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Facts
The assessee is in appeal against the CIT(A)'s order upholding the re-opening of assessment and additions made by the AO. The AO re-opened the assessment for AY 2011-12 based on an alleged investment in property on 24.10.2010, issuing a notice under Section 148 and making an ex-parte addition. The assessee claims the property was purchased in FY 2011-12 (AY 2012-13).
Held
The Tribunal found that the AO did not conduct proper investigation, relying solely on information from the Director of Income Tax (I&CI) without collecting crucial documents like the Purchase Deed. The Tribunal also noted the assessee's negligence in not presenting documents earlier. Due to the AO's failure in due diligence, the impugned orders were set aside.
Key Issues
Whether the AO properly conducted the re-opening of assessment and made additions based on sufficient investigation, especially when the property purchase date was disputed.
Sections Cited
148, 143(3)
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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
the order of the ld.Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 28.08.2024 passed for assessment year 2011-12.
The assessee has taken seven grounds of appeal
but her grievance revolves around two issues namely, (a) The ld. A.Y.2011-12
2. CIT(A) has erred in upholding the re-opening of assessment and (b) confirming the additions made by the AO.
3. The brief facts of the case are that according to the AO, assessee has made investment of Rs.3,40,15,000/- in purchase of property on 24.10.2010. The AO has issued notice under Section 148 of the Income Tax Act on 30.03.2018. He, thereafter, passed an ex-parte assessment on 06.12.2018 and made addition of Rs.3,40,15,000/- to the total income of the assessee in an ex-parte order.
4. Appeal to the CIT(A) did not bring any relief to the assessee.
5. Before us, ld. Counsel for the assessee submitted that alleged investment in the property was not done by the assessee in assessment year 2010-11. It is an incorrect assumption of facts by the AO. The property was purchased by the assessee on 20.10.2011 i.e. Financial Year 2011-12 relevant for assessment year 2012-13. Therefore, no addition can be made in assessment year 2011-12. He placed on record the copy of the Purchase Deed and other details.
ITA No.1048/CHD/2024 A.Y.2011-12 3
The ld. CIT DR, on the other hand contended that assessee did not appear before the AO. It is not discernible whether assessee has filed any application for additional evidence before the CIT(A). Thus, these documents are not available on the record and cognizance of these documents cannot be taken.
With the assistance of ld. Representative, we have gone through the record carefully. A perusal of the impugned assessment order would indicate that ld. AO has treated the alleged information received from Director of Income Tax (I&CI) as a gospel truth. He did not try to determine where assessee has made investment, which property is being purchased by him. He did not collect the Purchase Deed from the Registrar of Deeds. Thus, he has not carried out any investigation before putting the assessee under tax liability. The AO has failed to carry out any exercise even in an ex-parte assessment order. It is the AO who first brought on record demonstrative evidence exhibiting that taxable income of the assessee has escaped but he has not done any such exercise. The assessee is equally negligent. A.Y.2011-12 4 He did not respond to the AO nor put efforts to place on record these documents before the CIT(A). Thus, considering the contributory negligence, we deem it appropriate to restore this issue to the file of AO for fresh examination.
Both the impugned orders are set aside. The issue is relegated to the file of AO. It is observed that in case no investment is being made by the assessee for assessment year 2011-12, no addition is to be made. The AO first lay his hands on the Purchase Deed entered into by the assessee during the Financial Year relevant to this assessment year, only thereafter, re-examine the issue.
With the above observations, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 11.03.2025.