2024 (8) TMI 1180 - AT - Income Tax

ITAT deletes section 69A addition after assessee proves legitimate property purchase with bank loan funding

The ITAT Bangalore allowed the assessee's appeal and deleted the addition made under section 69A for non-payment of advance tax. The AO had initiated ... Condonation of delay - admissibility of appeal where advance tax not paid under section 249(4) - reassessment initiated on wrong information - addition treated as unexplained money under Section 69A - tax on deemed income under Section 115BBECondonation of delay - Delay of 89 days in filing the appeal was condoned and the appeal admitted for adjudication. - HELD THAT: - The Tribunal examined the affidavit explaining delay, noting that the assessee had pursued remedy by filing an application under section 154 which was dismissed and thereafter filed the present appeal. Having regard to the explanation and circumstances, the Tribunal found the reasons to be good and sufficient and exercised its discretion to condone the delay and admit the appeal for hearing. [Paras 2, 4]Delay of 89 days condoned and appeal admitted.Admissibility of appeal where advance tax not paid under section 249(4) - Invocation of section 249(4) by the CIT(A) to dismiss the assessee's appeal for non-payment of advance tax was erroneous where the assessee disputed the taxability of the amount added. - HELD THAT: - The Tribunal noted that the CIT(A) dismissed the appeal under section 249(4) on the ground that the assessee had not filed a return and had not paid advance tax. The assessee contested the addition in full, maintaining that without the addition she was not chargeable to tax and therefore had no obligation to pay advance tax. The Tribunal held that where the assessee challenges the chargeability of the income and contends there is no tax liability, invoking section 249(4) to dismiss the appeal was not appropriate. The Tribunal treated the submission on merits and considered the material placed on record rather than sustaining a dismissal on that procedural ground. [Paras 6, 9, 10]CIT(A)'s dismissal under section 249(4) was erroneous where the assessee disputed the chargeability; appeal admitted and considered on merits.Reassessment initiated on wrong information - addition treated as unexplained money under Section 69A - tax on deemed income under Section 115BBE - Addition of Rs. 14 lakhs made under Section 69A read with Section 115BBE was deleted because the reassessment was founded on incorrect information and the assessee produced the correct sale deed and source of funds. - HELD THAT: - The Tribunal examined the material relied upon by the Assessing Officer, namely information from the National e-Assessment Centre indicating a purchase for Rs. 45 lakhs dated 07/10/2017. The assessee produced the correct sale deed showing purchase on 06/10/2017 for Rs. 31 lakhs and evidence of the source of funds by way of a bank loan. The Tribunal found that the AO's addition was based on a wrong assumption of fact-the transaction for Rs. 45 lakhs did not involve the assessee-and that the assessee had satisfactorily explained the source of the payment. In view of these findings, the basis for the addition under Section 69A did not survive and the addition was deleted. [Paras 5, 10, 11]Addition under Section 69A read with Section 115BBE deleted; appeal allowed.Final Conclusion: The Tribunal condoned the delay, held that the CIT(A) erred in dismissing the appeal under section 249(4) where the assessee disputed taxability, and on merits deleted the addition made under Section 69A read with Section 115BBE as the reassessment was founded on incorrect information and the assessee furnished the correct sale deed and source of funds; appeal allowed. Issues:1. Condoning delay in filing the appeal.2. Validity of assessment order based on wrong information.3. Dismissal of appeal by CIT(A) for non-payment of advance tax.4. Addition of unexplained money under section 69A.5. Jurisdictional validity of reassessment.6. Tax liability under sections 115BBE and 234B.Condoning delay in filing the appeal:The appellant filed an appeal before the Tribunal with a delay of 89 days, citing reasons related to pursuing remedies under section 154 of the Act. The Department argued that there was no valid reason for the delay. The Tribunal, after considering the explanations provided, condoned the delay and admitted the appeal for adjudication.Validity of assessment order based on wrong information:The assessment was initiated based on information from the National e-Assessment Centre, alleging a property purchase for Rs. 45 Lakhs by the assessee. However, the actual transaction was for Rs. 31 Lakhs, supported by documents. The Tribunal found the addition of Rs. 14 Lakhs as unexplained money to be erroneous and lacking factual basis. Consequently, the Tribunal deleted the addition.Dismissal of appeal by CIT(A) for non-payment of advance tax:The CIT(A) dismissed the appeal on the grounds of non-payment of advance tax, invoking section 249(4) of the Act. The appellant contested this, stating that the initiation of assessment proceedings was illegal due to incorrect information. The Tribunal agreed with the appellant, ruling that without the disputed addition, there was no tax liability, and hence, no obligation to pay advance tax.Addition of unexplained money under section 69A:The AO made an addition of Rs. 14 Lakhs as unexplained money under section 69A of the Act. The appellant challenged this addition before the CIT(A) and subsequently before the Tribunal. The Tribunal found the basis of the addition to be incorrect and lacking merit, leading to the deletion of the said addition.Jurisdictional validity of reassessment:The appellant contended that the reassessment was void ab initio due to the lack of jurisdictional requirements under section 148 of the Act. The Tribunal, after examining the facts and documents, concluded that the reassessment was based on incorrect assumptions and lacked legal basis. Consequently, the reassessment was canceled.Tax liability under sections 115BBE and 234B:The appellant raised concerns regarding the tax imposed under sections 115BBE and 234B of the Act. The Tribunal, after analyzing the facts and circumstances, found no justification for sustaining the tax liability imposed under these sections. Therefore, the Tribunal ruled in favor of the appellant, allowing the appeal.This judgment addresses various issues, including condoning the delay in filing the appeal, the validity of the assessment order based on incorrect information, dismissal of the appeal for non-payment of advance tax, addition of unexplained money, jurisdictional validity of reassessment, and tax liabilities under specific sections of the Act. The Tribunal found in favor of the appellant on multiple grounds, highlighting errors in the assessment process, lack of tax liability due to incorrect additions, and procedural flaws in the reassessment. Ultimately, the appeal was allowed, and the additions made by the AO were deleted.