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Facts
The assessee did not file her return of income for AY 2015-16. The AO reopened the case under Section 147 after the assessee purchased an immovable property for Rs. 60,00,000. The AO added the investment as unexplained income. The NFAC sustained an addition of Rs. 7,30,000.
Held
The Tribunal held that the addition of Rs. 6,00,000 related to agricultural income claimed from the father is upheld due to lack of evidence. The addition of Rs. 1,00,000 from a friend is deleted as explained. The addition of Rs. 30,000 (TDS) is upheld due to lack of substantiation.
Key Issues
Whether the additions made towards investment in immovable property are justified, particularly concerning agricultural income, friendly loan, and TDS, when the assessee claims to have provided explanations and evidence.
Sections Cited
147, 148, 142(1), 144, 69, 271(1)(c), 271(1)(b), 271F, 250(6)
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 31.03.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2015-16.
2.0 The brief facts of the case are that the assessee had not filed her return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had purchased an immovable property valued at Rs.60,00,000/- . The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice to the assessee under section 148 of the Act. However, the assessee neither responded to the notice under section 148 of the Act nor filed any return of income for the year under consideration. The Assessing Officer (AO), thereafter, issued statutory notices to the assessee, requiring the assessee to furnish the details of source of investment in the immovable property. However, still there was no response from the side of the assessee to the notices issued by the AO. Thereafter, the AO issued notice under section 142(1)/144 of the Act to the assessee, requiring the assessee to furnish the copy of registered sale deed in respect of purchase transactions, in response to which the assessee filed reply on 16.01.2023, stating as under:
"The immovable property purchased for Rs.60,00,000 was paid via loan sanctioned from LIC HFL for Rs.42,00,000. The balance amount as a down payment was paid via salary receipts of my own and the rest of amount were paid via my father Sh. Satyendra Kumar Chaubey.” 2.1 Further, in response to show cause notice issued by the AO on 10.03.2023, the assessee filed reply through e-filing portal on 16.03.2023, stating as under:
"In addition to the previous evidences provided pertaining to the notice, I am providing sanction letter from LIC Housing Finance Ltd. Also the bank statement regarding the relevant period A.Y. 2015-16 has been provided. Disbursement has been made after ascertaining the repayment capacity and the evidences in regarding to amount provided has been made in the bank statement vide date 19.03.2015 on which cash has been deposited.”
2.2 Not being satisfied with the reply furnished by the assessee, the AO held that since the assessee had failed to explain the source of investment in the immovable property, the investment of Rs.60,00,000/- in immovable property would be treated as unexplained investment. Accordingly, he added the same to the income of the assessee under section 69 of the Act. The AO completed the assessment under section 147 of the Act read with sections 144 and 144B Of the Act.
2.3 The AO also initiated penalty proceedings under sections 271(1)(c), 271(1)(b) and 271F of the Act, separately.
2.4 Aggrieved, the Assessee preferred an appeal before the National Faceless Appeal Centre, Delhi (NFAC), wherein the assessee furnished additional evidences, on which the NFAC sought Remand Report from the AO. The AO submitted his Remand Report dated 22.02.2025, based on which the NFAC deleted the addition of Rs.52,70,000/- and sustained the addition of Rs.7,30,000/- out of the total addition of Rs.60,00,000/- made by the AO.
2.5 Being further aggrieved, now the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:
1. BECAUSE, the order passed by the respondent is erroneous both on facts and in law. In the facts and circumstances of the case, the respondent ought to have accepted the appellant's explanation, as all necessary documents were furnished and the transactions in question were duly justified and supported by evidence.
The Ld. CIT (A) erred in sustaining the addition of ₹7,30,000/- as unexplained income despite the appellant having furnished explanations and possessing supporting documents. The order is erroneous on facts and in law.
The impugned appellate order was passed in undue haste without affording a meaningful opportunity of hearing or calling for additional evidence, thereby violating Section 250 (6) and principles of natural justice [Andaman Timber Industries vs. CCE, 281 CTR 241 (SC)].
The addition of ₹6,00,000/- Cash Deposit was made without seeking clarification or allowing submission of evidence. Had the opportunity been granted, the appellant would have established the source of funds.
The addition of ₹1,00,000/-, received from Shri Dhananjay Singh as a friendly loan, was unjustified, as the transaction was fully explained. The addition is contrary to the law laid down in CIT vs. Lovely Exports (P) Ltd. [(2008) 216 CTR 195 (SC)].
