2020 (7) TMI 328 - AT - Income Tax

Tribunal remands case for fair assessment, emphasizing procedural fairness and evidence examination.

Shri Dharam Bir Singh Versus The Income tax Officer Ward 2 (1) Ghaziabad

Shri Dharam Bir Singh Versus The Income tax Officer Ward 2 (1) Ghaziabad - [2020] 82 ITR (Trib) 176 (ITAT [Del]) Issues:Enhancement of income by the CIT(A) under section 69 of the Income Tax Act based on unexplained investment.Analysis:1. Issue of Enhancement of Income by CIT(A):The appeal was filed by the assessee against the CIT(A)'s order enhancing the income by Rs. 15,44,600 on account of unexplained investment under section 69 of the Income Tax Act. The Assessing Officer had added Rs. 15.50 lakhs to the assessee's income as short term capital gain based on information from AIR. The CIT(A) accepted the short term capital gain at Rs. 5,400 but raised concerns about the unexplained source of investment amounting to Rs. 15,44,600. Despite the assessee providing details of the source of investment, the CIT(A) confirmed the addition made by the Assessing Officer and further added Rs. 15,44,600.2. Judicial Interpretation and Legal Principles:The counsel for the assessee argued that the CIT(A) exceeded his powers by enhancing income under a new source of income not considered by the Assessing Officer. Reference was made to the decision of the High Courts of Kerala and Delhi to support the argument that enhancement cannot be made under a new source of income. It was also highlighted that the approval granted by the Additional Commissioner lacked a date, raising questions about the timing of the approval in relation to the notice issued under section 148 of the Act.3. Consideration by the Tribunal:The Tribunal noted that the assessment proceedings were ex-parte as the assessee did not attend, leading to the Assessing Officer framing the assessment under section 144. While the CIT(A) accepted additional evidence and the computation of short term capital gain, the Tribunal observed that additions under section 69 were made without issuing a notice of enhancement to the assessee. The Tribunal found that the CIT(A) should have first asked the assessee to explain the source of investment before considering enhancements.4. Decision and Direction by the Tribunal:Considering the lack of opportunity for the Assessing Officer to examine the evidence, the Tribunal decided to remand the issues back to the CIT(A). The CIT(A) was directed to re-examine the evidence related to the source of investment, ensuring a fair opportunity for the assessee to be heard. It was emphasized that the CIT(A) should follow the legal principles and decisions of the High Courts of Kerala and Delhi while reconsidering the matter. As a result, the appeal of the assessee was treated as allowed for statistical purposes.In conclusion, the Tribunal's decision highlighted the importance of procedural fairness and adherence to legal principles in enhancing income under the Income Tax Act, emphasizing the need for proper examination of evidence and granting a reasonable opportunity for the assessee to present their case.