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Facts
The assessee purchased an immovable property for Rs. 1,03,09,200/- during FY 2011-12. The case was reopened under Section 147 based on AIR information, but the assessee failed to file a return or provide details for the source of investment. The AO completed the assessment ex-parte under Section 144, treating the investment as income from undisclosed sources.
Held
The Tribunal noted that the assessment was completed ex-parte and the assessee has now produced documentary evidence. In the interest of justice, the Tribunal decided to grant the assessee one more opportunity to present her case before the AO.
Key Issues
Whether the CIT(A) erred in not deciding the appeal on merits and rejecting additional evidence, and whether the ex-parte assessment order passed under Section 144 was justified.
Sections Cited
147, 148, 142(1), 144, 69, 271(1)(c), 271(1)(b), 234A, 234B, 234C, 149, 150, 151
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िनधा"रती की ओर से/Assessee by : Adj. Application (Rejected) राज" की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr .DR सुनवाई की तारीख/Date of Hearing : 09/04/2025 उदघोषणा की तारीख/Date of Pronouncement : 16/04/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A) / NFAC, Delhi, dated 19/07/2024, pertaining to Assessment Year 2012-13. 2. In the present appeal Assessee has raised the following grounds:
1. That the order of Ld. CIT(A) is against the law and facts of the case.
2. That the Learned CIT(A) has grossly erred in not deciding the appeal on the merits of the case and is not justified while rejecting the additional evidences, which is registered sale deed and is per se admissible evidence, which is very vital and important for deciding the only issue in the appeal i.e. proving the legitimate source of investment.
3. That the learned CTT(A), has grossly erred in not considering documentary evidences i.e. copy of registered sale deed and proof of agricultural sale produced without appreciating the fact that assessee was prevented by the sufficient, reasonable and genuine cause and could not properly pursue her case before the Ld. AO due to prolonged illness and medical grounds of the husband of the assessee, who was looking after & managing all the financial affairs of the assessee appellant, and the husband of assessee also finally died on 01.12.2020, 2 4 . That the Learned CIT(A) has erred in upholding the addition of Rs. 1,03,09,200/- without appreciating the fact that the assessee appellant has purchased the agriculture land from the legitimate and genuine funds available with the assessee for which impeccable documentary evidences were not considered by the Ld. CIT(A) arbitrarily and on flimsy grounds despite the categorical acceptance of the Ld. AO in the remand report qua the registered sale deed.
5. That the Ld. CIT(A) has grossly erred in upholding the order passed u/s 144 by the AO, without appreciating the fact that the investment of Rs. 1,03,09,200/- was made out of the sale proceeds of agricultural land amounting to Rs. 78,70,000/- and out of the agricultural income of the assessee and there was legitimate sources for purchase of agricultural land.
6. That the learned CIT(A) has grossly erred while upholding the ex-parte assessment order for the A.Y. 2012-13, which order itself is in violation of the statutory provisions of section 148, 149, 150, and 151 of the Act and without fulfilling the mandate of reopening in the facts and the circumstances of the case.
7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off.
