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Facts
The assessee filed an original return of income and purchased a property for a significant amount, funding it partly from a loan and partly from her husband. The Assessing Officer (AO) questioned the source of funds, treating the return as invalid due to non-verification and making an addition. The CIT(A) dismissed the appeal on technical grounds, stating the assessee did not pay advance tax.
Held
The Tribunal held that the CIT(A) erred in dismissing the appeal on technical grounds as the assessee had filed the original return and paid taxes. The Tribunal found that the sources of the amount in question were explained, with Rs.9,00,000/- paid by the assessee's husband from his account (rent received by the assessee from him) and Rs.6,74,067/- paid from the assessee's account, with immediate credit from her husband's account.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal on technical grounds without deciding on merit, and whether the source of funds for the property purchase was sufficiently explained by the assessee.
Sections Cited
148, 144, 249
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against the order of the ld. CIT(A) dated 26-11-2024, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2013-14 raising therein following grounds of appeal: ‘’1. The ld. CIT(A) has erred on facts and in law in dismissing the appeal filed by the assessee by holding that since the assessee has offered ‘no’ comment at S. No. 9 of Form No. 35, it means that she has failed to make payment of amount equal to advance tax whereas ‘no’ mentioned in this column refers to ‘NA’ inasmuch as assessee has filed the original return of income on 25-07-2013 which was verified on 22-09-2014 and the tax and interest payable on such returned income has been duly paid.
2.1 Apropos grounds of appeal, brief facts of the case are that the assessee filed original return of income on 25.07.2013 declaring total income of Rs.5,17,730/-. The AO on the basis of information that assessee purchased a property at Mumbai on 13.07.2013 for Rs.5,63,56,434/- against which assessee obtained loan of Rs.4.50 crores and claimed to have funded the balance amount out of the amount received from her spouse but from the bank account it was noticed that only Rs.84,02,488/- was received from the spouse out of which only Rs.81,17,333/- was paid to the seller of the property, issued notice u/s 148 dt. 25.09.2017. 2.2 In response to notice u/s 148 the assessee e-filed return on 06.11.2018 declaring same income of Rs.5,17,730/- but since the return was not verified, AO treated the same as invalid return and passed the order u/s 144 of the Act by not accepting the explanation of assessee as to the source of the balance amount to the extent of Rs.15,62,175/-. 2.3 Being aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A), who dismissed the appeal of the assessee by observing as under:- ‘’4.3 The appellant has offered ‘No’ comments at Sl. No. 9 of 35 and the appellant failed to make payment of amount equal to the advance tax which was due on its income. It is, therefore, clear that information given at Sl. No. 9 of Form-35 is correct and the SMT. SANYA SURENDRA MEHTA VS ITO, WARD 6(1), JAIPUR appellant has not made payment of amount equal to the advance tax which was due on its income. The appellant has also not requested for exemption from operation of the provisions of clause (b) of Sub-section(4) of Section 249 of the Act.
5. Since the appellant has not filed return of incomeas well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infurcutous and, therefore, is dismissed.
6. The appeal is dismissed.’’ 2.4 During the course of hearing, the ld. AR of the assessee has filed the following written submission with a prayer that the impugned addition made by the AO needs to be deleted as she has explained the source of the amount of Rs.15,62,175/-:
1. At the outset it is submitted that assessee filed the original return of income on 25.07.2013 on which tax payable was Rs.34,552/- which was paid by way of advance tax and TDS (PB 1-3). Column No.9 of Form No.35 is required to be filled where return is not filed. In the present case, since return was filed the assessee mentioned ‘No’ against this column which in fact mean that this column is not applicable to the assessee. The Ld. CIT(A) without seeking any information from the assessee against the alleged discrepancy has dismissed the appeal which is against the principal of natural justice and therefore the order passed by him be quashed and the appeal of assessee be decided on merit since all the facts are on record. Reliance in this connection is placed on the following cases:- (a) Zuari Leasing & Finance Ltd. Vs. ITO (2008) 112 ITD 205 (Del.) Trib.) (TM). The Honb’le ITAT at Para 10 of the order held as under:- “10. It is clear from above that primary power, rather obligation of the Tribunal, is to dispose of the appeal on merits. The incidental power to remand, is only an exception and should be sparingly used when it is not possible to dispose of the appeal for want of relevant evidence, lack of finding or investigation warranted by the circumstances of the case. Remand in a casual manner and for the sake of remand only or as a short cut, is totally prohibited. It has to be borne in mind that litigants in our country have to wait for long to have fruit of legal action and expect the Tribunal to decide on merit. It is, therefore, all the more necessary that matter should be decided on merit without allowing one of the parties before the Tribunal to have another inning, particularly when such party had full opportunity to SMT. SANYA SURENDRA MEHTA VS ITO, WARD 6(1), JAIPUR establish its case. Unnecessary remands, when relevant evidence is on record, belies litigant’s legitimate expectations and is to be deprecated. Having regard to aforesaid principle, it is necessary to look into records to see whether there is sufficient material on record to dispose of the issue on merit and there is no need to remand the issue to provide a fresh inning to the Revenue.” (b) Srimanta Shankar Academy Vs. ITO (2007) 107 ITD 99 (Gauhati) (Trib.) (TM). The Honb’le ITAT at Para 10 of the order held as under:- “It is true that remand of a matter is discretionary. But such discretion is required to be shown to be exercised in a judicial manner. In the case of Saurashtra Packaging (P) Ltd. vs. CIT (1996) 131 CTR (Guj) 40 : (1993) 204 ITR 443 (Guj), their Lordships of Gujarat High Court have observed that where matter can be disposed of by the Tribunal on the basis of material already on record, a remand should not be resorted to. It is always necessary to avoid multiplicity of proceeding and to save time. There are large number of decisions of High Courts and Supreme Court where instead of directing the Tribunal to make a reference of question under s. 256(2), the Courts while disposing of reference application answered the question sought to be referred and directed the Tribunal to proceed in a particular manner. All this is done to save time and multiplicity of proceeding. I am convinced that such a course to save time should have been adopted in this case and remand of the matter is totally unnecessary. I say so for the reasons and after noting following facts available on record.”
