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Facts
The assessee, a doctor, declared an income of Rs.10,04,680/- for AY 2017-18. Her case was selected for limited scrutiny, leading to an addition of Rs.3,86,467/- under Section 69C by the AO for investment in fixed assets, which was upheld by the CIT(A)/NFAC. The addition pertained to the valuation, stamp duty, and registry expenses of a gifted property received from her father.
Held
The Tribunal rejected the assessee's contention that the AO exceeded the scope of limited scrutiny by inquiring into the gifted property, stating it was within jurisdiction as the property was disclosed in the capital account. However, in the interest of natural justice and given the assessee's claim of having submitted evidence not considered, the Tribunal remanded the matter to the CIT(A)/NFAC to provide a final opportunity for the assessee to present documentary evidence and submissions, requiring the CIT(A)/NFAC to conduct ground verification and pass a speaking order.
Key Issues
Whether the AO exceeded the scope of limited scrutiny; validity of addition u/s 69C for expenses related to a gifted property; denial of adequate opportunity to the assessee to submit evidence before the CIT(A).
Sections Cited
69C, 143(3), 115BBE, 250(4), 250(6)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
This appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 28.02.2025 for the assessment year 2017-18 as per the following grounds of appeal:
1. That under facts in the law the Id. CIT(A) erred in not considering the submissions made by the appellant. The observation by the CIT(Appeal) that no submission is made is incorrect.
2. That under facts in the law the Id. CIT(A) erred in sustaining addition of Rs.386467/- u/s 69C of the income tax act based on presumptions and surmises ignoring the submission made.
3. That the ld. CIT (A) erred in sustaining addition of Rs. 386467/- of the Ld. AO who travelled beyond the scope of limited scrutiny.
4. That under facts in the law the ld. CIT(A) erred in sustaining addition u/s 69C which is not attracted as the case was selected in limited scrutiny for large increase in capital.
5. That under facts in the law the ld. CIT(A) erred in applying section 115BBE as the appellant has no other source of income except the professional receipts.
6. The appellant reserves the right to add, alter, and omit all or any of the grounds of appeal with the permission of the Hon'ble ITAT.”
2. The brief facts in this case are that the assessee is a doctor by profession who had filed his return of income for the year under consideration declaring an income of Rs.10,04,680/-. Thereafter, the case of the assessee was selected for limited scrutiny through CASS. Assessment was completed by the A.O vide his order dated 25.11.2019 u/s. 143(3) of the Act wherein an addition of Rs.3,86,467/- u/s. 69C of the Income Tax Act, 1961 (for short ‘the Act’) was made which was upheld by the Ld. CIT(Appeals)/NFAC.
At the very outset, the Ld. Counsel for the assessee submitted that the A.O travelled beyond the scope of “limited scrutiny” since only regarding the capital account he was supposed to enquire. The Ld. Counsel submitted that the capital account pertains to the gift property received by the assessee from her father, however, the A.O travelled beyond his jurisdiction and enquired regarding the valuation of the property, stamp duty, registry expenses of the property as well as investment in fixed assets.
Alternatively, the Ld. Counsel also submitted that the assessee had filed all the necessary documentary evidence a/w. written submission which were not considered by the Ld. CIT(Appeals)/NFAC. It was prayed by the Ld. Counsel that one final opportunity may be provided to the assessee before the Ld. CIT(Appeals)/NFAC to represent her case based on merits.
The Ld. Sr. DR conceded to the contentions of the Ld. Counsel to the extent that one final opportunity may be provided to the assessee for adjudication substantially on merits at the level of the Ld. CIT(Appeals)/NFAC wherein the Ld. CIT(Appeals)/NFAC shall consider all relevant documents filed before it.
As regards the legal ground raised by the Ld. Counsel for the assessee that the A.O had travelled beyond the scope of “limited scrutiny”, I am of the considered view that when the matter is with regard to the property i.e. received as gift and as per the submissions of the assessee it is gift property within the blood relation from his father and it has been registered, therefore, it is well within the jurisdiction of the A.O to enquire about the valuation of the property, stamp duty and registry expenses with regard to the said gift property which is disclosed in the capital account. Therefore, the said plea of the Ld. Counsel that the A.O had exceeded his jurisdiction beyond the “limited scrutiny”, is being devoid and bereft of any substance is rejected and dismissed.
That regarding the alternative plea raised by Ld. Counsel on a careful perusal of Para 4.5 of the impugned order of the Ld. CIT(Appeals)/NFAC, it was observed by it that the assessee had failed to file any reply or documentary evidence contradicting the findings of the A.O. For the sake of completeness, Para 4.5 of the impugned order is culled out as follows:
“4.5 As brought out above, during the appellate proceedings, the appellant failed to file any reply or documentary evidence contradicting the findings of the A.O. Further, she has neither provided gross receipt vouchers nor has produced evidences to substantiate the cash use for stamp duty and registry expenses. She was afforded with ample opportunities to file his submissions but he did not produce the adequate evidences.”
Though the Ld. Counsel for the assessee claims that the assessee had filed all the documentary evidence a/w. submissions before the Ld. CIT(Appeals)/NFAC however, there had been no enquiry conducted by the Ld. CIT(Appeals)/NFAC in terms with Section 250(4) and (6) of the Act as per its order. In the interest of natural justice, one final opportunity should be given to the assessee so that the ground verification is done in this case at the level of the Ld. CIT(Appeals)/NFAC calling for a remand report from the A.O by which, the scales of justice would be maintained. At the same time, the assessee will get an opportunity to substantiate before the Ld. CIT(Appeals)/NFAC regarding the genuineness, as claimed by the assessee. The Ld. CIT(Appeals)/NFAC shall pass a speaking order in terms with the mandate of the statute enshrined u/s.250(4) and (6) of the Act. I order accordingly.
As per the above terms, the grounds of appeal raised by the assessee stands partly allowed for statistical purposes.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in open court on 21st day of May, 2025.