3. Briefly the facts of the case are that the case of Smt. Husna Begam was reopened under Section 147 of the Income Tax Act, 1961, on the basis of AIR information, which revealed that she had made an investment in the purchase of immovable property amounting to Rs. 1,03,09,200/- during the financial year 2011–12, relevant to the assessment year 2012–13. The investment was supported by a registered purchase deed dated 07.06.2011, where the assessee held 100% ownership. Upon obtaining the necessary approval from the Ld. Pr. CIT, Panchkula, the assessment proceedings were initiated by issuing a notice under Section 148 on 25.03.2019. However, the assessee failed to file her return of income in response to the said notice. Subsequently, statutory notices under Section 142(1), along with a detailed questionnaire, were issued on multiple occasionsfirst on 04.07.2019 and again on 21.08.2019. Although the assessee's representative, CA Sh. Parmeet Singh, appeared and submitted a Power of Attorney, no relevant details or documentary evidence clarifying the source of investment in the property were furnished. A final show cause notice was also served on 29.11.2019, fixing the hearing for 05.12.2019, but the assessee did not respond or comply. 3.1 In light of the repeated non-compliance and failure to file a return or provide any explanation regarding the substantial property investment, the Ld. AO proceeded to complete the assessment ex-parte under Section 144 of the Income Tax Act. After examining the facts and records, the Ld. AO found that the assessee had failed to 3 disclose the source of investment of Rs. 1,03,09,200/-, which was accordingly treated as income from undisclosed sources under Section 69. The AO observed that this constituted concealment of income and initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars of income. Additionally, due to persistent non-compliance with statutory notices, penalty proceedings under Section 271(1)(b) were also initiated. Interest under Sections 234A, 234B, and 234C was directed to be charged wherever applicable. As a result, the total assessed income for the assessment year 2012–13 was determined at Rs. 1,03,09,200/- against a returned income of NIL, with the entire amount being added on account of unexplained investment in immovable property. 3.2 The assessee had originally filed an appeal before the Ld. CIT(A) against the order of the Assessing Officer (AO), wherein an addition of Rs. 1,03,09,200/- was made under Section 69 of the Income-tax Act, 1961, treating the same as unexplained investment in immovable property. The Ld. CIT(A) dismissed the appeal and upheld the addition, observing that the assessee had failed to respond to multiple statutory notices, including those issued under Sections 148 and 142(1). It was further noted that the assessee neither filed her return of income nor furnished any explanation or supporting documentary evidence to establish the source of such investment during the assessment proceedings. 3.3 The Ld. CIT(A) also declined to admit the additional evidence submitted by the assessee at the appellate stage, stating that no sufficient cause had been shown for the failure to produce such evidence during the course of the assessment. Relying on judicial precedent, including the decision in Fairdeal Filaments Ltd., the Ld. CIT(A) held that the Assessing Officer had granted adequate opportunities and had rightly treated the investment as income from undisclosed sources under Section 69.
4. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred the present appeal before us. 5. During the course of hearing, the Ld. Counsel for the assessee submitted that the impugned order is contrary to law and facts on record. It was contended that the registered sale deed and supporting documents clearly established the legitimate source of investment, which arose from sale proceeds of agricultural land and other 4 disclosed sources. The assessee could not respond earlier due to the serious illness and subsequent demise of her husband, who managed her financial and tax-related affairs. The Ld. Counsel pointed out that in the remand report, the AO had accepted the genuineness of the registered sale deed. However, the Ld. CIT(A) not only ignored this factual aspect but also rejected the additional evidence without cogent justification. It was further submitted that the assessment order passed under Section 144 was ex parte and violated the procedural safeguards envisaged under Sections 148 to 151 of the Act.
6. In view of the above, the Ld. Counsel prayed that the impugned order of the CIT(A) be set aside and the matter be restored for proper adjudication.
Per contra, the Ld. DR opposed the remanding back the matter to the file of the lower authority. It was submitted that the assessee was not having any regard to the rule of law and is a habitual defaulter.
We have considered the rival submissions and perused the record. It is evident that the assessment was completed in an ex-parte manner, and the assessee has now produced documentary evidence, including the registered sale deed and explanation of the source of funds, which go to the root of the matter. In the interest of justice and fair play, we are of the view that one more opportunity ought to be granted to the assessee to present her case before the AO.
However, considering the prolonged delay and repeated non-compliance in earlier proceedings, we deem it appropriate to impose a condition while remanding the matter. Accordingly, the assessee is directed to deposit a sum of Rs. 2,000/- (Rupees Two Thousand only) with the PM CARES Relief Fund and furnish proof of such deposit before the Assessing Officer at the time of fresh proceedings, within two months from the receipt of this order.
In view of the above, the impugned order is set aside, and the matter is restored to the file of the Assessing Officer with a direction to frame a de novo assessment after granting adequate opportunity to the assessee. The assessee is also directed to cooperate with the Assessing Officer and avoid seeking unnecessary adjournments.