NEHAL RAMANBHAI PATEL,ANAND V. THE ITO, WARD-3 NOW WARD-1, ANAND

ITA 131/AHD/2025

AI Insights

The case involves Nehal Ramanbhai Patel, who appealed against the order of the Commissioner of Income Tax (Appeals) which upheld the addition of Rs.26,49,250 as unexplained money under section 69A of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer following the reopening of the assessee's case for the assessment year 2013-14, based on information about a property purchase. The Tribunal noted that the assessee had provided substantial evidence, including bank statements and income tax returns from the USA, to substantiate the source of funds for the property purchase. The Tribunal criticized the CIT(A) for not considering these documents and allowed the appeal, deleting the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717611 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 20-01-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: DARSHAN BELANI
• Keywords: Condonation of delay; Additional evidence; Corroborative evidences; Unexplained cash credit; Source of fund
• Section: 147; 148; 143(3); 142(1); 271(1)(c)

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ]BEFORE MS.SUCHITRA R. KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.131/Ahd/2025 Asstt.Year : 2013-20140 Nehal Ramanbhai Patel Gold Street Pamol, Borsad Anand-388 540, Gujarat PAN : ATDPP 4094 K Vs. ITO, Ward-(3) Anand. (Applicant) (Responent) Assessee by : Shri Darshan Belani, AR Revenue by : Shri Amit Pratap Singh, Sr.DR सुनवाई क तारीख/Date of Hearing : 29/07/2025 घोषणा क तारीख /Date of Pronouncement: 12/08/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal filed by the assessee is directed against the order passed under section 250 of the Income-tax Act, 1961 (“the Act”) by the Learned Commissioner of Income Tax (Appeals), Addl./Joint Commissioner of Income Tax (Appeals)-1, Pune [hereinafter referred to as \"Ld. CIT(A)\"], dated 26.12.2023, arising out of the assessment order dated 31.10.2017 passed by the Assessing Officer under section 143(3) read with section 147 of the Act for the assessment year 2013–14. 2. Condonation of Delay 2.1 The impugned order of the CIT(A) was passed on 26.12.2023. As per section 253(3) of the Income-tax Act, 1961, the time limit for filing the appeal before the Tribunal is 60 days from the date of receipt of the order. Printed from counselvise.com ITA No.131/Ahd/2025 2 In the present case, there is a delay of 326 days in filing the appeal before the Tribunal, as noted by the registry. 2.2 In support of the request for condonation of delay, the assessee has filed a duly notarised affidavit dated 02.01.2025 from the United States of America. It is explained therein that the assessee, a resident of Anand, Gujarat, was residing in the United States of America at the time when the appellate order was passed and was therefore unable to receive the notices issued electronically or physically at his Indian address, which remained locked during his absence. The notices regarding appellate proceedings were either delivered physically at his closed premises or sent to the email ID of his Chartered Accountant, who failed to take timely steps for filing the appeal before the Tribunal. As soon as the assessee became aware of the order, he took immediate steps to collate the documents and file the present appeal. The delay, therefore, is attributed to circumstances beyond the control of the assessee, namely his residence outside India and non- cooperation on part of his erstwhile Chartered Accountant. 2.3 It is further noted that the Departmental Representative has not raised any objection to the request for condonation of delay. 3. Having regard to the reasons stated in the affidavit, which are supported by facts and found to be bona fide, and in the interest of substantial justice, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the stipulated time. The delay in filing the appeal is accordingly condoned and the appeal is admitted for adjudication on merits. 4. Facts of the Case 4.1 The appellant had not filed a return of income for A.Y. 2013–14. The AO reopened the case under section 147 based on the information that the assessee purchased immovable property worth Rs.25,24,250/- plus stamp Printed from counselvise.com ITA No.131/Ahd/2025 3 duty of Rs.1,25,000/- (total Rs. 26,49,250/-). Notice under section 148 was issued on 18.03.2017. In response, return filed on 01.08.2017 declaring total income of Rs.15,301/- only. In response to notice by the AO, it was stated by the assessee that the property in question was purchased jointly with her father and other two co-owners and the payment towards her share of 25% was made out of NRE account No.17135 with Bank of Baroda. It was also explained that the bank account used for making the property payment was jointly held by the assessee and his father. However, no documentary evidence was filed to substantiate the source of funds, or the