NILESH VALLABHAH ROJIVADIYA,SURAT V. .INCOME TAX OFFICER WARD-3, VALSAD

ITA 784/SRT/2024

AI Insights

The case involves Nilesh Vallabhabhai Rojivadiya, the appellant, who contested the reopening of his income tax assessment for the year 2010-11 under sections 147 and 148 of the Income-tax Act, 1961. The Assessing Officer had reopened the assessment based on information that the appellant had purchased immovable property worth Rs.1,33,00,000 but had not filed a return of income for the relevant assessment year. The appellant argued that the payments for the property were made in installments over several years and that the property was actually owned by Shri Nikhil V. Jain, who had made the payments. The Tribunal found that the lower authorities had not adequately addressed the appellant's arguments regarding the reopening of the assessment and the subsequent additions made to his income. Consequently, the Tribunal remanded the case back to the Assessing Officer for a fresh assessment, allowing the appellant to present his case anew.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473279 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Other Referred Cases: Paresh Babubhai Bahalani vs. ITO, Maniben Amrutlal Patel vs. ITDO, Udesh Sharma vs. ITO, Vijaya Vinod Durgkar vs. ITO, Raymond Woollen Mills vs. ITO, ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: RAJESH M.UPADHYAY
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences; Unexplained investment; Reopening of assessment; Source of fund; Tangible material
• Section: 148; 143(3); 143(2); 250; 68; 69; 44AD

