RITIKA JAIN,THANE V. ITO(IT TP), BHOPAL, AAYKAR BHAVAN

ITA 632/IND/2024

AI Insights

This case involves an appeal by Ritika Jain against the order of the CIT(A) which dismissed her first appeal on technical grounds without considering the substantive issues. The primary contention was regarding the additions made to her income for the Assessment Year 2015-16, which were treated as unexplained investments under Section 69 of the Income Tax Act. The ITAT found that the CIT(A) and the Assessing Officer (AO) had not adequately considered the merits of the case and had dismissed the appeal based on procedural technicalities rather than substantive legal principles.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312739 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Other Referred Cases: Shri Pushpendra Singh Chouhan V/s ITO ITA No.122/Ind/2024, M/s. Nine Globe Industries Pvt. Ltd Vs. ACIT, Vishnusharan Chandravanshi Vs. ITO, Shamama Reddy Vs. ITO, Vikram Singh Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHISHPORWAL
• Assessee Lawyers: SHRISOUMYABUMB
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained investment; Salary income; Rule of consistency; Principle of natural justice; Source of fund; Competent authority; Non compliance
• Section: 147; 148; 144; 142(1); 68; 69; 139

Judgement Text

"Page 1 of 18 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI PARESH M JOSHI, JUDICIAL MEMBER ITA No.632/Ind/2024 (AY: 2015-16) Ritika Jain, A-504, Laxmi Residency Chs Ltd, Opposite Datta Mandir Check Naka, Wagle Estate, Thane (PAN: ASBPJ7735N) बना म/ Vs. CIT (Appeals), NFAC, Delhi (Appellant) (Revenue) Assessee by Shri Soumya Bumb, AR Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 21.04.2025 Date of Pronouncement 29.04.2025 आदेश/ O R D E R Per Paresh M Joshi, J.M.: This is an appeal filed by the assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal as and by way of Second appeal under the Act. The assessee is aggrieved by the order bearing Number ITBA/NFAC/S/250/2024-25/1066243407(1) dated 29.06.2024 passed by Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the “Impugned order”. The relevant Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 2 of 18 Assessment Year is 2015-16 and the corresponding previous year period is from 01.04.2014 to 31.03.2015. 2. FACTUAL MATRIX 2.1 That the Department of Income Tax had received credible information from reliable sources that the assessee had purchased an immovable property of Rs.76,80,000/- during the year under consideration. 2.2 That since the assessee entered into huge financial transaction during the year under consideration and she did not file her ITR for the Assessment Year 2015-16. 2.3 Accordingly, after providing opportunity of being heard to the assessee an order u/s 148A(d) was passed on 29.03.2022 with the prior approval from the competent authority. 2.4 That accordingly, a notice u/s 148 of the Act was issued on 29.03.2022 through ITBA portal. 2.5 That assessee despite notice u/s 148 did not file her ITR for Assessment Year 2015-16. 2.6 That however assessee submitted that she was a NRI during the year under consideration. In support of the said claim she Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 3 of 18 submitted all the supporting documents which was placed on record after examination. 2.7 Upon transfer of case on 20.02.2023 further various notice(s) u/s 142(1) of the Act was issued to the assessee for submitting reply regarding purchase of immovable property and source of investment therein. In compliance assessee furnished her reply. The same was placed on record after examination. 2.8 That further the proposed addition was sent to the assessee vide draft order u/s 144C of the Act dated 26.03.2023. In response to the draft order, the assessee submitted her reply but she did not mentioned that whether she preferred appeal before Hon’ble DRP or accepted variations proposed in the draft order. 2.9 That on basis of the perusal of the submission made by the assessee it was noticed that assessee had purchased an immovable property jointly with her husband Shri Ankur Priti Jain Total consideration of the property was Rs. 80,94,000/- (including stamp duty of Rs. 3,84,000/- and registration charge of Rs. 30,000). Out of total consideration of the property, Rs. 35,00,000/- had been paid through a loan from Oriental Bank of Commerce. Further, it is also observed that Rs. 29,80,000/- was Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 4 of 18 paid through the ICICI bank account of the husband of assessee, Shri Ankur Preeti Jain and the balance amount was paid through the PNB account of the assesse. On being asked for the source of the payment made by her and her husband, the assessee submitted that source of the her husband's income was his salary income and savings. Further, she submitted that she had taken loan of Rs. 10,85,000/- from her relatives. 