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Facts
The assessee purchased immovable property for Rs. 1,09,36,920/- and declared income of Rs. 2,04,030/-. The Assessing Officer (AO) treated the investment as unexplained and added it to the assessee's income. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee's appeal.
Held
The tribunal noted that the assessment was done ex-parte and the CIT(A) dismissed the appeal considering the assessee's submission as an afterthought. The tribunal decided to remand the matter back to the AO for a decision based on evidence and submissions.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without considering the assessee's explanation for the investment, and whether the addition made by the AO on account of unexplained investment was justified.
Sections Cited
69, 147, 144
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 318/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2012-13 Shri Jagdish Malakar cuke ITO Assessing Officer, Kishangarh. Gujro Ki Dhani, Vs. Village-Ralawata, Kishangarh, LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BAOPM5636H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Prateek Kedawat (Adv.) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 22/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 27/08/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Ld. National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)/NFAC”] dated 17.01.2024 for the assessment year 2012-13, which in turn arise from the order dated 19.11.2019 passed under section 144 r.w.s 147 of the Income Tax Act,1961 [Here in after referred as “Act” ] by the ITO, Ward-1, Kishangarh.
2. The assessee has marched this appeal on the following Shri Jadish Malakar vs.ITO grounds:- “1. That on the law and in the facts and in the circumstances of the case, the ld. Lower authorities grossly erred in making addition of Rs. 1,09,36,920.00/- u/s 69 of the Income Tax Act, 1961 on account of unexplained investment in property/land.
That the ld. CIT appeal grossly erred in not considering the reply filed by the assessee wherein the source of cash transactions is duly explained along with evidences which is illegal and bad in law and also in gross violation of principles of natural justice.”
The fact as culled out from the record is that the assessee filed his return of income on 12.09.2012 declaring and income of Rs. 2,04,030/-. As per information available with the revenue during the year under consideration the assessee had purchased immovable property situated at Village-Madanganj, Patwar area, Kadanganj, Kishangarh from Shi Lakhma Urf Lakhmi Chand.
The assessee vide letter dated 12.03.2019 was given an opportunity to explain the source of investment. In response to this letter reply of the assessee was received with the ld. AO on 15.03.2019. The reply furnished by the assessee was not found convincing to explain the source of investment made.
3.1 Accordingly, Ld. AO recorded reasons to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the IT Act, 1961. Therefore, notice u/s Shri Jadish Malakar vs.ITO 148 of the Act was issued ld. AO on 29.03.2019 after obtaining necessary satisfaction of competent authority. In response to this notice, no ITR was filed by the assessee. Thereafter, a reminder was issued on 20.08.2019 and the assessee was again asked to file ITR in response to notice u/s 148 of the Act. But no ITR was filed by the assessee. The assessee had only filed a written submission of 01.10.2019 and submitted that the title of the property is under dispute in the Court of Law.
The reply filed by the assessee was carefully considered but not found convincing as the title dispute in the court is separate matter and it has nothing to do with the source of investment made by the assessee.
Therefore, due to non-filing of ITR by the assessee ld. AO left with no option but to complete the assessment ex-parte u/s 144 of the IT Act.
Accordingly, a final show cause notice was issued on 01.11.2019. In response to this notice again no compliance was made by the assessee and no reply was received by the ld. AO.
3.2 Therefore, in view of above facts and circumstances of the case, income of the assessee for the year under consideration is Shri Jadish Malakar vs.ITO being computed in the best judgment manner on the basis of details available on record. The ld. AO noted that the assessee had made payment of Rs.1,00,00,000/- in cash to the seller and paid stamp duty of Rs.9,36,920/- for purchase of the land in question. The assessee made a total investment of Rs.1,09,36,920/- (purchase cost stamp duty) and he had completely failed to justify the investment made in purchase of immovable property.
Accordingly, investment of Rs. 1,09,36,920/- is treated as an unexplained investment of the assessee u/s 69 of the Act and added to the income of the assessee.
Aggrieved by the above order of the Assessing Officer the assessee preferred an appeal before the ld. CIT(A). After perusing the submissions of the assessee, the ld. CIT(A) has dismissed the appeal of the assessee. The relevant finding of the ld. CIT(A) is as under:-
“6. Decision: In this case, the addition has been made by the Assessing Officer worth Rs. 1,09,36,920/- on account of unexplained investment u/s 69 of the Income Tax Act, 1961. The appellant has purchased a property and paid Rs. 1,00,00,000/- in cash to the seller and paid stamp duty of Rs. 9,36,920/- for the purchase of the land. Since no reply was filed during the course of assessment proceedings, hence the Assessing Officer made the addition.
Shri Jadish Malakar vs.ITO 6.1 Now before me in the appellate proceedings, written submission has been filed. I have gone through the written submission, statement of fact and grounds of appeal filed by the appellant. The Video Conferencing was also given to the appellant. It has been stated that the Assessing Officer has not considered the reply of the appellant during the course of assessment proceedings. It has been stated that the appellant has received cash from his mother worth Rs. 32,00,000/-, withdrawal from banks worth Rs. 3,29,500/-, out of savings worth Rs. 20,00,000/- and balance from his father. The appellant has filed declaration regarding the gift. No evidences have been filed regarding the creditworthiness of the father and the mother of the appellant from whom such huge amount in cash have been received. It is also not clear that how many members are in the family of the appellant and when his parents gave such huge amount in gift to the appellant. This just appears like an afterthought by the appellant to evade taxes and explain the huge amount of cash paid for the purchase of the property in cash. Hence it is clear that in the written submission and in the Video Conferencing, the appellant has failed to explain the source of cash and also to prove the creditworthiness of the parents, giving so much amount of cash to the appellant in gift. Hence the addition of the Assessing Officer is confirmed, and the appeal of the appellant is dismissed.”
5. As the assessee did not receive any favors from the appeal so filed before ld. CIT(A). The present appeal is filed against the said order of the ld. CIT(A) before this tribunal on the grounds as reiterated in para 2 above.
The ld. AR of the assessee submitted that the assessment in this case was done ex-parte. The ld. CIT(A) has dismissed the appeal of the assessee, considering the submission of the assessee after thought and hence, the appeal of the assessee was dismissed.
Shri Jadish Malakar vs.ITO The ld. AR of the assessee assured before the Bench if one chance is to the assessee he will submit all the details relevant to the assessment to the Assessing Officer if one change is given.
Per contra, the ld. DR supported the order of the ld. CIT(A) and submitted that the assessee has purchased property by paying a sum of Rs. 1,00,00,000/- in cash and there is no other details of source of the money so provided by the assessee. Even the assessee contended that he has received the money from his father and mother but no such details of source of father and mother was submitted by the assessee. Therefore, if the assessee is agreeable to furnish all the details before the Assessing Officer matter be send back to the file of the ld. AO.
We have heard the rival parties and perused the materials available on record. The Bench noted that the assessment in this case was done ex-parte. The ld. CIT(A) has dismissed the appeal of the assessee, considering the submission of the assessee as afterthought and hence, the appeal of the assessee was dismissed. The ld. AR of the assessee assured before the Bench if one chance be given to the assessee he will submit all the details related to the investment made and thereby to assessee income Shri Jadish Malakar vs.ITO before the Assessing Officer. As it is evident from the record that the order in this case is ex-parte before the ld. AO and therefore, considering that aspect of the matter we hold to remand back the matter to the file of the ld. AO who will decide the issue based on evidence and submission of the assessee as submitted in the remind proceeding. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO.
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 27/08/2024.