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Facts
The assessee, engaged in real estate development, purchased property for Rs. 5,00,00,000/- using unsecured loans. The assessment was reopened under Section 147, alleging unexplained investment. The Assessing Officer made an addition of Rs. 5,00,00,000/- under Section 69A, treating it as unexplained money. The assessee contended that the investment and its source were reflected in financial statements and books of accounts.
Held
The Tribunal held that the reassessment proceedings were validly initiated as the Assessing Officer had a reasonable belief of income escapement based on the investigation report. However, the Tribunal also found that the assessee's submissions regarding the source of investment being reflected in financial statements and books of accounts were not considered. Therefore, the matter was remanded to the Assessing Officer for a de novo assessment.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the addition under Section 69A was justified, considering the assessee's claim that the investment and its source were duly recorded.
Sections Cited
147, 148, 69A, 144, 144B, 253(3), 133(6), 143(3), 68, 271(1)(c)
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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
This appeal has been filed by the assessee against the order of the ld. CIT(A)/National Faceless Appeal Centre (NFAC), Delhi dated 17.10.2023 for the assessment year 2016-17. The grounds of appeal of the assessee are as under: -
1. That on the facts and circumstances of the case, the Appellate Order passed by the learned Commissioner of Income Tax NFAC was passed without providing proper opportunity to the appellant and therefore, the same is void ab initio and bad in law.
2. That the learned Commissioner of Income Tax NFAC has failed to appreciate that Reopening the Assessment u/s 148 of the Act is merely on the basis of the report of ITO (I & Cl) without making any independent application of mind , in a mere mechanical manner.
3. That the learned Commissioner of Income Tax NFAC has failed to appreciate that the Assessing Officer has not brought any independent material on record to suggest that any Income has escaped assessment.
4. That the learned Commissioner of Income Tax NPAC has failed ta appreciate that the Assessing Officer has not disposed the objections raised by the appellant against the reasons recorded for reopening the assessment, thus defying the mandate laid down by the Hon'ble Supreme Court which renders the entire assessment null and void.
5. That the learned Commissioner of Income Tax NFAC has failed to appreciate the documentary evidences supplied by the appellant during the appellate proceedings on the pretext that procedure of Rule 46A relating to additional evidence has not been followed by the appellant.
That the learned Commissioner of Income Tax NFAC has failed to appreciate that the documentary evidences supplied by the appellant were not additional evidences , more particularly when the same were submitted before the Assessing Officer, what failed to consider the same in his assessment order, and therefore the same should have been considered by the learned Commissioner of Income Tax NFAC, 7. That the learned Commissioner of Income Tax NFAC has erred in law and on facts and circumstances of the case in confirming the addition of Rs 5,00,00,000/- by treating the investment in property as Unexplained money u/s 69A of the Income Tax Act,1961. 8. That the learned Commissioner of Income Tax NFAC has failed to appreciate the investment in property and the source of investment in property i.e Unsecured Loans were duly reflected in the books of accounts, financial statements as well as the Income Tax Return of the appellant and hence the observation that the source is unexplained Is incorrect and not tenable in law. 9. That learned Commissioner of Income Tax NFAC has erred in law and on facts and circumstances of the case in understanding that the provisions of Section 694A, do not apply In the Instant case of the appellant since the Investment in property as well as source of the same Is duly reflected in the financial statements and books of accounts of the appellant, thus making the very foundation of the addition misconceived and Incorrect. 10. That the appellant craves leave to add, alter, amend or withdraw any or all the grounds of appeal on or before the hearing.” (A) This appeal has been filed by the assessee, beyond time limit prescribed under section 253(3) of IT Act. The application for condonation of delay is supported by an affidavit of the assessee. The Ld. Sr. Departmental Representative for Revenue did not express any objection to the delay being condoned. Being satisfied with the reasons stated in application seeking condonation of delay in filing of this appeal; we condone the delay in filing of this appeal and admit the appeal for decision on merits.
(B) In this case, the assessment order dated 23.03.2022 was passed u/s 147 r.w.s 144 read with section 144B of the Income Page 3 of 22 Tax Act, 1961 (“Act”, for short) whereby the assessee’s total income was assessed at Rs.5,00,00,000/- as against the returned income of Rs. Nil. In the aforesaid assessment order an addition of Rs.5,00,00,000/- was made by the Assessing Officer on account of property purchased by the assessee at Viraj Khand Gomti Nagar, Lucknow. The aforesaid assessment order was passed ex parte u/s 144 read with section 144B of the Act. The assessee’s appeal against the aforesaid assessment order was dismissed by the Ld. CIT(A) vide impugned appellate order dated 17.10.2023 of the Ld. CIT(A). The relevant portion of the impugned order of the Ld. CIT(A) is reproduced as under: - “3. Statement of Facts as submitted by the Appellant The appellant Company is engaged in the business of Real Estate Developers and Contractors. The Appellant filed its Income Tax Return u/s 139(1) on a Loss of Rs 11293/. The case was selected re-opened u/s 147 read with Section 144 B of the Income Tax Act, 1961 and compliance to the show cause notice of the learned Assessing Officer was made alongwith documents, details and submissions were filed during the course of re-assessment proceedings. The learned Assessing Officer framed assessment under section 147 r.w.s 144 r.w.s 448 of the I.T. Act, 1961 at an assessed income of Rs.5,00,00,000/-by making an addition u/s 69A amounting to Rs 5,00,00,000/- treating the investment in property to be Unexplained money. The appellant was served a Notice u/s 148 on 20/02/2022 and the reasons recorded for reopening, as intimated to the appellant, are as under: purchased a property of Rs 50000000/- at Viraj Khand Gomtinagar, Lucknow but had not fumished documentary evidence in respect of the source of investment. As the assessee does not justify the source of such huge investment considering the source of income shown by the assessee in his return. Since the assessee could not substantiate the source of investment of Rs 5,00,00,000/-against purchase of property, it is inferred that source of unexplained investment amounting to Rs 500,00,000/- has left to be taxed and escaped assessment for Α.Υ 2016-17* To summarise, the entire reasons for reopening of assessment is based on Investigation report of ITO (I&CI). One needs to understand that no independent material or verification has been adduced by your honour which could have lead to the formation of belief that Income has escaped assessment. All that has been done is that the case has been reopened on the basis on an uncooked information without any application of mind.
