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Facts
The assessee failed to file a return for AY 2016-17, leading the AO to conduct a best judgment assessment under sections 144 r.w.s. 147. Significant additions were made for unexplained investments, including Rs. 1.36 Crore for immovable property, as well as amounts for mutual funds, equity shares, and credit card payments. The assessee argued that the property valuation was a clerical error by the Sub-Registrar that was subsequently corrected, but the CIT(A) upheld the additions citing a lack of verifiable evidence.
Held
The Tribunal condoned the 33-day delay in filing the appeal. It found a prima facie case that the Sub-Registrar's office might have wrongly recorded the immovable property value. Consequently, the Tribunal restored all issues, including the additions related to the immovable property, shares/mutual funds, and credit card payments, back to the Assessing Officer for fresh adjudication, directing the assessee to provide comprehensive evidence.
Key Issues
Whether additions for unexplained investments/expenditure, particularly due to an alleged clerical error in immovable property valuation, were justified, and if a remand to the AO for fresh examination was warranted.
Sections Cited
Income-tax Act, 1961, Section 250, Section 69, Section 69C, Section 148, Section 142(1), Section 144, Section 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K, Vice- & Shri Inturi Rama Rao
:Asst.Year 2016-2017 Divine Kanjiramadathil Ignatious The Income Tax Officer CCC6-1499, 42/2435A v. Ward 2(1) Kanjiramadathil House Trivandrum. Wax Wall Lane Chittoor Road, Cochin – 682 018. PAN :AALPI4977M. (Appellant) (Respondent) Appellant by : Sri.Shivashanker Panicker, Advocaate Respondent by : Smt.Leena Lal, Senior AR Date of Date of Hearing :13.05.2025 Pronouncement : 14.05.2025 O R D E R
Per George George K, Vice-President :
This appeal at the instance of the assessee is directed against Commissioner of Income-tax (Appeals)’s [hereinafter “the CIT(A)”] order dated 03.08.2024 passed u/s.250 of the Income-tax Act, 1961 (hereinafter “the Act”). The relevant assessment year is 2016-2017.
There is a delay of 33 days in filing this appeal. The assessee has filed a petition for condonation of delay. On perusal of the reasons stated for late filing of this appeal, we are satisfied that there is sufficient cause and no latches can be attributed to the assessee. Hence,
The grounds raised read as follows:-
The learned CIT(Appeals) is erred in adopting the wrongly reported property value of Rs.1,36,26,000/- as against the actual figure of Rs.13,25,500/- and treating the same as unexplained investment u/s 69. The data uploaded by the sub- registrar's office mistakenly included an extra digit, reflecting the property value as Rs.1,36,26,000/- instead of Rs.13,25,500/- .
The learned CIT(Appeals) is erred in treating the purchase of mutual fund for Rs.4,00,00/, purchase of equity shares for Rs.4,26,000/- and credit card payment for Rs.2,93,000/- as unexplained expenditure u/s 69C. The actual purchase amount for share and mutual funds, with the consideration discharged through bank was Rs.4,24,231/-. The remaining purchase amount pertains to switching transaction where holdings were transferred from one scheme to another, without making any payments. 3. The learned CIT(Appeals) erroneously treated Rs.7,74,000/- as salary payment made by the appellant to employees and added it as unexplained expenditure. The appellant was an employee of HDFC Bank and a figure of Rs.7,74,000/- is the gross salary received by the appellant. 4. Brief facts of the case are as follows: The assessee was an employee of HDFC Bank Limited. For the assessment year 2016-2017, the assessee did not file return of income. As per the information available with the Revenue, the assessee had purchased an immovable property valued at Rs.1,36,26,000, made payment towards credit card bill of Rs.2,93,000 and purchased equity share / mutual funds of Rs.4,26,000 during the relevant year and having . Divine Kanjiramadathil Ignatious. not filed the return of income, the Assessing Officer (hereinafter “the AO”) issued notice u/s.148 of the Act on 25.03.2023. The assessee did not file any return in response to the notice issued u/s.148 of the Act. The AO issued various notices u/s.142(1) of the Act. Since there was no response, the AO issued show cause notice why the assessment should not be completed on best judgment basis u/s.144 of the Act. Since there was no compliance to the show cause notice issued by the AO, the assessment was completed on 04.01.2024 on a total income of Rs.1,55,19,000 u/s.144 r.w.s. 147 of the Act. The computation of income made u/s.144 r.w.s. 147 of the Act, reads as follow:-
Sr. Description Amount (in No. Rs.) 1. Income as per return of income filed (not filed) NA 2. Income as computed u/s.143(1)(a) NA 3. Addition in respect of purchase or immovable 1,36,26,000 property as disclosed above at para 4. Addition in respect of payment towards credit 2,93,000 bills.
