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Facts
The assessee challenged the order of the CIT(A) which upheld the addition made by the AO for AY 2018-19. The addition was for unexplained investment in an immovable property, purchased jointly by the assessee and his wife, for which the source of funds was not satisfactorily explained. The assessee claimed to be a non-resident for the past 25 years with no source of income in India.
Held
The Tribunal noted that the assessee was a non-resident with no Indian source of income. While the revenue alleged incomplete details regarding the source of payment from outside India, the Tribunal found it fit to remand the matter back to the Assessing Officer for a fresh decision after due verification of facts.
Key Issues
Whether the addition for unexplained investment in property is justified when the assessee claims to be a non-resident without Indian income, and if not, whether the matter should be remanded for further verification.
Sections Cited
147, 144, 148, 142(1), 69, 234A, 234B, 234F, 139
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No.824/JPR/2024
fu/kZkj.k o"kZ@Assessment Year : 2018-19 Avinash Dadhich cuke The ACIT, Circle, A-191 Mansarovar Scheme Pal Road, Vs. International Taxation, Jodhpur. Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.:BIFPD2373H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Amit Kothari (C.A.) (Th. V.C.) jktLo dh vksjls@Revenue by: Shri Anup Singh(Addl.CIT) lquokbZ dh rkjh[k@Date of Hearing :13/11/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 20/01/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee challenges the finding of the learned Commissioner of Income Tax, Appeal, Delhi-42 [ for short CIT(A)]. The dispute relates to the assessment year 2018-19. That order was passed by the ld. CIT(A) because the assessee challenged the order of ACIT, Circle, International Taxation, Jaipur [ for short AO ] which was passed on 24.05.2023 under section 147 r.w.s. 144 of the Income Tax Act, 1961 [ for short “Act”].
Avinash Dadhich vs. ACIT 2. In this appeal the assessee has raised following grounds: - “
1. The ld. CIT(A) has erred in upholding the order passed by ld. AO u/s 147 r.w.s. 144. The order so made is bad in law and bad on facts and is contrary to the principles of natural justice.
2. The ld. CIT(A), has erred in upholding additions of Rs. 52,38,810/- which is bad in law and bad on facts. The ld. CIT(A) has erred in not properly appreciating the facts and circumstances and the addition so sustained is bad in law and bad on facts.
3. The ld. CIT(A) has erred in sustaining interest charges u/s 234A and 234B.
4. The appellant craves leave to add, alter, amend or vary from the above the above ground of appeal at or before the time of hearing.”
3. Apropos to the grounds so raised by the assessee the brief fact of the case that the assessee did not file his ITR for the A.Y. 2018-19. Information in this case was gathered from AIR Information/TAS/26AS as to the purchase of immovable property. Based on the information gathered a notice u/s 148 was issued to the assessee on 29.03.2022, after getting prior approval of the ld. Pr. CIT, Jodhpur-1, for filling ITR for A.Y. 2018-19. In response to that notice assessee had not filed any ITR. As per the information available with the revenue the assessee purchased immovable property of Rs.1,86,22,750/- and paid amount of Rs. 9,61,200/- on account of stamp duty and registration charges.During the assessment proceedings, the assessee was asked regarding the source of funds used to purchase the said immovable property and doing the above mentioned transactions vide notice u/s 142(1) dated 02.11.2022, Avinash Dadhich vs. ACIT 25.01.2023 and show cause notice dated 11.03.2023.The assessee vide various submissions furnished relevant documents to the case. On perusal of the documents submitted by the assessee it was noted that the said immovable property was jointly purchased by the assessee with Mrs. Rajshree Dadhich, therefore, purchase cost at the part of the assessee amounts to Rs. 93,11,375/-i.e. 50% of the total purchase value of Rs. 1,86,22,750/- and charges paid of Rs. 9,61,200/-.The assessee furnished copy of NRE bank account held with HDFC bank. On perusal of that bank account statement ld. AO noted that the assessee made a total payment of Rs. 45,53,161/- during the F.Y. 2016- 17 and 2017-18, but the assessee failed in submitting justification and documentary evidence regarding the source of the remaining payment. In the light of that observation ld. AO noted that the transactions of Rs. 52,38,814/- remain unexplained and falls under the purview of unexplained investment u/s 69 of the Income Tax Act, 1961. Since the assessee failed to explain the source of investment even after providing sufficient time, therefore, the source of investment of Rs. 52.38,814/- remained unexplained and thus added to the total income of the assessee on account of unexplained investment under section 69 of the Act. The draft order was served upon the assessee and since the assessee did not raise any objection before the Avinash Dadhich vs. ACIT DRP in this case within the stipulated time, therefore, the assessment was completed at a total income of Rs. 52,38,810/- as discussed in the draft assessment order.
