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Income Tax Appellate Tribunal, DELHI ‘SMC-1’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. SUCHITRA KAMBLE
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the CIT(A), Ghaziabad dated 28.09.2018 pertaining to assessment year 2009-10.
The solitary grievance of the assessee is that the ld. CIT(A) erred in enhancing the income of the assessee by Rs. 15,44,600/- on account of unexplained investment u/s 69 of the Act.
Briefly stated, the facts of the case are that as per AIR Information, the Assessing Officer came to know that the assessee has sold immovable property alongwith one other co-owner situated at Sikhri Khurd Modinagar, Ghaziabad for a sum of Rs. 31 lakhs out of which, half share of Rs. 15.50 lakhs belonged to the assessee.
Notice u/s 148 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] was issued and served upon the assessee.
None attended on behalf of the assessee and the Assessing Officer was forced to proceed ex-parte. The Assessing Officer was of the firm belief that the consideration of Rs. 15.50 lakhs is a short term capital gain and, accordingly, added the same to the income of the assessee and completed the assessment ex-parte.
The assessee carried the matter before the ld. CIT(A) and furnished some additional evidences, which were admitted by the ld. CIT(A).
The ld. CIT(A) called for remand report and the Assessing Officer filed the same vide letter dated 28.08.2018. In his remand report, the Assessing Officer accepted that the short term capital gain worked out to Rs. 10,800/- and the assessee’s share comes to Rs. 5400/-. The ld. CIT(A) accepted the short term capital gain computed at Rs. 5400/-.
However, the ld. CIT(A) was of the opinion that the source of investment of Rs. 15,44,600/- remained unexplained. Accordingly, the assessee was asked to explain the source of investment.
The assessee filed necessary details of his source of investment which did not find any favour with the ld. CIT(A) who proceeded by confirming the addition made by the Assessing Officer to the extent of Rs. 5400/- and made further addition of Rs. 15,44,600/-.
Before us, the ld. counsel for the assessee vehemently stated that the ld. CIT(A) has made addition under a new source of income which was never considered by the Assessing Officer and thereby exceeded his powers. It is the say of the ld. counsel for the assessee that though the provisions of section 251 of the Act gives power to the ld. CIT(A) for enhancement, but at the same time, the same cannot be considered for enhancing income under a new source of income.
Strong reliance was placed on the decision of the Hon'ble High Court of Kerala in the case of B.P. Sherafudin 399 ITR 524 and on the decision of the Hon'ble High Court of Delhi in the case of Sardari Lal & Co. 251 ITR 864. The ld. counsel for the assessee further stated that even the approval granted by the Additional Commissioner is not dated and, therefore, it is not known whether the approval was granted before issuance of notice u/s 148 of the Act.
Per contra, the ld. DR strongly supported the findings of the lower authorities. It is the say of the ld. DR that the assessee has not attended the assessment proceedings and, therefore, the Assessing Officer had no occasion to examine the documents furnished before the ld. CIT(A) and the ld. CIT(A) has rightly questioned the source of investment thereby making the additions.
We have given thoughtful consideration to the orders of the authorities below. It is true that the assessment proceedings were never attended and the Assessing Officer was compelled to frame assessment u/s 144 of the Act. It is equally true that the Assessing Officer has made addition on account of short term capital gain.
Before the first appellate authority, though the first appellate authority accepted additional evidences and computation of short term capital gain, but at the same time, made additions u/s 69 of the Act thereby exploring the new source of income.
A perusal of the order of the first appellate authority does not reveal that any notice of enhancement was issued to the assessee and prior to such notice it is not known whether the ld. CIT(A) has asked the assessee to explain the source of investment. Though there is a passing reference that the assessee was required to explain the source of investment but evidences filed by the assessee have been simply rubbished by the ld. CIT(A).
In our considered opinion, the ld. CIT(A) ought to have asked the assessee to explain the source of investment and if not satisfied, then should have issued notice of enhancement. Since the Assessing Officer had no opportunity to examine the evidences, we deem it fit to restore the entire issues to the file of the ld. CIT(A). The ld. CIT(A) is directed to examine the evidences relating to the source of investment and after satisfying himself, should proceed further keeping in mind that the Assessing Officer has not made any addition u/s 69 of the Act and the ld. CIT(A) has to consider the decisions of the Hon'ble High Courts of Kerala and Delhi [supra]. Needless to mention that the ld. CIT(A) should give reasonable opportunity of being heard to the assessee.
In the result, the appeal of the assessee in is treated as allowed for statistical purposes.
The order is pronounced in the open court on 03.06.2020.