income-tax returns of the father, who was claimed to have contributed the funds. The Assessing Officer issued notices under sections 142(1) and 143(2) of the Act, seeking supporting evidences, including source of bank credits and returns of income of the assessee or his father. The Authorised Representative of the assessee reiterated earlier submissions but did not furnish any fresh or conclusive evidence to explain the bank deposits. In the absence of any satisfactory explanation or verifiable supporting documentation, the Assessing Officer treated the investment of Rs. 26,49,250/- as unexplained money under section 69A of the Act and added the same to the income of the assessee. Penalty proceedings under section 271(1)(c) were also initiated. 4.2 The assessee preferred an appeal before the Ld. CIT(A), which was originally instituted on 16.12.2017. As recorded in the appellate order, the appeal was later migrated to the National Faceless Appellate Centre under the e-Appeals Scheme in terms of CBDT Notification No. 76/2020 dated 25.09.2020 and thereafter transferred to the present jurisdiction. In the appellate proceedings, the Ld. CIT(A) recorded that the assessee had not responded to multiple notices issued under section 250 of the Act on five occasions (from 2020 to 2023), nor filed any written submissions or documentary evidence in support of the grounds raised. The Ld. CIT(A), relying on various judicial pronouncements, held that mere filing of the appeal without prosecution does not entitle the appellant to relief and Printed from counselvise.com ITA No.131/Ahd/2025 4 further observed that the assessee had failed to discharge the burden of explaining the source of investment in the immovable property. The appeal was therefore dismissed ex parte, and the addition made by the Assessing Officer was upheld in full. 5. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal: 1. The Hon'ble CIT(A) erred in law and facts of the case by passing ex-parte appellate order without considering the written Submissions, supporting evidences and additional evidences submitted dated 14.06.2018. 2. The Hon'ble CIT(A) erred in law and facts of the case by upholding the addition amounting to Rs.26,49,250/- made as unexplained credits in case of the appellant for AY 2013-14. 3. The appellant reserves the right to add/alter or amend any of the ground of appeal. 6. During the course of hearing before us, the learned Authorised Representative (AR) appearing for the assessee reiterated the factual background of the case and submitted that although the order passed by the Ld. CIT(A) is ex parte in nature, the assessee had in fact submitted a detailed written representation along with supporting documents before the CIT(A)-4, Vadodara, vide letter dated 10.06.2018, requesting for admission of additional evidences. A copy of the said letter is placed at pages 10 to 12 of the paper book. The AR pointed out that the assessee had clearly explained that the investment in the immovable property was made jointly by the assessee and her father, each holding 25% share in the total consideration of Rs.50,48,500/-, i.e., Rs.25,24,250/- each, out of their NRE Bank Account No. 17135 with Bank of Baroda, Anand. A cheque-wise breakup of payments aggregating to the above amount was also furnished and is reproduced in the additional evidence letter dated 10.06.2018. 6.1 It was submitted that the NRE account from which the investment was made was jointly held with the assessee’s father and was duly supported by entries reflecting credit of foreign remittances in Indian Rupees converted from US Dollar savings. The AR pointed out that the Printed from counselvise.com ITA No.131/Ahd/2025 5 assessee has been residing in the United States for more than 10 years, engaged in pharmacy business, and had filed income-tax returns in the USA, copies of which for the year 2010 were submitted at pages 13 to 18 of the paper book. The AR further submitted that the amount credited in the NRE account was sourced from Hudson City Savings Bank, NJ, USA. A copy of the relevant bank statement reflecting the wire transfers was placed at page 19 of the paper book. Additionally, the assessee also submitted confirmation from Bank of Baroda, Anand, evidencing the credit of wire- transferred funds into the joint NRE account, placed at page 20 of the paper book. The AR contended that the entire transaction was routed through banking channels, fully explained with documentary evidence including the Purchase Deed, cheque copies, source-wise fund trail, and foreign income disclosures, which were filed as part of the paper book. The AR submitted that the Ld. CIT(A) has passed the order without considering these vital evidences, which were on record, thereby vitiating the appellate order. 7. The learned Departmental Representative (DR) relied upon the orders of the lower authorities. He submitted that the assessee was afforded sufficient opportunities both during the course of assessment proceedings as well as during the first appellate stage. 