Same property investment cannot be taxed twice; linked substantive and protective assessments remanded to decide correct assessee

ITAT held that the same investment in immovable property cannot be simultaneously assessed in the hands of both the alleged real owner and the assessee treated as benamidar. Observing that the substantive assessment in the hands of the alleged real owner and the protective/benami assessment in the hands of the assessee were inextricably linked, the Tribunal restored the matter to CIT(A). CIT(A) was directed to hear and decide both appeals together, examining the merits comprehensively before determining the correct person assessable. The assessee's appeal was allowed for statistical purposes.

---

---

1. ISSUES PRESENTED AND CONSIDERED

(1) Whether delay of 7 days in filing the appeal before the Tribunal deserved to be condoned.

(2) Whether the same investment in an immovable property, already assessed substantively in the hands of the ostensible purchaser, could simultaneously be assessed in the hands of the alleged real owner, and the appropriate course of action in such circumstances.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Condonation of delay in filing the appeal

Interpretation and reasoning

The Tribunal took note of the assessee's condonation application explaining that the delay of 7 days occurred because the assessee's wife was hospitalized with dengue and other medical problems, preventing the assessee from meeting his counsel in time. A hospital discharge summary evidencing admission and treatment from 06.11.2023 to 10.11.2023 at a hospital in Jabalpur was produced. The Tribunal, after considering the stated circumstances and the supporting medical document, accepted the explanation as sufficient cause for the short delay.

Conclusions

The delay of 7 days in filing the appeal was condoned and the appeal was admitted for hearing.

Issue (2): Simultaneous assessment of the same investment in hands of ostensible and alleged real owner; necessity of coordinated adjudication

Legal framework (as discussed)

The assessment in appeal involved an addition under section 69 read with section 115BBE of the Income-tax Act on account of alleged unexplained investment in immovable property, treated as benami investment made by the assessee through his employee. Parallelly, assessment orders under section 143(3) had already been passed in the hands of the ostensible purchaser (employee) for the same investment in the same property for assessment years 2012-13 and 2013-14.

Interpretation and reasoning

The Tribunal noted from the material placed before it that: (i) in respect of the very same immovable property, an addition of Rs. 40 lakhs had been made in the hands of the ostensible purchaser for assessment year 2012-13; and (ii) a further amount of Rs. 88,52,740 had been assessed in his hands for assessment year 2013-14 under section 143(3), on account of payment towards purchase of property and registration charges. An appeal against those assessments was stated to be pending before the first appellate authority.

On these admitted facts, the Tribunal held that the investment in purchase of the property could not be assessed in both the hands of the ostensible purchaser and the assessee (alleged beneficial/benami owner) simultaneously. In the circumstances, the Tribunal considered it appropriate that both appeals concerning the same investment in the same property be adjudicated together by the same appellate authority to avoid inconsistent or overlapping findings.

The Tribunal therefore determined that the proper course was to restore the present matter to the file of the first appellate authority handling the employee's appeal, so that both assessment orders are examined together and a final view is taken on the person in whose hands, if at all, such investment is to be assessed.

Conclusions

The Tribunal held that the same investment in the property cannot be taxed both in the hands of the ostensible purchaser and in the hands of the assessee as alleged benami owner. The matter was restored to the file of the first appellate authority (NFAC) with a direction that the appeal of the assessee be assigned to the same Commissioner (Appeals) who is seized of the appeal of the ostensible purchaser, so that both assessment orders are considered together and a consolidated decision is taken on the merits. The assessee's appeal was treated as allowed for statistical purposes.

---