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Facts
The assessee purchased an immovable property worth Rs. 36 lakhs. The case was reopened under section 147, and a notice under section 148 was issued. The assessee filed a return in response but failed to explain the source of investment. Consequently, the entire amount was added to the assessee's total income under section 69 of the Act.
Held
The Tribunal held that the CIT(A) had passed an ex-parte order without considering the merit of the case, and the assessee was unable to submit supporting documents. Therefore, the matter was remanded back to the CIT(A) for further adjudication, providing the assessee with a reasonable opportunity for hearing.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without considering the merits of the case and the explanation of the assessee regarding the source of investment for the immovable property.
Sections Cited
250, 147, 148, 69, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “J(SMC
Before: SHRI BR BASKARAN & SHRI ANIKESH BANERJEE
The instant appeal of the assessee was filed against the order of theNational Faceless Appeal Centre, Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2011-12, date of order14.03.2024.The impugned order was emanated from the order of the ld. Income-tax Officer 23(3)(3),Mumbai (in short, ‘the A.O.’) passed under section 143(3)read with section 147 of the Act, date of order24/12/2018.
Shama Shamin Gubitra 2. The assessee has taken the following grounds of appeal:-
“1. SUMMARY OF THE CASE ASSESSEE: SHAMA SHAMIM GUBITRA / PAN: ATTPG5653P Order u/s 250 of the Income tax Act, 1961 Assessment Year: 2011-2012 1.1, MRS.SHAMA SHAMIM GUBITRA, born in Bangalore in 1971, currently aged 52, reside in Mumbai,Maharashtra. I entered into marriage with MR. SHAMIM GUBITRA, on 06th January, 1991,when I was 19 years and 8 months old. It'snoteworthy that prior to our marriage, MR.SHAMIM GUBITRA was wedded to his first wife, MRS. ZAHIDA SHAMIM GUBITRA, on 15thSeptember, 1990. According to the Muslim , Personal Law Application Act (Shariat) of 1937,our marriage holds legal standing, i. My husbandand I were blessed with three children: two sonsand one daughter: 1. MR. SALMAN SHAMIMGUBITRA: Born on 08/02/1992 (Education: MBAin Finance) 2. MS. TAHOOR SHAMIM GUBITRA: (Daughter) - Born on 14/04/1997 (Education: Psychologist) 3. MR. BILAL SHAMIM GUBITRA-Born on 05/12/1998 __ (Education: Graduated inB. Com)
Additionally, my husband, Mr. Shamim Gubitra, and his first wife, Mrs. Zahida, have three children as well: two sons and one daughter:
1.
AWAIS SHAMIM GUBITRA: - Born on 10/06/1992 2. HIJAB SHAMTM GUBITRA: (Daughter) - Born on 27/03/1994 3. TMAD SHAMTM GUBTTRA: -Born on 16/04/1999 II. My husband, MR.SHAMIM GUBITRA, has faced legal repercussions resulting in imprisonment in the following cases: Case I: Case Number-2400587/1996 This case was initiated on 21/05/1996, leading to his arrest on the same date. He was released from police custody on 20/08/1996, and the case concluded on 08/11/2021. Case II Case Number- 2401061/2008 Another -legal issue arose on 03/06/200S, leading to hisarrest on that date. This case was resolved on07/11/2019 in Metropolitan, Borivali, Mumbai.
3. III. The persistent legal battles have significantlyimpacted our family's financial stability. Thecontinuous drain on resources due to legalproceedings has led to a substantial decrease in ourfamily income. As a result, we have encounteredsignificant financial hardships, struggling to meetour daily expenses and provide for the educationalneeds of our children. IV. During my husband's
Shama Shamin Gubitra legal troubles, I took on the responsibility of raising our children for a period of 3- 5 years, during whichwe had to significantly reduce their educational expenses. We managed to sustain ourselves and our children by utilizing the savings we had accumulated over the years and supplementing itwith income from temporary sources up untilMarch, 2001. This challenging period required usto tighten our budget and make do with limitedresources to ensure the well-being of our family.