2.10 That in the context of above discussion, further, a notice u/s 142(1) of the IT Act dated 01.03.2023 has been issued to assessee for submitting evidence regarding the income earned by her husband and loan received from relatives. In compliance to the same the assessee has submitted the earning evidence of her husband but regarding loan received from relatives, the assessee has provided only confirmation of the relatives. 2.11 That in view of the fact that assessee did not submitted the all details/evidence with respect to the loan received from relatives, a show cause notice dated 19.03.2023 2015-18 has been issued for submitting copy of ITR and copy of bank statements of the relatives, whereby creditworthiness and Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 5 of 18 genuineness of the transaction can be established. The response of assessee was required on or before 23.03.2023 at 01:52PM. 2.12 On the date given in show cause notice no response was received from the assessee. Since, the assessee has not complied the notice dated 19.03.2023, it may be presumed that assessee has nothing in her possession to substantiate her claim regarding loan received from her relatives. Thus, amount so claimed to be have received from relatives is remained unexplained. 2.13 Basis above Ld. A.O recorded that it is an undisputed fact that the assessee in spite of providing several opportunities of being heard, she did not furnish satisfactory explanation and thus, has failed to discharge the onus of proof cast upon her. Therefore, the amount Rs. 10,85,000/- claimed to be have loan from her relatives is remained unexplained. 2.14 Accordingly Ld. A.O recorded that assessee has failed to establish the genuineness and creditworthiness of the loan received from relatives of Rs. 10,85,000/-. Therefore, the loan received from relatives of Rs 10,85,000/- is being disallowed and treated as unexplained investment made in aforesaid immovable Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 6 of 18 property and being added to the total income of the assessee as unexplained investment u/s 69 of the IT Act for A.Y. 2015-16. 2.15 The d. A.O thus made addition of Rs. 10,85,000/- (supra). 2.16 That since the assessee despite opportunities of being heard u/s 142(1) vide notice dated 01.03.2023 had not provided any evidence of source of payment of stamp duty and other charges to the tune of Rs.4,14,000/- same was treated as unexplained and added. 2.17 That Ld. A.O computed the total assessed income as under:- Particular Amount Income as per ITR (not filed in response to notice u/s 148) Nil Added income as per para 4.4 Rs.10,85,000/- Added income as per Para 6.1 Rs. 4,14,000/- Total assessed income Rs.14,99,000/- 2.18 That the aforesaid assessment order of Ld. A.O bears No.ITBA/AST/S/147/2023-24/1052774554(1) dated 12.05.2023 and that the same is hereinafter referred to as the “Impugned Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 7 of 18 Assessment Order” which was passed u/s 147 r.w.s. 144 of the Act. Additions were made u/s 69 of the Act. 2.19 That the assessee being aggrieved by the “impugned assessment order” prefers first appeal u/s 246A of the Act before Ld. CIT(A) who by the “impugned order” has held as under:- “I have gone through above reply of appellant. The appellant in his reply has admitted that he did not file return of income for his income was below taxable limit. This explanation is not acceptable as it is not as per computation of income, made by the appellant, but after determination of income unless any changes are made in the assessed income by virtue of rectification or giving appeal effect, which decides the quantum of income. In this case, assessed income is above taxable limit and the appellant was supposed to file return of income. At present appellant has to just tell whether he paid an amount equal to the amount of advance tax which was payable by him and if he had not made such payment whether he wants exemption from operation of provisions of section 249(4)(b) of the Act. The appellant has failed to do so. It is, therefore, clear that the appellant has not made payment of amount equal to the advance tax which was due on its income. 7. Since the appellant has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by it, present appeal is not liable to be admitted. The appeal is infructuous and is, therefore, dismissed. 8. The appeal is dismissed.” 2.20 That the assessee being aggrieved by the “Impugned order” dismissing 1st appeal has filed present appeal before us Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 8 of 18 and has raised following grounds of appeal in Form No.36 against the “Impugned order” which are as under:- “1) Ld. CIT(A) erred in not considering the merits of the case but dismissed it merely on technical grounds without consideration of the substantive issues which is unjust and contrary to established legal principles. 