So far as merit of the case is concerned, the source of Rs.15,62,175/- is as under:-
(a) Rs.9,00,000/- was paid to the seller of property on 09.07.2012 from the bank account of assessee’s husband Sh. Surendra Mehta (PB 10). In fact the assessee is receiving rent of Rs.9 lacs each year from her husband which is declared in her return of income. The assessee instead of receiving the payment of rent in her account, requested her husband to make the payment of this amount directly to the seller of the property. Thussource to the extent of Rs.9,00,000/- is fully explained. (b) Rs.6,74,067/- was paid on 30.07.2012 from the bank account of assessee (PB 7). From the bank account it can be noted that there is no immediate cash deposit in the bank account. In fact the immediate credit is from her husband's account. Hence the source of this amount is fully explained. Thus when the source of the amount of Rs.15,62,175/- is fully explained, addition made by the AO be directed to be deleted. To support the case of the assessee, the ld .AR of the assessee has filed a paper book containing followingevidence :
SMT. SANYA SURENDRA MEHTA VS ITO, WARD 6(1), JAIPUR S.N. Copy of submission filed before ld.CIT(A) Page No. Filed before AO/CIT(A) 1. Copy of submission filed before ld. CIT(A) 1A-2A CIT(A) 2. Copy of paper book index filed before ld. 3 CIT(A) CIT(A) 3. Copy of ITR and Computation for A.Y.2013-14 01-03 Both 4. Copy of ITR and Computation for A.Y.2012-13 05-06 Both 5. Copy of Bank statement of assessee (A/c No. 07-09 Both 05431000056687) 6. Copy of Bank statement of Mr. SurenderaMehta 10-12 Both (A/c No. 05431000017869) 7. Copy of RTGS and receipt of payment received 13-14 Both from Lodha Pranik Landmark Developers Pvt Ltd. 2.5 On the other hand, the ld.DR supported the order of the ld.CIT(A) and submitted that the assessee could not explain the source of amount and that why the addition made is required to be sustained. 2.6 We have heard both the parties and perused the materials available on record. We note that ld.CIT(A) has not decided the appeal on merit rather dismissed the appeal by incorrectly holding that the assessee has not filed the return of income and not paid advance tax which was payable by her. We find that the assessee filed the original return of income on 25-07-2013 and has also paid the taxes due as per the return of income by way of advance tax and self-assessment tax. Hence, ld.CIT(A) was not justified in dismissing the appeal on incorrect technical issue. He should have decided the appeal of the assessee on merit. Since all the facts to SMT. SANYA SURENDRA MEHTA VS ITO, WARD 6(1), JAIPUR decide the appeal on merit are on record and before both the authorities, to impart substantial justice and in view of the decisions relied by the ld. AR (supra), we proceed to decide the appeal on merit. 2.6.1 From the records, we noticed that husband of the assessee Shri Surendra Mehta paid an amount of Rs.9.00 lacs from his bank account to the seller of the property which is available at page 10 of the paper book. It is also noted from the records that the assessee received a rent of Rs.9.00 lacs each year from her husband and the samewas declared in her return of income so filed. It may be noted that the husband of the assessee directly made the payment of Rs.9.00 lacs from his account to the seller on the request of the assessee as she was receiving the payment of rent in her account which shows that the amount paid to the seller is fully explained. It is further noted that an amount of Rs.6,74,067/- was paid by the assessee from her bank account which is available at page 7 of the paper book. It is also noted from the bank account of the assessee that there was no immediate cash deposit in the bank account. In fact, the immediate credit is from the husbandof the assessee’s account which shows that this amount also sourced from the explained source and it cannot be considered as unexplained. Hence, in view of the above facts and circumstances of the case, we do not concur with the findings of the ld.
SMT. SANYA SURENDRA MEHTA VS ITO, WARD 6(1), JAIPUR CIT(A) and the addition amounting to Rs.15,62,175/- so made by the AO is directed to be deleted. Thus, the appeal of the assessee is allowed. 3. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 12 -02-2025.