4. Aggrieved, from the said order of assessment, assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after considering the contention of the assessee dismissed the appeal. The relevant finding of the ld. CIT(A) reads as under:- “7. I have carefully considered the facts of the case, order u/s 147 r.w.s. 144 and written submissions of the appellant.
8. In ground no. 1, the appellant has challenged the order of the Id. AO being erroneous to the extent and it is prejudicial to the appellant. 9 During the course of assessment proceedings, it is observed by the AO that appellant has not filed his return of income for A.Y. 2018-19. On the basis of the information gathered and after duly recorded reason to believe and after approval from the competent authority (ie. after getting prior approval of the Ld. Pr. CIT, Jodhpur-1), notice u/s 148 was issued to the appellant on 29.03.2022 for filling of ITR for A.Y. 2018- 19. 9.1 The appellant was asked to file return by issue of notice u/s 148 of the Act dated 29.03.2022. In response to the notice u/s 148, appellant did not file his return of income for AY 2018-19. Thereafter, the AO issued notice u/s 142(1) dated 02.11.2022, 25.01.2023 and show cause notice dated 11.03.2023 to furnish requisite details regarding source of fund utilized for purchase of immovable property. During the appellate proceedings, the appellant stated that he had submitted every possible document before the AO like Bank Statement, Agreement Copy, Payment Schedule related to purchase of property and Salary 9.2 On perusal of the documents submitted by the appellant, the AO noticed that the appellant jointly purchased immovable property with Mrs. Rajshree Dadhich, for a purchase consideration of Rs. 1,86,22,750/-. Appellant's share in the purchase consideration is Rs. 93,11,375/- (50% of the total purchase value of Rs. 1,86,22.750/-) and charges paid of Rs. 9,61,200/. On perusal of the copy of NRE bank a/c maintained with HDFC bank furnished by the appellant it was noted by the AO that appellant made a total payment of Rs. 45,53,161/- during the F.Y. 2016-17 and 2017-18, but the appellant failed to furnish justification and documentary evidence regarding the source of the balance payment of Rs. 52,38,814/-(9311375-4553161+50% of charges paid of Rs.961200).
9.4 During the course of appellate proceedings, appellant has furnished salary certificate received from T&D POWER SOLUTIONS FZE dated 01.07.2023. The company has certified that Mr. Avinash Dadhich (EMP No. SAIF2015-1) is working with their organisation and furnished details of remuneration received from the company by the appellant from 2017 to 2022.
9.4 During the course of appellate proceedings, notice u/s 250 of the Income tax was issued to the appellant on 18.12.2023, 08.01.2024 to furnish requisite details on or before 03.01.2024 & 23.01.2024 respectively. To provide natural justice, a final opportunity was provided to the appellant by issuing notice on 26.02.2024 to furnish requisite details on or before 05.03.2024. In response, the appellant filed written submissions and salary certificate. In the reply of the condonation delay, appellant has stated that he has compiled all related documents and collected his salary certificate from his employer to verify all his payments towards purchase of property. Appellant has not filed a single document with respect to the source of payment made amounting to Rs. 52,38,814/- except salary certificate which does not substantiate the claim of the appellant.
Avinash Dadhich vs. ACIT 9.5 Appellant has neither provided any bank statements, nor tried to explain the source of purchase of immovable property during the course of appellant proceedings. The appellant has stated that without providing sufficient and reasonable opportunity of being heard AO made addition of Rs. 52,38.814/-on account of unexplained investment. Various opportunities were provided to the appellant during the course of assessment proceedings and also during the course of appellate proceedings but no cogent/plausible reply has been furnished by the appellant to justify that the property was purchased from the explained sources of income. Only salary certificate received from the employers cannot prove that how much amount was paid for the purpose of purchase of property.
9.6 In the interest of natural justice, the evidences in support of the source of investment submitted at the time of assessment, which are mainly bank statements, have been carefully perused by the AO. Further, apparently, the appellant furnished only salary certificate received from employer T&D Power Solutions FZE Ghana during the appellate proceedings. Appellant has not elaborated about the source of funds before the AO nor even during appeal. In the absence of any proof of source of fund it has to be concluded that the appellant has failed to satisfactorily explain the source of investment. The appellant in his submission has relied on various case laws which are distinguishable on the basis of facts of the case in the case of the appellant. The appellant has failed to substantiate the source of investment amounting to Rs. 52,38,814/- and in absence of any supporting evidence to prove the above mentioned investment in property, the judicial pronouncements as quoted by the appellant do not come for the rescue of the appellant.
9.7 Reliance in this regard is Hon'ble Kerala High Court decision in the case of KV. Mathew v. ITO [2014], 42 taxmann.com 571 (Kerala) where addition under section 69A was upheld as no proof was furnished in respect of claim regarding receipt from NRI.