Page 4 of 22 One fails to understand that whether the Balance Sheet and the Income Tax Return was ever examined by the Assessing Officer before initiating any such action since it is not necessary that any asset is purchased by income of the current year, it can be from accumulated sources and borrowed funds as well. All the details were duly furnished before the ITO (I & CI) and were there on record, which presumably were never examined by the Assessing Officer before the re-opening of the case. The reasons fails to establish what contrary material has been brought on record by the Assessing Officer except picking up information from the Investigation report in a mechanical manner, which could suggest that there is an escapement of income. How can a third-party information form basis of reopening the assessement without confronting the assesse, further more Ld Assessing Officer already drew conclusion that the said Investment in property being income escaped assessment without even examining or verifying the evidence provided to him. The reasons for reopening u/s 148 are vague in as much as totally borne out by presumptions and surmises. It is a settled precedent by various courts that the reasons for reopening the assessment should have a nexus or a live link to be connoted as escapement of income. A notice u/s 148 should be there only when there is a definite Information which clearly establishes the escapement of income and not for the purposes of any enquiry. The Learned higher courts have time and again laid the principle that the reopening of the assessment, if it is totally on an unsubstantiated and vague third party information which there being any nexus of the assessee, cannot form the sole basis of the reopening of the assessment. There is no material much less tangible, credible, cogent and relevant material to form a reason to believe that the investment in property represent income escaped of the assessee. The reasons recorded are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement of Income and therefore merely presumption in nature. It is a case of mechanical action on the part of the AO as there is no application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such investment represented income. The Learned Supreme Court has laid the precedent that the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the Income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt that the court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be initiated for reopening assessment. At the same time, we have to bear in mind that it is not any and every material, however vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the Income of the assessee from assessment. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter, how desirable that may be, unless there is a reason to believe rather than suspect, that an income has escaped assessment. Thus, it was a mere suspicion of the AO that Page 5 of 22 prompted him to initiate assessment proceedings under section 147, which is neither countenanced, nor sustainable in law. Another serious flaw which renders the entire assessment bad in law, is the fact that the objections in response to reasons recorded under section 148 were never disposed by the Ld Assessing Officer. Instead, the Ld Assessing Officer ignored the same citing that only 10 days were left for completion of assessment proceedings Your honour will appreciate that Income Tax Proceedings are quasi-judicial proceedings, and therefore the right of reasonable opportunity of being heard should not be denied since the same is against the principles of natural justice. The Hon'ble Supreme Court has laid down certain principles for reopening of assessment in the matter of GKN Driveshafts India Ltd Vs ITO. Reported in (2003) 259 ITR 19(SC) which were not complied with. The Ld Assessing Officer is expected to furnish reasons for every decision taken. Two components are of paramount importance. Adherence of the procedures contemplated, firstly and furnishing reasons for arriving a particular decision, thereafter. Thus, on Initiation of re-opening proceedings by invoking Section 147 of the act, the Assessing Officer is obligated to follow the procedures contemplated and furnish the reasons for arriving a particular decision. In the present case, reasons are furnished for reopening of assessment. The objections should have been disposed of in a meaningful manner by the Ld Assessing Officer. The consideration of objections and the findings for reopening are of vital and in the absence of any reasons, one cannot form an opinion that reopening of assessment is made with reference to the conditions in the Act. Therefore, a non-speaking order in this regard non sustainable and therefore, the impugned order is to be construed as lacking, on application of mind and the objections raised by the appellant are not considered, nor a finding is given. Thus, the Ld Assessing Officer has violated the principles of natural justice in not disposing Off the objections by a speaking order, which action is not tenable under law and the entire assessment deserves to be quashed. Without prejudice to the above: The Ld Assessing Officer has made an addition to the tune of Rs 5,00,00,000/- being investment in property treated as Unexplained Money u/s 69A of the Act. During the relevant previous year, the appellant invested in a Property at Viraj Khand, Gomtinagar, Lucknow. The Property was purchased through Unsecured Loans procured from Directors of Company i.e. Mr. Ankush Agarwal & Mrs. Pooja Agarwal. The Investment in property coupled with Unsecured Loans were duly reflected in the financial statements of the appellant concern and forth duly filled in the Income Tax Return as well. As a matter fact the observation of the Ld Assessing Officer, where he has linked the Income with the investment made in the property is totally misconceived and on incorrect understanding of facts. It is worthwhile to mention that all the documents in relation of the source of investment were duly supplied to the ITO (I &CI) and presumably open to the Ld Assessing Officer for verification. Thus, the conclusion drawn by the Ld Assessing Officer is devoid of material available on records and wrong appreciation of facts. Further the Ld Assessing Officer has made the addition u/s 69A treating the same as Unexplained Money. Your honour will appreciate, given the facts of the case, Section 69A do not apply in the instant case of the appellant. In this reference we would like to quote the text of Section 69A for your honour's reference:
Page 6 of 22 “Where in any financial year the assessee is found to be the owner of money, bullion, jewellery or other valuable article and such money, bullion. jewellery or valuable article is not recorded in the books of account, if any maintained by him……………………………………………such financial year. The section clearly says NOT RECORDED IN THE BOOKS OF ACCOUNTS. In the present case of the appellant, the investment as well as the source of investment l.e Unsecured Loans, are duly recorded in the regularly maintained books of accounts and also appearing the duly Audited balance Sheet of the appellant. Therefore, the application of Section 69A does not fall in place hence making the entire addition void ab initio. All the investment is duly explainable and recorded in the regular books of accounts maintained by the appellant and hence the entire addition of 5,00,00,000/- made by the Ld Assessing Officer is purely on surmises and conjectures, and hence deserves to be deleted. It appears that the learned Assessing Officer has not correctly appreciated the facts and circumstances of the case and is wrong in drawing adverse inferences.
