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Facts
The assessee, a Non-Resident Indian, received a notice under Section 148 to explain the source of investment for a property purchased in Mumbai for Rs.2,78,87,860/-. The Assessing Officer (AO) completed the assessment under Section 147, making an addition of Rs.2,93,14,320/- under Section 69A, rejecting the assessee's claim of exemption under Section 54F from the sale of land in Indore due to non-filing of ITR for the relevant year and lack of documentary evidence. The CIT(A) upheld the AO's addition, dismissing the appeal.
Held
The Tribunal observed that the assessee's counsel stated that relevant documents were not available during the CIT(A) proceedings and requested one final opportunity to submit documentary evidence for the exemption claim under Section 54F. Considering the principles of natural justice and the substantial demand involved, the Tribunal set aside the order of the CIT(A) and remanded the matter back for de novo adjudication to allow the assessee to present her evidence.
Key Issues
1. Whether the addition of unexplained investment under Section 69A of the Income Tax Act was justified in the absence of proper appreciation of the source of investment and documentary evidence. 2. Whether the CIT(A) erred in rejecting additional evidence and affirming the AO's order without considering principles of natural justice and proper verification.
Sections Cited
Section 69A, Section 148, Section 147, Section 115BBE, Section 271AAC, Rule 46A, Section 54F, Section 143(2), Section 142(1)
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM:
The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 07.03.2025 for the assessment year 2017-18 as per the following grounds of appeal:
1. The learned CIT(A) erred in upholding the addition of Rs.2,93,14,320/- under Section 69A of the Income Tax Act, 1961, without properly appreciating the source of investment and documentary evidence submitted by the appellant. The addition has been sustained solely on presumptions and conjectures, which is unsustainable in law.
2. The learned CIT(A) erred in affirming the order of the Assessing Officer (AO) without properly considering the submissions, documentary evidence, and legal contentions submitted by the appellant, thereby violating the principles of natural justice.
3. The learned CIT(A) erred in rejecting the additional evidence submitted by the appellant solely on the ground that the AO did not comment on it, without conducting an independent verification or recording proper reasons for its rejection, which is contrary to Rule 46A of the Income Tax Rules, 1962.
4. The learned CIT(A) erred in not considering the amended/additional grounds of appeal filed by the appellant, despite their material relevance to the case, which is in violation of settled judicial principles and procedural fairness.
5. The learned CIT(A) erred in passing the appellate order in haste, merely to comply with the 90-day deadline prescribed by the Hon'ble Chhattisgarh High Court, without ensuring proper adjudication of the issues involved, thereby defeating the purpose of appellate proceedings.
6. The appellant reserves the right to amend, modify or add any of the grounds of appeal.”
2. The brief facts in this case are that the assessee is an individual “Non Resident Indian” and had not filed her original return due to no income in India. The assessee had received notice u/s.148 of the Income Tax Act, 1961 (for short ‘the Act’) on 30.03.2021 and in response, she had filed Nil return on 30.04.2021. The reasons for issuing notice was to explain the source of income for purchase of property which the assessee had purchased in Mumbai for Rs.2,78,87,860/-. Assessment was completed u/s.147 of the Act, dated 31.03.2022 with an addition of Rs.2,93,14,320/- u/s.69A of the Act. The relevant part of the assessment order are culled out as follows: “Assessee purchased land of Rs.2,78,87,860/- during the F.Y. 2016-17 relevant to A.Y. 2017-18. Regarding the source of investment in the said property the assessee has replied that the investment in the property has been made out of sales proceeds of a land at Indore in July, 2013 for Rs.1,60,05,000/-. It is pertinent to mention here that the assessee has not filed any documentary evidence regarding the sale of land has claimed by her. Further it is found-that the assessee has not filed any return of income for the A.Y.14-15 as a result of which she failed to disclose the sale of land at Indore for Rs.1,60,05,000/- as well as she failed to pay the capital gain, if any arised on the sale of land at Indore. So far as the claim of the assessee that she had availed exemption under section 54F on the sale of above Land at Indore is baseless because for claiming the exemption one has to file his/her return of income, otherwise the same is not allowable. Therefore, the claim of investment it in the flat with L & T Reality at Navi Mumbai is not acceptable in absence of proper corroborative evidence. Considering the above facts of me case, the investment made in the purchase of property for Rs.2,78,87,860/- along with the stamp duty of Rs.13,94,400/- and Rs.32,060/-additional expenses of such transactions totaling to Rs.2,93,14,320/- is treated as unexplained investment u/s.69A of the I.T Act and liable to tax in view of provisions of section 115BBE of I.T. Act, 1961. Penalty u/s.271AAC of the I.T. Act is initiated separately. Subject to the above discussion the income of the assessee is computed as under:- Income as return of Income : Rs.Nil Add Unexplained investment as discussed: Rs.2,93,14,320/- Above Total Taxable Income : Rs.2,93,14,320/-