Avinash Dadhich vs. ACIT 9.8 Reliance is also placed on Hon'ble Kerala High Court decision in the case of P.P. Koya v. DCIT, 175 Taxman 4 (Ker) Section where addition u/s 69A was upheld in respect of credit entries in assessee's bank account as the assessee had failed to prove the remittances from NRI.
9.9 Based on the detailed discussion made above, I find no infirmity in the action of the AO with regard to the addition of Rs. 52,38,810/- on account of unexplained investment u/s 69 of the Income Tax Act, 1961. Therefore, the addition of Rs. 52,38,810/- is hereby upheld. Hence, ground no. 1 is dismissed.
Ground no. 2 is against levy of interest u/s 234A and 234B of the I.T. Act. Charging of interest is mandatory, consequential and automatic in nature. The AO does not have discretion in these matters. Thus, this ground is dismissed.
Ground no. 3 is against levy of fee u/s 234F of the I.T. Act. Section 234F of the IT Act has been introduced w.e.f. 01.04.2018. The relevant portions are reproduced below:
(1) Without prejudice to the provisions of this Act, where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in sub-section (1) of the said section, he shall pay, by way of fee, a sum of, (a) five thousand rupees, if the return is furnished on or before the 31st day of December of the assessment year, (b) ten thousand rupees in any other case:
Provided that if the total income of the person does not exceed five lakh rupees, the fee payable under this section shall not exceed one thousand rupees.
(2) The provisions of this section shall apply in respect of return of income required to be furnished for the assessment year commencing on or after the 1st day of April, 2018.
Avinash Dadhich vs. ACIT 11.1 As is clear from the plain reading of the above Section, if the appellant has not filed his return of income, he shall pay a sum of Rs. 10,000/-, In the case of the appellant, it has been clearly mentioned by the AO that the appellant has not filed return of income even after issuance of notice u/s 148, therefore, it is a clear case for the levyof fee for default in furnishing return of income u/s 234F of the IT Act. Therefore, the ground of appeal no. 3 is dismissed.
12. Ground no. 4 is general in nature and does not require separate adjudication. The ground is dismissed.
13. In the result, the appeal is dismissed.”
5. Feeling dissatisfied with the above order of the ld. CIT(A), the assessee filed the appeal before this tribunal challenging the finding of lower authority on technical as well as on the merits of the case.
6. Apropos to the grounds so raised the ld. AR of the assessee vehemently argued that the assessee is Non-Resident to India tax for last 25 years or so and therefore has not filed any ITR and as such he is not supposed to file. Assessee has no source of income in India and merely made the investment revenue could not make the addition and failed to appreciate that aspect of the matter. Assessee has placed all the details before the ld. AO but has not appreciated the facts. When the matter carried before the ld. CIT(A) he had confirmed that addition only on the ground that the assessee has filed only the salary certificate from the employer T & D Power Solution FZE Ghana. Ld. CIT(A) noted that since the assessee not proved the source he confirmed the addition. Ld. AR of the Avinash Dadhich vs. ACIT assessee submitted that merely the assessee could not provide the a satisfactory explanation for the source of investment could not lead to the presumption that it was the assessee’s income[ CIT Vs. Taikisha Engineering India Ltd.] the assessee has submitted all the details but has not been appreciated by the lower authority. Even if the plea of the revenue is accepted the matter be set aside to the file of the ld. AO so as to give the assessee a fair chance to represent the correct facts.
Per contra, ld. DR relied on the finding of the lower authority. But at the same time he did not objected to the alternative plea of the assessee to set aside the matter to the file of the ld. AO.
We have heard both the parties and perused the materials available on record. The bench noted that the assessee was non-residentfor the year under consideration. He submitted that he is not having any source of income in India. The assessee has placed on record the employment certificate and his NRE Bank account so as to prove that the payment has been made from the income earned outside India and therefore, the same cannot be added merely the assessee has purchased the property. Looking to that aspect of the matter that the assessee was a non resident and has no source of income merely the investment is made the same cannot be Avinash Dadhich vs. ACIT considered as income of the assessee. However, as alleged by the revenue that the assessee has not given the complete details of the source of payment made from out of India we deem it fit to remand the matter back to the file of the ld. Assessing Officer to decide the contention raised.Considering that peculiar aspect of the matter we deem it fit to remand the matter to the file of the ld. AO who will consider the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee if so to be taxed in accordance with law. At this stage we note that since the assessee being nonresident sufficient and due opportunity be given to the assessee in the remand proceeding. At the same time assessee is directed not to seek the adjournment without sufficient reasons. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 20/01/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh½ ¼jkBkSM+ deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 20/01/2025 *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू Avinash Dadhich vs. ACIT The Appellant- Avinash Dadhich, Jodhpur. 1. 2. izR;FkhZ@ The Respondent- ACIT, Circle, International Taxation, jaipur. 3. vk;d jvk;qDr@ The ld CIT 4. vk;dj vk;qDr ¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File vkns'kkuqlkj@ By order,
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