Submissions made by the Appellant The submissions made by the Appellant are reproduced hereunder: Grounds 2,3 and 4 Justified the source of such huge Investment considering the source of income shown by the assessee in his return. Since the assessee could not substantiate the source of Investment of Rs 5,00,00,000/- against purchase of property, it is inferred that source of unexplained Investment amounting to Rs 500,00,000/- has left to be taxed and escaped assessment for A.Y 2016-17" Your honour will observe that the Ld Assessing Officer has simply picked up the entire reasons for reopening of assessment from Investigation report of ITO (I&CI). One needs to understand that no independent material or verification has been adduced by by the Ld Assessing Officer which could have led to the formation of belief that Income has escaped assessment. All that has been done is the case been reopened on the basis on an uncooked information without any application of mind. Another fact which needs to be placed on record is that the appellant duly filed its Income Tax Return for the relevant previous year and it is presumed that the same would be open to the Ld Assessing Officer for verification. One fails to understand that whether the Balance Sheet and the Income Tax Return was ever examined by the Assessing Officer before initiating any such action since, the appellant being a private limited company has to furnish all the details in respect of financial statements in the Income Tax Return. In order words, the assets, Liabilities Expenses and income are duly incorporated in the Income Tax Return at relevant schedules. Therefore, the remark of the Ld Assessing Officer that the appellant has not explained the same is incorrect and uncalled for. Your honour will appreciate that it is not necessary that any asset is purchased by income of the current year, it can be from accumulated sources and borrowed funds as well. All these facts were available on record in the form of Income Tax Return and also such details were duly furnished before the ITO (I & CI) and were there on record, which presumably were never examined by the Assessing Officer before the re- opening of the case.
Page 7 of 22 The reasons fails to establish what contrary material has been brought on record by the Assessing Officer except picking up information from the Investigation report in a mechanical manner, which could suggest that there is an escapement of Income. How can a third-party information form basis of reopening the assessment without confronting the assessee, further more Ld Assessing Officer already drew. The Learned Supreme Court has laid the precedent that the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt that the court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be Initiated for reopening assessment. At the same time, we have to bear in mind that it is not any and every material, however vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. Of course, it may be desirable, from the point of view of revenue authorities, to examine. Ground 5 Ground 6 Another serious flaw which renders the entire assessment bad in law, is the fact that the objections in response to reasons recorded under section 148 were never disposed by the Ld Assessing Officer. Instead, the Ld Assessing Officer ignored the same citing that only 10 days were left for completion of assessment proceedings Your honour will appreciate that Income Tax Proceedings are quasi-Judicial proceedings, and therefore the right of reasonable opportunity of being heard should not be denled since the same is against the principles of natural justice. The Hon'ble Supreme Court has laid down certain principles for reopening of assessment in the matter of GKN Driveshafts India Ltd Vs ITO. Reported in (2003) 259 ITR Ground 7 The action of the Ld Assessing Officer is arbitrary, unjustified and devoid of any merits. The proceedings were delayed on the part of the Ld Assessing Officer, and hence the assessment framed is totally against the principles of natural justice, without giving proper opportunity to the appellant of being heard and therefore null and vold at the very onset and should be annulled. Grounds 8 and 9 The Ld Assessing Officer has made an addition to the tune of Rs 5,00,00,000/-being investment in property by the appellant during the year, treated as Unexplained Money u/s 69A of the Act. Facts of the Issue is, that during the relevant previous year, the appellant Invested in a Property at Viraj Khand, Gomtinagar, Lucknow. The Property was purchased through Unsecured Loans obtained from its Directors i.e. Pooja Agarwal 4,96,00,000/- Ankush Aagrwal 40,00,000/- Page 8 of 22 The Investment in property coupled with source Le Unsecured Loans were duly reflected in the financial statements of the appellant concern and forth duly filled in the Income Tax Return as well. Copy of the Audited Financial Statements of the appellant for the A.Y 2016-17, Copy of confirmations, income tax returns of lenders alongwith their respective bank statements are furnished herewith for your honour's kind perusal. As a matter fact the observation of the Ld Assessing Officer, where he has linked the Income with the Investment made in the property is totally misconceived and on incorrect understanding of facts. It is worthwhile to mention that all the documents in relation of the source of investment were duly furnished to the Ld Assessing Officer and ITO (I &CI) as well and were open to the Ld Assessing Officer for verification at all times. Instead the Ld Assessing Officer chose not to consider them, and passed the assessment order without even acknowledging the same. Thus the conclusion drawn by the Ld Assessing Officer is devoid of material available on records and wrong appreciation of facts. Grounds 10 and 11 The Ld Assessing Officer has made the addition u/s 69A of the Income Tax Act 1961. treating the investment made in the property as Unexplained Money. Your honour will appreciate, given the facts of the case, Section 69A does not apply in the Instant case of the appellant. In this reference we would like to quote the text of Section 69A for your honour's reference: “Where in any financial year the assessee is found to be the owner of money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any maintained by him…………………such financial year. The Section 69A has two limbs, which a stated hereunder: a) The assessee has to be the owner of money, bullion, jewellery or other valuable article. b) That money, bullion, jewellery or other valuable article is not recorded In the books of account, if any maintained by him. In the instant case of the appellant, it has invested in an Immovable property, squarely which is not covered in the definition of money, bullion, Jewellery or other valuable article as stated in the section. Further the Investment in property as well as the source of investment is duly reflected in the books of accounts of the appellant. and also appearing the duly Audited financial statements of the appellant company. The appellant is subject to audit under Companies Act 2013 and Audit report was duly furnished before the Ld Assessing Officer. Therefore, the invocation of Section 69A is misplaced, misconceived and based on incorrect understanding of facts and hence renders the entire addition void ab initio. The investment is duly explainable and recorded in the regular books of accounts maintained by the appellant and hence the entire addition of 5,00,00,000/- made by the Ld Assessing Officer is purely on surmises and conjectures, and hence deserves to be deleted. It is therefore humbly prayed that the above submissions may kindly be considered and the appeal be decided on merits.