2) Ld. AO has erred in passing the assessment order u/s i.e. 147 r.w.s. 144 of I.T.Act, 1961 dated 12-05-2023 without considering the reply filed against the draft order u/s 144C(1) I.T.Act, 1961 dated 26.03.2023 merely on technical grounds without considering its merit which is against the principle of natural justice and in law. 3) The appellant was deprived of a fair hearing at both levels due to procedural oversight, which violated the principles of natural justice. 4) The Ld. AO has erred in passing the assessment order under section 147 r.w.s 144 of the Act instead to be passed under section 144C after compliance of notice under section 142(1), thus the order by the Ld.AO is without applying his mind and against the principle of law. 5) The appellant humbly submits that the order passed is bad in law and the additions made should be deleted. (a) Ld.AO erred in making addition amounting to Rs. 10,85,000 u/s 69 of the Act however had issued show cause u/s 68 of the Act. (b) Ld.AO erred in making addition to the tune of Rs.4,14,000 u/s 69 of the Act without issuing show cause notice. 6) Ld. AO has erred in passing order u/s 148A(d) & issuing notice u/s 148 of L.T.Act, 1961 without appreciating that appellant was not having the jurisdiction for the same in view of Section 151A and the notification issued thereunder notifying e-Assessment of Income Escaping Assessment Scheme, 2022 and, thereby, rendering the said order and the notice as well as the entire assessment proceeding as null and void. 7) Ld. Officer has erred in not furnishing the copy of approval u/s 151 of 1.T.Act, 1961 and notice u/s 143(2) of 1.T.Act, 1961 during the course of proceedings. Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 9 of 18 8) The Ld. AO erred in not considering all the submissions made as there was ample time on hand and whereas the order was passed on 12.05.2023 against the last submission made on 14.4.2023. 9) That other grounds may be urged at the time of hearing, the appellant prays that the appeal may please be allowed or entire addition may kindly be deleted or deemed fit as the case may be. 10) The appellant reserves the right to add, alter, or amend any ground or grounds of appeal on or before the hearing.” 3. Recording of Hearing 3.1 The hearing in the matter took place before this Tribunal on 21.04.2025 when Ld. AR for and on behalf of the assessee appeared before us interalia stated that the “Impugned Order” is totally illegal, bad in law. The Ld. CIT(A) has not considered the merits of the case and has dismissed the appeal on technical ground without considering substantive issues. Reply filed before A.O were not considered including objections against additions proposed. Assessee is deprived of fair hearing. Other legal objections and grounds as per grounds of appeal were agitated too before us. 3.2 Per contra Ld. DR stated that this Tribunal be pleased to pass such order as it thinks fit and proper according to law. Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 10 of 18 4. Observations,findings & conclusions. 4.1 We now have to decide the legality, validity and the proprietary of the “Impugned Order” basis records of the case and rival contentions canvassed before us. 4.2 We have carefully perused the records of the case. 4.3 We basis records of the case and after hearing and upon examining the rival contentions are of the considered opinion that 1st appeal dismissed on limited ground that assessee has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable, present appeal is infructuous and is therefore dismissed. We hold that said finding is not legally tenable as at the material time the assessee was under a reasonable belief that she is not liable to file return of income as no known sources of income were with her or any income was accrued to her. The stand of the assessee throughout has been that there are no identifiable income which had accrued to her. The Ld. AO even in the impugned assessment order has not been able to establish any known source of income of the assessee requiring her to file return of income. Therefore assessee did not file any return of income either u/s 139 or u/s Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 11 of 18 148. The“Impugned assessment order” also shows that the Ld. A.O has taken returned income at Nil. Only additions have been made. Hence Ld. CIT(A) is wrong in holding that assessee had not filed any return of income and further erred in holding that assessee has not paid advance tax. It cannot be said in law that there was non compliance of Section 249(4) of the Act though in the impugned order it is not stated very expressly. We gainfully refer to decision of this Tribunal in case of Shri