V. As my children grew older, I faced the challengeof ensuring their access to quality education andother essential amenities. Faced with this pressingneed, I found myself emotionally compelled to seekemployment and generate income. At that time, myson Salman was 9 years old, Tahoor was 4 yearsold, and Bilal was 3 years old. It became imperative for me to find suitable employment to support my family's needs, particularly to ensurethat my children did not suffer from a lack ofeducational opportunities. VI. In the earlier years, Ifaced restrictions that prevented me from seekingemployment outside the home. Consequently, in 2001,1 Initiated a tiffin making service as a meansto address our family's basic needs and generate income. This endeavour allowed me to earn moneyto cover our daily expenses while working from home.
5. VII. Initially, I operated my tiffin service from home, catering to approximately 12-13 customersin nearby areas. The monthly income from providing vegetarian meals ranged from 500-1000 rupees per customer. However, realizing the need for additional income to meet our growing needs, I learned tailoring and engaged in clothing activities alongside my food service. VTH. Over the years, my small business flourished, and I expanded my tiffin service to cater to around 20-30 vegetarian tiffin's and 30-35 non-vegetarian tiffin's per month. This increase in clientele allowed me to meet our monthly expenses and even save a portion for emergencies and my children's future education. IX. Despite the success of my business, I incurred yearly expenses amounting to 30-35% of my income to sustain and grow my revenue. As all transactions were conducted in cash, I did not operate a bank account, managing all income and savings in cash form.
X. In 2005, when my son Salruan reached the age of 13-14, he began assisting me with fooddeliveries, which further boosted our businessscope and income. With the help of my children,particularly Salman, we were able to Shama Shamin Gubitra overcomefinancial challenges. By 2005,1 had managed tosave a considerable amount from my businessincome, providing a safety net for our family'sfinancial stability. XI. Over time, we activelysought ways to boost our income, exploring varioussupplementary activities. After a few years, Salmanbegan offering both vegetarian and non-vegetariantiffin's, delivering them on a bicycle, therebygradually expanding our income opportunities. XII.The revenue generated from our tiffin and clothingservices effectively covered our children'seducational expenses. As they grew older, Idiligently saved any surplus income to secure their_ future.
XIII. Moreover, to sustain and grow our business, Imade necessary investments totaling between 1,50,000 to 2,00,000 rupees each year in essentials such as clothing materials and food products. XTV.By the year 2010-2011, Salman, then around 18 year’s old, was nearing adulthood. Recognizing theneed to prepare for his future, I began setting aside funds for his marriage expenses and to ensure his well-being in his married life, Additionally, withthe aim of securing a better living situation for myfamily, I decided to separate from our joint family, with whom we had resided until 2010. However,due to financial constraints, I was unable to afford property investments at prevailing rates. Consequently, I reached out to my brothers forassistance in acquiring a separate house.
8 XV. Out of the love and care of my eight brothers, each generously contributed towards purchasing a new property. XVI. Upon exploring various properties in the Goregaon to Andheri area, where rates ranged between INR 32,00,000 to 45,00,000,1 found myself in need of additional funds. In 2010, to bridge this gap, I sold approximately 1 kilograms of gold jewelry gifted to me during my marriage by my parents and relatives. At the prevailing rate of around INR 1850 per gram, this yielded approximately MR 27,00,000. XVII. With these I combined funds, I proceeded to purchase a residential flat located at Dheeraj Residency Co-Operative Housing Society Limited, Flat No. 803, 8th Floor. Oshiwara Bus Depot, New Link Road, Goregaon (West), Mumbai - 400104.