Addition in respect of payment paid to mutual 4,00,000 funds 6. Addition in respect of purchase of equity shares. 4,26,000 7. Addition in respect of payment of salary to 7,74,000 employees 8. Total income / loss determined as per the above 1,55,19,000 proposal
Aggrieved by the best judgment assessment completed u/s.144 r.w.s. 147 of the Act, the assessee preferred an appeal before the first appellate authority. Before the first appellate authority, it was submitted that the assessee had ceased the employment with HDFC Bank Limited in October 2015, and subsequently, relocated abroad. It was stated that . Divine Kanjiramadathil Ignatious. since the taxable salary income was covered by the TDS and refund was claimed, coupled with the assessee’s relocation abroad, he did not file the return of income for the assessment year 2016-2017. It was submitted that the assessee became aware of the assessment proceedings only after receiving the ex parte assessment order. As regards the addition of Rs.1,36,26,000 on account of purchase of immovable property, the learned AR submitted that the assessee had purchased only a studio apartment valued at Rs.13,25,500 and after doing the interior and incurring registration expenses, the total cost on the flat was only Rs.28,00,000. It was stated that the data uploaded by Sub-Registrar’s office of cost of immovable property at Rs.1,36,26,000 was a mistake and the same has been corrected y the District Registrar, vide order dated 14.05.2024. The CIT(A), however, rejected the contentions of the assessee by holding that in absence of details it is unverifiable whether the sale deed submitted by the assessee during the course of appellate proceedings and the property in question is one and the same. The relevant finding of the CIT(A), reads as under:-
“4.3.0 I have gone through the grounds of appeal, assessment order and submissions of the appellant. It is seen from the submissions that the appellant had purchased the flat for Rs. 28 lakhs and the same was registered for Rs. 13,25,500/- . It is further submitted that the data uploaded by the sub registrar's office had one extra digit (6) by mistake the reported figure was Rs. 1,36,26,000/-. In support of his claim the appellant had filed a copy of the sale deed, housing loan sanctioned letter and a copy of the letter addressed to the Ernakulam District Registrar for correction of the fair value in the online data of the sale deed registered as document No. 2005/1/2015 at the sub registrar office Ernakulam. However, the appellant had not filed any letter from the Sub registrar office in this regard. In the absence of these details, it is . Divine Kanjiramadathil Ignatious. unverifiable whether the sale deed submitted by the appellant during the course of appellate proceedings and the property in question is one and the same. In the absence of these details, the claim of the appellant could not considered and the addition made by the AO is upheld. The ground No. 1 is dismissed.”
6. As regards other additions made with regard to the purchase of mutual funds / equity shares and credit card bill payments, the CIT(A) confirmed the addition made by the AO. Accordingly, the appeal filed by the assessee was dismissed.
7. Aggrieved by the order of the CIT(A), the assessee has filed the present appeal before the Tribunal. The learned AR filed a paper book comprising of 92 pages enclosing therein purchase deed of immovable property dated 05.05.2015, rectification order of the District Registrar directing corrections in encumbrance certificate, submissions made before the AO, copy of the bank statement, HDFC OD account, tax computation sheet for salary for the relevant assessment year, etc. The learned AR by referring to the purchase deed of the immovable property dated 05.05.2015, submitted that the Sub Registrar Office had mistakenly included an extra digit reflecting the property value as 1,36,26,000 instead of Rs.13,25,500. The learned AR submitted that the same has been corrected by the District Registrar vide order dated 14.05.2024. A copy of the same (English translation) is placed on record at page 65 of the paper book. The learned AR submitted that in the interest of justice and equity, matter may be restored to the AO for fresh adjudication.
The learned DR supported the orders of the AO and the CIT(A).
We have heard rival submissions and perused the material on record. On a perusal of the document placed on record, prima facie, we are of the view that while furnishing the AIR information, the Sub Registrar Office had wrongly mentioned the immovable property value as Rs.1,36,26,000 instead of Rs.13,25,500. In the interest of justice and equity, we are of the view that this aspect of the matter needs to be examined by the AO. Accordingly, we restore this issue to the files of the AO. The assessee is directed to furnish all the necessary evidences to prove the impugned property has been purchased by the assessee (the land and building value) for Rs.13,25,500. Since we have restored the issue of main addition to the files of the AO, the other subsidiary issues such as addition made on account of purchase of shares / mutual funds and credit card bills payments are also restored to the files of the AO. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 14th day of May, 2025.
Sd/- Sd/- (Inturi Rama Rao) (George George K) ACCOUNTANT MEMBER VICE-PRESIDENT Cochin; Dated : 14th May, 2025. Devadas G*