Pushpendra Singh Chouhan V/s ITO ITA No.122/Ind/2024 order dated 24.06.2024 wherein following is held:- “7. We have considered the rival submissions as well as relevant material on record. The Assessing Officer initiated proceedings u/s 147 on the basis of the AR information regarding the cash deposit of Rs.36,03,600/- in the savings bank account of the assessee. Since there was no response on behalf of the assessee to the notices issued by the Assessing Officer, therefore, the assessment was framed ex- parte as best judgment assessment thereby the Assessing Officer has assessed total income of the assessee at Rs.36,03,600/-. The assessee has explained the reasons for non appearance before the Assessing Officer as the assessee belongs to a rural area and having no computer or internet facility in the village and therefore, the assessee was not having access to the notice issued by the Assessing Officer and consequently could not furnish any reply or submissions as well as evidence during the assessment proceedings. Further the CIT(A) has dismissed the appeal of the assessee in limine for want of payment of tax as per the provisions of Section 249(4)(b) of the Act. This is a case of reassessment framed by Assessing Officer u/s 147 r.w.s. 144 of the ACT and therefore, there is no obligation of payment of advance tax as per Clause(b) of Section 249(4) as held by the Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 12 of 18 Mumbai Benches of the Tribunal in case of M/s. Nine Globe Industries Pvt. Ltd Vs. ACIT (supra) in para 4 to 6 as under: \"4. In that view of the matter, the appeal came to be dismissed on the ground that the appellant has not filed RoI as well as not paid an amount equal to the amount of advance tax, which was payable by it. It can thus be seen that the CIT(A) had no occasion to examine the merits of the impugned additions. 5. We have heard parties. Perused record. It can be seen that the case was Initially selected for scrutiny, which was completed on 29.03.2015, and there was no change in the returned income of Rs.51.80.800/- in the absence of any additions being made. It is a matter of record that originally the return was filed for the relevant year under consideration on 29.09.2012. It was not disputed during the course of hearing that the advance tax has per the assessed income of Rs. 51,80,800/- has been paid. Here is the case of reassessment which is done for the benefit of Revenue. Hence, in our view, clause (b) of Section 249(4) of the Act will not apply as there is no question of paying advance tax in reassessment proceedings, even though assessee did not file RoI. 6. In the said circumstances, we find that the impugned order dismissing the appeal on the ground of non-compliance of Section 249(4) of the Act cannot be sustained and deserves to be set-aside\". Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 13 of 18 In the case in hand the assessee has filed return of income and thereafter, the Assessing Officer has initiated reassessment proceedings and passed reassessment order. Therefore, for filing the appeal before CIT(A) the question of payment of advance tax by the assessee as per clause(b) of Sub Section 4 of Section 249 does not arise. Similarly the Raipur Bench of the Tribunal in case of Vishnusharan Chandravanshi Vs. ITO in ITA No.73/RPR/2024 order dated 10.04.2024 has also considered the identical issue in para No.10 to 15 as under: 10. Admittedly, it is a matter of fact borne from record that the assessee had neither filed his return of income u/s 139 of the Act nor in compliance to notice issued to him u/s. 142(1) of the Act, dated 10.03.2018. As the assessee had failed to file his return of income, the CIT(Appeals) had brought his case within the meaning of Clause (b) of sub- section (4) of Section 249 of the Act. For the sake of clarity, Section 249(4) of the Act is culled out as under: \"(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,- (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the Commissioner (Appeals) may, for any good and sufficient Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 14 of 18 reason to be recorded in writing, exempt him from the operation of the provisions of that clause.\" The CIT(Appeals) observed that as the assessee who had not filed his return of income had neither paid an amount equal to the amount of advance tax which was payable by him; nor filed any application seeking exemption from operation of the aforesaid statutory provision for any good and sufficient reason, therefore, he had failed to comply with the statutory requirements contemplated u/s 249(4)(b) of the Act. Accordingly, the CIT(Appeals) dismissed the appeal on the said count itself. 