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Facts
The assessee, Seema Gupta, faced reopening of assessment u/s 147/148 based on AIR information regarding the purchase of an immovable property. An addition of Rs.63,85,100/- was initially made u/s 68, later reduced to Rs.11,48,016/- by the CIT(A) considering the assessee's 1/6th share. The assessee challenged the legality of the reopening, alleging non-application of mind by the AO and an incorrect change in the section for addition.
Held
The Tribunal held the reopening was bad in law because the AO failed to independently examine the sale deed, which clearly showed six co-sharers, indicating non-application of mind. Relying on a similar case for a co-sharer, the Tribunal concluded the reopening was mechanical and set it aside. Consequently, the addition on merits and the penalty imposed were quashed.
Key Issues
1. Whether the reopening of assessment u/s 147/148 was valid given the AO's failure to apply independent mind and verify co-ownership from the sale deed. 2. Whether the addition u/s 68 or 69 and the consequential penalty were sustainable.
Sections Cited
144, 148, 271(1)(c), 147, 142(1), 68, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES: G : DELHI
Before: DR. B.R.R. KUMAR & SHRI ANUBHAV SHARMA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G : DELHI BEFORE DR. B.R.R. KUMAR, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITAs No.2822 & 2823/Del/2023 Assessment Year: 2009-10 Seema Gupta, Vs ITO, 156, Kishan Pura, Ward 2(5), Baghpat Road, Meerut. Transport Nagar, Meerut (UP) – 250 002. PAN: BKAPG2049G (Appellant) (Respondent) Assessee by : Shri Rohit Aggarwal, CA Revenue by : Shri Shyam Singh, Sr. DR Date of Hearing : 07.02.2024 Date of Pronouncement : 16.02.2024 ORDER PER ANUBHAV SHARMA, JM:
These are appeals preferred by the assessee against the orders dated 27.07.2023 of the Commissioner of Income-tax (Appeals), NFAC, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeals No.CIT(A), Meerut/10178/2019-20 and No.CIT(A), Meerut/10179/2019-20 arising out of the appeals before it against the orders dated 26.12.2016 and 23.06.2017 passed u/s 144/148 and 271(1)(c) respectively ITAs No.2822 & 2823/Del/2023 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ITO, Ward 2(3), Meerut (hereinafter referred to as the Ld. AO).
Heard and perused the record. 2.1 It is pointed out that there is a delay in filing the appeal of ten days for which an application for condonation of the delay is filed. The assessee is a housewife aged 52 years and, thus, the delay not being for a substantial period is condoned.
3. The case of the assessee was reopened u/s 147/148 of the Act on the basis of AIR information of the assessee purchasing an immovable property on 26.02.2009 for an amount of Rs.63,85,100/-. To verify the source of investment made in property, notice was issued u/s 148 followed by notice u/s 142(1) of the Act. However, no response was received by the ld. AO. So, an addition of Rs.63,85,100/- was made u/s 68 of the Act. The ld.CIT(A) has confirmed the same to the extent of Rs.11,48,016/- while taking into consideration the fact that the assessee had 1/6 share only in this property. The assessee is in appeal raising the following grounds:- “
1. That the Ld. CIT(A) has erred in law and the facts of the case by upholding the assessment order under appeal, wrongly deciding ground no.2 of appeal memo in which legality of the assessment order has been challenged, for having been based on borrowed satisfaction taken from AIR information without any independent application of mind by the Ld. A.O.
2. That he Ld CIT(A) has erred in law and the facts of the case by changing the section of the addition under appeal from Section 68 of the Act, as invoked by the Ld. A.O. in the assessment order to Section 69 of the Act.
ITAs No.2822 & 2823/Del/2023
That the Ld. CIT (Appeals), NFAC, has erred in law, as well as on the facts of the case by confirming the addition of Rs.11,48,016/- u/s 68 of the I.T. Act, 1961, as no books of accounts have been maintained by the appellant and, therefore, no unexplained cash credit could be said to have been found recorded therein for making addition u/s 68 of the Act.
That the confirmation of addition of Rs.11,48,016/- u/s 69 of Act, as unexplained investment, is unjust, illegal and in any case, is highly excessive in the absence of any unexplained source of income brought on record and as such the impugned investment ought to have been treated, as explained out of past savings and accumulations. 5. That the appellant respectfully craves leave to add alter omit or substitute any or all of the above grounds of appeal
at any time before or at the time of hearing of appeal to enable your good self to decide the appeal in accordance with law.”
4. The ld. AR has primarily argued that reopening is bad in law as there is no application of mind independently by the ld. AO because, admittedly, the sale deed is not in favour of the assessee alone, but, the assessee is a co-sharer with five other persons and there was no investment of Rs.68,88,100/- by the assessee alone. The ld. AR has relied the order dated 16.01.2020 in for AY 2009-10 in case of Priyanka Garg who was also co- sharer to submit that in her case, the coordinate Bench has taken note of the mechanical reopening and has set aside the same for non-application of mind.