Case Law Details
Sujata Banerjee Vs ACIT (ITAT Delhi)
Introduction: In the case of Sujata Banerjee vs. ACIT, heard by the Income Tax Appellate Tribunal (ITAT) Delhi, the main issue revolved around the addition of an amount of Rs.2,92,86,700 in the assessment year 2015-16. The appellant, Sujata Banerjee, a non-resident individual and a tax resident of the United States of America (USA), had purchased immovable properties valued at Rs. 2,40,50,300 and incurred additional costs of Rs.52,36,400 towards transfer charges during the financial year 2014-15.
Detailed Analysis: The Assessing Officer reopened the assessment under section 147 of the Income Tax Act since the appellant had not filed any return of income for this substantial investment in property. During the assessment proceedings, the Assessing Officer requested Sujata Banerjee to explain the source of the investment made in the purchase of the property. In response, she stated that the property was purchased jointly with her husband for a total consideration of Rs.2,40,50,300 using available funds.
However, the Assessing Officer did not accept this explanation and considered the amount of Rs.2,92,86,700 as unexplained income, subsequently adding it to Sujata Banerjee’s income. She challenged this draft assessment order and raised objections before the Dispute Resolution Panel (DRP). The DRP, after reviewing her submissions and evidence, directed the Assessing Officer to consider and verify her contentions, based on the documents and submissions available on record.
Despite these clear directions, the final assessment order reiterated the addition made in the draft assessment order. The appellant appealed to ITAT Delhi.
The tribunal observed that Sujata Banerjee had left India in 1988 and had since become a citizen of the USA. Her husband was also a non-resident Indian and a USA citizen. They jointly purchased the subject property. The appellant provided detailed explanations, supported by evidence such as bank statements, income sources in the USA, and her filed tax returns in the USA. It was evident that she was a salaried employee at Hewlett-Packard (HP) and consistently filed her income tax returns in the USA. Thus, her sufficient source of income was beyond doubt.
Reviewing the bank statements, it became clear that the investment for the property purchase occurred over several years, and each payment was routed through a bank account maintained with CITI Bank, which was evident from the provided bank statements and wire transfer request forms.
In conclusion, the ITAT Delhi found that the Assessing Officer had not followed the directions of the DRP and had not carried out a proper inquiry into the available evidence. The tribunal was convinced that Sujata Banerjee had explained the source of her investment in the immovable property, making the addition unsustainable. Consequently, the addition of Rs.2,92,86,700 was deleted, and the appeal was allowed.
Conclusion: The Sujata Banerjee vs. ACIT case serves as a reminder that thorough examination of evidence and adherence to directives are vital in income tax assessments. In this instance, the tribunal’s decision favored the appellant due to the clear and substantiated explanation of the source of income used for property investment.
FULL TEXT OF THE ORDER OF ITAT DELHI
This is an appeal by the assessee against the final assessment order dated 25.01.2023 passed for the assessment year 2015-16, in pursuance to the directions of learned Dispute Resolution Panel (‘DRP’).
2. The dispute in the present appeal is confined to addition of an amount of Rs.2,92,86,700/-.
3. Briefly the facts are, the assessee is a non-resident individual and a tax resident of United States of America (USA). The Assessing Officer received information that in the financial year 2014-15 relevant to assessment year 2015-16, the assessee had purchased immovable properties valued at Rs. 2,40,50,300/-and has incurred additional cost of Rs.52,36,400/- towards transfer charges. Since, the assessee had not filed any return of income, the Assessing Officer reopened the assessment under section 147 of the Act. In course of assessment proceedings, the Assessing Officer called upon the assessee to explain the source of the investment made in purchase of property. In reply, the assessee submitted that the property in dispute was purchased jointly with her husband for total consideration of Rs.2,40,50,300/- from available funds. The Assessing Officer, however, did not accept the explanation of the assessee and proceeded to frame the draft assessment order by treating the amount of Rs.2,92,86,700/- as unexplained income and added to the income of the assessee. Challenging the draft assessment order, the assessee raised objections before learned DRP. Based on the submissions made and evidences furnished, learned DRP called for a remand report from the Assessing Officer. Ultimately,
learned DRP issued the following directions to the Assessing Officer:
“In view of above, the AO is directed to consider and verify the assessee’s contention in light of submissions made as above including the assessee’s rejoinder along with the details and documents annexed herewith as observed by the Panel at para no 4.1.3.2 above by passing a speaking and reasoned order within the ambit of law and facts of the case. The Panel hastens to clarify that the AO shall not conduct any fresh inquiry in this regard; the verification shall be made on the basis of documents/submissions available on the records. Further, the assessing officer at this juncture cannot raise any issue related to living expenses etc.; he/she is directed to concentrate on the issue under consideration and verify the details and documents filed by the assessee vide her submissions made including letters dated 19.11.2022 and 29.11.2022. The AO is further directed to incorporate his/her observation on the issue of difference of value of investment in the immovable property as raised by the assessee vide point no. 2 & 3 of the rejoinder. The assessee’s objections made at all grounds in this regard are hereby, disposed off accordingly.”
4. However, in the final assessment order, the Assessing Officer again repeated the addition made in the draft assessment order.
5. We have heard Sh. Porus Kaka, learned Senior Counsel appearing for the assessee and Sh. Vizay B. Vasanta, learned Departmental Representative.
6. On perusal of facts and materials available on record, it is observed that the assessee has left India long back in the year 1988 and has become a citizen of USA. Her husband is also a non-resident Indian and a citizen of USA. The facts on record further reveal that the subject property, as referred to by the Assessing Officer, was jointly purchased by the assessee and her husband. It is observed, in course of proceeding before learned DRP, the assessee has explained in detail the source of investments along with supporting evidences, such as, bank statements, source of income in USA, return of income filed in USA etc. It is observed that the assessee is a salaried employee, being employed with Hewlett-Packard (‘HP’). It is also evident, she regularly files her return of income in USA. Thus, the fact that the assessee has sufficient source of income, is beyond doubt.
7. On perusal of the bank statement, it is patent and obvious that the investment for purchase of property was made over a period of time starting from January, 2023 to December, 2015. Each and every payment made towards purchase of the property has been routed through bank account maintained with CITI Bank. This is evident from the documents placed in the paper-book in the form of bank statements and wire transfer request forms.
8. Thus, facts on record clearly reveal that the source of each and every payment made towards purchase of immovable property has been explained by the assessee through supporting evidences. Though, all these materials were available before the Assessing Officer, however, he has preferred to turn a blind eye to them in spite of the specific directions of learned DRP to pass a speaking and reasoned order and not to conduct any fresh inquiry. Thus, it is quite clear that the Assessing Officer has not carried out the directions of learned DRP in letter and spirit. Inasmuch as, though, investments in property was jointly made by the assessee and her husband from their independent sources, however, entire investment has been added at the hands of the assessee.
9. Be that as it may, after perusing the materials on record, we are convinced that the assessee has explained the source of investment in the immovable property. Therefore, in our considered opinion, the addition made is unsustainable. Accordingly, we delete it.
10. At the time of hearing, learned counsel for the assessee, on instructions, did not press the additional grounds. Accordingly, they are dismissed.
11. In the result, the appeal is allowed, as indicated above.
Order pronounced in the open court on 16th October, 2023