9 XVHI. After completing all registration formalities and paying the required stamp duty, I successfully purchased the property and took possession on 27th October 2010. XIX. I want to emphasize that all the funds used for this purchase
Shama Shamin Gubitra were accumulated over ' the past 10 years through my small businesses, savings, and gold investments. None of the funds were acquired through loans; they represent theresult of my hard work and dedication. XX. Operating primarily in cash transactions due to a lack of digital knowledge, my business has beenmanaged solely by me and my children.Unfortunately, this meant that formal accounting ordigital records were not maintained. However, Ihave attached the purchase agreement of theproperty along with my income tax filings from29th October 2018, including computations andacknowledgements, to provide evidence of my income sources and the legitimacy of the property purchase.
10 XXI, As all my income was received in cash, and prior to the Financial Year 2010-2011. each year's. income fell below the taxable income threshold.Additionally, due to a lack of understandingregarding income tax regulations, I did not file anyincome tax returns for the income earned before theFinancial Year 2010-2011. XXII. I received anotice under section 148 after 2-3 months from theissuance date. The reason cited was that I was notregistered with the e-filing income tax portal, which prevented me from submitting any online reply within the stipulated 30-day period.”
The brief fact of the case is that the assessee had purchased immovable property amounting to Rs.36 lakhs. The case was reopened under section 147 and the notice was issued under section 148 of the Act. In response to the said notice, the assessee filed the return under section 148 of the Act. During the assessment proceedings, the assessee was unable to explain the source for investment of immovable property amount to Rs.36 lakhs. The entire amount was added under section 69 of the Act with the total income of the assessee. Aggrieved, the assessee filed an appeal before the ld. CIT(A). But ld. CIT(A) had issued the notices for hearing, but all are remained non-complied. Finally, the ld. CIT(A) passed an order exparte by upholding the assessment order. Being aggrieved on the appeal order, the assessee filed an appeal before us.
Shama Shamin Gubitra 4. When the appeal was called for hearing, none was present on behalf of the assessee. No adjournment petition was filed. Considering the merit of the case, we proceed to dispose of the appeal exparte qua for assessee after hearing the Ld.DR.
We heard the Ld.DR and considered the orders of the revenue authorities. The Ld.DR first pointed out that the assessee has not appeared after several notices issued by the Ld.CIT(A). The appeal order was passed exparte. The relevant paragraph 4.2 is duly reproduced as below: - “4.2 In this case notice of hearing u/s 250 of Income-tax ACT 1961 was issued for hearing as under: - Date of sending Hearing date fixed DIN Remarks hearing notice 29/01/2021 15/02/2021 ITBA/NFAC/F/APL- Noncompliance 1/2020- 21/1030189403(1) 20/02/2024 27/02/2024 ITBA/NFAC/F/APL- Noncompliance 1/2023- 24/1051185282(1) 04/03/2024 11/03/2024 ITBA/NFAC/F/APL- Noncompliance 2023- 24/106193943(1)
The appellant has been given three opportunities in past to substantiate his Grounds of Appeal and Statement of facts. None of the occasion, the appellant submitted any response. There is no gainsaying that once the appeal is filed by the appellant, it is obligatory en 'is part to purposefully and co-operatively pursue- the same in a worthwhile manner, which the appellant has evidently failed to do.
Shama Shamin Gubitra During this appeal proceeding the appellant has not complied to any of the notices as stated above and also has not submitted any details/document/evidence in support of his ground of appeals.”
6. The Ld.CIT(A) has passed the order without considering the merit of the case and the assessee was unable to submit its documents in favour of its claim. In the ground of appeal, the assessee has mentioned that the assessee has accumulated the funds for last 12 years and the same funds were invested for purchase of immovable property. In our considered view, the matter should be remanded back to the file of the Ld.CIT(A) for further adjudication of the issue. We are not expressing our opinion on the merit of the case which will impair the set aside appeal proceedings. Needless to say, the assessee should get a reasonable opportunity of hearing in set aside proceedings. On the other hand, the assessee should be diligent and cooperative in appeal proceeding for quick disposal of appeal.