11. Controversy involved in the present appeal lies in a narrow compass, i.e. sustainability of the view taken by the CIT(Appeals) that the appeal of the assessee who had not filed his return of income for the subject year was not maintainable for the reason that he had failed to satisfy the conditions contemplated in Section 249(4) of the Act. 12. Admittedly, as per section 249(4)(b) of the Act, in a case where no return of income has been filed by the assessee, then his appeal shall be maintainable before the CIT(Appeals) only if he had paid an amount equal to the amount of advance tax which was payable by him. At the same time, the legislature had carved out an exception to the applicability of the aforesaid statutory requirement by way of a \"proviso\" to Section 249(4) of the Act, as per which, on an application made by the appellant, the CIT(Appeals) may, for any good Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 15 of 18 and sufficient reason to be recorded in writing exempt him from the operation of the aforesaid statutory provision. 13. At this stage, I may herein observe that the statutory requirement contemplated in Clause (b) of sub-section (4) of Section 249 of the Act would stand triggered only where any obligation was cast upon the assessee to pay \"advance tax\". As stated by the Ld. AR, and rightly so, in absence of any taxable income for the year under consideration [as was stated by him in the \"SOF\" filed before the CIT(Appeals)] no obligation was cast upon him to compute and pay any advance tax u/ss. 208 & 209 of the Act. Considering the fact that as no obligation was cast upon the assessee to compute/deposit any amount towards \"advance tax' for the subject year, I am unable to concur with the view taken by the CIT(Appeals) who dismissed the appeal as not maintainable for the reason of non-compliance off mandatory condition contemplated in Clause (b) of sub-section (4) of Section 240 the Act. Although, at the first blush, I was of the view that the amount assesse the A.O vide his order u/s. 144 of the Act dated 23.11.2019 of Rs. 10 lacs would saddle the assessee with an obligation to pay \"advance tax\", but stood corrected a careful perusal of Section 208 and Section 209(1)(a) of the Act, which contemplates determination of the said tax liability at the behest of the assessee. 14. As in the present case, the assessee had not only before me but had in the \"Statement of facts\" stated before the CIT(Appeals) that he had no taxa income, therefore, in my Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 16 of 18 view in absence of any obligation cast upon the ass to compute/pay \"advance tax\" u/s. 208 and 209 of the Act for the subject year first appellate authority could not have held that he had failed to comply with statutory conditions contemplated in Sec. 249(4)(b) of the Act. My aforesaid we fortified by the orders of the ITAT, Bengaluru in the case of Shamama Reddy Vs. ITO, ITA No.1120/Bang/2023 dated 20.02.2024 and that of ITAT, Deih in the of Vikram Singh Vs. ITO, ITA No.6559/Del/2019, dated 21.02.2023 15. I, thus, in terms of my aforesaid observations, set aside the order of the CIT(Appeals) and restore the same to his file with a direction to dispose appeal after considering the merits of the case. Needles to say, the CIT( Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.\" 8. Accordingly, to maintain the rule of consistency we follow the earlier decisions of the Tribunal cited above and consequently the impugned order of CIT(A) is set aside being contrary to the provisions of law.” 4.4 Thus, applying the view taken by ITAT, Indore cited above the impugned order of CIT(A) is hereby set aside. 4.5 The Ld. A.O in the impugned assessment order ought to have give further opportunity to the assessee to justify her stand. We observe that assessee too has partly responded. Be that as it may we are of the view that assessee now can place all material in her possession to give a suitable justification about additions made, if one more opportunity is provided by Ld. CIT(A). By taking into consideration overall facts and circumstances of the Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 17 of 18 present case it would be just fair and prudent that “impugned order” be set aside. Accordingly we set aside the impugned order as not being on merits and remand the case back to CIT(A) to pass a fresh order on merits of the case so that there is meritorious disposal as per Section 250(6) of the Act. 5. Order 5.1 In result appeal of assessee is allowed as and by way of remand back to file of CIT(A) to pass a fresh order on merits on denovo basis. 5.2 Appeal of the assessee is allowed for statistical purpose. Order pronounced in open court on 29.04.2025. Sd/- Sd/- (SMT. ANNAPURNA GUPTA) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore िदनांक/ Dated : 29/04/2025 Dev/Sr. PS Ritika Jain ITA No. 632/Ind/2024 - A.Y.2015-16 Page 18 of 18 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "