VIJAY KANTIBHAI PRAJAPTI,AHMEDABAD vs. THE IITO, WARD-3(3)(15) PRESENT THE ITO, WARD-3(3)(5), AHMEDABAD

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ITA 818/AHD/2023Status: DisposedITAT Ahmedabad14 February 2025AY 2011-12Bench: Ms. SUCHITRA KAMBLE (Judicial Member), SHRI NARENDRA PRASAD SINHA (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in outrightly rejecting the assessee's affidavit denying the investment without calling for a remand report from the AO, especially since evidence of purchase was not on record. The grounds for reopening were found to be without merit.

What were the facts?

The assessee filed a return of income for AY 2011-12, which was later reopened under Section 147. The AO made an addition of Rs. 1.28 Crores under Section 69 for alleged unexplained investment in cash for a property, as the assessee made no compliance during assessment. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the CIT(A) correctly rejected the additional evidence (affidavit) filed by the assessee without proper inquiry, and if the reassessment proceedings were validly initiated and conducted.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 69,Section 148,Section 234A,Section 234B,Section 234C,Section 46A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri P F Jain, AR, Shri Rignesh Das, Sr. DR
For Respondent: Shri Rignesh Das, Sr. DR
Hearing: 13/02/2025Pronounced: 14/02/2025

This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 29.08.2023 for the Assessment Year 2011-12.

2.

The brief facts of the case are that the assessee had filed return of income for A.Y. 2011-12 on 07.01.2013 declaring total income of Rs.4,50,410/-. The case was reopened under Section 147 of the Income Tax Act, 1961 (in short ‘the Act’) on the basis of information received by the AO that the assessee had purchased a property and made investment of Rs.1.28 Cores in cash in the Maruti Nandan Green Project (‘MGP’) situated at Village – Randheja, Dist. – Gandhinagar. In the course of assessment, no compliance was made by the assessee. Hence, the assessment was completed ex parte u/s.144 r.w.s. 147 of the Act on 07.12.2018, wherein addition of Rs.1.28 Crores was made u/s.69 of the Act on account of unexplained investment in land.

3. Aggrieved with the order of the AO, the assessee has filed an appeal before the Ld. CIT(A), which was decided vide the impugned order and appeal of the assessee was dismissed.

4.

Now, the assessee is in second appeal before us. The following grounds have been taken in this appeal:

“1. The Learned CIT(A) has grievously erred in law and on facts in upholding addition of Rs.1,28,00,000 made by the A.O. u/s. 69 for alleged un-explained investment in cash for purchase of property in the Maruti Nandan Greens Project, Village Randheja Developed by Maruti Nandan Developers without properly appreciating the facts of the assessee.

2. The re-assessment proceedings initiated by A.O. by issue of notice dated 31/03/2018 u/s. 148 are submitted to be bad in law and on facts in as much as that neither the documents in possession of Department for alleged investment of Rs.1.28 Crore in purchase of property, nor full copy of reasons recorded and sanction by PCIT, Ahmedabad have been furnished to the assessee.

3.

The re-opening is submitted to be bad in law in as much as that the conditions envisaged u/s.147 have not been fulfilled, no independent satisfaction has been recorded by the A.O. and it is based on borrowed satisfaction.

4. The learned CIT(A) has erred in law and on facts in not admitting the Affidavit dated 03/01/2019 filed by the assessee under Rule 46A denying alleged cash investment of Rs.1.28 Crore in Maruti nandan Green Project (MGP) and holding the same to be afterthought.

5. He has erred in law and on facts in not appreciating the ground of non passing speaking order by the A.O. on the objections of the assessee as required by the decision off Supreme Court in the case of GKN Drive Shaft.

6.

On the facts of the assessee no addition u/s. 69 of Rs.1.28 Crore for alleged Investment in cash in the scheme of Marutinandan Green Projects ought to have been made.