Decision Page 9 of 22 I have gone through grounds of appeal
, statement of facts; submissions made by the Appellant and have considered the facts and evidence on record. 5.1. Grounds 1, 12,13 and 14. These Grounds being general in nature do not require any separate adjudication and hence, these are dismissed. 5.2. Grounds 2, 3 and 4. Vide these Grounds the Appellant has challenged the reassessment proceedings as being bad in law as the same has been Initiated merely on the basis of report received from ITO (I&CI) without any independent application of mind by the AO and without bringing any independent material on records to suggest that the income of the Appellant has escaped assessment. In this regard the Appellant has submitted that the reasons recorded are vague and there is no nexus or live link with the alleged escapement of income. The AO has, without applying his/her mind and without making any independent enquiries has reopened the assessment on the basis of a third-party report. The Appellant has further submitted that being a private limited company, all facts were duly disclosed in the ITR and accompanying financial statements which were already with the AO and yet the AO proceeded to initiate reassessment proceedings Ignoring all these facts. In respect of these submissions, the Appellant has placed reliance on some case laws which have been reproduced at para 4 above. I have considered the submissions of the Appellant. The 1st issue to be decided here is whether the AO was justified in reopening the assessment merely on the basis of the report received from ITO(I&CI). In this regard, it would be appropriate to first go through the reasons recorded; the same is reproduced hereunder: purchased a property of Rs 50000000/- at Viraj Khand Gomtinagar, Lucknow but had not furnished documentary evidence in respect of the source of investment. As the assessee does not justify the source of such huge investment considering the source of income shown by the assessee in his return. Since the assessee could not substantiate the source of investment of Rs 5,00,00,000/-against purchase of property, it is inferred that source of unexplained investment amounting to Rs 500,00,000/- has left to be taxed and escaped assessment for Α.Υ. 2016-17 From the above, it can be observed the I&CI wing of the Income Tax Department had carried out investigation in the case of the Appellant in respect of Investment made in a property in AY 2016-17 amounting to Rs.5,00,00,000/-. The Investigation was carried out through issue of statutory letters u/s 133(6) of the Act. It was concluded post Investigation that the Appellant could not explain the source of investment in the property amounting to Rs.5,00,00,000/-. The I & Cl wing shared this report with the AO through proper channel. The AO applied his mind on this report and formed a reasonable belief that there is escapement of income since the investment in property amounting to Rs.5,00,00,000/- remained unexplained, more so, when the there is a loss of Rs. 11,293/- reported by the Appellant AY 2016-17. On these set of facts, in my considered opinion, the AO has validly initiated the reassessment proceedings. Facts, as pointed in the report of Page 10 of 22 I&CI are unambiguous. The Appellant has made an investment In property of Rs.5,00,00,000/-in AY 2016-17. However, the Appellant has reported loss of Rs. 11,293/- In the return for AY 2016-17. Further, the Appellant has not furnished source of such investment when queried by I&Cl wing of the Department. These facts are sufficient for the AO to form a reasonable belief that there is an escapement of Income to the tune of Rs.5,00,00,000/-. In this regard, I find that Hon'ble Gujarat High Court In the case of M/s Aradhana Estates Pvt Ltd vs DCIT [2018] in Special C.A. No.21999 of 2017, has upheld the validity of reassessment proceedings Initiated on the basis of report received from the Investigation Wing of the Department. While arriving at this conclusion, the Hon'ble High Court has placed reliance on decisions of Hon'ble Supreme Court. I find the facts of this case to be similar to the facts in the case of the Appellant. Relevant part of this order/judgment is reproduced below for reference: "2. Brief facts are as under. The petitioner is a private limited company. For the assessment year 2010-2011, the petitioner had filed return of income on 21.9.2010 declaring a total income of Rs.15.14 lacs (rounded off). Such return was taken in scrutiny by the Assessing Officer. During such scrutiny assessment, he had raised queries about share application money received by the company from various entitles. The petitioner replied to such queries, upon which, the order of assessment under section 143(3) of the Income Tax Act came to be passed on 1.1.2013 making no addition with respect to such share application money.
7. We have reproduced the reasons recorded by the Assessing Officer for reopening the assessment. In such reasons, he pointed out that the Information was received from the investigation wing of the department at Calcutta regarding shell companies which had given accommodation entries for share premium to Surat based companies. A list of 114 Calcutta based companies was provided which had given accommodation entries to such Surat based companies. Statements of many entry operators and dummy Directors recorded during various search and seizure operation, survey operation and Investigation were checked. The Assessing Officer thereupon proceeded to record that" On perusal of data so provided by the DDIT(Inv) Unit-3(1), Kolkatta, it is noticed that during the period under consideration, the assessee company has accepted share capital/share premium from the following entries/parties which have been proved to be shell companies based on the investigation conducted by the DDIT(Inv) Unit-3(1), Kolkatta". Underneath, he provided a list of 17 companies who had transacted with the assessee company during the year under consideration and were allotted equity shares by purported investment of sizeable share capital and share premium amounts. On verification of such materials, the Assessing Officer noted that the assessee had received share capital/share premium amount, amounting to Rs.14.76 crores. Since the investor companies were found to be shell companies Indulging in providing accommodation entries, the Assessing Officer was of the opinion that the share capital/share premium claimed to have been received from the company by the assessee was not genuine. Amount is nothing but assessee's own money introduced in the garb of share capital/share premium from the shell companies and therefore, such amount is liable to be taxed under section 68 of the Act. He therefore, recorded his satisfaction that the Income to the tune of Rs. 14.76 crores had escaped assessment and that this was due to the assessee having failed to disclose truly and fully all facts.
Section 147 of the Act provides inter-alia that if the Assessing Officer has the reason to believe that any Income chargeable to tax has escaped assessment, he may subject to the provisions of section 148 to 153 of the Act, assess or reassess such Income. Proviso to section 147 of-course Page 11 of 22 requires that where the assessment under sub-section (3) of section 143 of the Act has been made for the relevant assessment year, no action shall be taken under this section after the expiry of the four years from the end of the relevant assessment year, unless any Income chargeable to tax has escaped assessment by reason of the failure on part of the assessee to make return under section 139 or in response to a notice issued under sub- section(1) of section 142 or 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. In this context, it is well settled that the requirement of full and true disclosure on part of the assessee is not confined to filing of return alone but would continue all throughout during the assessment proceedings also. In this context, the materials on record would suggest that the Assessing Officer had received fresh information after the assessment was over prima facie suggesting that sizeable amount of income chargeable to tax in case of the assessee had escaped assessment and that such escapement was on account of failure on part of the assessee to disclose truly and fully all material facts. The Assessing Officer formed such a belief on the basis of such materials placed before him and upon perusal of such material. This is not a case where the Assessing Officer was re-examining the materials and the documents already on record filed by the assessee along with the return or subsequently, brought on record during the assessment proceedings. It is a case where entirely new set of documents and materials was placed for his consideration compiled in the form of report received from the investigation wing. Such material was perused by the Assessing Officer and upon examination thereof, he formed a belief that the petitioner company had received share application and share premium money from as many as 20 different investor companies who were found to be shell companies and indulging in giving accommodation entries. From our view point, the Assessing Officer had sufficient material at his command to form such a belief. Such materials did not form part of the original assessment proceedings and was placed before the Assessing Officer only after the assessment was completed. Since on the basis of such materials, Assessing Officer, as we have recorded, came to a reasonable belief that income chargeable to tax had escaped assessment, merely because these transactions were scrutinized by the Assessing Officer during the original assessment also would not preclude him from reopening the assessment. His scrutiny during the assessment will necessarily be on the basis of the disclosures made by the assessee.
With these foundational conclusions, we may deal with the contentions of the counsel for the petitioner: ………………………………………. ……………………………………….
This Court has examined the belief of the Assessing Officer to a limited extent to Inquiry as to whether there was sufficient material available on record for the Assessing Officer to form a requisite belief whether there was a live link existing of the material and the Income chargeable to tax that escaped assessment. This does not appear to be the case where the Assessing Officer on vague or unspecific Information initiated the proceedings of reassessment, without bothering to form his own belief in respect of such material. We need to notice that the Joint Director, CBI, Mumbai, intimated to the DIT (Investigation), Mumbai. A case is registered against Mr. Arun Dalmia, Harsh Dalmia and during the search at their residence and office premises, the substantial material indicated that 20 dummy companies of Mr. Arun Dalmia were engaged in money laundering and the income-tax evasion. The said entitles included Basant Marketing Pvt. Ltd. also. From the analysis of details furnished and the beneficiaries Page 12 of 22 reflected, which are spread across the country, the CIT, Koklatta, suspected the accommodation entry related to the assessment year 2006- 07 as well, this information has been provided to Director General of Income-tax, Kolkata, who in turn, communicated to the Chief Commissioner of Income-tax, Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of Information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on non- supply of such document for which confidentiality is claimed at this stage, following the decision of the Delhi High Court in case of Acorus Unitech Wireless (P.) Ltd. (supra). Assumption of jurisdiction on the part of the Assessing Officer is since based on fresh information, specific and reliable and otherwise sustainable under the law, challenge to reassessment proceedings warrants no Interference." 12………What is required is the reason to believe that Income chargeable to tax as escaped assessment. Sufficiency of the materials in the hand of the Assessing Officer which enabled him to form such a belief would not be examined. A reference in this respect is made to a decision of the Supreme Court in the Wo case of Asstt. Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers P. Limited, reported in [2007] 291 ITR 500."
The next contention that the Assessing Officer did not demonstrate any material enabling him to form a belief that income chargeable to tax has escaped assessment is fallacious. The Assessing Officer recorded detailed reasons pointing out the material available which had a live link with formation of belief that the Income chargeable to tax had escaped assessment. At this stage, as is often repeated, we would not go into sufficiency of such reasons. In this context, reference can be made to decision of Supreme Court In case of Raymond Woolen Mills Ltd. (supra). In case of Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in (2007) 291 ITR 500(SC), It was observed as under: "The expression reason to believe in section 147 would mean cause or justification. If the Assessing Officer has cause or if the Assessing Officer has cause or justification to know or suppose that Income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. What is required is reason to believe but not the established fact of escapement of income. At the stage of Issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief is within the realm of subjective satisfaction of the Assessing Officer." ……………………….. ………………………..
The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reopening of the assessment. We have recorded that the Assessing Officer had perused the materials placed Page 13 of 22 for his consideration and thereupon, upon examination of such materials formed a belief that Income chargeable to tax had escaped assessment. In case of Principal Commissioner of Income tax, Rajkot- v. Gokul Ceramics reported in (2016) 241 Taxman 1 (Gujarat), similar contention was raised by the counsel for the assessee contending that the Assessing Officer had acted mechanically on the investigation carried out by the Excise department and not formed his independent belief. Such a contention was rejected making the following observations: "9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and show-cause notice placed at the disposal of the Assessing Officer. These materials prima facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the re-opening could not and should not have been declared as Invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions Invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for the Revenue. …………………… …………………… 11. In case of Income Tax Officer vs Purushottam Das Bangur (supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of manipulated transaction. On the basis of such information, the Assessing Officer Issued notice for reopening of the assessment. The question, therefore, arose whether the Information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such Information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: "12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any Inquiry or investigation into the information sent by Shri Bagai. Merely because the Impugned notice was sent on the next day after receipt of the letter of Shri Bagal does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and Information contained in the said letter, the Income Tax officer, without any further Investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could Page 14 of 22 have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal Is, therefore, allowed, the Impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs."
