Sri. H.S. Ningaiah, Bangalore V. Deputy Commissioner Of Income Tax, Central Circle-1(4), Bangalore

ITA 33/BANG/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2199 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Opportunity of being heard; Additional evidence
• Section: 69; 132; 250; 139(1); 72; 153; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.33/Bang/2021 Assessment year : 2007-08 Shri H.S Ningaiah, No.143, 4 th Block, RMHBCS Layout, Nandini Layout, Bengaluru-560096. PAN – ABRPN 0220 D Vs. The Dy. Commissioner of Income- tax, Central Circle-1(4) Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Pranav Krishna, Advocate Revenue by : Shri Pradeep Kumar, CIT(DR) Date of hearing : 04.05.2022 Date of Pronouncement : 17.05.2022 O R D E R Per Padmavathy S, Accountant Member This appeal is against the order of the Commissioner of Income Tax (Appeals)-11, Bengaluru dated 01.12.2020 passed for the assessment year 2007-08. ITA No.33 /Bang/2021 Page 2 of 7 2. The assessee raised the following grounds:- “1. The order of the Learned Commissioner of Income tax [Appeals] passed under Section 250 of the Act in so far as it is against the Appellant is opposed to raw, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. The Appellant denies himself Liable to be assessed on total assessed income of Rs. 93,61,440/- as determined by the learned assessing officer and upheld by the learned CIT[A], as against the returned income by the appellant of Rs. 4,46,440/- under the facts and circumstances of the case. 3. The learned CIT [A] erred in confirming the order u/s. 153C r.w.s. 143 [3] of the learned Assessing Officer without adjudicating the contentions taken by the Appellant on the issue of assumption of jurisdiction under Section 153C of the Act without even calling, examining the records, on the facts and circumstances of the case. 4. The learned CIT [A] failed to appreciate that the notice issued under Section 153C of the Act is bad in law, for want of requisite jurisdiction especially the mandatory requirements to assume jurisdiction under Section 153C of the Act have not been complied with and consequently the assessment is liable to be cancelled on the facts and circumstances of the case. 5. The learned CIT [A] failed to appreciate that the assessment is further bad in law as reasons for issue of notice under Section 153 C of the Act have not been given and the Appellant has reasons to believe that the same has not been recorded and consequently the assessment is bad in law. The Appellant submits that mandatory conditions to assume jurisdiction is to record reasons and in the absence of the same the assessment is bad in law and liable to be cancelled. 6. The learned CIT [A] failed to appreciate that the notice issued under Section 153C of the Act is further bad in law when learned Assessing Officer mentioned in the notice that he proposes to assess/reassess the income (highlighted portion 'assess/ reassess your income'), learned assessing officer ITA No.33 /Bang/2021 Page 3 of 7 issued a notice without specifically specifying by what he is proposing whether he is proposing to assess or reassess and there is no specific what he is proposing in the notice and consequently the entire proceedings initiated by the said invalid notice the assessment order passed is not valid and void-ab-initio. 7. The learned CIT [A] erred in confirming the addition of Rs. 87,75,000/- made by the learned assessing officer as unexplained investment u/s. 69 of the Act on the facts and circumstances of the case. 8. The learned CIT [A] erred in passing the appellate order dated 01/12/2020 without admitting additional evidence under Rule 46A of the Income tax Rules, 1962 filed on 08/06/2018 in support of the Appellant's case and thereby passed a perverse order under the facts and circumstances of the case. 9. The learned CIT [A] failed to appreciate that assessment order passed is in violation of the settled principles of natural justice on the facts and circumstances of the case. 10. Without prejudice to the right to seek waiver as per the parity of reasoning of the decision of the Hon'ble Apex Court in the case of Karanvir Singh 349 ITR 692, the Appellant denies itself liable to be charged to interest under section 234 B of the Income Tax Act under the facts and circumstances of the case. 11. The appellant contends that the levy of interest under section 234A, 234 B and 234C of the Act is also bad in law as the period, rate, quantum and method of calculation adopted by the learned assessing officer on which interest is levied are not discernible and are wrong on the facts of the case. 12. The appellant craves leave to add, alter, amend, substitute or delete any or all of the of appeal urged above. 