DIPA PRAKASHKUMAR VELANI,AHMEDABAD V. THE ITO, WARD-1(2), BHAVNAGAR

ITA 1039/AHD/2025

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This case involves an appeal by Dipa Prakashkumar Velani against the order of the Commissioner of Income Tax (Appeals), which confirmed the additions made by the Assessing Officer under Sections 69 and 115BBE of the Income Tax Act. The reassessment was based on information indicating substantial property transactions by the assessee, who had not filed a return of income for the relevant assessment year. The Assessing Officer rejected the assessee's explanations regarding the sources of funds for property purchases and the cost of improvements, leading to substantial additions to her income. The CIT(Appeals) upheld these additions, leading to the current appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717365 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 09-05-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATEEK SHARMA
• Assessee Lawyers: MANISH J SHAH; RUSHIN PATEL ARS
• Keywords: Additional evidence; Reassessment proceedings; Corroborative evidences; Unexplained investment; Capital Gains; Source of fund
• Section: 147; 148; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1039/Ahd/2025 (Assessment Year: 2015-16) Dipa Prakashkumar Velani, F-202, Sumadhur-II Apt., Nr. Azad Society, Ambawadi, Ahmedabad-380015 Vs. Assessment Unit through Jurisdictional Assessing Officer, Income Tax Officer, Ward-1(2), Bhavnagar [PAN No.AAQPV9113M] (Appellant) .. (Respondent) Appellant by : Shri Manish J Shah & Shri Rushin Patel ARs Respondent by: Shri Prateek Sharma, Sr. DR Date of Hearing 05.08.2025 Date of Pronouncement 13.08.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 25.02.2025 passed for A.Y. 2015-16. 2. At the outset, we observe that the appeal is time barred by 09 days. The delay of 09 days is condoned on due consideration of facts of assessee’s case and owing to causing no perceptible prejudice to other side. 3. The assessee has raised the following grounds of appeal: “1. Notice issued u/s. 148 dated 31.03.2022 and order passed u/s.148A(d) dated 31.03.2022 are bad in law for want of acquiring valid jurisdiction and consequently order passed u/.147 r.w.s. 144B dated 24.03.2023 along with demand notice issued u/s. 156 dated 24.03.2023 are equally bad in law. Printed from counselvise.com ITA No. 1039/Ahd/2025 Dipa Prakashkumar Velani vs. ITO Asst. Year –2015-16 - 2– 2. The ld. CIT(A) has erred in law and on facts of the case, in dismissing the appeal of appellant for non-prosecution and thereby confirmed the order of Assessing Officer passed u/s. 147 r.w.s. 144B dated 24.03.2023 without appreciating the fats and law of the case properly. 3. The ld. CIT(A) has erred in law and on facts of the case, in confirming the addition of Rs.43,33,000/- u/s.69 of the Act being alleged unexplained investment without appreciating the facts and law of the case properly. 4. The ld. CIT(A) has erred in law and on facts of the case, in confirming the action of the Assessing Officer of taxing short term capital gain of Rs.2,08,780/- without appreciating the facts and law of the case properly. 5. The appellant craves leave to add, amend or alter the grounds of appeal at the time of hearing if need arise.” 4. The brief facts of the case are that reassessment proceedings were initiated in the case of the assessee on the basis of information received through the Non-Filer Management System and Risk Management Strategy formulated by the CBDT, which showed that the assessee had purchased immovable properties worth ₹90,00,000/- and ₹42,33,000/-, and had sold property for ₹45,00,000/- during the year under consideration, however, no return of income was filed by the assessee for the impugned year under consideration. The Assessing Officer issued notice under Section 148 on 31.03.2022, and in response, the assessee filed a return on 04.08.2022 declaring total income of ₹65,610/-. During the re- assessment proceedings, the assessee submitted that a residential flat valued at ₹90,00,000/- was purchased by her husband, Shri Prakash J. Velani, and her name was included in the conveyance deed. The assessee submitted the flat was funded through her husband's loan from ICICI Bank and his own savings. Regarding the plot purchased for ₹42,33,000/- and sold for ₹45,00,000/-, the assessee stated that she acquired the plot in her own name and that the purchase consideration was paid out of the sale Printed from counselvise.com ITA No. 1039/Ahd/2025 Dipa Prakashkumar Velani vs. ITO Asst. Year –2015-16 - 3– proceeds received from Mr. Rajendrasinh Chudasama, the buyer of the said plot. The assessee submitted a cost of improvement of ₹2,08,780/- was incurred and declared short term capital gains of ₹58,220/- in her return. However, the Assessing Officer rejected her explanation and found her claims to be unsubstantiated. The Assessing Officer noted that it was implausible for the assessee to have received the sale proceeds from a buyer before acquiring the property. Further, the AO held that the source of funds used to purchase the property remained unexplained. The Assessing Officer noted that the ICICI Bank account showed a net banking receipt followed by payment to the seller, but the source and identity behind that receipt were not explained. In view of the absence of evidence of creditworthiness, genuineness, or identity of the party involved, the AO treated the investment of ₹42,33,000/- as unexplained under Section 69 of the Act and taxed the same under Section 115BBE. Further, the AO disallowed the cost of improvement of ₹2,08,780/- due to lack of any documentary evidences having been furnished by the assessee, and accordingly, the Assessing Officer computed the total short-term capital gain at ₹2,67,000/-. Thus, in the assessment order, the Assessing Officer computed a total income of ₹45,07,390/-. 