8. We have carefully considered the rival submissions, perused the material available on record. The core issue in the present appeal is the addition of Rs.26,49,250/- made by the Assessing Officer under section 69A of the Act on account of unexplained credits in the assessee’s bank account alleged to have been utilised for the purchase of immovable property. The AO rejected the explanation furnished by the assessee on the ground that no supporting documentary evidence was produced to establish the source of funds, and the Ld. CIT(A) confirmed the addition in an ex parte order without considering the evidence claimed to have been filed earlier. Printed from counselvise.com ITA No.131/Ahd/2025 6 8.1 It is noted from the records that the assessee had in fact submitted a detailed written explanation dated 10.06.2018 before the Ld. CIT(A)-4, Vadodara, together with supporting additional evidence including: - Cheque-wise details of payment aggregating to Rs.25,24,250/- made from joint NRE Bank A/c No. 17135 with Bank of Baroda, Anand; - Source-wise fund trail of USD remittances from Hudson City Savings Bank, NJ, USA; - Copies of US income-tax returns for years 2010–2012; - Bank confirmation evidencing receipt of wire transfers in the NRE account; - Purchase deed of the property and identity of joint owners; - Confirmation that the assessee had 25% ownership and the source of investment was his foreign savings. 8.2 In our considered view, these documents go to the root of the matter and clearly support the assessee’s contention that the source of the investment was foreign-earned income, duly remitted through legitimate banking channels, and credited into his jointly held NRE account. The evidences substantiate the identity, creditworthiness, and genuineness of the transaction and prima facie discharge the initial onus cast under section 69A. 8.3 We also note that the Ld. CIT(A), despite referring to the assessee’s non-compliance with section 250 notices, has not recorded any discussion or finding on the detailed submissions and documents filed by the assessee vide letter dated 10.06.2018. The order is mechanical and fails to adjudicate the matter in accordance with section 250(6) of the Act, which mandates the appellate authority to dispose of the appeal with reasoned findings on each ground. It is also settled law that additional evidence which is relevant and crucial for proper adjudication of the issue should not be rejected without assigning cogent reasons. Printed from counselvise.com ITA No.131/Ahd/2025 7 8.4 From the body of the appellate order, it appears that the materials earlier filed by the assessee before the jurisdictional CIT(A) were not considered or even referred to by the CIT(A), NFAC. While we refrain from making any conclusive comment as to why these records were not examined, we note that there may not have been any institutional mechanism or protocol for seamless transmission of physical files or evidentiary documents from the local office of the CIT(A)-4, Vadodara to the NFAC. 8.5 The documents, already submitted to the CIT(A)-4, Vadodara and placed in the paper book, clearly establish that the impugned investment was funded out of foreign remittances duly credited into the assessee’s non- resident external account (NRE A/c) maintained in accordance with FEMA and RBI regulations. It is trite law that foreign currency remitted through normal banking channels into an NRE account and subsequently utilised for investment in India does not constitute taxable income of the resident recipient, particularly where such remittances represent savings from taxed foreign income. 8.6 In the present case, the source of the bank credits has been demonstrated to be foreign savings duly repatriated to India through authorised channels. The identity of the remitter (assessee himself), creditworthiness (substantiated by US returns), and genuineness of the transaction (documented wire transfers) are all established. The AO has not made any enquiry or brought any adverse material to rebut these facts. Thus, the presumption of unexplained money under section 69A is not attracted. 8.7 We also note that the non-consideration of evidences by the CIT(A), NFAC, appears to be a result of systemic migration of the appeal from physical to faceless regime, without proper mechanism for record transmission. Without attributing fault, we are of the considered view that the assessee cannot be made to suffer for such administrative lacuna. Printed from counselvise.com ITA No.131/Ahd/2025 8 8.8 In light of the above discussion, we hold that the addition of Rs.26,49,250/- made under section 69A is wholly unsustainable in law and on facts and deserves to be deleted in its entirety. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 12th August, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 12/08/2025 Printed from counselvise.com "