited his native place in India. The order of the Ld. CIT(A) was sent to his email account but he was not regular in accessing his email Raojibhai Patel vs. ITO] A.Y. 2011-12 - 2 – account. It was only after his NRI savings account was frozen by the department for recovery of outstanding demand that he came to know about the order of Ld. CIT(A) and thereafter, he filed the present appeal. Considering the explanation of the assessee, the delay in filing of the appeal is condoned.
The brief facts of the case are that no return of income for A.Y.2011-12 was filed by the assessee. The AO, on the basis of information that the assessee had made investment in Mutual Funds, reopened the case under Section 147 of the Income Tax Act, 1961 (in short ‘the Act’). In the course of assessment, there was no compliance made by the assessee. Therefore, the AO treated the entire investment of Rs.1,44,71,816/- in SBI Mutual Fund as undisclosed income of the assessee. Accordingly, the assessment was completed u/s.144 r.w.s. 147 of the Act on 29.12.2018 at total income of Rs.1,44,71,820/-.
Aggrieved with the order of the AO, the assessee has filed an appeal before the First Appellate Authority, which was decided vide the impugned order and the appeal of the assessee was dismissed.
The assessee is now in second appeal before us. The following grounds have been taken in this appeal:
“1. Ld. CIT (A) erred in law and on facts in dismissing the appeal ex parte in absence of response by the appellant to the appeal notices overlooking the fact that assessee, a senior citizen settled in USA could neither access the notices on his computer nor on the phone due to his stay outside India.
2. Ld. CIT (A) erred in law and on facts in confirming addition made by AO of Rs. 1,44,71,816/- of investment made in Mutual Funds from NRI external a/c as unexplained investment u/s 68 of the Act.
Raojibhai Patel vs. ITO] A.Y. 2011-12 - 3 – 3. It is respectfully submitted that an opportunity be granted to the appellant to submit all relevant documents before the revenue authorities to substantiate the fact that no tax is required to be paid since investments in Mutual Funds were made from NRI account.
4. On principles of Natural Justice the appeal may be restored back since the appellant is facing grave difficulties as the bank account is attached by the department for recovery of demand that is not payable by the appellant.”
Ms. Urvashi Sodhan, Ld. AR of the assessee submitted that since the assessee is an NRI, he was not aware about the proceeding initiated by the AO. Therefore, no compliance could be made in the course of assessment proceedings. Before the Ld. CIT(A), the assessee had explained the source of investment in Form No.35. However, the Ld. CIT(A) had dismissed the appeal of the assessee without examining the merits of the addition. She submitted that the assessee being a senior citizen and residing in USA, he was dependent upon the local counsel for necessary compliance before the appellate authority. She further submitted that the entire investments in SBI Mutual Fund was made out of bank account of the assessee and, therefore, the AO was not correct in treating the same as unexplained investment. The assessee has also filed an application for admission of additional evidence in support of the investment made in Mutual Funds. The Ld. AR, therefore, requested that the matter may be set aside to the file of the AO with a direction to allow another opportunity to the assessee to explain the source of investment in the Mutual Funds.
Per contra, Ld. Sr. DR had no objection if the matter was set aside to the file of the AO.
Raojibhai Patel vs. ITO] A.Y. 2011-12 - 4 – 8. We have considered the submission of the assessee. The AO has given a finding that the assessee is an NRI. Further, the case was reopened to examine the investment of Rs.2,20,000/- only in respect of purchase of units of Mutual Funds. The AO was not correct in treating the entire investment of Rs.1,44,71,816/- in SBI Mutual Fund as unexplained without examining whether any of such investments were in the nature of re-investment. The matter was also not examined on merits by the Ld. CIT(A). Therefore, we deem it necessary to set aside the matter to the file of the Jurisdictional AO with a direction to allow another opportunity to the assessee to explain the source of deposits in the Mutual Funds. The assessee is free to bring on record the additional evidences filed before us as well as any other evidence before the AO and to explain the source of the investment in Mutual Funds made during the year.
In the result, the appeal filed by the assessee is allowed for statistical purposes.