5. Aggrieved by the reassessment, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The assessee reiterated her stand before CIT(Appeals) that the transaction was genuine and the purchase price was paid from the sale proceeds received from the buyer. However, CIT(Appeals) noted that despite being given multiple Printed from counselvise.com ITA No. 1039/Ahd/2025 Dipa Prakashkumar Velani vs. ITO Asst. Year –2015-16 - 4– opportunities and adjournments on 05.12.2024, 06.01.2025, and 06.02.2025, the assessee failed to produce any evidence such as the bank statements, identity and PAN of the buyer, or proof of source of funds used for the purchase. The CIT(Appeals) observed that the AO was right in questioning the credibility of the assessee’s explanation, especially in light of the fact that the assessee claimed to have received sale consideration even before she owned the property. CIT (Appeals) noted that the explanation offered by the assessee was not only illogical but also unsupported by any material evidence. Despite several reminders and opportunities, the assessee failed to substantiate her claim. Therefore, CIT(Appeals) upheld the findings of the AO, confirming the addition of ₹42,33,000/- as unexplained investment under Section 69 of the Act and ₹2,08,780/- as short-term capital gains, disallowing the cost of improvement. Accordingly, the appeal was dismissed and the order of the Assessing Officer was confirmed in its entirety. 6. The assessee is in appeal before us against the order passed by CIT (Appeals) dismissing the appeal of the assessee. Having considered the facts and circumstances of the case, we observe that the reassessment proceedings in the case of the assessee were initiated based on information showing substantial purchase and sale of immovable properties during the relevant assessment year, despite the assessee not having filed a return of income. In the reassessment completed under Section 147 of the Act, the Assessing Officer made substantial additions, including ₹42,33,000/- towards unexplained investment under Section 69 of the Act and a sum of Printed from counselvise.com ITA No. 1039/Ahd/2025 Dipa Prakashkumar Velani vs. ITO Asst. Year –2015-16 - 5– ₹2,08,780/- on account of disallowance of cost of improvement while computing short-term capital gains, thereby assessing total income at ₹45,07,390/-. The assessee, in response, had submitted that the property purchased for ₹90,00,000/- was funded by her husband, and that the other property, purchased for ₹42,33,000/- and sold shortly thereafter, was paid for using the sale proceeds received from the buyer. However, the Assessing Officer rejected these submissions on the ground that the explanation was not backed by documentary evidence and was not supported by any credible evidence. The CIT(Appeals) confirmed the additions made by the Assessing Officer, observing that despite being granted multiple adjournments, the assessee failed to furnish the required documentary evidence, such as bank statements, identity and PAN of the buyer, or proof of source of funds for the purchase of property. The CIT(A) held the assessee’s explanation to be non-convincing, and accordingly, dismissed the appeal. On examination of the material available on record, and in view of the quantum of additions involved and the implications on the assessee’s taxable income, we are of the considered view that that the present matter deserves to be reconsidered afresh by the CIT(Appeals) in the interests of justice and to afford fair opportunity to the assessee to present her case, including submission of additional evidence in support of her claim. The assessee is directed to produce all supporting evidences in support of the flow of events and prove the identity and creditworthiness of the party making the payment and also furnish evidence / proof of having incurred cost of improvement. In case the assessee is still unable to prove the creditworthiness of party concerned or fails to give supporting Printed from counselvise.com ITA No. 1039/Ahd/2025 Dipa Prakashkumar Velani vs. ITO Asst. Year –2015-16 - 6– evidence to having incurred cost of improvement, despite having been afforded another opportunity, CIT(A) would be at liberty to pass appropriate orders, on the basis of material available on record. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 13/08/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 13/08/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 11.08.2025(Dictated over dragon software) 2. Date on which the typed draft is placed before the Dictating Member 11.08.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 12.08.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 13.08.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 13.08.2025 7. Date on which the file goes to the Bench Clerk 13.08.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "