Case Law Details
Pravinchandra Naranbhai Patel Vs ITO (ITAT Ahmedabad)
The case of Pravinchandra Naranbhai Patel vs ITO revolves around an appeal filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. The appeal pertains to the Assessment Year 2012-13 and concerns non-cooperation by the tax consultant in furnishing details of investment in property.
The Assessee filed an appeal against the order passed by the CIT(A) regarding the Assessment Year 2012-13. The appeal arises from the issue of non-cooperation by the tax consultant in providing details of an investment in property. The Assessee raised several grounds of appeal challenging the validity of the order passed by the Assessing Officer (AO) and confirmed by the CIT(A). The Assessee contended that the order passed was bad in law and questioned the addition made under section 69 of the Income Tax Act.
The AO initiated proceedings under Section 147 due to the Assessee’s failure to furnish satisfactory information regarding investments in two properties. The AO added Rs. 74.27 lakhs to the Assessee’s income as unexplained investment. The CIT(A) confirmed the addition after the Assessee’s submissions were found unconvincing.
In an affidavit dated 9th March 2023, the Assessee explained that incomplete information was submitted to the tax authorities due to disputes with the consultant. The Assessee acknowledged the need for proper compliance and revealed a change of consultants. The Assessee sought a fresh opportunity to present the relevant details and cooperate fully.
Considering the Assessee’s affidavit and the changed circumstances, the ITAT Ahmedabad concluded that due to non-cooperation by the tax consultant, the Assessee was unable to provide necessary details. In the interest of justice, the matter was restored to the file of the CIT(A) for reevaluation, providing the Assessee an opportunity to present the required information.
The ITAT Ahmedabad ordered a fresh adjudication in the case of Pravinchandra Naranbhai Patel vs ITO. Due to the non-cooperation of the tax consultant, the Assessee was unable to furnish details of property investment. The case will be reevaluated by the CIT(A) with the opportunity for the Assessee to provide the necessary information, ensuring a fair consideration of the matter.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
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 11.11.2022 passed for Assessment Year 2012-13.
2. The assessee has taken the following grounds of appeal:-
“1. On the facts and in the circumstances of the case and in law, the order under section 143(3) read with section 147 of the Income tax Act, 1961 (‘Act’) passed by learned Assessing Officer (‘AO’) and confirmed by Hon’ble National Faceless Appeal Centre, Delhi (‘NFAC’) is bad in law.
2. On the facts and in the circumstances of the case and in law, the addition of Rs. 74,27,815 made by learned AO under section 69 of the Act and upheld by Hon’ble NFAC is not sustainable in law.
3. On the facts and in the circumstances of the case and in law, Hon’ble NFAC has erred in law in confirming the addition of Rs. 74,27,815, without appreciating the fact the learned AO has not provided any information on which he has relied upon to form reason to believe that Income has escaped assessment. The Learned AO has merely stated that “as per the information available with this office assessee has not disclosed any investment made in immovable ..” which cannot be construed as reasons to believe.
4. The Learned AO has erred in law for making addition of Rs. 74,27,815 section 69 of the Act without appreciating the fact that:
• The Investment in Immovable property has been duly recorded in the books of accounts of the appellant.
• Appellant has duly explained the source of investments along with confirmations from relevant parties from whom the funds had been borrowed for making the investments
The Appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the hearing of the appeal.
All the grounds of appeal stated above are without prejudice to each other.”
3. The brief facts of the case are that the original return of income was filed on 28-09-2019 declaring total income of ₹ 3.67 lakhs. Thereafter, proceedings under Section 147 of the Act were initiated, in response to which the assessee filed certain details. However, the assessing officer did not agree with the contentions/submissions filed by the assessee and held that the assessee had made investments in two properties, the source of which remained unexplained. Accordingly, the assessing officer made an addition of ₹ 74.27 lakhs to the returned income of the assessee by treating the unexplained investment as his unaccounted income. In appeal, Ld. CIT(Appeals) passed ex parte order in absence of any appearance/furnishing of information by the assessee and the order passed by the assessing officer was confirmed. While confirming the order passed by the assessing officer, Ld. CIT(Appeals) made the following observations:
“10. On the other hand, in view of above stated facts, as emanating from the assessment order as discussed in para 7 above and its sub-paras 7.1 to 7.6, it is quite evident that before AO, the assessee had failed to furnish any cogent evidences of sources of the investments in two properties as well as the same has not been reflected in the Return of Income filed. It is clearly observed that once the various facts recorded by AO in the assessment order are perused, the various claims made by the assessee through the two Grounds of appeal are observed to be containing absolutely no merit. The once the various facts recorded by AO in the assessment order have remained uncontrovered even during these appellate proceedings.
It is therefore observed that even during these appellate proceedings, the assessee has failed to explain the source of Investments made in the two properties, totaling to Rs.74,27,815/- Consequently, AO’s action of treating the Investments made in the two properties, totaling to Rs.74,27,815/- (42,39,655+31,88,160) as made out of unaccounted Income of the assessee and hence adding the same to the total Income of the assessee, Is fully upheld.
Both the Grounds of appeal are dismissed.
11. In the result, the appeal is DISMISSED.”
4. Before us, the assessee has filed an affidavit dated 9th March 2023, vide which it has been submitted that detailed information including the source of funds for the investments in properties as well as objections to issuance of notice for reassessment proceedings were filed before the assessing officer during the course of reassessment proceedings. Subsequently, during the course of reassessment proceedings, certain details were filed by the assessee vide letter dated 11-11-2019, which in the opinion of the assessing officer were not sufficient. It has been submitted by the assessee that the consultant appointed by him did not furnish complete information due to certain disputes between the assessee and his consultant. Subsequently, order under Section 143(3) r.w.s. 147 of the Act was passed on 23-12-2019 on the ground that incomplete information has been submitted by the assessee and an addition to the tune of ₹ 74.77 lakhs was made to the income returned by the assessee. Subsequently, an appeal was filed on 06-01-2020 before Ld. CIT(Appeals). However, the assessee submitted that the consultant appointed by the assessee did not submit any details or information before Ld. CIT(Appeals) and accordingly, Ld. CIT(Appeals) passed ex-parte order dismissing the appeal of the assessee by order dated 11-11-2022. Accordingly, the assessee vide affidavit dated 9th March 2023 has submitted before us that it was due to the assessee’s consultant’s non-cooperation before the assessing officer and also before the Ld. CIT(Appeals) that the assessee could not furnish the details in relation to investment in property, to the satisfaction of the Revenue Authorities. The assessee submitted before us that now he has changed his consultant and if given an opportunity, the necessary compliance with the Tax Department shall be made.
5. In view of the contentions put by the assessee by way of aforesaid Affidavit dated 9th March 2023, in the interests of justice, we are hereby restoring the matter to the file of Ld. CIT(Appeals) for de novo consideration, after giving due opportunity of hearing to the assessee.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 26/07/2023