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.784/SRT/2024 Assessment Year: (2010-11) (Physical Hearing) Nilesh Vallabhabhai Rojivadiya, A-304, Ishan Apartments, Halar Road, Valsad - 396001 Vs. Income Tax Officer, Ward–3, Valsad, 205, PalakArcade, Shanti Nagar, Tithal Road,Valsad-396001 èथायीलेखासं./जीआइआरसं./PAN/GIR No: ASNPR 6835 R (Appellant) (Respondent) Appellant by Shri Rajesh M. Upadhyay, AR Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 10/12/2024 Date of Pronouncement 27/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 27.06.2024 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2010-11 which in turn was against assessment order passed by Assessing Officer u/s 143(3) r.w.s. 147 of the Act dated 28.12.2017. 2. The grounds of appeal raised by the assessee are as under: “1. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to upheld A.O.'s reopening of assessment u/s 147 and issue of notice u/s 148 of the Act ignoring the fact that payment of alleged purchase was made long back in past i.e. from date 28/2/2013 to 11/2/2010 in instalment. Consequently, an amount of Rs.1,33,00,000/- could not be treated as income escaped for the year 2010-11. 2 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya 2. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to upheld A.O.'s addition of Rs.1,40,85,500/- being appellant's investment in agriculture land bearing R.S. no.92/1, Moje- Vesu, District- Surat without bringing any contrary evidence on record that Shri Nikil V. Jain has not made payment of purchase of land and only registered sale deed was executed in the name of the appellant who being an agriculturist. 3. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to confirm A.O.'s addition of Rs.1,40,85,500/- overlooking and ignoring the sale deed and MOU in which it was specifically mentioned that payment was made right from date 28/3/2003 to 11/2/2010 in instalment and sale deed was signed by Shri Nikhil V. Jain in the capacity of POA of Vimlabhai Jain. 4. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to confirm A.O.'s addition of Rs.1,40,85,500/- ignoring and overlooking the fact that, subsequently, when the property was retransferred, sale consideration was taken by Shri Nikhil V. Jain from the bank account of the appellant.” 3. Brief facts of the case are that the assessee had not filed his return of income. The case of the assessee was re-opened u/s 147 of the Act by issue of notice u/s 148 dated 26.03.2017. Initially, none attended but subsequently the assessee himself attended, but, no details were submitted by him. The Assessing Officer (in short, ‘AO’) requested him to file the return of income which was filed on 28.11.2017 declaring income of Rs.1,52,600/-, being 8% of Rs.12,05,010/- u/s 44AD of the Act. The AO issued notice u/s 143(2) and handed over copy of reasons for reopening to the assessee. As per the information available in the office of AO, assessee had purchased immovable property for Rs.1,33,00,000/-. However, he had not filed return of income for the relevant assessment year. The AO asked assessee to explain the source of investment in the property and furnish copies of purchase deed and bank statement for the relevant year. The assessee stated that though the property was purchased by him, he has not made any payment for the same. The 3 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya property actually belongs to Shri Nikhil V Jain who had made the payments. Subsequently, AO recorded statement of assessee u/s 132(1) of the Act. The AO did not accept explanation of the assessee because property was purchased by the assessee and not by Shri Nikhil V Jain and the payments were made since year 2003 till the year of registration of the deed i.e., 11.02.2010. The assessee was not having any documentary evidence that the property actually belonged to Shri Nikhil V Jain and it was only transferred in his name. Subsequently, a show cause notice was issued by AO. In response thereto, assessee repeated the earlier submission that he had not paid any amount for purchase of the property, however, no documentary evidence was given to substantiate the claim. Hence, AO added Rs.1,40,85,500/- being total of sale consideration, registration charges and stamp duty. He added the above sum as undisclosed investment of the assessee. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). During appellate proceedings, copy of the purchase deed written in Gujarati language was produced. The land was not registered in the name of Nikhil V Jain. On the contrary, the appellant had purchased agricultural land. The transaction in question is purchase of immovable property, which involves investment of money. If the taxpayer was unable to explain the nature and source of funds utilized for investment, the amount in question can be brought to tax as unexplained investment u/s 69 of the Act. The provision of section 69 of the Act has also been discussed by CIT(A), which is at pages 7 to 11 of the appellate order. The CIT(A) concluded that the assessee could not offer a 4 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya satisfactory explanation about the nature and source of purchase of immovable property before the AO as well as CIT(A). The CIT(A) observed that Sections 69, 68 are engrafted so as to raise a statutory presumption in the event of unsatisfactory explanation of the credit entries. The CIT(A) further stated that there are no details forthcoming from the assessee during scrutiny of appeal proceedings. No bank statement evidencing payments towards investment, no drawls from the banks, no party-wise accounts on investment are given. Even return of income was not filed by the assessee. The CIT(A) had posted the case for hearing on 15.01.2019, 21.01.2021, 30.12.2021, 02.02.2022 and 19.05.2022. However, there was no response from the assessee. As the assessee could not offer satisfactory explanation for the nature and source of investment, the CIT(A) sustained the addition made by AO and dismissed the appeal of assessee. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted a paper book including various case laws. He has strongly argued against the reopening of assessment u/s 147 and issue of notice u/s 148 of the Act. He submitted that the reopening is based on AIR information and the AO was not even having the purchase deed. This is evident because no primary details of the property such as the date, date of transaction, mode of payment, names of the buyer and seller are available in the reasons for reopening. Hence, the AO was not having any tangible material. The AO also did not make any independent enquiry with respect to escapement of income. The 5 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya reopening was based on presumption and surmises that purchase of property of Rs.1.33 crore is from undisclosed income. The AO had not even mentioned the section under which the appellant’s income has escaped. Even in the assessment order, the section under which “income” is assessed is not mentioned. There is nothing on record which shows that assessee had earned income of Rs.1.33 crore in AY 2010-11 and not shown the same in his ITR for AY 2010-1. The investment cannot be treated/interpreted as income He has relied on the decisions in cases of: (i) Paresh Babubhai bahalani vs. ITO (2024) 463 ITR 103 (Guj), (ii) Maniben Amrutlal Patel vs. ITDO ITA No.529/Ahd/2020 dated 29.03.2023, (iii) Udesh Sharma vs. ITO ITA No.7579/Del/2017 dated 29.03.2022 and (iv) Viujaya Vinod Durgkar vs. ITO ITA No.339/Nag/2023 dated 11.11.2024 6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that there should be prima facie reason at the initial stage of reopening. The sufficiency or correctness of the reason cannot be examined at the threshold. The conclusion or conclusive establishment of escaped income is not required while drawing satisfaction regarding reopening the assessment. He relied on t he decision in case of Raymond Woollen Mills vs. ITO, 236 ITR 34 (SC) and ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500 (SC). He also submitted that the decision of Paresh Babubhai Bahalani (supra) is distinguishable because in the said case the assessee had filed return of income whereas the appellant did not file his return of income. The assessee has paid in cash but 6 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya details were not given by him. The assessee has not explained the nature and source of investment with any supporting evidence. He also submitted that no question of beneficial or legal owner arises because everything is in the name of the assessee. 7. We have heard both parties and perused the materials available on record. We have also deliberated on the decisions relied upon by both sides. It is seen from the assessment order u/s 143(3) r.w.s. 147 of the Act that the assessee had not originally filed his return of income. He filed it on 28.11.2017 in response to notice issued u/s 148 on 26.03.2017. The case was reopened because assessee had purchased immovable property for Rs.1,33,00,000/- but he did not file his return. We find that AO had given copy of the reason recorded to the assessee along with notice u/s 143(2) of the Act. It is evident from the assessment order that assessee had not raised any objection to the reopening of assessment and notice issued u/s 148 of the Act. Rather, the assessee himself attended the hearing before AO and furnished various details and discussed the case with the AO. 7.1 We further find that the assessee had raised the ground of reopening before CIT(A), not because of the arguments advanced by the Ld. AR of the assessee before us; but because payment for purchase immovable property was made in the earlier period from 28.02.2003 to 10.02.2010 in instalments. It is clear from the ground raised by the appellant before CIT(A) that he had contested the addition in the subject assessment year, though payments for purchase of property were made in different assessment years, starting from 7 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya AYs 2003-04 to 2010-11. Thus, all additions could not be made in AY 2010-11. Hence, the ground now raised by the assessee is a fresh ground of appeal involving both facts and law. We also find that the CIT(A) has not decided ground No.1 which was raised for reopening the assessment for the year under consideration. Moreover, the arguments of Ld. AR of the assessee before us was also not canvassed before CIT(A). As the issue has not been dealt with by the lower authorities, we deem it proper to remit the matter back to the file of AO. Accordingly, order of CIT(A) is set aside and the matter is restored back to the file of AO for de novo assessment after providing reasonable opportunity of being heard to assessee. The assessee is given liberty to raise any new issue including the ground raised before us. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes. 8. Since we have set aside the matter to the file of AO for fresh assessment, the other grounds are academic in nature and do not require any adjudication. 9. In the result, appeal of the assessee is treated as allowed for statistical purposes. Order is pronounced in the open court on 27/12/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 27/12/2024 SAMANTA 8 ITA No.784/SRT/2024/AY.2010-11 Nilesh Vallabhabhai Rojivadiya Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Surat "