Gangady Venkatram Reddy Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in the case of Gangady Venkatram Reddy Vs ITO, has effectively set aside an addition of ₹74,00,000 made by the Assessing Officer (AO) as unexplained investment under Section 69 of the Income Tax Act, 1961, for the Assessment Year (AY) 2015-16. The Tribunal found that the lower tax authorities had passed ex-parte orders without properly considering the documentary evidence submitted by the assessee and based the reassessment on an incorrect premise regarding the purchase of property.
The case originated when the AO reopened the assessment under Section 147, suspecting that the assessee, an individual, had purchased immovable properties during AY 2015-16 and pledged them with HDFC Bank for a loan of $\text{Rs. }74,00,000$. Since the assessee, who is a senior citizen, did not adequately respond to notices, the AO completed the assessment under Section 147 read with Section 144, treating the entire loan amount of $\text{Rs. }74,00,000$ as unexplained investment. The Commissioner of Income Tax (Appeals) (CIT(A)) subsequently confirmed the addition ex-parte.
Before the ITAT, the assessee contended that the properties mentioned by the AO were acquired way back in 2004-05, not in the year under consideration. Crucially, the assessee argued that he had only pledged the property to take a loan of $\text{Rs. }37,00,000$, not $\text{Rs. }74,00,000$, and that the AO had added an incorrect loan amount. The appellant’s counsel pointed out that the assessee had submitted relevant documents, including the Loan Sanction letter and Advocate’s report, to the AO through the online portal on August 18, 2022. The ITAT’s scrutiny of the records confirmed that the AO’s final order, dated May 22, 2023, was passed after the submission of these documentary evidences, yet the AO failed to consider them.