That in view of the assessment order, when the matter was preferred on appeal before the Ld. CIT(Appeals)/NFAC, the said authority had held and observed as follows: “4. I have gone through the statement of facts, grounds of appeal, and the facts available on record. Brief facts of the case are that the department as per information available found that the appellant had purchased an immovable property of Rs,2,78,87,860/- and a TDS was deducted of Rs.27,35,500/- on it. Notice u/s.148 was issued on 30/03/2021 to file ITR for the year under consideration in response to which appellant filed ITR on 30/04/2021 declaring Nil income. Thereafter Notice u/s.143(2) dated 14/10/2021 issued to file reply. Thereafter Notice u/s.142(1) was issued alongwith questionnaire, whereby, the appellant was asked to submit source of investment regarding purchase of land of Rs.2,78,87,860/- in response to which it had been submitted that the same was made out of sale proceeds of land at Indore in july,2013 for Rs.1,60,05,000/-. However no documentary evidence regarding sale of land was submitted. Further it was also found that the appellant had failed to filed ITR for the A.Y 2014-15 as a result of which capital gain of the said land could not be ascertained and therefore the claim of the appellant she had availed under section 54F on the sale of such land at Indore was treated by the AO to be inadmissible. Therefore the AO treated the said investment made in the purchased of property of Rs.2,78,87,860/-alongwith stamp
duty of Rs.13,94,400/- and Rs.32,060/- as additional expenses aggregating to Rs.2,93,14,320/- as unexplained investment u/s.69A of the Act and added the same to the total income of the appellant. Now the appellant has filed this appeal on ground of appeal mentioned in Para 1 of this order. Therefore, the appeal is decided on merits on the basis of grounds of appeal, statements of facts, submissions and case records as under-
5. Ground No. 1 On the facts and circumstances of the case and in taw, the Id. AO erred in making addition of Rs. 2,93,14,320/- on the count of unexplained investment u/s. 69A is liable to be deleted. The said grounds of appeal taken by the appellant are against the addition of Rs.2,93,14,320/- made by the AO by treating the same as the unexplained investment u/s 69A of the Act. The appellant had filed written submission along with detailed evidences which were remanded to the AO for his comments but till date no comments on it has been received from the AO's end. Since the appellant had filed a writ before the Hon'ble High Court of Chhattisgarh at Bilaspur and the Hon'ble Court vide their order dated 11/12/2024 had asked to dispose of appeal within the period of 90 days from the date of their decision, I have no other alternative but to decide the case on merit. I have carefully gone through the order of the AO as well as the submission made by the appellant. It is observed that the AO in his order had stated that the appellant had failed to file ITR for the year under consideration within the due date. Later the said 1TR was filed only in response to notice U/s 148 of the Act declaring nil income. The AC ores of the view that since the appellant had filed her ITR declaring rill income, the plea of the appellant that she had availed exemption u/s.54F on the sale of land at Indore during the year under consideration was baseless because for claiming, exemption one has to file ITR within the due date. Therefore the AO had no option but treat the investment made in purchase of property aggregating to Rs.2,93,14,320/- as unexplained investment of the appellant. Further during the course of appellate proceedings also the appellant had not submitted documentary evidence regarding her claim of exemption made u/s.54F of the Act for the year under consideration. Therefore, the action taken by the AO in making the addition of Rs.2,93,14,320/- by invoking the provisions of Section 69A of the Act appears to be correct and the same is upheld. Ground No. 2: On the Facts and circumstances of the case and in law, the Ld. AO has erred in applying Section 115BBE. The said ground of appeal is against the application of Section 115BBE of the Act, 1961 which is consequent to the addition made therefore the same is dismissed. Ground No.3: The Appellant craves leave or to add, urge, alter, modify or withdraw any grounds before or at the time of hearing. The said ground is general in nature and needs no further adjudication. In results, the appeal of the appellant is dismissed.”
At the time of hearing, the Ld. Counsel for the assessee submitted that the relevant documents at the time of hearing before the Ld. CIT(Appeals)/NFAC was not in their possession and that if one final opportunity is provided, in such case, they would be able to submit all the documentary evidence regarding the claim of exemption u/s.54F of the Act for the year under consideration by the assessee. The Ld. Counsel further submitted that since huge demand has been made due to non placing the relevant documents on record, therefore, in the interest of natural justice one opportunity may be provided.
The Ld. Sr. DR conceded to the prayer of the Ld. Counsel for the assessee.
Having heard the parties herein and considering the documents/material available on record, we are of the considered view that one final opportunity should be provided to the assessee so that the matter is revisited at the level of the Ld. CIT(Appeals)/NFAC and the assessee can demonstrate through the documentary evidence justifying her claim of exemption u/s. 54F of the Act. That as evident from the findings of the Ld. CIT(Appeals)/NFAC that since during the course of appeal proceedings, the assessee had not submitted any documentary evidence regarding such claim of exemption u/s. 54F of the Act, therefore, the action of the A.O in making addition of Rs.2,93,14,320/- u/s. 69A of the Act was upheld.
That if the matter remanded to the file of the Ld. CIT(Appeals)/NFAC to consider the additional evidence of the assessee, in such case, the scale of justice shall remain equitable and there would not be any prejudice caused to the revenue also. Moreover, before reaching a particular conclusion and putting tax liability on the assessee, it is all the more important for the quasi-judicial authority to respond to all the documents placed by the assessee on record. We order accordingly.
In view thereof, we set-aside the order of the Ld. CIT(Appeals) and remand the matter back to its file for denovo adjudication as per law while complying with the principles of natural justice. As per the above terms, grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18th day of July, 2025.