The addition of ₹30,000/-, being the TDS amount, was treated as unexplained without calling for any explanation from the appellant. Relevant supporting documents were available and could have been furnished if a proper opportunity had been provided.
The assessment order passed under Section 147 read with Section 144 is void, as it was completed without providing the appellant a sufficient opportunity of being heard and is vitiated by procedural irregularities.
The additions are based оп mere assumptions and conjecture, without conducting any proper inquiry, despite the appellant having disclosed the sources and possessing supporting evidence [CIT v. Orissa Corp. (P) Ltd., 159 ITR 78 (SC)].
The respondent failed to conduct any independent verification before making or sustaining the additions, thereby rendering the order perverse and arbitrary.
The impugned order violates Articles 14 and 19 of the Constitution India, as it is arbitrary, discriminatory, and contrary to the principles of due process.
The appellant has a strong prima facie case. Unless relief is granted, the appellant will suffer irreparable loss and hardship.
Because, That the respondent erred in law by sustaining additions aggregating Rs.7,30,000/- as income despite the appellant unexplained i) Disclosing sources of investment ii) Expressing readiness to furnish evidence iii) Seeking opportunity to clarify iv) Supporting documents are in possession The additions are de hors the material record and unsustainable [CIT v. Ltd. (1986) 159 ITR 78 (SC)] on Orissa Corp. (P)
BECAUSE, the appellant craves leave to file another ground of appeal on or before the hearing in appeal. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 62 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated 01.08.2025 for condonation of delay, duly supported by an Affidavit of the assessee and Medical Certificate, stating therein that the assessee was suffering from severe illness and was under continuous medical supervision and she also remained on complete bed rest from 25.05.2025 to 28.07.2025 and that upon her recovery, on 28.07.2025, she contacted her Counsel and got the appeal filed before the Tribunal with a delay of 62 days. The Ld. A.R. prayed that the delay be kindly condoned and the appeal be heard on merits.
4.0 The Ld. Sr. D.R. objected to the delay being condoned.
4.1 In view of the prayer made by the Ld. A.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
5.0 The Ld. A.R. submitted that the NFAC had erred in sustaining the addition to the extent of Rs.7.30 lakhs, as the assessee’s father enjoyed agricultural income as well as also had accumulated savings, which were deposited in the bank to the tune of Rs.6.00 lakhs. It was further submitted that another amount of Rs.1,00,000/- had been directly paid by a family friend, Shri Dhanajay Pratap Singh for the purchase of property through banking channels, a fact which has duly been mentioned in the impugned order also and, therefore, this should not have been added. Regarding the addition of Rs.30,000/-, it was submitted that the payment was pertaining to Tax Deducted at Source and, thus, the same could not be said to be unexplained. The Ld. A.R. prayed that all additions sustained by the NFAC be deleted.
6.0 Per contra, the Ld. Sr. D.R. placed reliance on the observations and findings of the NFAC and submitted that the NFAC had already given relief to the assessee on facts and that the additions as sustained by the NFAC deserved to be upheld.
7.0 I have heard the rival submissions and have also perused the material on record. As far as the addition of Rs.6.00 lakhs is concerned, it is seen that the NFAC has recorded a categorical finding that the assessee has not furnished any document/evidence to establish receipt of agricultural income in the hands of the father. Before me also, no evidence of agricultural income has been brought on record. There is no proof of the assessee’s father holding agricultural land or enjoying agricultural income in earlier assessment years too.
Therefore, in absence of any evidence to substantiate the claim of having earned agricultural income, compounded with the fact of the NFAC having already given benefit to the assessee in respect of assessee receiving retirement benefit of her father, the addition of Rs.6.00 lakhs is upheld.
7.1 As far as the addition of Rs.1,00,000/- claimed to have been paid directly by Shri Dhanajay Pratap Singh is concerned, it is not in doubt that the payment was made by Shri Dhanajay Pratap Singh and the same is duly supported by the affidavit of Shri Dhanajay Pratap Singh and also his bank statement, the same is treated as explained and is directed to be deleted.
7.2 As far as the payment of TDS of Rs.30,000/- is concerned, again the assessee has not been able to substantiate the source of this payment as the same has not been made through bank. Accordingly, this addition is also upheld.