In case of Income Tax Officer vs Selected Dalurband Coal Co. Pvt. Ltd. (supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been Inspected and there had been under reporting of coal raised. Upholding the validity of re-opening of assessment, the Supreme Court held and observed as under: "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9,1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated In the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid......." ……………………………. …………………………….
Learned Single Judge of Madras High Court in case of Sterlite Industries (India) Ltd. vs. Assistant Commissioner of Income Tax reported in [2008] 302 ITR 275 (Mad) upheld the notice for reopening which was based on information from enforcement directorate showing possible inflation of purchases made by the assessee."
In the result, petition is dismissed.
All the above observations are only for the purpose of dealing with the petitioner’s challenge to the notice of reopening and would not limit any of the contentions of the assessee with respect to the reassessment." Thus, placing reliance on the above decision of Hon'ble Gujarat High Court, I uphold the action of the AO in initiating reassessment proceedings on the basis of report received from I&CI Wing of the Department wherein the investigation carried out clearly demonstrate the source of investment in the property amounting to Rs.5,00,00,000/- remained unexplained on the part of the Appellant.
Page 15 of 22 Now coming to the 2nd issue whether alt facts were duly disclosed in the return filed for AY 2016-17 and therefore, the Investment in the property was fully explained and there was no occasion to Initiate reassessment proceedings in absence of any new facts coming into the possession of the AO. At the outset, I find this argument completely devoid of logic. The Appellant was required to explain the source of such investments, which, inter alia, required the Appellant to furnish relevant documents like bank statements, loans taken along with confirmations etc. The Appellant has not furnished such details in the course of proceedings before ITO (I&CI). Thus, source of such investments remained unexplained. The AO was therefore, justified, in coming to a reasonable belief that income to the tune of Rs.5,00,00,000/- has escaped assessment. Thus, in view of the above discussions, I uphold the action of the AO IN Initiating reassessment proceedings. The reassessment proceedings have been validly initiated. Grounds are, thus, dismissed. 5.3. Ground 5 Vide this Ground, the Appellant has submitted that all information was furnished before the ITO(I&CI) and thus, there was no reason to believe that any Income has escaped assessment. I have considered the submissions of the Appellant. I find the same to be factually incorrect. Reasons recorded by the AO (reproduced at para 5.2 above) clearly demonstrate that the Appellant has not furnished any documentary evidence to explain the source of investment in property amounting to Rs.5,00,00,000/-. In fact, the Appellant has not furnished any such documents explaining the source of investment in property amounting to Rs.5,00,00,000/- In the course of assessment proceedings either. Thus, this ground being factually incorrect is dismissed. 5.4. Ground 6 Vide the Grounds, the Appellant has submitted that the assessment order is bad in law since the AO has not disposed of the objections raised by the Appellant as has been mandated by Hon'ble Supreme Court in the case of GNK Driveshafts India Ltd vs ITO (2003) 259 ITR 19(SC). Accordingly, the order passed by the AO is null and void. In this regard, the Appellant has placed reliance on various case laws which are reproduced at para 4 above. I have considered the submissions of the Appellant. I find that on request of the Appellant; the AO has supplied reasons of reopening on 20.02.2022. The Appellant did not furnish any objections to the reasons for reopening on receipt of the same. This is an undisputed fact. It is also an undisputed fact that the Appellant has not cooperated in the assessment proceedings and has raised objection only when show cause was Issued u/s 144 of the Act on 16/03/2022 enclosing a copy of draft assessment order. Thus, the Appellant has raised objection to the show cause issued u/s 144 enclosing the draft assessment order and not to the reasons for reopening which was provided almost a month ago. So, the allegation of the Appellant that it has raised objection to reasons for reopening vide letter dated 17/03/2022 is factually not correct. The Appellant has responded to the show cause letter enclosing the draft assessment. This is evident from the assessment order. In view of these facts, the ratio of the judgment of Hon'ble Supreme Court in the case of GNK Driveshafts India (supra) will not apply. Accordingly, the Ground is dismissed. 5.5. Ground 7 Page 16 of 22 Vide the Ground, the Appellant has stated that the reasons for reopening was supplied after a gap of more than a month i.e. on 20/02/2022. Thus, the AO has erred in rejecting the objections raised vide letter dated 17/03/2022 citing paucity of time. The Appellant has further submitted that post receipt of show cause u/s 144 enclosing the draft assessment order, the Appellant raised objections vide letter dated 17/03/2022 and also furnished submissions vide letter dated 21/03/2022, however, the AO did not consider the same and passed the assessment order on 23/03/2022. Thus, the Appellant was denied reasonable opportunity of being heard, thus, violating principles of natural justice. These facts make the assessment order as bad in law. I have considered the submissions of the Appellant. I do not agree with the same. The Appellant was supplied reasons for reopening on 20/02/2022 when the same was requested. It is a settled law that reasons for reopening have to be supplied when the return has been filed u/s 148 of the Act and the same is requested by the assessee. It is further observed that the Appellant did not respond to various notices issued u/s 142(1), thus, compelling the AO to initiate proceedings u/s 144 and subsequently pass the order under the said section. Thus, sufficient opportunities were provided to the Appellant to make submissions, however, the same were not availed for reasons best known to the Appellant. Further, the Appellant has not furnished copy of any letter dated 21/03/2022 vide which it claims to have made submissions in response to show cause u/s 144 of the Act. The AO does not mention of any submissions being made vide letter dated 21/03/2022. If there was any such letter dated 21/03/2022(with proper acknowledgement from the Department), the AO could have furnished the same in the course of present proceedings. In fact, the Appellant has not submitted any document/letters which can demonstrate that the Appellant did cooperate in the assessment proceedings. Thus, on the basis of details available on records, the Appellant has not been able to negate the findings made by the AO that the Appellant did not furnish details called for In the course of assessment proceedings. This view is also supported by the fact that the Appellant has not raised any ground challenging the action of AQ In passing the order u/s 144 when submissions were made in the course of assessment proceedings. In view of the same, I hold that reasonable opportunity was provided to the Appellant and thus, there is no violation of principles of natural justice. The assessment order is, therefore, not bad in law on account of violation of principles of natural justice. Ground is, thus, dismissed. 