13. For the above and other grounds to be urged during the course of hearing of the \ appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.” ITA No.33 /Bang/2021 Page 4 of 7 3. Brief facts of the case are that the assessee is in the business of real estate. The search u/s 132 of the Act was carried out in the group cases of Shri KG Krishna and Others on 5/11/2021. Consequent on the search operation, several documents belonging to the assessee were found and seized. The case was centralized with DCIT, Central Circle- 1(2), Bengaluru on 3/11/2015. A notice u/s 153C of the Act was issued on the assessee on 13/11/2014. In response to the notice, the assessee filed a letter requesting to treat the original return of income filed u/s 139(1) of the Act on 1/11/2007 declaring a total income of Rs.4,46,400/- on the return filed in response to the notice u/s 154C. During the course of search proceedings, a sale deed for purchase of property from Shri Laxmin Promod Kumar on 3/3/2007 for Rs.87,75,000/- was found and seized from the residence of Shri Laxmin Pramod Kumar. The said purchase as per the sale deed was drawn by way of cheque favouring Shri KG Krishna at the instance of the vendor. It is mentioned in the sale deed that the payment was made to Shri KG Krishna vide cheque No.88128 drawn on Karnataka Bank, Mahalakshmipuram at the instance of the seller. However, on perusal of the bank account of Karnataka Bank, Mahalakshmipuram no such cheque entry was noticed reflecting the payment. The AO also noticed that the said assets and its sources were not disclosed in the balance sheet of the assessee. Before the AO, the assessee submitted that the property was returned back in the months of April, 2007. However, when the AO asked for supporting documents like cancellation deed, no such information was produced ITA No.33 /Bang/2021 Page 5 of 7 by the assessee before the AO. Hence, the AO proceeded to add said sum of Rs.87,75,000/- as an unexplained investment and concluded asst. accordingly. 4. Aggrieved, the assessee filed an appeal before the CIT(A). 5. Before the CIT(A), the assessee shared cancellation deed which is produced in support of his claim that the said transaction of investment in property did not go through and that the assessee had not received any payments. The assessee also produced a confirmation from Karnataka Bank stating that the said cheque was not enchased. However, the CIT(A) did not accept the additional evidences produced by the assessee stating that the assessee had not given any satisfactory reason for not filing the same during the asst. proceedings. The CIT(A) thus dismissed appeal of the assessee. The assessee is in appeal before the Tribunal. 6. Aggrieved by the order of the CIT(A), the ld.AR argued the matter only on merits and did not go into the legal issues raised in the grounds of appeal. The ld.AR submitted that the assessee had entered into the registered cancellation deed of sale which the lower authorities did not take into consideration. The ld.AR also submitted that the question of explaining the sources does not arise when the payments itself in the purchase or investment has not met. The ld. AR further submitted the confirmation from Karnataka Bank Ltd., stating that the ITA No.33 /Bang/2021 Page 6 of 7 cheque by the assessee in the name of Shri KG Krishna is not realized and is in unused state (Pg 82 of paper book) supports the claim of the assessee that there is no payment made towards the purchase of property. 7. The ld.DR relied on the written submissions. 8. We have heard the rival submissions and perused the materials on record. We notice that the AO had called for the details of cancellation if any of the purchase which the assessee could not produce and hence the AO proceeded to make an addition u/s 69 of the Act for the payment made towards purchase of property. Before the CIT(A), the assessee had submitted the cancellation deed (pg. 72 of paper book) which is the registered document dated 13/12/2007 when questioned why the said sale deed which is executed well before the date of the assessment proceedings could not be produced before the AO. The ld.AR submitted that the assessee was not given a proper professional advice and also that the AO did not provide enough time to the assessee to share the documents. 9. We notice that the CIT(A) has not recorded any specified reason for not admitting the additional evidence in terms of the cancellation deed and the bank letter and dismissed appeal merely stating that these details ought to have been produced before the AO. Since the supporting document in terms of the cancellation deed and the letter ITA No.33 /Bang/2021 Page 7 of 7 from Karnataka Bank Ltd., which are the core basis on which the addition u/s 69 of the Act is made needs to be verified, we are of the considered view that the appeal needs to go back to the AO for proper verification of the said documents. We, therefore, remand the issue back to the AO to look into the documents produced by the assessee to substantiate the claim that the deal did not go through and hence there is no unexplained investment to be added u/s 69 of the Act. The AO is directed accordingly and needless to say that assessee should be given reasonable opportunity of being heard. 10. In the result, the appeal by the assessees is allowed for statistical purpose. Order pronounced in court on 17 th day of May, 2022 Sd/- Sd/- (GEORGE GEORGE K.) ( PADMAVATHY S) Judicial Member Accountant Member Bangalore, Dated, 17 th May, 2022 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. By order Asst. Registrar, ITAT, Bangalore.