Somabhai Mohandas Patel Vs ITO (ITAT Ahmedabad)
The case of Somabhai Mohandas Patel vs. ITO before the Income Tax Appellate Tribunal (ITAT) in Ahmedabad involved an appeal by a taxpayer, Somabhai Mohandas Patel, against an order passed by the National Faceless Appeal Centre (NFAC) upholding the addition of ₹10,33,012 to his income. This addition was made by the Assessing Officer (AO) on the grounds of unexplained investment in an immovable property. The core issue revolved around whether the assessee had a legitimate source for the funds used to purchase a share in a property.
The Assessing Officer had initiated proceedings under Section 147 of the Income Tax Act after discovering that Somabhai Mohandas Patel had a 12.5% share in an immovable property purchased for a total consideration of ₹82,64,025. This share amounted to an investment of ₹10,33,012. The AO, after noting that the assessee did not respond to several notices, concluded that the source of this investment was unexplained and added the amount to his income as “income from undisclosed sources” under Section 69 of the Act.
The assessee appealed the decision to the Commissioner of Income Tax (Appeals), or CIT(A). During the appeal, the assessee provided additional evidence, including a copy of the sale deed, PAN details, and a bank statement, claiming he had borrowed ₹4,00,000 from his daughter-in-law’s proprietorship concern, M/s Jay Ambe Sales Agency. The CIT(A) forwarded this evidence to the AO for a remand report. However, the AO’s report noted that the assessee failed to comply with the remand proceedings. Furthermore, the AO pointed out a discrepancy: the loan was allegedly taken on March 24, 2012, while the property was purchased earlier, on March 14, 2012. This, along with the assessee’s failure to provide a confirmation from the creditor or proof of repayment, led the CIT(A) to agree with the AO and uphold the addition.