7. On the facts off the assessee no interest u/s. 234-A, 234-8 and 234-C ought to have been levied.

8.

On the facts the return income of Rs.4,50,410 ought to have been accepted without any addition.”

5.

Shri P F Jain, Ld. AR of the assessee submitted that the Ld. CIT(A) had dismissed the appeal of the assessee without considering the additional evidence filed by the assessee in the appeal proceeding. He explained that the assessee had filed an affidavit dated 03.01.2019 claiming that he had not made any investment in MGP during F.Y. 2010-11. The Ld. AR submitted that this additional evidence filed by the assessee in the form of affidavit was not admitted and the appeal was dismissed without examining the merits of the case. According to the Ld. AR, when the assessee had denied the transaction, a report in this regard should have been called from the AO. He, therefore, requested that the matter may be set aside with a direction to examine the contention of the assessee that no investment was made by the assessee at all in the plot of land as alleged in the assessment order.

6. Per contra, Shri Rignesh Das, Ld. Sr. DR submitted that the assessee had not made any compliance before the AO in the course of assessment proceeding. Before the Ld. CIT(A) also, except the filing of the affidavit dated 03.01.2019, no compliance was made by the assessee in spite of the fact that six opportunities were provided to him. Ld. SR. DR submitted that the Ld. CIT(A) has rightly rejected the additional evidence in the form of affidavit, which was filed without any supporting documents and evidences. He, therefore, strongly supported the orders of the lower authorities.

7.

We have carefully considered the rival submissions. As regarding the grounds taken by the assessee in respect of reopening of the case, we do not find any merit therein. The AO had disposed off the objection of the assessee in respect of the reopening of the case and the copy of the reason was also provided to the assessee. Therefore, the ground taken by the assessee against the reopening is dismissed.

8. As regarding merits of the addition, the AO had reopened the case on the basis of information received from ADIT, Investigation, Ahmedabad vide letter dated 26.03.2018 that the assessee had made investment of Rs.1.28 Crores in cash in the MGP, Village – Randheja, Dist. – Gandhinagar for purchase/ investment of plots. The AO had made enquiry in this regard from the assessee and since no compliance was made by the assessee in the course of assessment, the AO had made addition of Rs.1.28 Crores u/s.69 of the Act. No additional fact was brought on record by the AO to establish that the assessee had actually purchased the plot during the year. Even if, no compliance was made by the assessee, nothing prevented the AO from making enquiry with MGP to find out whether the assessee had made the investment in this year or not. No evidence of purchase of plot by the assessee during the year was brought on record. Considering these facts, the Ld. CIT(A) was not correct in outrightly rejecting the affidavit dated 03.01.2019 filed by the assessee claiming that no investment of Rs.1.28 Crores was made by him in MGP. When the assessee has denied the transaction, the Ld. CIT(A) should have called for a remand report from the AO on the affidavit of the assessee, particularly when the evidence of purchase of plot was not available on the assessment record. The Ld. CIT(A) had rejected the affidavit on the ground that it was an afterthought and no supporting documents were filed to substantiate the claim as made in the affidavit. When the assessee had denied the transaction out-rightly, we fail to understand as to what supporting document was required by the Ld. CIT(A).

9.

In view of the above facts, we deem it proper to set aside the matter to the file of the AO with a direction to enquire into the correctness of the affidavit dated 03.01.2019 filed by the assessee before the Ld. CIT(A). If necessary, the AO may make enquire from MGP to find out whether the assessee had actually made any investment in MGP during the year and the documentary evidences in this regard should be brought on record. The AO may also make further enquiry in the matter as deemed fit. The AO is also directed to confront the assessee with the evidences gathered in the enquiry and, thereafter, decide the matter.

10.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

This Order pronounced on 14/02/2025

Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 14/02/2025 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबं�धत आयकर आयु�त / Concerned CIT आयकर आयु�त(अपील) / The CIT(A)- 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

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