5.6. Grounds 8 and 9 Vide these Grounds, the Appellant has submitted that the AO has erred in making the addition of Rs.5,00,00,000/- on account of being unexplained. The Appellant has submitted that the investment as well as the source of investment i.e. unsecured loans is duly reflected in the ITRs and the accompanying Financial Statements. The investment of Rs.5,00,00,000/- has been made out of unsecured loans of Rs. 4,96,00,000/- and Rs.40,00,000/- taken from Ms. Pooja Agarwal and Ankush Agarwal respectively. The Appellant has submitted confirmation, bank statements and relevant ITRs of the loan lenders. The Appellant has further submitted that these were also submitted in the proceedings before ITO (I&CI). I have considered the submissions of the Appellant. At the outset it is stated that the Appellant had not submitted these details pertaining to loan lenders before ITO(I&CI). I have discussed the same at para 5.3 above. Further, its an undisputed fact that these details were also not submitted in the course of assessment proceedings. Thus, these evidences, Page 17 of 22 being furnished for the first time in the present proceedings, partake the character of additional evidence. However, there is no accompanying petition of the Appellant under Rule 46A of the IT Rules, 1962. In this regard, it would be imperative to refer to the provisions contained in rule 46A of the Income Tax Rules, 1962 which is being reproduced as under: "Rule 46A.-- (1) The Appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer), except in the following circumstances, namely: -- 1. where the [Assessing Officer] has refused to admit evidence which ought to have been admitted; or 1. where the Appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer]; or (c) where the Appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal; or 1. where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the Appellant to adduce evidence relevant to any ground of appeal.
(2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer) has been allowed a reasonable opportunity- 1. to examine the evidence or document or to cross-examine the witness produced by the Appe Appellant, or 1. to produce any evidence or document or any witness In rebuttal of the additional evidence produced by the Appellant. (4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause Including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the Imposition of penalty under section 271." A perusal of the above provisions of Rule 46A would reveal that Rule 46A(1) is negatively worded and precludes an appellant from filing any evidence in the nature of additional evidence, other than those which have been filed before an AO, except in the circumstances laid out in Rule 46A(1). Thus, it is clear that before the first Appellate Authority an Appellant can rely on the evidence filed before the AO and incase an Page 18 of 22 Appellant so chooses to furnish any evidence other than the ones filed by him before the AO, then in that situation the Appellant must make out a case as falling under any of the four limbs of rule 46A(1). It therefore emerges that without stating a case under Rule 46A(1), an appellant cannot file additional evidence. A natural corollary of the same is that in the absence of any case made out by an Appellant under Rule 46A(1), the first Appellate Authority cannot consider the additional evidence filed before him. In this regard, it would be pertinent to refer to the ratio of the following judgments: In the case of CIT vs. Manish Build Well Pvt. Ltd. [ITA no.928/2011 dated 15/11/2011], it was held/averred, as follows, by the Hon'ble Delhi High Court: "23. It is for the aforesaid reason that Rule 46A starts in a negative manner by saying that an appellant before the CIT (A) shall not be entitled to produce before him any evidence, whether oral or documentary, other than the evidence adduced by him before the assessing officer. After making such a general statement, which is in consonance with the principle stated in the above Judgment, exceptions have been carved out that in certain circumstances It would be open to the CIT (A) to admit additional evidence. Therefore, additional evidence can be produced at the first appellate stage when conditions stipulate in the Rule 46A are satisfied and a finding is recorded. ………………………………………………………. We are highlighting these aspects only to press home the point that the conditions prescribed in Rule 46A must be shown to exist before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with so that the Rule is meaningfully exercised and not exercised in a routine or cursory manner. A distinction should be recognized and maintained between a case where the assessee invokes Rule 46A to adduce additional evidence before the CIT (A) and a case where the CIT (A), without being prompted by the assessee, while dealing with the appeal, considers it fit to cause or make a further enquiry by virtue of the powers vested in him under sub-Section (4) of Section 250. It is only when he exercises his statutory suo moto power under the above sub-section that the requirements of Rule 46A need not be followed. On the other hand, whenever the assessee who is in appeal before him invokes Rule 46A, it Is incumbent upon the CIT (A) to comply with the requirements of the Rule strictly." In the case of ITO vs. Bajoria Foundation [254 ITR 065 (Cal); Para 6], it was held/averred, as follows, by the Hon'ble Calcutta High Court: "It is trite that rules have to be framed within the scope of main, provision and that a rule, which travels beyond or is inconsistent with or Is repugnant to the provisions in the statute will be ultra vires and void. Rule 46A was introduced with effect from 1-4-1973 and as a result of Insertion of Section 295(2)(mm) in the income tax act which empowered Board to provide for the circumstances in which, the condition subject to which and the manner in which Commissioner (Appeals) may permit an Appellant to produce evidence which the Appellant did not produce or was not allowed to produce before the assessing officer. However, these powers of the Board, which have been vested in them for carrying out for the purposes of the Act, have to be exercised in such a judicious manner so as not to make any statutory provision redundant and nugatory.
Page 19 of 22 In the case of DCIT vs. Gurdaspur Central Co-op. Bank Ltd [ITA No. 99 (Asr.) of 2011 dated 07/05/2012], It was held/averred, as follows, by the Hon'ble ITAT Amritsar: "9.1 As per Rule 46A(2), no evidence can be admitted by the Id. CIT(A) under sub-rule (1) unless he records in writing the reasons for its admission. Under Rule 46A(3), it is clearly mentioned that the Ld. CIT(A) shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity to examine the evidence or document or to cross-examine the witness produced by the appellant, or to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. As regards Rule 46A(4), it has also been mentioned that nothing contained in this rule shall affect the power of the CIT(A) to direct the production of any document to enable to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty, whether on his own motion or on the request of the AO. In the present case, the assessee had submitted the details with regard to hiring charges, petrol charges and other charges before the Id. CIT(A) and other evidences to show that the claim of Rs.12,00,000/- is available to the assessee. In the present case, the assessee has not moved any application for admission of any additional evidence under Rule 46A of the Income Tax Rules, 1962, Even if the application under Rule 46A has not been filed before the Id. CIT(A), the assessee has not shown that the AO has refused to admit the evidence which ought to have been admitted or the assessee was prevented by sufficient cause from producing the evidence which he was called upon to produce by the AO; or where the assessee was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal; or where the AQ has made the order appealed against without giving sufficient opportunity to the assessee to adduce evidence relevant to any ground of appeal. 9.2 The Ld. CIT(A), without application under Rule 46A and without recording any reason for admitting the documents and explanation filed before him and without affording reasonable opportunity to examine such evidence or documents filed before him by the AO had decided the Issue in favour of the assessee, which is clear violation of principle of natural Justice. It is not a case under Rule 46A(4) that the Id. CIT(A) had directed the assessee for production of any document to enable him to dispose of the appeal. Therefore, the decision of the Id. CIT(A) Is in clear violation of principle of natural justice and bad in law. But in the Interest of Justice, since the details submitted by the Id. CIT(A) remained to be examined by the AO, though the same were not submitted before the AO in spite of number of opportunities given. Therefore, the issues involved in ground Nos. 1 & 2 are set aside to the file of the AO who will decide the issue de novo but by providing opportunity of being heard to the assessee and after considering the documents submitted before the Ld. CIT(A). Accordingly, the appeal of the Revenue is allowed for statistical purposes." Respectfully following the ratio of the above judgments and in view of the fact that the Appellant has furnished the additional evidence without any accompanying petition making out a case under any of the four limbs of the Rule 46A(1) of the Income Tax Rules, 1962, 1, being constrained by the procedural rules and law laid out, cannot consider the additional evidence. Thus, in the absence of the requisite documentary evidences, the contention of the Appellant remained unverified and unproved solely due to the conduct and latches on the part of the Appellant and these cannot be accepted. Accordingly, the addition made by the AO is hereby confirmed. Grounds are, thus, dismissed.
Page 20 of 22 5.7. Grounds 10 and 11 Vide these Grounds, the Appellant has challenged the action of AO in making addition u/s 69A of the Act since the same does not apply in its case. The Appellant has submitted that provisions of section 69A applies in cases where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, the assessee offers no explanation about the nature and source of acquisition of the same. However, in the case of the Appellant, the undisputed fact is that there is an investment of Rs.5,00,00,000/- in an immovable property and the same is reflected in the books of account. The AO has found the source of such investment as unexplained and has Invoked provisions of section 69A for making addition. This is legally wrong, since Immovable property is not covered u/s 69A. The additions, thus, made under a wrong section and therefore, the same deserves to be deleted. I have considered the submissions made by the Appellant. It is observed from the assessment order that the AO has made the addition treating the purchase consideration of Rs.5,00,00,000/- as unexplained money. The AO has not made addition on account of unexplained investment in a property. The Appellant has misunderstood the same. This is evident from the assessment order; relevant part of the assessment order is reproduced below for reference: "3. On perusal of financial statements available with the department, it is observed that during the F.Y.2015-16, the assessee had purchased a property of Rs. 5,00,00,000/-at Viraj Khand Gomtinagar Lucknow. Assessee has failed to explain the source of investments despite several notices. In view of the above the source of investments in immovable property remained unexplained. The entire purchase consideration of Rs. 5,00,00,000/- is treated as unexplained money u/s 69A and added to total income of the assessee. Penalty proceeding are initiated separately u/s 271(1)(c) of the IT Act for concealment of income." Since, the AO has made addition on account of unexplained money; provisions of section 69A have been correctly invoked. In view of the same, Grounds are dismissed.” (A.1) The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 17.10.2023 of the Ld. CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal (ITAT), the assessee filed a paper book containing the following particulars: - (A.2) At the time of hearing, the Ld. Authorized Representative for the assessee submitted that the assessee had filed written submissions during the assessment proceedings. He drew our attention to pages 40 to 42 of the paper book which contained acknowledgment for written submissions filed by the assessee. He further submitted that Assessing Officer as well as Ld. CIT(A) have passed their respective orders without giving any consideration to the aforesaid written submissions. He submitted that the issues in dispute regarding addition of Rs.5,00,00,000/- made by the Assessing officer on account of being property purchased by the assessee at (Viraj Khand Gomti Nagar, Lucknow) may be restored back to the file of the Assessing Officer with the direction to pass fresh assessment order on the issue after giving due consideration to written submissions and other evidences filed by the assessee and after providing reasonable opportunity to the assessee. The learned CIT-D.R. for the Revenue expressed no objection and left the matter to the discretion of the Bench. In view of the foregoing, the impugned appellate order dated 17.10.2023 of the Ld. CIT(A) is set aside Page 22 of 22 and the issue in dispute regarding of the aforesaid addition of Rs.5,00,00,000/- is restored back to the file of the Assessing Officer with the direction to pass de novo order on this specific issue, in accordance with law, after providing reasonable opportunity to the assessee and after giving due consideration to written submissions and other evidences filed by the assessee.
(B) In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 11/09/2024